So What’s happened to Next?
01-05-2006
Back in the early 1980s Next caused a major retail revolution. Co-ordination was born and for the first time a retailer used wall space to mix and match carefully designed soft dressing and tailoring items to make “outfits”. The brains behind the concept was George Davies of current Par Una fame and also the Pipa Dee party plan selling organisation that, at its peak, was a multi- million pound listed public company.
Next has long been the darling of the stock exchange and under the helm of David Jones, Chairman, the retailer has been from a low of £25 million turnover to a high of more than £4 billion. However, all is currently not well in the Next head office. Like for like sales have decreased by 9% at a time when M&S are recording an increase in sales year on year. Next has sustained five years of excellent growth but why has the down turn occurred now?
Some experts believe that the product mix is now too dated at Next and has become overpriced too. With increasing lower end competition from the likes of Primark and Matalan Next now need to rescue their current perceived standing in the market place by new product innovation. Next also face increasing pressure from other retailers such as River Island where 19.5% of Next customers also shop at River Island, the privately owned retailer. Last year River Island had one of their all time best years reporting a 50% increase in profits to £120m.
River Island is known for encouraging their buyers to have greater automony in buying and adopting a flexible buying approach with their suppliers. Open to buy budgets are “significant” and this allows the buyers to buy closer to the season plus place repeats on best selling lines. This compares starkly to the regimented buying systems of Next which are relatively formal and have a mix of different management levels “interfering” with the buying process. The same thing occurred at M&S too and greatly contributed to their demise before Stuart Rose entered.
Major buying reshuffles are now being forecasted and the drafting in of new blood in to both buying and the design departments It’s going to be a bumpy ride for Next and with the stepping down of David Jones in favour of the John Barton the new Chairman its time hold on to your hats and keep your eyes peeled for the new relaunched look at Next.
Jennifer Holloway
Industry Advisor
