“Yuh got tuh be a good sailor tuh walk on a wet deck” – Bajan proverb
Prologue: When Barbadian retailer Cave Shepherd & Co celebrated its centenary in 2006, the company commissioned a book to honour the landmark, called ‘A Barbadian Odyssey’. It was an evocative, wholly appropriate phrase. The word odyssey (born out of Homer’s epic poem describing the travels of Odysseus) means a long, eventful and adventurous journey. And that description neatly captures the remarkable story of this unique retailing institution.
On December 17, 1906 two respected Bridgetown businessmen and inveterate salesmen, Rupert George Cave and Julian Packer Shepherd, opened a wholesale supply store on Palmetto Street. A dry goods store on Broad Street was added early the following year. The founders reckoned they enjoyed a crucial point of difference over their many competitors – an acute knowledge of customer needs and desires.
They were proven right sooner than they expected. The dry goods (retail in modern parlance) store was overrun in the lead-up to its planned Grand Opening on 4 February, prompting the partners to “positively refuse admittance to all and any today” on Saturday 2 February 1907.
“The Manager says the customers will be well rewarded by waiting until Monday when the windows are properly dressed and the shelves arranged in proper order,” noted local newspaper, the Agricultural Reporter. Two days later the same media carried a bold advertising invitation in bold capital letters, “COME TODAY TO THE IDEAL STORE”. For the ensuing 111 years the company has done its best to live up to that moniker.
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From its early days, Cave Shepherd was a shopping magnate not just for locals but for the burgeoning tourist trade. It remained so through good times and bad (including a disastrous fire in December 1969 that gutted the flagship store). In 2000, the tourism focus became more institutionalised as the company formed a joint venture with Swiss travel retail giant Dufry [see panel below]. The result was Duty Free Caribbean (Holdings) Ltd (DFCH), in which Cave Shepherd today owns a 40% stake.
Martin Moodie spoke to Maureen Davis and David Pietrzak, Chief Development Officer and Chief Operations Officer, respectively of Duty Free Caribbean (Holdings) about the past, present and future of an enterprise that represents the heart and soul of the island of Barbados.
Retail history is writ large with the tales of proud family enterprises, many of them nationally or internationally famous stores, that have not survived the passage of time. At the time of the company’s centenary in 2006, Cave Shepherd Chairman Sir Geoffrey Cave (he was knighted in 2016) noted that seven out of every ten family companies don’t make it to the second generation; and just one in ten makes it to the third. As the old proverb has it, ‘From shirtsleeves to shirtsleeves in three generations’. Cave Shepherd is still going strong into the fourth, with two of Maurice Cave’s grandsons holding key positions in associated companies and three sitting on the Company’s Board of Directors.
“The mere fact that we’re still standing is quite remarkable,” says Maureen Davis, Chief Development Officer of one of Cave Shepherd’s major associated companies, Duty Free Caribbean (Holdings) Ltd (DFCH).
“We’ve probably had seven expansions or major renovations over our 112 years. Of the three main department stores of the ‘60s, ‘70s and ‘80s, Cave Shepherd is the only one remaining.”
Key to the survival of the Barbadian company, she says, was Geoffrey Cave’s insistence on maximising the potential of the tourism sector – a vision that culminated in the historic agreement with Dufry (then Weitnauer Group) in 2000.
“I think the fact that we have stayed both a local and a tourist destination is what’s really kept the department store alive,” says Davis. “We weren’t dependent on either market which reduced the risk if there was a decline in either the local economy or visitor numbers.”
Today, the famed department store’s business is almost equally split between tourist and local customers. “Our ground floor is focused on travel retail, including liquor, tobacco and destination categories. We have a huge local business with our perfumes and cosmetics. But we’ve always tried to keep that store equally balanced in order to survive. Of course, it gets skewed at Christmas when we have a huge local thrust at Christmas.”
The company learned a salient lesson from the fate of its long-time Bridgetown rival Harrisons, which was acquired by airport retailer and caterer Alpha Airports Group in the late 90s. Under its new ownership the retailer focused aggressively and solely on the tourism market. Despite having a global partner, this strategy did not work and DFCH ended up buying the business and operating assets of AG Retail (Harrisons) in 2002.
