As Next release their trading statement for H1, WGSN Analytics Division takes a look at the strategies they are adopting in order to be a more reactive retailer.
Flex your phasing
The weather has long taken the blame for mark-downs and out-of-stocks within fashion, with the volatility of the weather becoming increasingly unpredictable and extreme in cases, it is now more important than ever for retailers to ensure their phasing is flexible, agile and responsive in order to achieve full price sell through. It is crucial that retailers approach phasing beyond planning, in order to effectively capitalise on opportunities the weather brings and safeguard against weather inhibited sales. With an exceptionally long heatwave gracing consumers this summer in the UK, the omni-channel retailer announced a significant uplift in sales, exceeding forecast. The over performance of sales, the retailer claimed were those that had been pulled forward from August.
Opportune your overstock
Across the board, retailers are struggling with overstock as the rise of e-commerce creates a necessity for multi-channel retailers to strategise their online/offline stock levels and phasing. Whilst other brands have received damaging press coverage, revealing that they have turned to burning excess inventory, Next ensured that they went into Sale with 20% less stock than the previous year. Despite bringing their – heavily anticipated and acclaimed – end-of-season sale forward by one week. Indicative that their willingness to adapt to a changing retail environment has had a positive impact.
Invest in initiative
Next reported largely offset profit thanks to higher warehouse and distribution costs, signifying their investment into their supply chain in order to fulfil the demands of online commerce and preparation to capture the a more demanding consumer. Particularly those in the younger demographic where instant gratification and convenience is now a commodity rather than a luxury. The retailer reported a 15.5% growth in online sales driven by overseas growth and the Next Label initiative, a growing strategy adopted by the retailer selling non-competing brands through a sister site and catalogue. Instock data shows a comparable increase in new-in volumes of the label brand up 36.7% YOY compared to that of Next branded stock which decreased by 6.1% YOY. Demonstrating the retailers focus on their branded offering, again signifying preparation to cater for, and capture a younger market.
Despite Next being a traditional household retailer, their recent performance has demonstrated their willingness to adapt to a changing marketplace. Through flexible phasing, efficient stock management and focused investments Next has all the characteristics to become a reactive retailer in a volatile environment.
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