Category: Retailing

Currently many retailers from the United States and Europe attempt to enter Asian countries, which have recently become open to free trade. This paper aims to discuss the strategies they employ in order to gain competitive advantage and the peculiarities of consumer behavior in this region. At first, it should be pointed out that Asian market is extremely heterogeneous, which means that these states differ in terms of population density, purchasing power of the citizens and intensity of competition (Krafft & Mantrala,101).

These are the factors that should be taken into account by the management. Many international retailers like Wal-Mart, or Carrefour gravitate to the regions where the level of financial welfare has risen over recent years: namely Taiwan and China (Dawson, 41). Furthermore, there are no barriers to entry such as presence of domestic firms. In contrast, they are less successful in Japan, due there are many local retailers, which can enter into price war with foreign companies (Krafft & Mantrala, 101).

It should be noted that buyers in this region are not concentrated, and there are not large-volume clients in Asian market. On the one hand, this means that customers cannot dictate terms to the foreign companies, which operate in their country. Actually, large-volume customers are rather unlikely to appear in retail industry. Still, one should not presume that the bargaining power of clients is small.

The thing is that products, offered by Carrefour or Wal-Mart are not differentiated or unique in any way, and the clients can find alternative suppliers (Alexander, 116). This goes for food, drinks, clothes etc. So, consumer can choose the firm that offers the best price-quality ratio. Additionally, we should not forget that consumers in Asia face virtually no switching costs, in other words they can go from one supplier to another, and they would incur no expenses. This situation can be observed in Japan (Dawson & Lee, 153). This is one of the reasons why international retailers have to fit their prices toward their needs.

As far as profitability of the customers is concerned we cannot make any generalizations. In Taiwan or Malaysia, the population is more price-sensitive, as their income level is not very high, whereas in Japan, buyers are more well-to-do; therefore, they attach importance to the quality of the products, rather than the price. On the whole, we can argue that Asian buyers do not pose a threat of credible integration because it is more typical of wholesale trade rather than retailing.

Finally, we need to say that that the quality of the buyers products is not affected by the industrys product. This means that foreign retailers do not sell good and services superior in quality to those ones of domestic shops. Yet, it should be borne in mind that this situation is not characteristic of all Asian markets. In Indonesia or Cambodia, the quality of commodities is at a low level, while in Japan or China it is of the highest standard.

Therefore, foreign retailers try to adapt their prices to the needs of Asian population. Normally, it is done by providing discounts to the returned customers and setting prices which are than those ones of domestic retailers. Internationalization of Asian retail market beneficently affects the buyers of this country, as they are now able to choose the store that suits them best in terms of price and quality.

Works Cited

Alexander Nicholas. International retailing. Wiley-Blackwell, 1997.

Chan Tsang-sing. Consumer behavior in Asia: issues and marketing practice. Routledge, 1999.

Dawson John. The internationalisation of retailing in Asia. Routledge, 2003.

Dawson John & Lee Jung. International retailing plans and strategies in Asia. Routledge, 2005.

Dess Gregory, Lumpkin G. T., & Eisner Alan. Strategic Management: Creating CompetitiveAdvantages. McGraw-Hill/Irwin, 2007.

Krafft Manfred & Mantrala Murali. Retailing in the 21st Century: Current and Future Trends. Springer, 2009.

In Saudi Arabia, there are several retail industries. These retail industries are specialized in different areas. There are several key issues that affect these industries but the dominant issue is the oil price (Ramady, 2010). This is because the economy of Saudi Arabia and most countries in Middle-East mainly relies on oil to support their economy. This means that a fall in the oil industry would result to an economic recession in the country. In this study, our focus shall be on four retail industries which include: Abdullah Al Othaim Markets Company, Aldrees Petroleum and Transport Services Company, National Agricultural Marketing Company and the Saudi Automotive Services Company. As we shall notice in our study, these companies are affected by almost the same issues they are all located in the same political, economical and social environment.

Abdullah Al Othaim Markets Company

According to Tadawul (2010), “Abdullah Al Othaim Markets Company is a company that specializes in selling foodstuff and other consumer products both in retail and wholesale.” According to Johany et al (1986), “this company was established by Suleh Al-Othaim trading in the year 1956 and the company is located in a city called Riyadh in Saudi Arabia.” This company has several supermarkets from where food stuffs and other consumer products are distributed from. The company has several stores too. According to Johany et al (1986), “other services offered by Abdullah Al Othaim Markets Company include catering, mechanics, electronics repair, computer maintenance, storage services and building.”

Macro Analysis of the Company

Macro-analysis of industry is carried out using the five forces in the Porter’s model. They determine not only the attractiveness, but also the profitability of a given industry. They are therefore very important to an aspiring entrepreneur. The five forces include: the supplier power, buyer power, threat of entry, threat of substitutes and competitive rivalry.

To start with, the company has a favorable buyer power. This is so because Saudi Arabia has a large population hence a higher demand for products in the company. Moreover, the company gets more customers during the month of Ramadan. This is because the Saudi people’s expenditure tends to rise during this month due to the fact that most people spend a lot on food compared to other times of the year. Given the high demand for food, food prices increase during this time. Spending on food by most customers increases double during the Ramadan month. Thus, Abdullah Al Othaim Markets Company in Saudi buyer’s power is increased during this period.

Secondly, Abdullah Al Othaim Markets Company has great supply power. This has been achieved by the expansion of its stores and good pricing. At the same time, the company makes use of the retail industry’s online website www.souq.com to make most of its supplies. Thus, most customers are able to pay for products by use of credit cards.

Thirdly, the threat of entry into the company is high. It is possible to penetrate into the company because in Saudi market, monopolistic tendencies are not encouraged. Besides, the differences between conventional and Islamic fiscal practices continue to become slim and as such barriers to new entries into the retail business are reducing.

Fourthly, the threat of substitutes in the company is high. This is because there is much importation of software programs, electrical appliances as well as food by other companies. The importation of various substitute goods has a way of reducing the prices for the local products especially when they come at low costs making consumers to prefer them. The domestic retailers will thus be forced to adjust their prices so as to compete effectively.

Finally, there is much competition rivalry. The Abdullah Al Othaim Markets Company faces much competition from the National Agricultural Marketing Company, Saudi Fisheries Company and Penn Traffic Company. This is so because these companies provide the same commodities as the Abdullah Al Othaim Markets Company hence competes for the same customers.

Apart from the five forces explained by Porter’s model, we have other key issues that affect the company. These issues include: oil prices, the political and environmental concern, the economic concern at the local and global level, sentiments from investors, influence of the US dollar and the new laws and policies.

First, we have oil prices. Since Saudi Arabia leads in the production and exportation of oil, the Saudi economy is largely affected by any fluctuations in oil prices. Apart from affecting the nation’s economic growth, the effect is also experienced at the Stock market. The stock prices in the country rise and fall when oil prices increase and decline respectively. What may result to these fluctuations in price are basically two aspects. First is because the Saudi Stock Market has a bi-directional causal or mutual predictive relationship with daily changes in the oil prices. Second, there is global demand for oil. The oil prices in Saudi Arabia affects the stock prices of the Abdullah Al Othaim Markets Company to a large extent.

Secondly, there are political and environmental concerns in Saudi Arabia and the world at large. Any changes either politically or environmentally easily affects Abdullah Al Othaim Markets Company.

The thirdly, economic concern at both the local and global level the company. Any major shock or incident in the world wide market will have a great impact on the price of the products. How the global market perms and grows greatly affects and relates to the growth of the Saudi Stock market thus affects the Abdullah Al Othaim Markets Company.

Fourthly, sentiments from investors can also affect the stock market performance, thus directly affecting the Abdullah Al Othaim Markets Company. Therefore, it is important for the investors in the Saudi economy to exercise caution with regard to the stock market. The market value can easily be propelled above our fair value estimate due to an investor’s sudden shift in sentiments.

Consequently, the influence of the US dollar has much impact on Abdullah Al Othaim Markets Company. Related to this is the US short term interest rate, the strength of the dollar, the global capital market and their impact to the domestic interest rate. Both local liquidity conditions and global prices of products are greatly affected by the US interest rates. The Abdullah Al Othaim Markets Company raises or lowers its prices depending on the interest rates of the US Dollar.

Finally, the new laws and policies also affect the Abdullah Al Othaim Markets Company. Three years ago, foreign investors could utilize the Saudi Stock through the swap agreement. However, the inflows that foreign investors brought were below the expectations. Within a period of about one year, foreign investors had purchased approximately 2.3 % of the total market capitalization. This was partly caused by improper timing following the crash of most global markets in 2008 as a result of a global economic depression. Another reason is due to lack of interest by foreign investors in the market access method. This is because it does not guarantee them the rights to profits or losses due to their own transactions.

Micro Analysis

The stock price for the company can be found using the following formula:

P= D/(k-g), whereby p is the estimated stock price, D is the last dividend paid , k is the discount rate and g is the growth rate of the dividend as follows:

• P=$19.93
• D=$2.5
• g=3.85%.

This implies that, $19.93=$2.5/k%-3.85%.

From this, K=3.98%. The last dividend paid was $3. So, P (estimated stock price) will be $3/3.98%-3.85%= $23.

Assumption

• k (discount rate) is constant.
• G (growth rate of the dividend) will be consistent, hence little or no change.

Comparing this value ($23) with the theoretical value which is 19.93, we see that there is an increase in the estimated stock value, hence it is overweight.

Recommendation

Since the estimated stock sale is overweight, stocks are supposed to be sold with the assumption that these stocks will fall.

Aldrees Petroleum & Transport Services Company

According to Johany et al (1986), “Aldrees Petroleum & Transport Services Company was founded in the year 1957 and the company deals with retailing petroleum and providing transport services.” The company has several petrol stations and vehicles that serve both the public and private sector. The company is situated in the city of Riyadh in Saudi Arabia. Over the years, the company has experienced rampant growth and has managed to gain a lot of customers.

Macro Analysis

As stated earlier, macro-analysis of industry is carried out using the five forces in the Porter’s model. They determine not only the attractiveness, but also the profitability of a given industry. They are therefore very important to an aspiring entrepreneur. The five forces include: the supplier power, buyer power, threat of entry, threat of substitutes and competitive rivalry.

To start with, the company has a favorable buyer power. This is so because Saudi Arabia has a large population hence a higher demand for petroleum and transport services that are provided by the Aldrees Petroleum & Transport Services Company.

Secondly, Aldrees Petroleum Transport and Services Company have great supply power. This has been achieved by the availability of well distributed petrol filling stations and many tractor heads with cargo careers to offer transport services. At the same time, the company makes use of the retail industry’s online website www.souq.com to make most of its supplies. Thus, most customers are able to pay for products and services by use of credit cards.

Thirdly, the threat of entry into the company is high. This is because it is possible to penetrate into the company because in Saudi market, monopolistic tendencies are not encouraged. Besides, the differences between conventional and Islamic fiscal practices continue to become slim and as such barriers to new entries into the retail business are reducing.

Fourthly, the threat of substitutes in the company is high. This is because there are other companies that have come up with substitutes for gas and diesel. There is also a possibility that other means of transporting cargos rather than use of tractors could be invented.

Finally, there is much competition rivalry. Aldrees Petroleum Transport and Services Company face much competition from the National Gas and Industrialization Company and the United International Transportation Company. These companies provide the same commodities as the Aldrees Petroleum Transport and Services Company hence competes for the same customers. It is also worth noting that currently, oil with low production costs in Saudi Arabia is being put to question by some geologists (Cooper, 2011).

Apart from the five forces explained by Porter’s model, we have other key issues that affect the company. These issues include: the political and environmental concern, the economic concern at the local and global level, sentiments from investors, influence of the US dollar and the new laws and policies.

First, there are political and environmental concerns in Saudi Arabia and the world at large. These changes could be due to diplomatic issues. Any changes either politically or environmentally easily affects Aldrees Petroleum & Transport Services Company.

Secondly, the economic concern at both the local and global level affects Aldrees Petroleum Transport and Services Company in Saudi Arabia is. Any major shock or incident in the world wide market will have a great impact on the price of the products. How the global market perms and grows greatly affects and relates to the growth of the Saudi Stock market thus affects the Aldrees Petroleum & Transport Services Company.

Thirdly, sentiments from investors will also affect the stock market performance, thus directly affecting the Aldrees Petroleum & Transport Services Company. Therefore, it is important for the investors in the Saudi economy to exercise caution with regard to the stock market. The market value can easily be propelled above our fair value estimate due to an investor’s sudden shift in sentiments.

Consequently, the influence of the US dollar has much impact on Abdullah Al Othaim Markets Company. Related to this is the US short term interest rate, the strength of the dollar, the global capital market and their impact to the domestic interest rate. Both local liquidity conditions and global prices of products are greatly affected by the US interest rates. The Aldrees Petroleum & Transport Services Company raises or lowers its prices depending on the interest rates of the US Dollar.

Finally, the new policies and regulations are another key aspect that affect Aldrees Petroleum & Transport Services Company. Three years ago, foreign investors could utilize the Saudi Stock through the swap agreement. However, the inflows that foreign investors brought were below the expectations. Within a period of about one year, foreign investors had purchased approximately 2.3 % of the total market capitalization. This was partly caused by improper timing following the crash of most global markets in 2008 as a result of a global economic depression and due to lack of interest by foreign investors in the market access method. This is because it did not guarantee them the rights to profits or losses due to their own transactions.

It is worth noting that most developed nations are experiencing an economic slowdown as a result of high oil prices. Therefore, while supplies are fluctuating, the demand for oil is rising signaling high oil prices. Studies from economic experts show that the cost of oil per barrel may not stop climbing. The world may need to be prepared for a third oil shock. The economy of most industrialized countries is weakening though there is not yet an outright recession. It may therefore be worth drawing the conclusion that unless the industrialized nations run into trouble, Saudi Arabia and the rest of the Middle East will continue experiencing good economic times as a result of success of Aldrees Petroleum Transport and Services Company as well as other retail industries that deal with oil and products.

Micro Analysis

The stock price for the company can be found using the following formula:

P= D/(k-g), whereby p is the estimated stock price, D is the last dividend paid , k is the discount rate and g is the growth rate of the dividend as follows:

• P=$15.74
• D=$ 2.0
• g=4.18 %

From this, K=4.31%. The last dividend paid was $1.5 So, P (estimated stock price) will be $1.5/4.31%-4.18%= $11.54.

Comparing this value ($11.54) with the theoretical value which is $15.74, the estimated stock price went down. Thus, the estimated stock was underweight.

Recommendation

Since the estimated stock sale is underweight, stocks are supposed to be bought with the assumption that these stocks will rise.

National Agriculture Marketing Company

According to Ramady (2010). “this company is also known as Thimar.” Tadawul (2010) notes that, “The National Agriculture Marketing Company was established in the year 1987 and that the company’s activities involve marketing products of agriculture as well as service provision in agriculture project management and market maintenance.” This company is situated in Riyadh, Saudi Arabia.

Macro Analysis of the Company

As stated earlier, macro-analysis of an industry is carried out using the five forces in the Porter’s model. They determine not only the attractiveness, but also the profitability of a given industry. They are therefore very important to an aspiring entrepreneur. The five forces include: the supplier power, buyer power, threat of entry, threat of substitutes and competitive rivalry.

To start with, the company has a favorable buyer power. This is so because Saudi Arabia has a large population hence a higher demand for products in the company. Moreover, the company gets more customers during the month of Ramadan. This is because the Saudi Arabia people tend to buy a lot of agricultural products during the month of Ramadan, hence the need to create more marketing on agricultural products.

