Next is a British multinational clothing, footwear and home products retailer headquartered in Enderby, Leicestershire.
The company operates Next web stores and has around 700 physical stores, of which 540 are in the United Kingdom and Ireland, and around 200 are in continental Europe, Asia and the Middle East.
Next is looking to improved delivery and international expansion to boost its highly-profitable online sales over the coming year.
The measures are part of a five-pronged strategy for growth at the multichannel fashion retailer, which said as it released full-year results today that it will also develop the company’s brand, invest in profitable new space, improve service and control costs.
But the online measures are among the most significant since ecommerce is the most profitable part of the business. During the year to January 2014, Next profits lifted by 11.8%, from £622m to £695m. Next today released figures showing that online contributed £48m of the profit growth, while new space contributed £12m. The company’s aim is that stores contribute 15% of sales as profit – currently 90% of stores achieve this. (Source: Internet retailing 2014)
Investing in online is a key pillar of the Next strategy, and the multichannel fashion retailer said 45% of its online orders were now delivered to stores, following the introduction of free next-day delivery to store for orders placed before 10pm. Previously, 30% of online orders were click and collect ones..
International sales, it said, grew by 86% during the year, contributing 3.9% to the growth of the Directory business. “However,” said the Next statement, “with a turnover of just over £100m it is still relatively small and it would be a mistake to over-emphasise its importance.” The company expects sales in this part of the business will grow by 50% to £150m in the year ahead. Overseas sales are currently serviced from Next’s UK warehouses.
As a marketing consultant you have been asked by Next plc to recommend 2 international growth markets for it to enter in 2016/17. Primary focus for market entry will be through online presence but you may recommend that a store presence may be required to support this.
You should prepare a report for the board that addresses your consultancy brief, this should include:
• An analysis of the macro and micro factors impacting on the retail market and the market recommendations
• An evaluation of market potential, to include an identified shortlist of markets with potential.
• Then using a clear and identified screening criteria, select two recommended market with clear justification as to why these markets have been selected.
• A recommended and justified market entry strategy to take Next into these markets
• Recommended adaptations to Next’s marketing mix for the proposed markets, ensuring differences in culture and consumer behaviour are recognised in their marketing mix activity
Researched information about next plc from mintel
Next Brand sales up 3.3%
Source: Mintel 10-09-2015
Total group sales for the six months to July 2015 reached £1,907.4m, up 2.7% on the previous year.
Sales for the Next Brand were up 3.3% to £1,850m driven by an 8.2% increase in Directory sales and a 0.2% increase in sales in the Retail division. Profit for the Next Brand was up 6.4% to £345.1m with the Directory and Retail divisions up 7% and 5.7% respectively.
Full price sales for the half year increased 0.8% whilst net new space contributed 2.2% of growth. During the period 22 new stores were opened adding 416,000 sqft of trading space. 11 stores were closed to be re-sited though only eight have re-opened with the planned opening of two stores slipping back into the next period and in another case two stores have closed to re-open one larger store.
? Next expects full year sales growth to be in the region of 3.5% to 7%.
Very impressive results. At a time when so much of the market is resorting to discounting, Next has actually increased its full price sales, cut the amount of discounted merchandise and produced a net sales gain which is better than expected. It even managed to increase sales through the stores, though it is artificial to draw a distinction between store and online sales – it is the performance of the brand that matters. As highlighted by Mintel’s brand research Next is one of the most trusted UK fashion brands and scores highly in terms of its online service.