A case study of the retail chain NEXT

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In 1864 Hepworth & Son, a Gentleman’s Tailors store was established in Leeds. Hepworth then went on to buy the chain of Kendalls rainwear shops in order to develop a group of Womenswear shops which was called NEXT. Since 1982, NEXT has expanded in a variety of different ways, whether it has been by expanding on existing products or clothing ranges or by expanding into different areas, for example home interior ranges.

On February the 12th, 1982,the first NEXT women’s wear store was opened. It introduced an exclusive and co-ordinated collection of stylised clothing as well as shoes and women’s accessories. By the end of July, NEXT had expanded greatly, forming seventy new shops. The collection ranges for men, children and home followed the opening of the women’s collection.

        In August 1984, NEXT launched their clothing range for men, and by December there had developed 52 shops. The same year, the first “mini” department store was opened in Edinburgh. This incorporated a café as well as Womenswear, menswear, and shoes. When NEXT launched their interior range of soft furnishings for the home in August 1985, the first department store, which had, Womenswear, menswear and interiors, was opened in Regent Street, in London.

        Between 1987 and 1988, NEXT launched both their Children’s wear collection as well as their directory, so that their customers were able to buy their products in the comfort in their home, with time to spare and look at the products carefully. In 1993, NEXT then announced the brand strategy of “One Brand Two Ways of Shopping”, which brought together the common ranges across both retail and home shopping formats. To further develop this strategy, in 1999 there was a launch of shopping on the Internet from the NEXT Directory at .

NEXT is now trading from over 330 stores in the UK, in 16 countries worldwide, such as: Bahrain Cyprus, Czech Republic, Indonesia, Japan, Kuwait and Qatar, and has 49 stores overseas. It recently opened several larger stores in the UK in areas such as Bluewater Park and Liverpool.



        I have chosen to base my report on NEXT. I will be considering different aspects of the business, for example: objectives, organisation, culture, structure and communication channels within the business. I will then be examining how these factors are affecting the success of the business.

As I am currently employed at NEXT, I can use this to my advantage in order to find out the information I will require in order to carry out my project.

Being an employee at NEXT, I am involved in team talks which are carried out each morning, in order to discuss ideas and for the manager to notify all the staff the objectives and targets for the day, which are mainly involved with the amount of sales required in order to reach profit targets. Staff are also notified how much profit each division of the business (home, women’s wear, men’s wear and children’s wear) is making each day. This enables all the employees to discover how well the business is doing.

         I will also be using the Internet to visit the NEXT website in order to collect general information about the business, as well what they offer to customers. I will also be using certain websites ion order to further my knowledge in the areas I will be discussing within my report.

         In order to collect more specific and detailed information, I will be having a meeting with the store manager so that I can find out about how the business is doing financially, and how the managers ensure that objectives are met within the business.


Business Ownership

In 1986 Parent company, J Hepworth & Son changed its name to NEXT plc. NEXT is a public limited company (plc). A public limited company is an organisation, which has limited liability, which means that the responsibility for the debts of the company is limited to the amount of capital invested in the company. A public limited company sells shares to the general public on the stock exchange.

Both private and public limited companies operate within the .  To set up a public limited company, application must be made to the Registrar of Companies in Cardiff. This application is accompanied by:

- a statutory declaration.
- a
 of Association.
- the

In addition to this, after receipt of a Certificate of Incorporation, a  has to
offer a
 to the public as well as share certificates to those who purchase shares. There are two types of shares, ordinary and preference Authorised share  is the maximum number of each type of share that can be issued, as laid down in the memorandum of association. Issued share capital is the actual number of shares of each type that have been purchased and share premium is the difference between the nominal  of the share and its
 price. The ownership of the public limited company rests with the shareholders. Control of the company is in the hands of the directors. Sight must never be lost of the fact that in many companies, major  may choose  and in turn directors
may be shareholders. Both of these situations could prove to be detrimental to the interests of the remaining

There are many advantages to be had from forming a public company compared with the formation of a sole trader or partnership. A few of these advantages are:

  • Limited .
  • Larger capital base, through the purchase of shares.
  • Separate legal identity ensures continuity of the business independent of the personal circumstances of the individual shareholder.

