Very expects record festive period as more shoppers go online

Very Group, the UK online retailer owned by the secretive billionaire Barclay twins, is expecting record Black Friday and Christmas sales this year as customers shun high streets in favour of ecommerce.

Henry Birch, chief executive of the group, said he “got the sense that people will want to celebrate Christmas as usual” despite the challenges of the Covid-19 pandemic, which at present include restrictions on households mixing in many parts of the UK.

Sales at Very, the UK’s second-largest online only retailer after Amazon, are up by “double digit” percentages since July. “We are anticipating that both Black Friday and Christmas will set records,” he said on Thursday as the company announced a return to profit.

He added that Black Friday had “historically proved an important time of the year for us both in terms of trading and customer acquisition”.

His optimism mirrors that of Amazon, which said last week that it intended to hire 7,000 permanent workers in the UK by the end of the year in addition to 20,000 seasonal roles.

Many experts say that retailers will try to stretch Christmas spending over more weeks to reduce both crowding in stores and pressure on distribution centres, where capacity has been reduced because of social distancing.

Mr Birch said Very was “confident” it could scale up a new and largely automated facility in the East Midlands that it opened at the start of the pandemic and which “has social distancing largely built in”.

The so-called golden quarter to Christmas is likely to be more difficult for traditional retailers reliant on in-store revenues.

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“The unfortunate reality is that many consumers will shun the high street in favour of online to avoid crowded shopping destinations and the frustrations that will come about from restrictive measures such as limiting shopper numbers,” said Richard Lim, chief executive of Retail Economics.

He added that survey evidence suggested three-quarters of shoppers would rely on personal finances to fund festive spending, rather than taking on debt.

Mr Birch said there had been some evidence that Very customers — about four-fifths of whose purchases are supported by credit — were indeed paying down debt rather than taking on more borrowing.

“Our payment rate has increased year on year, which is probably a function of people having more disposable household income,” he said, adding that defaults so far “have not been out of line with historical trends” despite the worsening economic outlook.

Bad debts are 8.2 per cent of the total, up from 7 per cent last year and Very, whose customer base is skewed towards lower income groups, made a £12m provision against a higher level of expected future credit losses. A 9 per cent drop in financial services income contributed to reduced gross margins.

Very reported revenue of £2.05bn in the year to June 30, up 2.9 per cent from last year. An absence of further provisions for mis-sold payment protection insurance made for a pre-tax profit of £48m — its first since 2017 — against a £185m loss last year.

A £15m increase in the total amount provided for PPI redress reflected coronavirus-related delays in settling claims rather than additional claims, the company said.

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