Secondly, the National Agriculture Marketing Company has great supply power. This has been achieved by strategic distribution of its accessories. At the same time, the company makes use of the retail industry’s online websitewww.souq.com to make most of its supplies. Thus, most customers are able to pay for products by use of credit cards.

Thirdly, the threat of entry into the company is high. This is so because in Saudi market, monopolistic tendencies are not encouraged. Besides, the differences between conventional and Islamic fiscal practices continue to become slim and as such barriers to new entries into the retail business are reducing.

Fourthly, the threat of substitutes in the company is high. This is because there are several other agricultural and marketing companies that are coming up. At the same time, the importation of various substitute goods has a way of reducing the prices for the local products especially when they come at low costs making consumers to prefer them. The domestic retailers will thus be forced to adjust their prices so as to compete effectively.

Finally, there is much competition rivalry. The National Agriculture Marketing Company.

face competition from: Abdullah Al Othaim Markets Company, Qassim Agricultural Company and Saudi Research and Marketing group. This is so because these companies provide the same commodities as the National Agriculture Marketing Company hence competes for the same customers.

Apart from the five forces explained by Porter’s model, we have other key issues that affect the National Agriculture Marketing Company. These issues include: oil prices, the political and environmental concern, the economic concern at the local and global level, sentiments from investors, influence of the US dollar and the new laws and policies.

First, we have oil prices. Since Saudi Arabia leads in the production and exportation of oil, the Saudi economy in general and the National Agriculture Marketing Company is largely affected by any fluctuations in oil prices. Apart from affecting the nation’s economic growth, the effect is also experienced at the Stock market. The stock prices in the country rise and fall when oil prices increase and decline respectively. What may result to these fluctuations in price are basically two aspects. This is because the Saudi Stock Market has a bi-directional causal or mutual predictive relationship with daily changes in the oil prices and the global demand for oil. The oil prices in Saudi Arabia affect the stocks prices of the National Agriculture Marketing Company.

Secondly, there are political and environmental concerns in Saudi Arabia and the world at large. Any changes either politically or environmentally easily affects the National Agriculture Marketing Company.

Thirdly, the economic concern at both the local and global level affects the National Agriculture Marketing Company. Any major shock or incident in the world wide market will have a great impact on the price of the products. How the global market perms and grows greatly affects and relates to the growth of the Saudi Stock market thus affects the National Agriculture Marketing Company.

Fourthly, sentiments from investors can also affect the stock market performance, thus directly affecting the National Agriculture Marketing Company. Therefore, it is important for the investors in the Saudi economy to exercise caution with regard to the stock market. The market value can easily be propelled above our fair value estimate due to an investor’s sudden shift in sentiments.

Consequently, the influence of the US dollar has much impact on the National Agriculture Marketing Company. Related to this is the US short term interest rate, the strength of the dollar, the global capital market and their impact to the domestic interest rate. Both local liquidity conditions and global prices of products are greatly affected by the US interest rates. The National Agriculture Marketing Company raises or lowers its prices depending on the interest rates of the US Dollar.

Finally, the new laws and policies also affect the National Agriculture Marketing Company. Three years ago, foreign investors could utilize the Saudi Stock through the swap agreement. However, the inflows that foreign investors brought were below the expectations. Within a period of about one year, foreign investors had purchased approximately 2.3 % of the total market capitalization. This was partly caused by improper timing following the crash of most global markets in 2008 as a result of a global economic depression. Another reason is due to lack of interest by foreign investors in the market access method. This is because it does not guarantee them the rights to profits or losses due to their own transactions.

Micro Analysis

The stock price for the company can be found using the following formula:

P= D/(k-g), whereby p is the estimated stock price, D is the last dividend paid , k is the discount rate and g is the growth rate of the dividend as follows:

• P=$3.35
• D=$ 0
• g=0 %

From this, K=0 %. The last dividend paid was $ 0.5 So, P (estimated stock price) will be $ 0.5/0 %-0%= $0.5.

Comparing this value ($0.5) with the theoritical value which is $ 3.35, the estimated stock price went down. Thus, the estimated stock was underweight.

Recommendation

Since the estimated stock sale is underweight, stocks are supposed to be bought with the assumption that these stocks will rise.

Saudi Automotive Services Company

According to Johany et al (1986), “Saudi Automotive Services Company was established in the year 1988 and this was done in accordance to a previous ministerial decree. Tadawul (2011) states that, “this company offers car services, restaurant services and beverages.’’ According to Ramady (2010), “other services offered by the company include: fuel transportation, sale of construction materials as well as purchasing and leasing of real estate.” Johany et al (1986) also notes that, “the company also owns an international automobile association which offers international driving licenses custom transit books.” The Saudi Automotive Services Company is a public shareholding company located in Saudi Arabia.

Macro Analysis of the Company

As stated earlier, macro-analysis of industry is carried out using the five forces in the Porter’s model. They determine not only the attractiveness, but also the profitability of a given industry. They are therefore very important to an aspiring entrepreneur. The five forces include: the supplier power, buyer power, threat of entry, threat of substitutes and competitive rivalry.

To start with, the company has a favorable buyer power. This is so because Saudi Arabia has a large population hence a higher demand for products in the company. Moreover, the company gets more customers during the month of Ramadan. This is because the Saudi people’s expenditure tends to rise during this month due to the fact that most people spend a lot on food, leisure and recreation as compared to other times of the year. People are also frequently in need of car services as they tour many places. Given the high demand for these products, prices increase during this time. Thus, the buying power of Saudi Automotive Services Company increases during this time.

Secondly, Saudi Automotive Services Company has great supply power. This has been achieved by providing all the needs for travelers, building many motels at strategic places, and offering frequent workshop services. At the same time, the company makes use of the retail industry’s online websitewww.souq.com to make most of its supplies. Thus, most customers are able to pay for products by use of credit cards.

Thirdly, the threat of entry into the company is high. This is because it is possible to penetrate into Saudi Automotive Services Company because in Saudi market, monopolistic tendencies are not encouraged. Besides, the differences between conventional and Islamic fiscal practices continue to become slim and as such barriers to new entries into the retail business are reducing.

Fourthly, the threat of substitutes in the company is high. This is because there is much competition by other companies; hence these companies may introduce substitute products. There is also much importation of substitute products. The importation of various substitute goods has a way of reducing the prices for the local products especially when they come at low costs making consumers to prefer them. The domestic retailers will thus be forced to adjust their prices so as to compete effectively.

Finally, there is much competition rivalry. The Saudi Automotive Services Company faces much competition from the Food Products Company and Red Sea Housing Company. This is so because these companies provide some common commodities as the Saudi Automotive Services Company hence competes for the same customers.

Apart from the five forces explained by Porter’s model, we have other key issues that affect the company. These issues include: oil prices, the political and environmental concern, the economic concern at the local and global level, sentiments from investors, influence of the US dollar and the new laws and policies.

First, we have oil prices. Since Saudi Arabia leads in the production and exportation of oil, the Saudi economy is largely affected by any fluctuations in oil prices. Apart from affecting the nation’s economic growth, the effect is also experienced at the Stock market. The stock prices in the country rise and fall when oil prices increase and decline respectively. What may result to these fluctuations in price are basically two aspects. First is because the Saudi Stock Market has a bi-directional causal or mutual predictive relationship with daily changes in the oil prices. Second, there is global demand for oil. The oil prices in Saudi Arabia affects the stock prices of the Saudi Automotive Services Company.

Secondly, there are political and environmental concerns in Saudi Arabia and the world at large. Any changes either politically or environmentally easily affects the Saudi Automotive Services Company.

Thirdly, economic concern at both the local and global level affects the Saudi Automotive Services Company. Any major shock or incident in the world wide market will have a great impact on the price of the products. How the global market perms and grows greatly affects and relates to the growth of the Saudi Stock market thus affects the Saudi Automotive Services Company.

Fourthly, sentiments from investors can also affect the stock market performance, thus directly affecting the Saudi Automotive Services Company. Therefore, it is important for the investors in the Saudi economy to exercise caution with regard to the stock market. The market value can easily be propelled above our fair value estimate due to an investor’s sudden shift in sentiments.

Consequently, the influence of the US dollar has much impact on Saudi Automotive Services Company. Related to this is the US short term interest rate, the strength of the dollar, the global capital market and their impact to the domestic interest rate. Both local liquidity conditions and global prices of products are greatly affected by the US interest rates. The Saudi Automotive Services Company raises or lowers its prices depending on the interest rates of the US Dollar.

Finally, the new laws and policies also affect the Abdullah Saudi Automotive Services Company. Three years ago, foreign investors could utilize the Saudi Stock through the swap agreement. However, the inflows that foreign investors brought were below the expectations. Within a period of about one year, foreign investors had purchased approximately 2.3 % of the total market capitalization. This was partly caused by improper timing following the crash of most global markets in 2008 as a result of a global economic depression. Another reason is due to lack of interest by foreign investors in the market access method. This is because it does not guarantee them the rights to profits or losses due to their own transactions.

Micro Analysis

The stock price for the company can be found using the following formula:

P= D/(k-g), whereby p is the estimated stock price, D is the last dividend paid , k is the discount rate and g is the growth rate of the dividend as follows:

• P=$11.39
• D=$ 0.5
• g=3.82 %

From this, K=1.97 %. The last dividend paid was $ 1.0 So, P (estimated stock price) will be $1.0 /1.91 %-3.82%= -$0.52.

Comparing this value (-$0.52) with the theoretical value which is $ 11.39, the estimated stock price went down. Thus, the estimated stock was underweight.

Recommendation

Since the estimated stock sale is underweight, stocks are supposed to be bought with the assumption that these stocks will rise.

In conclusion, the key issues that affect retail industries in Saudi Arabia revolve around the porter’s model as well as the oil prices, the political and environmental concern, the economic concern at the local and global level, sentiments from investors, influence of the US dollar and the new laws and policies. Oil industries are the key determinant’s of Saudi Arabia’s economy. Thus, success in these industries means that there will be economic growth in the country while their decline will result to the country’s economic recession. Any changes in the political and environmental concern will impact retail industries in Saudi Arabia. On the other hand, the economic concern at both the local and global level means that any major shock or incident in the world wide market will have a great impact on the stock price. How the global market perms and grows greatly affects and relates to the growth of the Saudi Stock market. Sentiments from investors can lead to the market value being propelled against Saudi Arabia’s retail industries fair value. The value of the US dollar also affects the stock price of retail industries in Saudi Arabia. Policies and regulations also affect the stock price of retail industries in Saudi Arabia. In this study, three companies namely; Aldrees Petroleum Transport and Services Company, National Agricultural Marketing Company and Saudi Automotive Services Company estimated stocks value was found to be underweight while Abdullah Al Othaim Markets Company estimated stock value was found to be overweight.

References

Cooper, P.J. (2011). Just where is the Middle East Business Cycle?

Johany, A. Berne, M. & Mixon, J. (1986). The Saudi Arabian economy. London: Taylor & Francis.

Ramady, M. (2010). The Saudi Arabian economy: policies, achievements and challenges. London: Springer.

Tadawul (2011).Saudi Arabian retail industries.Web.

The Market Structure of Retail Grocery Market in Australia

There are a number of market structures that can be adopted in an industry, depending on the type of products and services offered. The market structure that is in place is shaped by how many and what types of firms make the industry. There are four major market structures: perfect competition, oligopoly, monopoly, and monopolistic competition. A perfectly competitive market structure is one whereby there are many players in the market, as well as many customers (Stackelberg et al., 2011).

The barriers for entering the market are not there, or they are minimal if they are present. In this kind of market structure that is also referred to as pure competition, there are no players who are large such that they dominate and control the market. In other words, there are no organizations that are powerful such that they can set or influence the prices of goods and services.

Some of the characteristics of a perfectly competitive market include unlimited number of buyers and sellers and no barriers for entry or exit to and from the market respectively. In addition, there is perfect information regarding prices, quality as well as production of goods and services. Products are usually homogeneous, there are no transaction costs, and each organization tries to maximize its profitability by incurring the minimum costs possible (Stackelberg et al., 2011).

In an oligopoly market, there are a few firms that are usually strong and tend to influence the market. These firms have the majority share of the market. The organizations tend to compete against each other, while they dominate the rest of the market. These dominant organizations make it difficult for new organizations to join the market by putting barriers. The other major market structure is monopoly. This is a structure whereby there is only one firm that offers certain goods or services.

The firm does not have a competitor. In a monopolistic market structure, the provider organizations have the freedom to control and influence prices since there is no other organization to compete with. Buyers might suffer out of exploitation in such a structure. Finally, there is the monopolistic competition market structure, which is also referred to as a competitive market.

In such a structure, there are a large number of organizations that produce similar goods but the goods are differentiated slightly (Etro, 2009). Each organization tries to differentiate its products a bit to outdo its competitors.

Reasons why the market is not perfectly competitive

Retail grocery market in Australia may not be regarded as a perfectly competitive market because the market is seemingly dominated by two major competitor organizations. The two dominant grocery firms in the Australian market are Coles and Woolworths (Food System Research Group, 2009). It is, however, notable that there are other hundreds of grocery firms that operate in the Australian market.

However, the small firms control 20-30% of the grocery market since Coles and Woolworths are said to dominate and control over 70% of the total Australian grocery market. To be precise, Stuart Alexander & Co Pty Ltd (2013) state that Coles and Woolworths dominate about 80% of the market. However, there are many other retailers in the Australian grocery market, with the number of supermarkets growing increasingly high.

The Australian retail grocery market is comprised of more than 10,000 small retailers. Australia is regarded as one of the countries with most grocery retailers in the world. Having a population of approximately 22.7 million, which is much smaller compared to the United States and the United Kingdom populations respectively, Australia is said to have about three times as many supermarkets as those in the UK and more per capita supermarkets than the U.S. (Stuart Alexander & Co Pty Ltd, 2013).

Despite this large number of retailers, the major chain stores have continued to dominate the market as they increase their market share. This makes the grocery market in the country an oligopoly market structure. Another reason why the market is not a perfectly competitive structure is the fact that the small organizations have no influence on the prices of goods (ACCC, 2008).

The small firms are forced to adopt prices that are implemented by the large organizations. Finally, entry to the market is not without barriers because the large organizations are trying to defend their competitive advantages. The large firms might, therefore, make it hard for new entries that might be rivals to the two.

Implications to customers

The influence that organizations in an oligopoly market structure have is very similar to the influence of a monopoly organization because the few organizations in oligopoly have full influence on prices. The only difference is that there is only one organization in a monopoly structure, while there is more than one organization in an oligopoly structure. There is a big margin between the buyers available versus sellers, with buyers being excessively many compared to sellers. As a result, customers do not have many choices and are forced to buy whatever is being offered by the few sellers (Tucker, 2008). Customers may get products that are of low quality since the organizations are aiming to maximize their profits. Firms may, therefore, produce low quality goods in order to minimize production costs.

Another implication is that customers spend more on products because the oligopoly organizations can collude to inflate prices to maximize their revenue. They might exploit customers the same way a monopoly organization would do. Finally, there is no availability of perfect information in an oligopoly market. Therefore, customers do not have sufficient information regarding the goods being offered by organizations. This is a factor that is likely to affect buying behaviour in that customers might buy sub-standard good innocently (Tucker, 2008).

Workable competition

The issue of workable competition came into being in the year 1940, courtesy of an industrial economist by the name Professor Clark (Khemani and Shapiro, 2002). In a monopolistic market structure, customers are usually abused and oppressed by the organizations since there is no competition. Moreover, customers do not have alternatives to the products being offered. Such organizations offer sub- standard goods and services at a high price in order to maximize profits.

