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The Drapers Interview: Shop Direct's Alex Baldock makes it personal

Shop Direct CEO Alex Baldock reveals his aspirations to create a £1bn turnover etail giant with the intimate feel of a corner shop.

alex baldock

alex baldock

Alex Baldock is the epitome of a man living life in the fast lane. When he is not working an 80-hour week at Shop Direct’s Liverpool headquarters, the 45-year-old married father of four is also in training for what he calls “a mid-life crisis coming up” – a 10-day unsupported trek through Icelandic mountains in September.

As the Oxford- and Harvard-educated former Barclays and Lombard senior executive bowls into the room, this ceaseless energy is immediately apparent. Taking a seat on the sofa to discuss Shop Direct’s stellar Christmas sales and the etailer’s plans to them further in 2016, he leans forward, talking intently and at pace for more than an hour, barely stopping to eat a biscuit and drink a cup of tea.

Upward trajectory

Baldock has a lot to be enthusiastic about. Under his direction since 2012, Shop Direct has been through a vast transformation, reinventing itself and remodelling its team for a purely etail-focused future. The results have been impressive.

Last month the etail giant, which operates the, and sites, revealed another record Christmas. Group sales were up 6% year on year, led by Very, where overall sales grew 17%, and clothing and footwear was up 6%. The website is expected to now hit £1bn turnover this year.

Baldock is visibly proud of the sales uplift, adding “the results last year weren’t too shabby, either”.

“We’ve turned this business from unprofitable to £70m of profit before tax in the last financial year and we’re on track to substantially improve on that.”

This success he says is down to “staying true to a clear strategy”. tablets

“It’s so tempting to seize the latest idea, isn’t it? You need a level of responsiveness in retail – one of the things I like about retail is that you can make decisions and see the impact the next day – but you need to temper that by having a steady hand on the tiller and a clear sense of direction, founded in what makes you distinct.”

For Shop Direct, this is providing its female shoppers aged 25 and above “with the stuff she wouldn’t otherwise be able to afford. We have a roster of great brands and we help bring those within her reach by making them affordable through credit. That’s the heart of the business – we’re a lender as well as a retailer.”

On fashion this spans 250 brands including River Island, Ugg Australia and Hunter on Very, and Paul Smith Black, Tommy Hilfiger and Vivienne Westwood on VeryExclusive.

We have a roster of great brands and we help bring those within her reach by making them affordable through credit

At the forefront of this strategy is Baldock’s “maniacal” focus on digital. Shop Direct printed its last catalogue last year.

“Three years ago 72% of our sales were to catalogue customers. That’s now 0%,” he says. “We have moved fast, but that’s not just because we’re impatient and ambitious – we’re both of those things – it’s also because there’s a healthy sense of paranoia in the business. We’ve moved from a comfy old deckchair of catalogue retail to the shark tank of ecommerce. It’s an invigorating and exciting place to be, but it’s also an unforgiving one and hyper-competitive. I don’t count on our customers’ loyalty, why should they owe us that? We have to fight every day to earn their business and trust, and that’s the attitude we try to bring.”

Baldock’s key weapon in this fight is personalisation.

In March last year he announced that Very had become the most personalised retail website in the world with the ability to create 1.2 million different versions, and this was predicted to reach 3.5 million by the financial year-end of June 2016, netting an extra £20m in revenue for 2015/16.

Asked whether the business was on track to achieve this, Baldock confidently smiles: “’North of’ is all I’ll say for now.”

We’ve moved from a comfy old deckchair of catalogue retail to the shark tank of ecommerce

His ambitions have not stopped there. Last month Very revealed another first for a retailer: a £50m tie-up with IBM to personalise payment options that is expected to go live early in 2017.

Shop Direct has also been trialling a new ”decision engine” – software developed with US-based SAS – on Very for the last six months to help show the most relevant product first to shoppers when they search.

This he says is proving crucial on mobile where shoppers are more distracted and are “snacking” for up to 30 seconds at a time. To deal with this Shop Direct is focused on a three-second audition to capture customers’ attention.

“If she searches for a red dress and, in the one space you have to show a dress on a smartphone screen, it is the one she really wants, she is much more likely to buy it.”

But Baldock is adamant he is not “sitting in my office and dreaming big thoughts, and saying, ’Aha! This is the new direction.’ We just test a lot of stuff.” The Very platform can run 100 tests concurrently, and these “bubble up” from right across the business.

However, one key area on Baldock’s hit list is delivery, and ensuring the option best suited to shoppers is the first to appear.

“The aim is 360-degree personalisation and to have a scale business at £1bn turnover with the feel of a corner shop and someone who knows you intimately,” he says. “That’s the nirvana.”

very spring 16

very spring 16 spring 16 collection

Making conversions

Alongside personalisation, Shop Direct also leads the ecomm field on mobile conversion: 63% of sales made via the channel.

Referring to smartphones as “remote controls for life”, Baldock says: “I don’t think there’s any magic to it. One of the reasons we have been maniacal about simplifying this business – getting out of stores and catalogues, and shutting down some of the smaller retail brands – is precisely so we can focus on mobile innovation.

