Interview: John Goodwin, FD of Shop Direct Ireland (trading as Littlewoods Ireland)
Littlewoods Ireland dates back to what might be thought of as simpler times, the late 1970s when the arrival of the Family Album catalogue brought home shopping to choice-starved Irish consumers for the first time. The emergence of the internet in the 1990s, among a host of other changes, triggered a sharp decline in shopping by catalogue, although leaving in its wake a customer base well versed in receiving, and returning, goods through the post.
That decline might have been terminal for the business had not a change of ownership and a process of consolidation brought Family Album and one-time rival Kays together – they rebranded in 2007 as Littlewoods Ireland. While there was clear recognition that the future was in the online space, the catalogue element of the business remained steadfast in the years that followed. Indeed, it is only in the second half of 2015 that the final break has been made and the business has become 100% web-based. Littlewoods Ireland is unique among the country’s online retailers in offering a credit proposition and being regulated by the Central Bank of Ireland.
By any reckoning, both the rebranding and the move online have proved successful. Enjoying annual turnover of more than €60m and with 60% of its customers in the key female demographic of 25 to 45-year-olds, Littlewoods Ireland has succeeded in reinventing itself without alienating its original base. Processing 1.6 million parcels a year, the company offers up to 50,000 product lines, with clothing and footwear its mainstay in Ireland. It has offered free delivery for several years, and its introduction of free returns in late 2013 resulted in a 30% increase in sales during the period.
That market dominance is maintained by a team of just 22 staff, among them finance director John Goodwin FCCA, from the company’s offices in Blanchardstown, County Dublin. The team run the Irish business with some services outsourced and are central to growth in Ireland. Goodwin explains: ‘A lot of what we do is outsourced, which allows us, as a team, to stand back and plan for how we want the business to grow. We don’t have the headaches that come with having a large workforce, while, at the same time, we are part of a large UK parent company, which lets us do things that we couldn’t do otherwise in terms of warehousing, logistics and customer service.’
Working with a much larger parent company is a process that Goodwin says requires ‘building relationships, developing influencing skills and sometimes jumping and shouting a little louder than everyone else’.
From a shopping point of view, however, trends and tastes are very similar between the two countries. ‘Irish consumers tend to buy fewer electrical goods and furniture through us, but that is largely because credit limits are lower here than in the UK, as we are hindered by the lack of a credit bureau that’s fit for purpose.’
The online focus has also helped Littlewoods Ireland buck the trend of decline most Irish retailers experienced during the recession, with a year-on-year story of growth in turnover and profitability over the last five years. The weakness of the euro against sterling will temper that picture in 2015 but Goodwin is confident that the long-term proposition remains very strong. ‘We have evolved as a company over the last few years. If you look at where we are now compared to even a year ago, we have developed so much. For us, success has been about embracing different ways to improve the customer journey.’
One of the more recent challenges on that journey, which has taken all online retailers by surprise, is the move from desktop to mobile shopping. ‘Currently 50% of all our traffic is coming through mobile and, like every online retailer, we have to facilitate that and make it as easy as possible for the consumer to shop through their smartphone.’
As part of its response to these changing patterns, the company is investing in content that engages with people through social media, blogs and other channels. ‘The content element of the website is more and more important, but it is not a quick win. It’s a long-term play to get people to really engage with the brand, to comment on it and share it. It’s about a lot more than getting a few likes on Facebook.’
Digital marketing also requires serious investment, with digital advertising, pay-per-click and search engine optimisation all vying for attention. The great difference from traditional marketing is its measurability. ‘You can more scientifically assess the return on investment on your marketing spend and apportion this over the various touch points. We are currently investing in a new attribution reporting tool that will give us an even better handle on the data and allow us to react more quickly,’ Goodwin says.
Such developments are profoundly changing the marketing function, he adds. ‘Today’s digital marketers are not the people who traditionally got into marketing. They are often data scientists coming from a maths background.’ The benefit for a business is that ‘when marketing and finance have common data, then at least they know they are going in the right direction’.
Although the marketing emphasis is mostly online, conventional channels are not entirely ignored. ‘We have a comprehensive above-the-line strategy including TV and radio, which drives a really good ROI for the business and is a significant portion of our spend. However, digital is becoming more important and taking a greater proportion of our marketing spend on a yearly basis.’
