While New Look’s latest financial results were no surprise to the market, they served to highlight the depth of the retailer’s troubles.
UK like-for-likes fell 10.7% in the 39 weeks to December 23, while online sales crashed 15%.
A turnaround for the retailer will not be swift as it struggles with the relentless shift to online shopping and a shrinking of sales 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 brought back Alistair McGeorge, its executive chairman from 2011 to 2013, who has firmly established his intention to steer New Look away from its recent focus on younger shoppers.
WGSN’s consumer data suggests New Look has more authority and equity with older shoppers anyway, which encouragingly gives credence to McGeorge’s strategy.
“New Look’s fundamental stumbling block has been its inability to keep up with the likes of digital behemoths Boohoo and Asos, in terms of newness, trend and convenience”
According to Barometer data, New Look’s 25-34 and 35-49-year-old shoppers are more likely to promote the retailer, with advocacy scores of 39.9 and 44.1 respectively, rather than its 16-24 shoppers with an advocacy score 27.7.
While there is no denying New Look has to quicken its product turnaround and become more reactive to consumer demand, distancing itself slightly from the relentless chase for newness will help it better serve its “sweet spot” customer base – the 25-40-year-olds.
But the most worrisome part of New Look’s results are its declining own website sales, demonstrating why a robust own website proposition is integral to avoid cannibalisation 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’ Premier scheme).
“While there is no denying New Look has to quicken its product turnaround and become more reactive to consumer demand, distancing itself slightly from the relentless chase for newness will help it better serve its ‘sweet spot’ customer base – the 25-40-year-olds”
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 in-store ordering (with 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 a 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.
Nivindya Sharma is a senior retail analyst at WGSN