In an oligopoly market structure, the influence of firms is similar to that of monopolies. The few players in the market may collude to inflate prices to maximize their revenue. In addition, these organizations may also bar the entry of new players in order to protect their advantages. It is important to note that the major factors that influence competition in any market are mainly the number of sellers, as well as their sizes (Hennig-Thurau, 2000).

The barriers from entry or exit in the market, as well as the level of differentiation of products being offered may also have an influence on competition. An oligopolistic market is dominated by a few large firms that have the capacity to determine direction of the market.

‘Workable competition’ in an oligopoly market structure exists where there is sufficient competition between firms such that buyers are protected from abuse and exploitation. ‘Workable competition’ is relevant in any market set up. It is especially relevant where quality is needed. As mentioned earlier in this article, low quality production is highly likely in monopolistic and oligopoly market structures since organizations’ main objective is to maximize profits.

To do this, they need to minimize their production costs. In this bid, the firms are likely to produce low quality goods since the production costs will be significantly low. Firms will be almost certain that their products will be bought since customers do not have better options due to lack of competition. Therefore, the concept of workable competition may be applied to ensure that quality products are produced in an oligopoly market (Zarnowitz, 2007).

Another reason why workable competition might be relevant in a market is to prevent consumers from being exploited. Firms might increase prices of goods unreasonably to maximize their profits. Finally, economic growth is more likely when there is healthy competition in a market. It is also more likely that technological development will be embraced by organizations. Barriers to entry or exit are limited, or they do not exist when a market is competitive.

Therefore, more organizations are likely to join and create employment opportunities (Zarnowitz, 2007). This is important for the growth of national economy. In addition, technological development is another factor that is likely to improve the rate of employment since organizations will hire people who have the technical knowledge and skills to innovate and handle IT systems.

The concept of ‘workable competition’ may be relevant in the Australian grocery market to protect customers from being exploited by the two dominant grocery stores. In addition, ‘workable competition’ will encourage innovation and customers will get quality services. One needs to identify the number of firms that sell grocery in the country to justify whether ‘workable competition’ exists in the grocery retail market.

The number of firms needs to be enough to allow economies of scales. Expenses by firms need not to be excessive. Competition is not workable if expenses are excessive. Finally, informative advertisement should be embraced. Lack of information is one factor that leads to customers being abused. Therefore, customers should be fed with information during advertising (Khemani and Shapiro, 2002).

Vertical Integration

In a competitive business environment, all organizations are always striving to achieve competitive advantage that will enable them maximize their profits. Firms try to come up with strategies that are aimed at overcoming their rivals. It is for this reason that the issue of competition has gained a lot of popularity in the global market over the last two decades. Vertical integration has been a central concern when talking about competition in business.

Economists, as well as policy makers and lawyers have been mostly concerned about the effects that vertical integration has on the welfare of consumers. Competition is usually imperfect in an economy where the number of sellers is small (Wu, 2000).

This means that there are barriers to entry, imperfect information, and poor or sub- standard goods, among other features. Vertical integration could either be backward or forward in an oligopoly market structure. In addition, vertical competition is said to lead to pro-competitiveness in the market.

The term vertical integration in micro- economics is used to describe a form of management control. This is where firms in a certain market are united in some way. In most cases, such firms are united in that they share a common owner (Hubbard et al., 2013). What happens in such a market is that each of the various firms produces different products or offers different services. These products then combine in the market to satisfy the demands of customers.

This is likely to lead to a monopolistic vertical integration. However, the concept of vertical integration in an oligopoly market structure arises when upstream firms merge with downstream firms. The upstream market is made up of a few organizations competing against each other. These organizations are usually big and tend to dominate the market.

The integration realized when an organization in the upstream market merges with an organization in the downstream market can be described as a vertical (Stroux, 2004).

It is important to note that the exact meaning of this concept is yet to be understood because the term can take different dimensions depending on the context in which it is used. Study and research regarding the term ‘vertical integration’ has been a challenge to academics and economists at the policy, as well as theoretical analysis levels.

Some business people and academics have been known to make the conclusion that vertical integration is aimed at enabling firms obtain supply of inputs that is more certain. This is despite the fact that inputs are available in a competitive market. For instance, other firms can form a merger in order to edge out a certain organization that has a competitive advantage by cutting its supply (Lewis et al., 2010).

Implications of vertical integration for competitors in an industry

Vertical integration has either direct or indirect implications on organizations in an industry. For instance, organizations may benefit from reduced cost of production if they form a vertical merge in that they are able to produce goods in a manner that is more integrated compared to production when they were not merged. Most organizations in the downstream market in an oligopolistic market structure may merge in order to have market power when buying goods.

This is more effective when the organizations are buying intermediate goods (Lachmann & Lavoie, 2004). Further, integration helps firms to increase their capacity, and their production costs are lowered. This helps them in maximization of profit, thereby strengthening their competitive advantage. The firms are in a position to sell their products at significantly lower prices than their competitors, thereby making them command a large share of the market.

‘Strategy for Successful Entry of a New Competitor’

New firms always find it challenging to gain entry and establish in an oligopolistic market since there are a lot of barriers placed by the few dominant firms present. In Australia, the two dominant organizations in retail grocery market make it difficult for new entrants. New firms will have to devise a strong strategy to be able to join the market.

A potential entrant into the Australian grocery market should think of merging with existing firms to boost its chances of success in this market. This will make it easy for the new grocery firm to join and succeed in the market. The organization may retain its name and may even break from the merger later once it has been completely established.

Pay off Matrix.

Recommendation and Conclusion

It is difficult for an organization to join an oligopoly market. Therefore, it is important that the organization devises a strategy that will enable it enter the market successfully. According to the matrix above, an organization will have 70% chances of succeeding if it forms a merger with an existing organization.

Failure to form a merger will reduce chances of success to 30%. Therefore, I would recommend that a new entrant should form a merger with already existing organizations in order to succeed. ‘Workable competition’ should be exercised in the Australian grocery retail market to avoid abuse of customers by dominant organizations. This will also ensure quality products and services to customers.

Reference List

ACCC 2008, Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries.

Etro, F 2009, Endogenous market structures and the macroeconomy, Springer, Dordrecht.

Food System Research Group 2009, Structural changes in food retailing. Web.

Hennig-Thurau, T 2000, Relationship marketing: Gaining competitive advantage through customer satisfaction and customer retention: with 24 tables, Springer, Berlin.

Hubbard, G, Garnett, A, Lewis, P & O’Brien, A 2013, Essentials of economics 2nd edition, Pearson Education, NSW.

Khemani, RS & Shapiro, DM 2002, ‘Glossary of industrial organisation economics and competition Law’, OECD. Web.

Lachmann, LM & Lavoie, DC 2004, Expectations and the meaning of institutions: Essays in economics, Routledge, London.

Lewis, P, Garnett, A, Treadgold, M & Hawtrey, K 2010, The Australian economy: Your guide, Pearson Educational, NSW.

Stackelberg, H, Bazin, D, Urch, L & Hill, R 2011, Market structure and equilibrium, Springer, Berlin.

Stroux, S 2004, US and EC oligopoly control, Kluwer Law International, The Hague Stuart Alexander & Co Pty Ltd 2013, ‘Australia market’, Stuart Alexander. Web.

Tucker, IB 2008, Microeconomics for today, Thomson South-Western, Mason, OH.

Wu, C 2000, Strategic aspects of oligopolistic vertical integration, North-Holland, Amsterdam.

Zarnowitz, V 2007, Business cycles: Theory, history, indicators, and forecasting, University of Chicago Press, Chicago, IL.

History of Oil Industry

The oil industry started over 500 years ago and oil seeping up through the ground was mostly applied in waterproofing ships, medicine, lighting, and as paints for decoration and maintenance (Pratt, 2012).

During this period, the demand for oil products was greatly higher than the supply, and several oil companies and individuals were searching for an alternative and durable source, currently called black gold. Aside from a short period of coal oil, the solution was accompanied with the expansion of drilling for crude oil, and land wells were foremost. As the demand for oil products went on to advance, exploration companies started to search for other sources like sea bed.

Gulf of Mexico was the initial region where the oil well equipment was constructed, which was located in open waters. These structures were located in water depths of around 90 meters and built in a form of a piled jacket arrangement, where a framed template contained piles that were fixed in it to attach these structures to the sea bed. Such structures found in the sea bed were the precursors for the huge platforms currently found in the extremely deep waters and in several places all over the globe.

Land oil wells have been present since the 1910s in Europe. Only in the 1970s the discovery in the North Sea actually started, however, for the further several years no any successful achievements could be seen. Eventually, in late 1960s, oil had been stuck (Pratt, 2012). There have been explorations of new oil fields since that time and succeeding expansion of the North Sea is among the supreme investment plans in the globe.

History of ExxonMobil Company

ExxonMobil is an American Multinational oil and gas company that is originated from Standard Oil Company and established by John D. Rockefeller (Pratt, 2012). It was launched in 1999 when there was joined venture by Exxon and Mobil. The company has its main offices in Irving, Texas. Exxon Mobil Corporation (NYSE: XOM) is associated with a Canadian’s Imperial Oil, which is among the leading companies in Canada (Pratt, 2012).

ExxonMobil is among the biggest publicly traded organizations based on market capitalization in the globe and is the biggest organization in the globe based on the income. It is also positioned number three in the world by Forbes Global listing in 2012.

Reserves contained by ExxonMobil were around 70 billion barrels during the evaluation in 2008. During that time, the production rates were anticipated to be steady for around 14 years.

ExxonMobil contains 37 oil refineries in around 20 countries in the world that make up a joined daily refining volume of about 6.2 million barrels (Pratt, 2012). This makes this company to be the biggest refiner in the globe. This is a rank that was merged with Standard Oil found in Canada since its integration in 1870s.

ExxonMobil is the biggest of the six oil giants with weekly output of 27.447 million BOE. It produces almost three percent of the global inputs (Pratt, 2012). This is also less than the output of some of the biggest oil companies that are managed by government.

Current Status

About seven billion people in the globe receive around 60% of oil and gas in their daily normal energy requirement and the remaining part of 40% is received from hydroelectric generation, nuclear, and coal. Other basic sources include solar power, and biomass elements. Currently, oil stands for international commerce on an extensive scale and international markets are fast developing. Various oil companies allocate billions of dollars yearly to sustain and expand their oil and gas output.

More than 200 countries have requested oil and gas companies to bargain for the rights to use their lands or territorial waters since they are expecting that these companies will discover and generate oil and gas to the country, produce local employment, and finally support the country’s economy by inserting billions of money.

In the middle of 2008, ExxonMobil revealed an intention to change its process from direct-served retail market to another advanced process due to the increasing complexity of managing gas stations that were experiencing the increasing prices of crude oil.

This huge process of transition slowly threw ExxonMobil out of the direct-served retail market, and finally had an influence on 800 company-owned stations and around 1,500 other gas stations managed by entrepreneurs supplying oil across the countries. ExxonMobil introduced XTO energy into the world market in 2010 and focused on growth and creation of alternative resources to reduce risk and adapt the competitive market setting.

Macroeconomic Indicators

Economic Indicators

Economic indicators in every company are valuable since they help in understanding the underlying factors of the market. Particular economic indicators that companies watch will regularly rely on the market where the companies are functioning (Spangenberg, 2011). For oil companies, the key emphasis will be on economic indicators that give information concerning the oil industry.

The best indicators applied by most energy companies are the crude inventories, or sometimes called stock levels, which show the quantity of oil presently kept for the future use. The figures and other changes provide energy companies with a concept of the trends in use and production of oil in a particular period of time.

Unemployment Rates

ExxonMobil needs also to focus on the present employment situations. The company may analyze the Employment Index indicator that evaluates the degree of employment among the people involved in the industry or establishment-based employment. Most people believe that these companies can specifically discover from the daily establishment studies since they disclose the industrial sectors that contain a huge demand for jobs and sectors that do not require extra workforce.

These companies can particularly focus on the outcome at the entries on “manufacturing/ service provision and retail trade” (Spangenberg, 2011). Here, they can evaluate the results with statistics from the sources that are portraying employment levels in the oil sectors.

From such figures, these companies can execute new approaches in recruiting new workers and keep older workers in a view of transforming conditions in the oil industry. ExxonMobil can analyze trends in recruiting new employees from different racial groups with the intention of maintaining shared opportunity conditions in employment as they impose advance standards in the quality of production generated by these workers.

Consumer Price Index (CPI)

Consumer Price Index (CPI) is usually an important measure for oil companies, or ExxonMobil, since the Consumer Price Index changes in prices of essential consumer commodities (Hunter, 2012).

ExxonMobil, example of other oil companies, is the top producer of products associated with petroleum products that are among the commodities, which are being evaluated by the Consumer Price Index. Most people believe that it is essential for the company to follow the monthly changes in consumer prices through the Consumer Price Index, which allows the company to plan the pricing system that it contains in trading its commodities.

Certainly, this will rely on the demand and supply level for commodities associated with petroleum. It is essential for the company to understand the variation in prices based on the present economic conditions that the country undergoes along with the current market situations in the petroleum sector.

Macroeconomic Indicators and the Company Data Indicators

Economic Indicators

Figure 1: Oil Price and GDP Growth (Hunter, 2012).

Figure 2: ExxonMobil Growth Rate.

Employment Rate Indicator

Figure 3: National Employment Rate (Hunter, 2012).

Figure 4: ExxonMobil Employment Rate.

Consumer Price Index (CPI)

Chart 1: CPI and the CPI excluding energy (Hunter, 2012).

Data Analysis

The graphs above concerning GDP and ExxonMobil growth show more directly the manner in which the oil prices actually impact the unemployment rate. The graphs also illustrate decreasing GDP and negative economic effects on sensitive oil prices, which can affect the economy of the country. Graphs (ExxonMobil and microeconomic indicators) show that there is a fluctuation in the rates. The highest points were recorded in 2008 and in the middle of 2012.

ExxonMobil employment rate nearly went constant from January 2003 to January 2008, when it started raising sharply due to the increase of employment. While employment rate shown in the microeconomic indicator provides that the rates have been undergoing upset in their figures since they have been declining since 2010. This shows that ExxonMobil may experience a distinct growth in employment and expansion in the branch outlet across the world.

The graph above shows that the figures for national and ExxonMobil differ in the point that the Consumer Price Index (CPI) for microeconomic indicators is slightly below the figures of the company. The rate dropped in 2009 and both steadily rose in the middle of 2009, but dropped again in the start of 2011. This made the beginning of 2011 to be the highest Consumer Price Index (CPI) point since 2009.

Future Opportunities and Challenges

ExxonMobil has a collection of major opportunities with a current research focusing on varieties of exploration, technology growth, and project feasibility analysis, which are in line with the oil and gas industry in the world. Success in the future of oil and gas industry should call for the on-going revision of a strategic business approaches to figure out challenges and difficulties governing this industry (Sen, 2012).

It is also expected that participation of oil companies in the country will improve economic and employment status. The future of oil industry will also increase in looking at success and production since more fields are free for exploration and advanced technology of the oil markets in the world.

The major challenge is to make sure that both new and exposed resources can be generated in an environmentally and economically position to attain raising demand and counterbalance natural field drop. Environmental worries have already resulted to limitations to explore in regions potential for the oil industry in the world.

Discovering economic approaches to resolve this challenge is a part of the problem that serves as a field of higher competition inside oil and gas industry. Environmental factors and financial activities may be among the challenges that developing countries will experience in the future.

References

Hunter, P. (2012). Main Economic Indicators. MEI Methodological Analysis, 2: 7-59.

Pratt, J. (2012). Exxon and the Control of Oil. Journal of American History, 99(1): 145-154.

