It's been another extraordinary year for Shop Direct, which posted its fourth consecutive year of record growth this week.
Shop Direct, which consists of the brands Very.co.uk, Littlewoods.com, VeryExclusive.co.uk and LittlewoodsIreland.ie, reported an increase of profit before tax of 43.6% to £150.4 million and sales growth of 4.3% to £1.86 billion for the 53 weeks to 30 June 2016.
Speaking to Essential Retail on the morning of the results, CEO Alex Baldock, cited the retailer's continued investments in technology as the key driver of the year's growth, which was its first as a pureplay digital retailer, having ceased catalogue production in January 2015.
This has led to increased web traffic over the financial year of 12%, with 1.2 million customers now visiting the site every day, while smartphone traffic increased 42% to more than 638,000 daily visits.
"Personalisation technology has been at the heart of the great success for us this year," says Baldock, noting how this investment hadn't quite paid off when Shop Direct disclosed its full-year results last year. "We're making the most of how well we know our customer and being increasingly tailored to each of them."
He admits personalisation needs to be executed effectively and that crude personalisation can be self-deprecating. "If a customer buys a pair of slippers and we just target them with slippers for the next year, that could be worse than not personalising at all."
Instead, Shop Direct is working with a number of different vendors (who he refuses to name in order to stay competitive), as well as developing in-house predictive models which personalise the customer experience, not just based on previous purchase history, but using data from "inside and outside the business".
Baldock describes how personalisation is being used throughout the entire customer journey, from the email marketing sent to bring shoppers onto the site, to the online experience itself as well as follow up communications. In fact, Shop Direct now personalises customer emails, off-site advertising, homepage content, on-site sort orders and top navigation menus.
"A couple of years back we may have sent one email to all customers to prompt repeat trade, now with different customers, we use different ways, with different messages to prompt behaviour that is relevant to them. And this is done programmatically at scale."
Baldock also explains how these communications are not only increasingly personalised, but are conducted automatically through artificial intelligence. In fact, if 2016 was the year of personalisation, 2017 may be the year of AI for Shop Direct.
"A big focus for the year ahead is AI, we're particularly excited about it in personalisation," he says. "AI is an input, it's a computer that understands English – a computer on steroids – which can learn on its own and can get ever better at answering questions."
Baldock says the retailer is using this next-generation of technology to heighten its personalisation efforts. "Relevance is the output of all of this. It's about being the most relevant retailer for any customer at any time."
Shop Direct is also using data, predictive models and AI to build a programmatic and automated customer management engine. The e-tailer claims this will help it create an even more personalised customer journey, from more relevant and timely emails, SMS, push notifications, social media and on-site communications, to real-time, relevant special offers for each customer.
As well as automatically answering customer concerns as another channel for customer service, AI will also be integrated into the shopping journey to help customers choose what to buy. "We will look to democratise the personal shopper," says Baldock, noting how Shop Direct is working with IBM to incorporate this technology into the MyVery app.
"Every Very customer will effectively have their own personal shopper and using AI will chat to Very in the same way they chat to a friend on Whatsapp – that's the long term for conversational commerce."
Keeping Very customers happy is clearly important for Shop Direct, as its underlying profits were driven by a 15.9% increase in sales from Very.co.uk to £1.12 billion, this made it a £1billion-plus brand for the first time. Meanwhile, the younger, Very customer is more accustomed to digital, demonstrated by the fact its app hit one million downloads the day before the e-tailer shared its annual results. Meanwhile, mobile transactions now make up 62% of overall Shop Direct sales.
"We've gone from nothing to 62% in four years," says Baldock. "And one of the big trends has been in mobile. We've had to go where the customer has gone and we choose to go where the customer goes and increasingly that's her smartphone. She typically spends about four hours a day on her smartphone and she shops all the time."
He continues: "But the challenge is you have to be compelling, you have about three seconds to make an impression before she goes to do something else. It's a challenge to win the three second audition."
But there is still plenty left on the technology to-do list for this digitally-led business. "What concerns me is we take the chance in front of us and fulfil the potential this business has, and we're no where near fulfilling that potential today," admits Baldock.
"We're putting more brands online, strengthening and protecting our credit offer and investing in technology like AI, that's what we're concerned with and that's what we think will deliver another record year, this year."