Ideal Shopping Direct goes from £32m loss to an expected £5m profit

 

New CEO Jamie Martin hails “spectacular” news for live home shopping retailer

 

 

Owner of Ideal World and Create and Craft channels invests £4m in new technology

Company bucks retail industry and Brexit gloom that has dented consumer spending

C&C sees key growth with 14.5k new UK customers and sales up 40% in U.S. market

 

The new CEO of one of the world’s largest multi-channel home selling retailers has hailed a revival in the company’s fortunes just one trading year after it made a loss of £32m [Jan-Dec 18]. Jamie Martin, who took over at Ideal Shopping Direct in December, has revealed expected results for January to December 2019 will show a fast recovery to a £5m profit and 6.5% rise in average gross margins.

 

Mr Martin has played a central role in the return to profitability over the past nine months, along with new COO Martin Purcell, who joined at the same time. Following nine months of hard work to turn the business around, the expected 12-month results are now looking extremely healthy with total pre-tax turnover forecast to be £170m.

 

Peterborough-based ISD – whose two main channels are Ideal World and Create and Craft – sells into 31m homes in the UK via shopping channels on Sky, Freeview, Virgin and late-night ITV plus 35m homes in America and on its own websites. Between them the two channels have more than one million customers.

 

New management have been a new boom

 

Since taking over at the helm, Jamie and Martin have overseen a number of key changes and developments including a technology investment of £4m, the recruitment of new suppliers for its two main channels, the streamlining of its operations, a new partnership with ITV, growth of its American distribution channels and an overhaul of its main Ideal World brand. This has all happened alongside a transition to broadcasting in High Definition quality.

 

The new management has also worked hard to increase the quality of its flagship Ideal World channel by changing the on-screen product information overlays and rebranding set designs, VTs and social media. The company has also benefited from strong growth in its sales in America, which have risen by 40%.

 

CEO Jamie Martin says: “This is the biggest turnaround in live home shopping history. It has been a year of significant change, experimentation and learning while laying the groundwork for the future. Average order value and order frequency is up on last year and all other metrics have begun to plateau bucking the previous aggressive downward trend before I joined the business.

 

“It’s a simple story of sales up and costs down. We made tough choices to reduce our workforce by 110 people and negotiated new and better deals with suppliers. The business has also streamlined various aspects such as changing the way we source in China, cancelling marketing programmes that were not working and spending more money on our digital marketing, all of which have had a material impact on our profitability for the better.”

 

Create and Craft has helped put the pieces back together

 

In recent months, Create and Craft has seen a significant rise in popularity. Own brand Margins have increased by 23%, with the channel attracting 14,500 new UK customers so far in 2019.  Average spend is up by 3.6% per customer and this has been fuelled by the launch of hundreds of new products, including from brands like Dragon’s Den star Sara Davies Crafter’s Companion and Tonic Studios. Its loyal crafters generally buy products in frequencies ranging from 3 to 8 times a month.

 

Given traditional broadcasting demographics are mainly those aged 50+, the channel has aggressively embraced social media to future-proof the business by targeting the 25-34 year age bracket across Pinterest, YouTube and Instagram. Web sessions for C&C in this age group grew by over 200% vs the same period in 2018, with a dwell time, transactions, conversion rate and revenue also positive YoY.

 

The channel’s 2020 marketing strategy will actively pursue this customer segment in a more cohesive and intelligent way by exploring Google Display Network opportunities, including YouTube TrueView, enhancing its affiliate proposition with content publishers and testing influencer campaigns.

 

Ideal Shopping Direct to benefit from changing shopping habits

 

Mr Martin believes the growth in people working from home (27% in the last decade according to the TUC[1]) has given ISD a clear path to an increasingly successful future. He explains: “Given today’s connected world, advances in technology and the fiercely competitive world of retail, consumers have come to expect an ‘anytime, anyhow, anywhere’ shopping experience.

 

“Ideal Shopping Direct is no longer just a TV Shopping Channel, it has now pivoted into a Pure Play offering for customers discovering us via the web. It is a business dedicated to educating consumers through clear and engaging video content, delivering exclusive deals, sourcing quality products and providing market-leading customer service.”

 

ISD has also seen a younger audience emerge across its business, thanks to its focus on digital channels. It is now trialing online streams with exclusive content and making further investments into digital for other emerging video platforms served by new-style content.

 

Mr Martin says: “We now engage consumers across various platforms including our webshop, social media, live streaming, YouTube and TV and aim to work even closer with brands to reach genuinely suitable consumers by utilising the power of product demonstration across various platforms.

 

“The immediate focus when we took over in December 2018 was to ‘stem the bleeding’ and stop the freefall of customers, revenue and profitability. Now this has been achieved and things are stable, the company will be making further investments into innovation, acquisition and retention in a bid to aggressively narrow the gap to our biggest competitor, QVC UK, which is around twice our size. ISD’s core USP is demonstrating the products available for sale with presenters who bring a personality to the ‘sale’ that our customers love.”

 

Brexit likely to cause some product delays

 

Mr Martin added that while Brexit will undoubtedly cause some delays in product delivery from suppliers in Europe, he does not expect it to dent headline sales significantly, as the majority of its products are sourced under WTO trading rules outside of the EU.

 

Earlier this year, ISD secured a deal to air its two flagship home shopping channel brands on ITV’s late night broadcasts, boosting viewing figures by five million people. Around 25% of the UK’s population tune in to late night TV on ITV every year, made up of an engaged audience including shift workers, night owls and parents of newborn and young children.

 

Ideal World TV took over the 12am to 3am slot on ITV on August 1 and since then its Vibrapower Slim 2 Plus vibration plate is being ordered every three seconds by fitness fans and those looking to get into shape. This demonstrates the power that the company’s eventual digital and live streaming studios will bring to ISD in terms of opening up products to even wider audiences. Mr Martin believes it will be like “going from 0-60 in 3 seconds” in terms of sales.