PESTLE

PESTLE RESEARCH

POLITICAL

• EVENING STANDARD ARTICLE - HOW BREXIT WILL IMPACT FASHION https://www.standard.co.uk/lifestyle/esmagazine/how-will-brexit-impact-the-uk-fashion-industry-a3931611.html 

- clothes prices will go up after Brexit, the pool of available staff is likely to shrink which will cause an inflationary impact on wages 

- people are setting up factories in the EU due to Brexit uncertainties and whether they will still freely be able to trade with countries in the EU

- 'the fashion industry works so far in advance it feels like we're in a blackout room and having to use a crystal ball to find our way out' - says  Frances Card who is a fashion consultant and former Matchesfashion.com COO

- more Chinese, Arab and American tourists are buying high end items due to the crash in the value of the pound, increasing tourist-fuelled income for the economy 

- more companies are using factories in the UK to avoid potential difficulties in regards to trading with other countries post-brexit

- three quarters of the materials used in the UK are imported from other countries 

• NEW LOOK GROUP WEBSITE - https://www.newlookgroup.com/sustainability/factory-list 

- they source products from 619 factories and 23 countries 

- for example ; China 266, India 50, Pakistan 20, Morocco 11, Turkey 133

- this indicates ethical concerns to me; what are the working conditions of these factories? are the workers paid enough? is it a safe environment to work in?\

• 6 REASONS FOR THE FALL IN THE HIGH STREET BBC ARTICLE - https://www.bbc.co.uk/news/business-43240996

- retailers are currently battling a lot of pressures and it's predicted more and more stores will close in the future 

- squeezed incomes are resulting in rising shop prices and a smaller wage growth 

- Brexit resulted in a 15% fall in the value of the pound, this meant that importing goods is more expensive and the costs of products are made higher 

- "'pay squeezes' have been a real issue for high street retailers and have accelerated the decline of some" says Samuel Tombs (chief UK economist at Pantheon Macroeconomics 

- more people are shopping online as it's cheaper and easier - Amazon has been very successful 

- Paul Martin, head of UK retail at KPMG, says: "With the overall market not growing, it is all about market share, and 20% of that market is held by online players. If you don't have the right online offering, again, you will struggle.”  - if shops fail to ‘value, convenience or experience’ they’ll struggle 

- people want a better shopping experience - their tastes have changed 

- the national minimum wage is rising which pushes up payroll costs and puts more pressure on employers which are already facing economic problems. Trade body of the British Retail Consortium estimates that the National Living Wage costs the industry between £1.5bn and £3bn a year

- too many shops overextended in their 'good years', Richard Perks, director of retail research at Mintel, says: "In business you either go forward or backwards - but how do you go forwards? The natural thing is to open stores. People convince themselves they need to and then it goes pear-shaped. "But there's a lot more to being a successful retailer than your store count - having too many stores wouldn't kill you if you got everything else right.

- over expansion causes debt (this happened to New Look)

• NEW LOOK FACES BREXIT PROBLEMS, BOF ARTICLE - https://www.businessoffashion.com/articles/news-analysis/new-look-losses-mount-as-brexit-and-rain-keep-shoppers-away

- New Look reported statutory loss before tax of £522.2 million for the year ended March, compared with a loss of £190.2 million a year earlier

- people being worried about Brexit and rainy weather reduced footfall 

- In January New Look proposed a debt-for-equity swap to reduce its debt by £1 billion, in its latest turnaround attempt

- British retailers are battling a perfect storm of rising costs, uncertainty in the economy around Brexit and the structural shift online

- an industry survey said British shoppers cut back on their spending in May by the most in more than 20 years

- more stores are closing as retailers struggle with rising labour costs, business property taxes and growing online competition

• https://academic.mintel.com/display/959056/?highlight

- this graph suggests that consumers concerns around the economical repercussions of Brexit affects their spending habits, which consequently means that high street stores such as New Look underperform and lose money 

