Retail theory and practice Assignment solution

Introduction:

Retail is the process of selling goods and service to the consumer through following a chain of command. They need to follow multiple channels to satisfy the consumer by sending goods in a perfect way. It mainly occurs when a business sells goods and services to the consumer directly (Aiello et al., 2019). According to the office of national statistics (2020), has claimed that this industry has played a vital role in the economy of the UK. Especially super shop retail store like Tesco Plc, Sainsbury, ASDA, and ALDI and so on. Basically, a retail store buys a bulk of product from the whole seller then they sell to the consumer with a discount (Sievert and Shirley, 2014). The author will discuss here Burberry which is a luxury and popular fashion brand house in the UK. The author will find the impact of macro and microenvironment on the organization to evaluate the change and other things.

Company background:

Berberry is a group of company. They have started their journey with an aim of positioning as the top brand of luxury fashion in 1856 and they continue their business successfully till now. This business has founded by Thomas Berberry. But the first show was opened in 1891 in London (Einsele et al., 2015). They are family-controlled business till 1955 but they were incorporated in 2005. They are listed at London stock exchange. The number of location is around 500. Currently, there are 10161 employees are working. They are multinational companies because they have stored in 51 countries at all over the world. Their product line is very dynamic and diversified. But they are mainly sold out ready-to-wear-outerwear, fashion related products, sunglass, cosmetics and so on.

Figure 01: Logo

A representation of women and men in the workplace is as follows.

	Total	Women	% of women	Men	% of men
Executive committee	11	3	27%	8	73%
Leaderships	329	174	53%	155	47%
All workforce	10161	6755	66%	3406	34%

 

This the data table shows that they have reduced gender gap successfully. It is a rule of UK government to balance position in an organization equally for all gender. The organization needs to create an opportunity for women so that they could work. 

Figure 02: Sale of last 4 year (2017-2020)

Source:  (BURBERRY, 2020)

Figure 03: Net profit of the last 4 years (2017-2020)

SOURCE:  (BURBERRY, 2020)

Above the graph shows the performances of the organization are going down at each year. It is a very bad condition for the organization.

Key relevant changes in the UK fashion clothing market

Macro environment analysis

Macro environment deals with external factors of the organization. It is uncontrollable but it forces the organization to change the business strategy. It includes several factors like PEST. How these factors have forced the organization is discussed at following.

Political	Brexit
	Exchange rate
Economic	Brexit- Labour cost
	GDP growth rate
Social	Age
	Consumer buying behaviour
Technological	Transportation system
	Availability of internet

 

Political environment: It is an important issue for a business organization. Because it creates significant forces on business. It includes the taxation system, national and international relation, export-import tariff system, an exchange rate (Aiello et al., 2019), Brexit issue and so on. Recent changes of the UK have affected the business of Burberry. Brexit issue of UK is major forces for a multinational business. Because of Burberry gets some benefits until UK are a member of the EU in running business EU’s member nation. But now they have to calculate the tariff system for this entire nation (Sievert and Shirley, 2014). On the other hand, exchange rate changes are also impacting on the business of Burberry. Because they are a multinational company so they need to deal with a different currency. As a result, if the value of £ has decreased then they need to face lose when they export. The Burberry has got benefit also when they import if the value of £ has decreased. So they need to make a strong plan to mitigate this risk. On the other hand, COV-19 is another important fact at the current time. It locks down the whole world for a long time. As a result, people lost a job, the company may face annual losses, consumer losses disposable income. So the effect of COV-19 will affect greatly to the overall business condition of UK.   

Economic environment: It is another important force that makes the pressure on the business. It includes mainly GDP growth rate, inflation, recession, disposable income, interest and so on. It forces the organization to change its strategy to adopt the change in the economic environment (Einsele et al., 2015). Brexit has increased the labour cost in The UK. Because of immigrants of the different nation has to pay more taxes so that they may leave the country and back to their own nation. As a resulting shortage of supply of manpower will increase the cost. On the other hand, GDP growth rate is declining that means the organization needs to purchase more product from other nation. They get different tariff benefits until they were a member of the EU. But now Burberry needs to face a different problem because they need to buy the product from other nation and need to pay more tax (Sievert and Shirley, 2014). It is very much difficult situation for them. But they have to change their strategy to mitigate the risk.

Social environment: It is very much important for the nation because of social values, beliefs, norms, and behaviour is playing a good role to shape the need and demand. Consumer behaviour of buying process is important for any business (Einsele et al., 2015). Business needs to set its plan by focusing on consumer needs and demands. It has been found out that the number of young buyers has been increased than an old aged buyer in the UK. So it will create an opportunity for Burberry because of young people have trends to use the luxury product. On the other hand, there so many immigrants are living in the UK (Sievert and Shirley, 2014). So the culture has diversified into multicultural. So Burberry needs to consider the demand for all types of people. For example, Muslim people like to wear a more closed dress that is totally opposite of UK culture.

