The death of the high street had been a topic of discussion long before the coronavirus pandemic hit. As ecommerce sales continued to increase year on year, many bricks and mortar shops have struggled to stay relevant. And as the country went into lockdown in March 2020 (and pretty much stayed in lockdown until recently) the economic effect of the pandemic was too much for some retailers and many went into administration.
Bonmarche, Arcadia Group, Peacocks, Edinburgh Woollen Mill (EWM Group), Debenhams, Oliver Sweeney Trading and Aldo are just some of the retailers that have either entered into administration or closed permanently.
However, Next is one retailer who has expertly weathered the storm of the pandemic to record a pre-tax profit of £342m. And now, they plan to up their marketing spend to above pre-COVID levels, prioritising its online offering through almost exclusively digital channels.
The retailer managed to save £21m over the financial year ending January 2021 by simply getting rid of its catalogue. With no plans to bring it back, approximately 30% of the catalogue savings will be reinvested into marketing.
Despite non-essential shops being allowed to reopen on 12th April, Next “sees no value in using that increased marketing budget to draw consumers back to its bricks-and-mortar stores.”
According to CEO Lord Simon Wolfson said: “Almost all our expenditure now would be in terms of the various different forms of digital marketing, both in the UK and overseas. So we won’t be spending money in order to attract people back to stores. But we’re fairly confident from our experience with the last two lockdowns that people will come back.”
Next highlighted digital marketing as its priority way back in 2018 when it almost doubled its ad spend and simultaneously cut budgets for print, TV and direct mail. Since then the retail giant has gradually increased its digital spend, spending £44m in 2019 alone.
Despite temporarily closing its online store at the start of the pandemic because it couldn’t keep up with demand, its online customer base ended the year at 8.4 million, a growth of 28% on the prior year.