Remote Shopping 2010

Introduction

Verdict Research: UK Remote Shopping 2010 is a new report providing in-depth analysis into the online, mail order and TV shopping market. With each channel analysed independently and retailer shares of both the total remote market and their respective channel, this report provides a thorough understanding of market dynamics, key issues, retailer performance and company analysis of remote shopping.

Scope

UK remote shopping market size 1999-2010e, split by the three largest channels, online, mail order and TV shopping.

Mail order market is split by agency, direct and door-to-door. Online is divided into pureplays, store-based and mail order retailers' online sales.

16 profiles covering the top retailers in each channel with sales performance 2004-2009, recent events, key performance indicators and outlooks.

Key issues for the remote market, with strategic, market and company data analysis for the three core channels.

Highlights

The economic downturn, maturing online market and the deterioration of traditional mail order channels, is seeing remote shopping growth slow. Though outperforming overall retail, set to decline by 0.4% in 2009, for the second consecutive year growth is expected to slow, falling from its peak of 20.1% in 2007 to 7.4% in 2009 and 7.2% in 2010.

With mail order specialists facing stronger competition and their customer base diminishing as spend migrates online, their share of the remote shopping market has fallen from 95.5% to 36.7% since 1998. At the same time, the agency market continues its freefall, with the channel now worth less than a quarter of its value in 1999.

Of the three components of remote retail, online makes by far the largest, contributing £20.8bn of the total £27.0bn. As online asserts its dominance, market dynamics have changed, with other channels such as mail order being used as marketing tools to compel, entice and engage with consumers, providing a vital link in multichannel integration.

Reasons to Purchase

Understand the changing market dynamics of remote shopping and how best to respond.

Indentify the threats and opportunities in the remote shopping market and the strategies needed for success.

Analyse the performance of key players and identify market growth potential over the next five years.

Contents

CHAPTER 1 EXECUTIVE SUMMARY 6

Key findings
Remote shopping grows by 7.4% to ?27.0bn in 2009
Online continues to be dominant
Traditional mail order struggles
Agency model continues sharp decline
Amazon and Tesco continue to soar
eBay continues to struggle
Evolution of catalogue
Future growth will come from maturing online and TV shopping
Integrated offer across multiple channels will be pivotal

CHAPTER 2 KEY ISSUES

Remote shopping dynamics change
Changing opportunities
Avenues of growth change
Exploit international opportunities
Capitalise on ability to enter market quickly
Adapt offer to different markets
Exploit opportunities in TV shopping
Customer base for TV shopping grows
Interactive TV fillip to growth
Link to real time websites
Online still provides opportunites for growth
Website is not enough in multichannel environment
Revitalised catalogue market provides growth opportunities
Changing composition
Online retailing raises stakes and changes everything
Death of agency
Economic climate has negatively affected the market
Transferring customers over is vital
Growth of Online
Taking sales from other channels
Future of Traditional Mail Order
Changing competition
Online alters competitive environment and rules of engagement
Impact of online
More intense competition
Rise of the empowered customer
Reduced need for traditional mail order
Revitalised catalogues
Multichannel retailing
Role of technology
Keep ahead of technology curve
Prepare for new channels - get ready for m-commerce
Changing consumer
More internet savvy, more empowered and more demanding
Cross-channel shopper
Cross-channel shoppers turn to internet from traditional mail order
Customer loyalty
Retailers must work harder to maintain a customer's loyalty
Social shopping
Gaining new customers
Plethora of choice makes it hard to stand out
Creating retail theatre is essential
More ways to attract new customers

CHAPTER 3 MARKET ANALYSIS

Definition of remote shopping
Remote shopping market
Remote shopping channels
Channel analysis
Online sales
Total online market
Overview
Online market components
Online sales of physical retailers
Pureplay sales online
Mail order specialists sales online
Mail order market
Total mail order market
Overview
Mail order market channels
Agency
Direct
TV shopping
Remote shopping market forecast

CHAPTER 4 COMPANY DATA ANALYSIS

Remote shopping market shares
Winners and losers in remote shopping market
Multichannel and pureplay retailers are big winners
While eBay has gained share, this has been solely due to exchange rates.
Amazon and Tesco make big gains
Argos makes good progress
Shop Direct loses out despite substantial proposition enhancements
Online fashion specialists make strong gains
Next Directory continues to lose share in tough competitive environment
FGH (Otto) sees share of remote shopping continue to fall
TV shopping specialists lose out, but potential remains
Findel struggles due to declining core market
N Brown not able to maintain share
Avon performs well online, but declining sales see share decline
Agency market shares
Winners and losers in agency mail order
Direct market shares
Winners and losers in direct mail order
Online market shares
Winners and losers in online market
TV shopping market shares
Key operating statistics
Advertising

