(PDF) Perspectives on retail format innovation: Relating theory

Retail Theory

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Identify Relevant changes in the UK fashion clothing market....................................................1
Suggest and discuss strategies and tactics...................................................................................6
CONCLUSIONS..............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Retail is the process of selling goods and services to the customer through different
supply channels,. Retails activity satisfy the demand of customers it describes that this is an
application which helps to identify the different internal or external factor that influence the
decisions of the firm (Rodrigues, 2019). By the use of effective retail theory in the business, it
can be convenient to operates the business operation by analysing micro and macro factors.
These factors provide the internal or external performance of the firm.
The present report is based on retail theory of Mango company. It is the Spanish clothing
design and manufacturing company. Provides the highly quality fashion clothing for men,
women, teenager.
Furthermore, report will describe the relevant changes in UK fashion clothing market.
Moreover, report will describe the analysis Pestle analysis of Mango company to identify the
macro environment of the firm. Moreover, report will explain the porter five forces model that
helps to identify the micro environmnt of the firm. Lastly, study will describe different strategies
and tactics that will help to get success the busines.
MAIN BODY
Overview of the company
Mango is clothing brand it is Spanish clothing design and manufacturing firm. They have
huge collection of men, women and kids. There headquarter in Palau-solità i Plegamans Spain.
Mango has 16000 employees and in 2015 firm generate the revenue which is 2.327 billion euros.
Thus, according to the high profitability that means firm has a successfully clothing brand as
they achieved their objective.
Identify Relevant changes in the UK fashion clothing market
The clothing retail industry is elapsed valuable changes, there are different changes in
fashion industry such as competitive market and new tends is influenced fashion clothing
industry mostly. The ongoing changes in fashion industry like changes in buying behaviour and
preferences of customer is affects the firm profitability(Peddada and Adam, 2019). The retailers
are generally faced many difficulties due to enhance and development in online market so, it will
decrease the performance of retailers. Thus, due to changing the buying behaviour of customer is
affects the performance of retailers because customer prefer to buy the product through online.
On the other side, online market is grown as they continuous improve their services and increase
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the market share. Thus, In 2017, the online fashion market will increase 17.2% as compare to
the retail market. clothing retailers has faced many losses when their business is not run
successfully like, high rents of properties, land is also effects the business of retailers.
Pestle analysis — It is the process which describe the external environment of the firm. It is the
framework firms, can used this tool in the business to analyse and identify the macro-
environmental factors that may have created positive and negative impact on an enterprise
probability. There are different factors such as political, social, economical, technological, legal,
environmental that influence the decisions making power of the firm.
 Political factor — This factor is described that how much government policies
influenced the business through different political issues (Choi, Rabinovich and Richards,
2019). It can include different government rules and regulations like tax policy, political
stability or instability, corruption, foreign trade policy, employment law, environmental
law etc. Mango provides the job to the peoples because they have many stores in global
level it is the successful firm who operates their numbers of stores so, firm can hire the
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Figure:1 Pestle analysis
(Source : pestle analysis 2016)

huge number of employees to run the business as they provide high employment to
workers, it creates the positive impact on the performance and productivity of the firm.
On the other side, Mango is the successfully clothing brand, and they serve their product
in over the world as the different tax policy is increase the cost of the products so, sudden
changes in taxation policies can create loss to the firm because high tax is created the
negative impact on the cost of production of Mango. On other side,
 Economical factor — This factor is described the economy performance that directly
impact on the performance of the firm negatively and positively. It includes inflation rate,
interest rates, foreign exchange rates, economic growth patterns, disposable income etc.
Mango enterprise provides highly valuable products in growing international market so
the demand of product and supply of product is increases due to growing economy so, it
creates the positive impact on the sales of the firm. On the other side, foreign exchange
rates is different in each country whereas high currency changes is leads the prices of the
product as high prices is not attracts the customer . It reduces the demand of the product
so, it creates the negative impact as the number of customer is reduced.

