The Next wave: how the clothing retailer spread its wings and made sales surge

Whatever Next? One of the UK’s largest clothing retailers is shrugging off its rather dull image and spreading its wings internationally, even as many high street rivals suffer. You may think of Next as a place to buy reliable work clothes, a nice cushion or to kit out the kids – it is the UK’s biggest children’s clothing seller. However, it has quietly been morphing into something much bigger. Its shop on London’s Oxford Street tells some of the story – it houses not only a giant kids clothing department, but a big men’s suiting section and womenswear. Many of the parents shopping there appear to be waiting for teenage daughters who are thronging the Victoria’s Secret section upstairs and the neighbouring Bath & Body Works and Gap stores. We can expect to see an even broader range of labels appear within Next stores as, over the past five years, it has snapped up brands from Cath Kidston and FatFace to furniture group Made. It alsocontrols the UK rights to distribution of Victoria’s Secret, Bath & Body Works and Gap through joint ventures with their US parent groups. It is already selling these brands online. Related: Profit upgrade at Next raises hopes UK shoppers still keen to spend Under its leader, Simon Wolfson, known for producing chunky financial reports that give his detailed views on the economy as well as the Next’s performance, the company has also taken majority stakes in the UK brands Reiss and Joules, as well as smaller investments in the sofa maker Swoon, outdoorwear brand Sealskinz and quirky homeware label Rockett St George. Next has also built a plethora of licence deals, including Ted Baker, AllSaints kids ranges and Laura Ashley homeware and fashion. Last year sales of non-Next brands online in the UK topped £1bn, up from £434m five years ago and more than 40% of the business’s online sales. Overseas, non-Next products made up a fifth of the group’s £930m international sales last year. Richard Chamberlain, a retail analyst at RBC Capital Markets, says that more effort on design, quality and marketing has also helped improve the appeal of the Next brand, and some of its smaller labels, overseas. Last year the company booked £930m of sales overseas, more than double the figure in 2020. And last week, Next said a 39% surge in international sales was largely behind a much stronger than expected performance this summer and that the company now expects to make annual profits of £1.14bn – £30m more than expected. Emily Salter, a lead retail analyst at GlobalData, says: “Next’s range of brands and price positions allows it to cater to a wide range of consumers, including those who are focusing more on quality and trading up.” Next’s performance was helped by problems at its big rival Marks & Spencer, which was forced to close its online business for several weeks after an Easter cyberattack, and Next also cited an improvement in the flow of stock from its Asian suppliers compared with last year. However, the figures indicate that Next was able to hold on to some of those new shoppers even when M&S reopened, and that it is gaining a new fanbase overseas. It is not really about Next stores. In the past five years Next has closed about 40 stores, taking its total to 457 in the UK. It has switched to larger, better-located spots, and UK retail sales are at about the same level they were five years ago. Sales of the Next brand continues to increase online, especially overseas, but that growth is being outpaced by its wholly owned, licensed and third party brands. Next has been able to sign up those brands after heavy investment in IT and logistics so that it can help operate websites and the delivery network required to make them fly. Related: Shein warns on Trump tariff uncertainty after profits slip Richard Lim, the chief executive of Retail Economics research firm, says: “Next is so far ahead of the curve in terms of its multi-channel offer it is leaving many competitors behind.” That is partly down to history. Next, which was founded in 1982 after the men’s tailoring firm J Hepworth & Son bought up the Kendalls rainwear stores to create a womenswear chain, has been steeped in home delivery from its early days. The Next Directory launched in 1988 to shake up the then fusty world of catalogue shopping, after the Hepworths bought the Grattan agency catalogue business. By the noughties, when online shopping began to take off, Next had all the logistical systems already in place so that it could make the transition much more smoothly than rivals. It has often led the pace on quick delivery and uses its big network of stores to offer a cheap option for picking up and dropping off parcels – something online specialists such as Asos struggle with. Chamberlain says Next’s strengths lie in its “its relatively fast, automated logistics and its well developed customer loyalty and analytics.”