Technological environment: It indicates the technological development of the nation. The UK belongs to a developed nation but still, they need to develop the technology. Introducing 5G technology is the demand of time where China and the USA has already adopted this change (Aiello et al., 2019). The telecommunication system of the UK has changed and it helps the consumer and business to make contact easily. On the other hand cost of internet has decreased so that people can use the internet at any place. It creates the opportunity to run the online business. The developed transportation system of UK has supported to shift the product place to the destination easily. Amazon, UK has planned to use the drone to shift the product to the door of the consumer. All will be possible if the UK brings 5G technology which will decrease cost and increase artificial sensitivity.

So the above factors are forcing the business of Burberry to change their strategy makes some effective decision to pertain success. COV-19, BREXIT and change of exchange rate will make the different barrier to the path of success. These issues will also impact the economic situation. People will loss disposable income and it will change the buying behaviour of the organization. 

Microenvironment analysis:

Basically, it concerns about internal issues of the organization. It focuses on organizational development. The forces are controllable. So the organization needs to use a strong strategy.

Strength- Iconic fashion Global presence Strong brand management	Opportunity- Changing lifestyle Expansion of product line Increasing demand of consumer Social media advertising
Weakness- Premium price Limited product line Asian market	Threats- Market competition Changing customer lifestyle Threats from fake product

 

Strength: It indicates the potentiality and capability of the organization. Some major strength of Burberry is as following.

Iconic fashion brand: Burberry offers a most updated fashionable product which is very much trendy and iconic. They are committed to the consumer that they will provide high quality and long-lasting garments product(Chuang et al., 2015).

Global presence: Burberry has run its business in more than 50 nations with more than 500 outlets.

Brand management: They are branding their product to the consumer to create brand awareness. They have more than 150 years of experience.

Weakness: It means organizational weakness. It indicates the lacking of an organization that may cause their profitability.

Premium price: Burberry has offered a premium product so they also charge a premium price. It creates a barrier to their business.

Limited product line: Burberry has offered only apparel, fashion and beauty products and accessories. But many competitors have broadened product line like furniture, home décor personal grooming and so on(Aiello et al., 2019). 

Asian markets: A significant proportion of the group’s sales come from the Asian market. But economic challenges have forced the organization to change its strategy.

Opportunity: It means the probability of the organization to make a profit from different resources.

Changing lifestyle: Burberry can offer a trendy lifestyle to their consumer. They can change the value of life by offering qualify full premium product to their customer.

Expansion of product line: They have chance to expand the product line such as they can produce furniture, home décor product and so on.

Increasing demand for the customer: They can increase the demand of consumer by offering the best product with an affordable price. It is very much identical to the organization.

Social media advertising: Now a day, people are using so many social apps that are an opportunity for the organization to advertise their product and services. It will inform more customer than another source of advertisement.   

Threats: It means an organization has faced risk from different sources. It creates a barrier to the path of business.

Market competition: Some international brands like Gucci, Louis Vuitton are playing an important role here to create competition.

Threats from fake product: So many fake products have taken a larger share of the market. It has destroyed the brand's value.

Changing customer lifestyle: Customer is changing their demand always. As a result, the organization needs to follow the thief ash fashion strategy.

Porter’s five forces: it has been used to analyse the factors that affect the business organization. 

Figure 05: Porter’s five forces

Source:(Wang and Guo, 2014)

Bargaining power of buyer: Bargaining power of the buyer is high because of buyer has to option to switch any other brands easily.

Bargaining power of supplier: Bargaining power of supplier is less risky because of supplier don’t want to lose the relationship with key brands and a multinational company.

Threats of new entry: The risk is low because of a company can enter in this business but they need to take along time to take the place of Burberry.

Threats from a competitor: The risk is high here. Because of competitor creates pressure such as Gucci offers the most premium product always.

Threats of a similar product: There are different varieties of accessories and perfume and cosmetics. So the risk is high at this place.

So it indicates the organization has great pressure in this field. They may have a chance to make a profit by increasing product line but they also need to defend the kick of competitor as well.

Suggests and discusses strategies and tactics that could be used by the retailer to respond to the major changes occurring in the fashion clothing market.

Changes are a natural phenomenon. Passing every second is an example of change. But the main fact is how an individual or group of people react and adopt these changes. So the author will emphasize here to understand the nature of change and its impact on business then the author will provide a suggestion.

