Global Clothing B2C E-Commerce Market Analysis

This assignment analyzes the global clothing B2C e-commerce market. It highlights the dominance of clothing sales in online retail, comparing it to other categories like consumer electronics. The report examines the competitive landscape featuring pure-play online retailers, brick-and-mortar stores, and specialized clothing brands. Regional trends are discussed, showcasing varying market shares across developed and emerging markets. Major players like Tmall, Flipkart, Amazon, Zalando, and MercadoLibre are mentioned as examples of successful contenders in different regions.

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TABLE OF CONTENTS
1.0 INTRODUCTION...............................................................................................................................4
2.0 PERFORMANCE ...............................................................................................................................4
3.0 STRATEGY ........................................................................................................................................7
4.0 THE VIABILITY OF CURRENT STRATEGY.................................................................................8
5.0 PESTEL ANALYSIS AT UK.............................................................................................................8
5.1 Political Factors...............................................................................................................................8
5.2 Economic Factors............................................................................................................................9
5.3 Social Factors..................................................................................................................................9
5.4 Technological Factors.....................................................................................................................9
5.5 Environmental factor.....................................................................................................................10
5.6 Legal factor: .................................................................................................................................10
6.0 PORTER FIVE FORCES MODEL .................................................................................................10
6.1 Competitive Rivalry......................................................................................................................10
6.2 Threats of Substitutes ...................................................................................................................11
6.3 The Power of Supply.....................................................................................................................11
6.4 The Power of Buyer......................................................................................................................11
6.5 Threats of Entry.............................................................................................................................11
7.0 ENVIRONMENTAL ANALYSIS .................................................................................................11
7.1 Strengthens....................................................................................................................................11
7.2 Weaknesses...................................................................................................................................12
7.3 Opportunity...................................................................................................................................12
7.4 Threats...........................................................................................................................................12
8.0 CURRENT STRATEGY IDENTIFICATION AND EVALUATION ............................................12
9.0 STRATEGY SUGGESTIONS .........................................................................................................13
10.0 SUGGESTIONS TO THE BOARD ...............................................................................................13
REFERENCING......................................................................................................................................14
APPENDIX 1 (P. 163).............................................................................................................................16
APPENDIX 2(P. 164)..............................................................................................................................16
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APPENDIX 3(P. 164)..............................................................................................................................17
APPENDIX 4(P.44-51)............................................................................................................................17
APPENDIX 5(P. 195)..............................................................................................................................24
APPENDIX 6(P. 59)................................................................................................................................24
Illustration Index
Illustration 1: Sales figure of Marks and Spencer for past five years........................................................6
Illustration 2: Profit figure of Marks and Spencer for last five year .........................................................7
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1.0 INTRODUCTION
Marks and Spencer (M&S) has cooperated for over 130 years in United Kingdom. They have
over 1000 stores all over the world including Russia, China, India and Middle East countries. It sells
food, clothing, home ware and footwear. In addition to this, Marks and Spencer sold product of
different brands. It consists of classic collection, blue harbour and many other brands. In this regard, as
per the latest report, it is assessed that Marks and Spencer is losing its share in clothing market. From
the analysis, it is identified that the clothing sales of retailer has slipped by 0.4%. Furthermore, the
market share of firm was recorded as 10.4% in the year 2014. Moreover, significant decline was also
seen in the profit of company. The profits recorded was 603 million euro (Marks & Spencer's share of
the UK clothing market continues to slide, 2016). This report is analyzing their strategy with macro and
micro environment, SWOT and giving out recommendation and alternatives in future.
2.0 PERFORMANCE
Year ended Turnover (£ M) Profit before tax (£ M) Net profit (£ M) Basic eps (p)
30 March 2013 10,026.8 564.3 458.0 29.2
31 March 2012 9,934.3 658.0 489.6 32.5
2 April 2011 9,740.3 780.6 598.6 38.8
3 April 2010 9,536.6 702.7 523.0 33.5
28 March 2009 9,062.1 706.2 506.8 32.3
29 March 2008 9,022.0 1,129.1 821.0 49.2
31 March 2007 8,588.1 936.7 659.9 39.1
1 April 2006 7,797.7 745.7 520.6 36.4
2 April 2005 7,490.5 505.1 355.0 29.1
3 April 2004 8,301.5 781.6 452.3 24.2
29 March 2003 8,019.1 677.5 480.5 20.7
30 March 2002 8,135.4 335.9 153.0 5.4
31 March 2001 8,075.7 145.5 2.8 0.0
1 April 2000 8,195.5 417.5 258.7 9.0
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31 March 1999 8,224.0 546.1 372.1 13.0
31 March 1998 8,243.3 1,155.0 815.9 28.6
31 March 1997 7,841.9 1,129.1 746.6 26.7
31 March 1996 7,233.7 965.8 652.6 455.8
Recently, M&S is expanding the stores in worldwide (Appendix 4) such as India and China.
