Now that Bradford mail order giant Grattan has announced 250 redundancies what is the future of the home shopping industry? Business Editor Paul Parker reports

GRATTAN IS by no means the only company suffering from a fall in sales and having to make staff redundant.

Competitors Redcats UK - formerly Empire - has been losing staff since last September after discovering it needed to cut costs.

Andy Hill, managing director of Redcats, says 110 posts will have to go but the firm will not need to make as many compulsory redundancies as they originally thought.

In fact, the latest figures show that more than 80 per cent of the 36 people who have left the company were volunteers.

He said: "We are in a similar position to Grattan. We were looking at 110 posts out of a staff of 2,600 and they are looking at about 250 out of a workforce of 5,000. But we have found that our ability to diversify into our French catalogue brands has helped us redeploy people."

He said it was expected that Great Universal Stores - the biggest of the large five mail order firms - would be announcing job losses soon.

Grattan director Norman Finnigan says he expects Grattan's end figure to be less than 250 with many of the job losses coming through voluntary redundancy and a recruitment freeze.

"The firm will be starting a 90-day consultation from Monday with unions and staff members and after that we will know how many posts will have to go," he added.

The cost-cutting is being blamed on a fall in orders throughout the retail sector which includes prestigious High Street stores such as Marks & Spencer and the mail order industry.

The mail order business has been in decline for a number of years and what it knows it has to do is form strategic partnerships with retailers to diversify.

Michael Godliman, of retail market analysts Verdict Research, predicted Grattan would have to shed jobs after its parent company Otto Versand bought London mail order firm Freeman in May.

He said: "Home shopping is far from dead but the catalogue sector has been in decline for years. There are five leading agency catalogue firms producing very similar catalogues and what they all know is that they need to move more into home shopping using the Internet and through direct catalogues like the successful ones from Marks & Spencer, Next and Tesco."

Grattan has already started to do this with a partnership with Tesco which has resulted in the Tesco Direct business which is unaffected by the problems faced by Grattan.

In fact, at the end of the 90-day notice period, it may be that Grattan staff facing redundancy are found posts in the growing Tesco Direct business.

Michael Goldiman said: "Firms like Grattan have expertise in producing catalogues and delivering goods to customers. If they linked with retailers and used their knowledge of home shopping through the Internet and interactive television, they would soon see their sales lift."

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