Overdue Retail Shake-Up Puts Littlewoods on a New Track

Article excerpt

Littlewoods' decision to shake up its business and focus on retail has added to its reputation for muddled thinking. But it could just be the right move

The Littlewoods Organisation's decision to set up a new retail division, appoint a group marketing director and integrate its homeshopping and stores businesses is the latest in a series of drastic changes in direction for the group. Many observers have been left wondering whether it is suffering a chronic identity crisis.

The latest upheaval, reported in Marketing last week, was prompted by the fact that Littlewoods' leisure division, consisting of its lotteries and pools business, has lost 60% of its turnover due to competition from the National Lottery.

The reorganised group will focus its energies on retail and will significantly reduce investment in its traditional core business of pools and lotteries.

Accepting the need for this has not been easy, as the company was founded on the pools business by Sir John Moores in 1923. But now Littlewoods has completely restructured itself, removing layers of management in the process. Pools and lotteries will be handled respectively by managing director Ian Duncan and marketing director Andrew Slamin.

The changes are the most far-reaching yet imposed by chief executive Barry Gibson, who joined Littlewoods from BAA in September. Gibson, who was brought in to remedy years of lacklustre performance, is convinced retail is the key area. It currently holds 2% of the women's fashion market.

Littlewoods has never been renowned for its consistency. Last July it tried to sell off its 135-strong retail chain and failed.

The company claimed that the [pounds]550m bid for its stores division by venture-capitalists CVC Capital Partners, was inadequate. Littlewoods ended up selling 19 of its stores to Marks & Spencer for [pounds]200m, money which it plans to plough back into the company.

Foiled again

This failure to sell its retail business was followed by an unsuccessful attempt to buy the Freemans mail-order business from troubled retailer Sears.

Margaret Beckett, president of the Board of Trade, blocked the sale on the grounds that it would give Littlewoods and Great Universal Stores (GUS), its main rival, more than 80% of the mail-order market between them. Littlewoods' plans were thwarted once again.

After that, Littlewoods bills this latest restructure as a rejuvenation of the company. Is a clear strategy emerging at last?

Rude awakening

Gwen Gober, Littlewoods' director of group corporate communications, says: "We know that this group has not been performing well, and it is time to get it sorted out. The past ten years have been sleepy, and we failed to keep up with the consumer. There were no new developments or new innovations. …