Annual accounts and reports of a public limited company are subject to external review, therefore verifying the truth and accuracy of the financial control of the company.

Disadvantages associated with this type of ownership are:

  • there are many legal formalities that must be complied with before the company can be set up.
  • activities are closely controlled by company law and the running of the company is subject to legal constraints.
  • accounts are public and this means a lack of privacy.
  • the company has to pay for an auditor to independently check the accounts.

  • the company is accountable to its shareholders and its creditors.
  • divorce of ownership from control can lead to a conflict of , as the aims of the shareholders, directors and management may not be the same, eg directors may want to grow the business over the long term, shareholders may be expecting a quick, high return on their money.
  • the performance of the company may not be reflected correctly in its share price. If the industry as a whole comes under pressure, then the firm, through no fault of its own, may suffer.
  • if the company is too large, it may lose its efficiency and become tied down in red tape “diseconomies of scale”.
  • they are subject to  bids. There is no way of stopping other companies buying big blocks of shares.
  • in practice, the small shareholder can do very little to influence the way the company is run.

Culture and Objectives

One of NEXT’s most important objectives is to profitably expand their selling space, as they believe that new space would continue growth of sales and profits in the years ahead, as it would enable them to offer customers a greater choice of product in a more comfortable shopping environment.

They are continuing to develop and expand their product ranges, as they believe an understanding of their customers, combined with their design skills, can genuinely add value. The business is innovative as they are able to come up with new ideas to match changes in the business environment as well as changes within the markets, yet they still keep a high quality image of brand. The style, quality and value of their ranges remain their highest priority. They believe that it is important for the product to make the brand successful. They continue to pass benefits of better buying, by offering the same quality product at lower prices or better product at the same price. This effort will ensure that the business continues to go forward.

         Within the store team, team talks are held every morning so that the employees have time to talk to the managers within a group about ideas and suggestions that could be made within the business. This way the employees feel as if they have a greater involvement with what goes on. This relates to task culture. The managers have to encourage teams and listen to them rather than just telling than what to do. They think that everyone should be involved, so ideas can be shared and everyone feels involved. This way people feel committed to the changes that may be made to the culture of an organisation rather than seeking to resist it. Objectives and targets are set each morning for the day to ensure that aims are met and that they meet their profit targets for the day. The drive to profitability helps shape the attitudes, values and beliefs in the organisation. In this business organisation their role culture involves the objectives of maximising sales and making profit. All members of staff have a defined role to carry out which is determined by their job description.  Role culture is normally split up into a number of functions that are organized in a hierarchical way, for example Next divide themselves into various functions like accounts, marketing and production. This type of culture works by logic and rationality. Role culture is mainly used in large organization. In this culture position in the main source of power and rules and procedures are the main source of influence.    

        NEXT takes social, environmental and ethical matters seriously. They are committed to corporate social responsibility from Board level and throughout their teams and group. The Group has taken actions to contribute to ethical trade and, within commercial constraints, sustainable development. The Board has identified and assessed the key business risks, issues and opportunities that have come about due to social, environmental and ethical matters. An executive director has responsibility for these matters and considers all aspects of the Group’s behaviour.

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NEXT’s efforts to improve development will continue to focus on waste and climate change. They have taken steps to reduce waste and in particular have reduced use of energy and CO 2 release per square meter over last year. The Group will continue these ideas where commercially possible.

NEXT’s social policy involves the diversity of its workforce, and safety and ethical requirements for suppliers. People are a key asset to the business, so treatment towards them is very important.

They have developed policies for recruitment, training and development of personnel, which are contained in staff handbooks. The business is ...

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