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Next branches out into garden centres

Next customers will be able to shop for patio slabs and power tools as well as bed linen and jeans next week, when the fashion brand opens its first garden centre.

The Next Home and Garden store in West Sussex is a departure for the chain and will also see it add sheds, fencing and paint to its repertoire when it opens its doors on Wednesday.

Next's chief executive, Simon Wolfson, said the retailer was not "betting the farm" on the project, but claimed it was the logical next step for its homewares business, which already sells furniture, fitted kitchens and flooring. "We will trade it for six months and then take a longer-term view of its prospects," he said.

The update came as Next, which has more than 500 stores, delivered some welcome good news from the retail sector. First-half figures came in towards the top end of company forecasts, with group sales up 3.2% in the 26 weeks to 30 July. Sales at its stores were down 1.7%, but this was offset by a 15.1% surge at its Directory home-shopping arm.

Wolfson, a Tory peer who has built up a reputation for being something of a Cassandra on the economy, said the outlook was subdued, but added: "There's nothing in any of the numbers that I look at, whether it be inflation, or employment or unemployment numbers, that would suggest that the situation's going to get any worse."

By his usual standards, the comments were deemed optimistic. Shore Capital analyst Clive Black said that for retailers and consumers they represented "sight of the tunnel, if not the light at the end".

Wolfson also predicted that pressure from rising costs, such as higher cotton and manufacturing prices, would ease next year, meaning price cuts could be on the cards for shoppers. Next increased its clothing prices by 7% in the first six months of the year and said that figure would be around 8% in the second half. "Prices will not go up next year but at this point I can't say whether they will go down," he said.

Wolfson said Next's garden centre was not designed to compete with "buildery-type sheds" but offered "DIY-lite". The 36,000 sq ft store is two-thirds clothing and homewares, with the remainder of what is a former Homebase outlet devoted to items such as paint, wallpaper and bathroom and kitchen tiles.

Arden analyst Nick Bubb said one of Next founder George Davies's last moves as chief executive was to buy a garden centre business – a final act of the "megalomania" that led to his ousting. But Bubb added: "I'm not saying Simon is turning into a megalomanic. This looks like a very methodical and well-planned extension of its homewares range."

Wolfson, who has the ear of both David Cameron and George Osborne, said he had not had any discussions with Mary Portas, who has been appointed by the prime minister to review the state of the UK's high streets. "I am not enthusiastic to get involved in it," he said. "I prefer to do my bit through action rather than reports. What happens to retail will be what consumers and retailers decide to do ... and what retailers do is driven by what consumers want," he added.

Source : Zoe Wood -

08 August 2011
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