This strategy has been popular in other rivals such as Tesco and Sainsbury as well.
The above figure showcases the sales of company for past five years. In this context, it can be
said that there is an increasing trend which is being assessed for the sales of firm. For example, during
the year 2009, company’s sales were recorded as 9022 million euro. However, its sales figure increased
to 10026.8 million euro in the year 2013. The difference was minute but still it can be said that the firm
is performing well in market.
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Illustration 1: Sales figure of Marks and Spencer for past five years

The above figure depicts the necessary variations in the profits of company. In accordance with
the given context, the profit of company was improved from 2009 to 2011. But, after 2011, a
significant decline was seen in the profit of company. This depict that the firm is not performing well in
market and hence require number of improvements.
3.0 STRATEGY
Before making the strategy, a manager of firm will formulate the goal for the company. This is
because; it is through an effective goal only the objective of an enterprise will be met. For example, the
firm has a goal to improve the sales of its company by 10% till the year 2014.
The goal which manager of cited firm has set will be achieved, if it has competency and
resources with regard to the same. Here, in order to evaluate the resource and competency of Marks &
Spencer, the tool such as VRIO can be used. The firm carries out the production of its goods and
services as per the specific needs and demands of its buyers. Furthermore, the Marks and Spencer has a
very good relationship with its supplier which provides several benefits to the firm. Thus, these can be
considered as two basic core competencies of the firm (Paliwoda and Marinova, 2007). The respective
core competency of firm is analysed with the help of VRIO framework. Its detailed explanation is
depicted in below: Value: The core competency of corporation is valuable as it enables firm with regard to take the
action towards all the threats which lead to hamper the operations of enterprise. For example,
the threat of sudden change in the needs and demands of the buyers will be undertaken by cited
firm by taking help from its supplier. This is because; with the help of supplier, firm can
perform the production of such product which is being demanded by its buyers.
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 Rare: The core competency of firm is not rare as it has been practised by many other rivalries of
firm as well (Haro and Menot, 2014). Imitable: But, the major disadvantage which is associated with the firm's core competency is
that it can be easily imitated by its competitors.
 Organisation: The firm has full ability with respect to exploitation its resources in an effective
way.
Overall, it can be said that there are some complications which are associated with cited firm’s
core competency, but still these are providing competitive advantage to the corporation. Furthermore, it
is helping firm with respect to attain high profits and sales in an effectual way (Schläfke, Silvi and
Möller, 2013).
4.0 THE VIABILITY OF CURRENT STRATEGY
M&S dropped rapidly on 1999 to early 2000 but then it rises again after 2007. According to the
figure 1-3, they have no significantly drop or rises in past five years. However, they do maintain stably
revenue these years. (Appendix 1-3). After Marc Bolland has been taken the CEO form Stuart Rose,
the revenue didn’t grow these years. Only Rose had kept M&S recovered only so far. Specifically, it
has been noted that “Bolland is pretty much following the same course as Rose: improve the core UK
operations, develop an online business worthy of the M&S name and expand internationally”
(MacDonald, 2011). They provide food and clothing and still not generate the sales in the high
spending power group.
5.0 PESTEL ANALYSIS AT UK
To be successful, organizations need to recognize around its environmental impacts and trends.
Pestel analysis can achieve this goal, and provides a complete picture of the surrounding issue in the
work of various forces. Pestel analysis of measurement based on external factors, the company's market
and potential; political, economic, social and technological. The macro environment consists of larger
forces that effect the micro environment included Political Factors, Economic Factors, Social Factors
and Technological Factors. (Kotler, 2005)
5.1 Political Factors
Marks & Spencer is headquartered in a stable political program, and there is no serious threat to
the UK. Terrorist attacks raised concern that the political situation on 2015. However, things have been
brought under control due to strict security system. The third consecutive term services which is the
current Labour team, has basically proven to be very effective and efficient. Tax system in the UK is
one of the most attractive in the low corporate and personal income tax among developed countries.
