The retail market will be “really tough” in 2017 as inflation hits real wage growth but Shop Direct is ready for the challenge, its chief executive Alex Baldock said today.
In the seven weeks to 23 December sales at Shop Direct were up 9% year on year. Sales at Very (including Very Exclusive) rose 19%.
“We’re ready for a tough market,” said Baldock. “The indicators like growth in the economy, employment rates and consumer confidence are in reasonable shape but real wage growth is under pressure because of inflation. We’re a resilient business and have achieved record growth in not the friendliest environment over the last four years so we’re confident.”
Shop Direct is on track to deliver a fifth consecutive year of record growth, he added.
Fashion was its “standout” category, up 16% on last year, boosted by sales of own brand V by Very. “We managed to buck the trend in a difficult market,” said Baldock.
“The launch of V by Very was very successful and important for the business. We want to be famous for our own brands, as well as [third party]. Our own brand sales were up 25% on last year and V by Very contributed to that.”
Baldock said Very Exclusive was performing better than expected.
“We’re pleased with how it’s going. Our ultimate aim with Very Exclusive is to democratise luxury. Our ambition for it is very big but in the grand scheme of Very it isn’t massive. The launch of menswear this year got off to a strong start and as a whole it’s performing ahead of expectations.”
Athleisure was another strong area for the business. Women’s sportswear sales soared by 83% year on year.
Baldock said the team spotted the trend early and “made the most” of their relationships with brands like Nike and Adidas.
In 2017 Shop Direct will invest further in personalisation and AI to fuel mobile sales, which made up 68% of the online total over the Christmas period.
“That’s how our shopper wants to shop so we have to make sure everything we do is mobile first. On mobile you only have three seconds to capture her attention and on a small mobile screen so you have to personalise the offer,” said Baldock.
In November, Shop Direct launched Very Assistant, an in-app conversational user interface. An AI-fuelled platform will be launched this year.
Baldock added: “AI will be transformative this year for the retail market. We believe in it and we’ve put a big bet behind it. We want to give everyone the opportunity to have their own personal expert who knows what they like and knows the shopper.”