Retail Marketing Analysis on Next Plc - Case Study Example

TABLE OF CONTENTS HISTORY 2 CHARACTERISTICS 2 MARKETING MIX 4 PRODUCT 4 PRICE 5 PROMOTION 6 PLACE 8 STORE OBSERVATION 10 COMPETITORS 11 ARCADIA GROUP 11 MARKS & SPENCER GROUP 11 DEBENHAMS 12 POSITIONING 13 INTERVIEW 13 CONCLUSION 14 RECOMMENDATIONS 15 RETAILING MARKRTING ASSIGNMENT ON NEXT PLC Next plc is a company based in the UK that specializes in the home shopping and retailing of womenswear, menswear, childrenswear, interiors, accessories, fashion jewellery and telecommunication software services. It falls into the industry sector of retailing, more specifically, apparel retailing. HISTORY: Next retail chain was opened in February 1982 revitalizing the shape of fashion retailing in the UK. Its unique methods and innovative marketing techniques turned it into a huge success. The first store displayed women clothes, shoes and accessories. They were followed by collections for men, children and home. Next Plc trades from over 450 stores in the UK and Eire and 100 franchise stores overseas. In October 2005, Next achieved a breakthrough with the opening of its anchor store at Manchester. It launched its children’s wear in 1987.Next commenced its online shopping venture in 1999 and the concept of “next day delivery” was introduced in 2000. As a record, Next’s original collection that was displayed in 1982 It contains the cloth collection as well as marketing content .This collection is maintained by Leicestershire County Council Museums Arts and Record Service. The apparel from this collection is often displayed at fashion shows in Leicestershire. CHARACTERISTICS: Next Plc is a pioneer retail company in many respects. It has introduced many innovations and marketing tools to improve its sales and market positioning. It was the first company in home shopping to introduce the concept of online shopping. The whole list of its collections is available on its website to be purchased by online consumers. Its success recipe is dependent upon its high quality .To ensure a high standard ,its employees include garment technologists and fabric and sourcing technologists to provide technical support to the Product team, to design the product so that it fulfils the legal requirements and conforms to the standards of Next Plc. Similarly the fabric and sourcing technologists implement fabric management systems and study these systems worldwide to analyze and incorporate any changes or modifications that might occur. Likewise, Next Plc also hires a team of competent and creative designers who develop a new range of products involving latest colours, fashions and concepts. These are worked out keeping the Next consumer’s profile in mind. The Buyer is consulted and taken into confidence. Buyers source a range of products and are responsible for product and range development, negotiations with suppliers, researching competitors’ ranges and products and for suppliers’ source and management. Another important player in Next plc is the Merchandiser who’s supposed to maximize company’s profitability and turnover. Their responsibilities include Pre-season range building and planning, reviewing sales figures and scrutinizing stock levels to maximize sales. They also manage delivery schedules, secure delivery dates from suppliers and minimizing the risk of additional loss-making stock. Apart from that, Next plc has also acquainted its consumers with the idea of a Next directory which was created for consumers who prefer the ease of shopping from their homes. It gives Next a certain edge over its competitors as they capitalize fully upon their potential consumers.The economic facts for the year ended January 2005 for Next: Group turnover £2,858m Group profit before tax £423m Earnings per share 118p Dividends 41p Total trading space 3,327,000 square feet. (Company results-Next) NEXT has also proved its mettle when it comes to Corporate Social Responsibility. The following chart shows the huge contributions it made to various causes it support. MARKETING MIX PRODUCT Next caters to versatile consumers. Its clothes and accessories appeal to both classic and contemporary styles. Whilst the average age of a NEXT Womenswear customer is between 25-35 years old. In addition to essential casual wear and quality tailoring each collection also includes lingerie, swimwear, shoes and accessories as well as specialist ranges for petite women and maternity for fashionable mother’s-to-be. The typical NEXT Menswear customer is between 20-35 years old. Each season’s range features everything from formal tailoring, shirts and ties to contemporary casualwear, sportswear, underwear and shoes. When it comes to kids’ fashion NEXT Childrenswear aims to give customers real choice with a stylish yet practical range of colourful clothes that combine great design with superb value. Spanning from newborns to age 16 the collection is purchased primarily by 25-45 year old parents. NEXT Homes are known for their wide appeal to those who appreciate comfort, easy care fabrics, and innovative design