Analysis of Next Plc in the UK Retail Sector

This report analyzes Next Plc in the UK retail sector, including an introduction to the retail sector and the company, a PESTLE analysis, Porter's five forces model, and strategies and tactics. Recommendations are provided for Next Plc to improve its competitive advantage.

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Table of Contents
INTRODUCTION...........................................................................................................................3
Introduction to retail sector..........................................................................................................3
Introduction to the company........................................................................................................3
PESTLE analysis of the company...............................................................................................4
Porter’s five forces model............................................................................................................5
Strategies and tactics....................................................................................................................6
Recommendation.........................................................................................................................8
Conclusion.......................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The following report includes information about the retail sector of UK. It consists of the
various models which helps a fashion company to analyse the strategies that it can use for
performing business. This reports starts with the introduction of retail sector’s knowledge and
introduction about the chosen company ‘Next’. There is PESTLE and Porter’s model used for
developing strategies that can be used by this company for sustaining within market.
Introduction to retail sector
Retail is defined as the way by which goods as well as services are provided to the consumers.
This consists of providing goods directly to the manufacturers or consumers. The retail industry
has huge scope as there is a large pool of potential customers which are involved in purchasing
of products (Wigley, 2011). According to the statistics, within the UK retail industry, there was
generation of 1.14 trillion euros last year. This industry has the possibilities to provide profits to
various businessman.
Introduction to the company
The chosen company for doing this report is Next Plc. This is a British multinational clothing,
footwear and home products which are having headquarters in Enderby. There are approximately
700 stores of this company and out of this, 500 stores are located in UK. This company provides
products in Asia, Europe and Middle east. This is one of the nest retailing company within UK.
This company has great competitive rivalry with Marks and Spencer. The founder of this
company was Joseph Hepworth and he started this company in the year 1864. Joseph worked
hard and expanded this company by becoming the pioneer for the development of various chain
stores in Britain. This company sold women wear retailer Kendall and Sons and acquired more
than 600 stores. Next company basically has three main channels – Next retail, Next Directory
and Next International. Next retail is chain of more than 550 retail branches in UK. The Next
directory is a home shopping catalogue and website which is having more than three million
active customers (Zhang, 2013). Nest international has stores across the world. This company
deals with the fashion product selling across the world. This is helpful for the company as there
are opportunities of earning more profits and money in the retail sector. Next Plc. Provides latest
trends and fashionable products to customers. These consists of women wear mainly and
fashionable accessories are also sold within it’s stores.

PESTLE analysis of the company
 Political factors – Political factors are having a significant role for determining factors
which impact profitability of next PLC. this company is operating in different countries
in retail sector and there are various political system and environment it has to face. This
company has achieved success because of the dynamic retail industry all over the
countries. After the Brexit seen, this company faced problem in entering into different
European countries. Earlier there was stability in the trading but after this case of Brexit,
there was some issues in continuing business in some of the places. when next PLC has
to operate business it has to verify that there is political stability and lack of corruption in
the countries where it is operating. Also there must be legal framework for contract in
enforcement and intellectual property protection for providing products and services in
different countries.
 Economic factors – There are various macro economic factors that affects operations in
next PLC. some of these are savings rate, inflation rate, foreign exchange rate, savings
rate and interest rate. On the other hand, there are some micro environment factors that
affects the competitive advantage of this company. there are various economic factors
like inflation rate, growth rate that can be used by the economic indicators of retail
industry and providing customers quality products. next PLC has to ensure that in what
type of economic system it is operating and there must be no government intervention
which is related to the consumer service (Level,2016). The exchange rate of different
countries affects the operations of next PLC in both positive as well as negative manner.
 Social factors - Social factors include the culture as well as believe that it a community
or society adopts. what is essential for next PLC that it is analysing all the cultural
aspects of society in which it is providing services. Also the believes and attitude of
customers plays a significant role for this company in understanding the demands of
customers effectively. It is essential for next PLC to analyse all the social factors before
launching any new product in market. There is New social trend among customers that is
go green. According to this, any company must use recyclable products and