- for example 54% of participants believe that Brexit will have a negative affect on  the cost of living 

ECONOMICAL

• https://www-statista-com.hallam.idm.oclc.org/statistics/462216/new-look-revenue/

- this graph showcases NL's economic profitability 

- this graph in particular shows annual revenue worldwide from 2015-2019 in million £

- clearly, its annual revenue has declined year on year from 2016 

• SKY NEWS ARTICLE, WHY NL IS STRUGGLING - https://news.sky.com/story/struggling-retailer-new-look-sees-annual-losses-deepen-to-538m-11748466

- their annual loss was £358m

- Chairman Alistair McGeorge says the group expects the retail environment to remain "as challenging as ever" in the year ahead

- NL had a challenging start to the year 

- The group - which has been closing shops as part of a major restructure - saw the drop in sales narrow

- Core like-for-like sales in the UK and Ireland were down 1.6% against an 11.6% fall the previous year

- chairman McGeorge said the group was making progress but there was more work to be done, and expects retail to continue struggling with Brexit uncertainties and unseasonable weather

- NL closed 80 stores as part of their CVA and retreated from overseas markets (China and France stores)

- CBI (Confederation for British Industry) said only internet and mail order retailers saw rising sales that month (June 2019, retail sales volumes fell at their fastest rate this year since 2009 - "Retailers are having to continually compete for the attention of value-conscious shoppers, in the age of digital disruption."

• 2 REASONS WHY NL ARE FAILING, VERDICT ARTICLE - https://www.verdict.co.uk/new-look-another-victim-uks-troubled-high-street/

- they failed to respond effectively to online shopping revolution

- in its third quarter results the company reported that group revenue was down 6.3%, at $1.3 billion

- the UK online retail sector has experienced strong growth in recent years and is currently valued at $59.3 billion

- While New Look’s website has improved, it seems to be a case of too little too late, as online companies have already gained a strong foothold in the market by spotting the trend early and adapting quickly

- they have a slow adoption of fast fashion 

- NL has no firm place on the high street, the products are more expensive than Primark’s, yet are not regarded to be as high quality as other competitors such as Topshop

- they have a slow response to trends in comparison to they competitors 

- Rivals such as Asos and Zara use short and local supply chains, which has allowed them to respond to consumer demands quickly, whereas New Look still manufactures the majority of its clothing in China and Indonesia, which can take up to 12 weeks the hit UK stores

• NL AXING 1000 JOBS AND 60 STORES, BBC ARTICLE - https://www.bbc.co.uk/news/business-43486521

- axing 1000 jobs and 60 stores - will cut rent between 15%-55% across 393 remaining stores

- this is part of their CVA (company voluntary agreement), a goal to increase profits 

- planning on restructuring the brand (led by chairman McGeorge), in order to reduce cost and focus on its core customers (25-40 year olds)

- New look facing battle with rising costs and consumer spending that has been squeezed by inflation and stagnant wages 

- NL overstretched itself with 600 stores, which resulted in debt and they had a bad strategy to attract younger consumers

- McGeorge ran new look between 20212-2014 but was brought back when sales fell - he then cancelled plan to move headquarters to kings cross and decided to focus on selling ‘back to basic’ items which had a broader appeal rather than stocking items aimed at young people

- Charlotte Pearce (analyst at globaldata) says they still run too many stores - 10% isn’t enough - need to cut more stores and only keeps ones in right locations 

- sales fell 10% in 39 weeks before December 2017

- Richard Lim (consultancy retail economics) said that a fall in the value of sterling resulted in rising wage costs and business rates which put pressure on retailers

- online sales were much lower last year and sales fell in high street stores where they were meant to hold sway - "New Look hasn't been able to reach out in the way Primark has, or keep up with the more nimble online retailers like Asos and Boohoo."