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Marks & Spencer is based in the UK which has a stable political scenario and there are no serious
threats to it. Terrorist attacks in July 2005 did raise concern over the political situation; however, due to
tight security measures things have been under control since then. The current Labour administration,
which is serving its third consecutive term, has generally proved to be efficient and effective.
5.2 Economic Factors
Marks & Spencer needs to be analyst the economic through roughly. It is vital to consider in the
short and the long term economic conditions such as GDP, employment levels, inflation, interest rates
and other issues. It should have a marketing plan which included the strategy, to take all of these
problems encountered, and to ensure the sustainability of the competitive position. UK's current
economic situation is conducive to low to moderate interest rates indicates economic health. A healthy
and good economy is the sign of citizen’s income as well as good business. It needs to focus more on
the young generation fashion arena because they actually spend most of their disposable income on
clothing. The economic aspect includes the factors such as unemployment rate and GDP of the country
etc. All these given factors tend to influence the work of enterprise. For example, majority of citizens
within country are unemployed as they lack the necessary skills which are required with an aim to
achieve the goals and objectives of enterprise. In the given situation, recruitment and selection process
of Marks and Spencer will be impacted. This is because; in this circumstance, it will become difficult
for the cited firm with regard to fulfil its needs related to the employees in an effectual way (Singh and
Munjal, 2012).
5.3 Social Factors
Impact on corporate social and cultural vary from country to country. M&S not only focus in
the UK, but where in the whole world's 30 regions are operating a diverse socio-cultural arena. The
management team needs to be addressed, such as consumer favor and preferences, attitudes to foreign
products and services, the time, the consumer can be specifically used for recreation, aging population
amount and mortality. Taking into these factors will be equipped with the appropriate organization to
meet the needs of the consumers. (Mr. Gadget, 2011). In addition to this, cited firm has products for all
age group buyers. Thus, it can be said that it tends to target all types of customers.
5.4 Technological Factors
Since M&S is a worldwide retailer, online shopping is necessary nowadays. However, the
delivery has an issue such has no one can reach if goods delivered. And also, for online shoppers, items
cannot be trying on or see the real items and quality. The firm must streamline its operation as per new
and latest technology. This is because; if it does not perform, then in the given situation also, it
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becomes difficult for the cited firm with regard to maintain its competitive position in the market in an
effectual way.
5.5 Environmental factor
The firm should make significant actions towards protecting the natural environment of the
country. This is because; through this way only, Marks and Spencer can gain the trust of its supplier.
This will assist firm in the process of improving its sales and profits (Larsen, Tonge and Lewis, 2007).
5.6 Legal factor:
It is required by the cited corporation that it should abide all the legal laws and regulations
which are prevailing within the country. This is because; if it does not abide them, then for the firm, it
becomes very difficult task in terms of carrying out its operation in an effectual way.
Marks and Spencer used the differentiation tactic in order to compete with the competitive
business environment. In this regard, it is assessed that firm offers wide range of products.
Furthermore, the goods and services which firm offer changes as per the needs and demands of the
citizens of specific nation (Giovanni, 2012).
6.0 PORTER FIVE FORCES MODEL
Figure 1.
(Rodrigo, 2012)
6.1 Competitive Rivalry
M&S is a retailer of selling food, clothes and household and is extremely fierce. The
competitors with this sector included Tesco, Asda and H&M or Zara is one of the competitors among
clothing retailer. As M&S keep differentiate itself to position to a high quality and worth to buy so it
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started to cut off the price. However, it took the risk to downgrade their brand value. Thus, it can be
said that the company faces intense competition from the competitors.
6.2 Threats of Substitutes
As M&S provide food and clothes, there’re no direct substitutions can be replaced. A
Substitution can take the place of M&S and reduced the demand of the products when consumers
prefer to another alternatives. Tesco might be one of the major substitutes and a lot of stores selling
high quality food and beverage. They are one of the largest supermarkets in UK. H&M or Topshop also
their substitutes in UK. They provide low-cost products and up to trend fashion. Hence, it can be stated
that the threat of substitute product is moderate for the cited firm.
6.3 The Power of Supply
M&S has large amount of suppliers and also they have their own brands on some preserved
food. They have well reputation so it can maintain well on the supply chain. High bargaining power
can get a better offer for supply and logistic. This is low for the supplier of cited corporation. This is
because of the presence of number of suppliers who are ready to deliver product which is being
demanded by the enterprise (Carpenter, Sanders and Harling, 2012).
