UNIT 29 JACQUELINE FARROW

TASK 1 UNDERSTANDING RETAILING

PESTLE External CHANGES IN THE

INDUSTRY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Definition  OF RETAILING

 

he   definition   of   retailing   is   the   sale   of                  goods   individually   or   in   small   quantities   to  consumers   for   personal   use.     A   retailer   will   buy  goods  in   larger  quantities  through  manufacturers  or  wholesalers  and  then  sell  them  for  a  profit.    Retailing  can  take  place  either  in  a  fixed  location  in  a  store  or  market,   by   delivery,   online   or   door-­‐to-­‐door.   I   am  going   to  produce  an  article  describing   the   structure  and  organisation  within  the  retail  sector  in  response  to   some   of   the   external   changes   happening   within  the  industry.    I  will  identify  competitive  factors  in  the  retail   environment   which   the   organisation   faces  including   political,   economic,   technology,   social,  legal  and  environmental  (PESTLE).    I  will  also  explain  the   function  of   the   retail   layout  and   its  purpose   for  its  location.  

Retail   stores   are   classified   differently   depending   on  where   they   are   based   and   their   overall   purpose.    They   could   be   based   on   residential   streets,   high  streets  retail  parks  or  in  a  shopping  mall  such  as  The  Trafford  Centre.        The  location  of  a  retail  store  must  be   appropriate   for   its   purpose   and   the   store  much  ensure   that   enough   stock   is   available   to   meet   the  demands  of  the  consumer.  

T

ultiple   chain   stores  include   Primark,  Topshop   and   H&M.    

They   are   based   on   the   high   street   and  you  will  see  them  in  more  than  one  city  so   the   high   street   can   look   very   much  like   a   uniform   of   the   same   stores.     The  stores  may  be  based  on  a   road  which   is  for   pedestrians   only   or   sometimes   they  may  be  based   somewhere  with  a   full  or  partial  roof  to  protect  shoppers  from  the  weather.     Primark   has   over   250   stores  across   the   UK   and   Western   Europe.    Their   fashionable   clothing   is   sold   at   low  end  prices   for   the  high   street   customer.    Being  located  where  they  are  makes  the  business  more  successful  as   it   is  easy   to  draw  many   customers   into   a   brightly   lit  store  offering  fashion  at  such  low  prices.    In   2013   the   brand   made   nearly  £4.95billion  in  revenue  which  was  a  17%  increase   on   the   previous   year   reflecting  the   consumer   need   for   fast   fashion.    Across   the   UK,   Primark   employs   over  48,000   people   and   is   owned   by   one   of  the   largest   food   companies   in   Europe,  Associated   British   Foods   plc   (abf.co.uk).    As   each   store   is   so   large   they   employ   a  lot   of   staff   to   help   tidy   throughout   the  day,  as   it   is  a  continuous   job.    The  need  for  it  to  be  tidied  constantly  reflects  how  successful   the  business   is   as   it   is   always  busy  and  it  is  rare  you  will  find  a  Primark  store   that   is   quiet   and   calm.     In  Bournemouth   the   footfall   in   the   town  centre   was   driven   upwards   by   27%   in  2011  soon  after  the  opening  of  a  Primark  store   (bournemouthecho.co.uk).     The  Primark   store   on  Oxford   Street,   London  expanded   its   store   in   2013   after   rental  rates   rose   from  £350   to  £80  per   square  metre.     Stores   like   Primark   which   stock  such   a   high   quantity   of   clothing   will  often   manufacture   their   clothing   in  

China   as   the   costs   are   cheaper   than  manufacturing  in  the  UK.  

Independent   stores   could   include   Miss  Francesca   Couture,   Little   Red   Vintage  and  Boudoir  Boutique.    These  stores  are  owned   by   a   single   person   and   there   is  just   the   one   store.     They  may   be   based  just   off   the   high   street   in   a   smaller  location   as   being   based   on   the   high  street   is   very   expensive   for   a   small  business.     Due   to   the   recession   smaller  independent  stores  are  dying  out  as  they  have   less   finance   available   to   them   as  compared   to   larger   retailers.     Small  retailers   are   being   squeezed   out   of   the  high   street  by   their   large   rivals  who  can  afford  to  pay  the  higher  rent  prices.    As  a  consumer  we   benefit   from   lower   prices  from   the  main   brands   such   as   Asda   but  in  the  long  term  we  could  be  killing  off  a  breed   of   stores.     For   example,   Asda,  Tesco   and   Sainsbury’s   have   set   up   their  own   apparel   brands  which   you   can   buy  at   the   same   time   as   your   weekly   food  shop.    This  adds  a  convenience  factor  for  shopping   away   from   the   general   high  street   and   away   from   the   independent  retailer.     In   our  modern   and   busy   lives,  people   do   not   have   the   time   to   go   to  different   places   for   different   things   and  

find   it   more   convenient   to   be   able   to  pick   up   everything   they   need   in   one  place.      