CHAPTER 5 AMAZON UK

Innovation helps drive growth.
Recent key events
Group rolls out small range of own brand electronics
Javari.co.uk
Zappos
Prime service offers fast free delivery to loyal customers
Takes advantage of weak pound
Amazon innovates with Kindle
More third party sellers on website, new outlet store
Digital downloads available for MP3s
Mobile offer
Fulfilment by Amazon
Proposition
Financials
Positive performance with continued year-on-year growth
Market shares
Outlook - bright future for a forward looking company
Amazon to attract more third party sellers of new product
Own brand expansion to be expected
Grocery offer remains a possibility
Benefits from general migration of sales from high street
Fulfilment solutions will help the retailer gain more small businesses

CHAPTER 6 ARGOS

Under test by Tesco
Recent key events
Wow deals increase but prices rise
Truly multichannel
Develops check and reserve
Aims to improve customer service and feedback channels
Electricals top performing category
Growth continues, but pace slows down
Market shares
Outlook - aims to build on advantages
Multichannel approach & expansion enhance convenience credentials
Argos should use its extensive customer database to greater effect
Ties with Homebase will serve it well for the future.
Developing premium own brand offers more choice to customers
Argos must keep a watchful eye on Tesco and Asda
Grocers copy Argos
Important to keep an eye on prices

CHAPTER 7 ASDA WAL-MART

Remote shopping grows strongly yet challenges remain
Clothing offer grows strongly with George leading non-food
Price battle with Tesco
Asda Direct promotes the grocer's wide non-food offer
Sets up home shopping centre for food shopping
Encourages non-food online ratings
Proposition
Financials
Strong growth continues throughout business
Low prices and value credentials push growth through recession
Drive for ratings and transparency
Asda Direct is a necessary step forward in the race to catch Tesco
Asda regains clothing share with George

CHAPTER 8 ASOS

One stop internet shop for younger consumers
Recent key events
Exceptional choice
Big name brands
Strong own brand
No more worries over returns
Improves delivery
Better functionality and look
Introduces community aspect
Social networking
Expands internationally
International director
Proposition
Financials
Continues to grow at a more subdued pace
Year to March 2009
Current trading
Market shares
Outlook - must continue to evolve or risk being left behind
ASOS big success in downturn
Still massive scope to expand
Online shopper base still growing
International drives growth
Free returns - good for loyalty, bad for profits
Community aspect a good thing
Potential negative
Combination of factors could dampen growth
Competitive impact
Should continue to grow
Has to stay ahead of the pack

CHAPTER 9 AVON

Post-recession it will need to retain reps and trade customers up
Embraces opportunities of downturn
Continues to reap benefits of four point plan
PLS, SSI, RVP
Cost cuts outperform
Hello tomorrow
Celebrities used to front campaigns and drive awareness
Online presence
Innovation
Men's toiletries
Ethical credentials
Proposition
Financials
Sales drop
Market shares
Outlook - online balancing act
Representatives up and customers trade down in recession
However falling sales in a growing market a worry
Four point plan strengthens business
Tricky balancing act between online sales and rep recruitment
Men's range could be a strong growth driver
Needs post-recession strategy ...
... refocusing on premium lines

CHAPTER 10 EBAY UK

Continues shift away from auction site to new ventures
Recent key events
Sells 65.0% of Skype for $1.9bn
eBay and PayPal join forces
Struggles through recession
Outlet section promotes more retailer transactions
Fixed price becomes a larger part of its offer
Proposition
Financials
Market shares
Outlook - woos retailers to up marketplace margin
Less popular in downturn
Mobile channel may be a future focus
Shift away from its auction format

CHAPTER 11 FINDEL

Rights issue eases borrowings as Findel fights bad debts
Recent key events
Findel closes the Cotswold Company, Letterbox and Findel Direct
Aims to lower costs through efficiencies
Higher levels of bad debt
Raises capital to cheapen borrowings
Grows presence in home entertainment
Extends clothing mail order
Propositions
Financials - outlook positive for growth
Market shares
Outlook - needs to improve online and customer retention
Findel must keep bad debts under control
While restricting new customers is sensible, a balance has to be struck
Stripping out non-core offer is a sensible strategy
Rights issue pivotal to long term aims
Findel should improve customer retention rates
Online improvements would help