6.4 The Power of Buyer
The threat of buyer is high because alternatives retailers have a lot around. Customers can
choose other with lower price with almost the same quality. They have to maintain good quality in
order to sustain the growth rate. In addition to this, different competitors of Marks and Spencer offer
same type of products which it delivers to the respective. Thus, it can be considered as another most
crucial reason behind high bargaining power of buyers.
6.5 Threats of Entry
It has high difficulty to enter the market. M&S has build up high reputation. And also gained a
long heritage and established for over hundred years. It is hardly to set up a successful chain around the
world since M&S already very mature in the industry. (Appendix 5). In addition to this, there are many
legal complications that are also associated with the given industry. Thus, it is due to the presence of
given aspect, threat of new entrant is moderate in the retail sector.
7.0 ENVIRONMENTAL ANALYSIS
7.1 Strengthens
Marks and Spencer is a well-known brand across UK and also has over 400 stores in
worldwide. It built up a good reputation and brand image especially among over 50+ age’s women. It
has sustainable loyalty for customers. M&S has very good quality and their brand has been
synonymous with reliability, value and quality. M&S is regarded as setting the standards to other
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retailers while have tried over the years. Until now, M&S is the UK’s most enviable records of success
one of the best managed companies for growth and profits.(Unkown,2013) It has strong sales of food
and also making use of the technology through online selling. (Appendix 6). These all can be
considering as the major strengths of company which tend to enable it with respect to achieve high
profits and sales in the environment which is highly competitive.
7.2 Weaknesses
Weaknesses are one of the issue making the business dropped in past few years. M&S is
positioning in female fashion and targeting over 30years old women. The outdated fashion trend
decreases the volume of young aged women customer. Another problem it appears is too high cost. As
the crisis on 2009 in Europe, people have less disposal income and spending less on luxury products. it
can compare with other lost cost rivals like Topshop, Next or H&M.
7.3 Opportunity
The online channel is growing rapidly nowadays. Using internet shopping becomes daily life
for people. Convenient delivery, easier selection and various view of products and comparison made
business better. Increasing the stores network can extend the market in order the increase the revenue.
Market segmentation can divided to different group of interest and taste of consumer. It will also
decrease the maintenance cost but increase the profit compare to mega stores. In addition to this, cited
firm has the opportunity with respect to get entry in the market which is not being targeted by the firm.
Furthermore, it has the chance to introduce new products and services in market.
7.4 Threats
Strong competitors is one of the threats in M&S. The fashion retailer such as Next, Gap or
H&M. The food stores in UK such as Tesco and Sainsbury. These are also providing high quality and
value-added products to develop customer’s loyalty. Furthermore, constant changes in the needs and
demands of the buyers are being considered as one of the major threats of the company. However, firm
can use its core competencies with an aim to take the action towards the threat in an effectual way.
8.0 CURRENT STRATEGY IDENTIFICATION AND EVALUATION
From the above analysis, it is assessed that Marks and Spencer has the goal improve its profit
by 10% till the year 2014. Here, with an aim to attain the respective goal, firm is taking help from
different marketing means such as placing advertisement in television and social networking sites etc.
Here, by complying with the given type activity only, firm can attract large number of buyers towards
its products and services in an effective way. Thus, the given practices will assist firm in the process of
attaining the above mentioned goal (Turki, 2011). In this context, an evaluation is being carried out
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with an aim to assess that whether firm has achieved the respective objective or not. In this regard,
from the 2014 net profits status of company it is assessed that firm has earned the profit of 474 million
euro. This indicates that the firm has not achieved its goal to improve the profits of firm by 10%. Thus,
it can be said that the strategy which firm has employed will be proved as ineffective or not working
properly.
9.0 STRATEGY SUGGESTIONS
From the conducted analysis, it can be said that the corporation must use cost focus tactic. In
this regard, it should make efforts with regard to reduce the cost which is being invested by the firm in
an effectual way. Here, by applying the given tactic firm can attain its goal of increasing the profits of
firm by 10% in an effectual way. But, the suggestion given will lead to brought several changes within
enterprise which is generally being resisted by the employees. Hence, it can be consider as one of the
major disadvantage which is associated with the suggested tactic (Carpenter, Sanders and Harling,
2012). Generally, the stores are spacious and it has quite a lot of spaces are empty. The management
team can redesign each store or cut some floor space in order to putting more products or reduce the
rental expense. Besides to maintain the good quality, up-to-dated fashion is very important to face the
competitors. To increase the new items on selves more frequent can increase the customer visit the
stores again more often. It can also adapt the season change suddenly so they can switch to warmer or
cooler clothing. On the other hand, also keep attracting the cash of rich 30+ years old female
demographic.