Sen, A. (2012). Mortality as an Indicator of Economic Success and Failure. The Economic Journal, 108: 1-25.

Spangenberg, J. (2011). Economic sustainability of the economy: concepts and indicators. Int. J. Sustainable Development, 8(2): 47-64.

E-tailing is the use of an electronic medium like the internet to sell retail goods and services. This method has improved the commercial industry as the goods are sold at minimal costs because the channels involved in the marketing process are minimized. Its growth has fastened the shopping and personalization behavior of the consumers. This form of shopping has influenced the behavior of the consumers, the organization and that of the advertising market target.

The consumer behavior is the reaction and adoption of electronic retailing by the buyers. It is influenced by the quality of the products, the advertising means, the prices and the products diversity. The mode of communication to the consumers is the internet as it enables the buyers compare and contrasts the various items.

Websites are designed to meet the needs of the customers and market the products. The websites are a very important tool for e-commerce. This is because, the customers do not have to walk while doing their shopping but, they shop at a place of their convenience. The costs are reduced and they are able to choose from the variety of the items advertised. There is increased flexibility and the consumers are empowered because the shopping process is made easy for them.

The communication process involved in the web designing process is made in such a way that the final product reaching the consumer is desirable. A web page is designed with the contents that the firms intend to sell to their customers. They incorporate all the details of the product that the buyer is interested in like the price, quality and the durability.

They also include the image of the product, other related products, the category list and the product reviews. The product description and the pricing will determine the immediate response of the buyer. The payment methods should also be included and how the product will be delivered to the buyer. When all this information is included in the marketing and selling websites, the customer can be able to purchase the product with ease.

The organizational behavior and structure is affected by the adoption of e-tailing. The adoption of retailing over the internet, affects the organizational structure since the idea is perceived differently. Many workers may oppose the idea because it reduces the costs of the company meaning that people are at a risk of loosing their jobs.

The behavior of the organization towards the e-tailing could be communicated using the internet mailing. This is the selling of messages with an aim of passing an idea from the buyers to the sellers and vice versa (March, 2004, p. 4).

The company might pass the marketing and selling information either directly or using the existing hierarchies. The communication process involves the composition of the intended information by the marketing department. The products being marketed or sold are described and their images are also portrayed. This circulates to the departments involved so that they can make the necessary amendments to ensure that the final product is attractive to the customers.

The organization considers that it is competing with other firms producing the same products and thus, they try to come up with a unique and a very attractive strategy. This is because the message they pass to their customers will determine their buying behavior. The information may then be placed on the company’s web page and a description of how to contact them incase of any enquires.

E-tailing changes the behavior of an organization because it interferes with the hierarchical structures. For those who manage to catch the attention of their customers through well designed web pages with clear explanations, they are able to improve their marketing, advertising and selling methods. This will make them realize increased sales and profits.

The advertising market is also affected by the adoption of e-tailing. Those people who are engaged in sales are affected because their work is reduced and this limits their sources of income. The web marketing is different from traditional marketing and the advertising industry may decide either to incorporate the traditional methods with the modern designs or to start a new market with new designs.

The advertisers may not want to do away with their sales people and they may choose to use them and the webs as marketing channels. People could be used to advertise the online purchases while other may chose to use the media.

The communication channels in the advertising market could be designed in a way that the involved organization desires. The information concerning the products being marketed is designed in a way that the buyers will understand.

They are designed in a way that they attract both the traditional and the modern markets and to meet the needs of all the groups regardless of their background, race, color or nationality. The contacts of the salespersons are then included in the webpage so that interested customers may contact them. These people are the best to use when selling the goods even over the internet because they have adequate marketing skills.

The marketing environment is also critical because the buyers will not want a very noisy environment and this may put them off making them seek to purchase from other firms. The people in the marketing department should be available to receive the enquiries of the customers at all times, meaning that this is a market, which should work around the clock.

The communication channel is very important to the advertising market in the adoption and implementation of e-tailing because, it is the market which determines the success of this method of advertising and selling (Ancher, 2002, par. 6-7).

E-tailing has become a very useful mode of buying and selling in our society. With the use of the internet, we have been able to develop a market where the needs of the customers are put first. We have taken the products to our buyers making it very convenient for them to shop and we have offered them a great flexibility in their shopping patterns.

Since already everyone can access the internet, we need to utilize this resource so that we can improve our buying and selling methods. It is a great opportunity because the firms are giving the buyers a chance to air their views on any modifications on the products. The buyers are in a position to bargain while still in their houses.

This is for all of us, we should use these opportunities and we should take our time to visit these websites so that we can discover the variety of products offered to us. The firms should take this as a chance to cut down their cut down their expenses and the costs associated with the use of middle men. It is also a great boost to the advertising industry since they have gone international and they attract and sell to customers from all over the world. Who would have thought that shopping could become so easy?

Reference List

Anchor, N. (2002). E-tailing: an analysis of web impacts on the retail market. Journal of business strategies. Web.

March, L. (2004). Determinants affecting organizations, intent of adopting e-tailing: a study based on innovative theories. New York: Association of Computing Machinery.

Introduction

Business marketing has become one of the integral business features that organisations use as a competitive advantage to strive through market pressures. The mechanisms of businesses and corporations normally determine companies’ present success and expectations. The physical appearances as well as customs governing a business are good determinants that anticipate the growth and development of any single business with such prospects mutually influencing multinational corporations as well as small and medium business units.

Minor decisions, as they may seem, frequently have long lasting influence on businesses and may automatically determine the growth and development of such enterprises. Central to this argument, any business unit inclusive of retail stores principally requires comprehensive marketing planning from product determination and product arrangement to the final selling.

For several decades, the impact of store layout and design, merchandise assortment, and store location as retail managerial aspects have constantly remained undervalued. Therefore, this essay seeks to examine these aspects in a survey of three retail stores: Debenhams, Saks Fifth Avenue, and Marks and Spenser.

Industrial synopsis of retailers

The three retail stores operating in major economies including the United States and the United Kingdom and other parts of the European continent belong to the fashion and design industry, an internationally acknowledged industry that employs millions of designers. They compose the topmost designing companies across Europe, with reports indicating that most of these companies have stretched beyond the European continent.

Fashion and designing typically refers to the art of applying techniques in aesthetic or even natural beauty to garnishes and garments. The fashion and designing industry streams from social-cultural persuasions and for numerous decades, the industry is proving substantial in connecting different cultures to the international limelight through socio-cultural designs.

Fashion and designing commerce has constantly proven one of the most imperative apertures to cultural growth in a more sophisticated manner with different industries rapidly growing to meet the dire needs to consumer interests. Over the years, this industry has been influential in peoples living styles with numerous changes constantly taking place in this industry each successive year.

Concerning Debenhams Company

Debenhams is an internationally renowned fashion and designing company currently operating in over 28 countries globally. The history of Debenhams fashion and Designing Company “dates back to the 1778, when William Clark established a store of drapers, along 44 Wigmore Street in the west of London, selling luxurious gloves, bonnets, fabrics and parasols that constantly grew to a company” (Debenhams Plc. Para. 2).

As early as 1813, Debenhams grew exponentially through William’s innovations and the firm, Clark and Debenhams emerged, followed by the emergence of the first store in the London’s outskirts, Cheltenham in 1818, giving an exact facsimile of Wigmore Street Stores.

Came 1851, Clement Freebody “invested heavily in the firm and renamed it Debenhams & Freebody, subsequently, a wholesale business and some retail stores emerged, selling cloth and other products and in the 19^th century, retail, manufacturing and wholesale businesses grew exponentially with new offices established in Australia, Canada, South Africa, and China” (Debenhams Plc. Para. 5). In 1905, Debenhams limited became the official name for this company and 1951 became the largest department store in the UK.

Subsequently, acquisitions of retail, wholesale and manufacturing businesses continued and by 1950, Debenhams owned 84 companies and 110 stores and for the first time in 1966, central buying became a commercial aspect. In 1977, all stores possessed the name Debenhams, and it became the official name that serves to date, with only Brown’s of Chester retaining its name.

In 1997, the first intercontinental franchise store opened in Bahrain. Debenhams appeared in London Stock Exchange in 2003 and 2006 under the management of Baroness Retail Ltd. In September 2007 and November 2009, the company acquired nine stores Roches in the Republic of Ireland and Magasin du Nord in Denmark respectively.

Contemporarily, Debenhams ranks among the global multi-channel brands that operate worldwide with approximately 240 stores across 28 countries and available online to over 70 countries. Previously in the last year, Debenhams received an award of Multichannel Retailer of the Year at the Oracle Retail Week Awards. Through its exclusive Designers, Debenhams is among the leading fashion and design industries in British.

Dedicated to serving the surrounding communities with a cosmic of the best fashion and designing products across continents, while observing communal demands regarding corporate social responsibilities that comprise major prospects of their business, the industry is marvellous.

Supplier code of conduct is intrinsic in the company with legal requirements, employment standards, disciplinary practices, social ethics and environment standards well articulated and pragmatic (Debenhams Plc. Para. 2). In the case of this report or rather for the study purpose, the company contains a well-designed history and great global reputation that provides an unlimited data for comprehensive analysis.

It covers all the business and retail related aspects that learners can construct good reports regarding the foundation and development of its corporate image. To date, the company offers similar products that reflect its history and has substantial management or leadership system that entails the organisation and structure of the industry. Debenhams contains an exquisite and organised information framework ranging from magazines, newspapers, and online material that can suit comprehensive analysis.

About Saks Fifth Avenue Retail Store

Saks Fifth Avenue Fashion and Designing Company, streams from novelties of two men designers, Horace Saks and Bernard Gimbel who established this business in 1990s. They began operating independent retail store across Herald Square Street and the New York’s 34th Street, during the 1900s epoch.

Their ambition rested upon constructing a unique specialty store that would remain mysterious, but mainly produce cordial living fashionables (Saks Inc. Para. 5). The two great merchants, Horace Saks and Bernard Gimbel harmoniously generated financial revenues from family contributions that composed meagre but accommodative capital that purchased a construction land between 49^th and 50^th streets on the Upper Fifth Avenue.

Through their joint venture, the two merchants occupied the Buckingham Hotel and the Democratic Club, which by then were renowned entertainment hubs in the US. “With the opening of its founders’ ‘dream store’ on September 15, 1924, Saks Fifth Avenue became the first large retail operation to locate in what was then primarily a residential district” (Saks Inc. Para. 2). This move marked the beginning of real corporate growth in New York.

During this moment, Saks Fifth Avenue had begun dealing with elegant men and women fashions, inclusive of unprecedented programs of customer service and it subsequently became the embodiment for fashion and style. The era between 1924 and 1972 saw an extraordinary growth from simply Saks and Gimbel families’ governed business to an enormous construction of Saks Fifth Avenue, as a young entrepreneur, Adam Gimbel (Bernard’s cousin) became the business assistant.

On the sudden death of Horace Saks, this assistant automatically took the presidency of Saks Fifth Avenue, reforming it with imaginative prudence that brought Saks to substantial success. Adam Gimbel established coast-to-coast stretching Saks Empire with numerous branch stores.

From the 1925 Paris elucidations, Adam redecorated the entire Saks flagship stores and designed them to luxurious Art Modern style with numerous specialty shops, something he cherished until his retire in 1969. The period between 1972 and 1989 saw the establishment of over 20 modern specialty stores throughout the United States in Texas and the Midwest.

During this moment, viz. 1972 and 1989, Saks and Company acquired some subsidiary investments of B.A.T inclusive of BATUS, through its acquisition of Gimbel Bros Inc, in July 1990. Subsequently, a group of international investors acquired Saks and Company in July 1990 from B.A.T, which marked the beginning of a new chapter for Saks Fifth Avenue.

Immediately, Philip B. Miller joined the international group of investors of Saks and Company and became the vice chairperson. In the beginning of 1994, Saks and Company took over Magnin stores in Beverly Hills, Carmel, San Diego, and Phoenix, subsequently dominating the American West Coast and 1996 became a renowned public company dealing with fashion and designing.

In the year, 1998 Saks became a leading regional department store company as a central administration centre where it grew exponentially to the later. Just like the case of Debenhams, this study chose this company for its great historical public reputation and its universal success that suits this comparative analysis.

Regarding Mark and Spencer Company

Mark and Spencer Company Fashion and designing Company, also known as M&S, is UK leading retailer of grand worth garments, home products and other merchandise including outstanding food delicacies. The company’s history dates back to 1800 century, when investors namely Michael Marks and Thomas Spencer managed to establish a famous brand at Kirkgate Market around Leeds in the year 1884 (Marks and Spencer Para. 4).

Being one of the leading British retailers in an assortment of goods comprises of the leading British retail shop succeed through the efforts of cordial partnership between the two principles. Initially, the company began operating with few market stalls in North West of England before relocating to its current location in Leeds Penny Bazaar.

By the beginning of 1950s, the company began branding their goods and almost all goods under their stalls had “St Michael” brand name. The renowned fashion and design industry stretched out into Canada in 1973 and managed to posses over forty-seven stores in this region under the leadership of Michael Marks and Thomas Spencer.

Through several expeditions, Marks and Spencer has been among the companies who introduced the art of open display on trays for customers to inspect, an art that overwhelmed other investors in the entire UK during 1920s. During this moment when the events of First World War aggrieved the world, the company invested in buttons, needles, and threads for people to repair their torn attire.

As the demands of human needs became even direr, the innovations in this company were increasingly becoming eminent throughout the 1960s and 1970s, when the company made substantial advancement from fabrics vending to food retailing on refrigerated shop counters (Marks and Spencer Para. 4).

Suddenly life styles were changing dramatically through microwave cooking as consumers began developing interest in the frozen food stocks including chicken. “More women were going out to work, so we made things easier by introducing good quality, nutritious convenience food, like boil-in-the-bag meals and microwave dinners” (Marks and Spencer Para. 1). Innovations continued as the 1900 witnessed the emergence of real feat of food technology within Mark and Spencer Company.

With its headquarters in Leeds, the company has its personal achieve which is a vital business asset where data collection, preservation, and resources utilisation occurs with material of over 128 years available. It also hosts public-facing exhibition activities in this archive. Guided by the passion to enhance innovation and improve living standards of numerous British citizens, the company relates well with surrounding communities and observes corporate social responsibilities.

Currently, in the same year, Mark and Spencer Company is aiming at restoring its history by going back to its roots and opening an international stall at Kirkgate Market, the background to the entire firm.

For the purpose of this study, Mark and Spencer Company offer a paramount background to the discussion of the three management aspects: store layout and design, merchandise assortments and store location. The longstanding history of innovation with ample data for a website to books and journals, for comprehensive analysis of the three aspects is requisite. The well-organised marketing board will remain a crucial factor to the choice of this company.

Store Layout as a marketing factor

Typically, as postulated in the historical background and company profiles of three companies, one will notice that they both deal with similar assortment of goods including clothing, fabrics, and related products. Fashion and designing industry is key the development and links heavily with the three companies.

One of the most contemporary matters in fashion and designing industry is the layout of any given retail clothing store as the world approaches different business parameters especially those that aim at customer satisfaction. Central to this factor, any retail shop requires comprehensive store planning from determining the modes of stocking, the tendering and biding process to the constructing and arrangement of the commercial products inside stores.

Therefore, every marketing management system on companies must understand the significance and strategies necessary for store layouts. The layout of any given retail store is paramount to company sales as it assists customers to glimpse at products easily and make easily peruse through the store that makes shopping more comfortable.

The principal objective of planning store layout or any layout of a business building or office is to maximise customers and employee’s safety comfort as well as enabling the business to run effectively as this aspect may aid in improving sales in retail settings. Pantano and Laria assert, “The store environment, which includes various stimuli in the offline context such as colour, sound, scent, layout, and space, affects consumer perception of store image and their expectations towards the merchandise” (195).

