Mark Newton-Jones is confident that he can return the glory days to Littlewoods. Neil Tague went to meet him
When Littlewoods acquired Shop Direct in the Great Universal Stores break-up in 2004, giving itself a 70 per cent share of the UK catalogue market, the common wisdom was that it had built up a massive slice of an increasingly small cake. Mark Newton-Jones, the man headhunted to turn the venerable Liverpool business around, says that's far too simplistic an assessment.
"Traditional mail order retail has been a declining market," he says, "but direct home shopping and the internet remain very strong markets. Home shopping has changed - it built up when the lady at the end of street could get credit when all around her couldn't, and now everyone can. Although there are still a significant minority of agents, those days are gone and we're adapting."
As befits a man who was at the helm of Next Directory when it established itself as a must-have item for every middle class coffee table in the 1990s, Newton-Jones oozes confidence as he shows me round the impressive Skyways House, the former Speke aircraft hangar that has been Littlewoods headquarters since August 2006.
He has retail in his blood. Before and after college he worked in the family hardware business until the advent of DIY superstores made life impossible and the business was sold. He joined Next, "where it all started", as the retailer entered its golden age. He more or less handpicked his employer.
"The only job available was in the storeroom, but I knew I wanted to work for Next so I took it, before joining the management programme," he says. "I actually ended up running that same store, before going up through area and regional roles before David Jones asked if I was interested in moving into home shopping in 1998."
He ran Next Directory for five years, doubling turnover and trebling profit. "But then Next had so much momentum it was about cosmetic changes rather than surgery and an entrepreneurial approach. The phone went and I was asked to take a look at the home shopping and retail business here. I'd been off the high street for five years and thought it wasn't a bad idea."
The voice at the other end was David Simons, then the Littlewoods chairman - he's recently been replaced by Newton-Jones' former Next boss David Jones.
Newton-Jones spent a year getting to grips with Littlewoods' ageing real estate before deciding to make a clean break. "We did a lot of work on margins and cost base and brought about a marked increase in performance. But it needed considerable investment, the stores hadn't been updated for years. And when you've got 4 million sq ft of floorspace, refit doesn't come cheap,"x9d he says.
"A number of investors wanted to buy into the high street and we decided to sell everything in one complete transaction. Looking back, we definitely made the right decision."x9d The stores were sold to Primark for £3401m, netting a profit of £342.6m.
Since then home shopping has been the primary objective. There are arms of the business that deal with personal finance, print and packaging and a hugely successful home delivery arm, but they are primarily there to support Littlewoods' own trade.
Merging Shop Direct into Littlewoods and modernising them into one operating platform - Littlewoods Shop Direct Group (LSDG) - has been a lengthy process and "surgery"x9d (to use Newton-Jones' phrase) is still taking place - the week after our interview 200 marketing jobs are cut at Speke as the stable of catalogue titles is streamlined.
"It's been painful,"x9d admits Newton-Jones. "We've brought three head offices, each of which was too large, into one. We did that to put ourselves on a platform for future growth.
"These were two businesses that had lost their way from a retail perspective. They were in double-digit decline two years ago and we've stabilised that. This industry's all about product and customer service and that's what we're building here."
Over £330m has been invested in Skyways House - the Barclay brothers, who bought Littlewoods in November 2002 for £3750m certainly couldn't be accused of not being prepared to invest. And its creation has been symbolic. Although Newton-Jones says LSDG is a national business, it has a Liverpudlian heart and does much for local charities.
But is there really a future for catalogues? "There are three big misconceptions about catalogue shopping,"x9d says Newton-Jones. "That it's inherently northern, that it's downmarket and that it's for old people. They are all wrong. We have as many customers south of Birmingham as north, the bulk of our custom is in the mid-market, the C1s and C2s, and we have as many customers under 45 as over."
The challenge is to make shoppers realise that LSDG's stable of catalogues, which includes Additions Direct and Marshall Ward, has become a place where they can find the clothes and goods they want. And that means branding.
"Three years ago we had 2,700 product suppliers,"x9d says Newton-Jones. "To lots of them we were tiny and they were tiny for us - that's not the way to have a relationship in retail. You have no control over price and quality. Now we've got 700. It's important because as a successful retailer you have to offer better products at the same or a better price."
The strapline "Home of Big Brands" has become the LSDG mantra. Last year it sold 120,000 pairs of £3100-plus Timberland boots and a million pairs of trainers and 600,000 mobile phones, becoming the top seller of Prada phones.
LSDG has signed up formidable TV fashion duo Trinny and Susannah to head its ladies fashion offer. They are plastered across the new catalogues, which reach one in every three UK homes - "incredible penetration,"x9d says Newton-Jones.
"People told us: 'We don't want £36 jeans, we want designer products.' Product has been the starting point for change. We're the largest remote department store in the country - a store in your home, we say."x9d
The last frontier to conquer is the South East and LSDG's Trinny and Susannah-fronted TV advertising campaign is the first time the group has advertised on TV since the 1980s. It aims to build on the "we're not who you think we are" positioning campaigns the group has organised in London.
What Newton-Jones has been doing is building up an internet sales platform to rival anything else out there. "We realised early on that internet sales were only a small part of the business and that that had to change,"x9d he says. We're dealing with the next generation of shoppers - 95 per cent of 15 year olds have bought online. We needed an internet platform we could be proud of and now 35 per cent of our sales are made online. That was 20 per cent two years ago and we think it will be 50 per cent in three to five years' time."
But weren't some of the most spectacular failures of the dotcom boom clothing retailers such as Boo.com? And don't people generally prefer to touch and feel clothes they're buying? Yes, they were and not necessarily, says Newton-Jones: "Boo was a great idea years ahead of its time. We're in the Web 2.0 age now, where more than 50 per cent of homes have broadband,"x9d he says. "Back then, it took ages for images to download, the colour quality was poor - it was hugely frustrating.
"With broadband, there are high resolution images, zoom functions, product comparison, incredible download time. It's revolutionised the ability to sell fashion online. It gives you a virtual touch and feel. We have 700 online catwalk videos."x9d
It's been a tumultuous few years and Newton-Jones looks to be up for the ongoing challenge of returning the group to profit. And the Barclay brothers are prepared to let him get on with it, he says: "They are incredibly supportive. They want to see the business restored to its position as an iconic British retailer."
He also has a strong management team in place. Not only is there Jones, but also chief operating officer Keith Basnett - Phones4U founder John Cauldwell's former lieutenant - and a core of respected names: "All of them have big company, blue-chip experience, which is essential for where we're trying to go," says Newton-Jones.
"We're 18 months into a five-year plan. We've made a good start, but we've got lots to do. It would be very wrong to say the business is fixed yet."
He's certainly glad to be free of the high street amid the current blizzard of profit warnings. "This is a more exciting place to be,"x9d he says. "And while the big city centres and large malls will thrive, because they offer a fuller experience, I think the town centres are in danger of becoming wastelands. The face of retail is changing."