Internship report on

Next

Submitted by Submitted to

Harmeet Singh Ms Gurkiran

Objective

To take an overview of all the departments in Next.

To study the work culture in a buying house. To relate my theoritical knowledge with

practical work culture.

NEXT

The Next retail chain was launched in February 1982 and the first store opened with an exclusive coordinated collection of stylish clothes, shoes and accessories for women.

Today Next trades from more than 480 stores in the UK and Eire and over 140 franchise stores overseas. Over the last few years several larger format stores have opened across the UK and, in October 2005, Next opened the anchor store at the Manchester Centre with a store in excess of 80,000 square feet.

Work flow

Start

Design theory is set

Sample are made with their specification sheet in which all the

details are mentioned

Selection meeting is done

Locates the supplier for the selected styles.

Proto samples are made

If approved If not approved

3 Buying samples

NSL UK

NSL Gurgaon

Factory

Revised proto samples

Final selection

Costing

Lead time

Purchase order

Route is decided

Pre contract

P&P sheet

White seal

Black seal

Pre progress meeting

Pilot run samples

Gold seal samples

Shipment

Q.C file handover

Product development stage

Design theory

Product development stage is a very initial stage in this stage designs are selected by NSL buyers. Product development stage is basically a order booking stage.

Selection meeting

Approval received

Meeting

Buying samples

Final selection

Shipping Main documents involved in shipping are: Commercial invoice Packing list Certificate of origin GSP document

•Shipment cost is decided in advance and if there is any delay in shipment then The freight cost (whether air or sea shipment) is borne by the supplier according to delay in shipment. :

•If the shipment is delayed by 5 days then the freight is taken as 50/50

•If the shipment is delayed by 5/10 days then the freight is considered to be 100% which means the total freight cost will be borne by NSL supplier.

Shipment cost

Discounts in case of delayed shipment If the shipment is delayed by 5 days then out of the total consignment

5% is deducted as discount

If the shipment is delayed by 5-10 days then out of the total consignment 10% is deducted as discount.

•When the whole consignment is done as per Purchase order then the whole consignment is sent to Jenna and company for inspection .

Some of the reasons for rejection of shipment are as follows

•Incorrect fit measurements •Torn piece•Wrong ply carton.

If the shipment is passed then it will be finally shipped to UK Leeds port.

There are three modes of shipment By air By sea By air/sea

Air shipment generally takes 5-6 days

Sea shipment generally takes 25-27 days

Air/sea shipment is that in which half of the shipment is by air and half by sea. The time duration taken in this mode of shipment depends.

Charges by JennaJenna charges Rs 105 per kg for the whole consignment and other nominal freight

charges.Container size in case of GOH (garment on hanger) shipment LD3 – 600-700 PCThe basic measurements of LD3 container size are 156*153*163 cm The total weight of LD3 container size is 1588 kgLD6 – 1200 -1500 pcThe basic measurements of LD6 size are 162.5*317.5*350 cmThe total weight of LD6 container size is 3174 kg

Procedure of making payment to supplier

After the shipment reaches NSL warehouse then the buyer after

checking it ,mails all the documents back to the vendor and confirms by

mail.

After receiving the documents vendors sends them to NSL Delhi office.

NSL Delhi office team sends the documents to NSL Hong Kong finance

Team which makes the payment to the vendor with in 30-32 days.

Recession

Recession is a general slowdown in economic activity over a sustained period of time, or a business cycle contraction.

It’s a period during which business activity drops significantly. High unemployment rates and deflation often accompany a depression

Deflation - A decline in general price levels, often caused by a reduction in the supply of money or credit.

Unemployment - It refers to the situation in which a work force actively seeking jobs remains unhired.

Impacts of recession on next sourcing

Job cuts Recession has widely effected NSL by job cuts and lay offs.

With increasing pressures NSL has already slashed 1000 jobs and around

hundreds of lay offs leaving a large number of work force unemployed.

Sales plunged by more than 15% after this Christmas forcing NSL to shut 28

shops worldwide which slashed around 250 jobs and many lay offs.

0

100

200

300

400

1st Qtr 2nd Qtr 3rd Qtr

During the first quarter after Christmas job cuts rose to 100 and after march the rate rose to around 220 and then

nearby 310 after 2nd quarter

Less order to suppliers

Less Demand and orders placement with suppliers have a positive relation .

Suppliers had to suffer a lot because of fewer orders.

Recession has widely affected the sales figures of NEXT SOURCING.

Sales figures plunged by more than 15% from 10 Billion pounds. With less sales figures and less scopes of improvement. NSL could not place bulk orders with the suppliers.

From the time after Christmas it has been noticed that NSL is placing orders of only repeated styles.

Reduced profit margins Decreasing sales was accompanied by reduced profit margin. NSL had to

decrease the margins from its orders due to declining sales figures. Profits of NSL slumped to below 60 million pounds having topped 1 billion

pounds last fiscal year. Reduction in profit margins is seen in clothing as well as non clothing

department

0

20

40

60

80

2007 2008 2009

ROCE RATE

ROCE ratios of previous years 2007 – 74%2008- 62 %2009- 55%

More cancellation of orders. Last few moths had been the most unpredictable time for Next

sourcing with changing market needs and decreasing demand the company suffered huge losses.

According to NSL Hong Kong finance team NSL had to cancel lot of placed orders with companies. Order cancellation percentage rose from 8% to 18 % this season.

NSL generally makes future forecasts for sales and places orders with the factories accordingly, but due to bad times all the future forecasts went wrong and the company had to suffer losses in the form of claims to factories.

Claims are settled by Hong Kong by finance team. If the fabric is cut and then orders get cancelled then the NSL

team has to refund all the expenses bared by the suppliers.

Strategies

Introducing low fashion merchandise

Due to increasing difficulties due to decreasing sales figure the company had to introduce low fashion merchandise in a price range between 8 pounds to 15 pounds.

The acquisition of Lipsy limited helped the company to introduce new low fashionable merchandise in the stores

NSL had to concentrate on middle age working males and females who want dress to go to work for a reasonable price.

Giving discounts out of margins

Due to increasing competition and decreasing demands NSL had to

introduce many new promotional schemes and discounts to increase

demand

NSL usually keeps margins according to the style and NSL decreased the margins at a particular rate to give discounts to the customers

By adopting this strategy the company was able to attract new customers who are looking for cheap bargains

Closing non profitable stores

NEXT decided to modernize it, by closing some unprofitable stores and extensively upgrading and enlarging others,

NSL could not help with the increasing costs of operation for advertising purposes due to the less demand

An idea of closing non profitable stores and expanding the work cycle of other profitable stores helped the company to expand a sales figure by a certain percentage.

Branding

Branding is one of the important tools to fight the recession because it brings loyalty and attract customers as they get convinced and do not want to take the risk of switching and trying other brands

Advertising and sales promotion can not be used in space of branding

Next planned to start collecting information about the purchases of its customers and after that rewarding them with points, which are converted into vouchers

In facing another challenging year, there are four

points that NEXT would like to re-emphasize: Consumer environment will remain difficult for six

months. Next is well placed to weather the storm with high net

margins, a strong balance sheet, committed long term funding and positive cash flows.

NEXT expects group net margins to remain above 10% and our internal profit expectations to be in line with current market consensus.

NEXT will never compromise with the quality of its products