Follow us

Menu
PARTNER WITH USFREE NEWSLETTER
VISIT TheIndustry.beauty

The NEXT Connection: how the retail giant is taking control of the high street

Marcus Jaye
12 May 2023

On London's Piccadilly historic department store Fortnum & Mason is still doing a booming trade in trinkets and edible treats to celebrate the Coronation while next door, the flagship Cath Kidston is covered in posters highlighting the generous ‘Closing Down’ discounts on the chintz the brand is famous for inside. The British brand, founded in 1993, recently fell in administration for the second time in two years. The four remaining UK Cath Kidston stores - London, Ashford, Cheshire Oaks and York, are all liquidating stock after appointing administrators. In March 2023, NEXT bought the Cath Kidston brand name for £8.5m. Of course, it did.

A typical Saturday afternoon shopping trip now can’t help but take in part of the NEXT empire. Walk into Reiss, NEXT majority owns this now, pop into Gap on Oxford Street, NEXT runs that too. The list goes on; Joules, Made.com, Victoria’s Secret and Laura Ashley… These are all, or once were, big names in the UK’s shopping landscape and are now in some way controlled or connected to NEXT.

We’re at the point now that if there’s a familiar name on the high street, there’s a strong chance that if NEXT might own it, have an exclusive agreement with it or sell it on its marketplace. It was a surprise they let Paperchase to go to Tesco when that went into administration in January.

NEXT’s monopoly on the branded mid-market is an illustration of the success and strong leadership that has made NEXT, arguably, the UK’s most successful retailer.

The latest financials from NEXT saw it beat expectations with a smaller decline in full-price sales for Q1 ending 29 April 2023 than expected. The retailer's full price sales dropped 0.7% in the thirteen weeks, which was slightly ahead of its expectation of 2% decline. Bricks-and-mortar sales were down 0.6%, while online sales dropped 1.6%. To maintain its first half guidance, the retailer has moderated its sales forecast for the second quarter, which is now planned to be down 5% on last year. Its previous guidance was a drop of 4%. NEXT also said it would maintain its sales and profit guidance for the full-year, with sales expected to decrease 1.5% and profit before tax expected to total £795 million.

Reiss Manchester

NEXT’s recent shopping sprees took in Reiss in August 2022, when its shareholding in the fashion retail chain went from 25% to a majority 51%,  made.com in November 2022 and Joules in December 2022.

Many of these brands NEXT had sold previously through its multi-brand marketplace, so it was easier for it to judge these brands’ strength and desirability among its mostly female customers. NEXT targets the mother of the family, who holds all the purse strings and wants choice. If a brand NEXT can sell successfully through its channels, runs into trouble and is offered at a knockdown price, then it is best placed to swoop in and snap it up.

Where it doesn’t acquire majority stakes, it is adept at negotiating joint ventures and exclusive deals, such as the one it has with Laura Ashley to sell its homeware products. As part of a JV with Gap Inc, it has opened Gap shop-in-shops in Birmingham, Manchester, Glasgow and Thurrock, while Gap.co.uk migrated to the NEXT Total Platform in August 2022.

Gap

Gap at NEXT, Oxford Street

In 2006, NEXT was a trailblazer in the marketplace space by launching NEXT Label, an experiment in selling third-party sportswear. It evolved into one of its fastest growing segments selling hundreds of brands. NEXT’s Total Platform, opened in April 2020, and was a further development for brands by offering a full e-commerce service.

NEXT CEO, Simon Wolfson said at the time: “What that means is, not only will we run their website, but we will also do all their warehousing, distribution, returns, call centre work, customer credit, international sites, we will do absolutely everything that is involved with selling to customers.”  Brands can design their websites and still have creative control.

NEXT has cleverly gone from marketplace to fulfilment to ownership and has positioned itself as a very steady ship. Investors see it as a bellwether of the UK consumer economy.

The brands it has bought, or has an interest in, have strong awareness and points of view. Consumers know what these brands stand for and the types of products expected from them. This strategy diversifies NEXT’s offer and helps it weather the ups and downs of the retail market. And the plus side for the brands it buys is that they live on and the British high-street looks healthier.

The next time you go shopping, ask yourself, “What's the NEXT connection?”

Free NewsletterVISIT TheIndustry.beauty
cross