Haphazard layout undermine corporate image of the business, demoralise employee efficiency and generates organisational chaos, may cause ergonomic issues, result to severe injuries and even prove harmful the customers.

In broadest comportment, a good store layout in fashion and design, where attractiveness of each product calls attention to customers, is a potential factor to the protection of business inventories, stockpile and influence customer traffic that eases shopping and customer comfort ability that subsequently leads to high sales turnover and productivity.

Store Layout in Debenhams

The atmosphere inside Debenhams is cool with a fresh scent and attractive beauties of the designed clothing and other fabrics that make it a one-stop retail centre.

Nearly the entire United Kingdom will concur with the fact that the department stores of Debenhams are stylish with millions of assorted products ranging from men’s attire to women outfits arranged in technologically and modern manner, from garment type, garment brand, clothing class, design, and aesthetics including colour and shape.

“Due to the current advances in Information and Communication Technologies, the sector of retailing remains forced to pursuit innovation from the most recent technical solutions” (Pantano and Laria 195). Debenhams is perfectly among the fashion and design retail stores that have embraced technology.

One of the remarkable crucial factors eminent in the layout of a retail-clothing store of Debenhams is the lighting aspect. However, people may not figure this element in more technical manner and the laypersons may not understand its meaning, but this assertion is realistic.

On arrival, Debenhams retail shop bears a reliable customer care desk that sets an impressive welcoming atmosphere into the interior of the store as the customer support team guides clients through the procedure that gives customers enjoyable and unique shopping experience.

Debenhams size guides are in the onset with basic information about style, size and design one requires. The entrance and transition into Debenhams as layout aspects are eminent as display and the ambience in the frontline are commendable, thus commanding consumer’s attention into shopping with the Company.

The protracted corridors and the veranda of the company with smooth and clean floor give adequate aisle space for the conduciveness of customer’s traffic patterns exclusively lavish.

Customers acquire numerous customer services from trained professionals inclusive of store directory, wedding service, ordering services, food services, baby-changing facilities, and air conditioning among others. Coupled with other returns and refunds services where consumers can make their instant orders, request for forms of deliveries and express their views, make Debenhams a good store.

The aspect of light in Debenhams retail stores across the United Kingdom, and maybe from the perception created, other stores as well have virtually impressive lighting techniques. The lighting of Debenhams makes it a unique retail store that most consumers feel attracted and workers remain comfortable at their working stations.

Well-lit Debenhams has technical light providers with high-quality illuminations of antique and period lighting equipment across the stores that make the sparkling floors an attraction to customer’s foot traffic. Coupled with attractive colourful assortments, hanging on modern mannequins with spotlights upon them, and walls painted in best colours, Debenhams creates pressure on consumers and gives them ability to create illusions in their brains and feeling of immersions.

There is adequate liberty in almost all Debenhams stores with enough spacing for any moving creature to browse through the innovative and captivating products with customer restaurants providing warm welcome. Dressing rooms are plenty and fixed with wall mirrors of immersive technologies.

Store Layout in Saks Fifth Avenue Retail Store

Perhaps one of the remarkable shopping experiences that one needs to have is one that entails shopping at Saks Fifth Avenue Retail Store that offers broad services from technically engaged approaches to observation of tradition. Store operations in Saks Fifth Avenue Retail Stores seem to be doing well after several years of operation, a factor eminent through the rapid growth and development of new stores across the United States, Europe, and other parts Asian continent.

Perhaps the setting of the store layout of Saks Fifth Avenue Retail Stores makes the store one of the most organised stores within the United States.

The entrance into the flagship store operating in Saks Fifth Avenue 611 Fifth Avenue seems clear but with inadequate space to allow free movement of clients into and outside of the store. One of the important factors that one must have observed is lack of adequate packing space in the exterior of Saks Fifth Avenue Retail Stores. The lack of safe packing space in these stores causes inconvenience to customers with personal cars.

External appearance is paramount to the customer’s perception on the business. Despite the fact that this store might have desired to maintain the chronicle building of the ancient founders of the company, company visibility as one of the integral store layout factors. The congestion along the streets makes the company lack clear visibility, a factor that makes it easy for customers to make purchases.

However, this location assists the company and makes it one of the preferred shopping centres across Saks Fifth Avenue since the customer traffic flow seems to be boosting the sales in these stores. The storefront nonetheless is fantastic with the formal and businesslike mood eminent throughout the business centre.

Good architectural styles, well-designed business logo, and a cool atmospheric breeze make a smart welcome. Towards the interior, the gateway to the store looks attractive with the general appearance providing important clues to customers about the business picturesque. Wide entryways with attractive merchandise displays make the most attraction for Saks Fifth stores.

The interior of the store is what any customer will consider perfection to the shopping experience with glassy doors, clean windowpanes, pleasant scent, and soft music sound with smooth floor well contracted to fit the modern designs, makes Saks Fifth stores elegant shopping centres.

Creative lighting with modern technologies is one of the layout aspects that this store has invested flawlessly, with the blending of contrasting colours making the centre an attractive shopping hub with employees working at maximum efficiency. The lushly lighting and conducive ambience in this centre does not only seem attractive but also has assisted in maximising security. The walls and the ceiling of the storehouse are functional and attractive.

The ceiling of the storehouse is sparkling white with luxuriant lighting technologies well incorporated to produce the most desired shopping place for dandy men and beautiful women to browse through the stores. The charismatic 3D real-time simulations produced from the modern technologies make the storehouse more attractive for every customer.

Store layout in Marks and Spencer

The aptitude of layout designers of Mark and Spencer must be one of the most competent makers of fashion and designing layout approaches across the United Kingdom and probably the entire Europe. The leisurely built Marks and Spencer store with the most fascinating store designing must have been paramount to the heavily customer traffic flow experienced each successive day.

Marks and Spencer glassy layout plays an important role in the attracting of customer traffic with the designing well positioned to meet the dire needs of customers who value class.

According to Pantano and Laria affirm, “the visual aesthetic influences consumer’ perception, by providing a symbolic function, which affects the store evaluation and store judgments of store brand quality” (196). An exquisite appearance of the store layout since its refurbishment through new technologies makes the centre a preferred shopping hub for millions of the populace across the United Kingdom and other parts of the world with over 21 million customers visiting the store on a weekly basis.

Just like Saks Fifth Retail Stores and Debenhams fashion and design shops, Marks and Spencer is one of the unprecedented shopping units with intriguing layouts. A visit to this retail store will leave consumers with immense shopping experience and an incessant feeling of immersion over the virtual appearance of its environment.

At the storefront, at least one can observe the unswerving packing space with clean atmosphere and a pleasant fragrance from the outstanding quality food. The transparent glassy walls from the exterior make the best attraction for a potential customer traffic flow as the signs of the insignia designed in modern imaging provide the corporate image of Marks and Spencer.

At the clear doorway, a few clothing hanged on attractive mannequins with flourishing spotlight providing perfect illumination gives an enthusiastic welcome and command attention to customers without blocking the view. The loose transparent curtains provide an exclusive lighting experience that serves the contemporary designing with great uniqueness with the walls painted in typeface and inviting colours.

The fireproof and soundproof limit ceiling reinforced with sparkling white particles with lucid flashlight of modern technologies provide fascinating decors that provoke consumers buying attitude and presents the clear company’s image. The store layout has magnificent tiled floors with white colour presenting the crucial image of hygiene and ergonomics within Marks and Spencer.

The consumer interaction systems are in place throughout the shopping centre with the informative customer carers providing customers guides into the company and size guides that give clients the ability to select their clothing sizes. Pantano and Laria affirm, “The information quality reduces the risk related to a context featured by a lack of interaction with shopping assistants such as in e-tailing” (198).

The most contemporary 3D technology is no longer a new aspect in Marks and Spencer as consumers enjoy 3D video simulations projected through modern 3D graphics and immersive technologies that act as innovative appealing to real stores and capable of changing consumers in their decision-making process.

Aspect of Merchandise Assortments

Merchandising is one of the profound business aspects in retail stores where quantity and quality are influential factors to consumer’s traffic flow. In today’s competitive retail business across the globe, constant stocking and constant selling may play a critical role in managing the entire business.

Merchandising may simply refer to the aspect of enough stocking that motivates consumers to keep shopping from a given retail store or supermarket. While assessing the mode of stocking and the amount of merchandise necessary for any business two important things are inherent in this case: quality and quantity.

Through merchandising, retail keepers must understand that the form of merchandise offered on sale must be inconformity with the living standards of the surrounding community, local laws, and regulations governing merchant services like the consumer protection bills and their compatibility with the community. It is important for retailers to make a comprehensive research over consumerism of certain market commodities before investing in their retailing and stocking to avoid crumples.

Merchandise Assortments in Debenhams

Debenhams comprise one of the global business endeavours that other investors across the world feel fascinated by its rich historical background and others tend to find replicas of it, in consternation. As postulated earlier, it is a one-stop retail store that customer traffic is always impressing throughout successive moments and any blander resulting from poor marketing strategies like merchandising is least from the expectations of the majority.

With constantly growing numbers of consumers depending on products from Debenhams, frequent questions are always characterising the customer’s moods about new arrivals especially in the trendy world of 21^st century. The introduction of Debenhams retail store in the background might not have covered the merchandising aspect, but the merchandise in these stores is exceptional.

A diverse number of products ranging from textile, foods, to other valuable home accessories are readily available in Debenhams to meet the unremitting needs of human beings. The blending of varied products has been commendable for the past three decades.

An amalgam of products ranging from women wear and beauty products, kids wear, home furniture, accessories and appliances to stylish lingerie, toys, gifts, electrical and wedding garments. For the men, elegant shoes, coats and jackets, sweatshirts and suits, jumpers and cardigans, nightwear and loungewear, as well as swimwear and board shorts among others.

The women section is rich of classy and modern garments that inflame their purchasing aptitude to liveliness shopping experience immediately on their arrival.

A combination of female products from handbags and purses, jewellery and watches, Beach & Swimwear, bras and panties, dresses and tops, to cuteness products including perfumes and aftershaves, make ups and skincare products, bath and body care products, as well as other beauty accessories makes Debenhams a unique store.

Home furniture, accessories, and appliances including cookware, dinnerware, glassware, bathroom accessories, cutlery, and beddings among other home accessories are readily available for purchase from Debenhams. This aspect makes Debenhams a preferred shopping centre by clients across the continents.

Merchandise Assortments in Saks Fifth Avenue

A tour to shopping at Saks Fifth avenue means a bulky buying for all potential consumers at any given moment of operational hours. This assertion simply means that the Flagship stores at Saks Fifth Avenue provide a variety of goods for all consumers to make balanced shopping and enjoy a number of services provided by the company.

The merchandising aspect in Saks Fifth Avenue is eminent throughout ones shopping experience in the stores with their products providing virtual environment for consumers who desire shopping for quality and quantity. An impressive stocking of all attractive fashion and design goods within Saks Fifth Avenue stores makes it a potential shopping mall for million of customers who converge into the company everyday.

A continuum of products from women apparels, men attire to children and kids wear are always on stockpile for consumers to make their choices according to their purchasing power. Quantity and quality of products offered are all determinants of the success that Saks Fifth Avenue customers enjoy.

Several brands, models and types of menswear and women wear jewellery and accessories, beauty products, shoes and handbags, home appliances, gifts and kids wear are always on stock, providing Saks Fifth Avenue merchandise a smart one. An all-inclusion merchandising approach of Saks Fifth Avenue with numerous beautiful assortments makes it a modernised retail store that suits human needs satisfaction.

For men, shirts and sport shirts, jackets and jumpers, drivers and moccasins, swimwear and sport coats, jewellery and watches as well as wallets and massager bags. For the women, varieties of goods are available for pick and choose whenever they visit this business mansion with products like tops and tees, sleepwear and loungewear, bracelet and charms, skirts and leggings, dresses, denims and swimwear among other clothes are in plenty.

Children are not exceptional in this business unit as they play an integral part in boosting entire sales turnover and they enjoy a continuum of contemporary products including toys and other products. Home appliances cookware, cutlery, and furniture are also available.

Merchandise Assortments in Marks and Spencer

With proper planning and coordination, adequate space allocation, unending customer traffic, the management in Marks and Spencer are alert to the aspect of merchandising in this retail store. Managers must have been smart in designing and determining the form of assortments in Marks and Spencer retail shop.

As the key role of merchandising in retail business is to create attractive store image that attracts the target market and create persuasions for clients to engage in shopping, the factor is clear in Marks and Spencer stores. A medley of products with varying designs and models are all over the Marks and Spencer stores with new technologies incorporated to enrich the beauties of the merchandise.

Marks and Spencer plc is an all-inclusive fashion and design store that sales a variety of products including from foods, clothing, and home appliances like furniture and accessories of all kinds, which explains the reason behind an influx of approximately 21 million customers visiting the stores weekly.

Clothing has entirely been the probable merchandise that Marks and Spencer depend for most of its revenues, followed by food products and then general house appliances. For the clothing, menswear, women apparels, and Kids wear are all available as per the consumer’s demands with each of them varying in price depending on style and material.

For the foods, numerous food products are available at the business unit with new technologies providing convenient cooking process for takeaways for clients, thus, life made easier and comfortable. Home appliances including cookware, electrical cooking appliances like microwaves, gas cylinders, and cutlery among other home products are readily available for clients to make their shopping choice.

For the women, classy goods that involve clothing and cosmetics are all available in the store, with all customers enjoying quick delivery services and other customer related services offered at the stores. With all the desired fashion and design products incorporated in this store, Marks and Spencer stores are unique.

Aspect of store location

Just like the important variables determining good store layout, store location is the first significant considerations that a retailer must have before setting up any retail store. Setting up a retail store in a convenient place that customers can easily reach is a considerable factor in planning and designing of retail stores can make a substantial achievement in the growth and development of a business.

City and venue location for a retail store must consider several important factors including the city’s population trends and density, the prevailing competition, compatibility with the local community, prevailing laws and regulations as well as the transport networking among others.

According to the positioning of the three retail stores Debenhams, Saks Fifth Avenue and Marks and Spencer, the founders must have been strategic designers. A practical tour to experience the shopping in these retail stores and identify the positioning of the stores can greatly aid in understanding such concepts.

Location of Debenhams

Proper location aids in good communication flow, customer’s convenience and enables efficient transport of store goods from manufactures or to the clients. Debenhams retail store seems to have been performing well in marketing their goods due to its strategic positioning with most of its retail store located either next to big cities or in the core of such cities.

Speaking of the Debenhams retail store in UK, the locators of this store must have perfectly analysed the factors that attribute to its current location.

Normally, sites where businesses have repeatedly failed to create a negative impression among customers and hence, since Debenhams had acquired a rich historical background with most of its operations based at the heart of London, the business remained stable to the later.

London is currently among the world’s renowned capitals, which remain influential in controlling global economy and therefore centrality of Debenhams offers it a unique chance to triumph.

The root to successful strategic planning and structuring that developers of Saks Fifth Avenue stores in America initiated a way back might have made great contributions to the latest achievement of this company. Saks Fifth Avenue in America has continuously been growing in population and the strategic location of this store has aided in providing a steady flow of customers, who subsequently make potential sales turnover.

The locations practically fitted the lifestyle and living standards of individuals living near Saks Fifth Avenue, and currently the street is rapidly growing with different stores offering health business competition.

The trendy and technologically advanced Marks and Spencer seems to have identified the best positioning that suits the transport of products from the major manufactures to a fascinating transport link, connecting to various estates and suburbs. Millions of consumers depend on these retail stores primarily because of their convenient shopping offered buy varied products and quality of services offered through consistent prosperous backgrounds.

