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Next sets out how it is following customers as they move towards mobile and away from home delivery

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Next sets out how it is following customers as they move towards mobile and away from home delivery
Next sets out how it is following customers as they move towards mobile and away from home delivery
Next today set out its strategy to improve and differentiate its directory business in areas from mobile apps to collection from third party stores as it operates in an increasingly competitive market.

Next is a Leading company in IRUK Top500 research, and leads the Operations and Logistics Performance Dimension within that ranking. Today it said that while Next Directory sales had grown by 75% in the last five years, and added £300m to turnover through international online expansion and the development of its third-party brand Label business, growth in the directory had slowed as the business had matured.

"Partly," it said in full-year results, "this is as a result of competitors catching up with our delivery and warehousing capabilities; partly as a result of changes in the ways customers are shopping online. It is this last point that provides us with the opportunity to improve the business going forward."

From desktop to mobile



Back in 2010, said Next, 95% of orders, by value, were placed on desktop PCs. In 2015, just 37% of orders were placed on PCs, with the balance via tablets and phones.

Now Next is improving its mobile sites to boost conversion rates on mobile devices. Next figures suggest that until recently while 8.5% of visitors to the desktop went on to buy, that's only true for 7.7% of visitors to the site from an iPad and 4.2% of those visiting from a mobile phone. But since visitors from non-iPhone smartphones have been directed to a mobile version of the site, conversion rates have increased to 5.8%. iPhone visitors will be channelled to that site over the course of this year. Similarly, an iPad app was launched last August with the intention of giving the look and feel of a page-turning book, with website search and filtering functionality. Conversion rates among those using the app have risen from 8% to 10%.

From catalogue to email marketing



While in 2010, 89% of customers received a catalogue, that fell to 53% in 2015, and Next says that it will continue to produce them for those that want them. It will replace them with online advertising and email marketing worth £8m for those that do not.

From home delivery to third-party stores



Fulfillment has also changed over the last five years. While in 2010, 87% of customers had their orders delivered to the home, in 2015, that proportion had fallen to 45%, with the balance delivered to the store. Next said today that it would develop its delivery service by giving customers the option to collect and return goods through third-party parcel shops, scheduled to start in September 2016, and by offering two-hour windows for delivery, expected to start in December 2016.

International



The results came as Next expands its overseas business quickly. In the year to January 2016, sales from the directory overseas reached £197m, from £163m a year earlier, while profitability stood at 16%. During the year ahead, the company plans to focus on improving the speed of delivery in key markets. Delivery times in Russia and China, for example, have been reduced by more than six days to around three days. Next is investing £3m in overseas marketing in the coming year. Next currently trades overseas websites in 18 languages and 34 currencies. Next franchise partners operate 181 stores in 35 countries.

Results



The update came as Next today unveiled sales of £4.1bn in the year to January 2016. That's 3% up on the £4.0bn reported at the same time last year. Next brand sales of £4bn were 3.7% up from £3.9bn last time. Pre-tax profits of £821.3m were 5% up on last year's £782.2m.

Sales from the retail stores grew by 1.1% to reach £2.4bn, generating £402.1bn in profits, 4.8% up on last time. Sales from the directory grew by 7.7% to reach £1.6bn, with profits up by 7.5% to £405.2m, overtaking profits from the stores.

Simon Wolfson, chief executive of Next, said: "In many ways we have more to do than ever before with complex challenges to our working practices across product, marketing and systems. It may well feel like walking up the down escalator, with a great deal of effort required to stand still. It will not be the first time we have felt this way, and our experience is that the effort put into improving the business in tough times can pay handsome rewards when conditions improve."

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