Company Profile
The Next Best Thing
According to meteorological and economical optimists, there’s no such thing as bad weather, just the wrong kind of clothing. Foresight in the wardrobe department plays a large role in not only shielding a business from the elements but also helping it to make the most of fair-weather opportunities when the storm clouds part.
Knowing “what’s next” in terms of the right outfit for the right weather—and at the right price—provided a vital barometer for the apparel merger of Hepworths Gentleman’s Outfitters and Kendall & Sons to ultimately create the appositely named NEXT, the first of which opened its doors in February 1982.
Therein followed a series of cloud-busting economic developments including the launch of the runaway successful NEXT Directory in 1986, rebranded NEXT Online in 2018 following the acquisition of catalogue business Grattan, which provided the foretaste of what was to come in terms of the explosion in online retailing.
In fact, whenever storm clouds have circled over the high street in the last four decades—and there have been many inclement conditions from supply and driver shortages to COVID-19 and conflict in Europe—NEXT has successfully insulated itself to the point where it has developed an almost Midas touch of being able to come out of the crises stronger than when it went in.
The latest company figures highlight a thriving sunnier performance for the brand that employs 44,000 colleagues across 500 stores. In January it reported a profit of £823 million, which was up 10 per cent on 2019 figures, but by a staggering 140 per cent increase on 2020–2021.
CEO Lord Simon Wolfson and his board factored in the bad weather—they are already predicting an £85 million dip from the crisis in Ukraine and the closure of its Russian operations—but on the home front has dared to invest in both “clicks” and bricks-and-mortar retailing where others have taken a more risk averse and divesting approach.
The launch of its Total Platform approach allowing other household brands to sell through NEXT Online and further investment in physical experiential concepts in larger format stores have taken a seemingly middle-of-the-road apparel offering to the next level of multi-brand shop within shop availability.
Last year saw NEXT acquire a 25 per cent stake in high-end brand Reiss and a joint venture with Gap Inc., which had already closed its UK stores, to sell its stock online through the Total Platform and via physical concessions in NEXT stores. Other ventures offered through NEXT include luxury lingerie brand Victoria’s Secret, Child’s Play, and Bath & Body Works as part of making NEXT a “linger-longer” experiential destination akin to the department stores of old. This is no overnight operation but a thought-out, all-weather plan that started to build with the move to larger format, out-of-town stores that had already began to include Costa Coffee outlets as part of the fixtures and fittings.
Mitigating Risks through Omni-channel LP
But with all such expansion plans comes the unwelcome additional risk. To this end, NEXT has incrementally invested in the old adage of “selling more and losing less” through building a resilient LP function that includes the technology and teams targeting all points of vulnerability across its total supply chain—from identifying IP infringement upstream to cyber-criminals and serial refunders selling fraud-as-a-service (FaaS).
From dispatch to delivery, the trial of robust RFID capability to support sales through greater on-shelf availability to door-stepping fraudsters, flexible guarding, and to the Security Operations Centre (SOC) monitoring and seamless mass-screening of warehouse staff leaving shifts, NEXT has risk mapped its entire estate with a view to future proofing profit and intellectual property protection through a model fit for all weathers.
The man with both the risk and weather map is Stephen Teatum, who took on the challenge of NEXT’s Head of Group LP in 2019.
His previous role as NEXT’s head of LP for warehousing and distribution gave him a unique insight into helping to build a strategy for bringing together physical and online risk under one umbrella.
“A total of £3.1 billion of NEXT’s £4.8 billion turnover came through our online offering, so when you take on a new job you look at the low-hanging fruit. I made it my mission to avoid a silo approach to risk and improve the collaboration between the teams by building a full-value omni-channel loss prevention department,” Stephen said.
“The stores have been doing a fantastic job over the years in terms of supporting our online business through the click-and-collect offering, and ultimately coming to realise how both businesses (retail and online) support each other. I felt my department could take a leaf out of that book.”
He added, “Omni-channel is a passion of mine, and we are on a good journey. The concept has proved extremely fruitful in terms of building the team’s understanding of how LP dovetails across the whole business.
“If you look at some of the most successful Premier League football teams, they didn’t go on to win successive league titles just because they have the best international star striker. It’s all about the overall dynamic of the team from the goalkeeper, defence, midfield, and forwards, and my role at NEXT is to instil that team mentality.”
Although “fruitful,” the journey has met with some bumps in the road, most of which were related to the global pandemic that has slightly delayed the transformation.
Although two-thirds of the way through the plan, the LP team structure is in place with 350 colleagues dedicated to managing the group risk, 207 of whom are focussed upon warehouse and distribution, protecting the integrity of NEXT’s overall supply chain and omni-channel operations.
The restructured, pyramid-shaped team is composed of LP officers, senior LP officers, managers, regional managers, and department heads, all of whom have clear succession paths based upon performance.
