Scotland

The Luxury Of The Long Term View

The luxury of the long-term family business view: Past, present and future at Johnstons of Elgin. The Johnstons of Elgin textile business dates back eight generations and 220 years, making it Scotland’s second-oldest family firm.

In that time, changing customer tastes and the advent of new technology have transformed both the product and the production. As Chris Gaffney, Finance Director says, “People sometimes say family businesses can struggle to reinvent themselves over time, but to survive successfully for over 200 years you have to reinvent yourself several times over. For example, we were one of the first firms in the country to export cloth to the US and we’re still developing new international markets today. These days, most of our business is making luxury accessories and knitwear for some of the world’s premium brands. But alongside that we’re also building our own brand and we are supporting that with a new retail presence on New Bond Street in London. We’ve also invested in online retail and in our home interiors range but all of that is built on the same foundations as it was when the firm was first started: fantastic craftsmanship and the highest quality products. So what we do may change, but the values we believe in are still the same.”

Having family ownership has given the business stability over the years, but ever since the 1980s there have been professional CEOs running the firm, supported by a family Chairman and non-executives as well as senior managers hired from outside.

As Jenny Houldsworth, Deputy Chairman says, “As family members, we see ourselves as custodians for the next generation. Having that perspective means that you’re much more open to bringing in non-family expertise with fresh ideas who will challenge how we do things. It means you get the best of both worlds – innovation and drive for improvement, alongside the knowledge that the family is behind the business, with a long term view, investing for the future.”

The commitment to innovation comes through both in the appointment of a new Creative Director and an ongoing programme of capital expenditure, which last year included investment in a new jacquard loom and whole-garment knitting machines. These produce lighter-weight accessories and seamless garments to be sold alongside the company’s signature cashmere lines.

Chris Gaffney commented “Given the size of our turnover, we actually have quite a complex business model. We have a lot of different customers in varied markets, and many products and product types. Managing that complexity comfortably is therefore always a challenge – in particular, ensuring we deliver on time and that we can manage the peaks and troughs of the manufacturing cycle. As the “Johnstons of Elgin” brand grows we’ve also put resources into understanding our ecommerce data, how to market ourselves online, and really getting to know our consumers and the way they shop.”

Looking ahead, both the family and the firm are fit for the future. “We have strong governance processes in place, designed to cope as the family gets larger with each generation,” says Jenny.

“And we’ll be sticking to the growth strategy that’s stood us in such good stead up to now. We’ve never been interested in growing sales for the sake of growing sales. Our ownership structure gives us the luxury of thinking long term, and we’re not going to be chasing revenue at the expense of putting anything at risk. It’s about organic growth – growing alongside our customers and anticipating their needs, even as we build our own brand and make the most of new opportunities, for example in the US and China, both of which have huge potential for us. Because when it comes down to it we love change – we thrive on it, and we always have.”

 

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