ideas. The collection offers customers the opportunity to add style to every room in their home with a range of contemporary furniture and furnishings as well as wall coverings, rugs, lighting and accessories. PRICE NEXT plc sells moderately priced clothing for men, women, and children; housewares, making its appeal wider to a broad market. The price for its other products such as fashion and home accessories etc is also very reasonable keeping in mind its target audience. PROMOTION The marketing policy of Next is simple - to consistently deliver what we promise in terms of quality and value, to increase loyalty and encourage our customers to have the confidence to buy from us again and again. However, in addition to keeping our existing customers it is important for NEXT to recruit new customers too. We increase our active customer base by carrying out the following marketing activities:- Press advertisements and loose inserts in magazines and newspapers. Targeted direct mail campaigns. In store promotions. Selling books in selected stores. The marketing department is responsible for ensuring that the brand is maintained and that brand values are consistent across all three ways of shopping. To remain successful a company must continue to identify and anticipate their customers’ current and future requirements so NEXT tries to develop products and services that will satisfy their needs. The Market Research Department provides essential information for decisions involving every aspect of the Company’s business activities. In addition to monitoring market, product and socio-economic trends they also keep a close watch on NEXT’s competitors and give an invaluable insight into our customers’ purchasing habits and attitudes. In-Store Merchandising and Promotions NEXT aims to create an innovative, imaginative yet relaxing environment for our customers. Although the store layout changes regularly it is always designed to provide : An easily recognizable and consistent brand identity. Co-ordinated in store displays with graphics to highlight key trends and illustrate garment versatility. An uncluttered spacious look using fixtures and fittings that display products strongly. NEXT Public Relations The role of the Public Relations Department is to manage NEXT communications with the media and maximize all PR opportunities. The NEXT Press Office is based in London to work closely with the national media including newspapers, style magazines, television and on-line media to promote the NEXT brand, as well as the complete range of NEXT products. In order to ensure press coverage coincides with product availability both in store and by mail order, national press launches are held approximately four months before products are scheduled to go on sale. A product placement service is offered so individual media may borrow merchandise they require for relevant editorial features. Regional media activity is co-ordinated from Head Office, supporting new store openings and providing regular fashion and home stories through press packs. A dedicated media web site with over 300 high-resolution images is available for the media to download for their features. PLACE NEXT offers one brand and three ways of shopping, in NEXT’s stores, shopping from home through the Directory and shopping through the Internet using the web-site. NEXT Directory was created for busy customers who prefer the ease and convenience of shopping from home. Before its arrival mail order was not the fashionable alternative to retail that it is today. The success of NEXT’s distribution network can be judged by the fact that its stores and selling space has constantly increased. . Warehouses NEXT have several major Warehouses in Yorkshire which receive, store and dispatch stock to our retail stores and our Directory customers. Once a delivery has been received from the suppliers, random samples are passed to the Quality Control Department to be checked. The stock can then be logged onto the computer system ready to be allocated to the stores by the Branch Merchandising team. NEXT Overseas NEXT currently has franchise operations trading across Europe, the Middle East and Asia. To maintain the strength of the brand all the stores are designed to look exactly like those in the UK and stock a similar product range. However our agreements with local trading partners allow us to manage the selection of styles to suit the specific needs of their customers. NEXT DIRECTORY-SHOPPING AT YOUR DOORSTEP For the first time in history mail order became an acceptable, respectable and fashionable way to buy. Clothes were beautifully presented in a unique hard-backed book and delivery promised within, a previously unheard of, 48 hours from receipt of order. Later in the same year the initial success of the Directory brought the introduction of NEXT Directory Shops and a Gold Award for Direct Marketing from The Royal Mail, for the most outstanding consumer campaign of 1988. NEXT WEBSITE- SHOPPING AT YOUR FINGERTIPS The NEXT website was originally set up as an