Next has reported its first half results to July 2014 which saw total sales increase by 10.3 per cent over the first half last year. Directory sales – at £694.3 million which includes both catalogue and online channels – were up by 16.2 percent with retail store sales at £1,075.6 million showing a 7.5 per cent improvement. The business credits these results with its focus on range extensions, the opening of profitable new space, as well as improvements to its online business in the UK and overseas. In usual Next style, the retailer also underlined that improvements to the economy, continued low interest rates, increasing availability of credit, improved summer weather and less discounting in the wider high street, had contributed. In addition Lord Wolfson said “an improved housing market has helped our Home business.” Next Home occupies some 1.7 million sq..ft. of selling space, close to as quarter of the group’s overall retail space.
The business has heavily focused upon improving its product and design, which includes adopting new trends earlier and in greater depth, and developing relationships with quick response suppliers. It has also moved from a two season cycle to buying four distinct seasons to ensure that ranges are more weather-appropriate in the transitional Spring (January, February) and Autumn (August and September).
This coming Winter will see the inclusion of premium products selling at prices far higher than usually expected from Next. A new catalogue LABEL was trialled as the starting point for a new stand-alone upmarket business spin-off which will sell premium brands to existing Next 4 million customers. The trial was well received and generated a healthy return on investment, and whilst it will be developed its potential is being underplayed by the Next board.
New editions have been added to the schedule for Next Directory so that customers receive four main publications plus four new “in between” smaller catalogues showcasing new products. Last October it had introduced a free next day delivery to chosen store service for orders placed up until 10pm, and has seen strong uptake with some 50 per cent of online orders delivered this way. It is now extending the cut-off time for this free service from 10pm to midnight, which it says tends to be used more for single item orders as most customers ordering multiple items still prefer home delivery.
Internationally, Next’s website accounts for 85 per cent of its overseas orders, with the balance coming via local third party home shopping operators. In the past six months it has begun trading online is 11 new territories including Cyprus, Malta, Saudi Arabia, Belarus and China, bringing the total number of countries it serves to 71, with 98 per cent of all overseas sales transacted in local currencies. As for other UK multichannel retailers, the potential in China is significant – and could lead to a doubling of Next revenues within a decade – but, like most of its competitors Next is approaching the Chinese market cautiously.
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