ACS Clothing, Europe’s largest men’s formal clothing hire business, hosted a fascinating FBUS visit to its Eurocentral headquarters, providing valuable insights into a rapidly-expanding business which has just embarked on a pivotal multi-million pound move into the United States, the world’s largest rental market for tuxedos and formal wear.
ACS, which is headed by Chief Executive Richard Freedman, was founded in 1997 by Richard and his father Joe, now Director, making it a relative youngster among established Scottish family firms. However, the Freedmans involvement in menswear dates back four generations to Richard’s great-grandfather Joe who sold Army surplus clothing after WWI, a tradition followed by his grandfather Daniel after WWII.
Craig Corporate has provided strategic advice since 2005
The current generation have earned their place in the annals of successful family firms through identifying and seizing opportunities for ACS to innovate and to diversify into new activities and new markets. The ACS journey has entailed a series of bold decisions and the Freedmans (both Joe and Richard) have been supported in these for the last decade by Craig Corporate’s Paul Yacoubian. Paul has been involved with ACS since 2005 initially as a consultant and then non-executive director on the 12-strong board.
ACS has made a number of smart moves which have laid solid foundations for its expansion, including significant investment in state-of-the-art technology and premises and bringing in external expertise and finance to achieve a radical transformation in the scale, nature and growth potential of the business from a relatively small corporate wear supplier to a leader in formal wear hire.
Reaping benefits of technology investment
A walk around ACS’s substantial Eurocentral operation reveals row upon row of neatly-sorted cravats, waistcoats, and handkerchiefs in every colour of the rainbow and more kilts and sporrans than at a clan gathering – ACS is the world’s biggest kilt hire supplier as well as Europe’s largest provider of men’s rental formal wear.
It demonstrates how ACS is reaping the benefits of investing in sophisticated technology throughout its operations, including an automated garment sorting and stock control system which uses RFID (Radio Frequency Identification) chips to enable real-time tracking of every single garment it provides to an impressive array of corporate clients including Burtons and Debenhams. It also boasts an eco-friendly ozone cleaning system which restores rental clothing to pristine condition without the use of chemical pollutants.
Another key strength of the business is its multi-channel platform powered by its own Xedo software. ACS clients use Xedo software to help their own retail customers make important sartorial decisions and place orders. Men or their partners can log onto the SortMyWedding Outfit website created by Xedo to find the perfect outfit for grooms and other wedding guests.
US operation targets $1.2 billion market
The Freedmans have applied the same smart technology and logistics approach to their new US operation which opens in January 2016. They chose to locate in Memphis near the global headquarters of their shipping partner Fedex, enabling them to supply clients nationwide and maximising their opportunity to capture a lucrative slice of the $1.2 billion US formal rental market.
Craig Corporate helps secure financing
The US expansion has been financed with the help of £8.8 million from the Business Growth Fund, marking BGF’s second investment in ACS following an £8.5 million funding round in 2014. Joe said: “The fact Craig Corporate is on our board was an important factor in helping us get funding from Business Growth Fund and Paul helped us to get several government grants too, he really knows his way around all of that.”
Joe said an enduring and warm relationship with Craig Corporate has been a real strength for the family and for the business as Paul Yacoubian acts as both a trusted sounding board and conduit between father and son on business issues. “Paul is not risk-averse but he will help us to assess risk properly. We have two sages we consult frequently and Paul is one of them.”
Joe said: “Craig Corporate has made a positive difference to ACS in many ways including their understanding of business and connections with banks and other funding sources. Paul helped us to get funding from Clydesdale when we were making an acquisition. He was really instrumental in making sure we got funding for that deal. Craig Corporate not only know lots about business, they are very well-connected and they understand how to make complex issues like tax and pension simple and not intimidating.”
FBUS can help families plan for the future
Joe started work in the family business at 15, learning the ropes alongside his father in a small menswear shop in Glasgow. “He let me make my own decisions and learn from my mistakes,”Joe recalls. Joe had to take charge at just 19 after his father died of cancer and having had to take over the reins while still a teenager, Joe sees value in the FBUS initiative to help families plan for the future, to adapt to change and to provide an educational pathway.
Being alert to change on the horizon is key, Joe says. “I was always assessing and anticipating change, anticipating where the markets are going as they are always fluid. Change can come from government legislation, social change, technological change – these are things family businesses need to watch out for.”
Richard worked in the business while studying and joined full-time after graduating from Stirling University. Joe said: “I didn’t want him to come into the business at the start. I wanted him to have knowledge and experience and the disciplines of a large company first but I gave him the freedom to choose for himself whether to come into the business or not. He talked to the Co-Op Funeral business and landed a contract for suits and then he asked: “Can I come into the company now?”
Making a commercial leap
Richard quickly proved his commercial acumen and Joe said he has been behind several major strategic decisions which set ACS on a higher growth path, including a decision to stop selling suits and concentrate on formal wear rentals, with a strong focus on kilts. Richard also decided to invest in new 8,000 square feet premises in Queenslie in 1999 ahead of landing a major deal to supply rental wear toGreenwoods. The deal came through and Joe says: “That was a leap – a Richard leap. Suddenly we were getting scaled up to something we could really grow- it got us into different places.”
Joe offers this advice to other family businesses: “The worst thing is to make the younger generation always be the child. When your son comes into the business and you’ve taught him as much as you can, you reach a tipping point and you realise he is no longer just your kid, he is at least your equal. When he is the CEO, his decisions are his decisions.”
He adds: “Nowadays we have a large board – 12 people from different backgrounds who bring on board a lot of skills and experience. It has gone beyond the stage of ‘Dad, what do you think?’ There is proper governance there…I get upset with people in family business always wanting to play the father card. The older generation should not be an obstruction to the business progressing.”