Apparel Retailer Industry Analysis

This essay analyzes the UK apparel retailer industry using Porter's Five Forces model and the value chain model, focusing on Marks and Spencer. It examines the competitive landscape, analyzes Marks and Spencer's internal business environment, and explores appropriate adaptations the company has undertaken in response to external business environmental forces.

INDUSTRY ANALYSIS AND
POSSIBLE ADAPTATIONS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
a) Applying porter's 5 forces model on Apparel retailer industry in UK....................................1
B) Using value chain model to analyse the internal business environment of marks and
Spencer. ......................................................................................................................................3
c) Appropriate adaptation that are undertaken by Marks and Spencer in response to external
business environmental forces....................................................................................................5
d) Reflection on usefulness of Porter 5 forces model and its limitation ....................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Apparel retailers sub sector is growing in the economy and they provide different types of
clothing for different age group people. This industry is gaining more market share than other
industries in the economy. Marks and Spencer will be included in this essay which is involved in
providing the clothing for men, women and kids. This company is operating in various countries
and thus it has its global presence. Task that will be included in this assignment will include
porter 5 forces model to identify and analyse the current environmental influences on Apparel
retailers sub sectors in UK economy. Moreover, it will include value chain model to analyse
internal business environment of Marks and Spencer. Also, it will provide appropriate
adaptations for Marks and Spencer with regard to influence of external factors. Furthermore, it
will provide reflection on usefulness of Porter's 5 forces model and its limitations.
a) Applying porter's 5 forces model on Apparel retailer industry in UK
In my opinion, The clothing industry includes various firms which are the retailers of the
clothing and fashion accessories. The porter 5 forces model is applicable to the Apparel industry
of UK and it includes threat of new entrants, bargaining power of suppliers, bargaining power of
buyers, threat of substitutes and rivalry in the industry.
I can say that there are Threat of new entrants because there are various barriers for the
new entrants in this industry as this industry is very populated and have many retailers which
provide barriers to the entrants in the market (Grant, 2016). There are various brands that are so
popular and they done not have any threat of new entrants as they have high reputation in the
industry. Therefore, there is no significant force in the fashion retail industry relating to new
entrants. There are various barriers which includes high investment, lack of distribution
channels for new entrants, etc.
Also, I have identified that bargaining power of suppliers is low and thus It is an
insignificant factor as there are many suppliers in this industry as thus the firm have the power to
switch to other suppliers if there are conflicts with the particular suppliers due to high cost or
quality of raw material (Potts, 2017). Most of the apparel companies get their products from third
world manufactures that receive few shares in profit. So, the power of suppliers in this industry is
low and weak due to which suppliers in this industry provide low prices to retailers to retain
them in business.
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Furthermore, I can say that In the apparel industry the bargaining power of buyers is
high because there are large number of retailers present in this industry due to which buyers have
choice to shift to other retailers to get the products at low prices (Lin and Ouyang, 2014). The
Apparel companies in order to retain the customers in business spend high investment on
marketing to attract customers towards the firm as there is high competition in the industry.
Thus, the bargaining power of the buyer in this industry is high.
Moreover, I have identified that threat of substitute product in this industry is high .
There are different firms that are providing innovative ways to increase their customer base and
for that they are using various ways such as online shopping, etc. to retain the customers in
business (Fazey and et.al., 2016). The threat of substitute in this industry is high as competition
is high and to increase the profitability and increase the customer base the retailers in this
industry develop innovative product that will increase the profitability. Also, I have determined
that those customers that cannot afford luxury brands there are substitutes that provide high
quality products at lower prices.
Also, the retailers in this industry face tough competition from each other as there are
many companies that provides different clothes for different age groups which increase the
competition. There are large number of retailers in this industry that sells similar products (Evans
and et.al., 2017). The competition in this industry is increasing fast as retailers are coming up
with new ideas to increase their customer base in this industry. Thus, according to me there is
high competition among the retailers involved in apparel industry. In my opinion, There are
various competitors of marks and Spencer that includes tesco, Aldi etc.
