UNIT 29

Task 1…DESCRIBE THE STRUCTURE AND ORGANIZATION

OF THE RETAIL SECTOR &

IDENTIFY THE COMPETITIVE FACTORS IN THE RETAIL ENVIRONMENT A SELECTED

ORGANIZATION FACES

CHLOE MCVEIGH

he definition of retailing are the activities involved in the selling of goods to consumers for personal or household consumption. A retailer’s purchases goods or products in large

quantities from manufactures directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets or either to a consumer’s door through home delivery. In this magazine article I am going to produce information describing the structure and organization within the retail sector in response to some of the external changes happening within the fashion industry. I am going to look at different competitive factors in the retail environment, which the organisation faces including, environmental, legal, social, technology, economic and political. I will also look into the function of retail layout and its purpose for its specific location / store.

Retails stores are classified differently depending on their location and overall purpose. They can be based on high streets, shopping centres and retail parks. The location of a store must be appropriate for its purpose and the store must ensure they have enough stock available in order to meet the demands of their consumers.

ndependent stores could include, Little Red Vintage, Cricket and Miss Francesca

1

‘’People are always going to go shopping. A lot of our effort is just: 'How do we make the retail experience a great one?’’

Phillip Green

Couture. These type of stores are owned by a single person and there is only usually one store in a specific area. They may be based just off the high-street or in a smaller location as being based on the high-street can be expensive for small businesses. Being an independent store they strive to provide bespoke ready to wear clothing. Online webpages are sometimes provided for customers to look at as well, but tend to be very minimalistic and often don’t provide much clothing to purchase.

Multichain stores include, H&M, ZARA, Topshop and Miss Selfridge. They are usually based on the high street and you will see them in more than one city so the high-street looks similar throughout each area, with the same chains of store available. The stores may be based on a road which is for pedestrians only or sometimes they may be based somewhere with full cover to protect customers from weather. ZARA has over 70 stores across the UK. Their fashionable clothing is sold at low-end prices for the high-street customer. Being located on the high street makes their business more successful as it is easy to draw many consumers into their brightly lit modern looking store, offering affordable runway doubles. Across the UK ZARA employs over 120,000 a year and is owned by one of the biggest fashion retail companies in the world. As each of their stores are so large they employee a lot of staff to help keep their shop floor tidy and to a certain standard. The need for it to be tided constantly reflect how successful the business is as it is always busy and it is rare you find a Zara store which isn’t busy.

Department stores include Debenhams, Harvey Nichols and Selfridges. They will sell small concession brands within the store and will often range from clothing to home wear. Department stores may also offer services such as beauty

treatments or personal shopping services for specific products.

Concession stores are based also on the high-street stores such as Topshop where they have an Office concession on

their shop floor. The Selfridges department store has now developed a concession for Primark which is a multi-chain store. This progression of chain store being sold in small concession also shows how retail is developing throughout time.

There are also stores, which are aimed for a niche or a specialist market such as Everton Fc and Maternity shops. These are provide for a specific target market and sell specialized products for customers.

A franchise store can include McDonalds, Burger Kings and Vodaphone. These stores are owned by an individual who is working under a large brand name and selling their

products to make a living. A franchise is bought by the franchisee. Once they have bought the franchise they have to pay a part of their profits to the franchiser.

Catalogue store such as Argos are usually based on the high-street and instead of the shop floor being filled with products, the customer can view all the products for sale in a range of catalogues available. If the customer would like a product they pay for it at the till and the product is then bought to them within a few minutes. The Argos store have over 700 stores with 430 million website visits a year.

Factory outlets like IKEA are where you can find your own way around the products on display and collect the items you want for yourself at the end. These type of stores are usually found on larger retail parks due to the amount of space available, as there will be a lot more stock.

Discount outlets are places like Cheshire oaks where expensive brands sell their last season products at cheaper prices for consumers. They are usually located out of town and on a motorway with a large car park usually available for customers. The Cheshire oaks outlet was the first in the UK and still remains the largest designer outlet. The size of the retail park is a quarter million square feet of retail space with more than 140 boutiques, and restaurants. They also offer late opening hours, until 10pm. The brands that are available to buy include M&S, Nike and Next. They also

2

offer higher designer brands such as Armani exchange, Hugo Boss, Polo Ralph Lauren and Michael Kors.

