Interview: Very boss Henry Birch – ‘If it’s not a record peak, I’m resigning’

One of the exceptions proving the rule in an unprecedented year is The Very Group, led by relative retail newcomer Henry Birch.

A Greenwich-born son of a diplomat, Birch has had a well-travelled life – his father’s job took them to Switzerland, Afghanistan, Hungary and the US – and career, spanning politics, online gaming and gambling.  

But when he took the helm of The Very Group – then known as Shop Direct – in September of 2018, it marked his first retail role, barring a Saturday job in Gap when he was a teenager.

Birch was named chief executive at a testing time for the online retailer. During his first 18 months, Very fell into the red following a hefty PPI bill, saw an exodus of its executive team and contended with longstanding owners the Barclay brothers mulling a sale of the business. 

Birch says this period, while challenging, does not rank among the most difficult moments of his career. He reserves that dubious accolade for an incident during his tenure as chief executive of William Hill online involving the company’s Israeli office, 300 staff staging “total mutiny” and a three-month stint in a Tel Aviv hotel to get the operation back up and running.

“We did feel a slight element of treading water… but today there is a real sense of renewed optimism with the business”

Henry Birch, The Very Group

It is perhaps no surprise that Birch has taken the highs and lows of his first two years in charge of Very in his stride. 

“Frankly it’s what makes life interesting – from a personal perspective, I’m not looking to put my feet up and have an easy time,” he says.

“When you look back on something in retrospect you can say: ‘Wow, that was intense or difficult.’ But it didn’t necessarily feel like it at the time. As a management team, we did feel a slight element of treading water, which was induced by the PPI overhang being much greater than we thought and resulted in us needing to divert cash that otherwise would have been invested in the business. 

“But today there is a real sense of renewed optimism with the business, which is borne of two things. One is that we’ve gone back into profit – the shackles of PPI have gone and more importantly, we are trading really well. Secondly, the digital transformation that Covid-19 has brought on, whether it’s been sped up by three years or five years, puts us in exactly the right place and we are firing on all cylinders.” 

‘How did we do that?’

As Birch alludes to, The Very Group has emerged as one of lockdown’s clear retail winners. Last month, the business returned to profit as its full-year sales surpassed £2bn for the first time, driven by a 10.6% boost in customer numbers to 4.5 million.

Very’s growth during the last nine months has been aided in no small part by the etailer’s new 850,000 sq ft automated fulfilment centre in the East Midlands, called Skygate, where Retail Week meets Birch to discuss the group’s recovery and plans to build on its purple patch of growth.

“It’s a bit like meeting someone for an interview in prison, isn’t it?” laughs Birch, gesturing to the sheets of perspex that divide each seat at the boardroom table in the era of social distancing. 

Covid-19 safety measures aside, this newly built warehouse is a state-of-the-art facility. The warehouse boasts a gym, basketball court, football pitch, multi-faith prayer room and canteen serving hot food 24 hours a day for its 500 staff – a number that operations director Phil Hackney estimates will rise to 850 during Christmas trading, though the etailer plans to lean on automation for the bulk of its order fulfilment during the peak period.

The new warehouse would be the envy of many retailers. It has 500 robots working inside a 180,000 sq ft grid, which will process 70% of the group’s orders. The technology enables the business to process an order – including returns for redeployment – in just 30 minutes and to fulfil next-day delivery on orders made as late as 10pm. There are plans to extend the cut-off time to midnight in the coming months.

“We ripped up our core plans, went for the stratosphere and it still worked without the teething problems”

Henry Birch, The Very Group

Getting this warehouse up and running has been a white-knuckle ride for Very. A soft launch was pushed forward to full operation on March 23 – the day Boris Johnson first told everyone in the UK to stay home to save lives. 

“We envisaged we’d open in March, ramp up here slowly and in the North West slowly,” Birch explains.

“We made the call to open just as lockdown was happening, the logic being that God knows what lockdown will entail but we have done sufficient planning and have an excellent team in place, which means we can cope with whatever is being thrown at us.

“All of those things were true, but what we probably underestimated was the speed and volume that this place ramped up. When you chuck in the logistical wrinkles of social distancing, hyper-cleaning and the fact that we are the first facility that our technical partners Knapp have launched with none of their engineers on site, we had a load of challenges that weren’t in the plan when we were initially planning the launch. 

