“This site was formerly an ugly old bus depot,” explains Hussain as he shows us around the new Pak Supermarket. “I’d driven past it before but it had never occurred to me that I could build a supermarket here. Then I just tripped upon it by chance one day and saw the ‘For Sale’ sign.”
Hussain got on the blower to the estate agents, only to be told that four other potential buyers were circling the land. But the proposals they’d put forward were all subject to planning permission.
“We went in with an unconditional proposal and that’s what clinched the deal,” he says. “Yes, I took a massive risk. The agent told me not to get involved but I thought, ‘What the hell, I’m going to do it anyway’.”
He bought the land for £2.3m and a year later, in June 2006, he got consent to build the supermarket. Hussain’s gamble had paid off. The entire project set him back a whopping £8m. NatWest ploughed in £6m and Hussain stumped up the rest of the cash (“I own a few properties, I can release equity from those if I need to”).
“We’d budgeted £5.5m for the entire project. We were slightly off!” he laughs. “But this is our flagship store – and I intend to take this model and roll it out across the country.”
This supermarket is certainly different from the other five stores in the Pak chain. For a start, it doesn’t just sell Asian food, it sells everything. Hussain realised that if he was going to be a serious threat to the Morrisons and the Tescos, he’d have to play them at their own game.
“Our core customers are of ethnic origin. That’s our niche and that’s where we have an edge over the Big Four – but we were missing a trick. Customers were coming to us to buy their halal meat, their lentils and their cardamom, then they were going on a second trip to one of the bigger supermarkets to do the rest of their weekly shopping. I realised we could bridge that gap and offer them the lot.”
It’s a cunning move. The average basket size in the new store is £25, compared with £8 in the other Pak shops. Overall sales this year will jump from £12m to a predicted £33m, with an 18 per cent gross profit margin.
And if the big players rain on Hussain’s parade by stocking more ethnic produce, he’ll still be standing.
Read the full interview with Khalid Hussain, the entrepreneur behind £33m-turnover Pak Supermarkets, in the November edition of Real Business magazine.
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