Economic Characteristics and Strategic Decision-Making in Retail Industry: A Case Study of Marks and Spencer

MICROECONOMIC
PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Important economic features of the industry...............................................................................3
Pricing and costs characteristics..................................................................................................4
Competitive environment............................................................................................................6
Strategic decision-making...........................................................................................................6
Graphs..........................................................................................................................................8
Recommendations on strategies..................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
The study is on economic characteristics and features of an industry. Retail industry has been
taken in the report. The economic features of the industry have been explained. Pricing, cost
characteristics have been talked about in the report. Competition and strategic decision-making
of the industry has been talked about. Data and charts have been provided for supporting the
points made. Recommendations have been given on strategies of organisation chosen as Marks
and Spencer which is a prominent retail company of UK.
Important economic features of the industry
Retail industry can be said as activities which are utilised for selling a product or service to
customers for their use. It is necessary for individual demands of customer to be matched with
supply by manufacturers.
Economic features of the industry
Retailers provide goods in finished form to the customers, they bring goods from wholesalers
and thus act as a link in goods distribution which is a significant part of the economy. The goods
being manufactured in factory reaches to customers through a logistics chain and retailers are the
last in the chain who come indirect contact with customers. The pricing in retail is done in a
manner that factory puts a profit on cost per unit on a product to gain revenue and supplies to the
wholesaler and the wholesaler supplies it to the retailer by putting a profit on the same. Retailer
now has to put a profit on the batch supplied and ultimately it gets to the customer at a price
called transaction price which is also the final price on which customer makes a purchase. Unlike
wholesalers, retailers do not purchase in bulk and thus cost of products increases for them
(Gonda and et.al., 2020). They have to buy and supply products in market as per demand and
thus regular quantities of the products are purchased and displayed for sale.
Retailers can be said to be the link in chain of gauging customer requirements and demand
anticipation accordingly. The market trends current information is gathered by retailers and
conveyed to the manufacturers telling them about anticipated demand for various categories of
products. Thus, this helps in making the right product by the organisation and sales which
generate revenues improving the economy.
The retail industry have players operating on a large scale and offer employment opportunities
on a large scale to people and thus are an important contributor in employment statistics of a
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nation. The retail sector has also expanded to many countries other than the host country. The
retail sector encompasses many areas of specialising having different skills and the departments
where one can find job is Finance, Accounts, operations, logistics etc.
Retail sector has also given birth to entrepreneurship and there have become many entrepreneurs
in retail who have become wealthy businessmen. Thus, retail sector has been one which has
economically benefited the nation in growth and employment benefitting people (Gonda and
et.al., 2020).
Pricing and costs characteristics
The different types of pricing models exist in retail where sale exists from many forms of retail.
The organisation in retail, as said before, adds a profit to its cost price of the product from the
wholesaler. Cost pricing becomes easier to comprehend when retailer adds own profits to the
product price till then in chain.
Cost addition pricing
This strategy is easier to calculate for price of merchandise and the increase in merchandise retail
price is proportionate to increase in cost price of the product. The customer do not have a role to
play in this mechanism.
Manufacturer suggested retail price
The retailer makes the transaction price on suggestion of manufacturer of the product.
Condition 1
Retailer makes sale of the product at the price which is at same price as put by manufacturer.
Condition 2
Retailer makes the selling of merchandise at a lesser price which was given by manufacturer.
This period sees the discounts being offered on the merchandise (Kaur and et.al., 2021).
Condition 3
Retailers mark a price which is unreasonably higher and then do a reduction in price on request
of customer and thus through bargain, it is made lower where customer has to negotiate for the
product price.
Competitive pricing
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