How Phoenix 2 Retail turned a £ 9m loss around to become a £ 200m-turnover business
FEATURE
How Phoenix 2 Retail turned a £ 9m loss around to become a £ 200m-turnover business
BY SARAH WALKER
When vaping and smoking alternative products wholesaler Phoenix 2 Retail lost £ 9m-worth of stock in its fourth year of trading , it would have been easy for Chris Kelly , managing director to throw in the towel .
Instead , Chris showed the same positive attitude and determination with which he approaches the many charity marathons and triathlons he takes part in .
Now , Phoenix 2 Retail , based in Queens Meadow , Hartlepool , has been named as one of the UK ’ s fastest-growing businesses after carrying out a deep dive into what went wrong , so he could not only prevent the same thing happening again , but actually enable his industry to grow .
Chris explains : “ It all played out in February 2022 when a product we had sold was taken off the shelves due to a compliance issue .
“ For probably the next 12 to 18 months we had to go around the country , find the products and take them off the shelves , bring them back and ensure they were destroyed in the right way .
“ We had to give the customers a refund as well , so these were challenging times .”
The loss of £ 9m worth of stock was a huge body blow for Chris , as it came after he and his wife had moved back from London to their hometown of Hartlepool to set up the business .
Chris had given up his job in Paddington with vaping product retailer JUUL , while his wife , who was pregnant at the time , also quit her job to work full-time in the business too .
Shortly after the business started , Covid hit , but despite the challenges around the pandemic , the business grew .
That was until the loss of £ 9m of products in 2022 .
“ We were only three years old at that stage , but we looked at how we could switch it to a positive for the industry ,” Chris said .
“ We looked at why it happened to the industry and what gaps there were in terms of testing and compliance and we created a new way of testing within the market to ensure that brands that say they are compliant actually are .
“ We support pre-market and postmarket testing of products , so that every product we supply is tested before it makes it on to the shelf .
“ Every three months , products are also retested to ensure they are still compliant and that what they said when they launched the product is still correct , in terms of things like the amount of nicotine and liquid .”
Chris and the team don ’ t have their own testing facilities on site , but instead order independent laboratory testing to check strength and look out for any ingredients that shouldn ’ t be in the product they are selling , before it is able to be sold to its retail clients .
The packaging is also checked to ensure it is compliant .
“ All the products can only be a certain strength of nicotine – 20mg ,” Chris explains .
“ In certain products , the maximum amount of liquid is two millilitres and we check that the brands are sticking to that .
“ We work with independent laboratories so that our clients can be assured of the high quality and rigorous nature of the testing , before we supply our compliant products to the likes of Tesco , Booker , One Stop and Morrisons .”
Because of their diligence and the high-quality service Phoenix 2 Retail offers its clients , the business has gone from strength to strength , turning over £ 500,000 in its first year and growing to 80 staff and an expected £ 200m turnover by the end of January 2025 .
The firm is also currently recruiting more territory managers to support convenience store and supermarket customers in different areas .
Chris says : “ We started our business just before Covid hit - but it has still grown since there . “ We ’ ve got a good team around us . “ We have 80 staff in total and by January , we will have 110 as we are recruiting more territory managers who call on independent convenience stores . “ Another 20 will join us in January .” Despite the success of the business , Chris has his feet firmly on the ground and doesn ’ t take anything for granted .
“ Every day , there is a new problem , challenge or situation to manage and when it comes to our turnover , although we ’ ve obviously done really well , I never
Colleague – Chris says he takes the responsibility for the people who work for him very seriously .
really focus on the numbers ,” he says .
“ Saying that we are expected to turn over £ 200m at the end of our financial year in January always looks and sounds amazing .
“ But I take my responsibility to the people who work with me very seriously and no matter what problems you encounter , we model the fact that if you get in the trench , there is always a solution .
“ I always just keep going – keep building the business and I feel like when you do that , the figures take care of themselves .”
Chris also has a positive outlook when it comes to the Teesside and wider North- East region in which he works .
As well as its base in Hartlepool , Phoenix 2 Retail also has offices in Peterlee and Durham – but before they started the business , many people warned them against setting up their business in the region .
“ We got told many times it was impossible for someone from Hartlepool to build a successful business here ,” admits Chris .
“ People would say , ‘ start it in London or Manchester ’ but I firmly believe we have great people where I ’ m from .
“ I love being from the area and I ’ ve proved you can make a successful business from Hartlepool .
“ We now have bases in Peterlee and Durham too and we have proven it can be done from this area .”
Chris also recognises the fact that over the last few years , more jobs and opportunities have come into the area – but it is still a challenging region , where poverty is experienced by many .
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