Very and m-commerce drive growth at Shop Direct as it continues to invest in AI

Etail giant Shop Direct has announced its fifth consecutive year of sales and underlying profits and has cited fashion and lifestyle site Very.co.uk and m-commerce as two of its biggest growth drivers.

The group, which also owns the Littlewoods and Very Exclusive brands, achieved a 5.3% growth in like-for-like sales which reached £1.93bn in the 52 weeks to 1 July. Very achieved a growth in sales of 14.6% to £1.26bn while underlying profit before tax grew by 10.2% to £160.4m.

Use of mobile devices, including smartphones and tablets, were up seven percentage points to 69% as a proportion of online sales, while sales via smartphone alone made up over half (53%) of online sales for the first time and was up 10 percentage points compared with 2016.

CEO Alex Baldock said the group had also been quick to pick up on trends, which had boosted its fashion performance. "We’re pleased to report our fifth successive year of record sales and underlying profits. Once again, Very and m-commerce were the big drivers of our growth," he said.

“Our fashion performance stood out in a volatile market as we brought even more famous brands within reach of our customers. Spotting the athleisure trend early boosted sportswear and V by Very became an £150m brand in its first full year," Baldock added.

The group said its investment in personalisation before, during and after shopping, had helped drive its mobile sales. It has been working with Facebook and Google on targeted marketing and is applying machine learning to target customers who look like they may be lapsing with an incentive to shop. It also uses machine learning to identify when customers may be running our of a product and encouraging them to re-purchase - a technique that has proved effective with beauty products and scented candles.

Further investment in AI is coming later this year which it says will benefit customer service and "credit decisioning". It plans to launch the AI-powered, ‘natural language’ version of its customer service chatbot within the MyVery app. The AI-powered conversational user interface (CUI) can answer 32 different types of customer query, recognising over 4,000 written phrases and responding accurately and Shop Direct’s long-term vision is for Very Assistant to develop into a personal shopper for every customer.

The company will also apply AI to its credit decisioning capabilities, which it says will result in faster, more personalised outcomes for customers, and better credit decisions and risk discipline for the business.

"Our long-term investments in digital, data, personalisation and Very are coming good. And our obsession with winning the ‘three-second audition’ on smartphones also continues to pay off. We’re delivering one of the most relevant shopping experiences on a 4.7-inch screen, with our five-star apps, digital marketing expertise and leadership in personalisation," Baldock said.

“Artificial intelligence is already driving results for us and we’ll soon launch one of UK retail’s first AI-powered chatbots for customer service. Longer term, we believe AI will bring scale to personalisation so digital retailers like us can be every bit as personal as stores. Very Assistant 2.0 will be another step closer to us democratising the personal shopper," he added.

The business said it had started the new financial year with a performance that was in line with expectations and cautioned that it did "not expect the economic backdrop to get any easier".