Next snapped up Joules out of administration for £34m last week and is aiming to rebuild the mid-market retailer, which less than three years ago was one of the stars of the sector.
The retailer fended off rivals, which are thought to have included Hobbs and Whistles owner The Foschini Group, Frasers Group and Marks & Spencer, to buy the retailer.
It teamed up with founder Tom Joule to secure the deal, which will see it take 100 stores, saving almost 1,500 jobs across the embattled fashion retailer‘s stores and head office.
GlobalData apparel analyst Pippa Stephens says this is “a positive outcome” for Joules, as other bidders such as Frasers Group would have likely closed a “large proportion” of stores or even just bought the brand’s IP.
Taking on the stores is a smart move as it will help maintain brand awareness better than if it were an online-only brand, says Stephens.
Allow Joule to work his magic
It is also a smart move to partner with Joule, who picks up 26% of the retailer to Next’s 74%, as it ensures both continuity for the brand’s staff and suppliers, but also means the fashion giant will benefit from the expertise of the man who created the Joules brand.
In fact, Next is giving Joules “management autonomy and creative independence” rather than subsuming it into its business.
Joules will have its own board of directors, including CEO Jonathon Brown, who was hired during the summer, and Next has even forked out £7 million to retain its Market Harborough head office.
Brown, who previously led John Lewis’ online operation, brings solid credentials, however it is Joule, who founded Joules in 1989 and built it into a mid-market fashion powerhouse, that will be integral to the brand’s turnaround.
The founder, who was parachuted into an executive role as product director back in September, will carry on in that role under Next, taking a lead in “re-establishing the clear identity of both brand and product that has been at the heart of Joules’ success over the last 30 years”.
It’s notable that the decline of Joules only happened after the founder stepped back from operational duties in 2019.
Under Joule, the retailer’s distinctive handwriting won it legions of fans, however, in recent times there have been concerns over the quality of its products.
One rival fashion CEO told Retail Gazette that Joules’ quality had gone downhill over the past year to 18 months, which has harmed the brand’s reputation and led to more markdowns on products.
However, the CEO believes that Joule was the right man to rectify this and reinstate its quality credentials.
Joule says he is “truly looking forward to inspiring teams with clear direction to excite and recapture the imagination of the customer again”.
“Our customers have always trusted us to lead, not follow, with products that reflect their lifestyle,” he adds.
“It’s important that we live up to the high standards they desire in design, quality and, with Next’s Total Platform delivery and customer support proposition, the service they expect.”
Stephens says that it is integral that Joules can “justify its prices, especially in the context of the cost-of-living crisis”.
“It must refresh its product ranges to be more modern and inspiring, while maintaining its distinct handwriting, which it will find much easier to do now that Tom Joule is back in a creative role,” she says.
This will help ensure it is driving full-price sales, rather than resorting to discounts. The retailer admitted in the summer that its gross margins had come “under significant pressure” as consumer appetite was “weighted towards mark downs”.
Next, which famously shuns discounting other than its much-anticipated end of season Sale, will be a strong influence here for Joules.
Propelling online
Whilst Joules retains control over its brand and product, Next will take over the online side of its business.
Next has long been one of the UK’s leading multichannel retailers and has built a £3 billion a year ecommerce empire.
The retailer is further monetising its prowess in this area through its Total Platform offer, through which it offers brands services including logistics, warehousing, online ordering and stock planning to help boost their profitability.
The retailer already runs the online operations of brands such as Reiss, Gap and Victoria Secret’s UK arm and from early 2024, Joules will join Next’s Total Platform.
It said this will bring “operational efficiency” to Joules’ online business.
The retail giant has certainly boosted Reiss’ performance with the fashion brand’s CEO Christos Angelides flagging that the move had “delivered significant improvements in our delivery promise, customer service and returns options” in September.
This has helped drive online sales at Reiss, which Next has taken a 51% stake in. Next revealed that the brand had taken “a greater percentage of Total Platform sales than expected” in the half year ending July.
Next will be looking to replicate the success it has achieved with Reiss at Joules.
As Next chief executive Lord Wolfson says: “We are excited to see what can be achieved through the combination of Joules’ exceptional product, marketing and brand building skills with Next’s Total Platform infrastructure.”
With distinctive, high-quality products and an industry-leading online business, a revamped Joules could once again be a force to be reckoned with in the mid-market fashion sector.
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