On the question of how online shopping itself will evolve, Goodwin stresses that the only guarantee is that change will be driven by the consumer. ‘Internet shopping has been around for almost 20 years now, but it has really only taken off in the last few years. As far as the customer is concerned, online isn’t going to take over the world, and bricks and mortar aren’t going to disappear. People want their shopping to be easy and convenient for them. Retailers need to embrace online, not necessarily to increase sales but to hold on to what they have and remain relevant to the customer base.’
To facilitate that convenience, Littlewoods Ireland is looking at creating a network of drop-off and collection points around the country through local convenience stores. It is also working on personalising the website, so that customers are served content that’s relevant to them. Goodwin uses the analogy of the boutique shop, where the owner knows the preferences of every longstanding customer and will introduce them to brands, styles and colours the owner feels they will like.
So what about trends further down the line? ‘From a technology point of view, wearable and home tech will become more relevant, and there is a future for virtual reality technologies. We will also see a lot more voice-activated technology and interaction. Things are evolving rapidly and disruptive technologies are always likely to emerge.’
None of these advances will come without challenges, and a key one for online retailing is meeting the needs of an ever more demanding, and empowered, consumer. Goodwin says: ‘Everyone is trying to get into the online space, so you need to have a really good proposition that differentiates you from others and gives your customers a really good shopping experience.’
With an offer focused on clothing and footwear, return rates are naturally high for the company, and more than 250,00 parcels flow annually between Irish customers and the company’s returns centre in the UK. With such high volumes, there will always be issues, and Littlewoods Ireland has worked hard to address these, improving its customer service ratings significantly over the last few years, according to Goodwin. ‘One of the themes we stress in our management team is not just excellence but customer excellence, drilling into ourselves that the customer is the focus of everything. We are fully aware of the impact on the customer experience when something goes wrong and we spend a huge amount of time working to improve that. In that regard, customer satisfaction is so important to us and is measured through net promoter scores, and linked to our management bonus strategy.’
Born and raised in Limerick, Goodwin was drawn to accountancy as a career choice from secondary school and went on to earn a business studies degree from the University of Limerick before taking the path to becoming a qualified accountant. ‘I knew I wanted to work in industry, rather than practice, so there were a few choices. Thanks to my work experience in a number of companies as part of the degree programme, I decided to go with ACCA. Once I became a member, I knew I could take the Qualification anywhere.’
Goodwin’s first role was with Intel, which he describes as ‘a truly world-class organisation and, in the mid-90s, the Google of its day. I learned a huge amount about discipline, “right first time”, and always striving for excellence from working there.’
Wanting to work in a smaller organisation, where he could get more involved in the day-to-day running of the business, he joined Creative Labs, which had its European HQ in Dublin. Dominating the market for PC sound cards in the 1990s, the Singapore-based company also had success in the early 2000s with its Zen MP3 players. Goodwin had a number of managerial roles in the company, culminating in European financial controller. The emergence of the Apple iPod transformed the MP3 market, though, and Goodwin found himself in a downsizing company. ‘I had wanted a new challenge and I learned a huge amount about every aspect of finance through the company. But Steve Jobs of Apple had done a really good job and Creative was always number two in the MP3 market.’
Joining Littlewoods took him to the coalface of retail and, he says, the appeal was multifaceted. ‘It was not only getting into retail, but getting into online retailing which I saw as a really exciting opportunity. It was also doing so as a big player in the Irish market, which meant the decisions I would make would affect things locally.’
He is clear about the value that ACCA membership has brought to his career. ‘No matter what organisation you are in, if you are a member of ACCA you come in knowing the principles and fundamentals are the same: it’s about maintaining costs and maximising shareholder return. When I moved into retail and online, I was going into a business I’d never been in before, and one with a financial services proposition. ACCA gave me that grounding, experience and skillset to get my foot in the door.’
Goodwin’s focus at the moment is to help steer the company to further growth. ‘We are the leading online retailer in Ireland and we want to maintain that. We want to be more relevant to more people, to give a better service and to give people what they want. Of course, we want to grow the usual metrics like profitability, but what’s really important to us is to make things more and more customer-oriented and to keep the customer at the forefront of everything we do.’
Donal Nugent, journalist