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AI will transform every retailer, says Shop Direct boss

Artificial intelligence will transform every retail business in the UK over the coming months and years, “whether they are ready or not,” Shop Direct CEO Alex Baldock has said.

Baldock told Drapers the rise of AI was the next big digital disruptor, and said Shop Direct has chosen to be at the forefront of the change: “We’ve chosen to be on the front foot of this wave of change. It’s coming whether businesses are ready or not.

“We’ve made some big bets in the past on mobile and data, and our next big bet is on AI and personalisation. AI will allow us to take our next big leap forward. It will allow everyone to have their own personal shopper and one who knows what she wants before she does.”

Later this financial year, Shop Direct will launch the AI-powered, “natural language” version of its customer service chatbot within the MyVery app. The AI-powered conversational user interface (CUI) can answer 32 different types of customer query, recognising over 4,000 written phrases and responding accurately. Shop Direct said its long-term vision is for Very Assistant to develop into a personal shopper for every customer

In 2018, the company will also apply AI to its credit-decision capabilities, meaning faster, more personalised outcomes for customers, and better credit decisions and risk discipline for the business.

“The app understands English, the power behind it is on steroids and it has the ability to learn,” Baldock explained. “This will help us crack that inspiration challenge. Everything we do is mobile first and to be successful in mobile you need to personalise. We have three seconds to hook our shoppers’ attention and by personalising and using our data we can ensure we are showing them the right thing.”

Baldock was speaking as Shop Direct announced group sales increased by 5.6% on a like-for-like basis to £1.93bn for the year to 1 July, driven by sales growth of 14.6% to £1.26bn at Very.

Underlying profit before tax was up 10.2% to £160.4m, while group gross margin was maintained at 40.8%.

As a proportion of online sales, those made on mobile devices – smartphones and tablets – were up 7 percentage points to 69%. Sales via smartphones made up more than half (53%) of online sales for the first time, up 10 percentage points compared with 2016.

Clothing and footwear sales grew by 6.4% year on year, fuelled by a 21.8% uplift in sportswear.

Baldock said the etailer was now the number one online sports retailer in the UK.

“We’re not resting on our laurels,” he added. “We see athleisure continuing to be a big seller, along with our own brand V by Very and our new Very range with actress Michelle Keegan.”

Baldock said it had been another “tough year” in fashion retail and added that although the difficult macro-environment was likely to continue Shop Direct was in a good position to weather the storm: ”We’re seeing a weaker picture in terms of housing, and consumer confidence and real wages are being squeezed, but our [credit] model makes us resilient. Our customer comes to us in good times and bad and that is reflected in our performance so far this [financial] year.”

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