Category: Retailing

Introduction

Retailers across the globe and in the UK, in particular, are searching for strategies that will help them achieve a competitive advantage and attract a more significant number of customers interested in their products. A new marketing strategy can help H&M achieve this goal despite the challenges of the current retailer environment in the country. This paper aims to examine the retail industry in the UK and Huddersfield and present a marketing plan for H&M.

Analysis of Retailer

The retail industry in the UK is affected by a variety of social, economic and political factors that determine its development. In general, this sector was able to generate £92.8 billion in 2017 (Rhodes, 2018). The number of businesses operating in this industry in the UK is approximately 319,000. The total amount of money spent in retail within the UK is estimated at £395 billion (Rhode, 2017). Thus, the industry appears to be earning a sufficient amount of money. Table 1 presents an assessment of the external components that affect H&M using a PESTEL model.

Table 1. PESTEL analysis of H&M (created by the author).

Huddersfield

It can be argued that retail in Huddersfield is experiencing similar issues that were described above. For instance, Wood (2019) states that a large retailer M&S plans to close its Huddersfield locations together with other stores in different cities. This decision was made based on declining sales over the last several years and a choice to focus on online shops. Therefore, Huddersfield’s retailers may have a reduction in sales and revenue due to a shift in consumer preferences. One of the most significant shopping spaces in the area is the Kingsgate Shopping Centre.

The plans that will affect the retail environment in the next 2-5 years are connected to digitalisation. It is anticipated that many physical locations of stores will be closed down (Lavigueur, 2018). Additionally, some changes may affect the Kingsgate shopping centre where an H&M store is located. Lavigueur (2018) states that the executives plan to expand the mall, thus providing more space to retailers. This will affect the competition in the area as new clothing companies will start selling their items in this location. However, Lavigueur (2018) adds that part of the development will include a cinema theatre, ice rinks and other leisure opportunities. Therefore, more potential customers will visit this location, which increases the chance to improve sales.

H&M

The retailer chosen for this strategic marketing plan is H&M. The brand is a large multinational corporation that operates in different countries and incorporates several companies, such as “H&M, COS, Monki, Weekday, & Other Stories, Cheap Monday, H&M Home, ARKET and Afound” (“About the H&M group,” n.d.). The products of H&M mainly consist of clothes, shoes and accessories for women, men and children. The business model is fast fashion due to the company’s low prices and collections of clothing.

The main office is positioned in Stockholm, however, there are stores in different parts of the world, including one in Huddersfield’s shopping centre. In general, the number of physical locations is estimated at 4,433 stores around the world (“About the H&M group,” n.d.). H&M was chosen for this paper because the organisation is a well-established retailer that tailors its products to a variety of markets. The fast-fashion model that it uses is a simplified approach for mass-market retailers and therefore, it is interesting to review the operations of H&M. In addition, the marketing approach that the company employs is closely connected to its operational activity. Thus, H&M creates a cohesive strategy for development, which provides implications for further examination.

Reasonability and Security

Despite H&M being a well-established company, it is also subjected to the pressure of the industry and its external environment. Shively (2019) states that approximately 160 physical stores will be closed in 2019. This is part of the optimisation strategy that will affect branches in the US and Europe. However, H&M does plan on opening stores in markets where it experiences growth in sales, such as China, India and Russia (Shively, 2019). Based on this information one can conclude that this retailer is reasonably secure despite having to close some of its shops because this decision allows H&M to focus on more attractive markets.

Objectives of H&M

The primary objective that H&M has is to change its production and selling model to be more environmentally friendly. According to Hendriksz (2018), H&M cites sustainability as its main target for manufacturing and selling clothing. This aim involves a circular model that implies using recycled materials to create new products. Heuvel (2015) states that within this approach organisations can prolong the lifecycle of their developments. Additionally, H&M aims to become a reliable employer by offering fair salaries to all its employees.

Evaluation of H&M’s Objectives

Considering the overall retail environment in the UK and worldwide it can be argued that H&M chose an appropriate model as its strategy, which allows offering sustainably manufactured closing to consumers. According to Braham (2017), the low price of closing items is no longer a competitive advantage for retailers. This change in attitude is partially connected to the reveal of the exploitative work conditions in factories located in developing countries. H&M targets this issue in the following manner – “in 2016, Swedish clothing giant H&M collected around 16,000 tons of discarded clothing” (Braham, 2017). Thus, the consumers are more aware of the factors that enable retailers to sell low-priced clothes and are willing to pay more for better quality and social responsibility of the brands.

Another factor is the increasing environmental awareness of customers. Braham (2017) argues that widely accepted approaches in clothing manufacturing result in land waste and pollution. As with the previous component, this element of H&M’s work is contributing to the purchasing decision of individuals. Thus, when evaluating the marketing strategy that H&M declares it can be argued that it corresponds to the requirements of the retail industry and existing consumer preferences. Additionally, H&M has already made a lot of progress in its move towards sustainable fashion, thus, this plan is achievable. Once the company can manufacture 100% of its clothing using the new model, which will help save costs and attract a new market, H&M will use these strategic objectives to continue and apply sustainable practices in its manufacturing. Thus, the analysis presented above provides insight into the fact that these plans are relevant to the retail industry.

One issue that may be connected to the strategic direction of H&M is its fast-fashion history. Since its establishment, the retailer offered clothes that looked trendy and cost less than those that could be purchased in luxury brands for a reasonable price. The significant change of its marketing mix can affect the perception of the brand while some customers may choose to shop in other stores. Hyatt and Spicer (2018) provide an example of an American supermarket brand Walmart, which also sells clothes and its efforts to implement sustainability into operations. The organisation started selling products that were manufactured by the sustainable model.

Strategy/Tactics

The application of the SMART framework will allow H&M to set clear objectives for its operations. In regards to this strategy, the plan is to increase online sales and sell 50% of goods through H&M stores via the internet in the next five years. The specific aim is to ensure that the company can respond to the alterations of its external environment, which requires a significant change in the existing sales channel. The measures for this plan are the percentage of sales online and optimisation of current locations that can serve as pick up points for customers and be designed more creatively to attract more attention. This strategy is actionable because it can be applied immediately using the information from the analysis presented above that can help improve performance, which is relevant to the specific market. Finally, the time-bound component of SMART is expressed through the ability to change adjust the existing timeline for this project, depending on H&M’s performance.

While H&M has a good marketing and operational strategy for its future, several changes can be made to enhance those. Firstly, more attention should be dedicated to the online shopping experience. It is because the number of shoppers that choose goods online has increased and will continue to grow, based on the statistics presented by Verma, Sharma, and Sheth (2015). The revenue that comes from this source is also increasing by several percents each year. This data indicates a significant shift in the preferences of shoppers because more people choose to purchase goods online. Therefore, the physical locations that the store has will not have as much impact on the revenue. Instead, they can be used as concept locations or places where customers can pick up goods they ordered online, try them on and return those easily. This strategic objective is appropriate for the retailer because it allows allocating resources into sales channels that are becoming popular with shoppers. H&M can become a well-established online retailer with a new strategy, which will help it achieve a significant competitive advantage.

Another critical component that H&M should consider is the changes in consumer behaviour. While the company recognises sustainability, other factors impact the decision-making process as well. Verma et al. (2015) point out that “the consumers of today are increasingly sophisticated—they look up, analyse and compare product features, prices, payment options, shipping information and return policies before making an online purchase” (p. 206). In this regard, access to information about products from mobile devices is essential as well. It can be argued that retailers that are unable to recognise this trend will lose a significant number of customers.

Apart from being able to purchase clothes online, H&M’s customers can read about the brand, find reviews and form an opinion regarding the company that will affect their purchasing patterns. Verma et al. (2015) argue that a relationship marketing strategy, which focuses on building a long-term relationship with clients shopping online is a valid approach for modern retailers. This model allows establishing trust and having a loyal customer base and high levels of customer satisfaction. The factors that will impact the success of this strategy are “commitment, trust, relationship satisfaction and relationship quality” (Verma et al., 2015, p. 206). The approach is based on the theory that describes the exchange between a retailer and a customer, in which the latter receives a benefit from saving time or costs.

One can conclude that the strategic objective appropriate for H&M is an emphasis on developing its online stores and mobile applications. The primary aims are to ensure that the perceived benefits of this shopping experience, such as saved time due to lack of need to visit a physical location or convenience because of easy access to product information, is not mitigated. The issues here may include shipping costs, problems with returns, taxes applied by individual countries and improper logistics strategy that results in delays.

Thus, the primary idea is to create an environment that would offer a better experience to the visitors. Van Elven (2018) states that clothing retailers can be inspired by art galleries or museums when designing their properties. This includes a specific method of displaying products that would be more engaging for customers when compared to traditional mannequins. The idea behind this model is in increasing the perceived value of the clothing by offering a different experience.

Additionally, physical locations can enhance their sales by using user data to tailor their stocks to the preferences of consumers that live in the area. Gibson (2018) describes an example of Nike and their store in Los Angeles that applies a similar model. The company collects information from clients based on their purchases in their online shop and application and utilises it to create a prognosis of items that will be popular in a specific city.

Why Choose This Objective

The objective proposed above offers H&M to use the trends of the current retail industry for achieving competitive advantage. The recommendations were made based on the peer-reviewed literature as well as online marketing magazines that describe novel approaches of other brands in the same industry. Therefore, H&M will be able to use the experience of similar companies and conclusions about the current market made by scholars, which should enable the efficiency of this approach.

Theory and Industry Examples

When evaluating a particular marketing strategy, it is necessary to clearly state the concepts and theoretical knowledge that the plan is based on because it will help define the viability of it. Rathnayaka (2018) indicates that based on the reviewed literature, marketers should adjust their strategy and consider the specifics of online retail. The most important component here is the fact that communication with fashion brands such as H&M is more easily accessible. Moreover, companies can interact with a large number of users and gather data about specific marketing approaches and their efficiency.

Next, it is necessary to consider the specifics of the theory that H&M can base its strategy on, including pricing and positioning of the new model. Pogorelova, Yakhneeva, Agafonova, and Prokubovskaya (2016) provide details of the marketing mix applicable to online retail companies. Firstly, it should be noted that standard marketing tools cannot be applied to online retail because the environment and consumer behaviour differs. The 7P model can be used because it accounts for the people, process and physical evidence that supplement the 4P concept. Pogorelove et al. (2016) classify H&M’s products as final consumption goods, meaning that the price has a significant role in the outcomes of a purchasing decision. This component connects to the evaluation of the sustainable fashion model, within which the company currently offers clothing items at a higher price when compared to similar products.

One approach to combining H&M’s sustainability strategy and online shopping model is to use innovation for reducing costs. Additionally, Pogorelove et al. (2016) argue that the concept of price is more volatile in online environments when compared to traditional retail. In this regard, social media has a significant role because Instagram recently introduced an in-app shopping that will help the brand expand its reach to the customers (Juhasz, 2019). Thus, in regards to the online shopping objective, H&M should apply the adjusted theoretical model that considers the specifics of online purchasing.

Some of the industry examples were discussed above, including the Nike application of user data for the enhancement of physical store’s stock and Walmart’s sustainability issues. Other examples include research by Klein, Falk, Esch, and Gloukhovtsev (2016) who argue that concept shops and pop up locations enhance “stores’ hedonic shopping value, store uniqueness and store atmosphere increase consumers’ word of mouth intentions” (p. 5761). Thus, H&M can use this strategy for its Huddersfield subsidiary to improve the perceived value of the purchases. The study by Gao and Su (2017) provides support to a need for shifting both marketing and strategic efforts towards the online model. The authors argue that novel approaches enabled by the Internet can help brands reach a different market segment and reduce costs.

Marketing Mix

Pricing strategy is connected to the positioning of H&M in the mass retailer market and can be considered a premium when compared to other companies. The main competitors are brands such as Zara and GAP. The average price per item at the retailer’s store is $25 (Hendriksz, 2018). Product strategy involves selling clothing using the model of fast fashion that targets a swift change of items in the store and allows H&M to offer the most recent trends to its customers. In addition, this retailer sells accessories and shoes for both men and women.

However, it should be noted that recently the brand decided to adhere to a more sustainable model, which will allow it to manufacture and sell clothes that are produced by ethical and environmental standards. Place and distribution strategy are facilitated through two main channels – online offline. The physical location is either owned by H&M or is franchised by partners. Promotion strategy involves the use of both traditional and Internet media resources. Thus, the commercials of H&M can be seen on TV and platforms such as YouTube.

Resources

H&M is a well-known brand with a long history of existence. Thus, the company has access to a large number of resources, including personnel, financials, capital, a variety of suppliers and physical sources. As was mentioned in the first section of this paper, the company operates 4,433 stores and has 148,000 employees (“About the H&M retail group,” n.d.). Therefore, no issue with the allocation of resources that will enable the implementation of the new strategy should be present.

Feasibility

The issues with the implementation of the proposed strategic objective may arise because H&M is a large international company with many subsidiaries and locations. Therefore, the process should be gradual and may take several years to implement. The anticipated outcome of this plan is an increase in the percentage of online sales in the overall revenue and improvement of the quality of interactions with customers through enhanced loyalty, which will be achieved by applying relationship marketing.

Delivery

The objectives proposed in this paper have several deliverables that consider different aspects of H&M’s operations. For instance, the online retail strategy involves collaborating with different platforms, setting up sales through social media and collecting data about user experience and preferences. The time of delivery for this project will consist of several crucial milestones that will ensure adequate implementation. However, the company will have to dedicate a lot of time and effort to ensure that the goals outlined in this strategy are achieved.

Implementation and Control

In order to implement the strategies described above, H&M should have a clear strategic vision regarding the use of its human capital and financial resources in the process. It is anticipated that the organisational structure of H&M will have to be reorganised to account for an increasing number of online sales, which will require more personnel in the packaging and shipping departments, and customer support representatives. However, it can be argued that the H&M staff members have sufficient expertise based on their previous work with online sales. Thus the implementation should be successful. The control process will consist of several indicators that help determine whether the plan is being implemented correctly.

Firstly, value indicators should be set that will help control the outcomes of this plan and whether the targets are reached. For this strategy, H&M will focus on online sales through its website. Therefore, the first goal is to increase sales volume through an online store by 30%. Additionally, the market share of H&M in online retail should grow by 10% within the next two years. Stock rotation of the items sold through the online platform should improve due to the ability to sell more items; however, it is expected that the number of returns will be higher. Therefore, this metric is not included in the control process. The tolerance range is estimated at a 5% difference for all parameters, which will allow H&M to proceed with the implementation even in case some metrics will have a less significant outcome than expected. Therefore, it can be concluded that the type of control system proposed in this plan is control of efficiency because that allows determining the effects of the marketing plan, advertisement campaigns, sales, and distribution strategies. Thus, implementation and monitoring are crucial for this marketing plan because they will allow H&M to follow the described policy and alter it if needed.

