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
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
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.
This failure to sell its retail business was followed by an unsuccessful
attempt to buy the Freemans mail-order business from troubled retailer
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?
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
’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
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
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
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.