Paul Loft
Managing DirectorHome Shopping
The Business Review
• What we said
– keeping and fixing is the best option
– programme to save £80m p.a.
– create a smaller, stable, profitable agency business
– financially low risk strategy
– improve proposition and retail disciplines
– leveraging the assets
Sales by Business Area
Choice11%
Direct8%
Other11%
Kays33%
Great Universal
37%
Agency £1,253m (-4%)
Year to March 2001 Numbers in brackets is annual growth in 2001
Other £169m(-14%)
Direct £120m(+3%)
% of sales
Three Year Plan
Phase IIIPhase IIIGrowthGrowth
Roll out newpropositions
Phase IPhase IStabiliseStabilise
Establish newteam
Create smallerbusiness withstable profits
Phase IIPhase IITest GrowthTest Growth
Improve theproposition
Explore low riskgrowth opportunities
Increase customerunderstanding
Cost Efficiency Savings
Marketing cost base 30 20
Supply chain savings 20 4
Customer service and logistics 15 7
Integration and rightsizing 15 4
Total £mTotal £m 8080 3535 2525 2020
Business Business reviewreview
Saving Saving 0101
Forecast Forecast 0202
Forecast Forecast 0303
Agency Customer Dynamics - Kays
0
200
400
600
800
1,000
1,200
1,400
99 00 01200
210
220
230
240
250
260
270
280
Customers
Spend per customer (£)
Spring / Summer
No. of customers
(000s)Spend per
customer (£)
Agency Product Dynamics
Product mix %
Home & Home & LeisureLeisure
FashionFashion
70%
60%
50%
40%98 99 00 01
Spring / Summer
• Top 250 line availability
• More brands
• New services
• ARG product pool
• VIP Club service
• Mid season catalogue
• Call centre/delivery
• On-line offer
• VIP Club discounts
• ‘Key line’ prices
• Product quality
ChoiceChoice
Improving the Agency Customer Experience
ValueValue ConvenienceConvenience
Current Perspective
• Growth of remote shopping market
• Improving offer in hard goods driving agency proposition
• Substantial opportunity to improve the ‘big book’
proposition
• CRM platform can give us competitive advantage
• Strong growth potential in the direct market
Lessons from Direct Trials
• High Street prices
• Different style
• Free delivery
• Range of credit
• Strong brands
• Unique product
abound – A World of Ideas Direct to Your Door
abound – A World of Ideas Direct to Your Door
• New direct test
• Learning from Kays Direct
• Aimed at the working woman
• Aspirational and contemporary
• Substantially different presentation
High Street Prices
• Prices 15% lower than agency
• Free delivery
abound – A World of Ideas Direct to Your Door
The Biggest Brands Direct to Your Door
abound – A World of Ideas Direct to Your Door
• Prices 15% lower than agency
• Free delivery
• Contemporary fashion
• Wide range of brands
Flexible Payment Options
abound – A World of Ideas Direct to Your Door
• Prices 15% lower than agency
• Free delivery
• Contemporary fashion
• Wide range of brands
• Flexible payment options
Summary
• Cost saving targets and stabilisation of profits on track
• In a strong position to exploit a mature agency market
• Agency business is an enabler
• Remote shopping is a growth market
• Testing growth in new direct propositions and services
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