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Very Group returns to profit as more shoppers bought via mobile during the pandemic; plus four other ways its shoppers bought differently during Covid-19

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Very Group has returned to profit and turned over more than £2bn for the first time in its latest financial year as more shoppers turned online – and to their mobile phones – to buy during the Covid-19 pandemic and lockdown.

The retail group, which operates the Very and Littlewoods retail brands, said that 82% of online sales in its latest financial year were made via mobile devices, with the Very app alone taking 35.7% of that brand’s orders. Visits to the Very website rose by 28.8% across all channels. The retailer has long taken a mobile-first approach, and this seems to have left it well-placed for the changes brought by Covid-19.

The update came as Very Group reported group revenue of £2bn in the year to June 30, up by 2.9% on the previous year. Retail sales at Very drove that growth, rising by 10.5% to £1.2bn, and lifting Very revenue by 6.8% to £1.6bn. Growth came particularly in the electricals (+18%), home (+13% including garden tools +35.2%) and ‘other’ category (+10.5%), which includes toys, gifts and beauty products, while fashion and sports sales rose by just 0.9%. Littlewoods revenue declined by 8.8% to £460.9m in what the group describes as a managed decline. At the top line, underlying earnings before interest, tax and asset write downs (EBITDA) came in at £264m, but Covid-19 costs means that at the bottom line, pre-tax profits were £48m, representing a return to profit. In 2019, the retailer reported a pre-tax loss of £185.5m after exceptional costs of £310.2m, mostly related to PPI compensation. 

Since then, the retail group has seen double-digit growth in the first quarter of the current year.

During the year the group completed its move to its new Skygate automated fulfilment centre, and invested further in the Very chatbot, which used machine-learning to answer 30,000 common customer questions a week during the pandemic – up from 25,000 previously – and last month expanded from the Very app to the Very website. A new feature, developed in partnership with Nike, enables shoppers to see what the clothes they are considering buying look like on a range of differently-sized models. Very Group also expanded its use of direct-from-manufacturer delivery as it widened its product range, and added new brands to all of its categories. 

Very Group now says it will bring forward planned digital investment by three years as it looks to improve its backend infrastructure. In response to staff feedback, it is also shifting to a flexible working model that will see office-based staff spend part of their time working from home and pat working from the office. The retail group is now refurbishing its offices to make them more suited to a more collaborative style of office working.

Five ways Very Group saw shopper behaviour change during the pandemic

Smartphones dominated

Even though more people were working from home during lockdown, Very Group customers were more likely to buy from their smartphones. Between April 1 and August 31, 81% of ordered were via mobile. That’s up by six percentage points compared to the same time last year – and is, says the group, “entirely attributed to orders using apps”.

Home delivery ruled

Stay-at-home shoppers were much more likely to opt for home delivery over click and collect. Some 80% of online orders were delivered to the home between April 1 and June 30, while the remaining 20% were collected from a store. At the same time last year, 67% of orders were for home delivery and 33% were click-and-collect.  Collection has gained ground, starting in July (27%) – but, again, that was well behind the same month last year (40%). In August 2020, 24% of orders were collected, against 31% in August 2019. 

Customers bought more during working hours

Shoppers appeared more comfortable browsing and buying between 9am and 3pm. Between March 1 and June 30 shoppers spent more time browsing between those hours – and less time shopping after 5pm. But the habit shifted back to normal in July and August.

Browsing took off ahead off the weekend

Thursdays and Fridays were the peak days for browsing online between April 1 and June 30, with Monday the least likely day. It seems shoppers were keen to get ahead with their to do lists at the beginning of the week but relaxed as the weekend approached.

Shoppers prioritised DIY products and children’s entertainment

Gaming, DIY and garden products dominated during lockdown, while fashion sales declined between April 1 and June 30. That said, some sub-sections of fashion were more resilient, including sports and childrenswear.

These patterns, says Henry Birch, could soon be seen again if a second wave emerges. “The easing of of lockdown caused many of these trends to normalise in July and August. However, with Covid-19 cases now increasing in the UK, and the recent introduction of ‘the rule of six’ and local restrictions across the country, the winter months could bring further disruption to daily life. This would mean more changes to the way we shop online, but whether we see a full return to lockdown shopping trends will depend on the measures implemented in future. There are a lot of unknowns.”

He predicts home and electrical will remain strong categories and that there will be a long-term recovery in fashion, especially sportswear. Now the retailer is looking ahead to Black Friday.

“Last year, said Birch, “was our biggest Black Friday ever, and our promotion lasted three weeks, rather than being limited to the day itself. With the recent growth in online shopping, it could be just as big again with electrical likely to be the standout category.”

The retail group did not furlough any staff, and introduced strict social distancing in warehouses that were dealing with peak-level trading. It offered a Covid-19 payment freeze to credit customers, in line with Financial Conduct Authority guidance but said that by the end of September, fewer than 1% of all credit accounts were using that plan. 

Very is ranked Top50 in RXUK Top500 research while Littlewoods is Top100. 

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