Conclusion

The retail environment in the UK is currently experiencing difficulties due to a decline in sales and changes in consumer behaviour that affect sales. In Huddersfield, a significant brand M&S decided to close down its store as part of its strategy for shifting towards online shopping. The objectives highlighted in this paper emphasise the importance of the online shopping experience, usage of customer data and the transformation of physical locations. Based on the resources available to H&M the project can be implemented.

References

About the H&M group. (n.d.). Web.

Braham, E. (2017). Closing the loop on sustainable fashion. Forbes. Web.

Gao, F., & Su, F. (2016). Omnichannel retail operations with buy-online-and-pick-up-in-store. Management Science, 63(8), 2397-2771. Web.

Gibson, E. (2018). “Retail is not dead” according to Nike. Web.

Hendriksz, V. (2018). Sustainability report 2017: How H&M aims to lead the way to a sustainable fashion future. Web.

Heuvel, R. V. (2015). The birth of circular manufacturing. Web.

Hyatt, D. G., & Spicer, A. (2018). Walmart tried to make sustainability affordable. Here’s what happened. Web.

Juhasz, J. (2019). How Instagram offers unique marketing opportunities.Web.

Klein, J., Falk, T., Esch, F., & Gloukhovtsev, A. (2016). Linking pop-up brand stores to brand experience and word of mouth: The case of luxury retail. Journal of Business Research, 69(12), 5761-5767. Web.

Lavigueur, N. (2018). Mystery as Kingsgate chiefs reveal more changes to Huddersfield mall.Web.

Rathnayaka, U. (2018). Role of digital marketing in retail fashion industry: A synthesis of the theory and the practice. Journal of Accounting & Marketing, 7(2), 279. Web.

Retail trends 2019. (2019). Web.

Rhodes, C. (2018). Retail sector in the UK. Web.

Pogorelova, E. V., Yakhneeva, I. V., Agafonova, A. N., & Prokubovskaya, A. O. (2016). Marketing mix for e-commerce. International Journal of Environmental and Science Education, 11(14), 6744-6759.

Shively, H. (2019). Clothing giant H&M planning to close 160 stores in 2019. Dayton Daily News. Web.

Van Elven, M. (2018). Store, café or art gallery? The rise and rise of the concept store.Web.

Verma, V., Sharma, D., & Sheth, J. (2015). Does relationship marketing matter in online retailing? A meta-analytic approach. Journal of the Academy Of Marketing Science, 44(2), 206-217. Web.

Wood, Z. (2019). Marks & Spencer closes 17 more stores in new blow to high street.The Guardian. Web.

COVID-19 has affected daily life and slows down the world economy. It has rapidly altered people’s life, industries, and global marketplaces. Its influence on the retail, consumers, and the e-commerce industry is powerful. Brands and retailers confront many short-term difficulties, such as safety, health concerns, supply chain problems, financial sheets, consumer requirements, and business income. Physical businesses shuttered as the lockdown drove individuals to remain home, with millions of retail workers unable to work. The retail industry has been hit hard by COVID-19 as it has lost physical customers, however, the retail industry has a chance to thrive online thanks to a well-established website, a unique brand history, and proper customer communication.

In each country, the retail industry is of prime importance. Retail sale of consumer goods is the most popular type of commercial activity in the world. Despite the economic crisis due to the coronavirus, the retail sector is actively developing and progressing. However, the pandemic greatly affected the algorithm of business. Retail is the sale of goods and services available to all customers in shopping malls and salons through Internet services (Bhatti et al., 2020). The most important element of this trade is the implementation of commercial activities. Another feature is the presence of a certain place where the exchange of goods and money, in most cases, it is a store. The enterprise can be large, medium, or small. In any case, the activity will be built according to the only established rules. They concern interaction with buyers and control services, sanitary and hygienic norms, and quality of goods (Bhatti et al., 2020). Moreover, the retail industry is highly labor-intensive, and any interruptions have huge effects on employment. It also depends on low- and part-time, on-call, and gig employees who do not have the usual social safety mechanisms.

As coronavirus expanded worldwide, the physical businesses shut down, and millions of retail staff could not do their jobs from home. Retailers need to develop a plan that ensures the security of their employees while maintaining their usual activities. Retailers must look at how their staff can deal with different scenarios and develop a strategy for crisis communication (Roggeveen & Sethuraman, 2020). Retailers may utilize stores to inform clients of the product variety, enhance brand image and promote online sales. Retail stores should also consider the impact these significant changes would have on the customer.

COVID-19 caused a global revolution in the introduction of e-commerce. This is due to the need for security and convenience of customers on the Internet. As a result of social distancing being implemented to slow the spread of the virus, there has been a decline in physical shopping. It seems that online shopping will increase as people have adapted to buying things that they would otherwise buy in physical stores from home much faster. Consumers now buy from the products’ websites consistently. Online merchants are strengthening their Internet capabilities and selecting various ways to interact with clients.

Retailers need to examine their existing goods and discover in response to various consumer preferences and expectations. Any modifications should be appropriately linked to the changing consumer demands and consistent with current services. Retailers should use rules and practices to designations for safe distances, sterilize surfaces and items, and engage with people proactively and compassionately (Chakraborty & Maity, 2020). Retailers need to speed up the processing of information and the production of new items. Retailers need to improve their customer relationships management (CRM) to deliver client support in real-time.

The pandemic and the resulting crisis will affect retailers and manufacturers. There are several recommendations for retail, such as the need to build pricing based on increased turnover and advertising. Moreover, the adaptation of the promotional policy is essential because – consumers love promotions, and it is challenging to move to the EDLP strategy at this time (Chakraborty & Maity, 2020). Therefore, many networks will continue to use the Hi-Lo strategy.

Altering consumer behavior also requires changes in terms of promotional planning, emphasizing new, fast-growing categories. Undoubtedly, in this case, a great chance dynamic pricing and the creation of individual and special offers within the loyalty program framework (Donthu & Gustafsson, 2020). The new reality does not mean shrinking the assortment and focusing only on low-priced products. It entails a qualitative change resulting from a new approach of consumers to reality, forcing the chains to comprehensively rethink their pricing and assortment policies.

Most economists agree that even when resuming retail trade offline, public spending on consumer goods will be significantly lower. The introduction of e-commerce will continue, as will the permanent closure of physical outlets (Donthu & Gustafsson, 2020). Therefore, the next few months will be especially difficult for leaders of the consumer sector and retail. Moreover, the decisions they make in the coming weeks could determine their business for the next five years. It is essential to have a plan to resume work at recovery and adapt to new realities. Traditional approaches to planning, characterized by long-term goals, seasons, and quarters, are too inflexible and ineffective to make decisions during a pandemic.

Designers can influence the future of the retail design environment by communicating with customers. Customer focus is a key element of a successful business. It is important to provide customers with quick access to products. It is essential to articulate the message that the designer wants to convey to the client. This way, the buyer forms a pleasant impression and expresses a desire to cooperate. In current conditions, proper communication is crucial in an online context. Also, influence on the future of the retail design environment can be implemented through an exciting story. There are now a huge number of interesting and original products on the world market. The designer must create something exclusive to interest the client and not to repeat the existing services. Designers can develop their own unique history of their brand, such as related to charity or helping animals. Originality in service delivery is a key element of success. (Pantano et al., 2020). Convenience is another element of influence on the retail design environment. Designers need to create user-friendly websites for their products or services so that the customer can quickly navigate the purchase algorithm. Retailers often lose a large number of customers due to poor site design.

The main task of designers is to influence the retail trade so that customers return to shopping in stores. Of course, due to COVID, many people have shifted away from shopping inside the store, because online shopping is much more convenient because it is fast. It is important to predict that people might be interested in returning to offline life. For example, a designer can create a concept of the store, which will combine not only shopping but also entertainment in the store. For example, arrange a photo area or offer coffee. Then people will choose to go to the store, because online shopping will be a little different. Also, the overall layout of retail stores has changed a lot. During the pandemic, a place for hand antiseptics and free masks were added to the interior of stores. This will not only help prevent the spread of the disease, but is to bring retail to a new level. Thus, retail in modern conditions requires uniqueness in the way products and interiors.

To conclude, COVID-19 has touched all sectors, organizations, and industries. The pandemic has resulted in the closure of numerous companies in most industries. The coronavirus hit the retail sector, as all sales had to go online. The economy has suffered huge losses due to the closure of physical stores. However, over time, everyone is adjusting to the pandemic and rebuilding the businesses that have endured losses. Designers can also influence the future of the retail design environment by creating a user-friendly website as well as a unique brand history of the products or services offered and ensuring proper communication with customers,

References

Bhatti, A., Akram, H., & Khan, A. U. (2020). E-commerce trends during COVID-19 pandemic. International Journal of Future Generation Communication and Networking, 13(2), 1449-1452. Web.

Chakraborty, I., & Maity, P. (2020). COVID-19 outbreak: Migration, effects on society, global environment and prevention. Science of The Total Environment, 728. Web.

Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of business research, 117, 284–289. Web.

Roggeveen, A. L., & Sethuraman, R. (2020). How the COVID-19 pandemic may change the world of retailing. Journal of Retailing, 96(2), 169-171. Web.

Pantano, E., Pizzi, G., & Scarpi, D. (2020). Competing during a pandemic? Retailers’ ups and downs during the COVID-19 outbreak. Journal of Business Research, 209-213. Web.

Executive Summary

Victoria’s Secret is a retailer that sells lingerie, women’s wear, and some beauty products. It is located in America and is the largest brand. It also has catalogs and fashion shows where the top fashion models are featured. Victoria’s secrets retailer has used a number of tactics and strategies to help it achieve its set goals. It has both external and internal strategies that are to run this successful retail operation. Assistance in the operation is available and that makes the first strategy that the retail operation uses (Miles 102). Their transactions are performed faster and efficiently. This kind of strategy satisfies the customers hence the growth of the retail operation. Victoria’s secret has made sure that their products are always available in their shop. It also has a very attractive appearance that is pleasing to its customers. Cashiers at Victoria’s secret are very friendly to the customers and this attracts and retains many customers. In the sector of sales, the retail operation has very good knowledge about it and this expands the business. The tactics used in Victoria’s secret retail operation go along with the strategies resulting in a successful operation. There are good services offered in the retail operation and they have made it an efficient and effective business operation.

History of Victoria’s Secret

Victoria’s secret is a business operation that started in 1977 in California. It was founded by Roy Raymond who was embarrassed when he tried purchasing his wife’s lingerie in a public store. The embarrassment led him to open the first store at Stanford shopping center and three other stores followed swiftly. A mail-order catalog also followed immediately after the opening of the first store (Nash 67). The whole idea of opening the stores was creating a very comfortable environment, particularly for men. The stores had walls that are wood-paneled and also had all the details about Victoria. There was then the introduction of a very helpful sales staff that was meant to offer proper services to the customers. The stores started with a single style of panties and bras that were mounted on the wall. In 1982, the company had operated for five years and this is when Roy Raymond decided to sell the company to The Limited. The limited still retained the image of Victoria’s secret. During the 1980s, Victoria’s secret expanded to most of the malls in the amalgamated States. In the malls, the company added more products like shoes, women’s evenings, and perfumes. During this time the mail catalog was issued at least eight times a year. It was in the early 1990s when Victoria’s secret became the top American lingerie retailer.

In mid-2007, the limited Brands managed to sell three-quarters of its limited clothing chain to the Sun Capital Partners so that they can improve the sales growth of the company. In 2006, Victoria’s Secret came to an agreement with the environmentalist groups of making the lingerie retailer’s catalog become friendly to the environment. Currently, there are one thousand Victoria’s Secret lingerie stores in the United States and 1000 Victoria’s secret beauty stores. Most of the stores are in the shopping centers and they sell brassieres, panties, cosmetics among others. There is more than four hundred million mail catalog issued annually in the United States. The company is now focusing on middle-class shoppers and is offering the best services so as to satisfy its customers. They have also ensured that their products are available in their stores for the shoppers to get access to them.

External Analysis of Competitiveness

Victoria’s secret has used the SWOT analysis as a tool to audit the company and its environment. The company has its weaknesses, strength, threats, and opportunities. One of the strengths of Victoria’s secrets is its knowledge in marketing its products (Kelegama 62). They also frequently introduce innovative products and services so as to satisfy their customers and to beat their competitors. Most of their stores are strategically situated in that majority of the shoppers are able to visit them. Victoria’s Secret is known for its quality products and services. For many years, Victoria’s secret has retained its good reputation among its customers. The company also has its weaknesses that they need to work hard on so that they retain their customers and beat their competitors (Underhill 216). Some of their stores are located in areas where many people are not able to visit. Their competitors are also selling some products that are fast-moving and this might result in most of the customers migrating to other shops.

The company also has a number of opportunities that might result in an expansion of the business. There are some new technologies that have arrived and will help the company to market their products better. They even have the chance of expanding their market internationally and this will increase their sales. The company is also facing a number of threats that are acting as an obstacle to success. Some of the threats are the competitors who are trading the same kind of products. The competitors have innovative products that might ruin Victoria’s secret sales. The company is also facing the threat of taxes that have been introduced on its products.

Victoria’s secret retailer practices financial ratio analysis which is how they determine and evaluate their financial ratios. A financial ratio is carried in the company to show how the company’s activities relate to each other. The ratio analysis is however very important in this kind of company because it reveals a great deal of information about the company and its operations. Victoria’s secret practices trend analysis whereby they compare their ratios over time (Forbes 54). This yearly comparison helps them to know so that they can act when there is a need to. However, there are some numbers of financial ratios carried out in the company. One of the financial ratios carried out in the company is the price earning ratio which is about the earnings and the sales growth of Victoria’s secrets. There is also the liquidity ratio which shows the ability of a company to meet its short-term financial responsibilities. The example is the current which is calculated by dividing the total current assets by the total current liabilities. This shows the ability of the company to pay its current debts.

Another ratio is the profitability ratio that helps the company to analyze its ability to manage their company’s expenses and earn profits through using the resources in the company. One of the examples is the net profit that is calculated by way of dividing the net profit by net sales. This shows the percentage of sales that have remained after the expenses. Victoria’s secret practices a financial ratio of asset management (Forbes 86). This ratio helps the company to analyze how swiftly the resources available in the company can be converted into sales. An example is inventory turnover which is calculated by dividing the cost gods with the inventory. This shows the rate at which the inventory is converted into cash after moving through the company. There is also debt management which helps the company to analyze the impact of the usage of the borrowed cash that financed the company’s operations. One of its examples is the debt ratio which is calculated by way of dividing the sum borrowed cash by the total assets. This helps to show the degree to which the company’s total assets have been financed using the debts.