Perhaps even more important to the company’s impressive longevity is the strength of its brand identity and the affection with which the main department store is held. “I know companies talk about their brand awareness but I have never felt and seen the brand awareness that Cave Shepherd has,” says DFCH Chief Operations Officer David Pietrzak, who joined the company in August 2014, having been Senior Director for HMSHost at Atlanta Hartsfield Jackson International Airport and before that General Manager of a flagship Macy’s store in the same city. “I’ve been in rooms where people start talking about Cave Shepherd as if it’s intimate family.”
“I know companies talk about their brand awareness but I have never felt and seen the brand awareness that Cave Shepherd” – David Pietrzak
But while its roots are steeped deep in the past, Cave Shepherd has also moved with the times. The retail proposition – to locals and tourists – has changed beyond recognition over the past 30 years, says Davis. “In past days we had china and crystal departments occupying 3,000 square feet, and we don’t even have one gondola today,” she notes. “The product categories that catered to the cruise ship tourist in those early days were so different to now. We have evolved constantly; we have reacted to the market and we have constantly innovated. We’ve done our best both to keep the Barbadian public interested and to keep the products relevant for our visitors.”
One of the biggest challenges Cave Shepherd’s flagship department store on Broad Street has faced in recent years is the alarming commercial deterioration of Bridgetown itself. The capital, sited on the island’s southwest coast, has faced a mass exodus of businesses over the past two decades to other parts of the island, including commercial centres such as Warrens and Wildey. Public and private sector offices have followed – and to some extent led – the trend. “There’s been a sharp drop in footfall over the last 20 years just of office people,” says Davis.
Regeneration of the city is the buzzword, especially following the UNESCO World Heritage Site designation of Historic Bridgetown and its Garrison in 2011. Cave Shepherd is determined to play a lead role in this process. While the store’s long term prosperity depends on such a renaissance, the company’s interest is not simply parochial, Davis points out.
“We have a challenge ahead of us as to how we remain relevant in a city which is really declining. But I think Cave Shepherd has always been the barometer of commercial activity here. If we are thriving, the Barbadian public, who look to Cave Shepherd as a sort of beacon of trust and integrity, then feel a level of confidence and comfort. If we are not, it is seen as an economic indicator.”
Bridgetown’s tourist trade has inevitably been affected by the relocation of offices and local businesses, says Ms Davis. “We’ve seen growth in tourism both in our air arrivals and our cruise arrivals over the last couple of decades. But people are less and less enticed to come to the city.”
“Bridgetown is a beautiful city. We have the third-oldest parliament in the western hemisphere. Barbados has a huge, rich heritage and history. Within retail we have to fit within that.” – Maureen David
Davis is hoping that the kind of regeneration programmes mounted in cities such as Manchester, England, can work in Barbados. “We’ve got to start shifting the focus, building on the rich historical and cultural heritage, while developing hotels and residential opportunities to bring back people to live in the city. That will then, of course, lead to a flourishing of restaurants and all the various ancillary services. Bridgetown is a beautiful city. We have the third-oldest parliament in the western hemisphere. Barbados has a huge, rich heritage and history. Within retail we have to fit within that.”
The company has poured much-needed heavy investment into the department store over the past three years, including an ambitious renovation and the installation of new escalators. That was easier said than done, recalls Pietrzak, who conceived the project. “It was an incredible feat, bringing escalators from overseas and having them come through the small streets of Barbados and hoisted into place, without disrupting day-to-day operations.”
“We hadn’t done a major investment in this department store since 1988,” adds Davis. “This was the first big spend since then and it really sent a signal to everyone – Barbadians and government – that said, ‘We believe in the city, we’re here to stay and we are investing.’”
