Impact of Changing Consumer Preferences and Increased Cost of Reverse Logistics on the Footwear Sub-Sector

This report discusses the impact of changing consumer preferences and increased cost of reverse logistics on the footwear sub-sector in the UK. It includes key issues, PESTLE analysis, and the positive and negative impacts on businesses. The report also provides a reflection on the research process.

Business environment

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Key Issues....................................................................................................................................3
PESTEL and the two issues affecting the sub-sector..................................................................4
Impact on businesses...................................................................................................................5
Reflection.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment refers to the combination of various intrinsic and extrinsic factors
that affects the working of organisation, negatively or positively. It involves the factors that pose
high influence on operations and working of company (Anolfatto and MacDonald, 2019). This
report is based on Footwear sector of United Kingdom and selected organisation for determining
positive and negative impact of issues is Reebok. The firm was established in 1958 and offers
sports clothing and footwear to customers. This report includes key issues that footwear sub-
sector face and PESTLE analysis on the sector. After that, positive and negative impact of key
issues on business are defined. At last, reflection based on entire report is included in which
challenges and ways to overcome those are discussed.
MAIN BODY
Key Issues
Changing consumer preferences:
One of the issue that affects footwear sub-sector is changing consumer preferences. In the
current era, consumers are more knowledgeable and educated as a consequence of this, they are
becoming more demanding. The customers who are searching for information or data and are in
favour of of some causes are increasing speedily (Birru and et. al., 2019). It poses huge challenge
in front of shoe makers as they are required to follow and adapt quickly to the preferences of
customers. Organisations not only required to adapt new fashion trends but, they also need to
consider the entire set of beliefs and desires. For example: there are many customers who search
for security and transparency. They always wants to make sure to buy safe footware and are
made as per the existing laws and regulations. These customers always ensure before buying that
the products are of good quality and made of good material, won't harm to their health and they
feel comfortable when wearing the shoes. These customers always show their concern about how
and where the product is made.
Increased cost of reverse logistics:

In today's competitive business environment, the another challenge in front of footwear
subsector is increased cost of reverse logistics. In supply chain, when the materials and products
move backward, the incurs cost which negatively influence the revenue numbers (Bocken, Rana
and Short, 2015). The reverse logistic complexity includes many transactions than forward
supply chain. Some types of cost involved in reverse logistics are transportation, cost of returns
and repairs, reselling and service cost etc. Reverse logistics is referred as the process of moving
goods from final destination to other point for suitable disposal of product. The main challenge
facing by the footwear industry of UK is lack of legal framework for managing waste vis-a-vis
reverse logistic. The manufacturers are required to cope up with all types of returns that did not
suits the expectations and needs of customers. Due to the issue of reverse logistics, the profit
ratios of companies are impacted negatively in footwear sector. The footwear manufacturing sub
sector has to deal with outmoded, unwanted, damaged or spoiled merchandise which is
responsible for 40 to 60% of returns (Crane and et. al., 2019).
PESTEL and the two issues affecting the sub-sector
PESTLE analysis is a tool which is utilized by organizations in order to analyse the macro
environment. In this study, footwear sector is taken into consideration for performing external
analysis. The factors included in PESTLE analysis are mentioned below in context of footwear
sector:
Political: The political condition of United Kingdom is stable which provides an opportunity
to organisation in footwear subsector to run its operation successfully within the confines of laws
and regulations.
Economical: The economy of UK is one of the leading economy all over the world. This
creates an opportunity for footwear sector to make utilisation of technological, infrastructural
and other facilities of country to achieve growth.
Social: The needs and preferences of customers are frequently changing which may pose
opportunity or threat for the business operating in footwear sector. It rely on respond time that
they take to support changes in their products as per the requirement of customers (Cyphert and
et. al., 2019).
Technology: It plays crucial role in improving performance and productivity of business.
Use of technology in manufacturing footwear products help companies in the sector to attain
competitive advantage in market.