Miss   Francesca  Couture   is   a   single   store  based   in   the   Met   Quarter   in   Liverpool  with   just   a   handful   of   employees.     The  independent   store   has   recently   started  selling   a   small   concession   range   in  Selfridges  Manchester.     Due   to   the   size  of   the   store   it   was   difficult   to   find   the  revenue  and  profit  of  the  store  as  it  was  not   displayed   publically.     You   could   pay  £4.99   to   get   the   information   from  Companies   House   though.     Being   an  independent  store  they  strive  to  provide  bespoke   ready   to   wear   clothing.     An  online  store  is  also  available  but  provides  limited   stock   and   sizes  (missfrancescacouture.co.uk).     I  searched  for  the  rental  rates  of  having  a  store  in  the  Met  Quarter  and  found  that  a   smaller   unit   on   the   ground   floor   was  approximately  £42,160  per  year  with  an  added   service   charge   of   £26,593.    Department   stores   include   John   Lewis,  Debenhams,   Harvey   Nichols   and  Selfridges.     They   will   sell   small  concessions   of   brands   within   the   store  and   will   often   range   from   clothing   to  home  ware.  

Met Quarter M

THE  

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Without changes made to our high street and local stores, politicians have

warned that many independent stores will have closed by 2015.

BBC  NEWS  

ba  

LIVERPOOL  

epartment  stores   may  also   offer   a  service   such  

as  beauty   treatments  or  home  design   and   fitting   services   for  products.    The  Selfridges  brand  is  a  UK  based  department  store  but   ships   worldwide.    According  to  the  Telegraph  the  store   hit   £1   billion   in   sales   for  the  first  time  in-­‐between  2011-­‐2012,   which   makes   its  operating  profits  boost  to  £133  million   (a   5%   increase   on  previous  years).    Across  all   the  stores  in  the  UK  they  have  over  5,000   staff   (retail-­‐week.com)  which   is   needed   to   maintain  the   high   standards   of   the  store.     Their   stores   provide  beauty   services,   food   and  restaurants   and   often   hold  events   to   attract   consumers.    In   March   2014   Selfridges  opened   an   indoor   skate   park  inside  the  Selfridges  store  with  

free   admission.     Having   events   like   this   in   store   can   increase  the  footfall  of  the  store  and  open  opportunities  for  those  who  may   not   normally   consider   Selfridges   as   a   place   to   shop   for  their   style.     Having   a  wide   range   of   concessions   available   for  different   people  makes   the   store   seem  more   like   a   one   stop  shop   for   all   the   family,   selling   a   mix   of   high   and   low   end  products.  

Concession   stores   are   based   in   high   street   stores   such   as  Topshop  where  they  have  a  Kurt  Geiger  concession  on  the  shoe  floor.   This   progression   of   chain   stores   being   sold   in   small  concessions   also   shows   how   retail   is   developing.     In   2011  Selfridges   opened   a   concession   for   both  men   and  women   for  the   low   end   multiple   chain   stores   Primark.     In   2012   the  concession   was   extended   from   London   into   the   Manchester  Trafford   Store   due   to   its   success   with   the   consumer.     A  concession  store  can  benefit  a  brand  who  is  trying  to  boost  its  reputation   or   rebrand   its   image   as   they   can   select   the   best  parts   to   create   a   smaller   and   more   tailored   collection   in   a  

department   store.     Although   they   will   have   to   pay   rent   or  commission  to  the  department  store  which  will  affect  the  overall  profit,   the   positive   impact   on   the   brand   image   can   be   more  beneficial.    A  small  concession  will  only  need  a  few  staff  members  and  may  boost  the  footfall  of  the  larger  high  street  stores  as  their  reputation  increases.  

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PRIMARK  OPENED  SELFRIDGES  CONCESSIONS  

SELFRIDGES  DEPARTMENT  STORE  -­‐  MANCHESTER  

“Selfridges, the world’s best department store introduces an exhilarating new in-store experience as part of a scheme that

celebrates the cult of skate and surf” SELFRIDGES  ON  THEIR  INDOOR  SKATE  PARK  

 

