M&S remains ahead – for now Today’s results have seen profits at Next poised to overtake those of Marks & Spencer. Next has reported an 11.8% rise in underlying profit before tax to £695 million for the year ending January 2014. The retailer saw a 5.4% growth in sales to £3.7 billion, with sales at its stores up 1.7% and its online and catalogue business up 12.4%. But M&S remains the market leader in clothing by sales. The press have relished criticising M&S, but it’s still the one to beat. Our estimates suggest Next would overtake M&S’s clothing-only revenues in 2014 and M&S’s total non-food revenues in 2016 – if current annual growth rates continued at both retailers. Figure 1: Projected revenues at Next and Marks & Spencer, 2012-16 Source: Companies/Mintel The Next shopper Next has captured a shopper that is, on average, younger than its mid-market peers, M&S and Debenhams. Next’s consistent investment in product, brand and stores has won it some younger shoppers from midmarket competitors such as M&S over the medium term. But by social grade, the average shoppers at these three retailers are virtually indistinguishable – they are, after all, the midmarket. Figure 2: Where they shop, by average age/affluence, July 2013 Source: GMI/Mintel So what is Next doing right? It understands its customers and knows how to target them: it has the right mix of fashionability and wearability Reflecting this, the company today said, “In today’s fast-moving fashion environment, to fall back on ‘safe’ historical ranges would merely guarantee failure. … Where we have been braver in buying into new trends, we have been successful” Next Directory continues to perform well and is an important part of its multichannel offering. Its range of delivery options, including next day delivery for items ordered before 10pm, make it one of the leaders in the online fashion field It invests in great stores: Mintel’s consumer research shows that Next stands out for its store layout, while M&S performs badly in this area Next is likely to have gained younger shoppers from competitors such as M&S, through consistent investment in product, brand and stores. While M&S shoppers have drifted slightly older, Next has maintained a slightly younger shopper You might also be interested in: No related posts.