Failure of Oasis and Warehouse in the Fashion Retail Industry

This report analyzes the failure of Oasis and Warehouse in the fashion retail industry due to COVID-19 pandemic and emergence of e-commerce fashion retail. It includes SWOT analysis, PESTEL analysis, and Porter's five forces analysis.

Module: (FY028) Inquiry Based Learning
Topic: Oasis

Executive Summary
The fashion company Oasis and warehouse recently filed for administration which
showcases the failure of the company to go with external environmental changes in
the fashion industry. The primary trends which affected the failure of Oasis and
warehouse are COVID-19 pandemic an emergence of E commerce fashion retail.
The company was not able to adopt to extra environment changes such as Brexit or
rise of distant technology and social media which affected the ability of the company
to attract and retain consumers. In addition to this external analysis of the fashion
industry states that the competitive rivalry in the fashion industry along with threat of
substitution is high which increases challenges for Oasis and warehouse to recover
from losses. It is recommended that Oasis and warehouse focuses on penetrating
the United Kingdom market in order to maintain profitability and survive for a long
time.
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Contents
Executive Summary.................................................................................................................................................2
Introduction..............................................................................................................................................................4
Company history background..............................................................................................................................4
Identify areas of failure and why..........................................................................................................................6
Current trends and competition at that time.........................................................................................................7
Models of Analysis..............................................................................................................................................7
References..............................................................................................................................................................12
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Introduction
This report focuses on the fashion retail industry and the failure of Oasis and
warehouse to survive the COVID-19 pandemic. The COVID-19 pandemic drastically
affected the retail landscape as physical purchase of goods became impossible to
spread off code 19 virus. this introduced various barriers in success or fashion retail
businesses such as the UK based company Oasis and warehouse. The respective
organisation was founded in the year 1991 and established various physical stores
as well as an online channel for purchasing fashion products. The fashion products
offered by Oasis and warehouse included High Street wear products. The company
was not able to survive the COVID-19 pandemic and the physical stores of the
organisation closed permanently. This report aims to understand the cause of
downfall of Oasis and warehouse in the fashion retail industry by applying
appropriate marketing analysis tools. This report identifies areas of failures current
trends and conduct a market analysis by using suitable tools such as pestel analysis
and Porters five forces analysis. Finally set of recommendations are also given for
Oasis and warehouse to recover and establish competitive positioning in the fashion
retail industry.
Company history background
The strong history associated with Oasis and warehouse makes it all the more
important to understand its failure to face the COVID-19 pandemic and maintain
profitable streak like its competitors Marks and Spencer and H&M. Oasis was
founded in the 1991 and offered consumers high Street wear fashion products
through physical stores. The company owned physical stores including concession
stores in various parts of United Kingdom. Few years after its formation Oasis stores
plc floated on the London Stock Exchange and in 2001 the company acquired Sierra
acquisitions (Oasis and Warehouse Group: what went wrong?, 2020). Oasis was
considered a competitive member of the fashion retail industry in United Kingdom
offering wide range of products for men women and younger shoppers.
After entering the London Stock in change Oasis warehouse and coast retail
chains were acquire from ppm ventures by a secondary management buyout
supported by bagger group and investor group led by captain bank. In the same
year the company music fashion was established as the takeover vehicle when it
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acquired the Karen Millen Ann whistle’s brand. In March of 2009 music fashions
entered is ministration of Oasis and warehouse and then you managing director was
appointed for Oasis and warehouse. soon after this in a matter of a year the chief
executive of Oasis was changed again as list Evans became the managing director
of Oasis.
Few years later in 2013 Oasis end warehouse were planned to be merged
under a new single parent company fresh channel which could not be accomplished
as the two brands were eventually merged as the Oasis and warehouse group in
2013. In the year the try a group of retail chains coast, oasis and warehouse were
placed a for sale at 100 million British pounds. after this a major development
happened for Oasis and warehouse in the year 2019 as the company acquired the
retailer the ideal man which offered online clothing to consumers.
