Next leverages online capabilities to beat expectations, says Retail Economics

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Commenting on Next’s trading update, Richard Lim, CEO, Retail Economics said: “Next continued to defy expectations against a hugely challenging backdrop of pre-Christmas lockdowns. It was able to leverage its slick online channel during this vital trading period and offer customers convenient ways to pick up orders through an expansive click-and-collect footprint.

“The retailer is benefiting from years of investment in its online channel and has proved once again its versatility in dealing with the ongoing disruption caused by the pandemic. It is far better positioned to deal with the demanding trading conditions than many of its competitors in the coming months. 

“These results are likely to set the tone for a polarised view of the retail sector which separates those with impressive online capabilities with those that do not.”

Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, said: “It was a stop-start year for most businesses in 2020 and while it might be too far-fetched to view Next’s results as a success story, it has undoubtedly ridden the coronavirus wave better than expected and shown a resilience that has surprised investors. Yet the closure of physical stores, reduced footfall and consumers’ fear of contracting the virus have undoubtedly presented many challenges; only one in six (16%) UK consumers intend to return to their old shopping habits post-lockdown. But Next has shown other retailers that there are also opportunities, and the pandemic may end up giving digital retail laggards a push to remaster and redouble eCommerce efforts.

“Even as a business with a large bricks and mortar presence, Next’s intuitive and ever-expanding online platform (mimicking larger marketplaces like Amazon) combined with smart discounting and its quick click-and-collect pivot last year has resulted in higher-than-forecast profits. It’s further proof that a reliable and convenient eCommerce operation has become essential as consumers’ purse strings tighten, renewed COVID-19 guidelines are implemented, and consumer behaviour continues to increase online. Our research indicated that65% of shoppers intend to use digital shopping channels more regularly in future, rising to 72% for those aged between 16 and 24.

“The challenge facing all retailers will be sustaining growth, offsetting rising costs and reliably supporting eCommerce operations as we enter a third national lockdown. While there is an expectation that we’ll return to normality in the summer of 2021 following widespread vaccinations, those who continue to adapt in the face of fast-changing guidelines will win out.”