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

NSL UK

NSL Gurgaon 3 Buying

Revised proto samples
samples

Factory
Final selection

Costing

Lead time
Route is decided
Purchase order Pre contract
P&P sheet
White seal
Q.C file handover Black seal

Pre progress meeting

Pilot run samples

Gold seal
samples

Shipment
 Product development stage
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.

Design theory

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

•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.
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 Jenna
Jenna 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 PC
The basic measurements of LD3 container size are 156*153*163 cm
The total weight of LD3 container size is 1588 kg
LD6 – 1200 -1500 pc
The basic measurements of LD6 size are 162.5*317.5*350 cm
The 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.
400

300

200 During the first quarter after Christmas

100 job cuts rose to 100 and after march
0 the rate rose to around 220 and then
1st Qtr 2nd Qtr 3rd Qtr 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
ROCE ratios of previous years
2007 – 74%
2008- 62 %
2009- 55%
80
60
RO C E RA T E
40
20
0
2007 2008 2009
 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.

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

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

Next planned to start collecting information about the purchases of its

customers and after that rewarding them with points, which are converted
into vouchers

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

 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