Brand loyalty is a common thing in Victoria’s secret company. The company has done its best to retain its customers who consume a certain brand in a product category (Gobé 83). The company started with a trial purchase in some specific brands and the customers were satisfied with them. There are a number of customers who are committed to some particular brands and they cannot change it no matter the costs. Some of them are willing to pay higher prices for the product rather than changing the brand (Maniatis 69). Most of them even recommend Victoria’s secret brands to other people. The company has played a vital role in their customer’s brand loyalist. They always remind their customers about the value of their purchasing and then they encourage them to continue purchasing the same brand. They have also done many advertisements for their products with the aim of creating awareness. They do the advertisements before the sale is critical and even after. The company has retained the brand loyalist because they sell quality products. They have also introduced the idea of giving their customers incentives when they repurchase their products. The products sold at Victoria’s secret are trusted and that encourages the customers to keep repurchasing the same product. The company offers good treatment to its customers and this has helped her for she has retained the customers (McGrath 154). They have also made their product to be available in their stores in that the customers can get it any time they need it. The company staff sometimes avail themselves and bring the product to the customer. They also have a superior way of reputation among their customers because they seek to serve their customers. This makes the customers will repurchase their product and it has helped them to retain their customers. The customers in this company are always satisfied and that is why they keep repeating the purchasing again and again.

Victoria’s secret has a number of competitors who sell similar products. The lingerie market especially has heated up and everyone is trying to sell the same product. Some other competitors are using the same trademark like that of Victoria’s secret and it causes confusion among customers for they can’t tell the difference. This is then termed unfair competition because they have stolen their name. Some of these petitioners are Victor and Moseley. They run a retail store similar to that of Victoria’s secret using the trademark Victor’s Little Secret. They sell the same kind of products and so they are the largest Victoria’s secret competitors.

Victoria’s Secret uses electronic commerce to examine the changes in the marketplace. The introduction of new technologies has helped the company to know much about the marketplace. The business has helped the company to identify its opportunities, weaknesses, strengths, and long-term prospects.

Internal Analysis of Strategy

The company has organizational strategies and mission that help it to meet the set goals and that separates the company from the competition. Victoria’s secret has a mission statement that helps the company to focus on achieving its set goals. Since Victoria’s secret is part of limited brands, Limited Brands is dedicated to building a family that has the best fashion brands globally that hold the interest of customers hence long-term loyalty and growth of the company’s shareholders (Strother 57). This mission statement will help the company do what they can to satisfy their customers so that they can retain their customer’s brand loyalists. The organization’s strategy is to direct the company in achieving its set goals. All the decisions made in the organization are in alignment with the strategic plan enabling everyone to be familiar with the plan. The company ensures that the customers are satisfied. They make sure that the products are available in the stores and are of good quality.

Victoria’s secret has distinctive competencies that enable it to provide quality products to the customers and are affordable to middle-class shoppers. The company responds to the demands of their customers and they ensure that they distribute innovative and new products efficiently. The products distributed should be profitable to the company. Victoria’s secret shine at brand creation and their management integrate and they have used technology in their business. The company has managed to differentiate itself from the competitors and even has maintained low cost and quality products. Their value creation has lead to their brand being recognized internationally.

The department stores of Victoria’s secret sell attires that come from major manufacturers and many people go to department stores to purchase a quality product. The company offers quality service that makes attracts and retains customers hence makes profits from the sold products (Frank 94). Due to their quality products and good distribution channels, the company sells a lot of products in a day. The quality of the product facilitates repurchasing of the product. Most of the distribution stores are located at strategic positions where anyone can visit. Their location helps the company to beat its competitors. The company also has good inventory management in that the managers ensure that the resources are converted into sales. Their services are recommendable because they seek to serve their customers and offer the best services. This helps the company to retain and attract more customers hence making many profits. They also have good human resource management in that; their employees are treated perfectly enabling them to serve up their clients perfectly.

Internal Analysis of Productivity

Victoria’s Secret was founded by Roy Raymond who opened three stores in the United States. He then later sold it to The Limited after five years of operations. The Limited expanded the business and opened many other stores in the United States. They are now marketing their products globally. Currently, the senior executive of Victoria’s secret is Tom Katzenmeyer and he is also the senior vice-president with Limited Brands which is a United States company. In his leadership, he has improved the company’s sales. The entire management relates well and that has contributed to the success of the company. The call scheduling approach of maximizing products practiced by Victoria’s secret was a good idea for creating jobs for many. The big number of employees increased the productivity hence the increase in sales.

In Victoria’s Secret, there are different jobs offered. One of the positions is the position of the store manager and the role is managing the store and ensuring customer satisfaction. The benefit of this manager is to reduce so many direct reports. The other position is the brand delivery and the operations manager. The roles of this manager are to run the end-to-end invention lifecycle, ensure proper presentation of products, deal with cash operations, support the rest of the staff and observe the activities within the organization. The delivery manager has some benefits and they include reducing cash issues and improve planning. The position of a product manager is to manage the product flow, ensure that the products are properly presented, and give support to the brand as well as giving guidance. The need of a product manager is to ensure that the product is always available and is well presented. It also improves planning. There is also the position of operations and staffing supervisor. This manager is responsible for scheduling and coordinating the staff in the store. The manager also has a role in training the new recruits and administers the activities carried out in the store. The benefit of having such a manager is that the labor is well scheduled and has good administration of activities. The manager helps to remind the management team that they have the task of hiring new people in the company. There is the customer knowledge and skills that manage the customer experiences in the store. The benefit of this manager is improving customer experience n sales and services (Kelegama 21).

Recommendations

Victoria’s secret needs an organizational strategy of internal assessment that focuses on the organization’s ability to assess its strengths and weaknesses. This will help the company to utilize the value chain analysis approach. In terms of finance, the company should fund the key initiatives and have a financial plan. In research and development, the company should always maintain a process that is creative and innovative. In terms of production, the company should ensure that all the departments do support production. When it comes to marketing the products the company should ensure that all the departments support marketing and have a marketing plan. In regard to sales, the company should ensure that the sales goals are achieved consistently. The company should ensure that its strategies always emphasize customer service.

Conclusion

In conclusion, Victoria’s secret is a large retailer that sells women’s wear in the United States. It sells bras, panties, and lingerie’s among others. The company was founded by Roy Raymond who was embarrassed when he tried purchasing his wife’s panties in public. He opened three stores and a mail-order catalog. He then later sold the company to The Limited after years of operation. They then expanded the company. Victoria’s secret has a mission statement that helps the company to prosper. The company has a number of analyzes that have contributed to its accomplishment. It also has its strategies and tactics that direct the company to achieve its set goals. The company practices financial ratios to lets them supervise the company’s finances. There are a number of employees working in the company currently. The company also needs to focus on the internal assessment of organizational strategies so that it can prosper. They should focus on sales, production, finance, and marketing among others. The company has retained most of its customers and is attracting new ones every day. They have maintained the brand loyalist that is very beneficial to the company. This is because they satisfy their customers as well as selling quality products and offering quality services (Nash 37).

References

Forbes, Ben. Victoria’s Secret. California: University of California, 2003.

Frank, Lewis. The Economic Naturalist. Chicago: Oxford University Press, 2007.

Gobé, Martin. Branding. New York: Allworth Communications, 2005.

Kelegama, Serah. SWOT Analysis, New York: SAGE, 2006.

Maniatis, Stephanie. Trade Marks. Texas: Sweet & Maxwell, 2006.

McGrath, Roger. Strategic Moves, California: Business Press, 2005.

Miles, Robert. Organizational Strategy. California: University Press, 2003.

Nash, John. Victoria’s Secret. New York: PLUME, 2002.

Simon, Michael. The Mall and Texas. Paco: Underhill River, 2004.

Strother, James. Victoria’s Secret Strategy. New York: SAGE, 2006.

Introduction

My future goal is to become a successful entrepreneur whose company meets the diverse needs of both communities and customers. This objective cannot be realized without having an effective business plan. Personal strengths and weaknesses should be studied in order to understand how every aim can be achieved. This paper gives a detailed analysis of my personal business plan and development of innovation and entrepreneurship.

Vision and Opportunity

My goal is to start a company that transforms the lives of the greatest number of people. I will engage in lifelong learning to acquire apposite dexterities that can support my career and personal goals. My purpose is to come up with a company that promotes the concept of sustainability and empowers my customers. The company’s mission is to acquire, repair, and upgrade used mobile phones and market them at affordable prices.

The values supporting this idea include sustainability and corporate social responsibility (Sazesh & Siadat, 2016). Justice, honesty, and ethics will sustain my venture. The company seeks to capitalize on the increasing need for handheld devices. Additionally, the fact that people are promoting sustainability is an opportunity for my innovative business. The expanding mobile phone market will ensure the goals of the company are realized. More people are using handheld devices than ever before. The profitability of the segment is also an opportunity for my business model.

Marketing and Implementation Strategy

The marketing positioning statement for the company (see Fig 1) shows clearly that the products will be admired by many customers. The statement is directed to the entire world. Potential customers will be sensitized about the importance of purchasing refurbished phones to minimize wastes. The marketing and implementation strategy should be supported by pertinent values such as sustainability (Renko, El Tarabishy, Carsrud, & Brannback, 2015). The strategy informs members of the society about a brand that delivers the above benefits. Values such as sustainability, ethics, and corporate responsibility define the company’s brand.

The model differentiates itself from those of my classmates because it does not seek to introduce a new product in the market. Instead, the brand delivers revamped mobile phones at friendly prices. The strategy will attract individuals who cannot afford new smartphones. People who appreciate the idea of sustainability within the broader populace will support this model (Renko et al., 2015).

Risks and Mitigation

The key milestones in my plan include the growth rate of the company, increased sales, and profits. Information gathered from stakeholders will determine the progress made throughout the plan. These milestones and checkpoints will be taken seriously to ensure the firm succeeds. The effectiveness of these milestones will be measured using the level of customer satisfaction.

The first external factor capable of disorienting performance is the existence of many corporations marketing premium mobile phones. Customers are also ignoring older versions or brands. However, issues such as climate change and environmental degradation might encourage customers to buy my products (Simsek, Jansen, Minichilli, & Escriba-Esteve, 2015).

Powerful contingency and risk mitigation strategies will be utilized (Simsek et al., 2015). For instance, research findings will ensure the firm is prepared against unpredictable events. I will consider various legal frameworks and practices to have a successful business. Competent employees will be hired to repair phones and market them effectively. A team will be formed to identify potential risks and deal with them.

Entrepreneurial Ethics, Personal “Board of Directors” Summary

Successful innovators and entrepreneurs are guided by ethical frameworks (Anand & Saraswati, 2014). I plan to follow ethical principles in my daily actions by creating a code of conduct. This code will always inform my duties, goals, and responsibilities. My followers will follow the code of conduct and uphold the outlined values.

I have identified three individuals who will be my mentors. The first one is my father. He has always guided me over the years to follow my aims in life. This empowerment has guided me to remain competitive and innovative. The second mentor will be my instructor. The concepts, ideas, and values gained in class will empower me to achieve my goals. Finally, Apple Corporation’s Steve Jobs has always inspired me. His innovative abilities will guide me to achieve my goals.

Concluding Summary of my Personal Business Plan: “Creative entrepreneur, sustainability educator, caring innovator”.

Further Development Strategies

Innovation is the ability to use creativity to come up with new ideas and products that support other people. On the other hand, entrepreneurship is an art whereby individuals engage in successful business dealings (EL-Annan, 2013). The two appear to converge because they work synergistically to support business performance. Different levels of entrepreneurship and innovation refer to the stages at which a person can make significant differences in business performances.

Such levels increase depending on the resources utilized and the size of corporations. I strongly believe that universities use proper structures and models to empower learners and make them successful entrepreneurs, innovators, and leaders. They offer meaningful concepts that can make a person successful. Leadership attributes and innovative ideas are also associated with such institutions. I strongly believe that such ideas have made me more entrepreneurial and innovative. Such concepts have empowered me to identify a creative business that can support my goals.

I was less creative and entrepreneurial before joining my university. I lacked adequate concepts and notions that can empower me to achieve my goals. The completed course has made me successful and innovative. I can now apply my concepts to pursue my personal and career goals. Individuals who want to measure their innovative capabilities must apply their concepts in different situations. The ability to come up with innovative ideas arises from improved entrepreneurial skills (Holzmann & Golan, 2016).

The main failure that has affected me in the past is the inability to lead others efficiently. I discovered this weakness when I was a team leader in our class discussions. This failure affected the team’s performance. I am now focusing on better skills and approaches to addressing this weakness.

My leadership abilities have also improved significantly. I can mentor and my followers to pursue their aims using efficient strategies. I will use a powerful action plan to strengthen my innovation and leadership skills. The first stage is a personal assessment. This step will be used to identify my weaknesses (Sazesh & Siadat, 2016). This activity can be undertaken within a week. The second stage is outlining specific strategies to strengthen such areas.

The focus will be on the best leadership practices and desirable innovative projects. This exercise will be undertaken a week. The third stage is undertaking various projects and involving others. The practice will ensure my entrepreneurial and innovative capabilities are improved significantly (see Fig 2). The phase will be completed in six weeks. The final stage is evaluation. This strategy will ensure the intended leadership abilities and innovative skills are improved significantly. This process will be completed within two weeks.

References

Anand, P., & Saraswati, A. K. (2014). Innovative leadership: A paradigm in modern HR practices. Global Journal of Finance and Management, 6(6), 497-502. Web.

EL-Annan, S. H. (2013). Innovative, proactive, and vision are three integrated dimensions between leadership and entrepreneurship. European Journal of Business and Social Sciences, 1(12), 148-163. Web.

Holzmann, V., & Golan, J. (2016). Leadership to creativity and management of innovation? The case of the “innovation club” in a production company. American Journal of Industrial and Business Management, 6, 60-71. Web.

Renko, M., El Tarabishy, A., Carsrud, A. L., & Brannback, M. (2015). Understanding and measuring entrepreneurial leadership style. Journal of Small Business Management, 53(1), 54-74. Web.

Sazesh, A., & Siadat, S. A. (2016). The relationship between leadership styles of human resources and entrepreneurship of managers in staff of cooperative office in Golestan, Iran. International Business Management, 10(6), 963-967. Web.

Simsek, Z., Jansen, J. J., Minichilli, A., & Escriba-Esteve, A. (2015). Strategic leadership and leaders in entrepreneurial contexts: A nexus for innovation and impact missed? Journal of Management Studies, 52(4), 463-478. Web.

Appendix: Exhibit Page

Appendix 1

Fig 1: Marketing positioning statement.

Appendix 2

Introduction

The global sports retail industry has achieved a rapid growth over the last ten years. It is also expected to continue growing over the next five years, with an estimated growth rate of about 6% per annum to reach about $130 billion by 2020 (United Nations 2014). The rapid rate of growth in this industry is due to a number of factors.

However, the major factor contributing to the industrial growth and development at a faster rate is the dynamism in the demand for sports goods. For instance, studies have shown that there is an increase in the demand for sports goods or sport-style products in various parts of the world, especially Asia.