SELFRIDGES  INDOOR  SKATE  PARK  

here   are   also   stores   that   are   aimed   for   a   niche   or   a  specialist   market   such   as   Liverpool   FC,   bridal   stores  and   maternity   shops.     These   stores   provide   for   a  specific   target   market   and   sell   specialised   products.    The  Mamas  &  Papas  store  which   is  made  for  parents  

who   are   expecting   children   or   already   have   children   is   based  on  most  high  streets.    It  was  originally  established  30  years  ago  when  a   new   set   of   parents   decided   that   the  products   available   on   the  market  were  not  of  a  high  enough  standard.     In  March  2013   the  earnings   made   rose   79%   to   £5  million   which   was   an  improvement   on   the   previous  year’s   loss.     Having   such   a   niche  brand  makes  the  brand  stand  out  clearly   in  the  consumers  mind.     It  makes   it   easier   for   the   consumer  to  recognise  what  the  brand  does  and   builds   a   unique   brand   over  possible   competitors.     A  streamlined   business   will   also  reduce  marketing  costs  as  you  do  not   need   to   advertise   to   a   more  generalised   market.     On   the  Mamas  &  Papas  website  there  is  a  news   story   about   more   store  opening   due   to   the   enhanced  consumer  demand  as  the  UK  birth  rate  steadily  increases  and  in  turn  increases   footfall   on   the   high  street.    Mamas  and  Papas  tend  to  position   their   stores   alongside  Zara,   Coast   and   other   higher   end  high   street   brands   giving   off   the  same   higher   end   impression   for  their   own   brand.     Their   website  offers   franchise   opportunities   so  that   individuals   can   open   their  own  store  in  a  specified  area.      

A   franchise   store   can   include  McDonalds,   Subway   and   O2.  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  purchased  the  franchise  they  have  to  pay  a  part  of  their  profits  to  the  franchiser.     In   an   O2   franchise   they   provide   the   training   and  marketing   campaigns   for   the   franchisee   and   so   sometimes   for   a  consumer   it   may   be   difficult   to   see   a   franchisee   apart   from   a  standard  store.    The  Mamas  &  Papas  website  states  that  they  have  an   “extensive   training  program   for   key  personnel   supporting   the  Mamas  &  Papas  operation”.    They  also  offer  a  web  resource  which  contains  all  of  the  information  a  franchise  store  would  need  with  regards   to   display   guidelines,   retails   standards   and   technical  information.  

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  stores  are  usually  found  on  large  retail  parks  due  to  the  amount  of  space  that  is  needed  to  store  the  large  amount   of   products.     IKEA   is   a   worldwide   brand   which   offers  products   at   affordable   prices   for   many   people.     By   offering  

services   the  way   they  do   they  are  able   to  keep   the  prices  down.    At   a   glance,   the   IKEA   brand  made   28.7   billion   in   sales  with   over  135,000   employees.     This   was   between   September   2012   and  August   2013.     This   information   is   available   on   the   IKEA   website  which   is   unusual   for   some  brands  who   are   a   lot  more   secretive.    This   type   of   business   seems   quite   open   to   share   their   success.    They   have   had   over   716  million   visits   from   consumers   and   have  314  stores   in  27  countries.    The   IKEA  store   in   this  area   is   located  just  off  the  motorway  and  you  can  clearly  see  the  large  IKEA  logo  

as   you   drive   past.     The   brand   has  over   1000   suppliers   in   53   countries  that  make  and  package  the  products  to   ship   to   the   IKEA   warehouses.    IKEA  also  has  a  very  clever  floor  plan  which   makes   it   impossible   to   just  pop   in   for   the   one   product   and   be  out  within  a  few  minutes.    Their  floor  plan   ensures   that   the   customer  completes   the   full   store   layout  allowing   them   to   promote   more  sales   and   the   length   of   the  consumers   stay   is   greatly   increased.    As   IKEA   sell   such   a   wide   variety   of  products,   it   ensures   that   the  customer   is   able   to   view   everything  on   their   visit   and   not   just   collect  what  they  need  and  leave.  

Catalogue   stores   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  brought  to  them  within  a  few  minutes.     The   Argos   store   have   740  stores  with  430  million  website  visits  a  year  (argos.co.uk).     In  the  financial  year   to   February   2012,   Argos   sales  were   £3.9   billion   and   it   employed  31,000   people   across   the   business.    Due   to   the   influences   of   technology  the   store   is   not   only   based   on   the  high   street   but   online   and   also   has  its  own  TV  channel.     Just   last  month  the  brand  teamed  up  with  Transport  for   London   to   launch   its   first  

underground   store   at   Cannon   Street   Tube   station.     This  convenient   access   to   its   stores   is   what   the   brand   is   striving  towards   going   forward   enabling   customers   to   order   online   and  pick   up   the   item  on   their  way   to  work   etc.    With   the   closure   of  some  of   the   larger  stores,   it   could   look  more   likely   that   they  will  open  more  of  the  click  and  collect  style  stores.    