The year 2019 was beneficial for Oasis and warehouse is the company so an
increase of 20% in its EBITDA to 11.5 million British pounds because of opening five
local stores in Dorchester, Hazelmere Ilkley Ringwood and tenterden. In addition to
this the skills of the company grew up to 6.5% in the year while online sales for the
period were increased by 17% would like for like sales improvement by 0.2% (Oasis
& Warehouse: What went wrong?, 2020). Despite such progress faced by Oasis
and warehouse in digital selling channels the company turnover was down by 2%
which was attributed to the planned closure of 11 unprofitable stores. The company
gave new found online success in the year 2018 but still was not profitable enough to
ensure long term operation of the company without facing huge losses.
In April 2019 the administration of Aurora fashions in House of Fraser’s
created a £5 million impact on Oasis and warehouse earnings which was attributed
to £10 million increase in pre tax loss to £39.9 million. After this the year, the year
2020 was the most disastrous year for Oasis and warehouse. This is because
COVID 19 pandemic arrived in United Kingdom and most of the physical stores on
which the company relied for profits became unprofitable. The reduction in
profitability paved the way for the company to slide into administration.
The announcement of Oasis and warehouse falling into administration was
announced on April 2020 after which soon administration was filed leading to 202
jobs being immediately made redundant while another 1800 are at risk as they
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remain on furlough. As of now the business operates 92 branches and 437
concessions located in 3rd party retailers. It has been used that the online retailer
boohoo will be purchasing Oasis and warehouse which can support the company in
recovering as boohoo is one of the most successful online fashion retailers in the
United Kingdom
Identify areas of failure and why
 Poor management: From the discussion about leadership of Oasis and
warehouse throughout the years it can be understood that the leadership
of the company continuously changed because of mergers or changes in
the parent company. This created an environment for poor management
as the top leadership was continuously changing with changing goals
visions impacting ability to effectively manage and stabilise the company
for a long time. Oasis in warehouse failed partially because of poor
management at the company which was not able to effectively predict
future conditions of the fashion retail market and take proactive measures
to ensure that the company survives changing expectations in the retail
industry.
 Change of the customer’s behaviour: Consumer expectations related to
fashion retail have changed because of social media digital retail and
ecommerce. Consumers in the current in age prefer online shopping as
well as home delivery instead of physically going to retail stores and trying
clothes (Brooks, 2019). Along with this modern age fashion retail
consumers onto demand business forms to be more innovative as social
media fashion trends are continuously changing which are demanded by
consumers.
 Lack of innovations: Oasis and warehouse did not offer consumers
aware variety of innovative fashion option which is the main demand of
consumers in the current age. Modern fashion retail consumers require
businesses to offer sustainable an innovative products which not only
enable his possible shopping but also help the consumers stay updated
with latest fashion trends (Choi and Shen, 2017). This was not offered by
Oasis in warehouse which made it considerably less desirable when
compared to other fashion retailers who offered wide variety of innovative
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fashion products including plus size product sustainable products and
creative fashion accessories.
 Very slow or late entry into online shopping: Oasis in warehouse did
not enter the realm of online shopping quickly which severely
disadvantage the company against global E commerce retailers such as
Amazon or new entries in the online fashion retail industry boohoo. Oasis
was not able to survive the pandemic with profits because it largely
depended on physical retail shops for profitability. Many physical fashion
retailers such as Marks and Spencer understood the importance of
developing strong digital platforms and were able to survive the pandemic
which in case of Oasis and warehouse was not accomplished and resulted
in huge losses of the company.
Current trends and competition at that time
E-commerce: One of the primary trends in the current fashion industry is rise of
ecommerce as more and more consumers are moving towards online shopping
instead of going to physical retail outlets. This is because of the convenience offered
by online shopping along with the technological improvements such as availability of
online virtual trial rooms and easy returns which help consumer select the best
fashion options during their purchase (Heller and et. al., 2019). This trend also
increased competition for Oasis as the company had to compete with local as well as
international ecommerce companies in the fashion industries like is ASOS and
boohoo.