• NL MAY HAVE TO PUT ITSELF UP FOR SALE, GUARDIAN ARTICLE - https://www.theguardian.com/business/2019/jan/24/new-look-may-have-to-put-itself-up-for-sale-rescue-refinance-bondholders-debt

- dated article = January 2019

- bondholders to be handed up to 92% of retailer in return for cutting £1.35bn debt to £500m

- NL may be forced to put itself up for sale in order to complete a rescue refinance 

- closed 85 stores in 2018 through an insolvency procedure after an annual loss of nearly £235m

- its chairman blamed its failing on its product range becoming too young and edgy for its general consumer 

• NL LOSSES NARROW, RETAIL WEEK ARTICLE - https://www.retail-week.com/fashion/new-look-losses-narrow-despite-falling-sales/7033449.article?authent=1

- NL registered a statutory loss before tax improvement of £30.7m to £11.2m, compared with a loss of £41.9m in the same period the previous year

- New Look chief operating officer Nigel Oddy said: “The first half of this financial year has been incredibly busy for New Look as we focused on strengthening the operational foundations of the business, We have reviewed our entire product range, improved our lead times, enhanced the customer journey, revitalised the company’s values, and have begun to make the necessary changes to our leadership, As we continue to recover the broad appeal of our product, our offer is now much improved as we focus on buying into successful trends quickly

- the convenient locations of our stores is a USP for them 

- July and august improved but sales in September dropped due to unseasonable weather 

• NL'S HAS UNDERLYING PROFITABILITY, RETAIL WEEK ARTICLE https://www.retail-week.com/fashion/new-look-celebrates-return-to-underlying-profitability/7032249.article

- The retailer reported core underlying operating profit of £33.2m in its latest year compared to a loss of £35.7m the year before

- Revenue over the year fell 3.8% to £1.24bn, which they said was expected as they focused on more profitable sales and fewer stores 

- New Look made a loss before tax of £522.2m, compared with £190.2m the previous year

- McGeorge said: “We have achieved a remarkable amount over the past year, delivering on our aim to achieve financial and operational stability 

- he said that they've made progress in recovering the broad appeal of our product and have improved on profitability in key product areas, ecommerce and store businesses are now working together better

- have completed financial restructuring which has secured the companys future 

- NL entered the financial year in a healthier, stronger position but has more work to do to enhance trading 

- expects the retail environment to remain as challenging as ever with continued brexit uncertainty and unseasonable weather  

• NL RESUCE DEAL PUTS 980 JOBS AT RISK - https://www.bbc.co.uk/news/business-43317334

- 980 face redundancy of 15300 workforce 

- chairman McGeorge said the cuts were 'tough but necessary' 

- NL faced an 'extremely challenging' retail market, driven by weaker consumer confidence, the implications of Brexit and competition from online channels 

- analysis by business correspondent Emma Simpson - online sales were down by 15% in December, In recent years it focussed on younger shoppers, but failed to keep up with the likes of Asos, Boohoo and Primark, New Look is also saddled with way too many stores, drowning in debt (1.2b, she also said that NL opened too many stores 

- NL said its been struggling with rental costs 

- NL entered into a CVA (company voluntary agreement); a compromise deal that stopped the firm from going into administration 

- e.g's of stores that are closing; Leicester, London Oxford Circus, Nottingham, Reading 

SOCIAL

• NEW LOOK GROUP WEBSITE - https://www.newlookgroup.com/who-we-are/our-customers

- NL aim to cater for everyone; women, men, maternity, plus size, petite, tall and teens 

- believe its all about 'accessibility' 

- 'whether our customers are after; the latest trends, celebrity looks, fashion forward pieces, or simply wardrobe essentials, we’ve got a range of products to suit their personal style'

- 'We stand out from our competitors with our Brand Promise by putting our customers at the heart of everything we do' 

- 'What we offer and how we communicate with our customers is about more than selling clothes; it’s also about the emotions that come alongside buying a new outfit'

- always listen to customers, are at heart of everything they do 

- looking at website you can see they have lots of different size ranges and product sections