Discount   outlets   are   places   like   Cheshire   Oaks   where   expensive  brands   sell   their   last   season   products   at   cheaper   prices   for  consumers.     It   is   located   out   of   town   normally   off   a   motorway  with   a   large   car   park   for   easy   accessibility.     The   Cheshire   Oaks  outlet  was  the  first  in  the  UK  and  still  remains  the  largest  Designer  Outlet.     The   actual   size   of   the   retail   park   is   a   quarter   –million  square   feet   of   retail   space   with   more   than   145   boutiques,  restaurants   and   cafes.     It   could   be   described   as   an   out   of   town  social  hub  especially  due  to  its  late  opening  hours  and  restaurants  

“The family continues to expand as we open new stores in new markets across the World, all

reflecting the core values of the brand that make Mamas &

Papas so special.” MAMAS  &  PAPAS  

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that  are  

open   until  10pm.     The  

brands   that   are  available   to   buy  

include   Nike,   M&S   and  Next.     They   also   include   all  

the  high  designer  brands  such  as  Burberry,   Hugo   Boss   and   Michael  

Kors.     It   is   owned  by   the  McArthurGlen  Group,   which   is   a   European   company,   and  

so  it  was  difficult  to  get  any  revenue  figures.    An  outlet  such  as  this  will  drive  a  lot  of  footfall  though  

as   people   will   be   able   to   get   expensive   items   at  

discount  prices   even  though  they  are   last  season.    The   outlet  provides   a  large  amount   of  parking  facilities   to  accommodate   the   high   footfall   especially   at   evenings  and   weekends.     From   personal   experience  though   the   outlet   is   more   popular   than  what  the  car  park  accommodation  provides.    Sometimes   it   can   be   very   difficult   to   get   a  parking  space  and  so  more   facilities   should  be  implemented.  

A  shopping  village  is  located  in  a  small  town  and   is   there   for   the   local   residents.     An  example  could  be  West  Derby  Village  where  they   have   a   small   collection   of   shops   with  local  convenience  stores,  a  hairdressers  and  a   couple   of   boutiques.     It   can   be   more  convenient   for   people   in   that   local   area   to  get   the   products   and   services   they   need  rather   than   having   to   go   further   afield.    West   Derby   Village   has   its   own   resident’s  website   which   advertises   local   events,  business  sponsors,  village  history  and  useful  information  for  the  area.     It  would  be  unlikely  that  people  would  travel  from  other  towns  to  shop  in  West  Derby  village;  places  like  this   tend   to   be   specifically   for   the   people   of   the   local   area   and  would   not   have   enough   facilities   for   someone   to  want   to   travel  from   further   afield.     Local   villages   like   this   have   been   suffering  lately  due   to  out  of   town   supermarkets   taking  away   the   footfall.    One   village   in   Derbyshire   recently   lost   their   local   store   and   now  have  a  vending  machine  to  dispense  every  day  essentials.    I  will  go  on  to  explain  this  in  more  detail  in  my  PESTLE  analysis.      

A  market   stall   is  normally   located  where   there   is   available   space  such  as   in  an  unused  warehouse  or  on  a   long  stretch  of   road.     It  will   be   filled   with   individual   vendors   selling   different   products  

usually   at   a   cheaper   price   than   in   a   store.     Markets   like   these  include   the   Manchester   Christmas   Markets,   the   Great   Homer  Street  Market  and  the  Heritage  Market.    A  market  stall   is  a  more  flexible   way   for   a   sole   trader   to   sell   their   products   as   they   can  normally   choose   the   hours   they   wish   to   work   and   it   is   a   more  relaxed  atmosphere.    The  Heritage  Market  in  Liverpool  used  to  be  located   in   disused  warehouses   but   due   to   the   site   being   bought  for  redevelopment  the  Heritage  market  has  closed  down.    Market  areas  such  as  this  may  not  be  guaranteed  to  run  unless  the  people  who  own  the  area  grant  permission.    A  market  area  as  large  as  the  Heritage   can   gain   a   large   amount   of   footfall   overall   for   the   city  though  as  its  history  can  even  attract  tourists  and  people  who  are  just  curious.    The  Great  Homer  street  market  has  been  part  of  the  city  for  180  years  and  will  be  getting  a  revamp  over  the  next  few  years   to  bring   it   into  the  modern  world  offering  both   indoor  and  outdoor  stalls.    The  modernised  street  is  hoped  to  increase  footfall  and  to  help  the  market  thrive  in  the  future.  

A  designer  

outlet  is  a  store  

such   as  TX   Maxx  

where  many  

different  designers  

and  brands  

are   sold  together  

in   one   place.     It   could   even   relate   to   a  centre   such   as   the  Met  Quarter  which   is  small   in   comparison   to   The   Trafford  Centre   but   contains   smaller   higher   end  brands   and   smaller   boutiques.     Miss  Francesca   Couture   who   as   I   mentioned  before   is   an   independent   retailer   is  located  in  the  Met  Quarter.    The  TK  Maxx  store  states  on  their  website  that  they  sell  brand  name  merchandise  which  is  sold  at  up   to   60%   less   than   the   prices   at   a  traditional   department   store   or   high  street   retailer.     A   store   like   this   would  stock   up   to   50,000   items   with   weekly  deliveries   of   10,000   new   and  different   products.     TK   Maxx  does  not  consider  itself  to  be  an  outlet  but  an  off-­‐price  retailer   selling  products   from  

thousands  of  vendors.     In  2010/11  TK  Maxx  increased  its  turnover  in  the  UK  to  £1.3  billion.    Some  of  the  newer   and   larger   TK  Maxx  stores   cover  approximately  17,000  sq.  ft.    