COVID-19 pandemic: The impact of COVID-19 can be clearly seen in case of the
fashion retail industry because COVID-19 pandemic restricted physical travelling of
the consumer which heavily impacted the profit of physical retail outlets (Henninger
and et. al., 2017). This increase the dependency of businesses in the fashion retail
industry to gain profits from digital channels an increased competition in case of
online fashion retail as many traditionally physical retailers like Marks and Spencer
and H&M also started enhancing their digital capabilities while he commerce fashion
retailers suggest Boo adopted competitive practises to stay profitable. the trains
introduced back over 19 pandemic negatively affected the growth of Oasis and
warehouse which resulted in its administration in the year 2020.
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Models of Analysis
SWOT Analysis
Strengths Weaknesses
 History of presence in United
Kingdom.
 Availability in physical own brand
stores and also as concessions in
fashion retail stores.
 Lack of online capabilities.
 Inability to offer innovative and
fresh fashion products.
Opportunities Threats
 Expand digitally to reach larger
consumer base.
 Expand internationally to break
dependence on UK economy and
business cycle.
 COVID-19 pandemic reducing
physical shopping.
 Threat by national and
international competition.
PESTEL Analysis
PEST analysis can be used to identify primary forces in British retail sector which
impacts the company. PEST analysis of Oasis is provided below:
Political Factors
Brexit affects the fashion retail industry as it changes the international supply chain
of fashion products to the United Kingdom by implementing new important export
regulations between United Kingdom and European Union (Juga and Juntunen,
2018).
 Positive Impact: The positive impact of Brexit on Oasis and warehouses that it
writes the company options for international expansion and reducing liability
on United Kingdom economy.
 Negative Impact: Brexit negatively affects Oasis investors business by
reducing the availability of affordable liberty United Kingdom as workers from
European Union faced more restrictions to freely work in United Kingdom.
Economical Factors
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The down turning impact of COVID-19 on the UK economy affects the growth of with
this envy house along with recovery of United Kingdom from cover 19 pandemic
(Kotni and Karumuri, 2018).
 Positive Impact: Recent vaccination rollouts have reduced infections in the
United Kingdom which provides opportunity for improvement in United
Kingdom economy. This is beneficial for Oasis and warehouse.
 Negative Impact: New COVID-19 variants along with current presence of
COVID-19 variants in other parts of the world homes the recovery of global
economy from COVID-19 pandemic which negatively impacts growth of Oasis
and warehouse.
Social Factors
The impact of social media trends on fashion demand affects fashion retailers across
the globe.
 Positive Impact: Oasis in warehouse will be able to estimate and influence
fashion trends to social media which is beneficial for improving sales.
 Negative Impact: The immediate changes in fashion trends caused by social
media negatively impacts profits gained from a specific fashion line which is
disadvantages for places and warehouse.
Technological Factors
The rise of ecommerce and improvement in digital technologies to offer fashion
consumers better online services such as virtual trial rooms provides opportunities
for every fashion retailer (Pantano, Pizzi and Rogers, 2020).
 Positive Impact: The positive impact of technological development on areas
and warehouses that the company as the opportunity to improve digital
capabilities.
 Negative Impact: Digital technological improvement increases threat against
Oasis and warehouse that big international ecommerce companies will be
able to attract large number of consumers and enhance competitive rivalry in
the industry through the use of digital technology.
Environmental Factors
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The demand for ethical responsibility fashion is an environmental factor affecting
fashion retail industry at large (Ryding, Henninger and Cano, 2018).
 Positive Impact: Oasis and warehouse positively affected by the
environmental demands of the consumers as the company can utilise
corporate social responsibility to attract consumers from international
corporations contributing significantly to climate change and global warming.
 Negative Impact: Corporate social responsibility initiatives require huge sum
of investment in terms of time and money which negatively affects profitability
of Oasis and warehouse.
Legal Factors
Ineffective Counterfeiting laws affects profitability of fashion brands.
 Positive Impact: Oasis and warehouse will be able to protect their intellectual
property through intellectual property laws.
 Negative Impact: The respective company faces the threat of international
counterfeiting of its products.