10.0 SUGGESTIONS TO THE BOARD
The strategy to make use of different advertisement tactic has not work well. Thus, it is
recommended to the firm that it should use the cost focus tactic as mentioned above with an aim to
accomplish the goals and objectives of the enterprise. If this is done, the goal which firm has set out
will be met in an effectual way.
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REFERENCES
Books, journals and online
MacDonald, G. (2011). For M&S’s Bolland, Success is in the Detail, Retail Week. [Online] Available
from: http://www.retail-week.com/city/for-mss-bolland-success-is-in-the-detail/5025603.article
[Accessed 28th February]
Kotler P. Amstrong, G. (2005) Marketing: an Introduction, 7th edition, Prentice-Hall
Mr. Gadget (2011) Marks & Spencer's PEST Analysis [Online] Available from: http://mr-
gadget.hubpages.com/hub/Analyse-your-own-organisation-or-division-in-organisation
[Accessed: 27th February 2015]
Rodrigo (2012) Strategic Analysis of Marks and Spencers Plc (M&S) [Online] Available through
<http://writepass.com/journal/2012/12/ms-and-modifies-its-business-strategies/>. [Accessed:
28th February 2015].
UK Essays. (2013). Evaluation Of Swot Analysis Of Marks And Spencer Business Essay. [online]
Available from <http://www.ukessays.com/essays/business/evaluation-of-swot-analysis-of-
marks-and-spencer-business-essay.php?cref=1>. [Accessed 28th February 2015].
Marks & Spencer's share of the UK clothing market continues to slide. 2016. [Online]. Available
through: <http://www.theguardian.com/business/2014/sep/12/marks-and-spencer-uk-clothing-
market-share-slides>. [Accessed on 12th February 2016].
Haro, P. S. and Menot, S., 2014. Strategic management of arts organizations. Éditions JFD Publishing.
Larsen, P., Tonge, R., and Lewis, A., 2007. Strategic planning and design in the service sector.
Management Decision. 45(2). pp.180–195.March 2014].
Paliwoda, S. and Marinova, S., 2007. The marketing challenges within the enlarged Single European
Market. European Journal of Marketing. 41(¾). pp. 233–244.
Carpenter, A. M., Sanders, G. W. and Harling, F. K., 2012. Strategic Management: A Dynamic
Perspective – Concepts. Pearson Education Canada.
Giovanni, D. P., 2012. Do internal and external environmental management contribute to the triple
bottom line?. International Journal of Operations & Production Management. 32(3). pp.265 –
290.
Schläfke, M., Silvi, R., and Möller, K., 2013. A framework for business analytics in performance
management. International Journal of Productivity and Performance Management. 62(1). pp.
110–122.
Singh, A., and Munjal, S., 2012. Issues and concerns in technology decisions: the hotel operator's
perspective. Worldwide Hospitality and Tourism Themes. 4(2). pp.174–184.
Turki, U. A., 2011. A framework for strategic planning in maintenance. Journal of Quality in
Maintenance Engineering. 17(2). pp. 150–162.
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APPENDIX 1 (P. 163)
APPENDIX 2(P. 164)
APPENDIX 3(P. 164)
APPENDIX 4(P.44-51)
M&S drafts 3-year global expansion plan
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http://cn-en.kantar.com/business/retail/ms-drafts-3-year-global-expansion-plan/
#sthash.49rK3Now.dpuf
Source: Kantar Retail
Business // Retail 04.08.2014
VIVIAN JIANG Analyst
Marks & Spencer Hanger Middle
Marks and Spencer (M&S) plans to accelerate its international operations expansion and add
250 stores by 2017. The growth will be focused on China, India, the Middle East, Russia and Western
Europe.
M&S is using a "bricks and clicks" strategy nuanced in flagships with clicks in high online penetration
markets and flagships and store density in lower online penetration markets.
M&S's strategy is to open flagships in main cities and online stores in a strategy called "bricks and
clicks".
By the end of 2013, M&S owned 455 stores in 53 territories and had 9 dedicated online stores.
