AGENDA: Overdue retail shake-up puts Littlewoods on a new track - Littlewoods’ decision to shake up its business and focus on retail has added to its reputation for muddled thinking. But it could just be the right move, writes Binnur Beyaztas

The Littlewoods Organisation’s decision to set up a new retail division, appoint a group marketing director and integrate its home-shopping and stores businesses is the latest in a series of drastic changes in direction for the group. Many observers have been left wondering whether it is suffering a chronic identity crisis.

The Littlewoods Organisation’s decision to set up a new retail

division, appoint a group marketing director and integrate its

home-shopping and stores businesses is the latest in a series of drastic

changes in direction for the group. Many observers have been left

wondering whether it is suffering a chronic identity crisis.



The latest upheaval, reported in Marketing last week, was prompted by

the fact that Littlewoods’ leisure division, consisting of its lotteries

and pools business, has lost 60% of its turnover due to competition from

the National Lottery.



The reorganised group will focus its energies on retail and will

significantly reduce investment in its traditional core business of

pools and lotteries.



Accepting the need for this has not been easy, as the company was

founded on the pools business by Sir John Moores in 1923. But now

Littlewoods has completely restructured itself, removing layers of

management in the process. Pools and lotteries will be handled

respectively by managing director Ian Duncan and marketing director

Andrew Slamin.



The changes are the most far-reaching yet imposed by chief executive

Barry Gibson, who joined Littlewoods from BAA in September.



Gibson, who was brought in to remedy years of lacklustre performance, is

convinced retail is the key area. It currently holds 2% of the women’s

fashion market.



Littlewoods has never been renowned for its consistency. Last July it

tried to sell off its 135-strong retail chain and failed.



The company claimed that the pounds 550m bid for its stores division by

venture-capitalists CVC Capital Partners, was inadequate. Littlewoods

ended up selling 19 of its stores to Marks & Spencer for pounds 200m,

money which it plans to plough back into the company.



Foiled again



This failure to sell its retail business was followed by an unsuccessful

attempt to buy the Freemans mail-order business from troubled retailer

Sears.



Margaret Beckett, president of the Board of Trade, blocked the sale on

the grounds that it would give Littlewoods and Great Universal Stores

(GUS), its main rival, more than 80% of the mail-order market between

them. Littlewoods’ plans were thwarted once again.



After that, Littlewoods bills this latest restructure as a rejuvenation

of the company. Is a clear strategy emerging at last?



Rude awakening



Gwen Gober, Littlewoods’ director of group corporate communications,

says: ’We know that this group has not been performing well, and it is

time to get it sorted out. The past ten years have been sleepy, and we

failed to keep up with the consumer. There were no new developments or

new innovations. It has been an era of complacency, and it is time to

focus.



’We are working on being in tune with our customers and understanding

what they want, and we see retail, the merger of our home-shopping and

stores division, as the way forward. We want to rejuvenate the

Littlewoods brand like Woolworths and Asda did theirs, and to be more

dynamic.’



To achieve all these goals Littlewoods is having to rethink its whole

merchandising and buying operation so that both its home-shopping and

stores divisions can work together.



At present, the company’s stores are seen as downmarket compared with

its mail-order business. The group is hoping to move its mail-order

merchandise to the stores, which would give a more consistent brand

image.



The group also has ambitious plans for its Index portfolio, which

consists of the Index stores and Index Extra, its mail-order division.

There are plans to pull the Index and Littlewoods brands closer

together, although Index’s identity will be kept separate.



Littlewoods’ biggest plan is to launch its own television home-shopping

channel in the UK in a joint venture with Granada Television. The two

companies propose to launch the channel on British Digital

Broadcasting’s terrestrial service and British Sky Broadcasting’s

satellite services.



This venture will become the group’s main focus and is a sign that

Littlewoods is looking to the future.



These developments will be backed by advertising and marketing

initiatives, something Littlewoods admits it has failed to use

effectively in the past.



Gober says: ’We have been poor in marketing and that is why we are

appointing a group marketing director to overlook the whole business and

drive us forward in the retail sector. The new marketing director will

look at advertising agencies and do what he/she feels is right, and will

review the overall brand strategy.’



Tony Hillyer, group marketing services director who is responsible for

the retail division’s advertising and media buying, says: ’We will look

at all the brands in the portfolio, be more fluid, understand the

customer, and look even closer at electronic methods of shopping.

Convenience will be everything. This is a radical restructure and it is

the right thing to do.’



Late in the day



The move is long overdue. Littlewoods should have realised the potential

of its retail operations much earlier but it was stuck with a corporate

legacy (the 32 shareholders are all members of the Moores family), which

made it difficult to let go of the past.



Its strengths are the Littlewoods brand, its home-shopping business and

its high-street outlets. The idea to merge the two may have come later

than many would have hoped, but at least now there is a suggestion of a

clear strategy for Littlewoods to achieve real consistency.



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