Next, the quintessential 80s fashion retailer, has had a tough time of it in the noughties. Profits at its retail division, which comprises more than 460 stores in the UK and Eire, fell to 拢316.6m in the 12 months to January 2007 from 拢329.1m the year before, with like-for-like sales down by 7.2%.
The group, which launched in 1982 as a womenswear retailer before adding menswear, childrenswear, furniture, soft furnishings, home shopping and even a flower-delivery service, made its name by doing affordable tailoring well. But it is now struggling on two fronts - against a resurgent Marks & Spencer and cut-price retailers including Primark and New Look, which are making the high-street trading environment ever more competitive by attracting shoppers from all income brackets.
Next's retail environment, once seen as a selling point, now looks dated and its merchandise has erred toward the bland in its attempts to be all things to all people. At one time, Next was perceived as aspirational, but few consumers would view it as that today. The openings of its sales are incredibly popular, but the ensuing bunfights do nothing for its brand image.
The disappointing results have prompted a promise by the company's chief executive Simon Wolfson to inject some 'magic' back into the brand with a raft of initiatives. The retailer has pledged to improve its product offer with an emphasis on quality and new ranges, rather than rely on tried-and-tested bestsellers. Store refits are also already under way.
Although it has flirted with the idea of hiring an ad agency, at present the retailer handles its advertising in-house and there are no signs that this will change. However, it is to ramp up its above-the-line investment with a brand ad campaign, rumoured to be fronted by Yasmin Le Bon and backed by a 拢10m spend - a sizeable increase on last year's 拢1.5m total outlay.
There are also plans to alter its logo to a lower-case version this autumn, and new shopping bags - black with a silver logo and red interior - will ape the red leather sole of French designer Christian Louboutin's luxury shoes.
We asked John Forsyth, director of ad agency Odd, which counts New Look as a client, and Caroline Wilde, head of retail at marketing services agency Arc Worldwide, for ideas on how Next should plot its course to recovery.
DIAGNOSIS 1 - JOHN FORSYTH DIRECTOR, ODD
For many people, Next was a starting point in fashion as a mail-order directory when they were kids. Over the years it has institutionalised itself as one of the biggest high-street fashion retailers, serving a middle-market buyer. Now the commercial highlight is the mass hysteria it generates around key sale periods.
The problem for Next is that it has no unique selling point and its rivals have accelerated past it; Primark has its low-cost point, and H&M is responding to the slowdown in fast fashion by creating a higher-priced range.
Next's most recent activity tries to raise the game with ads designed to appeal to a more stylish audience. However, the product is too safe and no longer cuts it compared with other retailers.
There is no reason why Next can't excel, but advertising on its own is not the answer. In such a fast-moving retail market, consumers are responding to brave, confident product and pricing statements. And when the brave decisions have been made, the advertising should simply create the excitement around them.
REMEDY
- Create a new and interesting unique selling point. Being best known for big sale trading is not enough.
- Make some brave decisions with the product range and pricing structure.
- Communicate the brand's lifestyle appeal and leverage its trusted, historical credentials.
- The homewares business has attracted praise, so build on that; look at what M&S has achieved in this area.
DIAGNOSIS 2 - CAROLINE WILDE HEAD OF RETAIL, ARC WORLDWIDE
I have nostalgic affection for the days when Next led the way in fashion merchandising; a visit to its stores in the early-90s was a revelation in outfit building and colour blocking. And it had a strong identity - fashionable without being too risky - for the well-dressed, mid-market professional and their family.
Today, its fortunes seem inextricably linked to Marks & Spencer's - both fighting over the middle market and attempting to stretch the brand to encompass everyone. Each rise in M&S' fortunes seems to prompt a dip in Next's, and vice-versa. Witness M&S' bullish confidence in its latest womenswear campaign and the subsequent reporting of another decline in like-for-like retail sales at Next.
It doesn't help that cheap and cheerful rivals are nibbling away at the value end of the market, nor that retailers such as River Island are now delivering a younger, funkier look. Furthermore, Next cannot rely on directory sales to boost its fortunes and the clock is ticking on its store refurbishment programme.
REMEDY
- Accelerate store refurbishment.
- Use innovative point-of-purchase and point-of-sale activity to add much-needed glamour into stores in the meantime.
- Focus on the core market and stop trying to please everyone.
- Be different from M&S - create fashion inspiration and cues.
- Create an upmarket basic range; the ultimate white T, the perfect linen trousers and so on, to regain credibility.