Retailer starts IT transformation

Littlewoods Integrates Systems with Shop Direct - By Miya Knightst

Computing, 23 June 2005

Retailer Littlewoods’ primary motivation behind its acquisition of Shop Direct (Computing, 23 June) is to become the largest home shopping firm in the UK.
But fulfilment of this aim will depend largely on the successful integration of the companies’ IT infrastructures and valuable customer data.

‘Technology drives our business,’ Littlewoods chairman David Simons told Computing. ‘All our communications are technology-driven, and we know more about out customers’ buying habits than anyone else. ‘In our Manchester warehouse, for example, an order is being picked within 30 minutes of it coming through.’

Littlewoods and Shop Direct are embarking on what Simons describes as one of the largest IT transformation projects ever undertaken in the UK retail sector. The deal will ring the technology infrastructure and processes supporting 20 home shopping and mail order catalogue brand, worth £2.1bn, under one banner. ‘Provided we get the infrastructure right, we have the opportunity to dominate the UK home shopping market,’ says Simons.

He says Littlewoods saw an opportunity to corner this market by its integration with Shop Direct. ‘Our core strength is essentially home shopping,’ he says.
‘With this merger, we’re already number one in this market. But with the integration programme there is a chance to create a business that will win market share from traditional retailers as well.’

Littlewoods has the largest direct home shopping business in the UK, while Shop Direct owns the largest agency mail order catalogue business, with brands including Kays, Universal and Choice.

An audit if the infrastructure of each company revealed that both were running heavily-customised, legacy IT systems. Simons says the integration strategy will establish a common IT platform based on the Littlewoods infrastructure, but incorporating the best functions of both. ‘We’re effectively taking the Littlewoods IT infrastructure as the standard business operating environment,’ he says. ‘But it will not be pure vanilla. We are trying to enrich it with the best from both legacy environments.’

The evidence of the strategy is apparent with the extension of the track-and-trace facility for Littlewoods’ Web site customers to the Shop Direct branded web sites and order fulfilment systems.

‘We are already having thoughts on how to get the track-and-trace data to where we can have it in real time. At the moment it is updated overnight,’ says Simons.

Specialist integration PIPC is managing the work, and has completed the integration of the two retailers’ financial systems. Integration of human resources and supply chain-related IT systems will follow.

The transformation work will create a new head office equipped with up-to-date PC desktops, supported by a newly consolidated datacentre. It will also establish a 600-seat call centre linked into the combined operational systems of the stores.
‘By autumn, we hope to have a common way of dealing with suppliers,’ says Simons. ‘But the big excitement will be in the middle of next year, when we bring the two big customer management systems together.

This will involve the transfer of 23 million customer records from Shop Direct systems, along with 6TB of commercial and marketing information systems data. Littlewoods will continue to run dual systems until the transformation programme is completed towards the end of next year.

Simons says Littlewoods’ 120 high-street retail stores will also enjoy benefits from the combined IT infrastructure. ‘This integration is so important,’ he says. ‘the benefits that can flow from it are vast.