Littlewoods Ireland

Source: Exec Digital UK

Date :26/07/2007 15:24:42

Littlewoods Ireland completes restructuring

Family Album and Kays have dominated home shopping in Ireland for decades. This month they are regrouping under their parent brand Littlewoods as customers embrace the internet.

Written by John O’Hanlon & produced by Kiron Chavda

The Littlewoods brand goes back to 1932 when the football pools millionaire John Moores took rooms over a shop in Whitechapel, Liverpool, and launched Littlewoods Mail Order Stores Limited with a share capital of £20,000. Moores saw an opportunity in being able to offer the recession-hit population with a way of buying essentials like clothing and household goods on credit, spreading repayments over a manageable period.

The concept was part of a social revolution that had been started by Sears Roebuck in the USA – but it soon spread throughout the UK as a convenient way of shopping, from home, from a catalogue, with the local agent/client network providing an agreeable social focus as well. That was 80 years ago. Today Littlewoods Shop Direct Home Shopping Limited is the UK and Ireland’s leading online and home shopping retailer, with annual sales of around £2 billion and five million customers; and selling major brands, including Sony, Nike, Levi’s, Adidas, Phillips, Kodak, Dyson, Bosch, Amanda Wakeley, Morgan and Miss Sixty.

Over the past four years, Littlewoods Shop Direct has transformed and modernised the entire business. It has sold its stores and in January 2006 moved in to a new £31m state-of-the-art head office in Speke, South Liverpool.

A different market

Geoff Scully, who heads up the comprehensively reorganized Ireland operation, was appointed in 2005, following the divestment of some non-core businesses, with the brief of delivering change culminating in a relaunch of the entire operation on July 1 2007. Scully is ideally placed to understand the supply chain, having previously worked for some of the important fashion brands on which the company depends – Tommy Hilfiger, Miss Sixty and Pepe Jeans of London.

But the Irish market is fundamentally different from that in the UK, as is the home shopping business model. For a start, Littlewoods Ireland doesn’t use agents – all of its customers have individual accounts. Through its two brands, Kays and Family Album (the latter known only in the Republic), the company has grown to be the home shopping market leader with 110,000 ‘active’ customers (and 250,000 ‘occasional’ customers) and an annual turnover of £37 million. “Family Album and Kay’s have been around for a long time,” says Scully. “Shop direct Ireland goes back around 30 years. The Family Album and Kay’s brand values are very strong, and there are strong ties of loyalty with customers who have been shopping with us for a very long time.”

With such excellent warehousing facilities just over the water in Liverpool there has never been any need to stock product in Ireland, and orders are fulfilled though a long-standing partnership with An Post, the Irish Post Office. An Post provides a wide range of services which encompass postal, communication, retail and money transmission services. It is one of Ireland's largest companies directly employing over 9,500 people through its national network of retail, processing and delivery points. A big business advantage for An Post is that it is really the only organization able to reach the entire population of Ireland: this is partly because of the Republic’s inability so far to introduce a postcode system, Scully points out. “In the UK if you have a person’s postcode you can pinpoint their location within a few yards. Any competitor to An Post would struggle, especially in the rural areas. So we depend on them entirely. Orders are dispatched from Liverpool direct to An Post and delivered within 48 hours right across the country.”

An Post also delivers the catalogues of course. All account holders receive two catalogues a year, the Spring/Summer and the Autumn/Winter editions, with an update in between. Prior to July 1 the two catalogues were identical apart from their covers, and were a smaller version of the UK Kays catalogue. However from that date the whole operation has been rebranded as Littlewoods, and the catalogues amalgamated.

The book rewritten

But there have been other fundamental changes: “Our product is our book,” says Geoff Scully. “Previously the policy would have been to put as much product as possible onto the pages of the book – but when you have a strategy of ‘shoehorning’ like that you get to a point where you can’t get any more products in. It is like walking into a shop that has the shelves so crammed you can’t find what you are looking for. Though it delivered profits for the company it created a problem for the future.”

One problem was that for economic delivery through An Post the catalogue can only be a certain weight. The UK Kays Catalogue is around 1,100 pages in length, but in Ireland 800 pages is the maximum, so its content has to be tailor made for that market. “We are 70 percent fashion led, which makes us a bit different from the UK market. But we are happy for it to be like that, because there is more margin in fashion than in household goods. When we're choosing a book we will take all the fashion we can and perhaps deselect products from the ‘back of the book’.”

Recent research commissioned by Geoff Scully shows that 81 percent of Littlewoods Ireland customers give as the main reason for shopping this way the fact that they can buy on credit. “They have access to brands that they might not normally feel they could buy or afford if they were to go to the high street but they can spread their payments over as long a period as they want. But for 96 percent of them it’s just an enjoyable experience. It’s a way for them to relax at home in the evening. They can browse through the book, place an order, and then six or ten days later the goods comes through the post. We make it easy for them in terms of returns – they get a 14 day cooling off period. Within that time they can send the products straight back to us and we won’t even charge it to their account.”

From catwalk to click

Fashion really drives the Irish home shopping market, says Scully. “Many of our customers use the book to browse fashion, and we have a big advantage since the group launched its own Love Label range last year. It is already turning over £5 million, and it is a fast fashion brand that goes, as the tagline says, ‘from catwalk to click’ in six weeks.” Love Label is an inexpensive range, in competition with Top Shop or Primark in the high street, and meets, he says, the massive demand in the market for new, quick turnover product. In addition, he adds, Littlewoods has been developing trendy fashion partnerships with personalities like Trinny & Susannah. “They have quite an English persona, but it does us no harm in Ireland to be associated with the cool image they project!”

To date Littlewoods has been restricted to dealing with its own registered accountholders. As a result only about 22 percent of sales have been made online compares with up to 50 percent for Littlewoods in the UK. This reflects to some extent the innate conservatism of the Irish, and their concerns over internet security, however his strategic goal is to grow internet sales to 33 percent within a year, and the new website, also launched on July 1 will boost this. “Registering used to be a difficult process because you had to download a PDF and fax or mail it to the company. Now new customers can register online. And from next year we will be opening the site so that anybody can come on line and purchase goods by credit card.” This will be a step change for Littlewoods Ireland, which will then be able to compete on the online retail market instead of the niche home shopping market, while retaining the advantages of the latter. It will also enable the company to tap into growing Irish participation in broadband, which is somewhat behind the UK and other EU countries.

Meeting the customers face to face

This month will be a busy one for Geoff Scully, who will be hosting four ‘mini roadshow’ opportunities at Dublin, Cork, Limerick and Wexford to celebrate the name change and show off the catalogue, the website and the upgraded services. “We decided to do that in an effort to reach out and talk to our customers. We have about 2,000 people coming - it will be an opportunity for them to touch and feel some of our new product, look at the website, bring their friends and register new accounts online.” The entire proceeds from the events, which all sold out within 24 hours of the mailing, will be going to Action Breast Cancer, an Irish charity.

Since Geoff Scully came on the scene, what he calls the company’s ‘tone of voice’ has changed. In the past, communications contained a perceptible sales pitch, now the emphasis in on information. “We talk to them about fashion: about what is hot and what is not. And because we don’t have a shop front we have to bring as much friendliness into our communications as we can – that is what makes events like this month’s roadshows so important.” These changes, together with the growth that can be expected in internet sales, makes his target of increasing sales by 15 percent per annum over the next two years seem eminently reachable.