It’s been an exciting three years for Shop Direct Group chief Mark Newton-Jones, since Littlewoods’ merger with rival GUS. Lisa Berwin finds out how the turnaround is progressing.
Every day around 30 e-mails land in the mailbox of Shop Direct Group chief executive Mark Newton-Jones, telling him how to run his business more efficiently.
There are many retail bosses whose egos would not take to the idea of being told how to do their job better, but Newton-Jones wants everyone in the business to have their say and knows that the best ideas do not always come from the top.
Mail Mark is an internal competition where Shop Direct Group employees e-mail Newton-Jones with their business ideas, the best of which win a bottle of bubbly and get a certificate at the retailer’s monthly update.
Three years into the retailer’s five-year turnaround plan, Newton-Jones is only part way through the huge task that began when Littlewoods and GUS’s retail arms were bought by the Barclay brothers and merged into one group, which has been in its present form since 2005.
“That itself has been the biggest challenge of all – taking two companies that have been arch rivals for the best part of 100 years and bringing them together. Not just from an operational point of view, but also two different business cultures,” says Newton-Jones of the merger. Mail Mark is just one example of how he has pulled the remaining staff from both businesses together.
The final march to complete its turnaround, in the present climate, is likely to be the steepest climb of all. But if he is at all worried, Newton-Jones does not show it. “We are about where we thought we would be,” he assures. Shop Direct Group sales climbed 2.6 per cent to£1.78 billion in the 53 weeks to April 30 and EBITDA soared 130 per cent to£60.9 million. The business is still not profitable before tax, but Newton-Jones says it will head that way now that the integration process of GUS and Littlewoods is complete.
However, Shop Direct Group’s customers are facing what Newton-Jones calls “a real crisis of confidence” and the business has this year had to make job cuts as more of its sales migrate online. Even so, its online division is better placed than most, as e-commerce continues to grow where bricks-and-mortar sales stall.
He says he has seen some interesting spending behaviour develop in recent months. “Ironically we are seeing furniture and electricals sales growth,” he says. “The provision of credit helps, but customers also like that you can see the functionality of products online.”
As for the heightened competition of pure-play and multichannel competitors online, Newton-Jones welcomes it. “The more people that compete in your space the better,” he says. “Asos is one example of someone doing great things. I’d like to think we have learnt a lot from them and they have learnt from us.”
He adds: “All research tells us that it is a myth about the mass of choice that customers face online, as they will only actually visit four or five sites.” Newton-Jones is hopeful one of these four or five will continue to be his. “In the last year, 5 million customers have ordered from us, but there are many more we can target who we don’t currently cater for.”
Next year Newton-Jones will turn his attentions to the other brands owned by the business besides Littlewoods – including Additions, Kays and Choice – which make up 40 per cent of its total sales. Until now these brands have remained quietly under the radar, while Newton-Jones pushed Littlewoods Direct into the limelight with high-profile multimillion-pound ad campaigns and tie-ups with celebrities such as Trinny and Susannah.
He is also aiming to push perceptions of Littlewoods Shop Direct beyond that of just a branded fashion store. “We have an 8 per cent share in homewares, one of the biggest in the UK,” he points out. “We are also the fourth biggest sports retailer in the UK.”
He says that Shop Direct Group will sell 70,000 iPods between now and Christmas and is confident that the festive season “will happen”. Hopefully there will be no need for staff to Mail Mark in the new year and tell him he was wrong.
Family: married, with two sons
Hobbies: include golf, football and sailing
2005 to date: chief executive, Shop Direct Group
2003-05: chief executive, Littlewoods Stores
1985-2003: various roles, including five years as director of the Directory business, Next