The purpose of this paper is to develop a comprehensive report based on the industrial analysis of the global sports retail business. It will examine the industry based on the conventional techniques of industry analysis, including forced field analysis, porters 5 forces, PEST and SWOT analysis.

This paper argues that the sports industry stands a better chance to develop rapidly over the next five years, giving corporate and other players a good chance to improve their economic development and financial health.

Force field analysis

Force field analysis is an important tool in the process and technique of decision-making (Lewin 2000). It aims at analyzing the forces for and against industrial or corporate change in order to provide corporate leaders with information needed to make effective decisions.

In addition, the technique helps corporate leaders communicate the reasons behind their need for change in the corporate management area, which makes it easy to convince stakeholders that a change or project is needed. In particular, the force field analysis model yields information that has two effects (Cartwright 2009).

It can provide information that supports the idea of change, thus calling the corporations involved to go ahead with a project, a change of a program.

The forces favoring the growth of the sports retail industry

Population growth

The increased rate of world population is an important factor supporting the rate of growth for sport retail industry. In particular, the growing demand for sports and sport-style products is high in areas with a high rate of population growth, especially in a number of Asian countries (Cai & Du 2013).

Statistics indicate that out of the estimated 7.14 billion people in the world, about 4 billion live in Asia, accounting for more than 55% of the total world population (World Bank 2013). Together, the populations of India and China make about 2.6 billion people, providing evidence of the increased rate of demand for sports products in these areas (Randers 2012).

For instance, the increase in the demand for sports-style products was more than 4% in China between 2005 and 2010 (Research markets 2012). Overall, the rate of demand for these products is more than 3% per annum (Mullin, Hardy & Sutton 2013). The high population is the largest player in the increased rates of demand.

Improved economies

Another major factor supporting the rate of growth in the sports retail industry is the trend of economies in various parts of the world. In North America, the economic situation has improved rapidly since the end of the global recession. Between 2010 and 2013, the economy of the US increased by 2.3% per annum (Coates & Humphreys 2003).

In addition, other regions have enjoyed improved economic growths since 2010. For instance, the economy of the south east Asian region has improved by more than 3%, while that of the near and middle east nations has achieved a growth rate of more than 4% per annum (World Bank 2013).

In addition, despite few cases such as Greece, Italy and Spain, the European Union has achieved an improved growth rate in its economy, which is expected to reach 2.1% per annum (Smith & Stewart 2012). South America has some of the most rapidly developing economies in the world. The number of people attaining the middle class level is increasing rapidly, while poverty rates are declining.

In nations such as Brazil and Argentina, the economic growth has developed rapidly over the last five years. This explains the rising demand for sport-like goods in these areas. In addition, African nations have the world’s largest rates of economic growth.

In the recent past, a number of African nations have achieved an economic growth rate of more than 5%, with some reaching a high of 8%, including Ghana, Angola and Senegal (Breisinger, Diao & Thurlow 2011). In addition, most countries in the region have a growth rate of more than 4%, with the most significant including Nigeria, Kenya, Tanzania, South Africa, Ethiopia and Ivory Coast (World Bank 2013).

The youth factor

In the modern world, the status of the young people has increased significantly. With an increase in the number of young people taking part in the economic building such as employment and business, most nations have experienced in increase in the demand for products and services that support youth affairs. Among the most important industry supported by this phenomenon is the sports retail industry.

In North American, South America, Asia and Europe, growth of the sports retail industry is favored by an increased rate of youth participation in various aspects of the economy. According to studies, young people have a tendency of being active in sports or wearing sport-like clothing and shoes.

In addition, the empowerment of the young people through financial support and improvement of employment opportunities in Asian nations, in particular, has supported the increase in the demand for sport goods and services, which supports the growth of the sports retail industry.

Restraining forces

Economic recession

Although the world economy has achieved a relatively good rate of recovery from the 2007-2010 economic recession, the effects of the phenomenon is still affecting most countries. For instance, the recession made the US economy lose by more than 4% per annum (Bjork 2012).

In particular, the employment rate declined significantly, with the rate of unemployment reaching about 8% per annum (World Bank 2013). The number of people that lost jobs during the time is significant, with a good number being young people.

This also took place in Europe and Asia, which affected the industrial growth rates. With a high number of people losing job opportunities due to the impact of the recession, the number of people purchasing luxury sport goods declined significantly in most nations in Europe, Asia and North America.

Porter’s Five Forces Analysis of the Global Sports Retail Industry

A five force analysis of the global sports retail industry is important in determining the effectiveness and micro environment forces that affect the industry’s ability to meet the demands of its customers, achieve profitability and the overall growth. The buyer power, new entrants, competition rivalry, supplier power and threats of substitutes provide evidence of the industry’s state at a given time.

Buyer Power in the Global sports retail industry

In sports retail industry, consumers have the largest role in driving the business of the industry. The power of the consumers is evident in pricing, especially when competitors tend to outdo each other based on pricing strategies. In the recent past, most competitors in the industry have been trying to attract more consumers through discounts and services to increase their market share.

Buyers reap the benefit of obtaining products at competitive prices. However, statistics have shown that the number of people aged 45 and above seeking to use sports product in managing their health has increased significantly, especially in the developed world (Quan 2010). This trend has allowed consumers to look for fashion that is mostly associated with sports.

The high rate of competition between retailers in the industry based on production of goods meant to meet the specific demands for various social groups has enhanced the power of buyers in the industry.

In addition, the amount of product differentiation in the market for sports goods has increased, with companies manufacturing products based on the specific needs such as jogging, cycling, skating for health purposes and those meant for real sporting activities (Andersen, Van Raalte & Brewer 2001). This has given consumers a wide range of choice, enhancing their power in the control of the industry.

However, there are only a small number of retailers in the oligopolistic sports retail market, which has restrained the buyer power because forward integration is difficult as the buyers are mainly the consumers, making their chance of taking over less significant. Nevertheless, the overall power of buyers in the industry is rated “moderate”.

The power of suppliers

In the global sports retail industry, the suppliers are the corporations involved in manufacturing, including Nike, Reebok, Adidas and Puma. These organizations are multinational and large corporates that control the industry. They are globally branded with reputation and value due to high quality products they offer to the market. This makes the bargaining power of the industry to be significantly low.

They have almost become the main decides of the prices for sports products. Forward integration seems to be relatively high because the retailers are threatened by the suppliers. For instance, a number of suppliers have been acquiring retailers, which makes the suppliers take over the control of the retail industry. A good example is the acquisition of Hargreaves Sports, a retail business in the industry, by Nike.

Nike used this opportunity to set up an exclusive fully branded outlet for sports good in Nike town, London, in 1999 (Deng 2009). On its part, Reebok opened a fitness center known as Reebok Sports Club in London, England, which provides consumers with a wide range of exclusively branded Reebok products for health fitness purposes (Yu 2011).

Moreover, the suppliers use marketing strategies such as advertising, promotion, corporate social responsibility and sponsorship for sports clubs and fitness welfares, achieving the overall control of the industry. Overall, the power of suppliers in the retail industry for sports good in the world is high.

Rivalry among competitors

There is a considerably good level of competition between main players in the retail business in the global sports industry. The concentration ratio as well as HHI is important measures of rivalry in the industry based on market share. These markets shares can be obtained in the Mintel’s report (2008) as shown in appendix 3.

In this case, it has been shown that the concentration ratio is the market share that the four major competitors in the global retail industry are JJB Sports, Sports World, DJ Sports and Supermarkets/retail chains in various parts of the world.

As shown in the appendix, the CR reveals that the four major competitors sell about 75% of the total output, which means that the degree of rivalry is high. In addition, the calculations in the appendix show that the HHI of the industry is about 1683, which lies between 1000 and 1800. This means that the market is moderately concentrated.

Threat of new entrants

As shown above, the CR and HHI degrees are relatively high, with the number of major players in the industry remaining relatively low. Each of the players has a large number of stores in various parts of the world. They compete among themselves to increase their market shares. In addition, they have dominated the market for a long time, providing quality products.

Therefore, for new entrants in the market to succeed, they must impress consumers that their products are quality. In addition, the entry of supplies in the market, especially through acquisitions and mergers or joint ventures with the existing retailers, has made it difficult for new entrants to tap market share in the industry (DePamphili 2013). Therefore, the overall threat of new entrants is low.

Threats of substitutes

In footwear, the price of sports shoes is likely to change when substitutes change in prices. In this case, substitutes include products from local companies, which is common in various parts of the world.

PEST analysis

Political

The global sports retail industry seeks to increase the volume of sales of sports goods and services to the global clients. The key players involved in this industry include Foot Locker, JD Sports, Sports Direct, Sports World, JJB Sports and supermarket chains. These companies face political challenges in their business. For instance, the politics of control of the industry is evident.

Suppliers seem to be fighting each other at the retail level. For example, Nike and Reebok have strategies to acquire or partner with selected retailers in order to lock out other suppliers (Slater & Lloyd 2004). This brings a tense political environment between the suppliers and the retailers.

In addition, retailers are flexing their muscles by moving beyond Europe and North American to venture new markets in Asia and South America, especially in China, India, Brazil and other nations in the Southeast Asian region. In all of these regions, the political environment is diverse.

For example, there are laws to protect local companies in some nations like South Korea and China. Taxation and legal politics are evident. In addition, the companies are considered western products, which affect the perceptions of the people in foreign nations.

Economical

Retailers of sports products seek to increase their market share and profitability. To do this, they tend to increase their outlets, which make it necessary to hire a large number of employees in Europe, North America as well as foreign markets. This contributes to the overall growth of the economies where the outlets are based. In addition, it is worth noting that labor affects these companies.

In Europe, the cost of labor is higher in France and Germany than in Britain. Similarly, the cost of labor is high in North American and Europe than in China and South Korea. Thus, most factories are located in Asia. It means that the retailers have to open new locations in Asia and sometimes obtain supplies from these areas.

Social

Sports products are associated with sports cultures at a given time and location. In Europe, North America and other westernized nations, sports are a major social factor, with few social restrictions attached to it.

Sportswear of different kinds and styles are allowed. However, in some nations such as those using strict Islamic laws, including Saudi Arabia, as well as those with strict cultural laws like North Korea, some sports and sportswear are not allowed, especially those though to expose certain parts of the bod. In addition, some cultural laws prohibit women from taking part in sports or wearing certain sports clothing.

Technological analysis

The internet technology has improved business processes. Sports retail business is one of the most affected industries. Currently, most consumers are increasingly moving to online shopping, where it is possible to select and order products. Thus, most retailers have implemented e-commerce as part of their business processes.

SWOT Analysis

Strengths

The sports retail industry is one of the fastest growing industries, thanks to an increase in the number of middle and aged people using sporting activities to enhance the quality of their lives.

According to statistics, the number of baby boomers population in North America and their similar population in Europe are concerned with their health. They have increasingly been using sporting activities as the most effective solution to improve their health and quality of life. Thus, the retail business is likely to remain strong over the next few decades.

Weaknesses

Sports products are mostly luxury goods and services. They do not have a high priority in most households. Therefore, frequent economic recessions and other financial problems are likely to affect the demand for these products (Mehta 2013). Thus, retailers face the risk of frequent decreases in demands.

Opportunities

As mentioned, the increase in global population, especially in Asia, South America and Africa, provides the sports retail business with chances for expansion and growth. In addition, the rising state of economics in various parts of the world means that the demands for these products are likely to rise. Moreover, the trend of using sporting activities to meet health demands is increasing throughout the world.

Threats

Although the number of retailers is relatively low, the current players face a threat of new entrants in the market. For instance, the increased tendency of suppliers to enter the retail market is a major threat. In addition, emerging nations like China, India and others have a quest for entering the market.

They are encouraging corporations to go global, which means that some of their retailers in this industry are likely to enter the market in the future (Development Research Center of the State Council 2009).

References

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Deng, T, 2009, “Just Done It—Nike’s New Advertising Plan Facing Global Economic Crisis”, International Journal of Business and Management, vol. 4, no. 3, p. 102.

DePamphili, D, 2013, Mergers and Acquisitions Basics: All You Need To Know, Academic Press, New York.

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Appendix

Calculations for rivalry in the sports retail market

CR4 = Market Share (JJB Sports + JD sports + Sports World + Supermarkets).

CR4 = 33% + 16% + 13%+ 13%.

CR4 = 75%.

HHI = SQUARE [Market Share (JJB Sports + JD sports + Sports World + Supermarkets)].

HHI= 1089+256+169+169 = 1683.

Introduction

Kering is a leading global brand in the fashion industry. Its success traditionally hinged on acquiring and developing some of the most successful luxury brands in the world, including Gucci, Bottega Veneta, Yves Saint Laurent, and Puma (Evans 1). By utilizing the power of creativity and innovation, Kering subscribes to a philosophy that premises on allowing its brands to reach their full potential in the most sustainable way (Kering Group 1). Today, the company has a global market presence in more than 120 countries (Kering Group 1). It also rakes in annual revenues of more than €11.5 billion and its comprehensive employee pool is comprised of more than 38,000 employees (Kering Group 1). This paper provides a comprehensive retail analysis of the company’s merchandising strategy.

Current Fashion Trends

Ubiquity vs. Exclusivity

According to Deloitte (10-11), major luxury brands in the world have stuck to a traditional production process (in-house), which is characterized by the refusal to outsource their production process. In this regard, many luxury brands have tight control of most aspects of their business. However, the internet is slowly changing this dynamic as it has shifted the power from the major brands to their consumers. This change has led to the emergence of a new trend in the fashion industry, which is characterized by ubiquity versus exclusivity. Indeed, since the start of e-commerce, most luxury brands have shifted their merchandising strategies online.

Nowadays, e-commerce could account for more than 20% of a company’s sales (Evans 1). For example, Amazon’s success in the e-commerce space has seen its fashion business grow to $95 billion annually (Deloitte 10-11). It is also the company’s fastest-growing business segment. The e-commerce trend has also infiltrated Kering’s merchandising strategy because customers can easily buy most of the company’s products on the virtual platform. However, the company joined this trend late because it thought that replicating some of the unique properties of its brands on the online platform would be difficult (Evans 1).

This concern was not exclusive to Kering alone because Deloitte pointed out that “the potential loss of exclusivity and the prestige associated with luxury brands’ bricks and mortar locations are hurdles that can be difficult for luxury brands to overcome, but they are surmountable, and some brands have embraced the technology” (8). The shift to the online platform is unavoidable and Kering has realized this fact. However, Evans (1) cautions that this shift does not mean that luxury brands have an excuse not to deliver an interactive, exciting, and efficient shopping experience to their customers. Nonetheless, the move to avail products online is growing as more companies are resorting to using their websites to promote their brand stories, fashion shows, and the likes. Kering’s main luxury products are on this platform as well.