Europe
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M&S aims to reach GBP 250 million sales by 2017 from its operations in Western Europe
excluding Spain, Italy and the UK. During 2014, M&S plans to open online stores in Russia and
Finland. M&S is considering expansion of stores in Milan (Italy), Madrid and Barcelona (Spain). In
France, 20 new M&S "Simply Food" stores will open in Paris in the next five years, making France the
largest food-oriented operations. The retailer plans to reach profitability in the next three years in the
country. M&S will offer same or next-day food delivery across the majority of European operations.
Middle East - Asia
The retailer plans to open especially apparel/clothing stores in China, Russia, India and the
Middle East. M&S opened a new M&S lingerie & beauty concept in Saudi Arabia that will also expand
into India. In Saudi Arabia the retailer owns two new format stores and plans to reach 10 stores in the
next two years. In India the first lingerie & beauty store will open during spring 2014 and aims to reach
20 stores in the next two years. M&S plans to expand India operations and targets 100 stores in the next
two years from 38 current stores operated in joint venture with Reliance Retail. The retailer is also
expanding to secondary cities such as Surat and Kanpur. China operations are currently owned and
have mixed results with strong results in Hong Kong. The retailer is currently looking for a local
partner to develop the operations in the country. The operations are concentrated currently in Shanghai
and Hong Kong.
Ultimately this indicates that M&S is looking for growth internationally in order to offset its
core UK market issues. However, whilst the food operation may be growing globally, including the
UK, it still has to resolve its rapid decline in clothing sales to maintain its long term profitability.
Alibaba to buy stake in department chain Intime Retail Intime Retail (Group) Co Ltd said Alibaba
Group Holding Ltd would invest HK$5.37 billion (US$692.25 million) in the Chinese department store
operator Intime Retail. Intime will issue 220.54 million shares (account for 9.9% shares) at HK$7.5335
each and HK$3.71 billion worth of convertible bonds to Alibaba. The two parties agree that Alibaba
could convert its convertible bonds to Intime's common shares, which will finally make Alibaba's share
to be no less than 25% in three years' time. The two companies will form a joint venture to develop
online-to-offline (O2O) business.
Lianhua 2013 profits nosedive
Lianhua Supermarket announced 2013 results on March 26. Overall sales grew 4.8% to 30.38
billion yuan over 2012. Overall comparable store (comps) sales grew 2.13%, an increase of 2.85
percentage points from last year, benefiting mainly from optimization of product mix, effective
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promotion and continuous transformation of outlets. The Group recorded a gross profit of 4.36 billion
yuan, representing an increase of approximately 11% year on year, and the gross profit margin
increased by 0.81 percentage point to approximately 14.36%. The rising costs drove the operating
profits of the Group decline drastically. During the period under review, the Company recorded an
operating profit of 265.81 million yuan, representing a decrease of 48.1% year on year. Operating
profit margin decreased by 0.9 of a percent point to 0.87%. The net profit attributable to its parent
company's owners decreased by 84.4% to 52.95 million yuan. The net profit margin attributable to
shareholders of the Company was 0.17%. As at December 31, 2013, the Group had a total of 4,530
outlets, a decrease of 168 outlets from the end of 2012. The decrease was attributable to the closure of
some franchised stores.
Hypermarket Division
Sales grew 5.7% to 18.2 billion yuan, accounting for 60% of the Company's overall sales. Same
store sales growth (SSSG) was 1.22%. Gross profit margin increased by 0.93 of a percentage point to
13.8%. Operating profit decreased by 57.8% to 98.56 million yuan. Operating profit margin decreased
by 0.81 of a percent point to 0.54% due to increase of labour cost and provision made for store closure
so as to improve outlet quality. During the period under review, three hypermarkets were opened in
Hangzhou, Zhejiang Province, which helped consolidating the Company's market share in the area. By
the end of 2013, total hypermarket count has amounted to 156.
Supermarket Division
Sales increased by 3.4% to 10.15 billion yuan, accounting for 33.4 percent of the Company's overall
sales.
Same store sales growth (SSSG) was 2.61%.
Gross profit margin increased by 0.49 of a percentage point to 15.09%.
Operating profit increased by 4% to 294.82 million yuan.
Operating profit margin was 2.9%, the same as that of 2012.
During the period under review, 153 new supermarkets were opened, including 21 directly-operated
stores and 132 franchised stores. By the end of 2013, total supermarket store count has amounted to
2,469 (including 641 directly-operated and 1828 franchise stores).