Conclusion

Conclusively, any given retail store needs to consider several management factors. Nonetheless, simple marketing management aspects that greatly determine the productivity companies like store planning and designing have relentlessly remained undermined. Through the above comparative analysis of the three retail stores: Debenhams, Saks Fifth Avenue, Marks, and Spencer, one will notice that store layout and design, merchandise assortments and store location are important factors of consideration for any retail store.

Store layout and design are indispensable factors as good store layout in fashion and design, where attractiveness of each product calls attention to customers, is a potential factor to the protection of business inventories, stockpile and influence customer traffic flow.

Merchandise assortments also determine business prosperity as constant stocking and constant selling of different commodities may play a critical role in managing the entire business. Merchandising is the aspect of enough varied stocking that motivates consumers to keep shopping from a given retail store or supermarket. Store location might be an important factor as well since the locale of the company influences convenience in shopping.

Works Cited

Debenhams plc. About Debenhams, 2013. Web.

Marks and Spencer. About Marks and Spencer Co, 2013. Web.

Pantano, Eleonora, and Giuseppe Laria. “Innovation in Retail Process: From Consumers’ Experience to Immersive Store Design.” Journal of Technology Management and Innovation 7.3 (2012): 194-206. Print.

Saks Inc. About Saks Fifth Avenue, 2013. Web.

Introduction

The fashion and apparel industry in the United Kingdom has experienced steady growth as more customers embrace renown brands such as Ralph Lauren, Nike, and H$M. The fashion industry and Apparel of the UK has an estimated market value of £50 billion.

Specifically, this industry is estimated to be growing at an annual rate of 7% as fashion becomes popular in the UK. At present, the fashion industry command 6% of the total market value of the consumer purchases in UK. The market share is expected to expand further to 15% by 2015.

The fashion industry in the UK at present is controlled by Ralph Lauren, Nike, and H$M who have managed to establish a household name for their fashion brands. Moreover, promotional services adopted by these companies have spurred the growth of fashion production in the United Kingdom market.

In addition, adoption of efficient and reliable technology in the marketing of these products has positively skewed the market to the advantage of these three retail giants. Thus, this reflective treatise attempts to explicitly review the aspects of store layout and design, retail pricing, and merchandise assortments in these retail stores. The treatise adopts a comparative analysis module.

About these Companies

Nike Inc

Nike Inc is one of the top sports footwear and accessories designers in the world. At present, the company controls a market share of 30% of the UK athletic market. This company stocks sports balls, bags, and eyewear, footwear, and sports shoes for adults and children. The London store is located at Westfield London Shopping Centre along Oxford Street (“NIKE Free: Products and Market”, par. 5).

H&M Inc

This company has been in existence for more than two decades. The company stocks a range of fashion ware for adults and children of both genders. The company has an amazing range of fashion collection that is relatively affordable to the majority of Londoners. The head store in London is located at Regent Street in Dinkins and Jones building (“H&M: Marketing Strategies”, par. 3).

Ralph Lauren Inc

The Ralph Lauren UK store specializes in fashion accessories and apparels such as fashion clothing and footwear brands for males and females of all ages. The company boost of uniqueness and brand loyalty to the middle class customers in London. The London office is located at Cork Street (“Ralph Lauren: London Marketing Activities”, par. 2).

Store Layout and Design

Ralph Lauren

The topological structure of Ralph Lauren Company consists of communication and operations management system which help in managing marketing, online sales, and direct sales.

Based on the credo emphasize, it stresses on ethical behavior among sales staff and customer satisfaction within accepted standards of moral obligation on the forefront as indicated in the mission statement hanging on the front office wall. The Ralph Lauren store occupies more than 6000 square feet of space and has the traditional UK design architecture.

The store has a unique arrangement in terms of utilization of space. The store is divided into four areas, that is, the exclusive range focal point, entertainment and refreshment area, office area, and the focal store points. Upon entering the expansive store, the customer will notice the attractive display of polo shirts, watches, shoes, and other sports ware hanged on the traditional UK brackets.

The brackets are made in bright colors and the wall beaming with displays of fashion celebrities such as David Beckham and Naomi Campbell. The next room is the exclusive range focal point which stocks customized and expensive designer wears.

The marketing and distribution channels are run from a central point, that is, the main store area. It is apparent that company structure, operations management, and efficiency of the advertisement department determine sustainability of its business.

Besides, the ability to customize products, attractive display, and offer competitive but high quality services has made this store successful and profitable in the UK. Skills required in supporting business strategy plan are found in the integrated management model which functions as an implementer and driver of business decisions.

The Company’s retail management systems incorporate planning, development, implementation, and discovery. Reflectively, the process captures organization chart, status reports, process map, compliance requirements, review structure, activities, dates, and resources employed within a specified period of time against response from customers. The pictures below were taken from within the store.

The transfer of brand knowledge is enhanced by other factors that include awareness and image. It is an area that continues to fascinate considering the interconnection between the recognition, recall, uniqueness, and positive attributes. Growth in brands is mainly subjective in nature meaning that the internal environment has the greatest influence.

Nike Inc

Nike store is larger than Ralph Lauren store and occupies a space of more than six thousand square feet. The store is very spacious and has an artistic display of its assortments arranged by sizes and categories.

The main mall’s walls have animated Nike products advertisement and pictures of the world athletic champion Hussein Bolt and the basket ball player Kobe Bryan among other renowned sports personalities.

Just like in Ralph Lauren product display, Nike’s products displays easily attract a potential customer upon entry into the store. In fact, the first thing a customer will notice is the unending line of different product assortments from brightly painted stalls with the Nike brand logo running below the products.

This aspect facilitates easy identification of customer responses to external stimuli, branding of private store labels, and evaluation of the marketing strategies that is used to promote store’s brands.

The store’s brands have benefit greatly from the improvement of overall production quality and marketing support as much as it is done from evolving purchasing habits based on the rapid changes in geo-demographic and psychographic behaviors of the customers influenced by what they see.

The resultant dependent variables of the Nike’s layout include increasing customer numbers, improved quality of goods, improved customer satisfaction, increased market share, and extended brand loyalty to the store. Essentially, the bridging of quality concerns between store and name brands has reduced the reputation gap leading to increased propensity of store brands.

Nike’s strategy in marketing its products relied on the assertion that “products don’t just perform, they actually exhibit behavior” (Kotler 22). This exhibits the nature of niche marketing by focusing on utmost premium brand quality that customers demand or may not know that they require at that time.

The company emphasized on creating sportswear trends. This is opposite of the conventional approach of forming focus groups who are interviewed on what attributes potential customers preferred.

Nokia took the approach of innovating new features positioned to be of great use in the feature without necessarily involving the potential customer in the development process. Specifically, the brand logo has remained instrumental in the marketing strategy.

Under certain conditions there was chance that they might consider switching to other brands. This is an avenue that is available for store brands which are targeting the market shares of name brands implying that the increasing pressure on name brands is benefiting them. The possibility that consumers could consider switching brands is important in increasing brand awareness. Through intensive marketing, the logo Nike is recognizable by nearly all potential customers in the UK. Since the logo has been animated and runs 24/7 at the store’s entrance, the self advertisement is critical in attracting undecided customers who are just passing by the store.

H&M Inc

H&M Inc store occupies three floors with each floor selling different categories of fashion products. Basically, this company has utilized the role of the digital media in increasing the targeting objectives to promote brand growth and brand logo in its attractive and convincing display price tags.

By combining the chosen generic strategy along with product and market positioning strategy, H&M brand has been able to develop its niche identity in the UK as that store stocking affordable designer clothing along the Regent Street. Linking the two sides of the market is important, that is, the low income and high income customer ends.

In essence, a brand involves; name, packaging, advertising, consistency, and reliability. It involves the symbol(s) of identification of a product or service that seeks to establish a degree of differentiation between it and other similar products and/or services. Branding offers “differential advantage (desirable attributes) over rivals’ products” (Kotler 34).

It is vital part of establishing healthy brand equity. The choice of branding is driven by the need to create that perception of differentiation. It takes some initial costs to develop the branding concepts but the advantages of branding products are; easier to sell, ability to legally protect the product, it offers some barriers to competition, and generally promotes customer loyalty (Kotler 33).

As a matter of fact, H&M has internalized this in their display of product. The logo H&M and their display are unique and cannot go unnoticed by any potential customer. Besides, the store is very spacious and offers customized services from its many sales staff. Retailers preferred to generally use the associative name H&M to refer to its assortment of fashion designs that continues to make statement in the stratified UK market.

The unique features are trademarked and allow H&M’s strong brand equities to establish reasonable barriers to competition. This was mainly because of these products being considered as off-brand unlike the H&M’s on-brand logo.

H&M Inc has exploited the power of positioning in relation to perception among the UK clients in its layout. Perception of brand equity is a major driving in promoting the acceptance of store brands.

The positioning strategy that is implemented by the retailer dictates the perception of the consumers about the brand and its related value to them. The H&M logo advertisement is very effective in terms of attention since it is decorated with simple to understand scenes besides the warm red color.

The strategically placed background red color is an eye catcher associated with pomp and sophistication. In addition, the targeted passing customer would immediately develop curiosity to understand the symbolic importance of the bright displays in the store.

As a result, it creates an intrinsic motivation response that triggers the mind to activate affiliation, self acceptance, and feign community feeling of belonging to the H&M brand. In the end, this advertisement succeeds in appealing to emotions through capitalization on biases and prejudices of UK population in the streets of London.

Generally, through envision creation of a simultaneous but independently functioning need to identify with attractiveness at Ralph Lauren, Nike, and H&M, a customer is easily swayed into buying the advertiser’s appeal when purchasing (Levy and Weitz 79).

Often, the attractiveness is displayed in tonal variation and language affirmativeness that directly appeal to positives emotions among target audience of the pitched idea. In the end, target audience will “accept the product without thinking very much about what the glittering generalities mean-or whether they even apply to the product”(Kotler 56).

Retail Pricing

Pricing differences between private labels and national labels is decreasing with taste, durability, and quantity being the more important factors for the consumers. Marketing around premium products positioning has long-term sustainability. This is supported by sustained advertising promotions, product availability, and sustainable sourcing.

Reflectively, “a best value strategy represents somewhat of a trade-off between the risks of a cost-leadership strategy and the risks of a differentiation strategy” (Kotler 71). The strategies may be broad or narrow based on the three strategies of differentiation, cost-leadership, and best value. In spite of well-developed strategies, competitive dynamics are fluid (Levy and Weitz 29).

Pricing objective

The pricing objective adopted by the Ralph Lauren, H&M, and NIKE is quantity maximization since the companies’ main mission is to become leaders in terms of market share amongst companies in the fashion and apparel industry of the UK. Consequently, the pricing objective of these companies seeks to maximize the number of the new fashion products to be sold in the dynamic UK market.

Pricing strategies

According to Kotler (2003), several pricing strategies exist for companies to choose from, however, some of these pricing strategies only work well with certain pricing objectives. The three companies have adopted multiple pricing, good, better, best pricing, loss leader pricing, penetration pricing and product bundle pricing for their different categories of fashion products (Kotler 19).

Multiple pricing: aims at luring customers to make large purchases by offering slight discounts to customers who buy goods in large quantities. At H&M and Ralph Lauren stores, the prices of single items are slightly higher to those that purchased in bulk.

For example, at Ralph Lauren store, buying one new polo shirt cost the customer approximately $ 25; the customer will be required to pay $ 40 for two shirts. As a result, the customers will feel that they are getting discount for buying two items since $ 40 for two shirts is $ 2.5 less than $25 for a shirt.

The strategy has been able to generate more profit for the company by increasing the quantity of items sold, as well as through increasing prices for customers who purchase one item. Practically, the strategy penalizes the customer for purchasing one item since the price is typically set higher than it will cost.

Good, better, best pricing: this is a pricing strategy in which the price of the same item increases with slight changes that are made to the product, for example, changes in design. The price can be offered in a series of three formats with the price of each series rising above the price of the previous series.

The goods that are priced at ‘better” price and those that are priced at “best” price require more attention from the producer than those with “good” price; however, the higher prices charged for them are worth the extra effort (Levy and Weitz 36).

For example, the 2009 NIKE air sports shoe edition is categorized as being “good” price, while that of 2011 is categorized as “better” price and the 2013 edition of the same product is priced at “best” price in the NIKE store.

Loss leader pricing: in this strategy, the customers are enticed into visiting the shop that deals with different product or parts by reducing the price of one item. This is done with the hope that when customers visit the shop to make purchase of the cheaper item they may also buy other items.

For example, in applying this strategy to the pricing of the female clothes, H&M Company uses other accessories such as shoes as the loss outfit product, thus customers who come to buy clothes may end up buying other accessories such as matching shoes to complete the outfit.

Product bundle pricing: this pricing strategy is applied when the producer wants to get rid of overstock or sell complementary products. The products are bundled together and the customer who buys the new item can get an older or complimentary good for less. In respect to the strategy of clearing 2012 stock models, the three companies have decided to sell the older versions or accessories in bundles at lower prices.

Merchandise Assortments

In merchandise assortment, planning is critical, especially in a dynamic market controlled solely by customer preference and perception. In sales forecasting, H&M and Ralph Lauren companies have assorted their merchandise according to the lifecycle of each category.

For instance, the seasonal winter items such as heavy clothing for the companies are categorised as slow movables. Besides, the latest fashion design products are categorised in the exclusive purchase segment in the stores.

Basically, the assortment adopted by these companies was informed by past volumes of sales and customer responses to periodic surveys by the companies (Levy and Weitz 41). Through shotgun merchandising, the two companies have assorted their products to capture all the segments of the fashion and apparel industry of the UK.

On the other hand NIKE store has been assorted as a general store with the speciality department occupying a negligible space in the store. The company has amalgamated its inventory turnover to categorise the products. Through rifle merchandising, the NIKE Company has captured the athletic market segment of the fashion industry through it multiplex strategy of product market penetration.

Conclusion

The success of retail management depends on execution pricing, assortment, and design layout as components of marketing. Successful execution solely functions on inclusiveness, creation of quantifiable tracking devises for results, and recreating an informed support team.

Generally, these aspects should be practiced flexibly since event marketing environment is characterized by constant dynamics that may make previous designs irrelevant. NIKE, Ralph Lauren, and H&M companies are successful in marking their products in the UK.

Works Cited

H&M: Marketing Strategies 2013. Web.

Kotler, Paul. Marketing management: Analysis, planning, implementation and control. New Jersey: Prentice-Hall, Englewood Cliffs, 2003. Print.

Levy, Michael, and Weitz, Barton. Retailing Management, London: McGraw-Hill Education, 2011. Print.

NIKE Free: Products and Market 2012. Web.

Ralph Lauren: London Marketing Activities 2012. Web.

Different business firms use generic strategies models to increase their competitiveness in different industries they operate in. Three retail firms will be analysed to find out specific business strategies they use to increase their profit revenues. This paper will discuss different business strategies used by McDonald’s, Pizza Hut and KFC in their operations.

These firms are reputable multinationals operating in various countries across the world. McDonald’s is a popular fast food chain whose brand is one of the most recognisable in the world (Lassar & Kulkarni, 2009, p. 3). KFC mainly sells chicken products in different global markets. Pizza Hut sells different types of pizzas to consumers across the world. It has more than 20, 000 franchises in different global regions.

McDonald’s has mainly used market and product differentiation strategies to increase its competitiveness in different regions. For instance, in China and India, it uses culture- specific market strategies to appeal to its consumers. In India, the firm sells vegetable burgers that do not contain any beef, pork or chicken.

