Shop Direct records first profit in a decade as digital strategy kicks in

Shop Direct has seen its mobile and online sales grow as the retail group notes its first profit in a decade.

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Shop Direct has seen its mobile and online sales grow as the retail group notes its first profit in a decade.

The company has moved away from its catalogue business following years of losses, to focus on a digital strategy that involves selling through online stores such as Very, Littlewoods and Woolworths.

In its latest financial results, Shop Direct revealed that internet sales accounted for 81 percent of revenues in the most recent quarter, and 78 percent for the full year up to 30 June 2013. This compares to the 18 percent of sales coming through mobile channels six years ago.

Sales through mobile devices were particularly strong, with 27 percent of purchases made on tablets or smartphones, up from 20 percent in 2012. Mobile accounted for over a third, 38 percent, of online of sales during the most recent quarter.

Shop Direct CEO Alex Baldock commented: “These results mark an important milestone in the journey of Shop Direct into a world class digital retailer. We’re delighted to report a positive pre-tax profit for the first time in 10 years, giving us a solid platform from which to move forward.

“Our digital progress also continues at pace, with online sales now exceeding 80 percent and almost two-fifths of those coming from mobile. Almost half of our customers [48 percent] now browse and shop our sites across multiple devices, with tablets in particular increasing in importance in the customer journey."

Moreover, 16 percent of customers use a combination of desktops, tablets and mobile devices.

At the same time, the group has seen its traditional catalogue business diminish, with the number of catalogues distributed falling from 8.2 million in 2012 to four million this year.

The increase in digital sales has coincided with growth in revenues, up by one percent this year to £1.69 billion for 2013. The group also noted its first profit in 10 years, of £6.6 million, compared to a £57.7 million loss in 2012.

The company said that it aims to grow sales further by introducing personalisation services for customers, and cited ‘early gains’ through current projects such as customer-unique email marketing and on-site product recommendations.

Baldock added: “We have a new level of ambition and have set out a clearly defined and disciplined strategy for the continued evolution of Shop Direct, with world class personalisation at the heart.”

Last year Shop Direct announced a £430 million ten-year deal with Serco to improve integration of mobile and online channels with its customer contact centres, as it aimed to focus on digital sales and support social media contact with customers.

 

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