05 October 2009 | Rebecca Ellinor

Reviving the fortunes of gaming firm Rank couldn't be left to chance. Rebecca Ellinor speaks to purchasing director Austen Bushrod

When someone says 'casino', do you think of James Bond playing for big bucks with a glamorous woman by his side? How about 'bingo' - does that bring to mind old ladies on a night out?

"The funny thing about casinos and bingo is that everyone has an impression of who the customer is," says Austen Bushrod, director of purchasing for Rank Group. "People think the typical bingo customer is a 70-year-old called Doris who looks like Nora Batty. In fact, it's very varied - it's largely female, but guys go too, as do a lot of youngsters.

"Just as I've had to learn who the bingo customer is, it's been important to get suppliers close to that too."

Evidence that times are changing can be seen at its G casino in Luton, Bedfordshire. Smart and bright to appeal to a young, funky audience, it has separate areas for those who want to watch sport, play on slot machines, chance the main tables, use the dancefloor or just hang out in the main bar and lounge.

Its first "new concept" Mecca bingo hall has recently opened in Nottingham to appeal to those who want to use handheld machines and chat in the lounge, as well as older players who want silence as the caller announces numbers.

Bushrod, who joined Rank two years ago, oversees £120 million of its £230 million total annual spend and heads a team of four. They buy for the £522 million turnover firm, which includes 30 Grosvenor casinos, Meccabingo.com, new site gcasino.com and an interactive gaming business called Blue Square. He arrived in 2007 during what was known as 'black October' - a month after the Gambling Act 2005 had been implemented and when the company was beset with difficulties: "The share price was falling through the floor, we'd been hit by gambling legislation, the smoking ban and taxation changes."

Bushrod was one of a number of new directors faced with the task of transforming the company.

HOUSEHOLD NAMES J Arthur Rank established the business in the 1930s, setting up Pinewood Studios with others in 1935. Household names associated with it since include Butlins, Haven Holidays, Hard Rock cafés, Odeon cinemas, half of Universal Studios, Rank Xerox and Rank Hovis.

"You name it, we owned it. As a large business we had to keep selling bits off because we weren't operating it very well. We were a jack-of-all-trades, master of none and kept getting outmanoeuvred by the competition. We needed to focus on what we were really good at - and one of those areas was gaming."

In the past two years it focused on this industry and the shift of attention - and size - meant the company also had to alter the way it worked with suppliers.

"If you go back 15 years, for example, the Rank contract for beer was the largest account you could win anywhere in the UK - and that gives you a certain amount of clout. But we're not as big as we were. We had to change the way the supply base perceive us and how we work with it."

For many years the approach of the company to vendors had been "we know best".

"The company wasn't as open as it could have been to supplier suggestion and advice. But I don't know best all the time, I'm constantly learning. You can't stand still, and Rank hadn't changed its company mindset, it hadn't accepted it was no longer the biggest player."

REPAIRING RELATIONS "Rank had some products, good potential and opportunity for change. What it also had was a loyal customer base.

"We recognised that the G casinos had been built as a result of customer research and insight. We wanted to apply that to other parts of the business so we had to find out what we needed to develop."

Up until then, the supply base had been kept at a distance. A month after joining the company, Bushrod invited some of the main suppliers to Maidenhead so he could present Rank as a business to them.

"I asked how many had been in a bingo hall - very few hands went up. The same with casinos.

"I showed them pictures of our products and sites, and spoke about what I had learnt in the first month. I also said that if anyone felt we weren't the right type of customer for them they only had to say 'it's not for me'."

He believes the business had been guilty of making some empty promises in the past.

"People were sold on the idea of supplying the bingo or casino business, thinking it was all milk and honey. I reckon some people were on board who hadn't been given an honest view."

For example, he says, Mecca bingo halls have hundreds of thousands of women coming through their doors every week, so it would be easy to assume you will sell countless ice creams and get a great price from a supplier on that basis - even if sales didn't correspond.

"There had been some overselling as a business because of our history. But some of it was false perceptions too, from those who think it's glamorous supplying to a casino.

"I've always felt you've got to be open and honest, that's how you get the long-term partnerships.

"Suppliers were really positive. The common response was 'nobody ever bothers to tell us' and my general answer to that was 'well you haven't gone off your own bat to find out either.' It's a two-way thing."

The next thing he did to boost relations was to organise a supplier poker night at the G casino in Luton.

"We had about 220 people here and it was open for business as usual. We had a buffet, a band and firebreathers out front to show what we can do. About 80 people played in a tournament and everyone had a good time.

"I like to be able to entertain suppliers, give them opportunities to see our business and get them closer to it. Suppliers often take buyers out - it's nice to be able to return that favour. It took a bit of energy and effort on our side, but that's what relationships are about."

Suppliers also had to be educated on the costs of running a casino and letting them know that while the 'house always wins' the profit margin on its operation may be low.

"Take the roulette table. While it's running, even if there's no-one playing, you have a croupier, an overseer for the area, the pit boss, someone in security at the back of house and all sorts of overheads.

"The house edge on a roulette table is 1.7 per cent. So in theory if someone plays a perfect game and spends £100, by the house odds we would get £1.70.

"With the supply base it's been about dispelling the rumours, making them understand we're value-conscious, we don't want to get ripped off or have them feel there's a premium associated with us working in a casino or bingo hall."

And some of the figures for the products are staggering too. New chips for a casino will set the company back £30,000. Improving these relationships with suppliers has already yielded benefits and led to a number of transformations.