Change 1: Ethnic miscellany: It has already discussed that the UK is a multicultural country. There are living so many immigrants who have their own diversified culture. The migration system of the UK is very much easier so many people take this chance. On the other hand, people of ex-British colonial has advantages to enter in the UK like Bangladesh, India, Pakistan, China and so more country (Chuang et al., 2015). As a result, the culture has mixed now. So the organization needs to consider the demand of each consumer. For example, Muslim people like to wear more closed drees like Hizab and Barkha. To support their thoughts and respect their beliefs, Nike has already launched hijab for a sportsperson. It is an important change that the organization needs to focus on. The author also analysed that demand for fragrance product also differs from customer to customer. African people like strong fragrance where American likes cool. In this case, Burberry needs to emphasize on research and development. Otherwise, their market share will be captured by another competitor.

According to Ansoff matrix, there are four ways of marketing strategies such as following.

Product penetration: An organization can offer an existing product at an existing market.

Market development: The organization offers the existing product at the new market.

Product development: The organization offers the new product at the existing market.

Diversification: The organization offers a new product at a new market.         

Burberry has already established business in middle-east. So they can use the product development strategy. Because of most of the Muslims live in middle-east.

 

 

Change 2: Investment and retail growth of online retail: Online shopping is a popular form of buying at this present time. It will be more popular in future because of WHO suggest keeping maintain a social distance (Rabajante, 2020). So buying from the crowded market will be risky being affected by COV-19 (Rabajante, 2020). So every organization needs to use online shopping by taking place outlet system. People of the UK are also using the internet due to cheap and available. In this case, the organization needs to ensure that they have online availability. Burberry also needs to respond to the demand of the market. They need to invest in the online shopping system so that they could place the product to the door of a consumer on time.

Change 3- Social media advertising: It is now a common trend of advertising product and services. Because of people are spending more time on social media than watching TV or gossiping with friends. Even friends are chatting; colleagues are meeting by using these social media (Wang and Guo, 2014). So it is a great opportunity for all kinds of business to advertise their product and inform the customer about their product values more easily. Burberry also needs to focus on this strategy to attract the consumer. They may offer their product to the consumer by using digital marketing technology(Chuang et al., 2015). Burberry needs to analyse the market and trends of apps because all apps are not popular. So the organization needs to use those apps which is popular and is used by the huge number of people. It may help Burberry to inform the consumer about their product and services.

Recommendation: The author has prepared a recommendation list consist of several numbers of suggestions like as following.

ü  Burberry needs to focus on their strengths to use it to take the opportunity to increase profitability.

ü  The the organization needs to focus on research and development process of the organization. Because of the effective use of the R&D department will create more opportunity for them.

ü  The the organization needs to increase product line if they want to survive in the market by competing for big brands.

ü  The the author recommends the organization to focus on online-based strategy like online selling, using social media to advertise the product (Wang and Guo, 2014).

Conclusion:

The author has discussed various issues of retail business. Retail business means an organization buys a huge quantity of products and sells it to the consumer. It has played a vital role in the development of the UK economy. But this industry has faced various internal and external challenges from the market. The author has analysed macro and micro analysis to find out these factors. It is very much important for the Burberry to take this factor seriously and follow the suggestion that has provided by the author. The organization must concern about online-based activity at this moment. Because of consumer prefer to avoid crowded place and they want to stay at home. Finally, the author would like to recommend that Burberry needs to take the challenges because they have strong strengths to achieve their goal.

 

References:

Aiello, L. M., Schifanella, R., Quercia, D. and Del Prete, L. (2019) Large-scale and high-resolution analysis of food purchases and health outcomes.EPJ Data Science, 8, 14.

Aletras, N. and Stevenson, M. (2013) Evaluating topic coherence using distributional semantics.In IWCS’13, 13–22.

Blair, S. J., Bi, Y. and Mulvenna, M. D. (2016) Increasing topic coherence by aggregating topic models. In KDD’16, 69–81.

Chuang, J., Roberts, M. E., Stewart, B. M., Weiss, R., Tingley, D., Grimmer, J. and Heer, J. (2015) Topiccheck: Interactive alignment for assessing topic model stability. In NAACL HLT’15, 175–184.

Einsele, F., Sadeghi, L., Ingold, R. and Jenzer, H. (2015) A study about discovery of critical food consumption patterns linked with lifestyle diseases using data mining methods. In HEALTHINF.

Hruschka, H. (2014) Linking multi-category purchases to latent activities of shoppers: analysing market baskets by topic models. Journal of Research and Management, 36, 267–273.

Jacobs, B. J., Donkers, B. and Fok, D. (2016) Model-based purchase predictions for large assortments.Marketing Science, 35, 389–404.

Sievert, C. and Shirley, K. (2014) Ldavis: A method for visualizing and interpreting topics. In ACL’14, 63–70.

Wang, Y. and Guo, Q. (2014) Multi-lda hybrid topic model with boosting strategy and its application in text classification.In CCC’14, 4802–4806.IEEE.

Rabajante., J., F., (2020). Insights from early mathematical models of 2019-nCoV acute respiratory disease (COVID-19) dynamics.