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Comment: Festive period not the disaster many predicted

NextÂ’s festive trading results show total growth of 11.9% with Retail growing by 7.7% and Directory by 21.0%. By Neil Saunders

CITY & CORPORATE

Comment: Festive period not the disaster many predicted

NextÂ’s festive trading results show total growth of 11.9% with Retail growing by 7.7% and Directory by 21.0%. By Neil Saunders

A very strong set of results from Next, which were significantly ahead of expectations, indicates three things about the festive trading period. First, despite the late start it was not the disaster many have suggested; this is especially so given the robust numbers coming from a number of retailers, now including Next. Second, although the high street was engulfed in sea of red promotional tickets, it was not necessary to discount to achieve success. Third, a strong multichannel platform was a critical success factor.

That Next has a strict policy of not discounting outside of sales periods continues to pay dividends and is something some other retailers should take heed of. Not only does it ensure that customers’ expectations are managed inasmuch as they do not hold off buying in the hope of a discount, it also ensures that, operationally, margins are maximised. This is one of the reasons why Next is a festive winner in terms of both sales and profits, guidance on the latter now being at the very top end of market expectations.

Of course, holding the line on discounting requires that the product is right, and on this front Next’s Christmas range was masterful. An impressive array of knitwear, much of which capitalised on the trend for festive patterns and designs, was in evidence across the trading period. This was joined by a compelling selection of gifting items, including cosy nightwear, accessories and non-clothing. Next also capitalised on partywear with a number of sophisticated pieces including lace dresses and silk jumpsuits, many of which were showcased by supermodel Kendra Spears. In short, Next’s range pushed the right buttons with consumers this Christmas.

Although, like others, Next will have been affected by the lateness of Christmas this year, its excellent multichannel platform allowed it to maximise trade, with customers ordering right up until the weekend before Christmas. This is a credit to Next’s operational efficiency which has created confidence among its consumers that its online operation delivers, in the very literal sense of the word.

Next’s performance puts it in the vanguard of those achieving success this Christmas and, as a result, it will have grown its share significantly. However, in doing so it is likely to have taken sales from others on the high street.

Neil Saunders is Managing Director of Conlumino

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