Porter’s five forces analysis
 Bargaining Power of the consumer: The bargaining power of consumers in
the fashion industry is high because they have many alternatives and the
switching costs to move to another brand is low.
 Bargaining Power of the supplier: This element of the analysis focuses on
the level of power suppliers have to impact profitability of the company and
influence costs of purchasing raw materials from their decisions (Sobande,
2019) The bargaining power of supplier in case of the fashion industry is low
as many suppliers offer high quality products at affordable prices on an
international scale.
 Threat of substitution: The threat of substitute products in case of United
Kingdom fashion industry is high as many counterfeit products are also
offered in United kingdoms. In addition to this consumers have online
channels to purchase fashion products or rent fashion products from different
second hand clothing sites.
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 Threat of new entrants: New entrants cannot easily enter the fashion
industry because of high level of investment required for setting up production
lines supply chain and marketing the brand to acquire large number of
consumers.
 Competitive Rivalry: The level of competition in a specific industry can be
determined with this element of the Porter’s five forces analysis (Zellweger,
2017). The level of intense rivalry in the fashion industry in United Kingdom is
high because there are many international as well as local fashion enterprises
competing for a small amount of market share.
Recommendations
 The company needs to focus on market penetration in UK in order to emerge
as leading fashion retailer in the country. The tactic recommended for this is
to develop sustainable consumer loyalty scheme which enables regular
consumers to exchange their useful second hand clothing item for discount on
other products of the company. These second hand products can be recycled
by River Island to offer sustainable products. This will help the company
develop a sustainable brand image and compete with second hand
marketplaces which act as product substitution for the company.
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Conclusion
From the above report it is determined that the fashion industry has affected by
various external factors which determine the level of profitability and survival of
businesses in the fashion industry. These factors can be determined by applying
various external environment analysis tools such as pestle analysis and porters
forces analysis. In addition to this SWOT analysis can also be used today to mind
internal capabilities of a fashion retail brand and identify recommendations which can
be helpful for the fashion retail company. There are several reasons which lead to
failure of a fashion retail brand including power management or lack of online
presence which is essential for gaining online sales in the current.
References
Brooks, A., 2019. Clothing poverty: The hidden world of fast fashion and second-
hand clothes. Zed Books Ltd..
Choi, T. M. and Shen, B., 2017. Luxury fashion retail management. Springer.
Heller and et. al., 2019. Let me imagine that for you: Transforming the retail frontline
through augmenting customer mental imagery ability. Journal of
Retailing, 95(2). pp.94-114.
Henninger and et. al., 2017. Sustainability in fashion: A cradle to upcycle approach.
Springer.
Juga, J. and Juntunen, J., 2018. Antecedents of retail patronage in cooperative retail
context. Journal of Co-operative Organization and Management, 6(2). pp.94-
99.
Kotni, V. D. P. and Karumuri, V., 2018. Application of Herzberg two-factor theory
model for motivating retail salesforce. IUP Journal of Organizational
Behavior, 17(1). pp.24-42.
Pantano, E., Pizzi, G. and Rogers, A., 2020. Who is interested in retail education?
The (mis) match between the leading universities’ offerings and job demand
in the UK. International Journal of Retail & Distribution Management.
Ryding, D., Henninger, C. E. and Cano, M. B. eds., 2018. Vintage Luxury Fashion:
Exploring the Rise of the Secondhand Clothing Trade. Springer.
Sobande, F., 2019. Femvertising and fast fashion: Feminist advertising or fauxminist
marketing messages?. International Journal of Fashion Studies, 6(1).
pp.104-113.
Zellweger, T., 2017. Managing the family business: Theory and practice. Edward
Elgar Publishing.
Online
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Oasis & Warehouse: What went wrong?, 2020. [Online] Available through
<https://www.retailgazette.co.uk/blog/2020/04/oasis-warehouse-what-went-
wrong/>
Oasis and Warehouse Group: what went wrong?, 2020. [Online] Available through
<https://www.drapersonline.com/news/oasis-and-warehouse-group-what-
went-wrong?tkn=1>
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