Omnichannel

The adoption of the omnichannel distribution and sales network is an emerging trend in the fashion industry, especially among leading global brands that major in the luxury brand segment (Deloitte 10-11). This distribution strategy is a cross-channel business model, which most companies use to increase their customers’ shopping experience. Kering has adopted the same strategy by offering its customers multiple channels to shop (Pinault 1-3). Particularly, it has chosen to merge it’s brick and mortar strategy with an online marketing strategy to provide its customers with both online and offline shopping experiences. The picture below shows some men’s accessories (wallets) that appear in the company’s online store and physical store in Australia.

The availability of these items offline and online demonstrates that Kering has adopted the omnichannel trend.

Globalization

Emerging markets have distinguished themselves as the new frontier markets for leading fashion companies, such as Kering. Asian markets are blazing the trail, while African markets provide a long-term growth plan for the same companies (Deloitte 10-11). Kering understands this fact by customizing its products to suit different market segments. For example, it has established different stores in many regions of the world, including Australia, major European cities, Africa, Middle East. East Asia, Japan, China, and the likes. A quick overview of the company’s website also reveals the same globalization strategy, as customers are required to state their countries when shopping. This way, they get to know the prices of their desired products in their local currencies and are informed of the physical location of their stores.

Merchandise Strategy Analysis

Although Kering is a conglomerate of different luxury brands, it offers little brand synergy, beyond the fact that it operates most of the websites for the individual luxury brands under its banner. The company encourages individual growth of the multiple brands and rarely imposes itself on the brand activities of its brand groups (Balenciaga 2). Nonetheless, an assessment of the company’s brand presentation shows that it is true to its luxury brand appeal. This finding emerges from its premium website, characterized by a black and silver color theme (Kering Group 1). Undoubtedly, it is difficult to ignore the superior brand appeal conveyed on this platform, particularly as some expensive fashion apparel and fancy holiday destinations appear on slides at the home page (Kering Group 1).

Company’s Financial Goals

Gucci is currently Kering’s strongest luxury brand accounting for close to 50% of the organization’s revenue (Pinault 1-3). Bottega Venetta is also another successful brand under the company’s brand portfolio, which accounts for a significant part of its success as well (Pinault 1-3). Yves Saint Laurent is also another brand that accounts for a significant portion of the company’s success. In fact, according to the company’s comparative market report for 2015 and 2016, this brand reported the highest level of market activity during the period (Kering Group 1). Kering’s sales plan has hinged on increasing the company’s sales growth. According to the company’s half-year financial report, it has managed to do so in most parts of the online business segments. For example, according to the company’s 2016 financial report, its luxury, sports, and lifestyle segments have reported a significant growth in the first half of 2016 (Kering Group 1). The first-half consolidated revenue was also up 5.5% and the recurring operating income was similarly up by 4.9% (Kering Group 1).

Current Season’s Sales Plan

Kering expects to meet its financial goals through different strategies relating to its different product categories. For example, it looks up to Gucci to sustain the positive financial performance through new creative impetus and strategic initiatives aimed at increasing the brand’s outreach and strengthening its current position. The company also looks up to Puma to drive most of its market growth in the sports and lifestyle segment (Kering Group 1). This brand category was the most vibrant in the 2015/2016 financial year (Kering Group 1). It also recognizes that its operating environment will continue to have uncertainty. To mitigate its effects, it hopes to maintain financial discipline and steadily implement its current strategy (Kering Group 1).

The company’s sales growth target aims to achieve higher same-store revenue growth than it did in 2015. The positive results depicted above are mostly representative of the company’s financial performance for the first half of 2016. To meet this goal, Kering depends on its market positioning strategy, which is premised on the fact that it has positioned itself in high-growth markets. The company also depends on its strong market fundamentals to meet this goal and sustain its future success. However, the dangers posed by its operating environment remain unchanged because, for a long time, this environment has been unsettled, from not only an economic perspective but also from a geopolitical and security perspective (Deloitte 10-11). Similarly, many factors are changing market trends, including consumer tastes and preferences. Against this backdrop, the company intends to use its resources efficiently to achieve its objectives.

General Direction of the Merchandise

The general direction of Kering focuses on promoting and developing sustainable brands. This direction appears in many expert analysis reports of the company (IF Innovation Forum 1). This strategic direction also appears in the company’s website, which reads, “Four years ago, we set ourselves a series of 2016 sustainability targets, pushing ourselves beyond our limits to drive our brands towards higher levels of economic, environmental, ethical and social performance” (Kering Group 6). Kering has made significant steps to make this brand direction a reality. For example, its new Saint Laurent Stores have incorporated the sustainability concept in their architecture. Originally designed in 2012, the company is building the store using renewable material and rich noble materials. Buoyed by the goal of achieving architectural clarity, this building is also set to convey a preference for simplicity, as opposed to elaborate decorations, which are synonymous with most luxury stores. The picture below shows a graphical representation of this store.

Broadly, through the infusion of the sustainability concept in its brick and mortar architecture, Kering aims to reduce the environmental impact of its operations (Kering Group 1). The same strategy has manifested in the design and production of its fashion and apparel. For example, it recently launched an innovative sunglasses model that infuses the concept of sustainability. It appears below

Its sports and lifestyle segment also promotes the same concept of sustainability as can be seen in the diagram below of Puma’s shoes, which were made using recyclable material

There are many more examples of Kering’s products, which demonstrate the direction towards sustainability. Indeed, most of them highlight the company’s commitment to pursue a direction that would safeguard the company’s future in the cutthroat fashion industry, but at the same time fulfill its social and environmental goals. The target market for this merchandising strategy is bound to receive this operational strategy well because most fashion consumers today are wary about the environmental impact of their purchases. More customers are also critical about the reputation of the companies they purchase their products from because they would not want to support the activities of an organization which is exploitative, or which does not pay close attention to the impact of its operations. Kering’s strategy to produce sustainable products and align its business expansion strategy with the same concept meets most of the ethical requirements customers look for among responsible global brands. In this regard, there is hope that its business strategy would work. This strategy aligns with other key strategies pursued by the business. The table below highlights a calendar report of the company’s merchandising strategy.

Merchandising Calendar

The general direction pursued by Kering has increased corporate social responsibility and the promotion of the company’s key brands. Promoting the sustainable concept also emerges as key them in the analysis of the company’s calendar. Details of this strategy have already been discussed in this paper.

Merchandising Analysis Table (Men’s Wallets)

• Item analysis in each category/class
• Color analysis in each category/class
• Size analysis in each category/class
• Price analysis in each category/class

Summary

This paper has outlined the key tenets of Kering’s retail strategy as representative of today’s fashion trends. An overview of the company’s merchandising strategy reveals that its main goal is to increase its sales growth through increased brand awareness and the increased protection of the company’s strong market fundamentals. Sustainability is also an inherent theme that will continue to underpin most of the company’s activities. By continuing to stick to this principle and ensuring the company’s strong fundamental prevail, Kering is set to meet most of its goals.

Works Cited

Balenciaga. Spring Summer Collection. 2016. Web.

Deloitte. Global Power of Luxury Goods. 2014. Web.

Evans, Katie. Kering offers a Luxurious Glimpse into Its Web Operations. 2015. Web.

IF Innovation Forum. How Brands Can Improve Apparel Value Chains. 2016. Web.

Kering Group.About Kering. 2012. Web.

Pinault, François-Henri.Kering’s CEO on Finding the Elusive Formula for Growing Acquired Brands. 2014. Web.

Product Offering, Target Market and Customer Service

Fair Do’s is a non profit company. It offers cheap and unique products from third world countries which are not well-off economically. Therefore, underpinning its operations on fair trade, Fair Do’s offers the populace from these countries a chance to trade their products. The company’s range of products is not well-defined. This is considering the fact that the suppliers do not come from the same geographical locations.

Fair Do’s, therefore, offers products ranging from compact discs, clothes, foods and beverages, and toys among others. It is crucial to note that these products are not modified, whatsoever. They are stocked in their original form in the shops. These shops are approved by the British Association for Fair Trade Shops (BAFTS) and/or the World Fair Trade Organisation (WFTO) (Fair Do, 2011).

The suppliers of this small scale company are not distinct, either. This is because the company has a policy that guides its operations. It must source its products from suppliers or people who do not have well-off backgrounds. However, the company gets its products from Europe and the Americas sometimes.

It is important to note that creative products are the focus of Fair Do’s. These products include designed pots from Africa, hand-made ornaments from Egypt, Somalia and Kenya, beauty products made from people’s hands, among others. This is in line with the fact that economics should be mixed with Fair Trade. This is the belief of the company, hence, its line of interest in suppliers and customers (Fair Do, 2011).

All these products are sold all over the world. But, mainly, the target market is developed countries. These countries are the focal point from which the market base of fair dos is situated. The company believes in putting people first. This includes its customer base, supply base, workers and volunteers. The argument is that they provide the company with the needed impetus in its policy application.

This explains the reason why the company is so particular with the quality and uniqueness of products it offers in the market. Its customer service is unique in its own way. There is also belief that the company offers products at different prices. Firstly, the price is fixed. However, a customer can offer to buy at a higher price going by the company needs to promote the direct producers from whom it buys the products (Fair Do, 2011).

Supply Chain Management and Logistics

Fair dos supply chain and logistics management is quite complicated. As noted earlier, the company does not offer products from specific suppliers. It only sources products from fair trade accredited companies. The accreditation is received from British Association for Fair Trade Shops (BAFTS) and/or the World Fair Trade Organisation (WFTO).

This essentially limits the planning of this department. Fair trade means that the company believes in paying a fair price to the suppliers. Hence, it cannot pass on the burden of supply costs to the suppliers. Therefore, although it is a company it essentially makes no profits. Most of the costs are associated with supply and logistics (Boyer, 2010).

The suppliers of these products are mainly from third world countries. These are the countries where the balance of trade is grossly against. However, there can be second tier suppliers who are also accredited for fair trading that can supply to fair do. However, these suppliers do not last long and may occasionally close down. An example is the recently closed shop where fair do was buying Peruvian hand made ceramics.

This partnership is also witnessed in its trade with Rwanda and Kenya. In Kenya there is a second tier supplier, Kazuri, which stocks the Masai and Kambas necklaces and hand products. In Rwanda the company coalesces with Cards for Africa, a company that sponsors orphans. These orphans make beautiful welsh cards. Once the company gets these products it stocks them mainly in its canton (Cardiff) based shop and in Wales. From there the company can buy the products (Fair Do, 2011).

From the above, it is notable that the company’s supply chain is two pronged. This means it can buy directly from the makers of the products or from second tier suppliers (Chen, 2004). The company does not, however, depend on these suppliers so much. This is because they might get wearied by the fair trade requirement and closed own. Therefore, it establishes contacts with direct suppliers (producers) and customers to remain afloat (Larson, 2004).

Technology, Its Impacts and E-Commerce

Fair do has a remarkable online presence. Website provides the necessary transition for people who want to trade with the company online (Fair Do, 2011).The company as with most companies has a face book and twitter page. It has ensured that the page is interactive enough and has updated information concerning its operations (Haag, 2006).

Through these two internet applications the company keeps its customers and suppliers posted at almost no cost. It also is able to promote more involvement with fair trading: a concept the company upholds. A perfect example is the upcoming Easter holidays (Fair Do, 2011).

Fair do’s has informed its stakeholders in advance of the imminent closure during that period. This is going to happen during the wedding of prince Williams and Kate (Fair Do, 2011).This is quite important as customers are able to make gift purchases in advance. It also improves the interactive nature that it operates. The company is very particular with its customers. Its customer service is unrivalled in Wales along with its product offering (Kouvelis et al. 2006).

The company has not exactly focussed on e commerce. Experts argue it is because of the complications that it may bring. The company will have to align itself with the policy of fair trade. This is quite hard when you do not know who you are dealing with. E commerce is usually faceless. This is only possible in the upstream side of the supply chain: where only selling takes place.

It is however almost impossible on the down stream side (suppliers) because accreditation is needed (Fair Do, 2011). Prove of accreditation and the risk of counterfeits is quite possible. Although the company can immensely reduce costs associated with direct dealing, it has other pressing needs to uphold. Hence, it opts out in that area. The impact is basically on costs and the issue of missed opportunities which can present competitive supplying to the company.

Technology is crucial in the growth of current businesses. This will keep the businesses relevant even in future. The company hence, plans to have a modified e commerce application to its business and to improve internet presence. This will present the company with insurmountable numbers of customer base and opportunities for expansion (Fair Do, 2011). Therefore, although it is a company it essentially makes no profits. Most of the costs are associated with supply and logistics (Boyer, 2010).

Store Design and Location

The company’s physical location is in Cardiff in canton along 10 Llandaff Road. This is where you find the main office which is registered (Fair Do, 2011). However, the company is a federation of small businesses located in almost every part of England. These small businesses have a particular store design that they operate. This is to give fair do’s an identity both from the customers and other stakeholders (Halldorsson, 2007).

The company has a theme where its stores are painted in happy colours. This is inline with the various unrelated products that the company offers. The size of the stores is always small. This is because the type of products stocked does not occupy large amounts of space. The company has two service people inside and a cashier. A customer has space for manoeuvre inside and this is crucial in the sampling of the various commodities (Fair Do, 2011).

Products are arranged according to origin. Products from Philippines, Kenya, Egypt and Somalia are kept in different places. It is also common to arrange them according to a large area of origin. This means products from east Africa, West Africa at cetera are kept together. This makes customer shopping experience greater. The products do not have price tags except for the most expensive ones (Hines, 2004).

The colours range is determined by the products. Basically, these products come from communities who use hands to make them. The raw materials range from sand, clay, ivory remains, bone among others (Fair Do, 2011). The paintings are also quite different inline with the diverse cultures of the people.

This is what the company essentially promotes in the design of its stores. Experts say that the company does it self proud by employing the sustainable mantra (Lavassani, 2009). What they argue is that the company is in tandem with the global call for sustainable development. This clarion call which asks organizations to go green has been received, or pioneered by fair dos. It is replicated in its store design also.

Pricing and Promotion

In actual business world, this is what would largely determine the success and or failure of a business. However, this is not the main factor for operation of fair do. The company‘s main focus is on sustainable development of economies (Fair Do, 2011). It also focuses on improving the lifestyles of people in less developed countries whose products do not find their way in mainstream markets. This is despite the fact they are unique products.

The pricing of the products at fair do is hence, focussed on this. This is considering the fact that the suppliers do not come from the same geographical locations. Fair do, therefore, offers products ranging from compact discs, clothes, foods and beverages, toys among others (Misiura, 2006).

In some cases the company prices its commodities highly. This is because they are unique products very suitable for expensive gifts and prizes. Therefore, people who love unique things especially artillery, ornaments and handicrafts find solace and perfect places for shopping at fair dos.

It is quite important as it is a two pronged approach which services the less privileged people in the world. It also works for the environment. These small businesses have a particular store design that they operate. This is to give fair do’s an identity both from the customers and other stakeholders (Fair Do, 2011).

