For the second quarter of 2016, fashion retailer Next posted a 3.3% fall in sales across its stores. Next have blamed this decline on shoppers, who - they claim - have been spending money on eating out and ‘experiences’, at the expense of fashion.
Our analysis suggests that, rather than eating out, other consumer passions are more likely to be reducing fashion’s share of consumer spend - and, regardless of the reason, Next’s dependency on two specific groups means that they’ll feel this competition for consumer spend more acutely than most.
Fashion consumers love beauty
As part of our Consumer Insight Series, we’ve studied the passion of fashion consumers, revealing what they truly love and what else, aside from fashion, they’re likely to be spending their money on.
Leaving aside the poorly defined category of ‘experiences’, our insights show that fashion consumers do, indeed, have a strong passion for eating out, with eating out being amongst the top 5 passions for four of our ten consumer segments.
However, what our data shows more clearly is that fashion is competing - quite literally, in some cases - with passions that are a lot closer to home. For seven of our ten consumer segments, Health & Beauty is a passion that sits second or third to fashion. For another segment (Fashion Insiders), Health & Beauty displaces fashion as the top passion; similarly, for Shopping Realists, House & Home sits as the first placed passion, ahead of fashion.
Consumer passions need to inform brand messaging
This insight should be invaluable to Next. While it could prove hard to prevent consumers spending more money on other passions and less on fashion, knowing precisely what these passions are would help Next at least try.
By knowing what consumers value, a brand - like Next - can adjust their message to resonate with consumers’ interests. Net-A-Porter, for example, which is the highest ranked brand amongst Investment Piece Buyers, focus the content of their magazine on beauty, lifestyle, and interiors - three of the top 5 passions for this segment.
Recognising the risk in your current customers
For Next, the phenomenon of shifting client spend is made all the more painful by their dependency on two specific consumer segments. 60% of their total online audience are consumers in the Shopping Realists and Deal-driven Homemaker segments. Both of these segments value the passions of Health & Beauty and House & Home highly, with Shopping Realists valuing the latter above fashion.
This is a huge risk to Next’s business and, in the coming months, it’ll be important for Next to move away from such a heavy reliance on consumers in these segments, towards segments where fashion doesn’t compete as fiercely with other passions.
Shifting toward the fashion loving consumer
Investment Piece Buyers and Luxury Fashion Aspirers would be good segments for Next to target. Together, both segments represent almost 30% of total fashion consumers. Currently, Next has a penetration of 2.1% and 6.6%, respectively, placing them as the 50th and 58th most popular brand. But, they’re fast growing their audience in these segments, with a growth rate of almost 20% in each.
Clearly, Next is doing something right to attract these consumers. What Next needs to ensure is that they continue to maintain growth in both of these segments, which will require a detailed understanding of the passions, interests, likes, and influences that define these consumers.
This is where our Consumer Insight Series delivers most value to brands: enhancing their understanding of consumers to inform the message they deliver to target customers.
It’s not only struggling brands like Next who need our insight. The fashion industry is ferociously competitive and to maintain sales - and to grow - all brands need to ensure that their message matches the genuine interests and passions of consumers.
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