Next is set to make a further foray into own-label fashion later this year. What steps does it need to take to ensure its newest venture is a success?
The mid-market fashion stalwart’s eponymous brand is one of the most powerful own-labels in retail.
Next aims to add to that bench strength with the launch of the latest own-brand in August. It has been created for Next’s Label business, which has specialised in the sale of third-party brands including Lipsy, which Next bought.
The retailer has been tight-lipped about the launch, which will be run by Next Label creative director, Gemma Metheringham.
Next’s latest venture comes at a time of varied fortunes for own-label fashion brands.
John Lewis expanded its own-label offer with a denim collection in March and new managing director Paula Nickolds aims to establish a 50/50 split of own-brand and branded sales.
Striking a balance
Debenhams trading director Suzanne Harlow says that retailers need to strike a balance between originality and competitiveness in their own-brand offerings if they are going to have a long-term shelf life.
“It’s vital that brands are distinctive and have a clear place in your offer,” she says.
“Exploiting gaps in the market has been the driving force behind the success of Go Outdoors’ own-brand offer”
“Genuine innovation is important, but sometimes there is also opportunity in doing things better and faster than others.”
For adventure equipment specialist and recent JD Sports acquisition Go Outdoors, exploiting gaps in the market has been the driving force behind the success of its own-brand offer.
The retailer’s OEX range, which won the Retail Week Award for own-brand range of the year, was designed to cater to shoppers embarking on the Duke of Edinburgh Award scheme.
Go Outdoors commercial director Dan Quinn says: “A lot of teenagers were doing [expeditions] and needed equipment, but the branded offer was relatively expensive – we identified a gap in the market and went after it.”
However, Quinn observes that own-brand sales can also come from following in a retail rival’s footsteps rather than blazing a trail.
“Our own-brand childrenswear offer came after we recognised a competitor that had a better offer in the category, which prompted us to up our game. It’s now one of our best-selling own-brand offers,” he says.
“Strong focus is on growing categories where we can increase our market share”
Judith Batchelar, Sainsbury’s
Likewise, Sainsbury’s director of brand Judith Batchelar says the grocer prioritises products that have already built up good sales momentum, either at its own business or at its rivals, when developing the grocer’s own-label offer.
“Strategically, our strong focus is on growing categories where we can increase our market share,” she says, highlighting the supermarket’s prepared fruit and vegetable offer and ‘Deliciously FreeFrom’ line as ranges that have piqued existing consumer appetites.
Launching the brand
Next said its own-label will begin as a trial and that sales are initially expected to be modest – an outlook that falls in line with Debenhams’ approach to new own-label lines, according to marketing director Richard Cristofoli.
“You only get one chance to launch a new brand – so do it well, but don’t be too quick or simplistic in judging its performance,” he says.
“Metrics, like attraction of new customers, are as important as total sales performance in those early seasons. We generally tend to see stronger sales in a second season as the customer discovers and familiarises themselves with the brand.
“You may be living and breathing it every day, but your customers are not.”
“It is vital to the business that we have a relevant, thriving own-brand proposition for our customers and members”
Breige Donaghy, the Co-op
When done right, own-brand can comprise a substantial proportion of a retailer’s revenue – the category makes up more than half of Debenhams’ sales and 47% of the Co-op’s grocery purchases.
The Co-op director of delicious food Breige Donaghy says: “It is vital to the business that we have a relevant, thriving own-brand proposition for our customers and members.
“This requires a huge effort on behalf of a number of teams stretching across product development, customer insight, own-brand development, ethics and sourcing policy, packaging, marketing, pricing and supply.”
A successful own-label launch requires consumer research and a slick product development programme that allows a retailer to cash in on shopper trends while they are still relevant.
“If you hit the sweet spot in terms of a great product you can see a real increase of awareness in your shoppers”
Dan Quinn, Go Outdoors
It is not an easy task, but Quinn believes that one of the biggest opportunities of own-brands lies in the ability of retailers to make the most of their proximity to shoppers by reacting quickly to items that they want.
“If you hit the sweet spot in terms of a great product you can see a real increase of awareness in your shoppers, be it through social media or product reviews, without investment in traditional advertising spend,” he says.
But when not executed correctly, own-label runs the risk of reducing a retailer’s relevance to shoppers.
As is so often the case in retail, execution is all.