The company does not focus on making profits. The costs associated with the companies operations are staggering. This is especially true in the logistics and supply chain management. The company does not however make losses. This is offset by fair pricing (Fair Do, 2011).

The company believes in offering the best deal to both the customers and the suppliers. However, on the customer side it gets better deals by offering products at different prices. The company also invokes the human side of the customers with the message of helping the developing world (Nagurney, 2006).

Fair do’s does not promote its products in the mainstream media. It, in fact does not promote products. This is because it does not have a distinct line of products. Therefore promotions may be an act in futility. The company however promotes its goal, mission and vision. This brings in volunteers from many departments.

It also works magic in word of mouth marketing. According to experts it is more productive when a company grows through buzz marketing than any other form of promotion. The company enjoys the services of students who work in the company for free. This way they reduce the overall overhead costs associated with operations. It is also important to note that the company will enjoy so much support form the government. This is inline with the governments plan to go green (Ketchen, 2006).

Reference List

Boyer, K. (2010) Operations & Supply Chain Management for the 21st Century. Mason, OH: South-Western Cengage Learning.

Chen, I. (2004) Towards a Theory of Supply Chain Management: The Constructs and Measurements. Journal of Operations Management, 22.2: 119-150.

Fair Do. (2011) Fair Do’s Siopa Teg, Fair Do Web. Web.

Haag, S. (2006) Management Information Systems for the Information Age. Canada: McGraw Hill Ryerson.

Halldorsson, A. (2007) Complementary Theories to Supply Chain Management. Supply Chain Management: An International Journal, 12.4: 284-296.

Hines, T. (2004) Supply Chain Strategies: Customer Driven And Customer Focused. Oxford: Elsevier.

Ketchen, J. (2006) Bridging Organization Theory and Supply Chain Management: The Case of Best Value Supply Chains. Journal of Operations Management, 25.2: 573-580.

Kouvelis, P. et al. (2006) Supply Chain Management Research and Production and Operations Management. Review, Trends, and Opportunities. In: Production and Operations Management, 15. 3: 449–469.

Larson, P. (2004) Logistics versus Supply Chain Management: An International Survey. International Journal of Logistics: Research & Application, 7.1: 17-31.

Lavassani, K. (2009) Developments in Theories of Supply Chain Management: The Case of B2B Electronic Marketplace Adoption. The International Journal of Knowledge, Culture and Change Management, 9.6: 85–98.

Misiura, S. (2006) Heritage Marketing. London: Elsevier, Burlington.

Nagurney, A. (2006) Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits. London: Edward Elgar Publishing.

Introduction

Through out their existence, organizations and businesses are considerably pressured to raise their levels of performance and productivity. This is especially so in the modern day business environment which is characterized by aggression and excessive competition thereby constantly forcing businesses to exhibit innovation and enhanced performance so as to remain relevant and profitable in the ever increasingly competitive arena.

To achieve the organizational goals of increased productivity, the input of both the individual and groups in the organization remains invaluable. However, for these inputs to make optimal impact, the organization must have a strong marketing strategy to steer it and its products in the right direction. This being the case, the development of marketing plans and skills is indeed necessary for the survival and continued success of any organization.

The Twentieth Century has seen the increasing dominance of formal retailing (e.g. retail multiples, shopping centers (malls) and internationalization of major retail brands).

The retail marketing literature has tended to focus on these phenomena whilst failing to appreciate that many household purchases and acquisitions are undertaken via non-formal retailers (e.g. farmers markets, swap meets, jumble sales and car boot sales).

This paper sets out to discuss what determines exemplary retailing in a business setting. This shall be achieved by going into a detailed discussion regarding to effective retailing. The factors that influence consumers to use non-formal retailing shall be discussed and an analysis shall be carried out to evaluate the extent to which the retail mix is relevant to non formal retailing.

Brief overview of formal and non formal retailing

Cox and Brittain define retailing as the direct sale of goods to consumers in small quantities (17). This aspect of business transaction has been in existence for a very long time. It has revolutionized from the barter trade system to the money based system and has gone to the next level (e-Marketing) in recent times.

However, due to improved business models and strategies, retailing has been divided into two categories which are; formal and non formal retailing. As mentioned earlier, formal retailing refers to the sale of goods through multiple retails, shopping malls and internationalized retail brands.

It is a more organized and efficient way of transacting with deeper managerial and financial aspects. On the other hand, informal retailing takes a more traditional face whereby transactions are carried out through farmers markets, swap meets, jumble sales and car boot sales. It lacks permanency and requires very little resources to establish or maintain.

Retail marketing

Marketing plays a pivotal role in the selling process of any given product. This is because marketing helps in the promotion of new and existing products, enhances consumer loyalty and is a vital tool in ensuring that a product attracts a large market base. According to Krafft and Mantrala, the consumer’s attitude plays a very important role in retail marketing (214).

Retailers should always know that retail marketing is driven by consumer’s needs and wants. As such, it is basically about satisfying these needs. The authors further contend that what the customers buy defines the nature of the retail business (Krafft and Mantrala, 224).

The main aim of retail marketing is to develop products that are highly demanded by the target market and sell them at a price that will yield the most profit all the while maintain a substantial percentage of the market. The main disadvantage of retailing is that most retailers sell the same product.

Therefore, overpricing the shoppers may lead to the loss of the market base. As such, the best way to ensure high profits in the retail business is to lower production costs and utilize product differentiation techniques. Such marketing decisions ensure that the shoppers are loyal and at the same time eliminate any possibility of aggressive competition from other retailers.

Varley asserts that a good retail marketing strategy should be stimulating, fast and influential towards the market (69). Among the essential aspects that should be considered in retail marketing are; product planning, customer analysis, market research and environmental factors.

To ensure success in the retail business, retailers should acknowledge the fact that it is the customers and not the demand that lies at the center of a retail business. The attitude of the consumer towards a product is what ensures that a retailer yields satisfactory profits and returns to investments. Therefore, the success of a retail business depends on the retailer’s ability to identify, anticipate and satisfy the customer’s immediate desires.

Marketing in the retailing business is important because it identifies the current needs of the consumers that are unfulfilled and then defines them to present viable solutions for the same. It can be viewed as a tool through which the desirable standards of living can be achieved.

In addition to this, it ensures that consumer needs and wants are satisfied; a factor that ensures consumer sustainability and loyalty. To further ensure success in a retail business, the retailer must at all times ensure that he has set objectives for his marketing strategy. Varley states that a retailer must have targets (short term goals with immediate results), objectives (stipulates the long term purpose of the retailer) and goals which are a prerequisite to the success of the business (116).

Retail marketing mix

Retail marketing mix can best be described as an array of elements as well as the methods that retailers use in the formulation and implementation of the desired retail marketing strategy. It is always important that the retailer adopt the most favorable retail activity mix and manage them in a manner that will ensure that they compliment each other.

The main purpose of such a coordination is to ensure that each retail store have its own image in the mind of the consumer. The mix adopted is mainly influenced by the type of products or services that a retailer is dealing with as well as the market type the retailer is in. The main elements that should be considered while developing a retail marketing mix are; product, price, place, promotion and people.

In terms of product, the retailer must consider branding, packaging, product development and management as well as the features and benefits that the product has. These are very important elements because they determine the retailing potential of a product. For example, in the fast foods sector, consumers tend to buy from shops that have recognized brands and quality packaging because in their mind, they perceive and relate such stores with quality services yet they sell the same products as many other stores e.g. Mc Donald’s fries.

In regards to place, the retailer must always consider the proximity to target market, retail distribution and his image. This goes hand in hand with promotion and price. This means that the level of promotion a retailer has as well as the price range of his products determines the consumers desire to visit that given retail store. The people element applies in the sense that retailing is all about the people and not the product.

Literature review

This book gives detailed information about the advantages and disadvantages of the retail sector in any given economy. It also highlights the policies that are put in place to manage and monitor activities in this sector in a bid to ensure fairness and healthy competition prevails.

Findlay has provided some insight on the problems that retailers may face in the future in terms of funding, escalating costs and public policies (71). The author clearly state that retailing will in the future plays a pivotal role in the development and growth of the US economy. Findlay concludes by saying that the emergence of new technology gives the human race an opportunity to further interact and transact both within their social niches and beyond (502).

Betancourt embarks on the hefty task of describing why the retail sector is necessary. He claim that incase of complications and problems (technical or otherwise) in the corporate sector, retailing stores may go a long way in providing solutions and assistance whenever required (78). The author claims that the retail sector provides employment and enhances innovation.

The author also gives a detailed description of the retail sector, how retailers operate and how they handle intense competition from the corporate sector. To further support the presence of the retail sector, the author has given the names of countries that have been boosted by this sector. This book is applicable in this study because it provides credible information about the importance of the retail sector in a world where profitability takes precedence over the satisfaction of human wants and needs.

Laudon and Traver explore the economic effects of retailing to other businesses. They state that this sector may lead to the collapse of the economy if not monitored. This they claim is because there are no strict rules governing the pricing, demand or supply in this sector (especially informal retailing) (27).

The authors also reflect on the importance of taxes in any economy. He states that the informal retail sector is less likely to pay taxes because most of the stores are not registered or licensed. Due to the increased number of dealers in this sector, the government stands to loose a lot of money if the retail sector expands.

Levy and Weitz discuss the concepts of the retail mix. They assert that understanding all the activities involved in the retail business is essential to the success of the business (67).

The authors claim that it is important for the retailers to be able to coordinate the prices, products, promotion efforts and the people involved in any given transaction such that they yield the expected results. In their book, the authors acknowledge that the ability to understand the consumer’s needs and desires can only be manifested through an effective retail mix.

Samli explores the impacts of local culture to retailing. In his book, he asserts that consumer behavior is to a large extent affected by the prevailing culture within a given setting (216). The author states that very little of marketing theory and knowledge is used in informal retailing. This he contends is because most of the sellers in this segment rely on social bonds and instincts to market and sell their products.

In this book, he explains how people willing to venture into the retail business can learn how to market so that they can better compete with others in that sector as well as corporations that deals in the same products. He states that in as much as culture plays a pivotal role in this sector, having marketing skills may assist the retailers in acquiring a larger market and guarantee consumer satisfaction by being reliable and flexible to their needs.

Impacts of technology to non-formal retailing

Since its conception, technology has been hugely influential in the development of the society and marketing in the business sector. The media can be used to drive public opinion, report on current news and advance some social values. The media is at best a complex genre which may be broken down into a large number of sub-genres e.g. news stories, opinion columns, advertisements and horoscopes to name but a few.

One of the key facets of the media is the advertising sub-genres. Croteau and Hoynes suggest that the heavy emphasis of advertisements in media is due to the fact that it is the best means of product promotion (145). The influence that advertisements have on the people is colossal as can be inferred from the rise in sales for corporations and business entities that engage in advertisement of their products. Most advertisements are therefore keen to include messages that are beneficial to the consumers.

Advertising is defined by Lester as “any form of non-personal presentation and promotion of ideas, good and services by an identified sponsor” (89). The primary objective of an advert is to promote the sale of the product being advertised. Elements represented in advertisement can signify a myriad of meanings apart from the very obvious message that the advertisement image purports to sell.

An image can denote varying directions and be made to evoke deeper sentiments from the viewer and from a simple image; one can build up an entire story. All this is in an attempt by the creator of the advert to persuade the consumer to think, feel or act in a predetermined manner.

In non-formal retailing, technological advancement such as the internet has helped in the marketing and sale of products. In this case, the products are sold online in a website and therefore the advertisements exist within the context of a website.

Some of the popular avenues through which technology has infiltrated informal retailing include e-Bay and Amazon.com. Amazon was started by Jeff Bezos as “the world’s biggest bookstore” but slowly changed from this single-product model to a multi-product enterprise which deals with a wide collection of products satisfying an even broader base of consumers. Lester concedes that Amazon.com has established itself as a household brand in the USA and is arguably the best-known online brand (2).

while offering of ” free shipping plans” and express shipping services is expensive and does cut into the profit margin of the company, online retailers should continue to offer these services to their clients. Competition in the online retail market is ever increasing and as such, a company needs to give itself a competitive advantage over its competitors. These “super saver shipping” scheme offers one such means since it proposes to offer the consumers value added services thus setting sites such as Amazon.com apart from its competitors.

Considering that online marketing strategy is pegged on an increase in customer traffic so as to promote repeat purchases and strengthen the brand name, the free shipping plan appeals to customers thereby leading to an increase in the traffic on the site. Pasiuk confirms that Amazon considered its free shipping offer as a marketing expense whose primary objective is to attract and retain customers (102).

While there is no doubt as to the increase in cost that Amazon.com incurs due to this schemes thus leading to decreased profitability, the increased traffic leads to increased turnover for the company. This leads to increased profits which compensate for the relative cost incurred in the provision of the services.

Membership plans lead to loyalty and a sense of affiliation to the company by the consumers. These plans involve increased customization which entails tailoring of services so as to suit the unique case of the customers (Hill and Jones, 123). While this does come at the cost of having to offer customized services which lead to rise in cost structure, it enables online retailers to respond to customer demands very quickly to the advantage of both the customer and the company.

In addition to this, retailers are able to display their products and attach their respective prices. Consumers can therefore log into these sites, search and eventually purchase their desired products.

This form of retailing is advantageous to the retailers because it is cheap to establish as compared to conventional stores and it does not require a lot of resources or marketing because the websites are well established and known. The consumers also gain from these sites in that they save time (can be done in the comfort of your home), their decisions to buy are not affected or manipulated by sales personnel and they get after sale services like free shipping and delivery services.

Factors that motivate consumers to use non-formal retailing

Hill and Jones affirm that reputation is a very important concept in the relationship between a buyer and a seller (47). This they contend is because it represents the retailer’s ability to be trusted. In non formal retailing, the retailer’s reputation in regards to performance, service delivery and trustworthiness determines his consumer’s loyalty.

As such, if a retailer upholds a reputation characterized by fairness, trustworthiness and good performance, then consumers are motivated to buy from him because in the consumers’ mind, the retailer is perceived as reliable and consistent.

Performance satisfaction is another factor that motivates buyers into using non-formal retailing. According to Varley performance satisfaction can be described as the extent to which a retailer can fully deliver as per the consumer’s requirements (37). When consumer’s needs are satisfied, they are motivated to continue their relationship with that particular seller. This leads to the establishment of trust and a long term commitment between the retailer and the clients.

Trust also acts as a motivating factor in retailing. Most buyers buy from specific stores because they have an established long term relationship based on trust with the retailer. In non formal retailing, the seller specializes in a given area and products. As such, most of their clients know them and what they sell. As a result, they feel obligated to buy from these retailers because they trust them and their products.

Social bonding may to an extent motivate clients into using non formal retailing. Arvidsson reiterates that it links and holds the customer and the retailer together (76). It represents the mutual friendship that exists between the two parties. As such, consumers may decide to buy from a retailer because they know the seller and have a chance to bargain or negotiate the prices. This gives them some authority in the transaction which further establishes a shared meaning between the buyer and the sellers.