 Social factor — This factor is represent the characteristics of consumers their norms and
values etc. it contains new trends of customer such as the population growth rate, age
distribution, income class, life style, career attitudes, health consciousness, education
level and cultural barriers etc. Thus, Mango enterprise are not clearly target their
customer due to changes in buying behaviour of customer. For example customer are
influence through advertising, and they shift their preferences as they want branded
products. Therefore, to recognize the demand of the product is much difficult in
competitive market so, it creates the negative impact on the profitability of the firm. On
the other side, positive impact — Mango makes innovative and latest design to meet the
requirements of customer. Firm launches new fashionable clothes as to improve the
brand. Thus, it can lead to enhance the customer loyalty and demand of product.
 Technological factor — This factor is pertain the innovation in technology that may
directly affects the revenue of the firm in favourably or unfavourably. The new
technology and developments is provided the opportunity to the firm. Thus, when firm
implement new technology in the business it makes a new and innovative product which
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can lead to enhance the profitability as it creates the positive impact on Mango enterprise
(Dean, 2019). On the other side, developing a new technology in the business, it requires
high investment that directly impact on cost of the firm as it increase high turnover which
creates negative impact on Mango firm.
 Legal factor — This factor is same as political factor it also effects the environment
through certain law and government rules. It contains, consumer laws, health and safety
act, equal opportunities, employment low, advertising standards etc. Thus, Mango has
faced some Controversies related to their designs of some products as it has invited
lawsuits so it many create negative impact because firm has not meet the requirements
of government and it may affect the brand reputation of the entity. On the other, firm can
follow the safety act for their employees. Thus, it helps to create positive impact as the
motivation among the employees is enhanced (Mishra and Vishvas, 2019). Therefore,
when employees are motivated they improve their performance and makes valuable
product for their customers.
 Environmental factor — This factor contains the surrounding environment such as
weather, climate, environmental offsets and climate change etc. Thus, there are different
climates in environment it facets the demand of the product so it can create the negative
impact on the Mango entity sales. On the other side, Mango is provides charity as well it
can reduce the waste. Thus, These both aspect is created the positive impact on the
reputation of firm that it can increase the positive impact on the performance of the firm
because firm follow the rule of government to protect the environment.
Porter five forces model — This model helps to analysing the competition in the business. This
is the tool which describes the five forces that may helps to find the competitive intensity in
particulate market place. There are five stages to analysis the competition such as — Threat of
new entrants, Threat of substitutes, Bargaining power of customer, Bargaining power of
suppliers, Rivalry Among Existing Firms.
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Threat of new entrants - There is huge competition in fashion industry. Therefore, a new
business who enter in new market with innovative and differentiate products it may reduce the
demand of existing firm (Riedel and Mulcahy, 2019). Thus, customers generally prefer to buy
the innovative and new products according to the new tends, so they buy new products which
meets their requirements Thus, it may affect the firm and it creates the threat of new entrants for
Mango. On the other side, a new business requires a lot of investment when they enter in big
market thus, it makes the problem for new entrants. For example, huge capital for launching
new firm in this industry, its costly so it is also makes the threat of new entrants.
Threat of substitutes - There are very few substitutes products in the fashion industry but few
products is highly branded which increase high competition. Thus, to reduces the threat of
substitute product firm can provide the low prices of product as compare to their rivalry (other
substitute products). Therefore, the threat of substitute product is less in this industry. Mango has
provide high quality products on minimum prices it easily attracts the customer towards the
products.
Bargaining power of customer — In this industry, the bargaining power of customer is high
because of different types of pricing and quality standard in the product. Therefore, customer
mostly choose the quality of product with minimum price as this types of behaviour is increase
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Figure : 2 Porter five forces model
(Source : Porter five forces model, 2018)

