Ask the expert: Will retailers celebrate Christmas?

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Phil Wrigley, chief executive of New Look, answers questions on what it takes to be a winner on the High Street.

Mr Wrigley revealed to the FT recently that New Look would be spending £6m with the opening of four stores in France and two in Belgium next spring. To read the article, click here

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In the interview with the FT, you talk about other markets. Can you say where you are looking and do you have any concrete plans? How do you go about researching markets?
Robin Foster, Kent

Phil Wrigley: At the moment, we don’t have firm plans to enter any other markets until we have seen the results of our trials in France and Belgium.

Before we enter a market, we examine market data and information on customers and the economic environment. We look at competitors, many of whom we can benchmark against in the UK, how new stores will fit with our network and whether we need a local partner. We already have 210 stores in France trading successfully as MIM, so it was a logical place to start as we already know the market well.

It is also important to have the right team in place, including people who know the market inside out. For example, early this year we appointed Michael Lemner as our Managing Director, International. Michael was H&M’s country manager for France and before that Belgium so he’s the perfect person to help build or presence there.


How is price deflation in the UK affecting clothing retailers?
James Sorolla, Brighton

PW: According to Verdict’s research, price deflation has affected the clothing sector for the last ten years - so it’s not a new phenomenon. Essentially, price deflation means retailers must become more efficient. For example, productivity can be improved through more efficient distribution of product, from more efficient deployment of staff to better match customer needs etc. We have done a lot of work on our supply chain, including investing in a new national distribution centre this year. Reducing our cost of distribution across the UK.


Are you being affected by weakening consumer confidence?
David Howard, Wimbledon

PW: The evidence is that the whole retail sector is becoming more difficult. There are always winners and at the moment we are still trading ahead of our plans.


An FT article over the weekend said Matalan had applied a 2 per cent retrospective cut to what it pays suppliers. Is this a sign on how difficult the market is? Have you asked suppliers for rebates? And if so, do you always do it on a forward-looking basis?
Andrea Lodge, Southampton

PW: We can’t speak for Matalan. We have a close relationship with our suppliers and look for opportunities for both parties to benefit from working together. As New Look is growing very rapidly, increasing by 50% in 18 months, we haven’t asked suppliers for rebates but are negotiating forward looking volume discounts with suppliers who will benefit from incremental business from us.


Having seen your interview with the FT, I wonder if you are able to confirm recent reports about intentions for a New Look IPO in the spring of 2006. If so, how and to what extent have things changed since going private in 2004?

Trevor Cooke

PW: At the moment we have no plans to IPO. The most obvious change to New Look since going private has been our rapid growth and the introduction of new ranges. By March next year the company will trade from 50 per cent more space than it did as public company. We have focused on adding larger stores, like the 34 we acquired from Littlewoods - so we can provide the menswear and kidswear ranges our customers have been asking for.

We are supporting this growth by investing throughout the businesses. We have opened our new national distribution centre. Our design team is four times larger then it was when we went private and that’s helped improve our speed to market, fashionability and the development of menswear and kidswear. We are buying stores three times the size we were two years ago. We have also built New Look’s credibility as Britain’s third largest clothing retailer with a reputation for having great fashion at consistently competitive prices. We have also improved MIM’s performance in France and developed capability to become a significant international retailer.


Who do you think will be the winners and losers on the high street this Christmas? Are you worried by the supermarkets moving into the clothing market? Why do you think that New Look can successfully expand abroad when most British retailers have struggled?

Anoop Ajay

PW: It’s always difficult to predict winners and losers though an early sign will be those companies that start discounting before Christmas.

I am not worried by supermarkets moving into the clothing market as we’ve expected it for some time. It’s a natural extension of out of town retailing and follows the patterns we’ve seen in the US and Europe.

Many UK retailers are thriving abroad. From Tesco to B&Q, Monsoon to Mothercare. We have 15 years experience in France and a successful business in MIM which is showing good returns and an improving performance. We tested New Look’s product in MIM and the response was very encouraging.


Do you have concrete plans for Russia? What is needed from a retailer to succeed in Russia?

Kristoffer Laurson, London

PW: We do not have any plans for Russia as yet. Therefore we have not reviewed what specifically is needed for a retailer to succeed in this country. However as I said earlier to be successful in any country you have to understand the market dynamics inside out, hire the right people and have a clear and different offer for the customers.


What do you think M & S can do to regain its position as the pre-eminent retailer on the High Street?

Caroline Greenland, UK

PW: A couple of observations: his last set of trading results show progress and I love his food ads on the television. Many people have been giving Stuart Rose advice on how to turnaround M & S but I’m happy to remain focused on my business.


Which public are you focusing on with the branches in continental Europe? How would you compare the positioning of the New Look brand with H&M and Zara?

Pierre-Yves Warnotte, Trends-Tendances, Brussels, Belgium

PW: All customers interested in fashion at great prices. We find that customers attitude is the most important factor rather than age or amount of money to spend and will learn whether this is as true in France and Belgium.

Our customers tell us we are similar to H&M but more fun and less expensive than Zara and more accessible.


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