Has Cave Shepherd ever been tempted to say, ‘If you can’t beat ‘em, join ‘em’ and relocate? No, says Ms Davis. “We do have stores across the island… we have satellite stores here and on other islands but we have always held onto the flagship department store. Because that’s what people talk about when you mention Cave Shepherd. The parent company is now a multi-faceted company operating in financial services, property development, renewable energy, international business and tourism. But people still see Cave Shepherd as that one building on Broad Street. It is very much their store.”
That sense of community ownership, long present, was underscored after the catastrophic fire of 10 December, 1969. ’62 Years of History Vanish in Smoke’ ran the headline in the local Advocate-News. The store was packed with merchandise for Christmas but by 10pm was a blazing inferno. By early morning everything was gone, including an adjoining jewellery store called Louis L. Bayley & Sons. The two stores accounted for some 60% of duty free sales to tourists at the time.
It was a terrible blow to a family company, a disaster that would have been the end of many. Instead, Chairman Maurice Cave, father of Sir Geoffrey, vowed to rebuild. However, financing turned out to be a problem. With the fire insurance falling well short of the reconstruction costs, the company turned to its bankers for help. Alarmed by a recent Black Power coup in Trinidad, and fearing instability across the region, the bank rebuffed the loan.
Undeterred, the Cave family turned to the Barbadian public to top up financing from another bank. The result was one of the most successful public offerings that Barbados has ever seen. Some two million Barbadian Dollars were raised from the public, topped up by another three million from the Cave family. “There were 2,000 shareholders at the time and the Barbadian public still feel as if they own this business. I think that loyalty has been a deep driver for us as well.” The rebuilt store, now a public entity in every sense, was opened in October 1972.
“Cave Shepherd is a brand that’s been built in the Caribbean,” adds Pietrzak. “It’s a brand that’s known inside the Caribbean and outside of the Caribbean, because obviously Barbados is a British destination.”
Facing the online challenge
Like department stores and other traditional retailers all over the world, Cave Shepherd faces a threat from the proliferation of cross-border e-commerce activity.
“It’s a huge challenge for us because of our geographical location,” says Davis. “We have a small population but many are going to travel to shop or they’re going to shop online. So, while we want to embrace e-commerce and we do have a small e-commerce website, the challenge is that we can never have the depth or the breadth of choice that you would get on US sites. So, with our website, we have to discover the best way to engage the local and even regional markets.
“We don’t lack for challenges,” Davis says with a wry chuckle.
Tourism numbers up but spending down
For Cave Shepherd, as with all travel retailers worldwide, business is not just about the number of tourists but what they spend. And while tourism to Barbados was strong last year and is marginally up so far in 2018, it’s the discretionary spend that is the challenge, says Davis. “Even though we have been having improved visitor numbers, those who have been coming have been spending less, especially on luxury.”
That trend, evidenced across the company’s various tourism-related businesses, was exacerbated after the UK’s shock Brexit decision on June 23, 2016 and the resultant slump in the Pound Sterling’s value. With the Barbadian Dollar linked to the strong U.S. Dollar, British spending power on the island was severely impacted.
“That hit us very hard,” says Davis. “We were starting to see a recovery and then Brexit happened and it all went downhill. Because, of course, you’ve got your British customer arriving on the island, taking out their phones and seeing what that watch or that Pandora charm would cost back on the High Street in England.”
From family-driven company to multi-national subsidiary
If Cave Shepherd is a very different company today from that launched by R.G. Cave and J.P. Shepherd, then Dufry also is a markedly contrasting enterprise with the old Weitnauer from which it sprung in 2003.
The intervening 15 years have seen Dufry emerge as the colossus of international travel retail, following an extraordinary M&A spree around the world. That has included mega-acquisitions such as The Nuance Group, World Duty Free, Brasif and Interbaires. Today Dufry is publicly listed in Switzerland and Brazil and is a tightly run, cost-efficient financial machine.