CHAPTER 12 FLYING BRANDS

Loses sales in challenging market
Gardening arm sees most success
Flowers and collectables suffer in recession
Must broaden appeal as active customer base shrinks
Flying Brands raised ?1.76m in share placing
Wishes to become more of an online player
Financials
Group sales in downwards spiral
Current tading
Market shares
Flying Brands underperforms rest of channel
Growing online presence is a sensible move
Must grow customer numbers
Strategic review needed to enhance proposition

CHAPTER 13 FREEMANS GRATTAN HOLDINGS (FGH)

Sound strategies implemented too slowly
Otto a global force with shrinking UK presence
Aims to modernise
Otto Group behind only eBay and Amazon in global e-retail sales
Propositions
Sales continue to shrink year-on-year
Market shares
Outlook - needs to renew website
FGH trails other mail order retailers in developing its online offer
More specialised catalogues will improve service
Exposure to agency will negatively affect FGH
Should look to create awareness for Oli and Kaleidoscope
If looking to open stores on the high street, Kaleidoscope offers the best potential

CHAPTER 14 N BROWN

Niche player outperforms
Recent key events
Move into Germany has been a positive step forward
Acquires High and Mighty
Sensible monitoring of credit policies
Move from print advertising into video media promotes new brands
Improvements to webpages
Propositions
Financials
Commendable performance under challenging conditions
Year to February 2009
Market shares
Outlook - customer rapport to earn future growth
Customer base helps retailer to thrive during downturn
Wins confidence by doing basics very well
Growth in difficult period bodes well for N Brown's brands
Childrenswear
The addition of High and Mighty will provide a boost
Germany move goes well
Entering the US market has the potenital to be very lucrative for N Brown.

CHAPTER 15 NEXT DIRECTORY

Chases younger demographic and international growth
Improves fashion credentials through acquisition and development
Incorporates brands in one website
Widescreen
Next is looking to drive sales through expanding internationally
Continues to grow outside clothing
Proposition
Financials
Directory continues to outpace physical stores
Year to January 2009
Market shares
German language site next international development
Not maximising online potential
Should enjoy a boost from Lipsy and Runway
Removing separate Brand Directory site makes sense
Improvements to online offer are essential as competiton heats up

CHAPTER 16 OCADO

Strong innovation and service
Recent key events
Plans new depot in White City, London and considers Bristol
Competes more aggressively on price
Appears closer to an Initial Public Offering
Attracts high profile investment
Positive EBITDA recorded
Ocado has constantly made improvements to its website.
Expands into non-food
Distribution
Financials
A history of positive year-on-year change continues
Market shares
Outlook - sales set to keep rising
Floating could move it on from start-up roots
Challenge is to appeal to a wider consumer base
Business model will flourish as convenience becomes more important
Innovation in product offer has allowed to stay ahead of competitors.
Sales set to grow further as the market expands
Potential for international growth

CHAPTER 17 QVC

Technological lead delivers growth
Recent key events
QVC goes interactive
Weathers recession
Loyal customers
Interactivity gives retailer benefits
Presence on social networks
Proposition
Financials
Steady but slowing growth
Market shares
Outlook - aims to build on true multichannel offer
QVC has led the way in developing online offer
Web streaming
Digital switchover to Freeview coming for almost all British homes

CHAPTER 18 SHOP DIRECT GROUP

Pushes growth online
Recent key events
Acquires Woolworths trade name
Littlewoods Direct rebranded as Very
Home Delivery Network is a forte
Shop Direct adapts to downturn
Virtual launch on Continent
Refreshes financial services
Propositions
Financials
Market shares
Outlook - admirable performance in a challenging environment
Restructures to pursue online route
Adds Woolworths and expands on Continent online
Shop Direct must work to retain loyalty
Separation of brands is necessary

CHAPTER 19 SIT-UP

Innovative TV shopping player has cross-channel options
Recent key events
Aurelius buys Sit-up from Virgin
Proposition
Financials
Market shares
Outlook - well differentiated offer needs online launch
Digital TV will increase coverage and potential market for Sit-up
Aurelius to help Sit-up grow
Unique offer will attract viewers
Has to be careful not to blur offers

CHAPTER 20 TESCO

Keeps proving itself an exceptional retailer
Recent key events
Launches clothing offer online
Significant steps made online
Tesco Direct goes from strength to strength
Double clubcard points
Proposition
Financials
Solid growth continues
Tesco.com
Market shares
Outlook - three big rivals in Asda, Argos and John Lewis
Tesco.com is the UK's top online grocery store
Needs more focus for online clothing store to compete in tough market
Tesco faces fight to maintain dominance against rivals
Competitive edge

