Jul 20, 2018 | By Rebecca Stevenson
Feb 06, 2018
While New Look’s latest financial results were no surprise to the market, they, once again, served to highlight the depth of the retailer’s troubles – UK like-for-like sales declined 10.7% for the 39 weeks to December 23rd.
Turnaround for the retailer will not be swift, as it struggles with the relentless shift to online shopping and a shrinking clothing pie as consumer spend diverts to experiences; but narrowing its consumer focus and enhancing its multichannel experience must be top priorities as it embarks on a turnaround plan.
In an effort to revive the business, New Look has brought back Alistair McGeorge, its executive Chairman from 2011-2013 – who has firmly established his intention to steer New Look away from its recent focus on younger shoppers.
This is a wise move as New Look’s fundamental stumbling block has been its inability to keep up with the likes of digital behemoths boohoo.com and ASOS in terms of newness, trend and convenience. WGSN’s consumer data suggests New Look has more authority and equity with these older shoppers anyway, encouragingly giving credence to McGeorge’s strategy.
According to Barometer data, New Look’s 25-34 and 35-49 year old shoppers are more likely to promote it (advocacy scores of 39.9 and 44.1 respectively) rather than its 16-24 shoppers (advocacy score 27.7).
While there is no denying the fact that New Look has to quicken its product turnaround and become more reactive to consumer demand, distancing itself a bit from the relentless chase for newness, will help it better serve its ‘sweet spot’ customer base – the 25-40s.
The most worrisome part of New Look’s results is its declining own website sales (Q3 YTD own website sales declined 15%), demonstrating why a robust own website proposition is integral to avoid cannibalization from online marketplace partnerships (third-party online sales increased 21.9%).
This is New Look’s real pain point, and drastic action will be required to switch this around.
The digital battleground is demanding – with agile veterans Asos and Boohoo setting the pace. While a more agile and reactive product offer will go some way to alleviating this, New Look has to rapidly catch up with a comprehensive and competitively priced fulfilment offer (at £19.99 its ‘Delivery Pass’ is double ASOS’s Premier scheme).
This is where New Look must use its substantial store portfolio to its advantage, using its stores to drive awareness and excitement around its online offer; ensuring its stores promote and educate shoppers of its online presence – through initiatives such as instore ordering (tablets offering shoppers a way to order out-of-stock sizes and styles), staff guidance and ‘online exclusive’ promotions.
As an established retailer, New Look has brand equity, and while this is in no way measure of future success in today’s rapidly changing retail environment, it is still a distinct competitive advantage that it must leverage as it embarks on its turnaround plan.
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