“It’s created a real buzz among the team. It’s aspirational because they know they can move up through the structure. Previously, the guys at the coal face perhaps did not recognise the opportunities, but now they see a much improved development pathway,” Steve explained. “We want to be an employer of choice—a place to go if you want to pursue a career in loss prevention.”
To this end, NEXT has introduced a formal and externally recognised training pathway to Business and Technology Education Council (BTEC) level qualifications through an external provider. Danny Wheatley-Durrand, a former prison officer and now senior LP manager with NEXT, was one of the first recipients of the qualification, which he passed with distinction.
“I thoroughly enjoy my new job role. I am always looking to progress and explore new opportunities within the department and within NEXT as a whole. I actively seek opportunities to develop and learn new skills to become the best I can be,” said Danny, who includes a black belt in taekwondo on his resume.
The latest training development involves those who conduct investigations within the NEXT LP team being put through the Bond Solon four-module investigation course that for many of them will complement their existing learning through the Wicklander-Zulawski non-confrontational interview training.
“It’s about investing in people,” said Steve. “I am a people person and understand that without good, motivated people, you do not have a good functioning LP team. This includes greater diversity. We’ve made some fantastic progress over recent years, with significantly more women in LP roles and a team that better reflects the society we live in today.”
Supply Chain (Warehouse and Distribution)
Steve’s legacy at NEXT evolved out of his work in the all-important warehouse and distribution team that he led prior to taking the job of Head of Group LP. Here, he had already begun the journey to arrest the attrition caused by internal theft. In 2018 he began negotiations with people-screening technology provider Thruvision to effectively mass-scan warehouse staff for hidden contraband after they finish their shifts, a relationship that has been nurtured and taken forward by his successor Brett Elliott.
Now, under Brett’s stewardship and ongoing collaboration with Thruvision, NEXT has just become the first business to roll out its enhanced walk-through screening solution.
Previously able to screen one in ten staff using Thruvision as they leave the site at shift changeover, the new technology has allowed NEXT to screen 100 per cent of the people leaving site at shift changeover. With 3,500 warehouse staff working in the Elmsall Complex, the augmented version of the technology now has the capability to screen 300-plus staff as they leave at the end of a shift, an industry first that will be extended to two more sites in 2022 and 2023. NEXT will have a version of Thruvision in fourteen out of the fifteen warehouses by the end of 2022.
“It has been a great journey over the last two-and-a-half years and the solution is timely in terms of boosting efficiency at a point in our development when we are also looking after other high-value brands,” said Brett.
“This has helped during COVID when we could not carry out random searches because of the social distancing rules. The new technology, which comes with a full analytics pack, now represents a 25 per cent time saving and works as a massive deterrent. Last year, for example, we caught one person with £670 worth of stock concealed on their person using this technology,” he said.
“Now with the amount of brands that NEXT sells online, including Hugo Boss, Nike, Reiss, and Victoria’s Secret, my job has become more about strategy and how we can utilise technology to execute a seamless exit and reduce potential stock loss.”
His approach encompasses everything from the cavernous sheds to the gatehouses and turnstiles, remote access control at office spaces that is now linked to HR and recruitment in terms of clocking in and out, and not to mention the 3,500 CCTV cameras covering tens of thousands of square feet of warehouse space to the far reaches of the perimeter fences.
Brett’s brief manages all transport and distribution security to protect the payloads from the point of omni-channel dispatch to the final-mile delivery, a task that justifies the lion’s share of LP personnel resource.
“We now look after trailer theft, which prior to last year was quite low, but with the pandemic it all changed,” he explained. “We try to encourage our transport partners not to allow their drivers to stop in laybys and service stations. If they are early for a delivery, we encourage them to come into the DC and be looked after rather than park up somewhere unprotected.”
To this end, NEXT has signed up as a member of NaVCIS, the National Vehicle Crime Intelligence Service, with the Police, who monitor and act on trailer thefts across the country that have mushroomed as a result of the explosion in COVID-19 and lockdown-related online growth.
Brett added, “The team also reviews social media and auction sites. My investigators work with our brand protection manager who works with our provider in taking down the sites and sellers, especially as our products each have a unique identifier (UID) number so we can be 100 per cent certain when a product has been stolen. With Police resources as they are, NEXT will do whatever it needs to do to support the Police, pulling the cases together for them to prosecute.”
NEXT has also invested in the Cayuga CCTV system and BVI technology that records items being packed at a packing station and links the data with the Warehouse Management System (WMS) platform. This allows colleagues in their call centre to accurately review what has been packed when a customer calls in with a missing item. This supports NEXT with fraudulent not-in-parcel (NIP) claims, but also provides a valuable evidential customer service tool when incorrect pick-and-pack orders commence their final-mile journey.
NEXT is taking another step forward this year by introducing automated gatehouses and removing barriers that rely upon a multi-language, touch-screen intercom solution to gain twenty-four-hour access to the DCs, a move that will save the business hours in the future.
Team Probes Illegal Online Activity
In the new inter-dependent LP function, Brett’s role is closely aligned with that of NEXT’s multi-award-winning online profit protection team that is headed up by Andy Wainwright.