Duty Free Caribbean Holdings profile Duty Free Caribbean Holdings (DFCH) was formed on 1 October, 2000 to fuse the regional expertise of Cave Shepherd & Co and the global strength of Swiss travel retailer Weitnauer Group (now Dufry). Both companies sought diversification from the deal – Weitnauer from its reliance on a moribund European duty free environment and Cave Shepherd an expansion of its tourist retail operations. Weitnauer had been Cave Shepherd’s duty free liquor & tobacco supplier for three years, so it was a natural corporate marriage. Regional expansion was the key focus and by 2004, DFCH had interests in 60 stores around the Caribbean. Today, the main retail brands within the DFCH portfolio are Cave Shepherd, Colombian Emeralds International, Jeweler’s Warehouse, Duty Free Caribbean and Pages Bookstore, with the Cave Shepherd operations headquartered in Barbados and the Colombian Emeralds International operations headquartered in Florida, USA. DFCH currently operates 65 stores in the islands of Antigua, Aruba, Barbados, Exuma, Grand Bahama, Grenada, St. Lucia, St. Maarten and Turks & Caicos in addition to 32 Colombian Emeralds International franchises in a further seven Central American and Caribbean territories and onboard Norwegian and Pullmantur Cruise Lines. Whereas the Cave Shepherd flagship department store in Barbados is balanced equally between tourist and local trade, most of the other DFCH operations across Barbados and the region are focused on travel retail. |
Inevitably being a minority partner in such a giant enterprise has meant some profound changes for Cave Shepherd. Quarterly results talk louder than nostalgic fondness for the old days and ways and undoubtedly the traditional nature of the flagship department store is an odd fit in an otherwise wholly travel retail global business.
When Weitnauer was negotiating to buy half of the business in 2000, its executives were shocked to discover that Cave Shepherd carried some 230,000 SKUs, hardly the stuff of modern category management.
“Certainly, when we joined forces they did not understand the department store business,” says Davis. “It was foreign to them. I think back in that day we even had a haberdashery. “It was foreign to them. I think back in that day we even had a haberdashery. As you know, their business focus was travel retail and yet we’re carrying kettles and so on. So, this has been an evolution really of understanding with them.
“We all know that it’s a department store and it’s in a city that is declining and we are working very hard to change that trajectory. Barbados has its economic challenges at this time but Sir Geoffrey and all three generations of Caves have adapted when a crisis has been upon them.
“The current performance is that we’re recovering. Despite a record year in 2007, we have been in a very difficult position since [the economic downturn of] 2008. However, we are expecting a return to positive performance this year, following years of work and efficiencies in all areas of the business together with growth in other areas.
“One such area of growth that has really borne fruit for us is in hotels with our Colombian Emeralds International brand. We opened two new stores with Sandals Resorts in 2017, making it seven in all, in addition to our first with Blue Diamond Resorts at Royalton St. Lucia So we do have some shining stars.”
Despite all the challenges, Maureen Davis and David Pietrzak are upbeat about Cave Shepherd’s and Duty Free Caribbean Holdings’ future. “I feel quite confident,” says Davis. “The company has endured far worse challenges than what it faces now and has come through them. If the will and focus is there, we will endure.”
Cave Shepherd holds a special place in the hearts of many Barbadians and, in Pietrzak’s case, non-Barbadians. “Cave Shepherd is an experience,” he says. “There’s more to it than just a department store. There’s heritage. There’s a hundred years of fashion and branding involved. It is just such a prominent brand in Barbados. So many people here have come to work for Cave Shepherd. So, it’s history.”
Pietrzak, a seasoned retailer with big international players, tells a lovely story about walking to the department store one day with Sir Geoffrey Cave. “He turned to me and said, ‘David you are a true retailer.’ The honour was just above anything that I could ever mention. You know, there are things in life that are pinnacle points. And I really felt at that moment that I had won the Academy Award of retailing.”
For Maureen Davis, now 35 years with the company, the emotional tug of Cave Shepherd is profound. “It means so much. It has been my life because I came here very young and like many long-serving members of our team, I have witnessed its growth and evolution, despite countless hurdles along the way.” For her, and many other Barbadians, Cave Shepherd still is ‘The Ideal Store’.
[Much of the historic material in this report is courtesy of A Barbadian Odyssey by Elizabeth Rajkumar]