There are many Indian consumers whose religious and cultural practices do not allow them to consume meat products (Lassar & Kulkarni, 2009, p. 9). The firm also uses its strong branding concepts to appeal to consumers by offering them value added services to build strong relationships with them. The firm has several franchises in different parts of the world which offer consumers localised service experiences which conform to their lifestyles and consumption habits.

KFC uses focus strategies by developing innovative products which serve clients’ needs effectively. The firm mainly sells chicken and fried foods targeting consumers in urbane locations. KFC has relied on the strong brand value of its products to expand into other foreign markets, where chicken and other fried foods are consumed on a large scale.

For instance, KFC’s Chinese operations have been well received by consumers in the country. KFC specialises in few product categories which help it sustain strong relationships with consumers in its target markets. It has cordial business relationships with its suppliers who provide raw materials used in its operations at a low cost. As a result, the firm has been able to improve its value chain functions by reducing costs incurred in internal procurement processes (Vrontis, 2003, p. 284).

Pizza Hut sells different types of pizzas to consumers in different markets across the world. The firm uses product differentiation strategies by specialising in narrow product segments which have high market demand. This has proven popular with customers who are attracted to the firm’s unique pizzas and croissants. Pizza Hut offers both restaurant and take-away services to its consumers, who benefit from different service experiences that conform to their lifestyles and interests.

The firm constantly develops new products targeting foreign markets to increase its penetration rates. This has helped it attract new customers in different regions across the globe. The firm’s stores have a good ambience which encourages customers to spend more time to enjoy exclusive service experiences. As a result, this has increased the firm’s profits (Vrontis, 2003, p. 289).

In conclusion, these three retail firms have been able to use their different generic strategies to appeal to their specific target markets. They have strong brands that communicate their product attributes more effectively. As a result, this has made their products more competitive in different markets they are sold in.

References

Lassar, W. & Kulkarni, S. (2009). McDonald’s ongoing marketing challenge: Social perception in India. Online Journal of International Case Analysis, 1 (2), 1-19.

Vrontis, D. (2003). Integrating adaptation and standardisation in international marketing: The adapt stand modelling process. Journal of Marketing Management, 19 (3-4), 283-305.

Executive summary

The purpose of this report was to compare the strategies of two retailers with a UK presence (Lidl and Iceland) that compete in the same sector of the UK retail-market, to evaluate the extent of these strategies’ circumstantial appropriateness, and to assess the effectiveness of their practical implementation.

The findings, obtained during the course of conducting this report’s consequential phases, suggest that, as of today, there are many discursive prerequisites for British retailers to consider adjusting their marketing strategies to be fully consistent with specifically the ‘low pricing’ method of attracting potential buyers.

The report’s conclusions reconfirm the validity of the initially proposed thesis and provide readers with a preliminary insight into what will account for the essence of future-dynamics in the British retail – market.

Introduction

One of the foremost aspects of a modern living in Britain is the fact that, as time goes on, more and more citizens decide in favor of shopping at supermarkets, associated with the names of world-known wholesale retailers.

The reason for this is apparent – even though that the retailers’ marketing practices do come under much of a criticism, due to what is believed accounted for these practices’ counterproductive effects on the communal integrity of British cities, the availability of supermarkets does serve the people’s shopping agenda rather effectively.

As Randall and Seth (2011, p. 168) noted, “Shoppers have voted with their feet – or rather their cars – patronizing the supermarkets and superstores at the expense of other outlets. The vast, gleaming superstores – open seven days a week, some 24 hours a day – are the clearest possible evidence that consumers are getting what they want”.

Thus, there can very few doubts as to the dialectically predetermined objectiveness of the phenomenon of retail-chains continuing to expand.

Nevertheless, as of today, there remain a number of discursive issues, concerned with the superstores’ continual functioning, which must be taken into consideration by both: ordinary citizens, who strive to gain a better understanding of the phenomenon in question, and economists/managers, who aspire to increase the extent of their professional adequacy.

In my report, I will aim to explore the validity of this suggestion at length, while conducting an analysis of the specifics of marketing strategies/operative philosophy, on the part of two large retailers that currently operate in the UK – namely, Iceland Frozen Foods and Lidl Stiftung & Co.

The retailers’ retail strategy in the light of its competitive environment

Ever since the time of Lidl’s entrance into the British retail-market, this German retailer never ceased taking advantage of its ability to provide British consumers with truly competitive (and often unbeatable) prices.

This, of course, allows us to identify Lidl, as a retailer that relies specifically upon the deployment of a low pricing strategy, as the foremost mean of maintaining its competitive edge (Bridges, Melewar & Otubanjo 2007).

Partially, the Lidl’s choice in favor of this particular retail-strategy can be explained by the specifics of the UK ‘oversaturated’ retail-market, which makes it quite impossible for new market-entrants to go about gaining advantage over their long-established competitors in any other way but by reducing prices for the offered goods down to their all-time-minimum.

The downside of this retail-strategy’s implementation is that it is capable of undermining the extent of the sold goods’ commercial appeal to aesthetically conscious consumers.

Even though that, throughout the course of its presence in the British retail – market, Iceland top-officials had revised their conceptualization of a proper retail-strategy a few times, this particular company continues to be strongly associated with the so-called ‘product positioning’ method of attracting potential customers.

In essence, this method is being concerned with the establishment of objective preconditions for consumers to think of the ‘perceived value’ of the acquired goods and services in a particularly high regard.

A thoroughly illustrative example of how Iceland proceeds with securing its niche in the country’s market of frozen foods is the company’s 1999 decision to switch to selling only organically grown and non-genetically modified fruits/vegetables (Wilson 1999).

Given the fact that, as of today, only a few of the Iceland’s food-retailing competitors offer consumers the option of buying ‘healthy’ foods, the company’s currently deployed niche-based competing strategy appears methodologically appropriate.

The overall sector’s position

As of 2009, the Lidl’s share in the UK grocery-market accounted for 2.4%. Even though that this share appears rather neglectful, it nevertheless continues to increase slowly but steadily (by approximately 0.4% per year). The number of the company’s currently operative stores in the UK is 580 (Randall & Seth 2011).

In its turn, this provides many economists with a rationale to refer to Lidl in terms of a ‘second tier retail chain’ – the company’s sector-positioning implies its marginal influence on the qualitative dynamics within the overall retail-sector of the British economy.

Nevertheless, an ongoing economic recession creates objective prerequisites for the Lidl’s share in the concerned industry to continue increasing, as the company’s currently deployed marketing strategy appears thoroughly consistent with the process of more and more British shoppers preferring to buy ‘no-frills’ grocery-items, as the mean to obtain the best value for their money.

With 810 stores currently operating across the UK, the Iceland’s share in the country’s grocery-retail market is estimated (as of 2010) to account for approximately 8% (Jones 2010).

Nevertheless, even though that the company continues to apply much of an effort into trying to expand this share, there is only so much it can achieve, in this respect.

This is because, as it was mentioned earlier, Iceland targets specifically the ‘perceived value’- conscious consumers, the number of which is likely to be reduced in the near future.

In its turn, this explains why, as of recently, Iceland top-officials have been trying to increase the extent of their company’s commercial competitiveness primarily by the mean of laying off ‘excessive’ employees (Blackhurst 2010).

The retailers’ strategies for dealing with the environment

Nowadays, it is being estimated that close to 50% of non-recyclable materials (primarily packaging items), sent to landfills in Britain on an annual basis, come from supermarkets (Facts and figures 2012).

Therefore, when it comes to assessing the extent of a particular retailer’s environmental friendliness, it is important to do it in regards to what account for the deployed packaging-policies.

Given the fact that Lidl is known for its practice of utilizing as little packaging material, as possible (as one of the methods of maintaining its operative efficacy), one may conclude that this reflects the concerned retail-chain’s adherence to the principles of environmentalism.

This, however, is far from being the case, because Lidl makes a deliberate point in utilizing the most cost-effective packaging. In its turn, this presupposes this packaging being weighty and substantially non-recyclable.

According to the survey, conducted by the British Market Research Bureau in 2009, “Lidl had the lowest proportion of packaging that could be easily recycled, at 58 per cent. Its packaging (of typical 29 goods) weighed 782.5g (1lb 11.5oz), the second highest (after Waitrose)” (Poulter 2009, p. 33).

Another factor, which contributes to the Lidl’s socially constructed image of a somewhat environmentally arrogant company, is the aura of secrecy that surrounds it. For example, Lidl top-executives are not being required to report to the shareholders the qualitative specifics of the company’s currently deployed PR/marketing strategies (Wiesmann 2008).

This, of course, creates a hypothetical possibility for Lidl managers to adopt a light attitude towards the company’s potentially environment-damaging practices. Finally, the Lidl’s practice of selling goods in huge warehouse-like stores is being capable of negatively affecting the environment, as well.

This is because by building these stores across the UK, Lidl inevitably alters the natural landscapes that surround the construction-sites.

An essential part of the Iceland products’ perceptual appeal is that fact that this company never ceased positioning itself as a nature-friendly commercial enterprise. Therefore, there is indeed a strong rationale for the company to continue investing in making its operations thoroughly observant of the WARP’s (Waste and Resources Action Programme) provisions.

The validity of this statement can be well illustrated in regards to the fact that in 2010, Iceland obtained the Carbon Trust Standard, due to having reduced the total amount of its CO2 emissions by 2%, over the course of 3 years. This came as a direct result of the company’s continual commitment towards making its commercial operations ever more energy-efficient.

As it was noted on the company’s web site, “During 2011 Iceland invested in excess of £3 million in energy saving projects including Voltage Optimization and High Efficiency lighting… Our 70 new stores opened during 2009/10… are achieving energy consumption 10-15% below our estate average” (Corporate responsibility 2012, para. 32).

In addition, Iceland is known for its rather aggressive policies, aimed to reduce the amount of packaging-waste it generates. For example, ever since 2011, the company’s stores in Wales started to charge customers 5p for every plastic bag, which immediately resulted in the reduction of these bags’ usage by 77%.

Thus, when compared to what it is being the case with Lidl, Iceland can indeed be referred to as being much more environmentally-friendly.

The retailers’ strategies for dealing with the competition they face

The way in which Lidl deals with competitors in the UK is being concerned with the exploitation of the operational deficiencies of a classical retail-philosophy, associated with the names of UK-based largest retailers.

According to this philosophy’s provisions, the consumers’ purchasing choices are being defined by the sensation of a brand-loyalty, on their part.

Given the fact that the majority of Britons is assumed to do their grocery shopping once per week, most UK-based retailers strive to make sure that, once in their stores, customers are being given an opportunity to choose from at least 10-15 different brands of the same line of a particular product.

Consequently, this drives the price for every offered item up, due to the associated storage-costs. Lidl, however, deploys an entirely different retail-philosophy, while offering severely limited but low-priced lines of the same product, which allows this retailer to maintain a high profitability of its commercial operations.

The competitive strategy, deployed by Lidl, has also been concerned with providing customer with quality-wise incentives to do their grocery shopping on the company’s premises.

This has been achieved by the mean of striking deals with long established brand-name producers to supply Lidl stores with often poorly packaged but still good-quality products, which are being sold under pretentiously sounding but essentially fictitious brand-names, such as Ombra, Del Rivo, Sainte Etienne, etc. (Blythman 2008).

Because, as of today, Lidl continues to expand in the UK, the company’s earlier outlined competitive strategy can indeed be defined thoroughly effective.

The foremost elements of the Iceland’s currently deployed competitive strategy can be outlined as follows:

1. 1. Providing ‘clear-cut’ prices. In order to attract more buyers, Iceland has implemented a price-setting reform, concerned with ‘rounding’ prices for the offered items, which in turn resulted in increasing the commercial appeal of the products in question.
2. 2. Advertising its adherence to the principles of a ‘healthy living’. In today’s British grocery-market, Iceland positions itself as the only UK-based retailer that provides consumers with an option to buy non-genetically modified food-items for comparatively low prices. This is expected to result in both: strengthening the measure of the committed buyers’ brand-loyalty and providing potential customers with rationale-based incentives to shop at Iceland.
3. 3. Offering customers ‘free delivery’ services. As of today, it remains an institutionalized practice in many Iceland stores to qualify customers, who have spent more than £25, for a ‘free delivery’ service. Partially, this explains why Iceland appears to be particularly popular with elderly customers (Finne & Sivonen 2008).

Target market(s), competitive positioning

Given the fact that, as it was mentioned earlier, it is specifically the Lidl’s ability to offer competitive prices on its products in stock, which allows this company to make profits, there can be few doubts as to what kind of customers this particular retail-chain targets.

These customers can be generally identified as ‘price-sensitive’. To be more specific, Lidl is being especially popular with recently arrived immigrants from the Third World and from Eastern European countries, as well as with currently unemployed British native-born citizens (Garvey 2002).

Because, due to an ongoing economic recession and due to the policy of ‘multiculturalism’ continuing to enjoy an official status in Britain, the number of consumers, potentially pre-inclined to prefer shopping at Lidl is going to increase, it provides this Germany-based retail-chain with a strategic advantage over its competitors.

This also explains why, as of today, Lidl is continuing to expand the range of its operations in the UK.

Even though that during the course of recent years, Iceland top-executives have been declaring that the company’s main operative objective is to provide ordinary Britons with an opportunity to buy high-quality foods at low prices, the majority of people who do their grocery-shopping at Iceland are far from being deemed ‘ordinary’.

This is because they overwhelmingly consist of the representatives of an upper middle-class, who can afford leading ‘healthy lifestyles’, in the first place. Hence, their willingness to pay extra for the ‘perceived value’ of ‘chemicals-free’ grocery-items, sold in Iceland.

As O’Sullivan (2000, p.11) noted, “The organic sector is growing, but the differences between organic and conventional prices remain marked – though many consumers seem willing to pay based on perceived quality of product and the ‘production environment’”.

Because the retailer’s marketing strategy proceeds with exploiting the motifs of ‘healthiness’, the actual manner in which this company targets consumers will continue to remain observant of what happened to be the specifics of their class-affiliation.

Evaluation of the retailers’ implementation

There are a number of objective reasons to believe that Lidl did succeed rather splendidly, while implementing its competitive strategy. The validity of this statement can be well illustrated in regards to the fact that, as of today, this retail-chain continues to expand its presence across the UK.

Moreover, Lidl also managed to assure a steady increase of its operational effectiveness, which in turn created prerequisites for the company’s share in the UK grocery-market to continue growing. For example, throughout the three initial months of 2011, “Lidl’s share (in grocery-market) rose from 2.2pc to 2.4pc, up by 9.1pc.” (Hall 2011, p. 4).

Apparently, Lidl managers, in charge of running the business in the UK, were able to adequately identify the economic significance of today’s socio-political and demographic dynamics in this country, and to take a practical advantage of the obtained insight.

Therefore, even though that Lidl continues to be referred to in terms of a ‘marginal retail-operator’, it appears being only the matter of time, before it will begin posing an acute competitive threat to the UK-based largest retailers, such as Tesco, Waitrose and M&S.

Before Iceland initial founder Malcolm Walker took over the company back in 2005, this retail-chain was rapidly losing its competitive edge. Partially, this had to do with the fact that, prior to the economic recession of 2009-2010, more and more Britons deemed the very idea of consuming frozen foods quite unappealing.

To make things worse, through the years 1999-2005, Iceland officials were applying a resource-consuming effort to popularize the practice of ‘online shopping’ among the company’s committed customers, which undermined the extent of this retail-chain’s even further, as the concept of ‘online shopping’ is being discursively inconsistent with the concept of ‘grocery shopping’.

