Following retailing company Next describing the last fiscal to be the most challenging in the last 25 years, the company reported a fall of 8% in its yearly profits.
2017 was the second consecutive year for the company when profits declined as the company reported pre-tax profits dropping to £726.1 million in the 12 months to January.
While there was a rising demand in its online channel, the sale of its full-priced products declined at the physical stores of the company, Next said.
In addition to “self-inflicted product ranging errors and omissions”, “a weak clothing market” was also blamed by it for this drop.
While falling 7% in stores, there was growth of 11.2% in full priced sales online. There was a drop of 0.5% in total revenue for the year to £4.1 billion.
“In many ways 2017 was the most challenging year we have faced for 25 years”, said Next’s chief executive Lord Wolfson.
Despite the year being an uncomfortable one, he said that “it has also prompted us to take a fresh look at almost everything we do” which included examining the shop portfolio structure and the “in-store experience”.
These are tough times for mid-priced retailers like Next, according to experts on the retail secto.
“The middle market is suffering and there isn’t a way back home,” Kate Hardcastle, from consultancy Insight with Passion, told the media.
“I think retail generally in this market place has been quite lazy,” she said.
According to Ms Hardcastle, those retailers who are able to react faster to changes in fashion trends as well as those which are cheaper are the ones that consumers are getting attracted to.
“So you’ve seen the rise of Primark on the discount side, Asos and Zara on the more fashion-orientated side and a consumer very much influenced by Instagram and social media.
“It’s just too much of a turnaround, too much of a challenge for these quite heavyweight retailers who have expected to trade the way that they always have,” Ms Hardcastle said.
There are clear indications that the British consumers are preferring to expend more money on essential items and cut down on items like fashion as indicated from the latest data on retail by the Office for National Statistics which note that in February, supermarkets saw a rise in sale while non-food stores saw a drop in sales.
Situations where drastic business restructuring has become necessary or imminent closure is being faced by multiple retailers and casual dining outlets.
Retailers like Toys R Us and Maplin have been pushed into administration. Closues of 60 UK stores and retrenchment of 1000 employees was secured by fashion chain New Look with its creditors this week.
Closure of outlets and laying of employee is also happening in the restaurant sector and is being done by the likes of Jamie’s Italian, burger chain Byron and Prezzo.
(Adapted from BBC.com)