Convenience Store Division
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Sales increased by 5.3% to 1.93 billion yuan, accounting for 6.4% of the Company's overall
sales. Same store sales growth (SSSG) was approximately 11.13%. Gross profit margin grew 1.24
percentage points to 16.13%. Despite good performance in same store sales growth, operating loss of
the convenience store division was 86.44 million yuan due to rise in labour cost and rental cost and
operating profit margin dropped to negative 4.47%.
During the period under review, 156 new convenience stores were opened, including 52
directly-operated and 104 franchised stores. A total of 160 stores were successfully transformed. The
Group gradually optimized the market positioning, in-store environment and merchandise display of its
outlets to improve their quality. By the end of 2013, total Convenience store count has amounted to
1,905 (including 929 directly-operated and 979 franchise stores).
Wumart net profits down by more than 20%
Wumart announced 2013 results on March 28, 2014.
In 2013, the Group achieved a total revenue of approximately 18.9 billion yuan, an increase of 9.0%
over the corresponding period in 2012. The growth in total revenue was attributable to:
(1)Total revenue growth driven by newly opened stores
(2) The rising rental income
(3) Constant comparable store sales growth (approximately 3.0%)
Consolidated gross profit amounted to approximately 3.8 billion yuan, an increase of 12.1% over the
corresponding period in 2012. The Group's consolidated gross profit margin was 20.1%, growing from
19.5% in 2012. The increase in consolidated gross profit margin was mainly attributable to the increase
in gross profit margin of fresh items and the increase in rental income. Net profit attributable to owners
of the company decreased by 23.7% to 459 million yuan; net profit margin declined from 3.5% to
2.4%, the first time below 3.5% in recent five years. The decrease in profit was attributable to:
(1)The extended initial incubation period for new stores
(2) The loss on one-off disposal of assets resulting from store closure
(3) The pace of rising staff cost exceeded the sales growth
(4) The expedited increase in rental rates for new stores
The Company opened 61 new stores in 2013, closed down 52 stores, bringing its total store count to
547 (155 Superstores and 392 Mini-marts), including three Superstores and 32 Mini-marts there were
Assignment 1 Page 18

not owned but managed by Wumart. In 2014, the Group will continue to remain its pace of store
opening as in existing regions and leverage the growing market share. The Group will also endeavour
to uplift its new competitive advantage in fresh products, logistics systems, procurement approach and
so forth.
Bu Bu Gao 2013 net profits up nearly 22%
Bu Bu Gao released 2013 annual report on March 28, 2014.
Overall sales grew 13.81% to 11.39 billion yuan.
Operating income increased by 26.36% to 528.9 million yuan.
EBIT rose 21.08% to 541.61 million yuan.
The net income attributable to its parent company's owners increased by 21.16% to 415.45 million
yuan.
The overall gross margin for the group increased by 1.04 percentage point to 22.31%, whereas
its hypermarket & supermarket business achieved a gross margin of 18.04%.
The sales of its hypermarkets and supermarkets together accounted for 58.18% of the total
sales, and the Hunan region generated 92% of total sales
The company opened 20 new stores and closed down one store in 2013, and it newly entered
Sichuan & Chongqing and Guangxi regions in 2013, which brought its total store count to 179,
including 152 hypermarkets & supermarkets and 27 department stores.
In December 2013, Bu Bu Gao launched its online business, and it will focus on developing its
O2O strategy in the coming years
Bu Bu Gao expects its sales to grow steadily and the net income to increase by 15%-25% in 2014.
Carrefour shuts down a Ningbo hypermarket
Carrefour closed down one store in Ningbo City, Zhejiang Province, on April 1, 2014. The store was
opened on February 1 in 2008, and was the second Carrefour hypermarket in Ningbo.
The selling space was above 7,000 square metres. This store was only 500 meters away from a Tesco
Hypermarket and had suffered unsatisfactory performance since opening.
Marks & Spencer eyes opening 80 stores by 2016 in India
Assignment 1 Page 19

http://www.livemint.com/Companies/pBTUmPO6CujRfXDtj1c5mK/Marks--Spencer-eyes-opening-
80-stores-by-2016-in-India.html?utm_source=copy
M&S on Thursday inaugurated an outlet in Hyderabad and plans to further open up two new
stores in the city this year PTI inShare 3 3 inShare 0 Comments Subscribe to: Daily Newsletter
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Modi launches charm offensive ahead of budget session Opposition stalling reforms, says Jaitley Marks
and Spencer, opened its first store in India in 2001, and currently runs 42 outlets across the country.
