On Monday the Ila Group (LON:ILA, share price 1.55p) announced a $250,000 order to supply the Norwegian retailer Elkjop with its range of personal alarms. This is a significant piece of business for a company that had total revenue in its last reported six-month period of just £136,000. But I have to say I was reminded a little of a certain Stuart Baggs.
Baggs, the Isle of Man’s most famous young entrepreneur, was memorably cut down to size by Claude Littner in my favourite moment on last year’s The Apprentice. ‘You’re not a big fish’, said Littner,’…You’re not a big fish. You’re not even a fish’. But much earlier than that Baggs had styled himself as ‘Stuart Baggs, the Brand.’
And that’s kind of the position that Ila finds itself in now. Ila Group wants to become the brand name we associate with personal security. And if that happened, it could be hugely lucrative for Ila Group. Think of Boots and how much it benefits from commanding customer loyalty on the back of its brand.
But Boots didn’t create its brand overnight. And when I met the Chief Operation Officer of Ila Group before Christmas, it struck me just how difficult it is for this kind of company to become a household name….
A bold play on fear
Paul Gazzard, the Chief Operating Officer of Ila Group, is a young man with branding on his mind. His mission is to make Ila the dominant brand in the world of personal security alarms.
He showed me Ila’s main product, the ‘Dusk’ Personal Alarm. This is about the size of a mobile phone, although much lighter, with a ring at one end and a chain coming from the other like a tail from a mouse. The idea, ladies, is that you use the ring to attach this to your handbag. Then, when dusk descends and you hear threatening footsteps behind you, you tug at the cord releasing a piercing scream, enough to make the would-be assailant think twice and attract the good offices of any Samaritans in earshot.
I got quite excited by this. This seems, I thought, like a great product. It is a simple idea. It plays on that most powerful of all emotions, fear.
The alarms are made in a Chinese factory run by a Scotsman – the ideal combination, you could say – and probably cost Ila around £2-£3. They are sold in Marks and Spencer, amongst others, for £15. So even if M&S takes it usual mark-up of 100%, then there still should be a decent margin in it for Ila.
The product also has universal appeal. You may ask why a woman under threat does not simply open her mouth and yell. But apparently vocal paralysis often sets in and it is simpler to pull a cord. In this respect at least women all over the world are the same, so this is a product that could sell anywhere. It is if not a ‘must-have’, it’s at least a ‘silly not to’ accessory, and it is inexpensive.
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A cross between a furious parrot and a scraping knife
Now Ila wants to go one step further and turn it into a bit of a fashion accessory. This is where the branding comes in. Personal alarms are not new but have hitherto been clunky and unattractive and liable to be lost in the murky depths of a woman’s handbag. Ila has given them a jazzy cover, so that fashionistas may feel inclined to buy more than one in order to have a colour to match each outfit.
Ila has now extended the concept. It makes a key-ring fitted with an alarm, a jogger’s pedometer complete with an alarm, and a door wedge that sets off an alarm should anyone try to enter your room uninvited.
Gazzard thinks that Ila can become the brand name that women all over the world associate with personal security. Former Chairman of Marks and Spencer Sir Richard Greenbury, no less, is on the Board, agents are fast being appointed overseas and Ila expects rapid growth.
But still I have my doubts. For one thing the alarm sounds less like a woman’s scream and more like a cross between a furious parrot and a knife scraping across a plate. Ila’s £10m stock market valuation is asking a lot. And at the end of the day I doubt that Ila is doing anything that cannot easily be copied.
Will consumers pay more for the Ila brand? Can the word ‘Ila’ add any more value than could the name of ‘Stuart Baggs’? I am not so sure.
I prefer to focus on stock stories where the company’s value has yet to be recognised. I also prefer company’s that develop products that are a bit more difficult to copy.
In my Red Hot Penny Shares letter, I’ve tipped a number of small manufacturers over the last year. And some of these are enjoying the same kind of commercial orders as Ila Group.
The difference is that they have developed medical devices or patented technology that can’t be copied. As with investors waking up to the opportunities in these penny stocks, Red Hot readers could still stand to benefit from a major run up in the stocks.
I’m fascinated by these kind of stories. And if you share my interest, why not take a read of my Red Hot letter.
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• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
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