Littlewoods to revamp image with pools sell-off windfall

by Camilla Palmer, Brand Republic 29-Jun-00

Littlewoods has confirmed it will spend some of the £161m cash pile from the sale of its pools business to rebrand its stores.

LONDON (Brand Republic) - Littlewoods has confirmed it will spend some of the £161m cash pile from the sale of its pools business to rebrand its stores.

The move follows a £26m revamp of 24 Littlewoods stores last year, which resulted in a sales increase of 25% in those outlets. Barry Gibson, Littlewoods chief executive, said he would spend a further £23m this year on revamping more stores in city centres.

The revamp will see the axing of the Index catalogue store brand just five years after it was launched. Gibson said the Index brand, which has already been partially phased out, did not have the same wide appeal as the Littlewoods brand.

He admitted Littlewoods had “taken its eye off the ball” in recent years, allowing other value chains such as Peacocks and Primark to steal market share, but added that multichannel selling would revive the company.

Home delivery, which accounts for 60% of sales, will also get a much-needed cash injection.

Online expansion will see Littlewoods launch its second website this month, bolstering its current 7,000-product electrical goods site, and Gibson says its interactive TV site is “doing well”. However, this is against a background of plunging profits in its other catalogue home delivery businesses – they fell nearly 50% this year from £7.7m to £3.2m.

Analysts are in agreement that the chain’s marketing strategy needs to concentrate on winning back shoppers who may have defected to rivals.

Investec’s David Stoddard said a total rebrand would be costly.

“Creating a brand, and then educating consumers, will take ages and cost a huge amount,” he said.

He added that it badly needed to address consumers’ perception of what Littlewoods could offer: “They don’t know what the brand means any more, and there are so many other options – TJ Hughes, Peacocks, etc.”

Promotional activity would probably increase, although Stoddard ruled out using loyalty cards. “They don’t make customers loyal and would cost an arm and a leg to run,” he said.

He added it was likely that marketing its e-commerce activities would probably remain a high priority.

“However, I can’t understand why it’s calling the new internet site Index Extra if the Index name is about to go,” he said.