Apart from the social structure, there are other factors that may affect the buying decisions made by consumers in non formal retailing. Local culture presents one such factor. In any given society, there exist some behaviors and activities that are common to the people that live there.

Activities such as designated market days, yard sales among others have enabled non formal retailing to thrive in many regions across the globe. In many cases, consumers rely on the same retailer because it has been a family culture to buy specific goods from a specific dealer. As such, their minds are set and they have more confidence in buying from that particular retailer.

The retail mix and non-formal retailing

Informal retailing is characterized by a general lack of permanence. Examples include hawkers, tuck shops and seasonal sales. The informal retailing sector contributes a considerable amount of income to any economy. This is because it provides goods and services for the less affluent households in the society whose household needs are easily and aptly supplied by the retailers. Despite the characteristics of these informal retailing stores, they continue to thrive.

The retail mix is very applicable in this form of retailing. As mentioned earlier, the success of any business depends on the ability of the owner to market his products. The retail mix is therefore very important in any business irrespective of its size, nature or management technique.

This is because it helps in attracting the consumers. As such, the variety of goods offered, the pricing policy, promotion and advertising, layout, location and personal selling do factor in to ensure that products are sold. Though informal, competition still exists in this sector and it is therefore important that the retailer devise means to tackle it.

Much consideration should be directed towards the competition present in the targeted market. This refers to both the substitutes and differentiated products. Allison & Kaye reiterate that a business can collapse due to poor management, marketing and promotion experience in various sectors (84).

As such, they recommend that a SWOT analysis should be carried out on both internal and external variables that may affect or benefit the business through the SWOT analysis, the retailers are able to identify the strengths, weaknesses, opportunities and threats present in the target market.

On the same note, they are better placed to make decisions on how the available resources should be allocated within the business in order to counter the weaknesses and capitalize on the strengths. For example, through a SWOT analysis, the retailers may decide to focus their attention on product differentiation which will consequently boost up the levels of production as well as the quality giving their businesses an added advantage against the rivals.

Also, they may decide to allocate resources into advertisements and promotions to further create awareness of their product to the public and market their product. Through the SWOT analysis, the weaknesses of the competitors may be uncovered and untapped opportunities discovered and with this information, the retailers are able to base and give accurate solutions without the risk of exposing themselves financially or mismanaging the funds.

The target market is by far the most important feature in the business cycle. The bigger the market size, the higher the profits. In light of this statement, retailers in the non formal retail sector should at all times keep an eye on the market trends and how they affect their business, this is because the market is the lifeline of any business and if unchecked it may lead to huge losses to the business. In order to capture a bigger market base, there are various tools that may be implemented.

The retailers may decide to use external sources of finance to increase their output base and then use the proceedings to buy out the weak competition (amalgamation). In so doing, they are also able to consume the market base of the smaller business plus they acquire the resources used by that company. This reduces the marketing costs, improves reputation especially in small markets and at the same time, expands the market base of the given retailer.

Kalakota and Robinson (2001) assert that any business entity must continually strive to fulfill customer needs which include; convenience, consistency and reliability. Be it formal or informal retailing, the marketing and selling concepts are still the same and the retail mix therefore applies because it helps in attracting consumers and to foster loyalty and a feeling of trust among consumers (Arvidsson, 75).

Conclusion

Because of stiff competition and the ever increasing influence of corporate outlets in our businesses, retailers need to possess the skills necessary to process and evaluate the constant challenges that are presented to them. Acceptance of business related technology such as the media and the internet is an important front from which to initiate better means of combating these challenges so as to enable retailers to recognize and therefore avoid the negative influences that may affect their businesses.

This paper set out to evaluate retail marketing and the factors that it covers. Aspects such as the retail mix have been covered and the retail marketing mix has also been analyzed. The factors that motivate consumers to use informal retailing have also been highlighted. It is evident that the retailing sector is crucial and there is therefore a need for the people involved in this sector to learn and understand the paradigms that encompass this sector.

This is because the retailing is as vital as any other sector in the economy in the deliverance of quality services and satisfaction of consumer needs. From this paper, it can be authoritatively stated that the retail mix is relevant to informal retailing because it helps the retailers to prepare and handle their market environment to an extent that it delivers accordingly.

Works Cited

Allison, M, J & Kaye, J. “Strategic planning for nonprofit organizations: a practical guide and workbook”. USA: John Wiley and Sons, 2005. Print.

Arvidsson, A. “Brands: Meaning and Value in Media Culture”. USA: Routledge, 2006. Print.

Betancourt, R. “The economics of retailing and distribution”. USA: Edward Elgar Publishing, 2006. Print.

Cox, R and Brittain, P. “Retailing: an introduction”. NY: FT Prentice Hall, 2004. Print.

Croteau, D and Hoynes, W. “Media society: industries, images, and audiences”. USA: Pine Forge Press, 2003. Print.

Findlay, A, M. “Retailing: The evolution and development of retailing”. USA: Taylor & Francis, 2002. Print.

Hill, C. and Jones, G. “Essentials of Strategic Management”. USA: Cengage Learning, 2008. Print.

Kalakota, R. and Robinson, M. “E-business 2.0: Roadmap for Success”. USA: Addison-Wesley, 2001. Print.

Krafft, M and Mantrala, M. “Retailing in the 21st Century: Current and Future Trends”. USA: Springer, 2010. Print.

Laudon, K and Traver, C. “E-Commerce 2010”. NY: Pearson Prentice Hall, 2010. Print.

Lester, P. “Visual communication: images with messages”. Cengage Learning, 2006. Print.

Levy, M and Weitz, B. “Retailing management”. USA: Irwin/McGraw-Hill, 2001. Print.

Pasiuk, L. “Vault Guide to the Top Internet Industry Employers”. USA: Vault Inc, 2006. Print.

Samli, C. “Strategic marketing for success in retailing”. USA: Greenwood Publishing Group, 1998. Print.

Varley, R. “Retail product management: buying and merchandising”. CA: Routledge, 2006. Print.

Company’s Background

With its first retail store in Wayne, Pennsylvania in 1992, Anthropologie shifted from Urban Outfitters Company that was inaugurated in 1970 by Dick Hayne. Notably, before the opening of Anthropologie, the product was being vended at Urban Outfitters Stores, as it was the first outlet. The company, just like Free People Retail Chains and Urban Outfitters Company, has its main office in Philadelphia, Pennsylvania.

It is worth noting that Free People Retail Chains and Anthropologie operate under the same management; they have similar fervent staffs, as well as same emotional attachment with their clienteles (Farfan par. 1). According to Anthropologie: Our Story (par. 3), the mission statement of the company is grounded on building a strong emotional attachment with the customers by creating environments that appeal to the emotions of the clienteles.

Anthropologie’s Brand Image

The company’s brand has undergone a notable evolution into the Anthropologie stores. The company boasts of its unrivalled status, as it remains an attractive purchasing store for women desiring a curated combination of attires, gifts, accessories, as well as household beautifications. Markedly, these product varieties mirror the buyers’ personal tastes and preferences, thus fuelling their styles and passions from art to fashion to entertainment.

The store has over 185 outlets across the UK, Canada, and the US; it reserves great commitment in providing the customers with signature goods and unrivalled services. The company has also executive branches in Edinburgh, Chelsea, and London in the UK.

As a way of ensuring global presence, the store opened the online platform – anthropologie.com (Anthropologie: Our Story par. 1). The picture below shows Anthropologie’s store in Glendale, California. Evidently, the uniqueness is also seen in the appearance, with 10-12,000 square feet to 15-18,000 square feet.

Demographic and Psychographic of Anthropologie’s Target Customers

Unlike most profit-making organizations, Anthropologie has never advertised its products and services on television commercials or in any print materials (Anthropologie: No Advertising, No Problem par. 1). It relies on the social media and the real outlets to develop and enhance its link with customers, as it believes that the brands can speak for themselves.

According to Southerland (par.1), Anthropologie has been at its best in targeting customers in Buckhead, Santa Monica, and Beverly Hills who does not fancy putting on similar clothing or beautifying their homes with similar materials as everyone else. In this aspect, the retail store focuses on the upscale customers. In terms of age as a demographic factor, Anthropologie targets a 30 to 40-something wealthy urban duo who wants an exclusive and unique product – a product that is totally different from those of the masses (Southerland par. 2).

With its variety of merchandise, Anthropologie has been able to attract numerous affluent couples across India, Far East, and Europe. Remarkably, the Urban Outfitters has been targeting 18 to 28 years old graduates, who still leave in their initial apartment. In a serial manner, Anthropologie targets well-established persons in the next phase of their lives, that is, those between 30 and 40 years. In terms of lifestyle as a psychographic factor, the company targets succeeders who fall in top management.

This category fancies brand selection based on prestige and are enticed by protective and unique brands. From the analysis of production style, Anthropologie offers products that meet the needs and desires of the affluent people in their 30s and mostly residing in suburban and urban areas (Anthropologie: No Advertising, No Problem par. 6).

The target customers like being unique and independent in their ways of doing things. In addition, this group drives their interests and satisfactions from the uniqueness of their products and ways of life; they prefer owning a product that would be a discussion piece among people (Southerland par. 4). The women customers are educated, holding prestigious positions, thus withdrawing weighty salaries. From this point of view, the target customers are very aware of their tastes and preferences.

To the Anthropologie women who have settled in their jobs, prices are not of much concern, and, therefore, their purchases are all about the design. Additionally, these buyers like travelling to adventure into new places in order to obtain new fashions. Olsen (par. 1) notes that these females like practicing yoga, and have great interest in Chinese culture and a collection of historic musical instruments; they are wealthy, but not materialistic.

The Likely Target Customers of the Men Collection

The different and distinctive nature of Anthropologie’s products has been the reason for the company’s reluctance to advertise. Attempts to advertise will bring in new customers from across the social class, thus eroding the distinction that the products initially had (Anthropologie: No Advertising, No Problem par. 8). If the company was to target men with its same marketing approach, well-educated men of between the age of 35 and 45 years will be the main target.

Clearly, this age bracket is already settled in their careers, and is taking home decent salaries. Besides, the target group will be living in affluent regions; therefore, they can easily purchase expensive products because of their uniqueness. Their high lifestyles are due to the high job ranks that they hold. From this dimension, Anthropologie will automatically stock such collections for men of between 35 and 45 years with high level of education, living high lifestyles, and already settled in their jobs.

Works Cited

Anthropologie: No Advertising, No Problem. 2013. Web.

Anthropologie: Our Story. 2014. Web.

Farfan, Barbara. Anthropologie Mission Statement – Passionate Employees, Customer Connection. 2014. Web.

Olsen, Erica. Anthropologie, a Nationwide Retail Store Resources. 2007. Web.

Southerland, Randy. Anthropologie’s Cultured Approach to Style. 2000. Web.

Introduction

Department store retail is a business that sells products and services directly to customers. The businesses do not sell products with an aim of reselling them. Rather, they target family and individual needs. The major role of the departmental store retail is to get products from producers to consumers. They are important in directing the physical flow of goods and services from their point of production to their point of consumption.

At the departmental retail, the retail operator has a direct contact with customers. This contact is crucial in any business since the operator can discover and attempt to meet the needs, tastes, and preferences of consumers. In departmental retail stores, there is a wide variety of product lines and merchandise dealings.

Large departmental retail stores such as Marks and Spencer, Saks Fifth Avenue, and Debenhams have different departments and sections that sell different merchandise to customers at one point. With close monitoring of clients, departmental retail operators can strategise to attract more customers and to satisfy their needs through various management issues.

Such management issues include merchandise assortments, store layout and design, customer traffic flow, retail pricing, and store location. This paper discusses and compares such retail management issues as applied by Marks and Spencer, Saks Fifth Avenue, and Debenhams.

Management issues applied by Marks and Spencer

Marks and Spencer is a British multinational departmental retail store with its headquarters at Westminister in London. Michael Marks and Thomas Spencer founded it in 1884 in a place called Leeds.

According to Angeleette, Marks and Spencer have 703 departmental stores in the United Kingdom besides having 361 other stores across 40 states (1189). The departmental store focuses on retailing lavish foods and garments. The departmental retail store is also listed in the London stock exchange market.

Marks and Spencer apply various management strategies to ensure that it holds its customer base to attract new clients to its retail products. One of such strategies is its use of layout and design. Image is imperative in creating a good appeal to customers.

Retailers such as Marks and Spencer work hard in coming up with an image that creates an appealing mental picture to their customers. Layout and design are a technique of advertising that this departmental store applies. Various items that are sold at Marks and Spencer are placed at strategic positions for purposes of catching the customers’ eye at a certain time.

Layout and design are also used to attract customers and to offer information in a bid to influence their buying spirit. The store has really invested in layout and design. According to Angeleette, Marks and Spencer contracted Urban Salon Architects to design its new look since 2008 (1189).

The design includes making the stores more bright, use of current designs in layout, use of more spacious rooms, and placement of white tiles on the floor of the shopping halls. This design aims at making customers more comfortable and well guided while shopping at Marks. The floor is designed with white mannequins put in contemporary design to create a modern display image on the eyes of the customers.

The design also comprises clothing rails put in new designs, stands in avant-garde and multiplicity of product walls and displays in the shopping mall. The store is also fitted with window display styles, till points, rooms that are large and fitting, signage, and lighting and product walls. In 2011, Marks and Spencer launched the Marble Arch store display design, which put a distinction on in-store brands.

This new design is able to mark differences in brands. On the other hand, the design from Blue Harbour comprises a flag that is hoisted on a table that is made of wood, which has props hanging on its walls. The other part of design is the change of dressing from black polo t-shirts to green ones.

Jackson and Leigh argue that the other management strategy that Marks and Spencer use is location (768). The location of business is imperative to its success. In fact, site is one of the factors that most businesses consider before engaging in trade. The location for a retail business such as Marks and Spencer must be very convenient for customers and the business itself.

According to Angeleette, Marks and Spencer is an organisation that normally considers the country, the town, specific part of the town, and the specific point where it establishes its shops. The premise is to move the product or service to as close as possible to the consumer. With such a background, the company’s stores are placed in economically viable economies, in well-secured ownership, and at points with high consumer record.

Merchandise assortment is another management issue that Marks and Spencer apply. In trade, some goods are supplementary while others are complimentary in the way they fulfil consumers’ needs. This knowledge is important in organising the appearance of various merchandises.

Certain goods must be placed close to each other while others must be placed at a point where the customers’ eye is caught first by a certain appearance. Such assortment is targeted at achieving high visual effect. Goods are therefore presented in a certain manner on the outlets.

Gary argues that Marks and Spencer achieve good assortment through product combination, creation of certain environments, for example, that of freshness in foodstuff shelves, and through stimulation of tastes and preferences of customers by placing related goods close to each other (60).

