Catalogue shopping finds new life in digital age

August 11, 2013 12:43 pm

Catalogue shopping finds new life in digital age

By Andrew Bounds

In the vast reception area of Express Gifts’ head office in Accrington, Diana, Princess of Wales, beams down from the wood panelled wall with her trademark Mona Lisa smile. The princess opened the building in June 1983, while catalogue shopping was in its heyday.

Today more than half its sales are online. But the group, part of listed conglomerateFindel, has adapted and returned to growth.

It joins NBrown, established in 1859, and the biggest of all, Shop Direct, founded as Littlewoods in 1932, in proving there is life in the oldest form of remote shopping in its northwest heartland.

NBrown, which employs 3,500 in Manchester, has become a model stock market performer, with the shares doubling in a year after five years of rising sales and dividends. It made £96.4m in pre-tax profit on revenues of £784.7m in the year to March 2.

Angela Spindler, the new chief executive, admits stepping into the retiring Alan White’s shoes will not be easy. She also cannot step into the company’s products – it caters for size 14 and above only, a growing market with little competition.

“It is a great place to be in terms of our relationship with customers. They are at best ignored and at worst actively alienated by the fashion industry,” she said.

Some 57 per cent of sales to its 6m customers are online, with 10 per cent still by post and the rest over the telephone. It sends out 70m publications a year. Ms Spindler, who arrived from the Original Factory Shop chain, said: “We are not a catalogue retailer. We are a multi-channel retailer.” But a catalogue arriving can still be a “trigger” to purchase, even if that is done online.

NBrown has launched a series of brands such as SimplyBe for women and Jacamo for men, promoted by cricketer Andrew “Freddie” Flintoff, to attract younger customers. It has learnt lessons, says Ms Spindler, chiefly that high street retail is about “location, location, location”.

Its next push could be international. It has trial sites in Germany and the US. While the rate of returned goods in Germany has been high – they “order four sizes and send three back” – Ms Spindler says in the US SimplyBe is “really resonating, we are seeing strong growth there”.

It may follow where Tesco retreated, with Ms Spindler set to unveil her strategy at the interim results announcement in October.

Express Gifts, which owns the Studio catalogue business, added 8 per cent more customers in the year to March 29. Sales were up 13.4 per cent from £231.9m to £263m and operating profit grew by 15.9 per cent from £18.8m to £21.8m.

It has two advantages. A 375,000 sq ft Accrington facility, fully automated, allows it to make money on even small items such as mop heads and can openers. It also services Kleeneze, Findel’s army of door to door salesmen.

But the main one is its ability to personalise its products by adding names or initials to everything from dolls houses to dressing gowns for “free”.

“It’s a point of difference. People are so price sensitive. You can’t go on the web and compare prices directly,” Phil Maudsley, chief executive, said. Some 40 per cent of goods are personalised, with a 48 hour turnround.

The catalogue retailers have another secret weapon: credit. Express has a 48 per cent APR, which is not atypical. Shop Direct, where 90 per cent of customers buy with credit, has hired Alex Baldock from Lombard, the asset-based lender, as chief executive to develop its offering still further.

Shop Direct, which is owned by the Barclay brothers and has merged with Great Universal Stores, its Manchester based rival, is also back on the path to profitability.

“It was like merging Liverpool and Manchester United,” Mr Baldock says of the challenge of bringing together the two biggest competitors in the market. “But it is done now.”

Mr Baldock is also talking about personalisation. But to him, it means using the vast amount of data the business has on its customers to tailor its selection of the 50,000 products it stocks, especially as more people buy through mobile devices with smaller screens.

It could suggest curtains to match a sofa bought last year, for example.

It is working with IBM to perfect the offering. “We intend to be a world class digital retailer. We have a strong foundation, a very clear strategy based on unique strength and support from our shareholders.”

He says the typical customer is an “aspirer and striver, female, aged 25-55”.

“This business has been focused on her for 80 years. We know her better than anyone else.”