Speke company enjoys annual sales worth almost £2bn via its Very.co.uk, Littlewoods.com and VeryExclusive.co.uk brands and is working with IBM on interactive technology. Tony McDonough reports.
Liverpool-based digital retail giant Shop Direct is developing Artificial Intelligence (AI) personal shoppers that will be able to properly interact with customers.
Currently the Speke-based company, that enjoys annual sales worth almost £2bn via its Very.co.uk, Littlewoods.com and VeryExclusive.co.uk brands, uses a WhatsApp-style chat facility that uses programmed responses.
But in an interview with the Sunday Times, Shop Direct chief executive Alex Baldock wants to take the technology a stage further and is working with IBM on the AI idea.
“Very will get to know you and your preferences and that’s properly exciting,” he explained.
Shop Direct is the former Littlewoods home shopping empire, founded by Sr John Moores almost a century ago.
In 2002 the Moores family sold the business, which mainly sold goods through mail order catalogues and through a small network of tired high street stores, to the billionaire Barclay Brothers for £750m.
Their executives set about modernising the business, moving away from catalogues and more towards online sales.
However, the company sustained heavy losses in the few years following the sale and when Baldock joined in 2012, Shop Direct had racked up £570m of pre-tax losses since 2008.
Last year it reported a healthy pre-tax profit of £150.4m and and more than 60% of its £1.9bn of sales were made on mobile phones or tablets.
Shop Direct’s growth is important to Liverpool – the company employs some 2,000 people in the city region.
Late last year it unveiled plans to open a London ‘hub’ employing 250 people but Baldock was quick to reassure that Merseyside will remain the company’s home.
The firm’s “bulls-eye” customer, according to the Times article, is female, a “aspirer and striver” aged 25 to 45 and Baldock believes his AI personalisation plan will appeal to this group.
Shop Direct has grown its range of products from, in the words of Baldock, “700 not terribly good brands into more than 1,300 premier brands”.
One thing that hasn’t changed since the days of Sir John Moores is its emphasis on people buying through high-interest credit – with an average interest rate of almost 40%.
More than 90% of Shop Directs sales are done on credit to typically low-income customers but, in the interview, Baldock is “unapologetic” about this.
He said: “Credit is absolutely core to who we are. It is the critical enabler that allows us to give our customers nicer things in their lives.
“We are very careful who we lend to. We turn down two-thirds of applications and it’s there to fund nice things for their families and homes – it’s not being blown on a trip to Vegas.”