Nevertheless, since the time when Walker started to take an active part in managing the company, Iceland was able to ‘get back on the horse’. According to Best (2012, p. 3), “The future looks bright for Iceland. The retailer… has a record share of the country’s grocery market… with sales increasing at a double-digit rate”.

In part, this can be explained by the fact that, ever since 2005, Iceland PR-specialists were applying a great effort into trying to convince potential customers that, while shopping at Iceland, they would be able to enjoy a number of different ‘price-cut’ deals.

Range of merchandise

As it was mentioned earlier, the very philosophy of Lidl commercial transactions presupposes a limited range of the merchandise it offers. It is now being estimated that the average number of product-lines, found in the company’s stores, rarely over exceeds 1.600 (Butler 2008).

As of today, 80% of products sold at Lidl consist of different grocery-items that can be stored for lengthy periods of time, such as peanut butter, canned fruits and vegetables, frozen pizzas, salad dressings, etc. Most of these items come in large packages, which create a certain inconvenience for those customers that come to Lidl to purchase a limited number of goods.

Given the fact that, as time went on, this Germany-based retailer was becoming increasingly popular with more and more British shoppers, Lidl executives are now planning to expand the retailer’s merchandise-range to include electronics, furniture and homeware accessories.

The very name Iceland Frozen Foods implies that the company that bears it specializes in selling frozen food-items. This, however, does not have much of an effect on the extensive number of product-lines, featured in the company’s stores, which often runs as high as 15.000-20.000 (Wright & McCrea 2008).

Among the most popular food-items, sold by the company, can be named: broiled free-range chickens, frozen meats, fruits, vegetables and fishes. Iceland also provides customers with an extensive variety of frozen meals, ice-creams and ‘roast from frozen’ food-items.

Packages of most of the earlier mentioned products feature ‘GMO-free’ labels. Because, just as it is being the case with Lidl, in recent years Iceland was able to increase the extent of its operational effectiveness, the company’s officials now consider expanding the range of the featured product-lines, so that it would include non-food items.

Pricing

The foremost feature of how Lidl sets prices for its retailed products is that it strives to encourage customers to think of them in terms of being not simply thoroughly affordable, but rather ridiculously cheap.

In her article, Stacey (2006, p. 1) provides us with an insight into what were the Lidl’s prices for some of its stocked food-items in 2006, “Buy: the pesto, which Good Housekeeping voted the best, 99p olives stuffed with cream cheese, 99p black-olive breadsticks and 69p the hot smoked-salmon fillets”.

In fact, recent years saw a number of public controversies, concerned with what some people consider the counterproductive effects of the Lidl’s low prices on the British society’s overall well-being, because by being offered irresistible deals on the vine and beer, customers are being tempted to indulge in an excessive alcohol-consumption.

Yet, the deployment of a low-pricing policy, on the part of Lidl, is exactly what allows this retailer to continue gaining a competitive advantage over the rest of UK-based retail-chains.

When compared to what it is being the case with the Lidl’s prices for the most popular product-lines, the Iceland’s prices for the same lines of products appear somewhat higher. However, they can still be referred to as being thoroughly competitive.

As it can be seen on the company’s web site, while shopping at Iceland, people can buy 4 100% Beef Quarter Pounders for £2 (£4.40 per kg), 10 Thick Pork Sausages for £1 (£2.00 per kg), 4 Chicken & Mushroom Individual Pies for £1.50 (£2.64 per kg), etc. (Meat 2012, para.1).

Iceland also offers a number of money-saving promotions. For example, one can easily sign up for the £10 Bingo Card, while being consequently qualified to pay with this card for £30 worth of groceries.

Thus, it can be well concluded that Iceland top-managers are being thoroughly aware of the importance of providing customers with ‘cost-cutting’ incentives to shop in the company’s stores.

Given the fact that, in full accordance with Walker’s recommendations, Iceland started to pay a closer attention to the promotion of ‘money-saving deals’, it appears that the percentage of the company’s loyal ‘perceived value’- conscious customers will decrease.

Customer communications

One of the reasons why Lidl is continuing to enjoy a considerable success in the UK retail-market is that its operating costs are being reduced down to a minimum. An integral part of how this retailer is able to ensure this is its deployed policy of limiting the staff as much, as possible.

This, of course, presupposes that the company’s approach towards maintaining good relations with customers cannot be referred thoroughly adequate, by definition. What also adds to the issue is the fact that there have been a number of Media-covered scandals, concerned with Lidl subjecting its employees to an unfair treatment, which negatively affected the company’s overall public image (Chesworth 2008).

Nevertheless, Lidl still applies a fair effort into maintaining the integrity of its PR-policies. For example, for a number of years Lidl has been collaborating with CLIC Sargent, which rise charities to help children with cancer.

Lidl also provides its loyal customers with an opportunity to receive weekly e-newsletters, which is supposed to help them to increase the money-wise effectiveness of their shopping trips even further.

Despite the fact, as it was pointed out earlier, Iceland is now focusing more into providing customers with specifically monetary incentives to shop in the company’s stores; it nevertheless continues to invest a considerable effort into ensuring its speedy responsiveness to the buyers’ wishes, comments and suggestions.

For example, while shopping at Iceland, customers are being encouraged to fill out questionnaires, which contain questions as to what they consider the indications of a particular store’s operative inadequateness.

Iceland also signed a partnership with the Government, while proclaiming to remain committed to the pledges of “Removing artificial trans fats… tackling under-age alcohol sales… promoting physical activity guidelines” (Corporate responsibility 2012, para. 32).

Among other implemented measures towards increasing the strength of the company’s appeal, as a socially-responsible commercial organization, can be named: the establishment of the Iceland Foods Charitable Foundation in 2010 and the company’s 2011 pledge to provide financial contributions to the Walking With The Wounded Foundation, which is supposed to improve the living standards of former British soldiers, who sustained physical injuries, while on the line of duty.

Service offering

As of today, Lidl provide customers with three services, worthy of being mentioned. The first one is the so-called ‘money-back guarantee’ service.

According to the information, available on the company’s web site, Lidle guarantees customers that they will be fully reimbursed for purchasing faulty non-food items within the matter of 28 days, after the concerned purchase took place.

Second – customers are being promised that the staff-members will never refuse to provide them with the full information, regarding a particular food or non-food product, sold on the company’s premises.

Moreover, customers are being also promised that, in case they fail to locate a particular sought-for product, while in one of the Lidl’s stores, the concerned store will promptly restock its shelves with this product. Third – the company’s web site now features informational videos about the Lidl’s most popular products.

This is expected to help customers to make proper purchasing-choices. Even though that the earlier mentioned services, provided by Lidl, can indeed be deemed rather helpful, it can hardly escape just about anyone’s attention that they (with the probable exception of the second one) require very little ‘human involvement’, on the staff-members’ part.

In light of what appears to be the scope of customer-oriented services, provided by Lidl, the scope of the same services, offered by Iceland, can be best referred to as being rather extensive.

It is not only that the most enthusiastic buyers are being offered to take advantage of a free-delivery service, mentioned earlier, but they also qualify for a number of ‘secondary’ in-store services. For example, customers are being welcomed to discuss their intended approaches to dieting with nutritionists, hired by Iceland on a full-time basis.

Customers are being also guaranteed to be given full nutritional information about the product of their interest, upon request. Just as it is being the case with Lidl, Iceland long ago enacted the policy of reimbursing customers for the purchased products, in case these products fail to meet their buyers’ quality-expectations.

It is needless to mention, of course, that the availability of these services in the superstores, operated by Iceland, does contribute rather immensely to the upholding of the company’s customer-friendly image.

Location

After having entered the British retail-market in 1994, Lidl pursued with the aggressive expansion-policy, which explains why, as of today, the company’s stores can be found in just about every part of Britain. The largest ones are located in Livingston, Middleborough, Leeds, Nuneaton, Coventry, Bletchley, Slough, Dorchester and London.

As a general rule, the geographic location of Lidl stores is being referred to as such that reflects the mangers’ awareness of the fact that it is specifically the representatives of Britain’s socially underprivileged populations, who would be naturally inclined to shop at Lidl more than the representatives of this country’s other social groups.

Hence, the company’s tendency to locate its stores, as close to what are being commonly referred to as poverty-stricken multicultural ‘ghettoes’, as possible (Kirkup et al. 2004).

In the geographical sense of this word, the locations of Iceland stores appear to be spatially resembling those of Lidl. That is, these stores can be found all over the country. The largest of them are located in Inverness, Dumfries, Newcastle, Huddersfield, Manchester, Sheffield, Leicester and London.

Even though that, during the course of the eighties and nineties, the majority of the Iceland’s customers were assumed to have been the representatives of a middle-class, it nowadays represents a rather challenging task to positively identify the particulars of the Iceland-loyal shoppers’ class-affiliation.

Partially, this can be explained by the fact that, even though Iceland continues to take pride in its commitment to selling ‘healthy’ foods, the prices it charges nevertheless remain thoroughly competitive. As Hall (2008, p. 4) noted, “Iceland sells cheap, frozen food to working mothers from uncluttered shops.

There are no bells, whistles, or whizzy marketing campaigns”. Therefore, there can be very little sense in assigning any discursive significance to the specifics of the company stores’ spatial distribution on the map.

Store ambience, layout and communication

The foremost aesthetic characteristic of Lidl stores, the average size of which ranges from 830 sq m to 1,700 sq m (Rhodes 2012), is that there is very little aesthetic appeal to them. In essence, most Lidl stores resemble huge cardboard boxes – this impression is being strengthened even further by the fact that these ‘boxes’ feature very few windows.

Apparently, the very appearance of Lidl outlets emanates the ‘no frills’ marketing philosophy, deployed by this Germany-based retailer. Unfortunately, the internal layout of Lidl stores matches an essentially tasteless design of many of the company’s newly built shopping centers.

In his article, Jamieson (2007, p. 26) provides us with a rather humorous account of his experience of visiting one of Lidl hypermarkets in Edinburgh, “Merchandising (at Lidl)… appears to be the work of a tortured genius on an absinthe binge.

The first aisle contains giant crates, each of which is a tombola of unexpected items including child car seats… Between the doormats, lampshades and cheap running shoes is a stack of Carlsberg lager… Giant fluorescent signs divide everything into two broad categories: ‘CHEAP!’ and ‘CHEAPER!’”.

Moreover, it appears a commonplace practice in many Lidl stores to have a person periodically yelling out commands to the staff-members (over the loudspeakers) with a heavy Pakistani accent, which makes one’s shopping experience at Lidl even uncannier.

As compared to what it is being the case with the architectural design of Lidl stores, the architectural design of Iceland retail-outlets appears much more aesthetically pleasing.

The validity of this suggestion can be well illustrated in regards to the fact that the majority of the company’s stores feature a plenty of wide enough windows, which eliminates even a slight possibility for some shoppers to grow claustrophobic, while inside (Hare, Kirk & Lang 2001).

This alone suggests that, unlike what it happened to be the case with many Lidl stores (which should be referred to as the de facto warehouses), Iceland stores do live up to the title. These stores’ internal layout also appears to be well thought-through, as the spatial locations of every isle, dedicated to a particular line of product, do make a perfectly logical sense.

The system of in-store communication deserves to be praised, as well, because it does enable both: customers and employees, to have a good mental grasp on what is going on in the store.

Conclusions

Given the discursive implications of the data, obtained during the course of conducting this study’s consequential phases, we can come up with the following set of conclusions, as to what this data actually signifies:

1. The euro-centric notion of a ‘customer loyalty’ can no longer serve as a conceptual premise for designing different retail-strategies. The apparent success of the Lidl retail-chain in Britain substantiates the legitimacy of this suggestion.
2. There are a number of objective preconditions for more and more British retailers to choose in favor of implementing the specifically ‘low pricing’ marketing strategy.
3. The qualitative essence of today’s socio-economic and demographic dynamics within the British society, implies that the people’s purchasing choices can no longer be discussed outside of what happened to be the particulars of their ethno-cultural/class affiliation.
4. An ongoing economic recession increases the extent of the large retail-chains’ operative effectiveness, as it naturally provides them with the additional inflows of customers.

I believe that these conclusions are being thoroughly consistent with the report’s initial thesis.

References:

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Retail business enterprises form major and imperative drivers of economies. In countries where unemployment ratio is high, retail markets act as job creators to the unemployed. As population of countries enlarges, the consumption rate is also increased leading to thrived business opportunities.

In tandem with the increasing population demand, retail markets should be developed to meet the demand of consumers. With the ongoing economic down turn, retailers are now posed with many challenges leaving them in a flux.

However, even with warring retail markets, one of the world’s retail overriding player Wal-Mart have continued to increase its sales thus creating a one type commodity retail market. As far as retail trade is concerned, there is one thing that traders can not speculate.

The behavior of retail markets today does not reflect its future operations nor can it guarantee tomorrow’s retail market. Retail markets keep on changing each and every period.

Hence, there is strong urge to look for future developments that will offer better competition and viable markets. The paper will examine three potential retail forms that are underdeveloped and their future speculations. (Venkatachalam, 2008, Para. 16-39).

The first retail market that is underdeveloped is bakery cafes. Consumer survey held by Technomic Consultants in Chicago in 2008, indicated that, about 5o percent of the people interviewed do not know whether this type of retail form exist. Some respondents cited the unavailability of these retail forms within their locality.

Most consumers buy bread from supermarkets while it can easily be accessed even at shops around homes. Bakery cafes do not receive attraction from consumers because they are unfamiliar with food items sold by these retailers.

Indeed, this is an underdeveloped retail sector with an enormous opportunity. Bakery café retailers now have the opportunity to market their services to consumers for their business to thrive well. The fact that, these bakery cafes are easily accessible to consumers is an advantage to retailers for their future enterprises.

What is required is accessibility and creation of awareness to non-customers who will turn to be consumers from retailers. Additionally, consumer cafes can bake other types of breads to create a competition to market existing ones. Furthermore, these cafes will act as social venues for young consumers thus attracting more revenues. (Business Wire, 2009, Para. 1-8).

Another retail form which is underdeveloped is farmer’s products in markets. In many countries, farm produces are not marketed well due to unavailable retail markets. Produces like milk, and farm products like vegetables and fruits exhibit a non-competitive retail market due to unavailable market.

Most farmers are forced to sell their produces to cooperatives and wholesalers who come from far yet these commodities can find a market locally.

Thus, agricultural retail markets can be positively utilized by retailers to become potential income generators in the future; not necessarily taking produces to big markets or selling farm products to companies but creating a retail market for these commodities.

Farm groceries is a good retail form as the consumers create a ready market for these commodities without looking them in supermarkets and city markets which may be kilometers away. (Encyclopedia of Nations, (n.d), Para. 2-17).

Apart from farming and bakery retail forms, fisheries form another underdeveloped retail market enterprise. If retailers do not have equipments like fridges, then this retail form becomes difficult to handle. There is a viable market for these commodities both locally and internationally.

However, in most countries, fishery as a retail market form has not developed due to lack of attention. Fish farmers undergo a series of loses due to lack of retail marketing. Consumers do not buy fish for consumption because; it is not easy to find even a single seller of this commodity. As a result, the retail form is underdeveloped.

The future of this form of retail enterprise is bright is this commodity is easily available to consumers and more awareness created. In conclusion, there are various retail forms that are underdeveloped due to inaccessibility and unawareness. The future development of these retail forms depends on their convenience and responsiveness.

References

Business Wire. 2008. Bakery Cafes: Still an Underdeveloped Growth Opportunity, Says Technomic. Web.

Encyclopedia of the Nations. (n.d). Morocco. Web.

Venkatachalam, M., 2008. Challenges in Retail Industry. Web.