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From the above analysis I can interpret that porter's 5 forces model provide the industry
analysis which has given information about the high competition and high bargaining power of
buyers which affect the profitability of the firms that are involved in this industry. There are
various factors that affect the apparel industry which includes technology, demographic trends,
economic factors, legal factors and environmental factors (Iritani And et.al., 2015). Technology
has a great influence on this industry as changes in technology brings changes in trends and to
overcome the impact of technology retailers have to adopt those changes to increase their
customers base and profitability.
In my views, The retailers in order to reduce the impact of technology are adopting
various technologies such as online shopping to increase their customer experiences etc.
Demographic trends have its influence on the industry and people have different demands
regarding the fashion trends. So, retailers in the industry in order to increase their sales and
customers base must provide clothes according to the trend existing in the market.
B) Using value chain model to analyse the internal business environment of marks and Spencer.
I have identified that Value chain model consists of various activities performed by
organisation. It includes the internal activities which are performed by the firm in order to create
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Illu
stration 1: Porter five forces model
(Source : Understanding Porter’s Five Forces, 2016)

value for its customers and return as margin of profit. The activities include creation and delivery
of products which includes inbound logistics, operations, outbound logistics and marketing and
sale and services.
From my point of view Inbound logistics are those activities that are performed by Marks
and Spencer and includes receiving, storing and distribution of raw materials that are required for
manufacturing of the products . Marks and Spencer have won GBS supply chain award. Inbound
logistics are very important as it is related to the providing inputs for distribution to the
manufactures to fulfil the demands of customers. It includes maintaining strong relationship with
suppliers for getting the inputs at the right time.
I have identified that operations include the various activities performed by company in
making that products to provide its customers with high satisfactions. From the above definition
I can say that The operations involve those activities which are required to transform the inputs
into outputs. Marks and Spencer is involved in providing high quality products and services to its
customers in order to increase their experience and satisfy their demands. Marks and Spencer
invest in IT systems to provide better supply chain management. There are various operations of
Marks and Spencer on which they don't have any control that includes loss of security of the
customer personal details that shows M&S have lack of appropriate control on its operational
strategies and plans.
I can say that Outbound logistics is a stage which is related to distribution of products and
services to customers. Marks and Spencer work with in – store shopping and shopping through
home catalogue and online shopping. In my opinion, The outbound logistics provided by Marks
and Spencer includes activities relating to storing, collecting and distributing the products and
services to the end – users. Marks and Spencer in order to make supply chain and distribution
more efficient is investing in warehousing to store the product for providing it to the consumers.
In my opinion Marketing and sales are the activities are related to providing information
to buyers about the products and services of the company to influence them to purchase those
products and services. I can say that Marketing activities helps Marks and Spencer to provide
information to their customers about the new products and services of company (Goh And et.al.,
2014). Marketing activities includes various promotional tools such as advertisement in various
newspaper, magazines, etc. and advertisement through social media that includes Facebook,
Instagram, etc. to promote the product and services of Marks and Spencer. These activities help
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Marks and Spencer in increasing their sales and gaining more profitability by increasing their
customer base.
I have determined that services are those aspects that will increase or maintain product
value. Marks and Spencer in order to gain customer loyalty are providing their customers with
high service quality to retain them in business. Also, Marks and Spencer provides free delivery
on orders above specific amount of purchase to increase their customer experience and to attract
potential customers towards the firm (Hopkins, 2014). I can describe that services includes
activities that are required to keep product and services to work effectively for the buyer after the
product is sold and delivered. This after sale services help Marks and Spencer in attracting more
customers towards the firm which helps in increasing the profitability in the apparel industry.
So, I have identified that Marks and Spencer in order to provide its customers with better
services is involved in improving their internal activities to enhance the customer services to
retain buyer in the business. The value chain model applied to Marks and Spencer provide
understanding that the firm in order to create value for its customers in improving its internal
activities and providing its customers with high quality products and service this helps the firm
in gaining competitive advantage in the industry of UK.
c) Appropriate adaptation that are undertaken by Marks and Spencer in response to external
business environmental forces
I have determined that there are various external factors that affect the business which
consist of Political factors, economic factors, technological factors and social factors etc. Marks
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Illustration 2: Value Chain Model
(Source: Components of porter's value chain, 2016)

and Spencer can adopt the external business environmental forces which influence on the
various activities performed by the firm. The organisation in order to get the positive influence of
these factors can adopt changes according to these factors which will help Marks and Spencer in
gaining competitive advantage against its competitors.
