Like many retailers facing the challenges of an increasingly digital world, Next’s end-of-year results for 2016, published at the end of March 2017 told a story of two halves. While overall revenue was slightly down on the previous year, (£4.1bn compared to £4.2bn), store sales were down 2.9%
(to £2.3bn) , while Directory sales, which are predominantly online were up 4.2% (to £1.7bn). This represented a fall in profitability in-store of 15.8% and an increase in profitability online of 9.6%. Some 41% of the company’s sales are now via the Directory (mainly online).
It’s no surprise then that beyond improving their actual products in terms of design, quality and responding more quickly to new trends, the company’s main focus for the year ahead will be the next phase for the Directory, especially addressing changes in the way that customers are shopping online. Explicitly, the results state that: “The way our customers trade with us is changing in four important ways. The devices they use to purchase items have changed, their desire for catalogues has reduced, their propensity to take credit has diminished and their preference to collect deliveries from stores has increased.”
In 2010, 95% of Directory orders were placed on a desktop PC. By 2015, this had reduced to 37% with the balance moving to tablets and mobile phones, a trend that has kept going in the same direction. In recognition of this changing landscape. The company has been taking steps to “improve the presentation of our website with particular reference to mobile devices” – something it has restated its commitment to doing for the year ahead.
So far, this has resulted in the company launching mobile websites in the UK and Northern Ireland for all hand-held devices, and improving its iPad and iPhone apps. It has enabled shopping carts to be saved across devices and from August will add touch ID to its mobile offering, followed in November by fast checkout. It is also launching 12 new international sites this summer, which will give access to dedicated mobile sites for 70% of its overseas customers.
In 2016, it cut its spend on print catalogues by £3.5m, offsetting some of its £6m increase in online marketing expenditure. It will continue to focus on online advertising this year earmarking £8m for UK and overseas to reactivate existing Directory customers and recruit new ones. This advertising will be personalised so existing customers don’t see recruiting adverts, but instead adverts reflecting their browsing and purchasing histories and abandoned baskets. From the autumn, its website will also be personalised.