“When you look at it in retrospect you do think: ‘Bloody hell, how did we do that?’ That is what is amazing about this place, not just size and scale, but what has been achieved in nine months under these circumstances. Most big projects like this go to plan in terms of volumes but screw up or have teething problems. We ripped up our core plans, went for the stratosphere and it still worked without those teething problems.”

Happy days

With the current climate driving shoppers online, operational prowess at Skygate already proven and the ability to ramp up capacity at one of Very’s three former warehouses in Shaw, Greater Manchester if demand requires it, Birch is adamant the etailer is set for its best Christmas ever.

“I would stake my job on it – if it’s not a record peak, I’m resigning,” he laughs.

“Across the board, we’re expecting a really good performance over Christmas. In terms of how long that goes on, all I can say is we continue to be surprised by the ongoing strength of demand we are seeing.”

Birch says Very’s stress-testing of a 25% sales slide at the start of the pandemic, before delivering a 28% uplift, has made him wary of predicting just how big Christmas could be for the business.

“We have underestimated every number so far, so I am a little bit loathe to make predictions, but we have real momentum as a business,” he says.

One of the elements driving that momentum is a new type of shopper coming to The Very Group in their droves during the pandemic.

“The last 12 months have had so many twists and turns, so we will be looking internally into where we are headed, and some of that has changed based on Covid,” Birch explains.

“Had you spoken to us a year ago, we would very much be talking about a focus on our core, highly engaged customers who shop across multiple categories and use our credit offer. That focus is still there but we have loads of new people shopping with us and not using our credit offer, using us as a pure retailer. Frankly, happy days.

“We welcome those customers. We are making money and growing from those customers as well, so making sure we are continuing to appeal to them is a priority alongside our core customer base.”

Brand appeal

This combination of new customers and Very’s established model as an online retailer with a built-in credit offer has also bolstered the etailer’s appeal to brands. The Very Group has signed up more than 100 new labels across fashion and beauty during the pandemic including Topshop, Mint Velvet, Elemis and Ren. Birch believes such additions – and deepening relationships with major brands such as Nike, Adidas, Samsung and Apple – will stand the etailer in good stead for long-term growth.

“From our perspective, we want to broaden the range of what we sell with Nike. From Nike’s perspective, they want to work with fewer but the right partners – and our model means they can trust that their brand will be protected in a way they can’t on a marketplace,” he says.

It’s not hard to perceive this as a veiled dig at Amazon, which Nike pulled its brand from in 2019 as part of its ongoing crusade to work with fewer, better retail partners.

“What I think they and other powerhouse brands like about us is we give them access to a group of customers they wouldn’t reach through other retailers, and that comes down to our integrated credit piece,” says Birch.

Very allows shoppers to defer paying with credit on any purchase, but its offer has different prongs including splitting payment into thirds over a three-month period with no interest added or interest-free credit on a purchase with payment deferred for three, six or 12 months as chosen by the customer.

“We’ve kept the same business model and core customer – we sell everything but spread the cost of what you buy. That applied in the late 1920s and it applies today”

Henry Birch, The Very Group

Birch says its data on customers using these payment options alongside other strands puts it ahead of rivals for many brands.

“We have a huge amount of data on our customers, whether that is transactional, financial or behavioural data, so there is potential to offer a much more personalised shopping experience to our customers and a more proactive one for our brands, which we work in tandem with to drive their and our growth,” he says.

Birch believes The Very Group’s model means it will punch above its weight in years to come – be it by luring brands that are wearied by the hands-off marketplace model of Amazon, or consumers who want to shop online across a broad church of categories.

The latter is what attracted Birch to The Very Group before he took the top job two years ago. 

“I found, and find, the company very compelling for a number of reasons,” he recalls. “Partly the legacy and history and our constant reinvention throughout. If you look at where we’ve come from through doorstep, catalogue, physical, telephone and now a digital model, we’ve kept the same business model and core customer – we sell everything but spread the cost of what you buy. That applied in the late 1920s and it applies today. 

“I like the longevity and legacy alongside the continual transformation our business has demonstrated. The model we have today, in terms of retail with integrated credit, is also one people are now copying. That model is really chiming with the times, but if you look at the here and now it chimes even more. We give you the option to buy anything you’d want outside of food and the flexibility to pay for it how and when you want in an uncertain world.”

Despite that uncertain landscape, Birch is confident the shift to ecommerce will play to The Very Group’s strengths – and could help transform the Liverpool-based etailer into the next online goliath.