CHAPTER 21 OTHER REMOTE PLAYERS

Betterware
Boden
M and M Direct
Net-a-Porter
Redcats

CHAPTER 22 GLOSSARY

Terminology
Abbreviations

LIST OF TABLES

Table 1: Remote shopping market definition 2010
Table 2: Remote shopping - sales by channel 1999-2009e
Table 3: Online market 2000-2010e
Table 4: Mail order market channels 1999-2010e
Table 5: Direct market 1999-2010e
Table 6: Remote shopping - sales by channel 2008-2013e
Table 7: Remote shopping market share trends 2004-2009e
Table 8: Agency mail order market share trends 2004-2009e
Table 9: Direct mail order market share trends 2004-2009e
Table 10: Door-to-door market share trends 2004-2009e
Table 11: Online market share trends 2004-2009e
Table 12: TV shopping market share trends 2004-2009e
Table 13: Remote shopping retailers key operating statistics 2008/09
Table 14: Remote shopping retailers advertising spend by medium 2008
Table 15: Amazon company overview 2009
Table 16: Amazon retail proposition 2009
Table 17: Amazon trading record 2004-2009e
Table 18: Argos company overview 2009
Table 19: Argos retail proposition 2009
Table 20: Argos trading record 2004-2009
Table 22: Asda remote shopping proposition 2009
Table 21: Asda Wal-Mart company overview 2009
Table 23: Asda trading record 1999-2009e
Table 24: ASOS company overview 2009
Table 25: ASOS retail proposition 2009
Table 26: ASOS group trading record 2004-2009
Table 27: ASOS UK & international trading breakdown 2004-2009
Table 28: Avon company overview 2009
Table 29: Avon retail proposition 2009
Table 30: Avon UK trading record 2004-2009e
Table 31: eBay UK company overview 2009
Table 32: eBay UK retail proposition 2009
Table 33: eBay trading record 2004-2009e
Table 34: Findel company overview 2009
Table 35: Findel credit business - catalogue retail proposition 2009
Table 36: Findel cash-with-order proposition 2009
Table 37: Findel group trading record 1999-2009
Table 38: Findel sales by division 2008 and 2009
Table 39: Findel Home Shopping division trading record 1999-2009e
Table 40: Flying Brands company overview 2009
Table 41: Flying brands trading record 2004-2009e
Table 42: FGH company overview 2009
Table 43: FGH agency catalogues retail proposition 2009
Table 44: FGH direct catalogues retail proposition 2009
Table 45: Grattan mail order trading record 2004-2009
Table 46: Freemans mail order trading record 2004-2009
Table 47: N Brown company overview 2009
Table 48: N Brown younger target titles - retail proposition 2009
Table 49: N Brown midlife catalogue titles - retail proposition 2009
Table 50: N Brown elderly target titles - retail proposition 2009
Table 51: N Brown other websites/titles - retail proposition 2009
Table 52: N Brown home shopping sales by catalogue target 2004-2009
Table 53: N Brown mail order trading record 1999-2009e
Table 54: N Brown sales mix 2004-2009
Table 55: Next Directory company overview 2009
Table 56: Next Directory retail proposition 2009
Table 57: Next Directory trading record 2000-2010e
Table 58: Ocado company overview 2009
Table 59: Ocado trading record 2004-2009e
Table 60: QVC company overview 2009
Table 61: QVC retail proposition 2009
Table 62: QVC trading record 2004-2009e
Table 63: Shop Direct Group company overview 2009
Table 64: Shop Direct Group agency retail proposition 2009
Table 65: Shop Direct Group direct retail proposition 2009
Table 66: Shop Direct Group home shopping trading record 2004-2009
Table 67: Sit-up company overview 2009
Table 68: Sit-up retail proposition 2009
Table 69: Sit-up trading record 2004-2009e
Table 70: Tesco company overview 2009
Table 71: Tesco.com retail proposition 2009
Table 72: Tesco UK trading record 2004-2009
Table 73: Tesco.com trading record 2004-2009e
Table 74: Betterware key operating statistics 2004-2009e
Table 75: Boden key operating statistics 2004-2009e
Table 76: M and M Direct key operating statistics 2004-2010e
Table 77: Net-a-Porter key operating statistics 2004-2009
Table 78: Redcats key operating statistics 2004-2009e