 

“At TK Maxx we deliver great value on ever-changing selections of brand name and designer products at prices up

to 60% less than the RRP and at a significant discount to the prices in a department store or on the high street.”

TK  MAXX  

 

 

 

 

 

 

Retail  stores  are  also  based  online  and  can  be  based  both  on  the  high   street   and  online  or   solely  online.     Stores   such  as  ASOS  are  only   based   online   and   contain   a   high   amount   of   products   both  own   brand   and   designer.     The   item   is   then   shipped   to   the  customer  at  the  most  convenient  time  for  them.    Another  type  of  online  store  incudes  an  Internet  auction  such  as  eBay  which  allows  general   consumers   to   sell   on   their   unused   products   to   other  consumers.     The   consumer   will   bid   on   the   item   in   the   hope   of  winning.    eBay  reported  a  rise  in  sales  in  the  third-­‐quarter  of  2012  as   their   net   profit   rose   14%   from   a   year   earlier   to   £445  million.    eBay   has   put   this   down   to   the   increase   in   mobile   use   and   the  increased   use   of   PayPal   services.     eBay’s   strengths   can   make   it  unique   as   they   do   not   compete   with   other  retailers   and   it   is   a   globally   recognised  commerce  website.    As  of  2011  eBay  employed  approximately   27,700   people   with   over   261  stores  across  UK  and   Ireland.    Retailers  are  also  developing   their   reach   to   customers   through  multi   channels.     A   retailer   such   as   River   Island  will  not  just  have  a  store  on  the  high  street  but  it  has  used  technology  to  develop  an  online  store,  an  online  shopping  app  which  you  can  use  on  the  go.     It   has   also   developed   its   social   media  channels   to  keep   in   touch  with  consumers  even  when   they   are   not   actively   shopping.     This  development   using   multi   channels   means   that  the   retailer   becomes   more   than   just   a   retailer,  but  they  have  more  interactive  options  and  ways  of   speaking   to   the   consumer   and   build   up  relationships.  

Most   retail   stores   offer   an   online   option   for  making  purchases,  which  allows  the  customer  to  buy   products   using   the   Internet.     The   internet  has  some  advantages  over  shopping  on  the  high  street  such  as  convenience,  more  choice  and  the  cost  of  items.    The  convenience  of  the  internet  is  drawing   people   away   from   the   high   street   as  they  can  save  time  by  shopping  from  their  living  room.    It  also  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.     The   cost   of   a   physical   bricks  and  mortar   store   is   greater   than   having   just   an  online   store.     The   online   store   can   also   offer  more  products  as  they  do  not  need  the  physical  space   to   display.     The   internet   also   provides  access   to   worldwide   products   and   services  whereas   the   high   street   is   much   more   limited.    Many   businesses   may   choose   to   combine   a  physical   store   with   an   online   store   and   this   is  known  as   “clicks  and  bricks”.     The  disadvantage  of  running  both  types  of  stores   is  the  cost  yet   if  done  well  can  be  beneficial  for  the  brand.  

 

An  emerging  store  type  of  store   is  a  hybrid  store,  which   is  based  on   the   high   street,   but   it   offers   more   than   one   purpose.     They  offer   more   than   just   products   and   now   offer   coffee   shops   and  entertainment  opportunities.    A  good  example  of   this   is   the  high  street  store  Next  which  has  recently  opened  a  Costa  Coffee  store  inside.    Factory  shops  and  outlets  are  also  becoming  more  popular  as  consumers  are  looking  for  ways  to  make  their  money  go  further  but   also   find   good   brand   names.     Teleshopping   is   also   evolving  with  the   introduction  of  smart  TVs  and  the  ability  to  buy  straight  from  your  TV  screen.    The  QVC  shopping  channel  also  has  its  own  website   where   you   can   purchase   items   directly   from.     It   is  becoming  rare  to  find  a  store  which  only  supports  one  channel  of  

retailing.     I  have  also  noticed   that  pop  up  stores  are  becoming  quite  popular  on  the  Liverpool  high  street.    At  the  moment  there  is  a  Harvey  Nichols  pop   up   food   store   based   in   the   centre   of  many  other  high  street  stores.    It  is  a  small  store  which  has   opened   during   the   run   up   to   Christmas   and  sells   novelty   and   unusual   food   treats.     This   was  also  based  in  the  same  place  during  the  previous  year  and  so  must  have  been  a  successful  venture  for   them   to   try   again.     Pop   up   stores   give  emerging   brands   or   products   the   chance   to   test  the   consumer   market   without   making   a   long-­‐term  commitment  on  paying  rental  and  rates.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facts from the British Retail Consortium

Retail  sales  in  2013  totalled  £321  billion.

