I have watched Shop Direct’s transformation closely over the years, as it has evolved from an old-fashioned catalogue business to become one of the UK’s most successful online pureplay retailers.
The business has gained a reputation for its “fail fast” mentality and constant innovation, which have ensured it remains at the top of its game. This week, it revealed that group sales have risen 5.6% to £1.93bn year on year for 12 months to 1 July (news, p6).
Following the announcement, chief executive Alex Baldock spoke confidently about the impact of artificial intelligence (AI) on retail. In his view, AI will transform every business in this industry, whether they want it to or not.
Although the use of AI in fashion retail has been a talking point for at least the last year, it is not something many CEOs have so publicly and fully embraced as part of their future strategy. Every retailer is trying to predict what impact new technologies will have, but businesses that are agile enough to embrace change quickly, such as Shop Direct and Yoox Net-a-Porter, are visibly beginning to pull ahead of their competitors.
Shop Direct took a similar approach with mobile a few years ago, when it declared this channel a priority. From then on, every development on the site had to work on mobile first. This has stood it in good stead with customers from a younger demographic. Mobile now accounts for nearly 70% of sales across the group.
The other interesting point Baldock made this week was about Shop Direct’s move away from unplanned discounting, to protect its gross margin. Shop Direct offers a credit option, which allows customers to spread the cost of their purchases – so why slash prices? It will still take part in Black Friday, but throughout the rest of the year its discounts will be more strategic and targeted.
This is a welcome decision. Many fashion retailers continue to rely too heavily on discounting to drive sales. Our lead news story this week is on the discounting “epidemic” on the high street, where many retailers are running deep mid-season discounts despite the return to more seasonally appropriate weather patterns (p4). We will explore this issue in more depth with the results of our second annual discounting survey, which will be published in the magazine on 20 October and available online that same week.
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