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Does the fashion industry need to make a shift in attitudes?

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 3 minutes

We are halfway through London Fashion Week which celebrates the best in British fashion talent and shines a spotlight on the new names set to make their mark on the industry. However, while all this celebration and spectacle is going on, high street clothing and home ware retailer Next has announced yet another fall in profits.

With that in mind, is it time the British fashion industry changed their attitudes to reflect the current climate and changing shopper’s needs? Or is this just a blip for an established name who is doing its best to deal with the current economic uncertainty?

Trading has been difficult for Next who have had another fall in profits in the first half of 2016, this is despite strong sales in July. Those strong sales were a result of a bigger end of summer sale than the previous year but this wasn’t enough to boost profits for the fashion retailer.

As a result of these recent figures, the company’s share prices are down 5% to £49.52. Chief executive of Next, Lord Wolfson, spoke to the Guardian saying that the fall in the pound could push up inflation, increase the wholesale cost of buying garments and squeeze consumer spending power.

He also stated that he would sooner lose some sales than take a hit on the profit margins of the company. This suggests that prices in store and online are due to rise soon, however many are split whether this is the correct course of action to take to improve Next’s situation.

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It has been suggested by Wolfson, and many others, that spending on clothing items has reduced as consumers decide to spend their money on experiences such as eating out and holidays. Wolfson feels that business for the fashion arm of Next should pick up over the next two quarters, particularly if the UK has a cold winter.

Pre-tax profits for Next for the six months to the end of July fell 1.5% to £342.1m, with full-price sales falling 4%. Retail profits fell 16.8% but there was some good news for the home shopping area of their business, Directory, saw a rise in sales by 10.9%.

Here is what Wolfson had to say about this in the Guardian; “Full price sales in July remained subdued, so we do not believe that July trading represented any change in underlying consumer spending patterns. Trading since July, which to some extent may have been affected by the sale, has remained challenging and volatile.”

Most businesses, including Next, are seeing a consumer slowdown on spending, the impact of the lower value of the pound and a growth in the trend to spend money on experiences rather than goods. As a result, this year is proving to be particularly difficult and testing for many retail businesses, specifically clothing retailers.

The new trends and names that come out of the current London Fashion Week need to be able to withstand a changing environment and a British public who are becoming savvier and pickier with the money they are spending.

The next generation of fashion retailers and designers should take this into account if they are to make a success of their business in the current and future economy, both of which are extremely difficult to predict.

References and further reading

Header Image Credit: BBC – http://www.bbc.co.uk/news/business-35888829

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