TECHNOLOGICAL

• LAUNCHED AR PHOTOBOOTHS IN STORES, RETAIL WEEK ARTICLE https://www.retail-week.com/technology/new-look-launches-ar-enabled-photobooths-in-store/7014807.article?authent=1

- 2016, launched augmented-reality photon booths in stores in Westfield London and Trinity shopping centre in Leeds

- was a drive to appeal to millennial shoppers 

- Created in partnership with creative agency Somewhat

- promoted AngelsxRobots campaign and included specially designed filters including their branding 

- shoppers take photos in booth which were then sent to their smartphone to post on social media

- chief executive at the time said: “New Look wanted to improve the in-store experience and make it more fun, particularly among the Instagram generation of girls in their teens and early 20s"

- was a drive to increase presence on social media platforms such as Instagram

- “This concept gives the brand ownership of, and direct association with, high quality premium images.”

(Retail Gazette article, 2016)

• retail newsletters = outdated, consultancy article - https://econsultancy.com/retail-newsletter-personalisation/

- 'it's time the generic retail newsletter is overhauled'

- results in huge data sets that can be difficult to unify

- hard to get feedback from customers and you can't personalise their experience 

- 46% of people think that most retailers who email them don’t understand their needs and tastes

- customers may be getting an overload of messages from a single retailer, who may not have a unified customer journey approach that takes into account what the customer has been sent before

- the world and the customer has moved on

- 70% of 18-24 years olds said that companies who fail to personalise their marketing will lose them as customers

• 16-24 year olds are the smallest group of people who read retail email newsletters, Statista - https://www-statista-com.hallam.idm.oclc.org/statistics/812064/marketing-email-read-world-by-age/

• https://academic.mintel.com/display/959100/?highlight

- New look should involve more technology-based innovations into their stores and website in order to appeal to more customers 

- for example 42% of people say that they would like to see clothing being models on different sized models, currently New Look only use 'typical' very slim models on their website to model their clothes (except for their plus size collection which is modelled by plus size clothing)

ENVIRONMENTAL

• NEW LOOK GROUP WEBSITE - https://www.newlookgroup.com/sustainability/environment

- environment is important to them 

- examine how business may impact environment and work to reduce this by improving energy efficiency, reducing waste and minimising water use

- they work hard to manage the environmental impacts of stores, offices and distribution centres
- developed our forest and fabric policy with NGO Canopy to demonstrate New Look’s support for remaining ancient and endangered forests
- are taking important steps to reduce the environmental impact of garments in supply chain 
- have introduced the Clevercare symbol on garments as a way for our customers to find out more about how they can implement a set of simple actions to improve their impact on the environment e.g lowering the washing machine temperature

(NL group website, 2019)

• HOW FASHION IS HARMING THE PLANET - https://www.bbc.co.uk/newsround/45756754

- 1.2 billion tonnes of carbon emmissions are produced by the fashion industry 
- 2781 litres of water is used to wash a pair of jeans over its lifetime 
- 700000 fibres are released in a domestic wash which flow to the sea and are eaten by fish 
- people are buying 2x as many items of clothing as they were a decade ago 
- British people buy more clothes than anywhere else in europe 
- 235m items of clothing were sent to landfill last year 
- 3/5 garments end up in landfill/ incinerators each year 
- half a million tonnes of microfibres end up in the ocean each year 
- population growth and increased demand had led to an increase in overall volume and the environmental impact of clothing 

• NEW LOOKS VIEWS ON SUSTAINABILITY - https://www.newlook.com/uk/sustainability

- fashion is the 2nd most polluting industry 

- NL recognise they can't eliminate the problem but they can try and make a difference 

- introduced their 'NL kind collection' ; "nothing changes for you, we promise. Our clothes are still the same quality and the same amazing prices. We're working with the Sustainable Apparel Collection and the Ethical Trading Initiative to improve our workers' quality of life and our environmental standards' 

