Comment: Next shows the way with multichannel model

Raising profit forecasts is pretty rare in retail at the moment but that’s what fashion group Next did on Wednesday when it unveiled first-half sales.

The retailer now expects profits to come in up to £15m higher than previously anticipated, at between £575m and £620m.

That confidence is in stark contrast to many of its peers, and testament both to executional excellence and, in particular, the power of its multichannel model.

While total store sales edged up it was the Directory business that really gave Next momentum.

Retailers are increasingly striving to build omnichannel business models and in some ways Next was there early.

The Directory and stores have complemented each other well and, as what was once a mail order business shifted online, Directory is increasingly a motor of international growth. The retailer already caters for online shoppers in 58 countries and that is likely to be extended.

Sometimes criticised as ‘boring’, Next in fact has proved itself to be one of the most resilient of retail brands – one that consumers continue to hold in high regard and that delivers the product consumers want.

In these tough trading conditions Next is a case study in smart retailing.

The Olympics effect

In the run-up to the London 2012 Olympics retailers were divided over what, if any, the benefits to the industry would be.

As Retail Week went to press it looked as if the sceptics were being proved right. Olympics stock was being marked down within days and concern was mounting about footfall levels in London’s West End.

The West End is one of the country’s premier shopping destinations, so any underperformance there is worrying for many retailers. However, it would be wrong only to look at trading through that single lens.

Retail sales were more than £300bn last year. The Olympics was forecast to generate about £560m for retailers. That would be very welcome, but would not change the overall picture.

A boost to confidence remains the biggest benefit the Olympics could deliver.