Farm shop and rural retailer expands with AMC's support
Published: 26 May 2016
In common with other commodity based agricultural businesses, garden centres and rural retailers such as Garsons of Esher in Surrey are vulnerable to huge trading volatilities and the effects of adverse weather. Reliable financial support and having the correct economic tools in place are therefore key to their ability to ride out periods of poor trading.
The Thompson family started the Garsons business at West End village near Esher in 1871. Traditionally supplying fresh vegetables to London greengrocers, the company was forced to adapt as the 1970s and 1980s heralded the rise of the supermarkets.
"With cheap food from international suppliers making it difficult to remain competitive, the company's directors took the decision to move into direct retailing," explains Ben Thompson, Garsons' Marketing Director.
The new 300-seater restaurant, which was funded with an AMC loan, is mutually beneficial to the Esher site’s 6,000m2 retail space.
At first the company's retail division was little more than a few fresh vegetables being sold from the farm's stable block. Today however, Garsons is an award-winning garden centre and farm shop with locations at Esher in Surrey and Titchfield in Hampshire. The Esher site is also home to the company's 170-acre farm where more than 40 lines of fruit and vegetables, including Pick Your Own soft fruits, are grown.
The Flexible Facility gives us the peace of mind that we can ride out what should be a temporary cash flow setback.
Derek Richardson Finance Director, Garsons
"A lot of our success is due to our Esher site's location," Ben continues. "We're conveniently located near to a number of affluent population centres to which our locally sourced and speciality products have a huge appeal. We've got customers from as far afield as Guildford, Wimbledon and south west London and are viewed by many of our regulars as a venue for a day out."
The Esher site's retail space now extends to 6,000m2 thanks to a recent project which has seen the farm's original glass houses being converted into a modern shopping facility. A 300-seater restaurant has also been built, replacing the garden centre's old 100-seater café.
"The business is still very much family run, but it has grown from a simple horticultural farm to a successful rural retail enterprise with two large sites employing 220 people," Ben adds.
"We have invested heavily in order to maximise our appeal and increase footfall at both sites, but we have always taken a relatively conservative and considered approach to developing and growing the business. For example, we have mitigated the financial risk of building the new restaurant by franchising it to a professional catering firm. Their three-year contract guarantees us a basic rental income, plus a percentage of trading profits, and ensures the restaurant is run to the very highest standards. So far it is an arrangement that is working well, with footfall on the increase and some very positive feedback from customers."
"The Flexible Facility gives us the peace of mind that we can ride out what should be a temporary cash flow setback." Derek Richardson, Finance Director, Garsons
Pick Your Own fruit is still a key aspect of the Garsons business.
Since the 1990s, the Garsons business has been supported by AMC, with a number of long-term loans put in place to finance the various expansion and refurbishment projects.
"AMC's support has been invaluable to our business," explains Garsons' Finance Director, Derek Richardson. "We took our first AMC loan out in 1991 and have since used similar long-term products to fund the purchase of the Titchfield site and to develop the facilities at Esher.
"We've also had an AMC Flexible Facility account since 2011, but so far haven't needed to draw any funds. It's an effective insurance measure which we put in place to cover any temporary or unexpected cash flow implications which might come about as a result of events such as poor Easter trade, snow in the run-up to Christmas or a hosepipe ban such as the one we had in 2012.
"Those sorts of weather events are completely out of our hands but can have huge implications on our monthly cash flow and balance sheet so it is good to know the Flexible Facility is there just in case we need it. It has also been nice to have in the wake of the recent developments at Esher.
"The new restaurant and retail centre have only been open for a few months, and while initial trade is good, as with any business that has just completed a major investment project, our cash flow is feeling the pinch. The Flexible Facility gives us the peace of mind that we can ride out what should be a temporary cash flow setback."
"Derek Richardson is also complimentary of AMC's ‘lend and leave' approach. "It's a way of working which suits our business model," he explains. "Whereas other lenders might look less favourably on a fluctuating balance sheet, AMC understands how our business can be affected by the weather and leaves us to get on with managing the business without having to be concerned about how AMC might respond to a period of poor trading. Their simple approach makes large building and investment projects easier and less stressful to manage.
"They have helped us to develop the business without having to tie up too much of our own liquidity in long-term investment projects. As a result, we've been able to move away from the wholesale sector in favour of retailing our own products directly to what has quickly become a loyal customer base. That isn't feasible for every farm to achieve, but businesses such as ours do present good opportunities for other producers to find an alternative route to market without having to be reliant on the supermarkets."
For more information about Garsons go to http://www.garsons.co.uk
Garsons produce as many as 40 lines of fruit and vegetables on their 170 acres at Esher.