Appendix E - Full SWOT Analysis Strengths Next has a strong brand image and reputation for its stylish fashion and accessories. Next is also one the pioneers of enabling customers to buy through a number of channels, retail stores, online stores, mobile apps, telephone sales and it is already ahead of most brands in the market (Ipsos Retail Performance, 2012). Furthermore, it also has a strong online store which has helped increased its sales with retail sales. NEXT’s sales growth is mainly driven by its online channel which shows the benefits of a multichannel strategy, according to industry commentators (Rigby, 2012).
Weaknesses The retail market is very competitive and fierce with many fashion brands in the market. For example, in terms of e-commerce division, NEXT invested £125,000 to improve its online store and delivery but in comparison to Debenhams, it invested more than 5m on internet technology and Mark & Spencer invested 50m on e-commerce and digital TV (Giffels, 2001). This makes it very completive for the brand NEXT to compete with and to win over its customers. The other significant weakness of the brand is its pricing is uncompetitive in a discount-driven market (Omolu, 2013). NEXT price range is mid-range which will not out beat other brands that provide lower costs and at the same quality, such as Debenhams with its big discounts.
Opportunities NEXT has been focusing on improving its online store through developing buying techniques, customer service and delivery capabilities (NEXT plc Annual Report 2015). There is a growing demand for online purchasing which has helped contribute to most of it’s sales. According to Tong (2010), there is an excess of £50 billion that is expected to change hands online in 2011. This gives a bright future for the brand to continue improving its e-commerce strategy. Moreover, the brand has also been focusing on expanding its store portfolio, such as store size and number of stores in the UK and overseas. NEXT has a very active management of its store portfolio which has significantly generated a healthy profit, with 97% of its space delivering a net branch profit of more than 10% (NEXT plc Annual Report 2015). With international sales, it is expected to grow by 50% to £150m in the year ahead, which is why the brand is expanding its operations in China (Rigby, 2014).
Threats The biggest threat to the company is its highly competitive market. According to Key Note (2000), the discount clothing brands in particular has considerable opportunities to take sales away from the standard clothing market. For example, companies such as TESCO and ASDA offer cheap clothing and accessories than high street brands. Furthermore, it can also be difficult to compete with well-known brands such as ZARA is known for its sophisticated and classy styles and trends. This can make it very difficult for the company to compete with discount retailers as the economy is still improving and consumers are becoming more discerning to prices and brands.