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April 6, 2018

7 Min Read

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Tucked away in Weymouth on the English South Coast, fashion retailer New Look has been quietly building an international business and at the same time updating its U.K. portfolio. M1.jpgM_t.jpg

New Look, which generated £1 billion in sales ($1.6 billion) in fiscal 2007, is all about product. It built its reputation on being a low-end, high fashion retailer, and its fashion credentials are still on the button with both designer diffusion and celebrity collections to its name. While it's retained a reputation for always being on trend, expansion over the past few years has seen men's and children's fashion added to the offer, complementing the existing tweens/teens section under the 915 label. And it also has a massive licensed product business. i1_20.gifi1_t_18.gif

Weymouth could hardly be called the epicenter of young fashion retailing. But the business is historically located in the area where founder Tom Singh started out as a market stall trader. He opened the first store in 1969. Today, the business is backed by private equity players Apax and Permina.

The retailer has some 600 stores, about 150 of which are international franchises, with the Middle East and Russia as the key territory targets. The aim, before the bank crisis, was to hit 1,500 stores in the next five years and become the world's favorite fashion retailer. New Look also owns the French fashion chain Mim, which has some 280 stores in France and a major expansion plan for Belgium.

Much of New Look's licensed product business comes within the domain of Malcolm Collins, divisional director of buying for footwear and accessories, largely because New Look includes nightwear, lingerie and swimwear, as well as actual accessories, within the division. And it is significant: Accessories, excluding footwear, accounts for 20 percent of New Look's business, and licensed product takes 8 percent of that.

Collins is firm that New Look customers shop in the store for the New Look signature and values, not for licensed brands. He says: "For us the brand is always New Look. That's what customers come to us for. But, licenses are an important part of our customer's lives at different times and for different licenses. Then it is our job to make sure that we stock those brands appropriately." i2_36.gifi2_t_36.gif

And the key to doing that job appropriately is pulling together a cohesive licensed range across categories, he says.

"New Look is not a license collector. We are focused on what licenses we have and how many we have. Our role is to edit for our customers, refresh the range and remove it when it starts to fade."

For an own-brand retailer, a licensed product range eats into margin, so any deals New Look makes have to be right for the business. "We have to make sure that we are always on the crest of a wave and manage the licenses through the business by stimulating our customers with new launches, by creating success by coordinating stories across product and by creating destinations for licensed product within stores," he says.

And to make products sit within the New Look signature, the fashion content has to be right. Collins says: "We work by knowing what the fashion trends are and by integrating the license into our world. We make it newer by bringing a fashion element to the product, so it was not just a mug or a pair of slippers. In the summer, for example, we brought on-trend stars into the design for our Me To You product."

When developing licensed product, New Look designers and buyers work as a team across categories deciding on which are the right categories for any given property. i3_116.jpg

"Some of the licensees have struggled to understand that the product has to be distinct and it has to say New Look. Our customers love fun and they have a sense of humor, so we have to bring that to everything we do at the same time as keeping in touch with the values that the license stands for. I understand that the licensors have to hold their property sacred, but we like to work with them to move it on. Our customer loves newness in stores—that applies to our range and to our licensed ranges."

Working with licensors and licensees is not always straightforward, Collins maintains, as the slow-moving licensing industry does not fit easily with the fast turnaround of value fashion retailing.

New Looks keeps its customers coming back by having a stock-turn discipline of six to eight weeks, with 60 percent of ranges changed in stores each six weeks. That discipline applies to licensed products, as well.

"New Look customers have to ask themselves, am I going to miss something new by not visiting a store? Getting to understand that philosophy is a huge challenge for the licensing industry," Collins says. "It has to understand that while a license may be great, it is no good without the right product."

As a result, Collins is a keen advocate of direct-to-retail deals. "We like DTR deals because from a buying perspective it is easier for us, and it makes it easier for us to pull together a coherent range. Working with a number of different licenses means we have to work to different lead times and different sign-off arrangements. That works for the wholesale collection, but not for an own-brand retailer like us because it adds cost, it adds complexity, and it adds time."

By using its own suppliers, New Look is able to control the supply chain and make sure that it also has tabs on ethical and green issues. It also gives it the ability to turn on—or to turn off—supply as the market demands.

Collins maintains: "The world has changed for licensors and licensees—they must change and move forward. With 18-month lead times, we have to ask if a license will still be relevant. If I take a license, I want to see it in store in three months. With DTRs, I can make that happen.

"The mood can change quickly, and so can the level of business. We have to be able to get in—or get out—just as quickly."

Collins does concede that he is working with licensors who are spearheading DTR deals that are proving great business for all parties.

With a tough trading environment, Collins believes that, while children's product will be safe, gifting product may suffer over the next months.

"We have to ask ourselves how do we make licensed product more desirable? What added value is there for our customers? What are licensees and licensors doing to support us? Why should we invest in stocking that license? What's the justification to sell this lower-margin product? And on our side we've got to be imaginative in taking a license forward and in developing it. Even in tough times customers will buy product if we have what they want."

New Look's celebrity and designer collections have included Gold by Giles Deacon, Kelly Brook's lingerie and swimwear collections and singer Lily Allen's Lily Loves collection. All are direct deals, although Kelly Brook originally signed with the retailer through a licensing agent.

Collins describes the retailer's international expansion plans as "a huge opportunity for licensors to get the brand out globally through one retailer"—although crossing licensing territories may prove a difficulty for them.

New Look usually only commits substantially to about five licenses at any time, with a number of small trials running simultaneously. The property does not have to be television-based, but it does have to have a reference point for New Look customers and what Collins describes as a "tangible talking point that drives the product." And the key is that they resonate with New Look customers. So, Me to You has the 'ahh' factor, SpongeBob SquarePants is humorous and Betty Boop is savvy.

And as Collins says, "What I want is what's big for the next six to nine months and then move on."

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