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Last Updated: Wednesday, 29 August 2007, 22:44 GMT 23:44 UK
Mail order looks beyond the printed page
Advert for Lovel Label dress, part of Littlewoods' autumn collection
Female shoppers account for the bulk of Littlewoods' online buyers

In the second of a series of features on current retail trends, BBC News business reporter Gavin Stamp examines the mail order industry's efforts to master internet shopping.

Not everyone may openly admit to filling their cupboards and wardrobes by mail order.

The reality is that millions of us do - and mail order transactions are worth more than 9bn a year.

But the industry has been suffering something of an identity crisis in recent years.

The rapid growth of Tesco and other supermarkets into clothes and household appliances - staple mail order goods - has squeezed smaller retailers.

At the same time, the transformation of shopping habits by the internet has left the trusty catalogue looking somewhat dated as a retail proposition.

The industry has been on the back foot in the face of these trends with sales - excluding door-to-door transactions - at their lowest level in a decade.

"The drop is due to a consumer preference for non-mail order, not by a diminishing preference for remote shopping," says Richard Hyman, from retail specialist Verdict Research.

But could the solution to these problems reside in one of its main origins - the seemingly unstoppable march of e-commerce?

Verdict certainly thinks so, saying firms can exploit the opportunities offered by the internet to attract younger, wealthier customers who will shop more frequently and spend more.

Internet revolution

While some mail order firms may have been slow to grasp the commercial potential of the internet, many are now evangelical about its impact.

"Historically,l mail order has very much been viewed as a Northern thing and aimed at the lower end of the socio-economic scale," says Patrick Jolly, chief executive of Findel, a leading player in the sector for more than 40 years.

Mail order originated in the 19th century where friends grouped together to buy goods. Each person would put in money and one would be chosen to receive the goods bought.
Clubs were replaced by credit unions and home shopping firms, which secured credit and used agents to deal with customers. Most people now shop directly but many still use credit schemes

"The advent of the internet is driving cultural and social changes within the UK and a much broader demographic is comfortable with home shopping."

Online orders now account for 50% of Findel's mail order sales, while one in three sales at Littlewoods Shop Direct - the UK's market leader - is made online.

Littlewoods, which was formed in 2005 by the merger of the Littlewoods store chain and the home shopping business of Great Universal Stores, expects online orders to account for half of all sales by 2009 - equivalent to 750m in annual turnover.

"This is a consumer-led shopping phenomenon," says its chief executive, Mark Newton-Jones.

Led by young women buying clothes online and by text in increasing numbers, demand is being driven by choice, price and convenience.

Catalogues critical

But despite the internet's growth as a selling tool, the industry believes the tried-and-tested catalogue still has plenty of life in it yet.

Littlewoods says the two platforms are working in tandem while Findel has launched catalogues for two online-only businesses it bought last year.

"Nothing works as well as sending the catalogue, regardless of what percentage of orders we take through the web," says Richard Bell, head of marketing for clothing firm Boden.

Boden head of marketing Richard Bell
I don't think you will truly be able to do without the catalogue for some time yet. The catalogue is still the king
Richard Bell, Boden

Sending out 30 million catalogues a year is a costly and energy-intensive business, and Mr Bell acknowledges he would like the internet to become the firm's "primary selling tool".

But even though 65% of Boden's orders now arrive via the internet, it appears there is nothing quite like a glossy brochure featuring attractive models to get customers' attention.

"I don't think you will truly be able to do without the catalogue for some time yet," Richard Bell says.

"The catalogue is still the king."

Mail order firms at all ends of the spectrum face the challenge of trying to migrate their customers online without undermining sales.

Findel, which has bought six mail order businesses in the past 18 months, says brand loyalty and product differentiation will be key to driving sales.

Having a highly-functional website is also key to attracting new customers.

To this end, Boden is looking at ways of showcasing "live" stock while Littlewoods' sites carry video streaming, outfit matching services and price comparisons.

Older man surfing the internet
Internet use is changing the demographic shopping trends

Littlewoods believes emerging web technology will enable it to offer personalised shopping, approximating a virtual High Street experience.

"This new technology will make the whole experience of online shopping more interactive for the consumer," says Mark Newton-Jones.

"Consumers will be able to adapt a website to suit their needs. If you only want to look at clothing in a size 12, that's all you will see."

The internet is also helping firms' expand its horizons. Boden's website helped it develop its fast-growing US business, which now accounts for 30% of total sales.

Only next year will it establish an actual physical presence across the Atlantic, with a warehouse in Pennsylvania.

High Street dilemma

But this two-pronged formula does appear to have its limitations.

For some people, the second-hand experience offered by mail order - in whatever format - will never match up to the real thing of pounding the High Street and its changing rooms.

Boden recently opened a second store and is mulling more openings.

Shoppers on Oxford Street in London
Will mail order firms be able to resist the lure of the High Street?

"There is still a significant number of people who do not want to buy mail order, for whatever reason," Richard Bell admits.

"If you want to grow the business - and there is a large number of people who are resistant to any form of home shopping - then retail is the way we are going to get them."

Littlewoods, meanwhile, still has 28 stock clearance outlets.

But many mail order firms such as Freemans, now owned by German firm Otto, abandoned the High Street long ago.

By doing so, they avoided the high fixed costs of operating stores, which can become a massive burden if the economy turns sour.

Mail order firms are somewhat less dependent on impulse spending - the first to be reined in during a downturn - than High Street stores.

Findel's Patrick Jolly says mail order firms have generally performed better than their "bricks and mortar" counterparts in the past year but they are not immune to economic trends.

They also feel the pinch when rising borrowing costs depress consumer spending.

"When money's tight, money's tight," says Boden's Richard Bell. "Everyone's going to find the same thing."

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