biodegradable packaging while providing services and products. The next PLC must use
biodegradable packaging while selling its products.
Technological factor – Technological factors are those factors which are dependent on the use of
latest tools and techniques of the industry. There is great transformation within retail industry
since few years. Next PLC has to adopt the new technologies used by other competitors of the
industry (Wigley, 2012). It is essential to to analyse the impact of technology on product
offering so that this company can develop and built competitive advantage. Latest technological
analysis of retail industry which clearly explains that due to the fast changing technological
environment there is need of providing products to customer which possess technological
advancement. One of the major issue that the company has to analyse is rate of technological
diffusion.
 Legal factors – Legal factors are different for various countries. These include
framework as well as institutions which help in protecting the intellectual property rights
of the firm. These are helpful for providing competitive edge within market and by
following all the legal framework issued by government helps next PLC to develop good
image and reputation within market. The minimum wage rate of the customers is great
issue which is analysed within next PLC while providing services in different countries.
 Environmental factors - Environmental factors are the issues that help marketers of next
PLC to analyse various norms and standards given by the government to protect
environment. There are some countries which provide various environmental laws as well
as liability laws which are a great concern for next PLC to consider while launching
products in market. In context of European countries there is healthy tax breaks for this
company.
Porter’s five forces model
Threat of new entrants – next PLC has to achieve a good position within market as within
retail sector there is high threat of new entrants. In the retail sector, there is access to distribution
network which will help in setting up the various channels for entering this business. Next PLC

can have a pot unity of the economics of scale within the retail industry and do well in market so
that there will be no threat of new entrants.
Bargaining power of suppliers- there are various number of suppliers in retail industry
which helps next PLC to provide products to the customers. Suppliers not have control over the
prices and us there is week bargaining power of suppliers (Omololu, 2013). Next PLC has an
opportunity to purchase raw materials from the suppliers at the cost which are visible for them as
they have other suppliers in market.
Bargaining power of buyers - there are lot of suppliers in the industry in which next PLC is
operating but the number of buyers have limited forms which they can choose for having their
product according to their price. In case of retail industry, quality is more important to buyer than
the price. Thus, next PLC has the power to keep prices according to their wish and not according
to the buyer's choice.
Threat of substitute products or services - within the retail industry, there are very few substitute
switch are available for the products offered in this industry. Next PLC has the opportunity to
provide products within market and earn profits as there is no threat of substitute product
(Drabkowska-Skarba, 2015). this company can emphasize on providing high quality products so
that buyers are more attracted towards purchasing from this company and not considering about
high price or amount of products offered.
Rivalry among existing firms – there is high competition within retail industry. So, next
PLC has to develop strategies in plants that will help in attracting more number of customers to
sustain in market for longer period. In retail sector, there are few forms which have craft a larger
market share and these are great threat for the next PLC in market. This company has to work
upon increasing number of customers every year so that it can maintain the position it is having
within market.
Strategies and tactics
Conflict theories - Conflict theory was given by Karl Marx and this explains that society is
in a state of perpetual conflict that is generated because of the competition within market. In
context of various companies in retail sector, there is high competition due to the lack of
resources. Just theory suggests that those companies which are having more power and resources
can sustain in market over the poor and less powerful companies of the retail sector. It is very
important for the next PLC to analyse conflict theory which will help in focusing on competition