SUPPLIER INNOVATIONS When Bushrod arrived only one wine label was sold and there was little choice of spirits.

"Our wine and spirits company is entirely responsible for advising and proposing the list, and works closely with marketing on promotions.

"We've increased champagne sales by 100 per cent and are now giving more choice and variety.

"The gaming companies [that make the machines] are very evident in terms of overall offering. Their products are constantly evolving."

One product, developed by Novomatic in Austria is the Gaminator. This is a slot machine that enables people to play multiple games on one unit, giving gamers more choice.

"It means they can vary it if they don't feel one game's lucky for them one night - that's direct supplier innovation."

Another change is the direct relationship Rank has developed with manufacturers of games machines. Whereas it used to rent all its slot machines from a company who maintained them, Rank realised in order to have more flexibility it needed a direct model.

It now deals directly with IGT, Novomatic and WMS, which give it more chance of being first to market with new products.

"We've seen slots performance improve as a result of this. The suppliers know we have a respect for them and their industry and we have contact with some key players and benefit as a result."

And in some cases Bushrod is looking to see where what the company buys can generate revenue.

One example is its relationship with Cadburys. Rank spent £170,000 with the chocolatier in 2007 - in 2008 it spent £1.3 million.

"Given our core customer base of women at Mecca, to me it was almost too easy."

The company did a lot of chocolate giveaways and promotions, such as Easter and Father's Day, which brought more people through the doors.

"Sometimes people say 'not another chocolate promotion' and I say, 'if someone offers me a bit of chocolate one day I'll have it, if they ask me the next day I don't turn round and say 'no I had a bit yesterday, I'm all right'.

"The challenge is to keep seeing ways in which our business offer can be enhanced by suppliers."

INTERNAL RELATIONS For Bushrod, maintaining good relations with your supply base is as much about educating others as to what not to do.

"If I heard once, I heard a dozen times hotels saying to their beer supplier 'can we have crates for our staff Christmas party?' If they're happy to do it, okay, but if you multiply that by all their customers you're talking a lot of beer."

Bushrod says it's the same when people come to him to ask for a dozen bottles of champagne to give out as prizes. He has to ensure his time isn't taken up with a series of small-scale requests and that the supplier is protected from those that may take advantage.

"If we spend too much time doing bits and pieces like this we're not doing our job and when you're responsible for that relationship you have the big picture to consider."

Another challenge - when you're supported by just three other buyers - is to keep focused on the priorities. He says demands placed on purchasing means it may need to act more in an advisory capacity, instead of doing all the work itself.

"When you have a tight team, one difficulty is to say what you're not going to do. You know you can add value in a million and one areas but the challenge is to try to pick the ones most important to the business.

"So you may be advising colleagues on a process rather than running it for them. Calling on their resource because if it's worth doing a project they can commit resources to it. If you do it right you can give everyone in the business some good commercial principles against which they operate.

"Doors at Rank are open to purchasing. There are some things we don't get involved in, such as tax auditing, but we can get involved in all kinds of areas."

For instance, purchasing is much more involved in construction projects than before.

"Ten months ago, I couldn't tell you what a G casino cost, now we're a regular part of team, that's about creating the internal relationships."

Rank has an almost entirely new management team, many of whom have come from outside the gaming industry.

"If you're effective in your area of expertise you can work in any industry. I was buying missile products nine years ago and the same principles apply whatever you're buying. You've just got to know what your product is, what it's used for and how things fit together, then you can be smarter about what you're doing.

"Anyone can negotiate or get a better deal by buying in volume. The skill is identifying the opportunity and making it happen."

This has led the purchasing team to work more closely with construction on the building and refurbishment of Rank properties.

It lopped 20 per cent off the cost of building a G casino, which Bushrod says bodes well for the company's development. Constructing for less means it can consider building venues in places where it knows it will have a smaller customer base. And with more than 10 'cold licences' in the UK [where it has permission to run a casino] there are lots of opportunities for the future.

And this summer Rank took over a new venue from a US company - the G casino in Coventry is the largest in the UK.

"There are some commodities where you need to do the buying but a lot of people in business ask us for the purchasing process, so you have to spend time with them to understand their strengths and struggles. If you just think I'm the guy who turns up and buys cheaper chips and don't take into account how they're cooked or served, you'll only get the information from the business about the chips."

In some cases this has meant calling on the supply base for help.

"We have more resources than anyone else in the business because you have a supply base there to support you. If you just think of them as supplying you something you're missing a trick."

For example, Brakes is now working with the company to design new menus instead of Rank employing a head chef or development manager to do so.

FEEDBACK "Customer is the key word. If you want to buy stuff in any company and just do it because someone says 'I want to this' and you don't understand what it's for, you lose the ability to influence and advise.

Rank conducts extensive work at customer research centres.

"Our customers are fairly vocal. I love going to the smoking shelter outside a bingo hall, they tell you exactly how it is, what they like and don't like."

Two years ago, Rank discovered the number one detractor for bingo customers was food and drink, and refreshed its offering.

"We kept it simple - fish and chips, chilli con carne - but good quality. Our gross profit might not be as high in terms of food sales, but we had to accept to make more money for the business, sometimes it's right to spend more."

Bushrod says feedback on items like food is a constant process.

"We don't stop it now, we keep the whole process going again and again and again - focus group after focus group, almost every month there's different things we look at. The customer is always evolving, so we should be too."

And does understanding the customer and offering mean sampling the wares? "You get better at gambling and I love doing it but when the limit's gone it's gone."

SMoct2009