information-only site in 1997. Two years later the site was updated to allow customers to order online as a third way to shop at NEXT. By 2001 the main next.co.uk website offered a new way to view NEXT Directory by featuring the entire contents of the book online. The launch of www.nextflowers.co.uk saw a new service allowing customers to purchase flowers via the internet. Other exciting features which have been added to the site include a secure online service for customers to access their accounts, view the balance and make payments online. Retail shoppers can search for their nearest NEXT store worldwide and/or register to receive details of special previews and promotions. STORE OBSERVATION NEXT have over approximately 400 stores throughout the UK and the Republic of Ireland. The number of products available depends on the location, target market and size of the store. Because the store window is the first ‘sales person’ the customer sees, it has the potential to deliver the most effective form of advertising. The window display also sets the standard for what’s inside so it must be clean, simple and easy to understand. NEXT’s Regional Display Teams change their store windows every three weeks but they are always designed to fulfill the following objectives: To increase sales by showing the products to their best advantage. To create displays in which the product is always the most prominent feature. The stock must be available inside the store for as long as it appears in the window. COMPETITORS Next has the following major competitors: Arcadia Group What's next in style is what concerns NEXT. NEXT plc sells moderately priced clothing for men, women, and children; housewares; and furniture through more than 350 stores primarily in the UK and Ireland. It also franchises about 70 stores elsewhere in Europe, Asia, and the Middle East. NEXT targets customers in their 20s and 30s who are looking for stylish but affordable clothes to take them through the next fashion trend. Revenue comes from its retail stores, its NEXT Directory catalog, a Web site, and Ventura, a division which provides call center and customer support services for other firms.( Arcadia-Hoovers) Marks and Spencer Group The sun now sets on Marks and Spencer (M&S). The department stores sell mid-priced clothing, food, and household items under the company's famous private label, the "very British" St Michael brand (found on items ranging from tweed jackets to marmalade). One of the UK's largest sellers of clothing, it has sold off most overseas operations in order to salvage its 400 M&S stores in the UK. The company got rid of more than 220 Brooks Brothers clothing stores in the US and Asia (to Retail Brand Alliance, 2001) and its 18 M&S stores in France (to Galeries Lafayette, 2001). M&S owns stores in Ireand and Hong Kong, operates franchises in 30 countries, as well as the 25-store Kings Super Markets chain in the US.( Marks & Spencer-Hoovers) Debenhams Debenhams has sat front-row to fashion for more than two centuries. The stalwart retailer runs more than 100 department stores in the UK and Ireland that sell women's, men's, and children's apparel; cosmetics; and housewares. It targets customers in the 35-55 age range. Company brands (Casual Club, Red Herring, Maine New England) account for about half of sales. Debenhams also offers a wedding gift service and in-store restaurants and cafes. It is expanding through franchises in the Middle East, a store in Malaysia (2003), and plans to enter Indonesia, Thailand, and China. Debenhams was spun off in 1998 and in 2003 was bought by Baroness Retail. (Debenhums-Hoovers) The following chart presents the sales growth of Next in comparison to its competitors. It suggests that Next is growing at a phenomenal rate in the industry. POSITIONING Next positions its products as stylish and affordable. It claims to provide more value for money to its customers as compared to its competitors. INTERVIEW WITH DAVID W. KEENS, FINANCE DIRECTOR , NEXT PUBLIC LIMITED COMPANY: Q: Let’s begin with an up date on NEXT Plc (London: NXT.L) and a picture of how the company is positioned today. Mr. Keens: That’s quite an easy task because NEXT as a company may not be the most exciting in terms of acquisitions or divestments but we’ve got a very clear strategy for growth and over the last two years that strategy has not changed. So what I’m about to tell you really is very much a continuation of the same philosophy that has served us very well indeed. NEXT is engaged in the European apparel market and in particular in the UK and Eire, which is our home market. Our brand is number two in those particular markets and since last speaking to you the business has grown in both profits and turnover by around about 40%. Turnover last year was US$3.5 billion and we made approaching US$500 million profit before tax. We trade Womenwear, Menswear, Childrenswear and Home products (both hard and soft goods) and the relative importance of each product group is in that order, i.e. Womenswear is the biggest. In terms of our