I have identified that Political factors include various laws and regulations which affect
the business activities such as changes in government policies or political changes which can
affect the business negatively. Marks and Spencer have to adopt this external force which have
its direct impact on the firm operations. Marks and Spencer made various strategies and
planning to adopt those changes which will provide benefit to the firm in the industry. Also,
marks and Spencer can adopt Pestle analysis which will helps the organisation in identifying
various external environmental forces to formulate strategis.
According to my views, Technological forces are the factors which will have a great
impact on the business activities and to overcome the impact of this factor marks and Spencer
have to adopt the latest technology to increase their customers base and to reach their customers
easily to provide them information about various products and services of Marks and Spencer.
Social factor has a great influence on the business operations and to get the positive
impact of these factors marks and Spencer will undertake this factor of adaptation which will
Improve performance and profitability in the apparel industry of UK. This factor will help the
business in identifying taste and preference of customers and their lifestyle to design the product
accordingly to increase their sales. I have identified that this factor will help the firm in
designing the product according to customers demands which will increase the profitability of
the firm.
I have analysed that economic factors can be beneficial for Marks and Spencer as this
factor is uncontrollable and if are not adopted than can have negative impact on business which
will reduce the profitability and performance of business in industry. I can say that Economic
factors include inflation, interest rates, changes in income level of customers etc. have direct
impact on business activities. For example, increase in Inflation will affect the prices charge by
M&S which will reduce the demand for the products offered by firm.
In my opinion, This factor is appropriate to adopt as it will affect the business activities
directly so to reduce the negative impact on functioning of Marks and Spencer. The company can
make various changes accordingly to get the competitive advantages of this factor. Marks and
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Spencer will adapt these external factors to provide changes accordingly to get the competitive
advantages against the competitors which will improve their business profitability and will help
the firm in increasing their customer base. Marks and Spencer by adapting this change can
improve their functioning and can provide better services to its customers.
I have identified that Pestle analysis can help marks and Spencer in identifying the factors
which will hampers its business image and can take necessary action before the change arises to
gain competitive advantage. External factors have their positive and negative impact on business
operations and Marks and Spencer are adapting PESTLE analysis to reduce the chances of
negative impact of these factors on organisation. Marks and Spencer provides products
according to the trend existing in the market to provide customers with products according to
their demand.
In my opinion With the help of pestle analysis, The company can adopt the latest
technology which will helps the firm in providing products and services to customers easily to
build strong relation with customers which will assist in retaining the customers in business. By
using social factors, organisation is able to provide products and services according to the
changing customer preferences and demands.
By adapting this external forces M&S will be able to manage the stable flow of logistic
and will improve the various operational activities of the firm. Marks and Spencer is operating in
different countries and maintain its position in the industry it has to provide its customers high
quality products and services according to their demands and have to follow various political
changes occurring in the particular country to exist in the market. I can say that Marks and
Spencer by adapting this factor can build a strong position in the industry which will be
beneficial of the firm to increase their customers. External factors are uncontrollable and thus
organisation cannot control them so firm gave to adopt these changes otherwise it can affect the
operation of organisation negatively.
d) Reflection on usefulness of Porter 5 forces model and its limitation
In my opinion porter 5 forces model analysis helps company in identifying various
factors affecting firms in the industry. These assist the company in identifying its competitive
environment that affect the profitability of the company. Like, the bargaining power of suppliers
and buyers affect the prices and cost of the products and services of marks and Spencer. This
model is useful for marks and Spencer because it provides organisation to measures the
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competitiveness and profitability of industry (Shapira and et.al., 2014). I have determined that
Porter five forces model is useful for business as it provides information about the various
competitive forces. It is a tool to measure the competitive environment which may affect the
business profitability and can reduce the market share of organisation.
