Next customers shun high-credit catalogue shopping

Next, one of the UK's most successful fashion brands, is feeling the pinch as customers start to shun its high-rate credit deals.

For many years, Next’s share price has climbed thanks to its reputation as an unshowy but reliable retailer of outerwear and work clothes. It has eclipsed Marks & Spencer as a force on the high street and enriched its long-serving boss, Lord Wolfson, whose 1 percent of the company is worth more than 100 million pounds.

Recently, however, there have been signs of trouble brewing. Gradual shifts in customer habits have revealed a trend that could turn out to be painful. After a rare shock from its Christmas trading figures, Wolfson admitted to “mistakes and challenges”. Of the 3.6 million people who used its Directory catalogue and website in the last full financial year, 2.7 million took up Next’s offer of finance.

After 28 days, purchases start clocking up interest at a double-digit rate 24.99 percent until last October, when it was cut to 22.9 percent.

Customers who buy with credit are several times more valuable to Next than “cash” customers. Not only do they bring in interest payments, 166.4 million pounds last year, but they tend to shop more frequently and buy more. For years they have been the quiet heart of Next’s empire, which spans 540 stores in Britain and boasts sales of 4 billion pounds.