Next latest high street brand to struggle as ‘digital disruption’ takes hold
Monday 26 March 2018
FAISAL Sheikh, finance and economics expert at the University of Salford Business School, comments on the latest figures from Next.
He said: “It appears that the British High Street is plagued by closures such as Toy R Us and retailers consistently losing revenue, and now Next have admitted that they are facing their toughest trading period in '25 years'. If we break down the numbers at Next what we discover is that for the year, profit from Next's shops shrunk by 24% to £268.7m. Sales decreased by 7.9% to £2.1bn. On the other hand online profits increased by 7.4% to £461.2m, with overall revenue rising by 9.2% at £1.8bn. This pattern apparently suggests that the High Street is experiencing a structural change in favour of online and that retailers should be diverting their attention to maximising online revenue.
“I believe retail is in the early stages of digital disruption or what I call 'RetailTech'. However, the major functions of retail remain unaltered – people want quality and fashionable goods and services at a competitive price with the best possible customer service. What is changing is the way these requirements are being met. The convergence of existing technologies such as the internet and smart phones coupled with advances in Artificial Intelligence (AI) and machine learning are supplying accessibility, speed and bulk in quantities never witnessed before, all making shopping easier, cheaper and more convenient. We have great examples of high street retailers who are not only bucking the trend but enjoying an increase in both retail and online shopping such as Argos. Other major players include the discount king Primark and the darlings for the millennial generation such as Asos and Zara whose digital and social media is second to none.
“All retailers ranging from micro entities to those generating billion pound turnovers can no longer take consumers for granted. As already noted the millennial generation is driven by social media particularly Instagram highlighting the instantaneous nature of fashion. Why should consumers wait for fashion trends to diffuse from the cat walks of Milan or Paris or anticipate the Next summer collection? Consumers can now have an individualised good or service at a competitive price all at the click of a button. The High Street has actually transformed into the 'Me Street' and retailers will need to respond accordingly especially with cutting edge and ongoing social media campaigns.”