UK retailers are experiencing something of a boom in sales at present, with the British economy picking up and yielding some positive results in the retail industry. Yet for many, the slow pace of growth has left them keen to chase a higher volume of sales in foreign markets, with emerging Eastern economies such as China and India fast becoming key markets for a wide variety of retailers.
New Look has become the latest UK high street chain to confirm it will be closely examining its options in China over the coming months following the release of relatively successful interim results. In the 26 weeks to the 28th of September, like for like brand sales climbed by 1.9 per cent when compared to the same period a year ago.
Furthermore, the retailer finally managed to return to profit following four uncertain years during the recession, with pre-tax profits of £13.8 million comparing hugely favourably to a loss of £13.6 million in the same period of 2012.
Part of this success is due to the huge upgrade of New Look’s online business, which saw an astonishing 78.8 per cent increase during the period. However, the modernisation of 199 stores in New Look’s commercial property portfolio also played a pivotal role, with consumers reacting positively to the brighter and more spacious interiors.
Chief executive Anders Kristiansen revealed that the retailer now intends to open its first Chinese store in the New Year; the first step in the group’s overall plan to operate at least six stores throughout the country by the end of 2014. Mr Kristiansen believes this will be an extremely profitable move for New Look thanks to what he called a “gap in the market” for an “affordable and fashion-forward retailer.”
China is not the only overseas market New Look has identified– the retailer will also be seeking to pick up property and build an online presence in the Russian, Polish and German markets over the next 12 months. As northern Europe continues to sustain only minor damage from the effects of the Eurozone crisis and Russia’s middle class growth powers on, it is safe to say that these areas will be keenly sought after by retailers looking to expand internationally, meaning New Look must move quickly in order to snap up commercial property in prime locations.
Although New Look seems well on the road to recovery, Mr Kristiansen remains cautious about the future, largely thanks to the changeable weather British consumers are currently experiencing. He also put paid to rumours that New Look is seeking to follow in the footsteps of rival brands with a stock market flotation.
He said; “It has been unseasonably warm in a season when we are supposed to sell a lot of coats and knitwear.
“We are 100 per cent focused on implementing the strategy – [stock market flotation] is not really on our radar at the moment.
“I don’t see us looking at it in the foreseeable future, it is up to the shareholders to decide when the time is right.”
Do you think an influx of fashion retailers will flood the Chinese and Indian markets in 2014?
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