Shop Direct to focus on fashion to drive sales, says Birch

Birch said the online retailer, which posted a 3.7% boost in group revenue in the seven weeks to December 28, deliberately reduced its promotions across its electrical categories over the Christmas period and delivered “more muted” sales growth as a result.

“From our perspective electricals remained healthy but what we didn’t do over Black Friday and Christmas was entering into excessive discounting,” he said.

“It’s the easy lever to pull because there is little differentiation from retailer to retailer – if you’re all flogging the same you can use price to stand out – but we didn’t want to get into an electricals price war.

“Compared to last year, sales growth was more muted but that was purposeful.”

Although electricals accounts for 35-40% of Shop Direct’s revenue, Birch said Shop Direct delivered more profitable growth by focussing on promotions in higher-margin categories, such as fashion and sportswear.

“Our standout categories were fashion, sportswear and toys. Obviously the uplift in toys was partly seasonal but we will continue with fashion and sportswear in the year ahead and focus on those areas where we feel we have real momentum,” he said.

Shop Direct’s margins held steady year on year and the etailer reported increased sales across all of its categories.

“What I’m most pleased about is that we delivered good revenue growth without sacrificing retail margins,” said Birch.

“We had a strong Black Friday which continued into a strong Christmas, it’s not like we shot our bolt in November and had nothing left.”