Surviving the impact of ‘external economic factors and internal issues’, New Look has managed to retain its No. 2 position in the UK women’s clothing and accessories market valued at £ 1.4 billion for the year up to 24 March 2012 – down from £ 1.5 billion for 2011. While international sales were up, its local sales fell by 5.7 per cent on a like-for-like basis, still constituting 77.6 per cent of the company’s turnover coming from the UK market, and New Look now is making significant changes to regain the market…
New Look which focuses on selling cheap fashion to teenagers and young adults, when compared to its peers, is recognized to offer ‘value fashion’ at genuinely surprising prices and quality. But due to stiff competition from an expanding Primark, and other supermarkets like George at Asda, that sell ever-larger range of clothes, the brand is under enormous pressure. The company believes that in an increasingly crowded marketplace, where many retailers today are establishing themselves as ‘low cost’, a brand must focus on delivering best value for money – a winning combination of price, superior quality and a ‘must have’ fashionability, and not just lowest price.
“Clearly these are disappointing results, reflecting a business that was suffering significant internal disruption against the backdrop of a harsh and deteriorating consumer economy. Additionally, we allowed our price architecture to drift upwards, which undermined our competitiveness and relative value positioning in the marketplace,” said Alistair McGeorge, Executive Chairman of New Look, while announcing the annual results.
Fast to react, the company took immediate action to relook its product values to improve local sales. “We’ve invested some of our gross margins into better pricing and better quality to reinforce our value credentials. We’ve tightened inventory further to exploit short lead times to improve our buying decisions which also helped mitigate inherent fashion risk. This should allow us to reduce our markdown and improve gross margin,” adds McGeorge. The supply base of the company has now been rebalanced with certain elements of production shifting from long to shorter lead time countries such as Turkey.
New Look also changed its in-store philosophy in the last one year from a push strategy where the brand shoved loads of product into the stores and hoped for the best, to the pull strategy by listening to the customer and – just as importantly – the store managers, and provide limited amounts of wanted product that changes regularly. “The results from the new concept stores are very encouraging both in terms of customer feedback and enhanced sales performance. We will aim to match this experience for our customers online so that the customer experience is consistent across all channels. This will be a key focus for us over the coming years,” says McGeorge.
Smart product offerings have also worked for the company with women’s clothing forming the key segment of the product mix, generating 56.6 per cent of total brand sales in 2011, supported with some key trends that did really well in the market like peg-leg trousers and smart cotton chinos, together with chiffon blouses and oversized shirts. Adding onto the list recently in 2012 are other equally popular categories such as coloured denim, quilted jackets, chiffon tops, wide leg trousers and tunic dresses. Lingerie, nightwear and swimwear are also observed as growing categories which now represent 3.9 per cent of New Look sales. The Limited Edition collections in specific attract the more fashion-forward customer towards the brand which was recently proven with the tremendous response of the new Kelly Brook range.
In the meanwhile, the company’s multi-channel business showcased a strong growth as online sales increased by 19.9 per cent to £ 62.7 million as compared to £ 52.3 million in 2011 making newlook.com the second most visited UK women’s clothing website with a market share of 4 per cent. Having presence in over 120 countries, the increased geographical coverage, together with improved brand awareness, improved interactive website, new e-commerce applications are reflected in the increased sales in the international arena, which grew by 0.5 per cent over a 12-month period. The company plans to double this growth by building on the various multi-channel launches during the third quarter of FY12 and improving the end-to-end customer experience.
India Sourcing…
New Look is sourcing through its Liaison office in India, buying around US $ 30 million from the country. Ladies wear accounts for over 70 per cent of the business with focus on woven tops. Working with 17-18 vendors in the country, the average order size is of 10,000 pieces, with the average FOB at around US $ 6. Mass fashion with little embroidery, bead work and prints is what constitutes the majority of the buying.
