Retail Theory and Practice: Strategies for Primark to Cope with Macro and Micro Environmental Changes

This article discusses the retail theory and practice with a focus on Primark, including relevant changes in the UK fashion retail industry, strategies and tactics to cope with macro and micro environmental changes, and recommendations for the company.

RETAIL THEORY AND
PRACTICE

Table of Contents
INTRODUCTION TO RETAIL INDUSTRY.................................................................................3
INTRODUCTION TO COMPANY................................................................................................3
RELEVANT CHANGES IN THE UK FASHION RETAIL..........................................................3
The strategies and tactics that could be used by Primark to cope up with micro and macro
environmental changes:...............................................................................................................6
RECOMMENDATIONS.................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10

INTRODUCTION TO RETAIL INDUSTRY
Retailing is one of the important aspect with regard to the economy because it involves
the sell and of products and services with respect to customers in order to meet their needs.
Retailing is the key aspect with an association towards the economy of UK.
In case of fashion retailing, clothing is the main business of UK. It is one of the most attractive
destination with respect to investment in the context of clothing industry. As the demand and
trend towards the clothing always be favourable and trending so UK's Fashion retailing industry
is counted as major and most important with respect to its economy. It also accounts for the
generation of revenue of 3.8 billion dollars in 2017 (UK fashion industry statistics, 2021). There
are various brands like Marks and Spencers, ASOS, Burberry and various others that are
associated within the retail industry of UK and plays a major role.
INTRODUCTION TO COMPANY
Primark is one of the most famous and fast fashion retailing fashion brand. Its
headquarter is in Boston, US. It was founded on 1969. It is an international fashion retailer that
sells large number of the latest fashion, beauty, and homeware products to its customers. It has
around 373 stores across worldwide including UK, Ireland, Germany, Africa and various other
countries (Blazquez, 2021). Its mission statement is to enable high quality fashion basic at value
pricing to its customers. Its main objective also includes to deliver the best quality clothing at
low prices. It performs its work as per customer need and demand. It works in the direction of
value for money. Apart from its physical stores Primark also operate its business at online and
digital platform wherein it makes sells of its products at 24*7. With the presence over the digital
platform it makes sales of its clothing and beauty products across various countries and grab
large number of customer share. Primark also follows the concept of Amazing products at
amazing prices. Through its online platform it performs its business operation and this has
enabled the company to enhance its sales and revenue shares.
RELEVANT CHANGES IN THE UK FASHION RETAIL
Macro environment:
It refers to the external environment that has a major impact over the companies and the
industries (Jelassi and Martínez-López, 2020Frue, 2017 ). It is an uncontrollable environment

because its factors along with its impact are not controllable with respect to the company. It is
very important it must be analysed by companies.
PESTLE analysis:
Political:
It is one of the major aspect of the UK retailing industry because it comprises of various
aspects and changes in the form of policies and rules. It includes the rules and concerned policies
(Shtal and et.al., 2018). With the impact of Brexit the UK' s trade and practices are being
affected and the restriction that was imposed with the Brexit has affected the fashion industry at
large. This is also brought impact towards the Primark in terms of affecting its sales and revenue
operation. In the same way the lockdown with regard to Covid pandemic along with its trade
restrictions has impacted the business of Primark and the entire industry.
Economic:
With regard to UK the manufacturing of clothes are expensive and hence most of the
companies try to make production in other countries in order to reduce their cost of production
and make avail their products at low prices (Rahman, 2021). However, with regard to Primark
the concept low prices with the availability of high quality products works favourable with
respect to this factor. But on a overall basis the impact of this factor towards the industry is not
favourable.
Social:
social factor is related with the customer taste and preferences (Thompson, 2019).This
factor is highly favourable with regard to the fashion retailing industry. This is because there is
high trending and demand of fashion with regard to the economy of UK. Various fashion events
and the presence of Universities and college along with the demand of people with respect to
fashion clothing has a positive aspect and impact towards the fashion retailing along with
Primark.
Technological:
This is also an important aspect with regard to fashion and retailing industry. This is
because with the introduction of digital technology and digitalization, the trend of e-commerce
and e-marketing came into effect and has positively supported the industry. In the same way with
the adoption of digital concept and digitalization the business operation of Primark is also
positively impacted.

