Could Harvey Nichols acquisition finally help Next crack the luxury market?

Sources close to Next told Sky News over the weekend that the high street giant intends to have “a serious look” at the Harvey Nichols business.

The news has certainly raised a few eyebrows on what appears to be a considered move into the world of luxury from Next, but it’s not the first time the retailer has sought to join the market.

Next, which has built its billion-pound fortunes on the high street, has shifted its focus to more premium brands by adding the likes of Reiss, Joules, and Russell & Bromley to its portfolio.

The retailer dipped its toes into the segment with the launch of its premium fashion platform Seasons at the end of 2024, offering consumers a tailored edit of aspirational luxury brands, including the likes of Ganni, Mulberry and Dragon Diffusion.

It’s safe to say that the launch of a luxury offering like Seasons has slipped under the radar for many consumers. So could an acquisition like Harvey Nichols, one of the world’s most recognisable luxury businesses, be Next’s answer to finally cracking the market?

Next’s move upmarket

Next has been shifting its focus towards more aspirational brands and pushing into the luxury space in recent years, following “exceptionally strong demand” for its existing premium brands.

“Historically, you wouldn’t have said Next was necessarily a luxury retailer, but increasingly its shopper is buying across various price points [and] luxury is one of them,” says Savvy Marketing chief executive Catherine Shuttleworth.

“Some of the moves they’ve made in terms of the brands that they now sell are more luxury, and I think they are increasingly becoming a sort of mid to luxury retailer,” she adds.

GlobalData lead apparel analyst Louise Deglise-Favre associates Next more as a “premium” retailer, taking note of the Reiss and Russell & Bromley acquisitions.

The retail giant has sought to expand its portfolio of brands with higher price points, and is understood to have engaged in discussions about snapping up LK Bennett and Radley earlier this year.

A bid for Harvey Nichols will undoubtedly provide Next with an already established player in its target market.

“It says luxury,” says Shuttleworth, who explains the Harvey Nichols brand has a “cachet” about it.

Similarly, Deglise-Favre says: “Harvey Nichols has, especially in the UK, this heritage and prestige, so [Next] associating themselves with such a retailer by buying it is probably a good move on their end.

“Where it’s a bit more tricky is that Harvey Nichols has not been doing so great in the past few years as have other luxury retailers.”

What happened to Seasons?

Next has been steadily growing out its luxury offering, but the retailer has failed to really gain much momentum. Its Seasons platform has been live for almost two years now and still remains somewhat of a secret.

The premium fashion offering is a sub-section within Next.co.uk, and is home to brands such as Mulberry, Coach, Farm Rio and Rixo.

At the time of launch, the platform was suggested to be a worthy alternative to Matches, which had collapsed earlier in the year when it was snapped up by Mike Ashley’s Frasers Group.

Despite coming under the umbrella of Seasons, most of the aspirational luxury brands are available to purchase in the main assortment on the Next website meaning consumers have no need to seek out a separate page. And if they do, it’s unclear how many would recognise its separate banner.

Both Shuttleworth and Deglise-Favre are not familiar with the platform, with Deglise-Favre noting it’s “gone under the radar”.

Shuttleworth admits: “I’ve just noticed when I go on Next that there’s much more luxury stuff that I could buy on it than I could do before.”

Seasons itself is not even big enough for boss Simon Wolfson to highlight in the retailer’s detailed financial updates. Perhaps the venture has not taken off quite like he thought it would.

A head start

Harvey Nichols is one of the world’s most recognisable luxury businesses, and an acquisition will give Next the platform and customer base it has been keen to target.

Deglise-Favre says such a move would help Next to “diversify and also to start playing into the luxury space”.

Harvey Nichols, under the leadership of chief executive Julia Goddard, has spent millions transforming its Knightsbridge flagship from a forgotten store into a destination space of fine art, fashion and wellness.

Owner Sir Dickson Poon will likely be looking for a new partner that will help fund the retailer’s ongoing turnaround programme – something that Next will be able to support from both a digital and operational perspective.

Such an acquisition will see Next enter into the world of Alaïa, Saint Laurent and Jimmy Choo. It’s a massive step up from the host of premium brands that it currently offers. The big question is, does Next have what it takes to conquer the luxury market?

Shuttleworth explains that many shoppers now understand that Next is no longer just a clothing retailer, but more of a “house of brands”.

“It’s a logical next step to move into a more luxury end of things, and I think their top 10% of spenders are probably quite interested in [Harvey Nichols].”

While Next’s interest in Harvey Nichols is still speculative, such an acquisition would help provide Next with a greater platform and share of the luxury market that it has been unable to quite establish itself.