Photo: AFP Hyderabad: Marks & Spencer Reliance India Pvt. Ltd plans to add 38 outlets to take the
total number of stores in India to 80 by 2016, a top official of the British retailer said on Thursday.
M&S on Thursday inaugurated an outlet at Jubilee Hills an upmarket area of the city. Venu Nair,
managing director of Marks & Spencer Reliance India, also said two more outlets will be opened in
Hyderabad by the end of December. “Currently, we have 42 outlets across India. We plant to take that
number to 80 by 2016. M&S has also announced it will further open up two new stores in Hyderabad
Assignment 1 Page 20

by December 2014,” Nair rold reporters. With the opening of three stores within the same fiscal year,
Hyderabad will become one of the top priority markets in India, he added. “Our new store (in
Hyderabad) is designed to delight and excite our customers and its a pleasure to bring our extensive
range of exceptional quality, innovative clothing and beauty ranges to more customers across
Hyderabad,” he added. Marks & Spencer opened its first store in India in 2001 and in April 2008
signed a joint venture with Reliance Retail to form Marks & Spencer Reliance India Pvt Ltd.
Established in 1884 in UK, M&S stores are located in Delhi, Gurgaon, Noida, Amritsar, Mumbai,
Pune, Kolkata, Bangalore, Chennai, Kochi, Baroda, Surat and Hyderabad in India.
APPENDIX 5(P. 195)
Threat of New Entrants. Threat of new entrants is low. This is because it takes enormous capital
investments to set up a successful chain of stores. The market is mature and an entrant would need to
offer something radically new, which is rather difficult to do in food and apparel retailing. All major
retailers have strong established brand names and so enjoy customer loyalty, which becomes
increasingly important in homogenous markets (Doyle, 2002). The incumbents are firmly holding their
market shares and would utilise all means to counter any new entrants, including litigation.
Importantly, absence of experience and knowledge of operating in these markets - especially for
foreign companies - would be a barrier to any new entrants.
APPENDIX 6(P. 59)
Research and Markets: Global Clothing B2C E-Commerce Market 2015
http://www.businesswire.com/news/home/20150203005551/en/Research-Markets-Global-Clothing-
B2C-E-Commerce-Market#.VO3xFvmUePt
February 03, 2015 06:58 AM Eastern Standard Time
This new report confirms that clothing is one of the largest segments of the online retail market
worldwide. The report Global Clothing B2C E-Commerce Market 2015, shows that clothing is in close
rivalry with the consumer electronics category for first rank among product categories by share of
online shopper purchases and tops it in many countries. Pure online, store-based mass merchants and
clothing specialists worldwide compete for a share of this booming market.
Clothing has been the most purchased physical product in recent years in many countries across all
regions, including the UK, Russia, China, India, Spain, Italy, Turkey, Mexico. In selected developed
markets, such as Germany, it tops all other categories in terms of sales volume. However, in some
emerging markets, like the Middle East, it is significantly behind consumer electronics in terms of
Assignment 1 Page 21

market share. Clothing was also the leading category in global cross-border B2C E-Commerce in 2014,
accounting for over a third of all cross-border online purchases.
The competition landscape features online pure-plays, store-based and multichannel retailers, clothing
specialists, brands and mass merchants. In China and Japan online mass merchants and marketplaces
are the most popular destinations among online shoppers who want to buy clothing. Tmall has a
dominant share of the online clothing market in China, hosting local and foreign brands and sellers. In
India, the largest general online retailers merge with clothing specialists to increase their share of the
booming market: Flipkart acquired the online fashion store Myntra in 2014 and Amazon was reported
to be in talks to buy another one, Jabong.
In the USA, on the other hand, apparel and footwear brands are second in popularity after online mass
merchants for buying clothes. One of the largest store-based apparel specialists in terms of online sales
in 2013 was Gap. In Europe, German online clothing retailers Zalando and Bonprix operate across
several countries, as also do France-based La Redoute and UK-based Asos. European store-based
retailers of apparel such as H&M, C&A, Marks & Spencer and Next were also popular among online
shoppers in the UK and Germany. Meanwhile, in South Africa online mass merchants Kalahari and
Amazon dominated by share of online buyers of clothing, and in Latin American countries
MercadoLibre's marketplace was a popular shopping destination, along with online fashion specialists
such as Dafiti.
Assignment 1 Page 22