Legal:
With the presence of strict laws and regulations and policies with regard to the retailing
industry in the context of UK there is a major and somewhat adverse impact of legal
environment with respect to the retailing industry and hence majority of companies has
outsourced their operation to abroad. On the one side it saves the cost of company but with the
same side most of the customers do not favour this. This has resulted a negative and adverse
impact towards the business operation of companies including Primark and thus need to be
analysed and studied.
Environmental:
With regard to the environmental factors it is to be considered that the pollution that is
caused with the production of clothing and material is high in comparison of any other operation.
This means that this factor has major impact towards the industry and the companies. Along with
rising pollution the interest of customers is also affected which on a broader scale affect the sales
of the Primark and the entire fashion retailing industry.
CHANGES IN THE MICRO ENVIRONMENT
Micro environment:
It refers to the internal environment which puts impact towards the industry and the company. It
is controllable environment because with the taking of adequate moves the impact of its factors
can be mitigated and minimized.
Porter's five force model:
As per this model an analysis of the various factors with regard to the environment will be made.
Threat of new entry:
The impact of this force is high with respect to the Primark. This is because it has very
low control with respect to new entrants. This means that any small company can make entry
with regard to the UK market and may affect the business and sales of the Primark. Thus, this
factor need to be analysed and considered.
Threat of substitutes:
This force also have high impact towards the companies and the industry. This is because
with respect to the fashion retailing there are large number of substitutes available in market.

And thus, the Primark need to be focussed towards the pricing strategy because a slight rise in
price will lead to have a major impact over the business in terms of loosing its customers.
Suppliers power:
It refers to the power of suppliers with respect to charging high prices (Bruijl, 2018). In
case of Primark this force is having low impact because there are large number of suppliers and
Primark can make arrange the raw material at low rate without being affected with the suppliers
force.
Buyers power:
It refers to the buyer power by which they can make decrease in prices. This power is
usually in case of Primark because being a large company it has high customer share. Likewise,
there are many other companies present in the market wherein customer can make bargaining
and buy products. Thus, its impact is high in case of Primark.
Competitive rivalry:
It refers to the existence of competition in the market (Grebenshchikova and Yakushev,
2017). With respect to the Primark there is a strong existence of market competition. As it belong
to fashion retailing industry there are large number of competitors and companies existed in
market which mat affect the Primark sales and business.
The strategies and tactics that could be used by Primark to cope up with micro and macro
environmental changes:
There are many macro environmental and micro environmental factors that have affected
Primark over last few years. These factors can be analysed and their appropriate responses that
Primark can use are:
Macro environmental analysis: The macro environment consists the factors of an economy as a
whole (Camilleri, 2018). The macro environment factors affecting Primark are:
Economic and government Factors: Primark was forced to close its stores during COVID-19
pandemic. The company is not much active on online selling which affected the company's
revenue generation. The prices of cotton industry also increased over the years which caused
huge increases in costs of production to Primark.
However, the company can reopen all its stores by following the government protocols
regarding COVID-19. The company can decide not increase the costs of products to support the
production cost so that it can still be the cheapest brand on the high street.

Environment sustainability: The customers today are more conscious towards protecting the
environment. They prefer to buy the products that affects the least to environment. As a clothing
brand the company produces huge wastages and pollution.
However, the company have banned the use of plastic and synthetic micro-beads in their
cotton buds and cosmetics stems which can it carry on in the future too. The company can
recycle, recover the cardboards and plastic wastes produced in the manufacturing processes. The
company can focusing on its supply chain to achieve zero use and discharge of hazardous
substances.
Legal and political environment: The rules and regulations of government have affected the
business of Primark. The laws and legislations have made it compulsory to contribute 3% of its
revenue to employee pension schemes (Gorlova, 2020).
The company can demonstrate the great working environment and living conditions of its
workers. The company can also participate in various programs to eliminate the challenge of
child labour in the world.
Culture and Diversity: The company is operating internationally. The changes in cultures and
behaviours of one community can clash with another in business. Nowadays the consumers are
more concerned towards wearing the fashionable and recognized brands.
However, Primark can invest more in its brand image. The company can advertise on the
cover pages of famous magazines which can deeply impact the average customers on how they
see the brand. This can change the way the consumers perceived the products in general.
Micro environmental challenges:
The forces that affect the business as individual forces are micro environmental factors
(Hampden, Trompenaars and Turner, 2020). