The rising popularity of shopping via mobile phones and tablet computers helped online retailer Shop Direct more than double its profits last year.
The group, which owns the Very.co.uk brand as well as Littlewoods and Isme, said underlying pre-tax profits rose to £64.6m in the year to 30 June as the company cut costs, improved management of stock, reduced fraud and saw its strongest sales rise in at least three years.
Sales at the group, which is owned by the billionaire Barclay brothers, were up 3% to £1.74bn as 7% growth at Very offset a near 8% fall at the Littlewoods and K&Co websites.
Alex Baldock, chief executive, said sales via mobile devices – mostly tablets – were leading the way, accounting for 44% of the group’s turnover, up from just 4% three years ago. Growth continues apace, with 52% of sales coming from such devices in the three months from the end of June.
“The explosion in mobile sales has surprised even us. They have gone from nowhere three years ago to over half of sales,” he said. Offering shoppers a more personalised experience – with the prominence of products and promotions varying to suit the person viewing the group’s websites – helped boost sales.
Baldock said he could not predict what proportion of sales mobile devices would eventually contribute, so the company was not betting on just one route to market becoming dominant. “We are building our websites in a no-regrets way so that if the market goes in an unexpected direction towards smart TVs or even smart fridges we will be ready for it,” he said.
Online retailers like Shop Direct continue to benefit from shoppers’ changing habits, which are having a dramatic effect on the high street. The wider availability and affordability of mobile technology, particularly tablets computers, is making access to the internet easier and more convenient. People shop via their mobile phones in bed in the morning, while commuting or while watching TV. A surprising 15% of those questioned in a survey of 6,000 people even shop last thing at night before they go to sleep, according to a report by web analysis firm Netbiscuits based on mobile users in the UK, US, Germany, Brazil, China and India. Those trends continue to rise as phones become larger and easier to use for shopping. More than 80% of mobile users are planning to spend money via their mobile phone in the next year up from 68% who did so last year according to Netbiscuits.
Baldock admitted that Shop Direct was suffering along with other retailers from the unseasonably warm autumn weather. “We’ve found the market to be bumpy in the last few months. It’s a tough environment but we’re set for record Christmas trading.”
