New Look CEO Anders Kristiansen and UK and Ireland managing director Danny Barrasso talk international expansion, UK manufacturing and how the retailer is transforming its product and speed to market.
Kristiansen and barrasso
- New chief creative officer joins in September and will make more hires to the buying, merchandising and design team
- New Look will be “more aggressive” on price and the pricing architecture will be stretched
- The target market will be narrowed to a “fashionable 25-year-old”
- China is a key focus but an entry into the US could be on the cards
High street giant New Look is undergoing a transformation in arguably one of the most challenging retail markets in recent history. Amid Brexit uncertainty, a shift in consumer spending from clothing to leisure and increasing pressure from agile online-focused fast fashion operators, CEO Anders Kristiansen has launched a new strategy: to be faster on delivering trends, reduce its reliance on discounting, cater to a more specific, younger customer and improve value for money.
“Last year was never going to be a great year, but as a team we could have done a better job,” the Danish national admits to Drapers as he and UK and Ireland managing director Danny Barrasso settle down at the boardroom table in the retailer’s smart central London head office. “You can roll up your sleeves and get back in there, or you can do nothing. We’re all about making change, moving the business on and making sure we continue to invest in our initiatives.”
Much of the fashion sector took a battering in 2016, New Look included. Underlying operating profits tumbled 44% to £97.6m in the 52 weeks to 25 March 2017, while revenue fell 2.4% to £1.45bn.
First-quarter figures published on 8 August showed a post-tax loss of £15.2m, compared with a profit of £5.8m for the quarter in 2016.
I really wanted someone to bring something very different to New Look to help us move on
Kristiansen says he is focusing on product to get the business back into growth and has looked to Spanish fast fashion stalwart Inditex – renowned for its vertical structure, trend-led product and speed to market – for his new fashion chief.
“I really wanted someone to bring something very different to New Look to help us move on,” says Kristiansen, who has led the retailer since 2013, when he joined from Danish fashion house Bestseller. “The business needs to be moved on all the time, especially today with social media, as consumers can see the trends as fast as we can.”
Paula Dumont Lopez will join as chief creative officer in September. Between 2003 and 2013 at Inditex, she worked her way up from fabric buyer to head of product at Zara, and has been senior vice-president and head of Esprit Woman since then. She will replace Roger Wightman, who is leaving New Look after 27 years.
“Roger and I have talked about him wanting to move on for the last couple of years but we wanted to find the right person [to take over] first,” explains Kristiansen. “I liked that Paula had been somewhere else in between [working at Inditex]. She isn’t just coming out of somewhere very successful and coming into something a lot harder. It was a bit challenging at Espirit and she has done exceptionally well. She has a lot of energy, passion and love for product. There needs to be a love for every single garment in that role. That’s how you create a great product range.” Barrasso nods fervently in agreement.
Undoubtedly, more additions to the 355-strong buying, merchandising and design team are to come, says the CEO, who is decked out in a grey New Look suit and teases the well-built Barrasso for not being able to fit into the retailer’s slim-fit styles.
“I would be surprised if Paula comes in and we don’t add people to the team. I’m happy with the team we have so it isn’t about changing them. We want to have a bigger team.” In June New Look hired Mango’s womenswear director, Rosa Gutierrez Sanchez, as a trend and design consultant, initially for a three-month period.
Meanwhile, as revealed by Drapers, New Look’s menswear director Christopher Englinde and women’s footwear, accessories and beauty director Amanda Wain have both left the business. Dumont Lopez will be tasked with finding their replacements.
In an increasingly crowded and competitive market, Kristiansen says New Look will be “more aggressive” on price across all categories. There will be more products at keener entry prices, and the pricing architecture will also be stretched upwards.
“There are customers for a higher price point. Our longline kimonos, for example, go from £9.99 to £27.99. I walked past a competitor and they had three beautiful kimonos in the window for £80 each. I’m not saying we should go that high, but why don’t we have something at £40 or £50 with a lining and more embellishment?”
We need to look at other markets where we can get better costs
Sourcing is another area of focus to speed up delivery to market while keeping costs low. The bulk of supply is from China and Bangladesh, but New Look has increased production in Myanmar and is looking at opportunities in other territories.
“There are certain markets we don’t source from today that we could look at in the future,” says Kristiansen. “At the moment we don’t source from Spain, but with Paula’s background maybe we will look at that. We need to look at other markets where we can get better costs and we also need to look at other markets where there are shorter lead times, but [we’ll be] paying a higher price. We need a combination of both.”
Kristiansen says the retailer will also stop placing orders with factories 12months ahead, which is cheaper, as he wants products designed closer to season: “I’d rather have a smaller intake margin and have flexibility, as I’m 100% convinced that my achieved margin will be better. What you buy long lead you are gambling [on] as you are so far away from the season, so you have more markdown on that product. Short-lead products are more expensive but they have fewer markdowns, so the achieved margins are better.”
One retail veteran agrees that New Look needs to work closer to market to compete with Zara: “I don’t think they are as fast on key fashion trends as they used to be. They have been slow on key trends where they used to score on fashionability and price. Everybody else is just as quick now. Primark, Zara and Boohoo are stepping up their games in terms of price and trend. New Look is in an increasingly tough part of the market.”
As a result of this need for speed Kristiansen wants to increase production in the UK, but claims many UK factories fail to meet ethical regulations: “I would love to buy more from the UK but I can’t. Four years ago we had 190 suppliers in the UK. Now we have 12, as many are not ethical and we don’t want to source unethically. We don’t want to have people working in an environment that doesn’t meet health and safety standards, and we don’t want people on benefits who are accepting £2-£3/hour.