A designer outlet such as TK.Maxx where many different designers and brands are sold all under the same roof. It could even relate to a centre such as the Met Quarter which is small in comparison to some of the larger designer outlets such as Trafford Centre but contains smaller higher end brands and smaller boutiques such as Miss Francesca Couture and Celeb Boutique. These are both independent retailer located in the Met Quarter Liverpool.

A market stall is normally located where there is available space such as in an unused warehouse or on a long road. It will be filled with individual stalls selling products usually at a cheaper price than in a store. Markets like these include the Manchester Christmas Markets, and the great homer street market.

Retail stores are also based online and can be based both on the high-street and online or just purely online such as ASOS, Boohoo and Miss Guided. ASOS is purely based online and contains a high amount of products both own brand and designer. The items are then shipped to the customer at the most convenient time for them. Another style of online retailing is auction, sites such as Amazon and Ebay which allows general customers to sell on their unused and unwanted products for other consumers to purchase. The customers will bid on the item in the hope of winning the product.

Most retail stores offer an online option for making purchases which allows the customer to buy products using the internet. The internet has many advantages over shopping on the high-street as there is more choice and it is proven a lot more convenient for customers, because of this it is starting to move more and more people away from shopping on the high-street in physical stores. It saves on the cost of travel whether it by car or public transport and the cost of expensive car parks. The cost of products can also differ online, as some brands can offer certain promotions online and not in their stores. The Internet also provides access to worldwide products and services whereas the high street is much more limited. Many brands

choose to combine their physical store with their online website this is known as clicks and bricks.

There are also stores which are aimed for a niche or specialist market such as Everton Fc stores, Taken shape and Maternity shops. These stores all provide products for a specific target market and provide specialized products for customers. The Taken Shape store which is aimed at bigger sized women is based on the high-street and online. By having such a niche brand makes the brand stand out well to consumers. It makes it easier for the consumer to recognize what the brand offers and does which helps build a uniqueness over their competitors.

A new store type which has been proven recently incredibly popular is a hybrid store which is based on the high street but offers more than one purpose. They don’t only offer products but coffee shops and entertainment for consumers. A good high-street example of this is Next, who has recently opened a Costa within their store. A more high-end example is Selfridges who have recently opened

an old fashion cinema experience within their store for customers. Outlet stores and factory outlets are also becoming more popular as customers are looking for ways to make their money go further but also find good branded names. Teleshopping has also evolved with the release of smart TVs which gives you the ability to purchase straight from your television screen. The QVC shopping channel also has its own website where you can purchase items directly from, because of all these different aspects it is hard now when walking down the high-street to find a store which doesn’t offer more than one of these channels.

3

Costa coffee inside Next store

s you can see the structure of the retail industry has become more complicated over the years as retailers have more opportunities and ways to provide for their customers. Retailers have become more diverse and are located in different places and in different ways. By looking at it in a more detail using PESTLE analysis gives a better understanding of each sector as a lot of external factors give a huge influence. I am going to look at six key areas, political economic, social, technological, legal and environmental.

The political factors are what are happening politically in the environment in which the retailer operates which could include areas such as tax policy’s and employment laws. An example of this is Syria, which is currently in the middle of a civil war which has stopped all imports and exports to and from the country. Syria produces oil and textiles and both of these industries have been seriously affected.

Many production companies are moving their sites to Egypt or turkey as a result and investment in the country has decreased by half from 2010 to 2012. This has a direct impact on the textile industry, as retailers now need to look for production to continue in other counties and finishing another reliable supplier. Production in another country may come at a higher price, which would need to be taken into account. This could alter the cost of the final product being sold to a consumer in the uk. The consumer may not want to pay an increased cost for a product, which is not of better quality and may look at the retailer’s competitors to buy their products from.

The economic factors that happen include economic growth and decline. It will include interest rates, exchange rates, wage rates, minimum wage, working hours, unemployment, credit availability and cost of living.

Social Factors that can influence retailers can include which is occurring socially in the markets in which you expect to operate. It will include cultural norms and expectations, health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. The individual consumer will now also drive fashion change as our society has become more concerned with being personally fulfilled. Customers use social media sites like Facebook and Instagram to create a statement about themselves. In previous years the Government, family and religion would have been more important than what the

individual customer wanted. The ability to create your own identity and create a self-centred culture online which enables people to make their own fashion statements and create a more diverse culture. With people now being able to create their own identity brands such as Vivien Westwood have picked up on it and turned into a catwalk trend. They used the punk trends to create a collection which was influenced by street style.

