'I wish we'd started this investment three years ago' - The Retailer Next on Digital Investment
For many fashion companies that I have worked for and with Next has been a huge competitor in the market, however when it comes to their digital innovations they have some how found themselves a little behind the times.
Simon Wolfson the CEO of Next admitted yesterday that the retailer had been slow in taking advantage of the opportunities on offer in the areas of digital marketing and optimisation of the online customer experience. Next says it has learnt a lot of lessons from it's online competition and looks to increase its investment in digital by a massive 25%, equating to an extra £11 million pound to be spent on their big online push this year which will take them to a grand total of a £50million spend on digital.
“I wish we’d started this investment three years ago,”
Wolfson told Marketing Week, speaking at Next’s annual general meeting yesterday.
56% customers are more likely to shop at a retailer or online that recognises them by name - Source: Accenture.
With personalisation and customer experience being absolutely key this year, this investment will be predominantly spent on digital systems enabling them to target their customers better and deliver a bespoke shopping experience.
“We’ve just significantly increased our level of investment in both systems and marketing – especially for big pieces of third-party software – and we have no intention of relaxing the rate at which we invest."
Next have learnt that in the current market climate, digital growth is essential in order to compete effectively.
People typically spend five hours a day on their smartphones, and 90% of users using their devices in-store while shopping.
In 2017 Next found that their retail sales were down by 7.9% on the year, this meant a 24% decrease in profit for the industry giant, however - online sales were up not only not down in a declining market, but up by 9.2%, which considering their lack of digital development in comparison to many other brands in the sector - could have been even higher with more focus and investment. While bricks and mortar remain king for shoppers, the growth available in ecommerce to to big to miss, the seamless integration of the two is where the gold is.
From it's development so far and it's more strategic target spend on third-party websites - Next are already seeing a 12% improvement on return on investment and a new improved ability to target specific customer groups that it wasn't able to do before.
We’ve learned a lot of lessons from other people in our industry and one of the things we’ve done is we haven’t spent too long deciding which software to use; we’ve gone for the one we know works well for one of our more advanced online competitors. This is one of the reasons we’ve been able to do this so quickly: we said, if it works for them, it works for us.”
Artificial intelligence the the theory and development of computer systems able to perform tasks that would previously requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
Also in the pipeline for the retailer is an artificial intelligence-based search engine, which Next are currently testing. This will enable the business to learn from customer behaviour relying less on manual attribution of its products. AI is also a huge innovation for the industry that will come into its own this year for sure! Understanding the current tools available is key for any business deciding budgets and investment spends, knowing how and what data to utilise will provide the most invaluable insights and will have critical affects on the company's future.
“Online marketing is about making online shopping easier and having stores doesn’t make it any less or more easy to shop online if you improve your systems,”
“What we’re focusing on in the year ahead is integrating our stores with our online systems and that is complex and the most difficult bit.”
After Next saw the toughest trading period it has seen in 25 years in 2017, Wolfson has said that it isn't expecting a easy year. However the economic conditions doesn't seem to look quite as difficult for 2018 as it was back in 2017 but brands and companies do need to ensure they stay at the top of their game in a struggling market with so much competition. In the last few weeks we have found retailers filing for bankruptcy and announcements of profit warnings in the city.