9%  of  UK  businesses  are  retailers,  which  totals  over  187,600  retailers  

in  the  UK.  

£32billion  worth  of  sales  was  from  online  purchases  in  2013.  

3  million  workers  are  employed  in  retail  in  the  UK.  

Retailers  invested  on  average  £1,275  in  training  per  employee  in  

retail.  

Retail  pays  £19.5  billion  in  taxes  per  year.  

Retail  pays  £7  billion  per  year  on  business  rates.  

UK  consumers  pay  5%  less  on  average  per  basket  than  in  the  

Eurozone.  

Retail  is  the  largest  private  sector  employer  in  the  UK.  

3  million  people  work  in  retail  in  the  UK.  

 

THE  

RETAIL Store

NEXT  &  COSTA  COFFEE  HYBRID  STORE  

s  you  can  see  the  whole  structure  of   the  retail   industry  has   become   more   complicated   over   the   years   as  retailers   have  more   opportunities   and  ways   to   provide  for   customers   than   ever   before.     Retailers   are   now   as  

diverse  as  the  customer  and  are  located  in  different  places  and  in  different   ways.     The   structure   of   the   retail   sector   could   be  examined   more   closely   though   by   looking   as   retail   size   and  profitability.    By   looking  at   it   in  more  detail  using  PESTLE  analysis  gives  a  better  understanding  of  each  sector  as  external  factors  can  have   a   big   influence.     I   will   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   and   could  include   areas   such   as   tax   policies,  employment   laws,   environmental  regulations,  trade  restrictions  and  reform  on   imports   and   exports,   tariffs,   VAT   and  political  stability.    Currently  Syria  is  in  the  middle   of   a   civil   war   which   has   halted  imports   and   exports   to   and   from   the  country.     Syria   produces   oil   and   textiles  and   both   of   these   industries   have   been  severely  affected.    Well  educated  Syrians  who  were  being  counted  on  to  move  the  country   forward   have   started   to   move  abroad   and   so   there   are   no   qualified  people   to   rebuild   the   infrastructure.    Many  productions  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   countries   and   finding   another  reliable   supplier.     Production   in   another   country  may   come   at   a  higher   price   which   would   need   to   be   taken   into   account.     This  could   affect   the   cost   of   the   finished   product   being   sold   to   the  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   the   economic   growth  and   decline.     It   will   include   interest   rates,   exchange   rates,  wage  rates,   minimum   wage,   working   hours,   unemployment,   credit  availability,   cost  of   living   and   the   recession.     Currently   there   is   a  

proposal   to   dramatically   raise   business   rates   for   those   retailers  who   have   a   bricks   and  mortar   store.     It   could  mean   a   collective  increase  of  £200  million   in  2015   if   the  government  do  not  agree  on   a   business   rate   cap.     The   article   states   that   the   economy  cannot   sustain  a   freeze  on  business   rates  and   that   they  must  be  increased  but  campaigners  are  trying  to  persuade  the  government  to   put   a   2%   cap   on   the   increase   so   that   the   effect   on   their  businesses   is   not   as   drastic.     Retailers   feel   that   the   current  taxation   system   is   out   of   date   and   that   they   would   feel  comfortable  with  a  2%  freeze.    A  dramatic  increase  in  rates  could  force  some  smaller  retailers  out  of  business  such  as  those  who  are  

solely   owned   yet   a   freeze   could   cost   the  UK   treasury   up   to   £1  billion   a   year.     The  rise   in   business   rates   could   affect  businesses   abroad   considering   expansion  within   the   UK   which   ultimately   has   a  knock   on   effect   on   globalisation.     More  start-­‐up   businesses   may   also   reconsider  and   also   head   abroad   for   more  reasonable   business   rates   and   economic  growth.     The   modernisation   of   UK  business   rates   would   make   the   UK   look  more  attractive  to  outside  retailers  and  in  the   long   term   stop   the   UK   from   turning  into  an  economic  decline.  