Androgyny also has influence on fashion change as the demands for unisex products increased. Men’s and women states have now joined together and brands such as Doc Martins are now creating products that are unisex. The democratic of fashion is another driver of fashion change as the growth of very exclusive brands is accepted into the mass consumer market. Brands such as D&G and Prada

have become more common and it is more achievable for more people to own such products.

A technological factor is what is happening with technology that can impact what retailers do. As technology is moving forward very fast retailers must look forward to the future to keep up with advances. Things that may not have been possible 5 years ago may now be possible with different technology and advancements in web, blogs and social media. New technologies will always be developing which may create barriers for retailers as they will need to consider financial implications of new technology. Technology also drives fashion change through the production methods and materials. Computers can generate prints and different material with different finishes. We also have the technology now to create garments that are easier to care for and require less maintenance. With technology the manufacturing speed has increased and also the quality of the production but also there are new methods of manufacturing such as laser

4

Doc Martins Unisex Campaign

cutting and garment welding. Due to the different changes in technology and the increase in the use of social media fashion is now a lot more accessible through the world and brands are now opening overseas when in previous years they may not have been able to.

The globalisation of brands has effected how we dress as now we are offered a much wider range of products and styles. The globalization of brands has now led to more competition for the brands as they need to stand out and attract the consumer. The Internet, social media, film and TV is accessible almost anywhere. This increase in media communication allows people to communicate globally at a fast speed. This instant exposure to other ideas, styles and cultural influences can interpreted on the catwalk and then can be interpreted on the catwalk and then interpreted by fashion retailers and sold in store within matter of weeks instead of months. The brand ZARA is an excellent example of this. Due to greater communication global brands can be created and consumers can get information on brands through the internet. Due to the amount of information being so accessible to consumers, a brand may decide to rebrand to make it better and have a fresh start if their current image isn’t working to well.

The pressure of consumer lifestyle also links back into technology as brands make clothing which are easy to wear and offer easy care garment which are easily washed. Clothes tend not to be made to measure and are more unstructured. This is due to consumers not having as much time to shop so they prefer to go for a more casual look. The use of internet and shopping from mobiles has increased and so brands have has to develop this side of their brand to react to the customer demand. Brands understand that customers do not wish to wait around to make purchases and so self-checkouts are not available in many stores.

The legal factors are what is happening with changes to the legalisation for example new laws for working hours on a Sunday the law for minim pay, plagiarism, illegal labour, access to material, resources, import and export restriction and charges and taxation. An article in the Guardian published in February 2014 exposed Bangladesh garment factories for exploiting child labour for Uk products. It was found that girls as young as 12 where forced to work 12 hour shifts in unsafe conditions despite a factory collapse that killed over 1000 people just last year. Brands such as Lee cooper use these factories were the workers were physically abused and fire safety precautions were ignored. Revelations like this are an embarrassment to any retailer who produces products in these factories as it destroys their reputation with the customers.

“Despite promises made by retailers to improve

conditions following last year’s Rana Plaza factory

collapse in Dhaka, where at least 1,130 people died and

thousands more were injured, staff as young as 13 are filmed in factories being

kicked, slapped and hit with a used fabric roll as well as

abused with physical threats and insults”.

The Guardian – February 2014The environmental factors are what is happening to ecological environmental issues. May of these factors will be economical or social in nature? They could include customer values, management and staff culture, EU factors and fair-trade. The health and wellbeing of people will effect fashion change. In modern world it is very important for people to keep fit and healthy. The customer concern and interest in this has affected brand so that they develop their clothing in a way to appeal to the healthy consumer. For example the retailer may use UV protection in swimwear or breathable fabrics for fitness purposes. Some brands offer a free gym pass with certain purchases while monsoon offer fair-trade organic and ethical clothing. An article from the Telegraph talks about how the fair-trade brands has evolved to become more style friendly and fashionable. In previous years it has been very important but never what you could call on trend. Everybody knew how important fair-trade was to the people in the poorer countries but it wasn’t a highly bought item within fashion and tended to be more popular with food products. Fairtrade have now appointed some high profile designers to use fair-trade cotton in their designs.

Ethical fashion works when it offers style first

and its ethical advantages as a

secondary benefit. That way, people will be prepared to pay the

higher prices”5

DOLLY JONES – EDITOR OF VOGUE.COM

By brands working together to make fair-trade a standard factor when making new products, the people who are manufacturing the products in other countries could benefit from a better way of life.

6

7