the bargaining power of customers. Henceforth, The income of buyers is normally low as they
not easily purchase the high prices of product so this is also affected the performance of the firm.
.This means that there is pressure to purchase at low prices, making the buyers more price
sensitive. This makes the buying power of buyers a higher forces within the industry.
Bargaining power of suppliers — In the fashion industry, the bargaining power of supplier can
high in case of low number of suppliers in the market. Thus, according to this, few suppliers is
decided their prices of product and sale their raw material according to their prices due to low
number of suppliers. Thus, Firm can purchase the product on high prices. On the other side, the
high number of supplier is reduced the bargaining power of suppliers because, Mango can buy
their raw matrices with different suppliers on minimum prices. Therefore, these both case,
influence the decision of the firm.
Rivalry Among Existing Firms — Mango faced high number of competition in clothing
industry because there have many big firms who compete with Mango such as ZARA and H&M
(Sarkar, Sarkar and Bhatt, 2019). These both have highly branded firm in the markets which
have huge market share. Therefore, the high competition among the market will enhance
competition among existing firms. That mean this is the big reason which increase the high
competition in the existing market. In addition, Zara and H&M use the different strategies to
operate the business like pricing and promotional strategies. Thus, these strategies are different
to each other as many firms use different strategies to success in the business. Therefore, Mango
can follow different types of strategies in the business to compete with large market share of
firms.
Suggest and discuss strategies and tactics
Political factor — The main issue mango faced in the political factor is that firm faced the
issues to operate the business in foreign market due to high taxation rates in different countries it
can reduce the profitability of the firm.
Social factor — The main issues Mango faced in social factor it is that, Due to changes in
buying behaviour of customers it affects the sales of the products. Thus, Mango can face
difficulties as they not meet the requirements of customers.
Environmental factor — The main issues Mango faces in Environmental factor it is that,
environmental issues its increase the expenses of the firm.
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Bargaining power of customer — The main issue Mango faced which is the bargaining power
of customers.
Theories and tactics
The wheel of retailing — This theory is helps to firm that how to deals with problems. For
Example, Mango faced issue to operate in the business in foreign market due to high taxes so,
firm can use this theory to reduce the problem like firm can use the best pricing strategies which
many not affects the tax charges. Thus, firm also use the best promotional strategies to increase
the demand of the product they improve their advertising strategies further firm can charges high
prices on the products so it covers the loss of tax (Seyfang and Gilbert-Squires, 2019).
Behavioural theory — Behavioural theory is reduces both issues such as social and bargaining
power of customers. Mango can implement this theory in the business to enhance the number of
customers. Mango can focus on innovation and differentiation products which easily attracts
more customers. In current trends, customer normally want Product differentiation and quality of
products, and Mango can attract many customers by making the product on the requirements of
customers (Kumar and Venkatesan, 2019). Therefore, firm also target the customer to analyse
the needs and wants, buying behaviour etc. Firm can use the STP tool to target their potential
customer as firm find the needs of customer they make product which meet the requirements of
customers. Thus, firm should apply this theory in the business because when firm provides the
quality products it reduces the bargaining power because they easily purchase the quality
products.
Corporate social responsibility — In this theory it describes the social responsibility towards
the environment. Therefore, to maintain the sustainability in the environment Mango can use this
theory in their business. Mango provides the charity to those people who need the money in
difficult situations. Therefore, they also use the best process in the business which makes the
friendly environment. Thus, firm focus on their manufacturing process which reduced the waste.
Thus, it helps to firm when firm use the waste as a material it leads the profitably as well as it
reduce the cost of production.
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CONCLUSIONS
From the above project report it can be summarized that retail theory is supports the
process of selling. Thus, this process is includes the sale of goods through different supply
channels to the customers. Thus, fashion industry used this theory in the business to solve the
problems and manges all activities.
The project report is based on retail theory and practices of Mango clothing company. It
has covered various micro and macro factors such as pestle and porter five forces this model
describe the internal or external environment of business. Furthermore, report has described the
strategies and tactics that helps to reduce the issues that firm can facing during the operations of
business.
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REFERENCES
Books and Journals
Choi, M., Rabinovich, E. and Richards, T.J. 2019. Supply Chain Contracts and Inventory
Shrinkage: An Empirical Analysis in the Grocery Retailing Industry. Decision Sciences.
Dean, C. 2019. Social Media Marketing Strategies Used by Owners of Small Retail Businesses.
Kumar, V. and Venkatesan, R. 2019. Journal of Retailing Special Issue-Metrics and Analytics in
Retailing. Journal of Retailing. 95, p.1.
Mishra, A. and Vishvas, R. 2019. Retail shopper empowerment: A consumer-centric measure for
store performance. IIMB Management Review. 31(1). pp.20-36.
Peddada, K. and Adam, N.A. 2019. Theory and Practice of Corporate Social Responsibility in a
Developing Country Context. In Opportunities and Pitfalls of Corporate Social
Responsibility (pp. 101-114). Springer, Cham.
Riedel, A. and Mulcahy, R.F. 2019. Does more sense make sense? An empirical test of high
andlow interactive retail technology. Journal of Services Marketing.
Rodrigues, V.S. 2019. Horizontal Logistics Collaboration—An International Retail Supply
Chain Case Study. InContemporary Operations and Logistics (pp. 233-258). Palgrave
Macmillan, Cham.
Sarkar, A., Sarkar, J.G. and Bhatt, G. 2019. Store love in single brand retailing: the roles of
relevant moderators.Marketing Intelligence & Planning. 37(2). pp.168-181.
Seyfang, G. and Gilbert-Squires, A. 2019. Move your money? Sustainability transitions in
regimes and practices in the UK retail banking sector. Ecological economics, 156, pp.224-
235.
Online
Porter five forces model, 2018. [Online]. Available through : <https://www.sasb.org/blog/five-
forces/>.
Pestle analysis, 2016. [Online]. Available through : <
https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>.
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