The ten-strong team, which has secured the Online Profit Protection Team of the Year accolade at the Fraud Awards for the last four years, comprises forensic data analysts and investigators who, according to Andy, represent “the combination of the right tools and the right people to dig into the data” and who use good old-fashioned detective work to identify and target fraudsters.
“Our unique selling proposition has to be that our field teams will use that data to go after the fraudsters. They will use traditional surveillance techniques and social media monitoring to identify the modus operandi and suspects and put together a comprehensive evidence pack.”
Ultimately, Andy’s team, many of whom are former Police officers, can take the investigation right to the doorstep and only use law enforcement resources for the final search of premises, which falls outside the scope of NEXT investigators.
“We have no powers of arrest, so our involvement is non-confrontational,” said Andy, “but we work with the Police who carry out the s.18 premises searches under the Police and Criminal Evidence Act (PACE).”
Although time consuming—some investigations can take a year to complete—the strategy is supported from the top. The executive team is supportive of the work that LP undertakes to ensure NEXT is not seen as an easy target, not an organisation where criminal activity can flourish, and the “tone from the top” is vital to the success of the department.
This joined-up approach puts NEXT into a strong position for the future as the addition of new brands and temptations is likely to keep Andy and the team busy during what is emerging as a cost-of-living crisis, where organised criminal gangs are joined by opportunistic thieves who are “feeling the squeeze.”
“NEXT has taken on more risk by offering higher value merchandise and integrating it into a frictionless service to customers. No doubt, some fraudsters may feel that we are selling them a dream opportunity, but our job is to support this business ambition by putting in place balanced controls that mitigate those risks without inconveniencing genuine customers,” explained Andy.
Enhanced Protection for Bricks and Mortar
The other side of its hugely successful online business is the bricks-and-mortar estate, the predominantly larger format stores that are now also showcases for a wider brand experience and something that, apart from its Lipsy higher-end offering, has materialised post-pandemic.
“Unlike other physical stores, we have come out of the pandemic stronger than when we went in,” said Stewart Farrell, head of retail LP whose remit is the physical protection of store colleagues as well as stock across multiple household name brands.
“We have now invested in the right brands to complement our existing core customer offering and that of course brings additional risk to my day job of looking after the 500-plus stores. We currently have twelve Victoria’s Secrets concessions in store, but we are soon to roll that out to around ninety and we are there to support that,” he said.
Stewart heads up the support of four regions with the backing of 150 LP professionals, which dovetails with NEXT’s other risk teams, including online as dynamic next-day ordering is picked in store rather than at the DC. This is familiar territory for Stewart who began his NEXT journey in online investigations in 2013. What is becoming even more familiar is the relationship with the operations department in terms of measuring and managing the ongoing and emerging “store-within-a-store” challenges.
“Working at NEXT is always exciting, and I am learning so much about the culture of the other new brands that we now have under our roof,” said Stewart. “We have a well-oiled LP team, and our job is to translate that to our new partners. We will build on our core strength and tweak certain elements so that strategy encompasses all the different risks and products on offer.”
Retail and Corporate Security Solutions
The NEXT LP engine room driving much of the innovation is managed by Adrian Sherry, head of security solutions for retail and corporate, a role that oversees the all-seeing, twenty-four-hour Security Operations Centre (SOC) that monitors the store estate and triages incidents in real-time so as not to waste valuable Police resources.
Adrian’s remit involves day-to-day management of NEXT’s retail security suppliers covering the normal areas such as intruder alarms and monitoring, CCTV, and EAS solutions, which involves the need to design tag solutions with embedded RFID technology that is unique within the world of retail.
Adrian and his team also support the company’s store development programme, which even during the two-year COVID-19 period continued unabated with new store openings and notably the introduction of the beauty and home concepts. The acquisition of the UK and Ireland Victoria’s Secret twenty-six store estate added to the never-ending stream of exciting projects. “I never tire of it. So many opportunities!” said Adrian.
One current project of real interest is a review of how NEXT utilises RFID for inventory management. A six-store proof of concept is soon to begin that could lead to a future of total hard tag removal in favour of embedded RFID labelling. As Adrian explained, “The potential savings in staff hours to not have to apply and remove tags are enormous. Vastly improved inventory management is also a game changer for us. However, we have to weigh the potential risk of increased shrinkage that may materialise as a result of removing the physical hard tag deterrent. It’s going to be really interesting.”
Part of the proof of concept, NEXT will also take the opportunity to look at self-checkout, an area NEXT has never previously ventured into. Adrian continued, “We are fortunate that some of our competitors have been really helpful in sharing their own experiences of self-checkout. We have learned a lot.”
So, what’s next for NEXT? If there is no such thing as bad weather, but just the wrong clothes, it would appear the forty-year-old fashion and home retailer that began life as part of a rainwear emporium has not only weathered recent storms, but has bucked a national trend through expansion and, by robustly challenging emerging risks head, has learned to splash in the post-pandemic puddles.