Social   factors   that   can   influence   retailers  can   include   what   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   Snapchat   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  “me,  me,  me”  culture  online  enables  people  to  make  their  own  fashion  statements  and  creates  a  more  diverse  culture.     With   people   being   able   to   create   their   own   identity,  brands   such   as   Vivienne   Westwood   have   picked   up   on   it   and  turned  it  into  a  catwalk  trend.    They  used  the  punk  trend  to  create  a  collection  which  was  influenced  by  street  style.    This  is  known  as  “trickle  up”.    Androgyny  also  has  an   influence  on   fashion  change  

Pestle FACTORS OF

Syria’s exiled businessmen set up shop in Southern

Turkey

“Saeed Nahass spent decades building up his business in Syria but it took just months for the civil war to devastate his work. One of the machine–tool

factories and an office were destroyed by regime bombs; another was robbed by renegade rebels. Debtors defaulted

on about $450,000 they owed him. Sales dried up. Since moving to

south-eastern Turkey, he has managed to relaunch his business and make it

thrive again”.

www.ft.com

A

as  the  demand  for  unisex  products  increases.    Men’s  and  women’s  tastes   have   now   converged   and   brands   such   as  Doc  Martins   are  now   creating   products   that   are   unisex.     The   democratisation   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  Gucci   and   Prada   have   become   more  common   and   it   is   more   achievable   for  more  people  to  own  such  products.    The  luxury   brand   Hermes   is   now   selling  trainers  to  appeal  to  a  larger  more  casual  market.     I   found   an   article   in   Drapers  magazine   which   talked   about   how   kids  wear   brands   are   now   producing   adult  range   clothing   in   a   mini   me   style   with  River  Island  being  the  latest  brand  to  join  the  mini  me  revolution.    Fashion  shoppers  are  now  more  educated  than  ever  before  with  what   is   in  and  what   is  not.     They   follow  a  celebrity   culture   and   can   get   closer   than   ever   before   to   their  favourite  celebrities  through  social  media.    Celebrities  have  helped  to   encourage   the   “me,  me,   me”   culture   and   some   have   started  dressing   their   children   in  miniature   outfits   of   their  own.    It  is  almost  a  natural  progression   for   kids   wear  to  be   influenced  by  §adult  clothing   as   before   it   was  very   lazy   with     cheaper  looking   logos   and  princess  style   dresses.     The   River  Island   range   for   2014  included   3D   flower  embellished   dresses   and  tropical   print   t-­‐shirts,   very  similar   to  the  adult  ranges  that  are  available.  

Technological   factors   are  what   are   happening   with  technology   that   can  impact   what   retailers   do.    As   technology   is   moving   forward   very   fast,   retailers   must   look  forward  to  the  future  and  keep  up  with  the  advances.    Things  that  were   not   possible   5   years   ago   are   now   possible   with   mobile  technology   and   advancements   in   web,   blogs   and   social   media.    New  technologies  will  always  develop  and  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   materials   with   different  finishes.     We   also   have   the  technology   now   to   create   garments  that   are   easier   to   care   for   and  require   less   maintenance   such   as  “non-­‐iron”.     With   technology   the  manufacturing   speed   has   also  increased  and  also  the  quality  of  the  production   but   also   there   are   new  methods   of   manufacturing   such   as  laser   cutting   and   garment   welding.    Due   to   changes   in   technology   and   the   increase   in   social   media,  fashion   is  now  more  accessible  throughout  the  world  and  brands  are   now   opening   abroad   when   in   previous   years   they   may   not  have  been  able  to.    The  globalisation  of  brands  has  effected  how  

we  dress  as  we  now  have  access  to  a  wider  range  of  products  and  styles  and  you  may  notice  that  students  in  Asia  dress  very  similarly  to  students  in  the  UK.    As  more  people  have  the  chance  to  travel  it  increases   consumer   awareness   of   products   and   styles.     The  

globalisation   of   brands   has   also   led   to  more   competition   for   the   brands  themselves   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   all   over   the   world   very  quickly.     This   instant   exposure   to   other  ideas,   styles   and   cultural   influences   can  be   interpreted   on   the   catwalk   and   then  interpreted   by   fashion   retailers   and   sold  

in   stores  within   a  matter   of  weeks   instead  of  months.     Zara   is   a  great   example   of   this.     Due   to   greater   media   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  is   not   working   very   well.    The   increased   pressure   on  consumers   lifestyles   also  links   back   into   technology  as   brands   make   clothing  which  are  easy  to  wear  and  offer   easy   care   garments  which   are   easily   washed.    Clothes   tend   not   to   be  made   to   measure   and   are  more   unstructured.     The  casualisation  of  clothes  has  come   from   the   need   of  consumer   convenience.    Consumers   have   less   time  available   to   shop   these  days   and   so   they   find  new  

ways  of   shopping   to  make   their   lives  easier.    The  use  of   internet  and  shopping  from  mobiles  has  increased  and  so  brands  have  had  to  develop  this  side  of  their  brand  to  react  to  consumer  demand.    Brands  understand  that  consumers  do  not  wish  to  wait  around  to  make  purchases   and   so   self-­‐checkout   is   available   in  many   stores  and   interactive   shopping   displays   are   available.     An   article   in  