Environment: For each and every organisation it is very necessary to compliance with
environmental laws and perform operations in such a manner that do not harm environment in
any way. So, organisations are required to follow all the necessary laws and regulations in order
to protect environment and maintaining its sustainability marketplace.
Legal: There are number of laws by which footwear sector is guided such as equality law,
health and safety act, employment regulations etc. All these laws are required to be taken into
consideration by companies in order to ensure their long term sustainability in market
(Deshpande, 2018).
Categorisation of problems in relation to PESTLE analysis:
Changing needs and preferences of customers: Social factor
In today's competitive environment, needs and preferences of customers are constantly
change in relation to footwears that creates a challenge in front of footwear companies to bring
modifications in their products timely and provide customers with the required products.
Categorisation of this issue in social sector seems to be relevant as the needs and preferences of
customers are changing very fast and it becomes difficult for the footwear companies to analyse
the changing needs of customers instantly.
Increasing cost of reverse logistics: Economic factor
The cost of reverse logistics increasing very rapidly in footwear sector as the returns are
more. this cost impacts negatively on the revenues of company. This cost in caused due to
transportation of product, cost including in repairs and returns etc. Categorisation of this issue in
economic factor seems to be relevant as increase cost leads to reduced company's revenues that
directly impacts the prices of product as company is charged high prices for its product in order
to cover the cost (Evans and et. al., 2017).
Impact on businesses
Reebok is a top notch company operating within the confines of footwear sector in United
Kingdom. This entity deals in an array of varieties pertaining to footwear which is why it is at a
leading position in the periphery of UK. The 2 issues that have been identified above to be
affecting the footwear subsector are changing needs and preferences of customers and increased
cost of reverse logistics. Both these issues held positive as well as negative impact for Reebok in
past and such effects have been illustrated in detailed manner as follows:-
Positive Impact

Although the 2 issues that have been identified above majorly held adverse effects for Reebok, it
also had a positive impact over the business (Georgescu and Popescul, 2015). The changes
taking place in needs and preferences of customers fostered the respective footwear brand to
come up with latest and stylish footwear designs which had all the features to gain the attention
of people. It facilitated Reebok to launch light weight footwear which could be produced with
low cost. The other issues linked to increased cost of reverse logistics led Reebok to implement
technologies such as ERP which provided aid to this organisation in lowering down the overall
cost of producing the footwear items (Golovnev and et. al. 2013). Also, the positive impact of the
2 issues could be seen in the form of high satisfaction that this brand gained from customers.
Even though the cost of operations got inflated for Reebok but it led to the development of a
large base of loyal customers for the entity who were not ready to shift to other alternative
brands at any instance.
Negative Impact
The issue of constant changes in needs and preferences of people inflates the cost of
operations for Reebok. In past also, whenever the respective organisation has come up with an
innovative and new design of footwear, the cost of production has increased, thereby affecting
the overall profits of company also. This had a negative influence upon the market standing of
the entity also as the margins of Reebok got decreased as a result of taking continuous initiatives
to cater to the needs and preferences of people persisting in market place. Furthermore, the
increased cost of reverse logistics also increases the cost for Reebok. Thus, both the issues had
somewhere impacted negatively upon the overall cost of production, creating adversities for
Reebok in the long run (Huang and et. al. 2013).
Reflection
While doing this report, i have learnt so many things. My knowledge has been enhanced and
my research skills are improved. I have search so many articles to gather information on the
topic. After doing research on footwear sector, i have found that companies are facing so many
issues in market due to frequent changes in taste and preferences of customers. As their needs are
constantly changing, firms deals in footwear sector needs to emphasize on changing needs of
customers and offer products accordingly in order to maintain long term sustainability in market.
This research not only enhance my knowledge on the topic, but in other areas also. This helps me
in knowing about market conditions of United Kingdom as well as other nations. This also help

in knowing about the issues that companies are facing in footwear sector (Teng, Thekdi and
Lambert, 2012). Apart from changing needs and preferences of customers, the another issue that
are facing by companies in footwear sector is increased cost of reverse logistics. I searched many
articles on the topic and this assists me in knowing various aspects of the selected area. At the
time of doing this research, I encountered various challenges like inadequate time, lack of
resources etc.
Inadequate time is one of the significant challenge that I have faced when doing study on the
topic as the study area is too wide and it takes a lot of time to research on the topic. This caused a
huge challenge in front of me in completing the study. However, by making use of time
management skills, I overcame this challenge. This skill helps me in performing each task
within. proper time frame. The another challenge is lack of resources which I face while
conducting the study. Due to less time, i felt that all the needed material was not access by me. In
order to overcame this issue, i take help from my seniors who guided me in collecting all the
required information on the topic. Thus, with the help of others, I was enable to collect all the
data and facts that are required for completing this study.
Lessons learned:
Number of lessons were learnt by me during this project. I understood that it, for completing
all the activities on time, time management skills are very necessary. Further, for attaining
research objectives, it is very necessary for an individual to have good research skills. Apart
from this, I have also learnt that smart work is equally crucial with the hard work as the supports
in attaining the assigned task within specified time frame.
CONCLUSION
As per the above mentioned report, it has been concluded that it is very important for
organizations to assess the different factors that are existing within business environment as
these factors impacts the operations and functioning of business. Consideration of these factors is
very necessary for an organisation in order to run its business successfully within competitive
market place. The issues that organizations in footwear sector faces includes changing tastes and
preferences of customers and increased cost of reverse logistics. These pose positive and
negative impact on organisation. It is very essential for an individual to have good time
management and research skills as this helps in completing the project within specified time
frame.

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