customer profile we’re really aiming at the 20 to 40 year old age bracket, targeting the upper end of the mass market. Q: How many stores do you have at this stage? Mr. Keens: We’ve got about 350 stores. We cover the whole of the UK , as I mentioned, so geographically we’re well spread. What makes us decide to go into any particular town is the size of the population in the catchment area. We’re pretty much in all of the larger conurbations that we want to be in and many of those stores have all four product groups within them. Q: What elements have come together to allow you to grow at a faster clip than the market? What, simply put, are you doing right? Mr. Keens: The real driver has been the bigger stores; I said to you that our average store size has now gone from five to seven thousand square feet. Our biggest store is actually in Liverpool, opened it in July 2001 and that’s 45000 square feet. Last summer we opened a similar sized store in Cardiff and as you can see these stores are many times bigger than the average. What it allows us to do is to show the whole range of our products, and show them in a clear and more enjoyable shopping environment. There are still many stores in the UK which we would want to be bigger. For example around about a third of our stores today could profitably be expanded and the really exciting thing is that seven years ago I would’ve said to you the same thing, also five years I would’ve said the same. So as each year goes by and we expand our stores, we’re also expanding our product ranges. CONCLUSION NEXT has over 350 retail stores and has won an impressive list of awards that include Cosmopolitan Best High Street Shop, Menswear/FHM Retailer of the Year, Retail Week Retailer of the Decade, FHM/Menswear magazine’s Multiple Retailer of the Year and the Prima High Street Retailer of the Year Award for an unprecedented four years in succession. Next Public Limited Company is listed in the FTSE4 Good Index. The index is designed to measure the performance of companies that meet prescribed standards of corporate responsibility and to facilitate investment in those companies. The financial success of the company can be gauged from the following facts Group turnover £2,858m Group profit before tax £423m Earnings per share 118p Dividends 41p (Data: 2005) RECOMMENDATIONS Although Next Plc could surely be termed as a success story, it still needs to take a few steps that would maintain and further consolidate its position in the industry. Also, Next Plc faces solid competition from strong brands such as Marks & Spencer who also retain a considerable segment of the market, which highlights the need for reforming at the company.Next could take following measures to maintain and improve its market standing. Diversifiacation-Next should seek to further expand its product range. It could diversify into accessories for children and furniture etc. Exploring new markets-Next should look into opportunities of exploring overseas markets such as Asian markets. This would enlarge their market segment as well bringing higher sales and profits. Increasing the target market-NEXT could exploit the opportunities of increasing their market segment by designing clothing, accessories and other things for various age groups. Promotional Strategy-Although Next Plc has an excellent distribution network, it should strengthen its marketing side. It should evolve new marketing schemes and campaigns to counter the competition from its competitors. It also needs to solidify its brand through marketing and quality control. With the help of above-mentioned steps, Next could turn into an exceptional retail success story. BIBLIOGRAPHY Arcadia –Hoovers, A D&B Company http://www.hoovers.com/arcadia/--ID__57716--/free-co-factsheet.xhtml Accessed April 21, 2006 Debenhums –Hoovers, A D& B Company http://www.hoovers.com/free/co/factsheet.xhtml?COID=55963&cm_ven=PAID&cm_cat=BUS&cm_pla=CO1&cm_ite=NEXTwww.hoovers.com Accessed April 21, 2006 Profile- Organisation Commission www.competition-commission.org.uk/inquiries/current/storecard/pdf/initial_subs_retailers_next.pdf - Accessed April 19, 2006 Financial Results- Next Plc http://order.next.co.uk/aboutnext/CompanyResults/jan2005.asp Accessed April 20, 2006 Social responsibility Next Plc http://uk.sitestat.com/next/next/s?CSRReport&ns_type=pdf Accessed April 20, 2006 Next Plc Hoovers –A D&B Company http://www.hoovers.com/free/co/factsheet.xhtml?COID=55963&cm_ven=PAID&cm_cat=BUS&cm_pla=CO1&cm_ite=NEXT Accessed April 21, 2006 Marks & Spencer –Hoover A D& B Company http://www.hoovers.com/marks-&-spencer/--ID__41199--/free-co-factsheet.xhtml Accessed April 21, 2006 Next Profile Business.com http://www.business.com/directory/retail_and_consumer_services/conglomerates/department_stores/next_plc/profile Accessed April 21, 2006 Interview – TWST http://rds.yahoo.com/_ylt=A0Je5rI2DU1EdpkAMMFXNyoA;_ylu=X3oDMTB2ZjQ4dDExBGNvbG8DdwRsA1dTMQRwb3MDMgRzZWMDc3IEdnRpZAM-/SIG=1226v8ogg/EXP=1145986742/**http%3a//www.twst.com/notes/articles/lys031.html Accessed April 23, 2006 Read More