”All the data science, big data and technology investments we have made, the test and learn experimentation we do, and the personalisation we do, is mobile first.”

James Doyan, managing director of ecommerce consultancy Athito Retail, believes: “It was really ballsy to drop the smaller brands and catalogues, and while other people talk about personalisation, Shop Direct is really doing it. They’re not scared of talking about new things and having a go. Other retailers should definitely take note and learn from them.”

Baldock is fully immersed in the world of tech, casually mentioning a lunch with Apple CEO Tim Cook and relationships with Silicon Valley giants Google and Facebook.

“We rub shoulders with some interesting people in this game and it’s one of the things that makes it so exciting,” he muses.

Among the future innovations piquing his interest are ”connected home” technologies, the maturation of wearable technology and virtual reality: “You’re not going to find any Very shops in the Trafford Centre or Westfield any time soon, but a virtual Very shop sometime in the future, why not?”

But keeping your tech team ahead of the ever-evolving curve is not easy and Baldock says Shop Direct is hungry for data scientists and analytics talent.

“We’re competing for the same talent with energy companies, financial services, telecoms, gaming – the supply is struggling to keep up with demand, so you need to have a very clear story to tell and very clear ambitions.”

He also reveals the firm is “experimenting with different types of hire”, employing psychologists to drill down into shoppers’ behaviours at its user experience lab in Liverpool, where the public are analysed as they browse Shop Direct’s sites.

Despite much of this innovation being lavished on Very – the apple of Baldock and Shop Direct’s eye and the main engine for growth – the Chelsea football fan also has “outsized” ambitions for the future growth of its premium stablemate, VeryExclusive.

Despite talk in the market that the platform has got off to a slow start, he insists: “It’s ahead of plan and it’s had a good start,” although he cannot reveal figures.

“We aim for nothing less than to democratise luxury fashion and that hasn’t changed. The premium high street and accessible luxury brands added to our easy end-to-end experience and the credit that brings these brands into reach for the first time for many customers – that vision is intact. I said at the outset that I expect this thing to be huge and I still do.

“It was never going to happen overnight. Net-A-Porter took seven years to get to scale – we aim to get there a little faster.”

He cites the brands that signed up – they include LK Bennett, Whistles and T by Alexander Wang – for autumn 16 as evidence of “the momentum that’s building”.

One brand trading on VeryExclusive suggests Shop Direct needs to focus on more marketing for the premium platform so shoppers are more aware of what it has to offer.

Separately, Adam Chester, national sales manager for Ugg Australia in the UK and Ireland, which is on both Very and VeryExclusive, says of the latter: “They are still finding their feet but we are getting very positive results. They have got the brand mix right.

“Shop Direct is at the forefront of ecommerce and the amount of information they can give us – such as how and when a customer is buying – is absolutely invaluable, helping us to make strategic decisions in the business.”

very spring 16 2

very spring 16 2 spring 16 collection

LIttlewoods loved

Conversely for Littlewoods, Baldock is not seeking rapid growth. He describes the 80-year-old model of value clothing with interest-free payments as one “we’re not going to tinker with too much”.

He insists it is a “much-cherished part of the Shop Direct portfolio and it’s not going anywhere”.

“Littlewoods isn’t a growth brand and it’s not intended to be,” he says. “It’s large, it’s stable, it’s profitable and it’s got millions of customers who love it to bits – and we do to. It’s trading above budget this financial year. We know who Littlewoods is and we’re going to stay the course with it.”

Neverheless the Shop Direct own-brand offer is due a refresh this year. Baldock says the 60:40 split between third-party brands and own-brand for fashion is something he is “not that fussed” about changing, but he is excited about the hard launch of the V by Very own label across all fascias in March for spring 16. Trial items such as rib vests at £5 up to a suede wrap coat at £160 are already being tested on Very.

Yet he remains coy on the details: “Matt Dixon our product director has been working very closely with Zoe Mathews, our fashion director, on preparing this. We’re being quite low key about it and we’ve not even announced a hard launch date, but it won’t be too long. You’ll hear more about it this spring season.”

He will not reveal where V by Very will sit in relation to existing own-brands and external brands, but adds: “Our ambitions will be no less outsized in this area than others we take seriously. We’re investing proper time and money in this.”

With so much innovation on his plate, you could forgive Baldock for being weary, but he remains passionate to the last, concluding: “We have so much to work with at Shop Direct and the opportunity to build a famous success story here and that’s what we fully intend to do.”

With that he springs off the sofa and dashes out to his next meeting.

Gareth Jones, Shop Direct’s deputy CEO, retail and strategy director and interim group chief operating officer, will be speaking at the Drapers Digital Forum on April 28 at Etc Venues, 155 Bishopsgate in London. Click here to book your place at the event.

Readers' comments (1)

  • Perfect timing. The growth will plateau next year as traditional retail catch up with digital know how.

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