“We don’t want to be a part of it. We have said all along that we want to do a lot more in the UK, even if the price is higher, as it is a lot faster. We are prepared to double, triple, quadruple our production.
I would love to buy more from the UK but I can’t
“We have talked to so many people about it and no one is doing anything. I find it immensely frustrating. I don’t know how to crack it. The only way we can manage it [at the moment] is to reduce our suppliers here.”
New Look is not alone in its desire to increase volume production in the UK, says Adam Mansell, CEO of the UK Fashion and Textile Association: “There is a desire from big retailers to move volume manufacturing back to the UK – we’re hearing it from several companies. They realise the advantages in terms of speed to market, control over the design and, with the uncertainty surrounding Brexit and tariffs, it is focusing a lot of firms’ sourcing strategies.
“The two key issues, however, are how we deal with bad employment practices that are undoubtedly happening in some factories in Leicester, and how we develop a partnership approach between the retailers and the factories. The industry needs to come together to drive out any illegal practice and work closely with government agencies to make sure those responsible are punished. Equally, factories need to be reassured and have confidence in the retailers that it is for the long term, and they aren’t going to drop them after three months.”
Internationally, China, where New Look had 110 stores as at 25 March 2017, remains a key market, but attention could soon turn to the US, indicates Kristiansen: “China is so exciting for us. It is very cheap to open stores there and they turn profitable very fast. We would love to go to the US and we will go there but for right now we have momentum in China and that is where we want to have our focus, at least in terms of expanding stores at the moment.”
The US is also of great interest from an online point of view, says Peterborough-native Barrasso, who was appointed to his current role in 2014 and has an ecommerce background at firms including Thomas Cook and Hilton Hotels.
“I read with great interest about what Misguided and Boohoo have done in terms of breaking into the US. Clearly it is the world’s biggest retail market, so that has got to be on our plan,” he says. Over the next 12 to 24 months New Look will launch dedicated language websites in “many” more markets following successful launches in France and Germany last year, but he declines to reveal exact locations.
A New Look customer shopping on more than one channel spends three times more than those shopping on one
“We had a back-end tech upgrade last year and moved our infrastructure on to a new hybrid platform,” explains Barrasso. “This enabled us to launch sites in international markets much quicker. It’s doing really well in France and Germany and it makes sense to launch more, especially in markets where we don’t have physical stores.
“Three-quarters of our sales on our third-party partners [Asos, Zalando and Amazon] come from outside the UK. We get really good intel from them and we can see there are markets where there are big appetites for our product.”
Barrasso says the dedicated language sites let the retailer tailor content, improve SEO in the market and target shoppers more effectively.
In the UK, online sales now represent 22% of the total, and the site will migrate to the new platform later this summer. The upgrade will allow New Look to double the number of changes it makes to both consumer-facing and back-end parts of the site. In 2016 2,400 alterations were made.
The strength of online sits hand in hand with New Look’s multichannel strategy, which links the retailer’s ecommerce offer with its 600-strong store estate in the UK.
“We try to innovate and bring the two channels together to make sure the shopper gets the most convenience from both channels, particularly those switching between them,” says Barrasso. “We were one of the first fashion retailers to introduce click-and-collect back in 2010.”
Most of those innovations centre around the increasing use and importance of mobile in retail, Barrasso adds: “In the next few years we see shoppers who buy on their phones going into store and swapping their digital basket on to the till in store. We are also looking at payments. Some retailers already have Paypal integrated into their apps and mobile sites – that’s where it is heading. Our stores are a big advantage and we leverage that. A New Look customer shopping on more than one channel spends three times more than those shopping on one.”
Like many other multiples and department stores, New Look is creating in-store experiences to increase dwell time and spend. For example, when the new 24,000 sq ft flagship opens on the east side of Oxford Street – its third on London’s best-known retail thoroughfare – in mid-November, shoppers will be able to visit the hair salon, make-up bar and an embroidery station where they can personalise their denim purchases.
The UK is a great market and it will come around. It is just a question of when
“We’re looking at experiences but it has to be relevant,” adds Kristiansen. “It can’t be experience for experience’s sake. We will change it all the time as our consumers move on all the time. It will continually evolve.”
The retailer’s target demographic is also changing. The average age of a New Look shopper is 33 years old, however, the team is now narrowing its target market and is tailoring all marketing towards a “fashionable 25-year-old”.
“We haven’t been as precise as we could be in targeting our customer,” admits Kristiansen. “Going forward we will be razor sharp. That’s how I think we will get our message across best, rather than trying to cater for an 18-year-old at the same time as a 50-year-old – it just doesn’t work.”
The CEO insists that older New Look shoppers will not feel alienated by seeing a model of a younger age in its advertising: “We still want to develop that broad church of product but in our marketing and communication we need to sell it to a 25-year-old. Most people at 40 won’t be put off. Danny still thinks he is 25 and he is far from it,” he laughs. “Most people feel that way.”
Looking to the next 12 months Kristiansen remains cautious, but is reluctant to blame Brexit for tough trade. “It is easy to blame everything on Brexit. It has caused distraction, uncertainty in the market and it isn’t helpful, but the only thing we can do is manage our business properly.
“We need to do more and we need to continue to develop outstanding product. It will take another 12 to 15 months for the economy to recover, but the UK is a great market and it will come around. It is just a question of when.”