Digital transformation begins to pay off for Shop Direct

Shop Direct Group announced record profits this week, as its focus on digital transformation begins to bear fruit.

The retailer, which is behind the Very.co.uk, Littlewoods.com and VeryExclusive.co.uk websites (or digital department stores as it calls them), has made some major changes over the past few years.

These include:

Phasing out catalogues

Once known as a catalogue retailer (and with 100s of stores) Shop Direct is now online-only.

After more than 80 years of this sort of thing, Shop Direct has printed its last catalogue.

The transformation is impressive. Just three years ago, 72% of sales came via catalogues, now it’s all online. 

Calling time on legacy brands

After its very public collapse in 2008, Woolworths did live on for a time as an internet retailer after Shop Direct picked up the brand name.

That ended in June this year, while Isme and K&Co (formerly Kay’s) were also closed, with the sites merging into the appropriate brands – Very for Woolworth’s, Littlewoods for K&Co.

A new site

Veryexclusive.co.uk, a site selling designer brands, launched in February.

A focus on customer experience

There are a number of strands to this. An investment in data, the use of personalisation, and testing.

Shop Direct says it now conducts more than 100 tests per month in its own user experience lab, giving it a greater insight into customer behaviour and the pain-points on its sites.

When you have several sites and so much customer data, this attention to detail can really pay dividends.

Alex Baldock, Group CEO explains:

Being online-only means more mobile innovation, especially in personalisation where we aim to offer each customer an experience as unique as she is. We’ve tailored her online experience, including the marketing that brings her in, the online shop she then enters, and the way we engage with her after she’s bought.

Our investment in Big Data and technology has started to pay off and is making these new levels of personalisation possible.

The results? 

Shop Direct posted some impressive figures:

• Group sales were up 3% year on year to £1.8bn (2013/14: £1.7bn).
• The group’s sites now attract more than 1m visits per day.
• Very.co.uk mobile sales are 59% of total online sales, which is ’17 points ahead of the market’.

Digital transformation

This news is interesting in the light of Argos’ profit warning last week. Our Global Director of Research Linus Gregoriadis wrote an interesting post on this last week.

He argued that, though there was some short-term pressure, Argos should keep the digital faith and continue its process of transformation.

In Shop Direct, we have an example of how well than can work out.

In Shop Direct’s case, the earlier move away from the high street and catalogues has helped to improve its focus on digital and reduced its overheads.

However, Argos’ position as a multichannel retailer does give it some advantages over the pureplays, especially given the popularity of click and collect.