Drapers   magazine   related   to  technology   as   it   talked   about   how  customers   are   using   their   mobile  phones   in   stores   to   check   prices   of  competitors,   which   is   known   as  “showrooming”.     Retailers   do   not  want   the   consumer   to   find   the  product   cheaper   elsewhere   and  leave   the   store   but   it   is   difficult   to  see   what   the   customer   is   doing   on  their  phone  while   they  are   in   store.    The  article  relates  to  the  use  of  Wi-­‐Fi  in   stores   and   suggests   that   more  stores   should   offer   free   Wi-­‐Fi   to  

consumers  so  that  they  can  monitor  the  sites  that  they  use  whilst  in  store.    80%  of  fashion  retailers  do  not  offer  free  Wi-­‐Fi  in  stores  and   are   missing   out   on   a   great   marketing   opportunity   as   if   the  customer   signs   up   to   the   free   Wi-­‐Fi,   they   are   able   to   collect  

Retailers face dramatic rise in business rates

“Recent inflation figures mean rates will rise but trade bodies are now

calling for a cap rather than a freeze”.

www.drapersonline.com

RIVER  ISLAND  MINI  ME  RANGE  

HUGO  BOSS  EASY  IRON  

consumer  data  which  they  could  then  use  in  the  future  to  contact  the  customer  and  encourage  them  to  come  back.  

The   legal   factors   are   what   is   happening   with   changes   to   the  legislation   for  example  new   laws   for  working  hours  on  a  Sunday,  the  law  for  minimum  pay,  copyright  and  plagiarism,  illegal  labour,  access  to  materials,  resources,  import  and  export  restrictions  and  charges   and   taxation.     An   article   in   The   Guardian   published   in  February   2014   exposes   Bangladesh   garment   factories   for  exploiting  child  labour  for  UK  products.    It  was  found  that  girls  as  young   as   13   were   forced   to   work   11   hours   a   day   in   unsafe  conditions  despite  a  factory  collapse  that  killed  1,130  people   just  last   year.     Retailers   such   as   BHS,   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   cripples   their   reputation   with   the   consumer.     An  article   like  this  can  impact  the  consumer  greatly  who  may  decide  they   want   to   shop   with   another   retailer   who   looks   after   their  factory  workers  and  offers  better  working  conditions.      

 

The   environmental   factors   are  what   are   happening   in   respect   to  ecological  and  environmental  issues.    Many  of  these  factors  will  be  economical   or   social   in   nature.     They   could   include   customer  values,   management   and   staff   culture,   EU   factors,   fair   trade,  sustainability   and   global  warming.     The   health   and  well-­‐being   of  people  will  effect  fashion  change.     In  the  modern  world   it   is  very  important   for   people   to   keep   fit   and   be   healthy.     The   consumer  

concern  and  interest  in  this  topic  has  affected  brands  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   Fairtrade,  organic   and  ethical   clothing.    An  article   from   the  Telegraph   talks  about  how  the  Fairtrade  brand  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   Fairtrade   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   Fairtrade  cotton   in   their   designs.     Dolly   Jones,   the   editor   of   vogue.com  agrees  with  the  changes  being  made.    

“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”

DOLLY JONES – EDITOR OF VOGUE.COM

It   has   gained   support   from   the   British   Fashion   Council   who   is  encouraging  brands   like  Burberry  and  Vivienne  Westwood   to  get  involved.    All  of  this  effort  would  go  to  waste  though  if  our  existing  high   street   retailers   such   as   M&S,   John   Lewis,   Debenhams   and  Topshop  were  not  taking  part.    The  designer  of  denim  at  Topshop  has   implemented   a   range   of   Fairtrade   cotton   shorts,   jeans   and  jerseys  but  thinks  that  more  could  be  done.      

Annie Greenabelle – Ethical brand sold at Topshop

By   brands  working   together   to  make   Fairtrade   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.     More   environmentally   friendly   brands   are   coming   to   the  forefront   of   fashion   now  with   brands   such   as   People   Tree   being  noted   in  Drapers   for   their   hard  work   and   awards.     A   new  brand  called  Vivobarefoot  has  taken  an  eco-­‐stance  on  the  production  of  shoes  by  using  locally  sourced  and  recycled  materials  all  produced  in  ethical  factories.    With  wholesale  prices  ranging  from  £18-­‐£90  it  is   an   affordable   venture   that   more   stores   could   encourage.    Another  external  factor  such  as  the  weather  could  have  an  impact  on   retail   areas.     If   the   weather   is   very   bad,   consumers   will   feel  more  encouraged   to  go  shopping   in  an  area  with  shelter   such  as  the  Trafford  Centre  or  Arndale  Centre  over  an  area  which  is  out  in  the   open   such   as   Church   Street   in   Liverpool.     Retailers   may  consider  setting  up  shop  in  these  areas  over  open  areas  especially  in  the  UK,  as  the  weather  is  so  unpredictable.  

“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 2014

BANGLADESH  FACTORY  COLLAPSE  2013