- NL kind collection are styles that are 'responsibly sourced and friendlier to the planet. Clothes in this range are made consciously, whether that by using less water , made with organic cotton fabric or better cotton, so not only will you look good but you'll feel good too. Nothing changes for you we promise, our pieces are still the same amazing quality at the same amazing prices' ; it includes mens, womens and girls 

- claim good environmental management is important to them, examine how their business affects the environment and work to reduce this by improving energy efficiency, reducing waste and minimising water use

- in the last year they've focused their work in 2 areas; network of stores and key suppliers in china and Bangladesh 
- developed their forest and fabric policy with NGO canopy to demonstrate their support for remaining ancient and endangered forests 
- clever care logo 

• SUSTAINABILITY ISSUES WITH FASHION - https://www.forbes.com/sites/jonbird1/2018/09/09/fashions-dirty-little-secret-and-how-its-coming-clean/#5e3611911771

- a Pulse Of the Fashion Industry report stated that fashion generates 4% of the worlds waste each year, 92 million tonnes (which is more than toxic e-waste), a lot that comes from off-cuts from the production process

- the global apparel market is valued at $3 trillion and accounts fo 2% of the worlds Gross Domestic Product 

- nearly 20% of global water waste is produced by the fashion industry 

- about 15% of fabric intended for garments ends up on the cutting room floor 

- up to 95% of the textiles that are sent to landfill; each year could've been recycled 

• NL IS THE FIRST FASHION RETAILER TO LAUNCH A VEGAN RANGE - https://www.retailgazette.co.uk/blog/2019/08/new-look-becomes-first-fashion-retailer-launch-vegan-range/

- the collection is partnered with the Vegan Society 

- launched around 500 footwear and accessory pieces that are entirely free from animal derived products 

- its PU faux leather and metal hardware have undergone a process that does not use animal products

- “We keep our supply chain transparent. This ensures that the hardware and adhesives on our vegan shoes and bags do not undergo chemical treatments that contain animal products,” New Look said

- “Veganism has leapt from our diets into our wardrobes. For the first time ever, New Look has designed a host of vegan shoes and bags that are free from animal products.”

LEGAL

• GARMENT LABELLING REQUIREMENTS - https://sewport.com/learn/garment-labeling-and-requirements

- garments legally have to include a label 

- label establishes clothing and brand identity and care instructions for consumer

- labels in the UK legally must contain; fibre content, country of origin, wash/care instructions, whether it's flammable, brand info/ style numbers and should be placed in a specific place on the garment depending on what it is 

- legal, labelling requirements vary according to country 

• GARMENT LABELLING REQUIREMENTS - https://www.gov.uk/product-labelling-the-law

- labels must not be misleading about; quantity/ size, price, what it's made of, how/where/when it was made, what you say it can do, the people/ organisations that endorse it 

- more specific laws apply to labelling on children's clothes 
- retailers must display; the price and metric measures 

• NL'S FACTORIES - https://www.retailgazette.co.uk/blog/2017/08/new-look-ceo-vast-majority-uk-factories-worse-bangladesh-china-burma/

- NL CEO says "vast majority of their UK factories are worse than the ones in Bangladesh, China and Burma"

- the problem is widespread to the extent that New Look has stopped using over 100 UK factories over the last three years due to carrying out “so many” audits that didn‘t meet standards

- “I don‘t want to be a part of it. Our competitors don‘t see it the same way. They know about the problem but don‘t want to fix it, The vast majority of all UK factories have issues with health and safety and salaries. They have people on benefits and pay them a couple of pounds an hour. We‘ve audited so many factories and they just don‘t pass"

- Kristiansen accused British factories of underpaying staff and failing health and safety standards 

- accusations follow a Channel 4 Dispatches expose in which workers in a factory in Leicester, found to be producing clothes for New Look, were paid £3.50 per hour

- Kristiansen said that although using UK locations would make New Look‘s supply chain more efficient, he would not use more until factories ethics had been cleaned up

- Kristiansen claims the brand wants to be "100% ethical in everything they do"