New Look to double revenues in international markets
Having been operating in international markets for some years fashion retailer New Look is now fully committed to expanding its overseas presence and expects non-UK revenues to account for more than half of total sales within a five-to-10-year time-frame.
Glynn Davis talks to Nigel Darwin, Managing Director International at New Look
This would equate to a doubling of revenues from international markets as New Look currently derives 24 per cent of group sales (£343.8 million) from outside its home market – from a mix of company-owned stores, franchised units with partners in local markets, its online stores, and its Mim chain of 300 outlets in France and Belgium.
Ahead of taking part in a panel discussion at the forthcoming Retail Bulletin International Expansion Conference in London on March 27th, Nigel Darwin, Managing Director International at New Look, says: “We have had some success overseas and we’re 100 per cent convinced that there are some medium-term opportunities and that scale-wise it will be as important as the UK.”
For all retailers expanding overseas he advises working out what are the objectives based on “an honest view of the opportunities and constraints of your own company”. “You’ve got to be rigorous – is it for short-term profit or to grow a world brand? Once you have an understanding of this then you’ve a much better chance to deliver [a successful outcome],” suggests Darwin.
This will impact on whether a retailer takes the route of opening its own stores or entering a partnership with a company that will operate the units under a franchised agreement. Many other factors are also taken into account. For New Look it considers whether it wishes to invest its own capital into a market, whether it has property contacts in that market, and whether it has knowledge of that local market.
If the answers are ‘yes’ then company-owned stores will likely be the preferred route it takes. It currently operates 80-plus outlets across Western Europe in countries such as France, Belgium and Holland.
If the answers are ‘no’ then working with a partner will be the best option. The selection of a partner is crucial and Darwin says New Look has so far not had to part company with any of its partners: “There is always a learning period to go through but with good due diligence we’ve now got a very strong and effective group of partners — we benefit enormously from their experience and skills.”
Although it is also important to have an ‘operating manual’ for these partners, Darwin says “versus some competitors we’re more flexible”. Whereas service has to be 100 per cent controlled, the brand has to be consistent, the trading mentality has to be the same as in the UK, and the look of the stores has to be recognised the world-over, Darwin says beyond this he is “open-minded” about how the partners operate the stores.
To date the company has 10 partners covering 14 countries – that involves 14 markets including the Middle East, Russia, Poland, Singapore, Ukraine and the Balkans – which equates to over 100 stores.
The third route through which New Look accesses international markets is through its online business, which presently supplies products to over 120 markets. According to Darwin it represents a “meaningful amount of sales that are expected to get bigger and bigger”.
Up to now he says development of New Look’s multi-channel proposition has been very much focused on the UK market, whereas working with partners in franchise markets has focused on the stores channel.
In the future he says the overseas markets will benefit from the “roll-out of multi-channel capability”, but he adds the caveat that all overseas activity will still take the approach of having a tailored offer which works for the specific market and the specific partner.
“The UK is generally recognised as leading edge in multi-channel and there are lessons to be learnt from this. But equally the characteristics of the overseas markets differ so things will not always work in each country,” explains Darwin.
So while the expansion of the group overseas will continue to involve the opening of more company-owned and franchise stores with partners, the online channel will begin to play a much more important role as it becomes integrated into the overall proposition rather than being run as an entirely separate operation in each market.
This should see New Look deliver strong growth especially as Darwin says the overseas business (particularly in its franchised markets) has involved laying down the foundations that can now be leveraged.
“We are small scale in these markets and along with entering [new territories including] China, India and Turkey there is a lot of scale to flow through from our existing markets,” he says.
The Retail Bulletin’s International Expansion Summit, sponsored by GfK is at the Cavendish Conference Centre, W1, 27th March 2012. For full details and registration, click here.