between various other competitors in market. It will help in in expanding market share of the
company across the globe. No conflicts among two companies file computing in market. they
both should develop their own strategies and plans for providing high quality products to the
customers. According to the conflict theories, competition among organisations is a constant
element within any interaction and relationship. Competition will occur only due to the scarcity
of resources. In case of retail sector, this can be due to the resources like commodities, money,
etc. All the competitors as well as organisation in market first focus on providing quality
products and services to the customers and not compromising with that as it will diminish their
reputation in market.
Environment evolution theory – According to this theory, it is suggested that distribution
sector is playing an important role in the life of consumers and producers. It is seen in various
countries that there are various countries in which the commercial distribution in retail sector is
due to the importance of owing the contribution among the business tasks and activities as well
as the gross domestic product. There is high evolution in the recent years within the retail
industry. There are some elements that are affecting the retail distribution such as relationship
with the suppliers, customer service capabilities, business innovations, competition between the
retail formats, integration of internationalism, government policy, etc. There is high evolution in
UK retail industry. The European distribution system of retail is also very effective. The
distribution sector of the European trading and structural change is defined as the various stages
which are due to the backwardness of other markets.
Types of retail competition - There are basically three types of retail competitors naming
intra type, inter type and divertive. In context of the intra type category of retail competition,
there are two or more than two similar type of stores which are competing against each other in
order to do business (Kennerley, and Neely, 2003). This type of competition is very common in
UK retail industry. The intertype competition is one in which there are two or more different
type of stores which are competing against the same customer type. Example of this type of
competition includes competing of retail shop against a super store of clothes. This type of
competition is helpful in attracting more number of customers to buy similar products. another
category of retail competition is diverted that occurs when one retailer is trying to divert
customer's attention towards their business. This type of competition can occur in both type of
businesses that is inter type or intra type competition. There is high competition among the retail

sector of UK. Different stores have to manage up according to the category with other
competitors for increasing the number of consumers buying the product.
Recommendation
From the above analysis, it is recommended to Next PLC that it can emphasize on
differentiating the products which it is offering. This will help in in overcoming the competitors
which are already doing well in market. Next PLC highest opportunity e of focusing on new
customers and providing them quality products. This will help in increasing profits and money
earn by the company. This will also enable next PLC to have good competitive advantage within
market. This is a well known firm of UK and that is why it is easy for it to enter any new market
or country. by the use of porter's five forces on next PLC, please strategic planners can estimate
the various factors which are having impact on profitability of this company in retail sector. This
will be helpful in making judgements of profitability of the company and also strategic planning
to operate across the globe. Also there are various opportunities in retail sector as buyers can
afford prize set by company. Customers focuses on quality and brand of the product and not on
price. This helps companies like next PLC to provide their best material to customers and take
high prices from them. This helps in making a lot of money within less time. This will help in
developing a good competitive advantage and maintaining good reputation among customers.

Conclusion
From the above discussion, it is analysed that retail industry is one of the most profitable
industries within market. It is essential for the companies operating in this industry to develop
strategies that will help in making a lot of money and profits. It is essential for retail industry
companies to have proper planning and analysis of customer’s demands before starting
operations within market. These enables to increase the market share and earn more profits. Next
Plc is a well reputed firm of the retail sector and for establishing good image within market, it is
essential for this company to develop strategies and plans that will help in attracting more
number of customers. It is helpful for the company for making more profits and money. This is
helpful in earning the customer’s trust and loyalty.

REFERENCES
Books and Journals
Wigley, S.M., 2011. A conceptual model of diversification in apparel retailing: the case of Next
plc. Journal of the Textile Institute, 102(11), pp.917-934.
Zhang, B., 2013. Turnaround and Sustainability in Economic Crisis: The Case of NEXT PLC.
Level, Q.F.C., Unit 22 Managing Human Resources Assignment Next plc.
Wigley, S.M., 2012. Core Competence & Diversification in Apparel Retailing -the case of Next
Plc.
Omololu, E., 2013. The Strategic Expansion of Hennes & Mauritz AB: A Potential Acquisition
of Next or Ted Baker PLC. Available at SSRN 2202976.
Drabkowska-Skarba, M., 2015. CORPORATE SOCIAL RESPONSIBILITY OR SPECIAL
MARKETING ACTIONS?-CASE STUDY OF NEXT PLC. Acta Universitatis Nicolai
Copernici. Nauki Humanistyczno-Spoleczne. Zarzadzanie, 42(4), p.115.
Level, Q.L., Unit 7 Business Strategy Assignment-Tesco PLC.
Kennerley, M. and Neely, A., 2003. Measuring performance in a changing business
environment. International Journal of Operations & Production Management.