LIST OF FIGURES

Figure 1: How market dynamics have changed 2010
Figure 2: How avenues of growth have changed 2010
Figure 3: How online retailing raises stakes & changes everything 2010
Figure 4: How online alters competition & rules of engagement 2010
Figure 5: Internet savvy, empowered and demanding consumer 2010
Figure 6: Main channels share of remote shopping 1999-2010e
Figure 7: Breakdown of remote shopping market 2008 vs. 2010e
Figure 8: Remote shopping channels 2008 vs. 2009e
Figure 9: Main channels share of remote shopping 2004-2009e
Figure 10: Remote shopping % change in sales by segment 2004-2010e
Figure 11: Total online sales & growth rates 1999-2010e
Figure 12: Breakdown of online market 2008 vs. 2010e
Figure 13: Online sales as a percentage of total retail 1999-2013e
Figure 14: Online sales as % of total remote shopping sales 2000-2010e
Figure 15: Total physical retailers online sales & growth rates 2000-2010e
Figure 16: Physical retailers online sales vs. total online sales 2004-2010e
Figure 17: Physical retailers online growth vs. total online growth 2004-10e
Figure 18: Total pureplay retailers online sales & growth rates 2000-2010e
Figure 19: Pureplay retailers online sales vs. total online sales 2004-2010e
Figure 20: Online pureplay specialists vs. total online growth 2004-2010e
Figure 21: Total mail order retailers online sales & growth rates 2000-2010e
Figure 22: Mail order retailers online sales vs. total online sales 2004-2010e
Figure 23: Mail order retailers online vs. total online growth 2004-2010e
Figure 24: Total mail order market sales and growth rates 1999-2010e
Figure 25: Breakdown of mail order market 2008 vs. 2010e
Figure 26: Mail order change % vs. total retail sales growth 1999-2010e
Figure 27: Mail order share of total retail and non-food retail 1999-2010e
Figure 28: Mail order online & mail order non-online change % 1999-2010e
Figure 29: Direct, door-to-door and agency shares of market 2004-2010e
Figure 30: Agency sales and change % 1999-2010e
Figure 31: Change % via agency channels vs. total mail order 1999-2010e
Figure 32: Direct mail order sales & change % 1999-2010e
Figure 33: Change % via total direct channels vs. total remote 1999-2010e
Figure 34: Change % via total direct channels vs. total mail order 1999-2010e
Figure 35: Change % via total direct vs. door-to-door element 1999-2010e
Figure 36: Change % via door-to-door vs. total mail order growth 1999-2010e
Figure 37: TV shopping sales & growth rate 1999-2010e
Figure 38: TV shopping vs. total remote sales growth 1999-2010e
Figure 39: Remote shopping channels 2008 vs. 2013e
Figure 40: Winners & losers in remote shopping market 2009e on 2008
Figure 41: Winners & losers in agency mail order market 2009e on 2008
Figure 42: Winners and losers in direct mail order market share 2009e on 2008
Figure 43: Winners and losers in online market share 2009e on 2008
Figure 44: Amazon remote shopping and online market shares 2004-2009e
Figure 45: Argos remote shopping and online market shares 2004-2009e
Figure 46: ASOS remote shopping and online market shares 2004-2009e
Figure 47: Avon remote shopping market share 2004-2009e
Figure 48: Avon door-to-door market share 2004-2009e
Figure 49: eBay UK remote shopping and online market shares 2004-2009e
Figure 50: Findel remote shopping & direct mail order shares 2004-2009e
Figure 51: Findel direct mail order and online shares 2004-2009e
Figure 52: Flying brands global divisional sales breakdown 2008 and 2009
Figure 53: Flying brands remote shopping and online shares 2004-2009e
Figure 54: FGH remote shopping market shares by brand 2004-2009e
Figure 55: FGH direct market shares by brand 2004-2009e
Figure 56: FGH agency market shares by brand 2004-2009e
Figure 57: N Brown remote shopping market shares 2004-2009e
Figure 58: Next Directory sales growth vs. store growth to Jan 2004-2009
Figure 59: Next Directory active customers & average spend to Jan 2004-2009
Figure 60: Next Directory remote, online and direct market shares 2004-09e
Figure 61: Ocado remote shopping and online market shares 2004-2009e
Figure 62: QVC remote shopping market shares 2004-2009e
Figure 63: QVC TV shopping market shares 2004-2009e
Figure 64: Shop Direct Group remote shopping market shares 2004-2009e
Figure 65: Shop Direct Group agency market shares 2004-2009e
Figure 66: Shop Direct Group direct market shares 2004-2009e
Figure 67: Shop Direct Group online market shares 2004-2009e
Figure 68: Sit-up TV shopping market shares 2004-2009e
Figure 69: Sit-up remote shopping market shares 2004-2009e
Figure 70: Tesco total remote shopping and online shares 2004-2009e Skip to top