The five forces model includes threat of new entrants, rivalry among existing firms,
threat of substitute products and services, bargaining power of suppliers and buyers which affect
the profitability and position of organisation in the industry. This model is useful as it helps the
organisation in implementing strategy which is suitable in competitive environment. I have used
this model in my study as it provides various benefit to organisation. This model assist in
developing various strategies that will be beneficial for the industry.
I have identified that porter five forces model in useful for companies to determine their
position in the market. Bargaining power of suppliers in this industry is low because there are
numbers of suppliers in Apparel industry and thus its organisation with advantage to switch to
other suppliers if the supplier bargains. Five forces model is used by marks and Spencer as it
provides information which is useful for increasing the market share and profitability of the firm.
This information includes statistical analysis, dynamical analysis, analysis of opinion etc.
statistical analysis assists in determining attractiveness of industry. Dynamical analysis provides
future insights of the business by identifying information about various factors such as political,
economic, technological etc. Analysis of option help the company to develop options to improve
the firm competitive position.
On the basis of information gathered by me it can be said that porter five forces model
helps the company in identifying information about influence of various factors on their
business. I have identified that this model is useful for marks and Spencer to get information
about various factors affecting the operation of the firm. This model supports the company in
identifying information such as switching cost of firm in industry. Also, support the firm in
making effective decision to improve the profitability and position of the company in Apparel
industry. I have gathered information about porter five forces model which has provided me with
understanding of various usefulness of this model and includes information which helps the firm
in making various strategies and planning to improve the business operations to gain competitive
advantage and to retain its customer ion business. Industry can measure the competition between
firms and can identify the future growth of the industry on the basis of these factors. It helps the
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industry to identify the customers bargaining power to determine the price of products and
services offered by industry.
There is various limitation of this model like, it assumes all business relationship are
competitive. Also, this model does not consider non- market forces. Furthermore, it does not
consider the fact that large firm can change their structure. It assumes that industrial factors are
primary determinants of profitability of the company. It is a framework and not a set of
principles. This model is relevant at the level of strategic business unit not at the level of whole
organisation. On the basis of information gathered by Me it can be identified that there are
various limitations which are provided by this model because it considers the whole industry
rather than organisation.
CONCLUSION
From the above study it has been concluded about the Apparel industry make use of
Porter five forces model to analyse various factors which has included threat of new entrants,
threat of substitute, bargaining power of suppliers and buyers and rivalry among existing firms.
Furthermore, this essay has provided understanding to me about value chain model that has
analysed the internal business environment of Marks and Spencer that has determined various
activities that has supported in creating value for the customers which consisted of inbound
logistics, outbound logistics, marketing and sales, operations and service. Also, it has undertaken
appropriate adaptation by Marks and Spencer relating to external environmental forces that
consisted of political factors, economic factors, social factors and technological facts which have
their positive and negative impact on business operations. Moreover, this essay has included
reflection on usefulness of porter's five forces model and its various limitations that provided
with usefulness with regard to profitability and competitiveness in the industry.
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REFERENCES
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Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hopkins, D., 2014. The sustainability of climate change adaptation strategies in New Zealand's
ski industry: a range of stakeholder perceptions. Journal of Sustainable Tourism. 22(1).
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Iritani, D.R. And et.al., 2015. Sustainable strategies analysis through Life Cycle Assessment: a
case study in a furniture industry. Journal of Cleaner Production. 96. pp.308-318.
Lin, B. and Ouyang, X., 2014. Analysis of energy-related CO2 (carbon dioxide) emissions and
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pp.688-697.
Potts, R., 2017. Early Hominid Activities at Olduvai: Foundations of Human Behaviour.
Routledge.
Shapira, P. and et.al., 2014. Probing “green” industry enterprises in the UK: A new identification
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ONLINE
Components of porter's value chain. 2016. [Online]. Available through
:<http://www.marketingstudyguide.com/structure-porters-value-chain/>
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Understanding Porter’s Five Forces. 2016. [Online]. Available through
:<http://topexceltemplates.com/free-templates/michael-porter-five-forces-model-template-
excel/>
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