This story appears in the February 10, 2013 issue of Forbes Asia. Subscribe to Forbes Asia
BY LUCINDA SCHMIDT
Ask serial Australian entrepreneur Brett Blundy about his most satisfying business investment and the answer is surprising. He doesn't mention diva, the 600-store jewelry chain that is expanding rapidly in Asia and elsewhere. Nor does he nominate the Sanity Entertainment Group, his first successful venture, which laid the foundation for his $835 million fortune that ranks him 33rd on this year's list of Australia's richest. Instead, he plumps for his 40% stake in an adventure company that takes people climbing to the top of Sydney Harbour's iconic bridge.
"Without any doubt BridgeClimb is the one that I'd hold up as really something very special," says Blundy, 53, who took less than a minute to say yes to founder Paul Cave's request for backing. "It's true entrepreneurship, taking an asset that's been sitting there doing nothing to [become] one of the top tourism assets in Australia." Especially when authorities initially presented Blundy and Cave with a long list of reasons why the proposal would not be approved. "Never tell two entrepreneurs who don't like taking no for an answer, never give them the 79 reasons why it can't be done," says Blundy. "Because we then spent literally the next nine years overcoming those 79 objections."
That tenacity--and the ability to spot an opportunity going begging--says a fair bit about Blundy's approach to all his investments. A large pink sign in his "office"--an $8 million harborside mansion in Vaucluse, one of Sydney's poshest suburbs, right next to his $17 million family compound--states: "Today I will make it happen." He describes the culture of his company, BB Retail Capital, as doing everything with a sense of urgency and with a focus on the customer. That attitude has seen BB Retail Capital expand to become one of Australia's largest private investment companies, with 8,000 staff overseeing businesses ranging from retailing (jewelry, homewares, bras and scented candles) to managing a $500 million property portfolio and exporting beef to Indonesia.
Blundy's interest in business started early. He grew up on a small farm near Melbourne where he and his four siblings would pick mushrooms to sell from a roadside stall for five cents a pound. When he was 9 his father gave him an orphaned calf to raise, allowing him to keep the proceeds when the cow was auctioned four years later.
Blundy remembers the day vividly; taking a day off school and watching bidding for his cow reach the day's top price, $868. For a 13-year-old it was heady stuff. "From an early age we were aware of the value of money, the value of work," he says. "I'm biased towards [using] your own energy, your own activity, taking care of yourself, making your own decisions."
His career dream was to be a pilot, but that was thwarted when he failed the final year of school. So at age 20 he joined with a friend to buy a run-down record store in a semirural suburb called Packenham. Within a month they realized it was a disaster, and both took on day jobs to earn funds to pump into the ailing store. "I needed to earn money fast because we were losing money fast," recalls Blundy, who did seasonal piecework such as bunching carrots, unloading hay or cleaning bricks, where the size of his pay packet depended on how hard he worked.
Packenham, they discovered, did not have a big enough population to support a record store. And the shop was away from the main street, in a sleepy arcade. On the day the lease expired, three years later, Blundy closed it. But he credits the experience with much of his later success. "That was the start of me learning people and customer service," he says. "We really had to do some extraordinary things to get any sales." An example? Because the small store couldn't carry a full range of LPs and cassettes, Blundy would order anything that customers requested and deliver the music to their homes at night, after he'd finished his physically exhausting day job as a pieceworker.
"We were very good retailers, we had just chosen our location very poorly," he says, adding that when they bought a second music store, in a busy shopping center, it took just six months for revenue to jump from $2,000 to $15,000 a week. Eventually Blundy's Sanity Entertainment Group became Australia's biggest seller of music, with 360 stores under the Sanity, Virgin and HMV brands, plus another 110 stores in the U.K. (Sanity became part of the Brazin group, which listed on the Australian Stock Exchange in 1997, with Blundy retaining a 62% stake. In 2006, after poor returns, Blundy bought out Brazin's minority shareholders and took the group private, then sold Sanity in 2008.)
Meanwhile, Blundy was on to his next big thing--bras. The connection between music and women's underwear is not immediately apparent, but he says the idea was sparked when a Sanity store manager's top slipped to one side, revealing a dirty old bra strap held together with a nappy pin. When Blundy asked the otherwise trendily dressed manager about it, she replied: "No one cares, no one sees that." "And I just thought, 'That is going to change,'" he says. "Back then bras were beige and boring."
That idea, in 1985, morphed into a chain of more than 200 stores around the country called Bras N Things. Along the way it involved swapping Blundy's three stores in Melbourne, then called The Bra Shop, with the original franchisor's four stores in Sydney, and Blundy moving to Sydney, where he's lived since. After five years Blundy had expanded throughout Australia and bought all the franchisor's other stores. He was 30. (Bras N Things became part of the Brazin group; Blundy retains a 50% stake.)
Nowadays Blundy's main focus is the diva jewelry chain and its upmarket sibling, Lovisa. Brazin bought diva in 2005, when it had expanded to 67 stores from a single shop in Sydney opened two years earlier. Blundy, who was often in the U.K. for his music-store business, had been looking for a new venture in fast fashion, and he wanted a vertically integrated business like Bras N Things. Plus he wanted a business to expand beyond Australia, after realizing that women's underwear was not ideal for Asia, given the petite sizes compared with Australian women. Selling an entirely different range of sizes would complicate arrangements with suppliers and reduce his economies of scale.
"I was seeing this great [jewelry] product in the U.K., very fashionable, at ridiculously cheap prices; earrings for two or three pounds," he says. "And I thought, 'Wow, that is just going to change the world.' The vast majority of females just love to buy things, and the more often they can buy them the better. So if they can change their earrings every day they would, and they do."
Blundy certainly knew his customers. The diva concept, with its bright pink heart logo and cheap, fashionable necklaces, earrings, rings and bracelets, has been a hit with teenagers and twentysomethings in 22 countries. In Asia the chain has stores in China, Singapore, the Philippines, Malaysia and Thailand, and he has his eye next on Vietnam and South Korea. Lovisa started about four years ago, targeting, in Blundy's words, an older Sex in the City demographic.
Next on the Blundy agenda is to move the headquarters to Singapore or Hong Kong, at least for diva and Lovisa and perhaps for the whole BB group. This month he and his wife, Vanessa, are listing part of their Vaucluse family compound for sale, with an asking price of $20 million.
Local retailing has been in a slump the past few years, and Blundy admits the group is "doing it tough" in Australia, with two brands up last year on same-store sales and three brands down (he won't say which brands). Asia, he believes, is more promising. "Internationally we have growth in all Asian territories, both in store growth and in like-for-like sales," he says. "We are a global retailer, and we want to continue that success. So we probably need to shift our center of gravity from Sydney to somewhere in Asia."
