Profits Soar at Ideal Shopping Direct For the Second Year despite Challenging Supply Chain and Trading Conditions
By Emily Peagram 15 Jun 2021
Ideal Shopping Direct (ISD), the leading UK multi-channel home shopping retailer and owner of the Create and Craft and Ideal World TV channels, has seen profits soar in the last 12 months despite challenging supply chain and trading conditions.
The company achieved record sales in 2020 of £150.6 million, an increase of 16.1% year on year, with pre-tax profits of £8.0 million, an improvement of £2.2 million on the previous year. This represents an ongoing upward trajectory in an uncertain landscape.
In addition to this, the company – which sells into over 31m homes in the UK via shopping channels on Sky, Freeview, Freesat, Virgin and late-night ITV plus 35m homes in America and on its own websites – has also reactivated nearly 22,000 previous customers and acquired more than 36,000 new customers during the past year alone.
Ideal Shopping Direct and the management team, CEO Jamie Martin and COO Martin Purcell attribute this upward growth to agility throughout the pandemic, flexible supply chain agreements in the face of Brexit and a reduced dependence on private-label brands.
Agility in the pandemic
Whilst the pandemic offered up unique challenges, the company’s business model provided both agility and flexibility. “In the early days, as well as being open and available for consumers, we were also able to move quickly by bringing forward a lot of stock, says Jamie. “Early on, we had fitness equipment a lot of online retailers didn’t have, which attracted many new customers who were desperately searching for ways to work out at home.”
Specifically, with average monthly searches for fitness equipment increasing by 166%, the business was able to move quickly to meet this demand, experiencing a 40% increase in fitness sales alone – representing Ideal World’s biggest ever fitness performance. In addition to this, the channel saw a 96% increase in lockdown bike sales from April 2020 to March 2021 – its strongest performance to date.
The start of the pandemic also saw an increase in sewing machines sales for the Create & Craft side of the business. Jamie says: “Many sewing enthusiasts started helping out making face coverings and gowns to help those on the front line as they struggled to get PPE. Many people decided to invest in or upgrade to a new machine. Others just wanted to start sewing again or as a new hobby.” In 2020, the business saw 45% year on year growth for sales of sewing machines, with stock selling out as quickly as it was delivered. In fact, the company has already achieved its 2021 forecast, with sewing machine orders having tripled in volume.
The business also capitalised on the consumer demand for outdoor and leisure products during the pandemic heatwave of 2020 – demand for rattan furniture for example increased by 600%. By increasing the range of these products online, Ideal World was able to reach their “buy anytime customers” – those that haven’t seen a TV presentation but are looking online to secure their purchase through Ideal World’s eCommerce offering.
Robust infrastructure and flexible supply chains
The business’ infrastructure also provided the foundations for stable growth amidst the uncertainty. “As many big known brands closed stores, this created a unique opportunity for us as many brands came to us for distribution”, says Jamie. “Our branded product count has now gone up considerably. And these are brands that maybe wouldn’t have considered it pre-Covid, including Clarks Shoes and Regatta.”
With much of the business’ supply chain being UK based, ISD has also been able to successfully navigate the ‘container crisis’ brought on by Brexit, continuing to dispatch product with supply chains remaining intact. This UK-based infrastructure has enabled the business to increase their product intake in line with consumer demand. For the stock that did need to be sourced from abroad, the company invested £5 million to secure it in one go. This meant increasing the number of containers at sea from around 80 or 90 to 200, enabling the stock to get through regularly, despite delays of up to 70 days in some cases.
Reduced dependence on private label brands
During the last 12 months, Ideal Shopping Direct has also reduced the dependence on private-label brands, particularly at Create and Craft, with more than 30 manufacturers of craft supplies added to the product assortment. In addition to increasing the appeal and the variety of the product offering for the brand’s loyal customers, the shift to directly dispatched products has reduced inventories by over 40%.
It is a shift in strategy that is directly benefiting growth right across the business. Jamie comments, “We doubled the sales of our own brand yarn business, Deramores, in 2020. This was through an increased margin through selling more of our own brand products, as well as carefully sourcing other products to achieve better margins. In an increasingly competitive market, we were able to gain back market share.”
It is clear the business’ growth strategy has been multi-faceted. “It would be too easy to point to changing consumer habits, increased time at home and lockdowns as the secret to our success and simply say we were in the right place at the right time”, says Jamie.
“Before the pandemic we were already well on the way with our digital transformation, which laid the foundations to navigate these choppy waters. And while we may have seen organic growth on our Ideal World TV shopping channel of around 30 to 40% in some weeks during the pandemic, the reality is that our business is now more effective and cost-efficient. We’ve done this by identifying and making the right strategic changes, whether trimming cost efficiency, margin efficiency or enhancing overall consumer appeal. It’s these small, but essential, tweaks that all add up at the same time to make the business more profitable.”
“By continuing to build on our solid foundations, innovate and tweak our business in new ways our evolution and growth is continuing apace.”