Next reported an uncharacteristic drop in sales in its first quarter and Quarter 2 could be even more disappointing.
What has changed in the last 3 months? Not much. The weather in June was dreadful, the country voted to leave the EU and we are talking ourselves into weakened consumer confidence.
So is there now a case for Next to look inward to its strategy and try a different approach?
It has been held in high regard as a leader in fashion retailing in the UK and there should be no reason why that opinion should change. Yet, there does feel to be a degree of complacency about Next.
If we were being critical we could suggest that Next are in danger of heading in the same direction as Marks and Spencer. The fashion starts to become a little samey, the website a little uninspiring, and the prices a little short of good value for money when value clothing is forecast to outstrip the rest of the clothing market.
But being generous, the Marks and Spencer customer did head in the direction of Next so its offer was more compelling. Next would do well to now look at that offer and consider where it is positioned in the market and remind customers what it has to offer rather than assuming they are loyal.
There isn’t very much retailers can do about the weather or the Brexit effect so if consumer confidence continues to dip, how can Next counter the effect?
We would suggest that Next looks at the product:price dimensions of its offer and consider how those levers can be pulled to protect sales and hold margin. Considering the forecast growth in value clothing Next might consider a value range for core fashion essentials. Bigger buys and good quality fabrics can deliver the value for money that customers will be looking for.
Delivery options are a battle ground in grocery and we can see this heating up for fashion too. Next already offer a competitive same day delivery service and click and collect giving Next a point of leverage that few can replicate.
Finally the stores themselves are a competitive advantage if the in store environment can be optimised. Next have some big stores with space that could be used for fashion shows, product launches or collaborations with some of the designer labels they already work with.
Next is not about to crumble, it is a strong retailer that has resisted difficult trading conditions well in the past. There is no reason to suggest that Next are not strong enough to trade through whatever the market has in store for the coming months and years with a little introspection and some creative thought.