The departmental store does research on the character of customers and their shopping habit to find out their way of combining goods and services during shopping. For example, customers are likely to buy sugar, bread, and butter when they shop for everyday foodstuffs.

Campbell asserts that Marks and Spencer have therefore assorted merchandise and placed them in alternate shelves such that, when one picks a packet of milk, he or she can spot and smell the scent of bread around (89).

The feeling that the environment creates through smell and assortment makes the customer unable to resist the purchase. Apparels are assorted in a way that various categories of clothing are placed accordingly. For example, men’s shoes are placed next to men’s clothing. Foodstuffs are paced far from clothing and shoes. In fact, they are placed in different floors.

Saks Fifth Avenue

Saks Fifth Avenue is a departmental store retail that has its headquarters at Manhattan in New York, United States of America. It deals with luxurious apparels. Andrew Saks initiated the departmental store in the year 1867. The company later on merged with Gimbel Brothers Inc in 1924 where later on opened branches outside New York and in other countries.

Wood affirms that Saks incorporate own Saks Fifth Avenue, which is an American multinational corporation (515). The departmental store operates in various countries across the world. The design and layout in Saks Fifth Avenue is unique. A common way that this retail outlet has exploited is the use of celebrities.

In most cases, the apparel department is in such a way that, as one shops, he or she can spot celebrities fitted on the apparels he or she chose on the other side of the mirror. Such designs are unique, with customers marvelling at them. The identity of the store is also a unique identifier. The brand identity is very compelling. Wood affirms that the departmental stores are designed to occupy whole blocks (515).

The design includes a well-heeled hum at the basement. The layout is in a way that there are well-organised cosmetics at the ground level with various sales persons keen to attend to customers. From this level, perfumes spritzers emit an overwhelming smell that pulls the mind of the customers to the next display stands.

The upper floors are meant for apparel sales. The floors are designed in a way that reflector mirrors magnify and multiply the appearance of the apparels. Apparels are then placed in accordance with class. Such classes are men’s fashion wear, kinds, jewels, and women’s fashions.

There is also a cafe and a bar at the top floors for customers who prefer lunch in the company. Each of the class of apparels, other goods, and services occupy a different floor. For instance, a whole floor holds men’s wear such as suits, shoes, outwear, and other fashions for men. The retail has opened stores at large towns in America such as Maryland, Philadelphia, New York, Boston, and Hampshire.

Saks Fifth Avenue also uses the location of business as a retail management strategy. It has its departmental stores located in major cities such as New York. The retail store has a touch of class and quality. It is out this that it chooses its locations with a slight bias to large cities. The business is also located in huge storey buildings. This strategy ensures that customers can shop for the whole family at the same location.

In fact, they can buy children, men, and women wear and jewels. Saks Fifth Avenue also achieves its management goals through merchandise assortment. Wood affirms that arrangement of various categories of apparel creates a certain image on the customer’s eyes (515). For example, in the designers, category women’s apparels are placed close to women shoes and handbags.

The retail store objectively puts complementary goods close to each other to enable double sales. When a woman buys a pair of shoes, she is also likely to buy a handbag to match the shoe. The retailers therefore place the shoes next to handbags. Ladies’ items are also placed close to jewels and beauty fragrance.

The premise is that women are likely to buy perfumes after buying clothes and shoes. Children’s clothes are placed in a particular floor. Next to these clothes are the children’s shoes and toys. Men’s clothes are placed in a certain floor next to men’s cologne, shoes, and ties. This kind of assortment has worked for the retail store.

Debenhams

Debenhams is a departmental retail that operates various countries. According to Glynis, the major countries of its operation include the United Kingdom, Denmark, and Ireland (31). Messrs Flint and Clark founded it in 1813. The retail store deals with fashion clothing, accessories, shoes, home furniture, cosmetics, electrical appliances, toys, and gifts. In 1851, the store partnered with Clement Freebody.

After the incorporation of Freebody, it became Clark and Debenhams. Later on, in 1976, it acquired another company: Browns of Chester. Debenhams retained its individual name even after incorporation and acquisition of other companies.

The departmental store has franchise retail outlets in other countries in the world. Debenhams was started as a store during the 18th century. The first store was set up in London, the United Kingdom. The retail store has now expanded to more than 165 outlets. The store is also listed at the London stock exchange.

According to Glynis, the layout and design at Debenhams is in such a way that fashion clothing, cosmetics, and shoes are placed under one line, whereas accessories and electrical appliances are well displayed in shelves, with home furniture and toys being placed under certain shelves (31). The lighting in the display areas is also regulated to create a shopping environment.

Electrical appliances are well packed, as others are open to provide a touch of reality to the customers. For example, some television sets are well assembled while some music devices provide a slow and sweet music that encourages shoppers. The location of Debenhams stores is not majorly in the big towns and city centres. In fact, most of its stores are located in shopping centres such as the riverside shopping centre in Shrewsbury.

The location of the businesses outside major towns allows customers to have a new shopping experience. Retailers also provide delivery services to their customers due to the nature of some of the products that they offer such as furniture. However, Debenhams does open displays and online advertising to direct customers to the specific location of various products.

Merchandise assortments comprise another management strategy that Debenhams has exploited. Debenhams launched various brands under its name. Retailers also have certain particular names of designers that it has promoted. The prices of items that are designed by the selected designers are hiked on the streets because of the distinction created by Debenhams.

Such designers include Jonathan Saunders, Roksanda, and Jonathan Kelsey. Various assortments are arranged by categories such as women’s wear, beauty, home and furniture, men and kids’ wear, lingerie, shoes, gifts and toys, electrical, designers, and wedding stuff. According to Glynis, women’s wear is assorted into various categories for clients to locate them with ease (32).

They include clothing, shoes and accessories, shop by range, and sports. Beauty products are assorted by their brands such as MAC cosmetics, Elemis, and Bliss. At Debenhams, one can shop for beauty products by category, for instance, new arrivals, make up, skincare, and male grooming. Unlike many other departmental stores, lingerie is assorted into one category.

The category comprises bras, knickers, dressing gowns, maternity and nursing, and thermals. The electrical machines are also assorted into various categories for instance small appliance, household appliances, and audio-vision technology.

Debenhams also has a special category of designers’ products such as designers women swear, handbags, dresses, menswear, shirts, and kid’s clothes. The readymade designer clothes are displayed along the names of the designers such as Ashley Thomas, John Rocha, Carol Lake, Jane Packer, and preen.

Comparative analysis of the Marks and Spencer, Saks Fifth Avenue, and Debenhams

In comparison, the three departmental retail outlets have similarities and differences. The similarities and differences that emerge from Marks and Spencer, Saks Fifth Avenue, and Debenhams can be categorised under three management issues: store layout and design, store location, and merchandise assortment.

The similarities that exist among the three departmental stall include the fact that all departmental stores deal with apparels in their merchandise assortment. In Marks and Spencer, various categories of clothing are sold. Similarly, Saks Fifth Avenue and Debenhams have various assortments of apparels. One can therefore argue that the three departmental stores discussed in this paper deal with apparels as a major product line.

In fact, according to Shannon, Marks and Spencer, Saks Fifth Avenue, and Debenhams have various categories of apparels ranging from those of children, men, and women (597). Similarly, customers who visit these departmental stores mainly do so to purchase apparels.

Departmental stores provide a variety of clothing. Such varieties give the consumer a touch of class and freshness. In fact, some of the departmental stalls like Debenhams have special designers for various categories of apparels.

Another similarity is that Marks and Spencer, Saks Fifth Avenue, and Debenhams sell products directly to consumers at their location. Since all the three departmental stalls are retail-based, they get direct contact with customers. The retail departmental stores are fully furnished with five major departments of a departmental store.

These departments ensure that services and products that consumers need are delivered to consumers at their location and that customers can acquire them fully at that location. These departments include the merchandising division, the sales promotion division, the personnel division, and the operations division (Rippin 575). The departmental stores are located at the points where the customers are situated.

The departmental retail stalls can therefore gain direct experience of the customers and their tastes. Such direct contacts with the customers enable the management of the stalls to tailor the products to the specific needs of the customers. Customers’ buying habits and consumption habits also influence how they display, order the flow of customers, assort various products, and or even how they price their products.

The three stalls have embraced self-selection procedures where customers pick the products they want and the cash them at the counter. Rippin affirms that the customers use a cash-and-carry method to acquire goods and services from the departmental stores.

Customers are therefore not allowed to use or consume the items they pick from the shelves or the display rooms before they pay for them meaning that they acquire ownership of the items they pick from the stall when they pay for them at the counter. Observations were conducted on the liking of the major products from a sample of 300 shoppers at each individual store: Marks and Spencer, Saks Fifth Avenue, and Debenhams.

Table of liking scale for the apparels offered by Marks and Spencer, Saks Fifth Avenue, and Debenhams

The table indicates that all the three departmental retails have a higher liking than dislike for their apparel products. None of the three retailers scores less than 20 on the like scale. All of them score 75 and above for strongly like. It is only Saks Fifth Avenue that scores lowly on the strongly like on its apparel.

Perhaps this finding can be attributed to the fact that it offers other assorted items that may be more appealing to customers than apparels. Debenhams store scores very high scores on the strongly like category at 260. This finding can be attributed to the fact that it specialises with designers. Hence, many people are attracted to the novel ideas of creative work.

Various differences exist in the way Marks and Spencer, Saks Fifth Avenue, and Debenhams manage store location, merchandise assortment, and layout and design. Merchandise assortment differs widely in the three retail outlets. The organisation of various assortments may differ widely due to the large number of goods and services that departmental stores provide today.

The three departmental stores are large multinational retailers. They therefore deal with large varieties of products in a bid to meet diverse customers’ needs. Merchandise assortments differ widely as the merchandising departments differ in various retail stores. The merchandise division in each of the three retail departments is responsible for buying and pricing of the merchandise.

After the merchandise is acquired, the sales promotion department takes over to advertise and display the assortments. According to Shannon, various goods are paced in different categories according to their usability, relatedness, for example, complementary or supplementary goods (598). The division sorts out the items to be placed together for display in a similar unit of point.

According to Angeleette, at Marks and Spencer, the merchandise and the assortment is put in such a way that foodstuffs are placed far from apparels (1189). Foodstuffs are placed in one floor while the apparels and footwear are placed in another floor. Various apparels are displayed according to their relatedness. For example, men’s vests are placed next to their socks and underwear.

However, at Debenhams, the assortment is completely different. The merchandise in Debenhams is assorted according to brand, designer, and quality. The premise is to give the customer a touch of class and uniqueness. Customers will therefore prefer shopping for apparels in Debenhams than in any other apparel dealers. Special designers listed by the outlet design the merchandise at Debenhams.

The designers and the brand of apparels that the customers prefer create the difference. The outlet also offers high-class furniture and jewels. At Saks Fifth Avenue, the merchandise differentiates the assortment. Merchandise is organised by consumers’ needs.

For example, men’s wear are placed under one floor while children’s wear are placed in a different floor. The different categories of merchandise at Saks Fifth Avenue are placed in different floors.

The second difference in management issues of the three departmental stores is in the store location. Different departmental stores are located in different places depending on various factors such as proximity to the customers and producers. Marks and Spencer as a company has located its departmental stores in large cities in various countries. These departmental stores are not located in the suburban areas.

Gary argues that Marks and Spencer targets the urban elites (60). The stores develop a class of consumers for their goods and services. This strategy is contrary to what Debenhams does. Contrary to Marks and Spencer, Debenhams usually opens new retail outlets in the suburban areas.

Although Debenhams has some stores in major cities, it has many other stores in the suburban locations in a bid to meet customers’ need at the places of their location. The stores aim at taking the goods and services to the place where customers can reach them faster. Saks Fifth Avenue has its stores in major towns since it majorly deals in apparels. The department aims at meeting the elites’ clothing needs.

This departmental store has a sense of class. It also has its outlets located in large storey buildings. Such buildings are meant to provide an ample shopping point for the whole family. The location ensures that families have a one-stop shopping point.

The third management issue that is different in the three departmental stores is display and layout. Although all the three retail stores do display as a way of advertising, they do so differently.

Campbell asserts the design, display, and layout effects of Marks and Spencer include making the stores brighter through lighting, use of the most recent designs in layout, making more spacious shopping rooms, and placement of white tiles on all the floors (80). Such layout and display target creating a certain mental impression in the mind of the customer.

On the contrary, product brands and designers do Debenhams’ display and layout. Categorisation of apparels, furniture, and other goods is done according to the designers. Special designers are listed by this departmental store with products being displayed along their names and pictures. Shoppers select goods according to brand and the designers behind them.

Recommendations

According to the findings of the report, various steps are evident that each of the retail departments needs to take in order to achieve better results. For example, Marks and Spencer should embark on diverging its goods and services to customers in the suburban areas.

Most of the customers who purchase goods and services at Marks and Spencer travel from far distances to cities and towns where the departmental retail store has branches. Moving the merchandise close to customers by opening suburban branches will increase the company’s customer base and help in serving the clientele better. The departmental store should therefore open businesses in other different locations.

Saks Fifth Avenue should also display its merchandise in the same floor instead of categorising and placing them in different floors. Jackson and Leigh argue that men, women, and children’s apparel should be placed under one floor instead of different floors to give the family a one-point shopping experience (766). The retail should also open more outlets in suburban areas.

Opening branches in suburban areas will enable it reach out to most of the customers since they reside away from town centres. Debenhams should assort its products more to make selective displays. Apparel products should be placed on the same line. Other products such as electrical appliances should be placed in a different point.

Marks and Spencer, Debenhams, and Saks Fifth Avenue should invest in opening more outlets in suburban areas in order to move their goods and services closer to the people. Display and arrangement of merchandise should also be done after a thorough research on customers shopping behaviour.

Works Cited

Angeleette, Benjamin. “The revolution that never came and the revolution that is coming.” Virginia law review 92.6(2006): 1189-123. Print.

Campbell, David. “Legitimacy theory of managerial reality construction. Corporate social disclosure at Marks and Spencer.” Accounting forum 24.1(2000): 80-100. Print.

Gary, Davis. “The evolution of Marks and Spencer.” Service Industries Journal 191.3(1999): 60-73. Print.

Glynis, Jones. “Middle east expansion the case Debenhams.” International journal of retail distribution management 31.7(2003): 359. Print.

Jackson, Paul, and Spaks Leigh. “Retail internalisation Marks and Spencer in Hongkong.” International journal of retail and distribution management 33.10(2005): 766-783. Print.

Rippin, Ann. “Marks and Spencer waiting for the warrior.” A case examination of the gendered nature of change management 18.6(2005): 573-59. Print.

Shannon, Brent. “Refashioning men’s fashion, masculinity and the cultivation of male consumer in Britain.” Victorian study 46.4(2004): 597-630. Print.

Wood, Steve. The limits to portfolio restructuring: lessons from regional consolidation in the US department store industry. New York: Word Press, 2002. Print.