Brand Health Check: Next

The retailer helped define the 80s but is now fighting falling profits and a staid image.

Few doubt that the gloomy economic climate is resulting in a profound shake-up on the high street, but the challenges faced by Next transcend the current slowdown.

Last month, the retailer posted a slump in pre-tax profits of 14% in its year-end results, with like-for-like sales down 6.5%. More troubling, given the nation's fondness for Next's end-of-season bargains, it offered discounts on 15% fewer items in its sales, citing 'effective stock control'.

Next suffers from indistinct, middle-of-the-road positioning in a high street that is segmenting between cheaper and classier options. While Topshop is able to hire Kate Moss to design collections, Next is starting to resemble that other once-thriving clothing retailer, C&A.

Over-diversification could also be an issue. When Next first opened its doors in the early 80s it sold only clothes. Since then it has added furniture and home shopping to its offering.

Some would argue that in the process the retailer has lost some of the appeal that originally drove its growth. Is it possible now to rekindle the kind of public affection for the brand that will not only keep people queuing from 5am for the start of its sales, but also install it as a regular fixture in their retail routine?

We asked Raoul Shah, chief executive of communications agency Exposure, who has worked on the European launch of Levi's Engineered Jeans, and David Yates, senior planner at ad agency Kitcatt Nohr Alexander Shaw, who works on the John Lewis account.

Raoul Shah chief executive, Exposure

Like most fashion retailers, Next is having to fight hard for every sale.

It is caught in that difficult part of the mass market. Newer players Mango and Zara have set the pace with fresh stock delivered several times a week and an exciting environment to shop in.

The Next shopping experience lacks the wow-factor, and innovation in the area of brand experience is badly needed. It must think harder about the nature of the Next experience online, in the changing rooms, at the counter, when a mail-order package is delivered.

It also needs to use its real estate to make bold statements. The shop windows are a fantastic asset to exploit - think Ted Baker meets Selfridges.

A recent visit to Next in Westfield was like an obstacle course - narrowly packed rails of sales goods blocked attempts to reach the shoes at the back of the shop. The company needs to think harder about the impact that its sales initiatives have on the brand.

Overall, Next requires ambition and a flourish of boldness to address the mature brand and reinvigorate it for the 21st century.

Remedy

• As a mature retailer, Next has to inject some novelty. Shoppers need a reason to part with their cash.
• An overhaul of the Next brand identity and shopping experience is overdue.
• Develop a higher brand profile and image - senior people need to be more visible in the media, giving more interviews and building deeper relationships with brand influencers.
• Build on the Brand Directory as a diversification story - 'lots of great famous brands brought to you by Next'. It demonstrates innovation and stretch.

David Yates senior planner, Kitcatt Nohr Alexander Shaw

Somewhere in the past 27 years, the UK's second-biggest clothing retailer has lost its mojo.

The chain has become high-street wallpaper - outshone by the fast-fashion and low-cost players next door, and the increased accessibility of 'real' brands and high-end labels online.

The breadth of this middle market positioning is reflected in both the product and the consumer. In the attempt to cater for everyone, Next inspires almost no one. Before you even walk into the store, you know what you're going to find, and it's either beige or grey.

A recession makes this mass-premium middle ground even less appealing. But the economic environment might help drive reappraisal from consumers who wouldn't otherwise consider Next. It should also prompt a much-needed refocus of the core target audience.

The decision to stick to its guns on price, and not discount outside of main sale periods, is brave and correct. In the immediate credit-crunch future, Next needs to give people permission to trade down, and reasons for them to trade up.

Remedy

• Be famous for brilliant basics. A classic, stylish white T should pull in the cost- and fashion-conscious.
• Reclaim some fashion credibility with statement pieces. Each collection should have a key item that delights customers and surprises their friends.
• The best opportunity to bring people back into the brand may lie outside fashion. An 'improve, don't move' strategy in homewares, backed by products that embody the Next sense of style, would create a group of people ripe for introducing into other categories.