Core Competence & Diversification in Apparel Retailing �- the case of Next Plc

The UK apparel retail market is characterised by transient intra-seasonal style trends and unpredictable and demanding consumers. From a commercial perspective, the market has also been marked by increasing concentration, offer homogenization, price deflation, corporate merger and acquisition activity and by the aggressive entry of foreign competitors. As a consequence, UK apparel retailers have historically faced a dual challenge: Firstly, how to create product development, marketing and distribution strategies aligning their products and brands with dynamic consumer preferences and perceptions; and secondly how to synchronize corporate assets and competence to create infrastructures for the execution of those strategies in pursuit of commercial growth. Against this background, this paper identifies the core competences required of participants within the apparel retail market and illustrates the diversification opportunities accrued by their acquisition. These are explored using the example of Next PLC, a historically successful participant within the UK apparel market. Applying historic commercial data since 1982 and contemporary media commentary to the core competence and diversification literature, this paper will show how apparel retailers may diversify by focusing on competences in branding, product development, retail channel and format, internationalisation and business support. Alongside the key findings, a model representing the diversification opportunities of an apparel retailer will be presented.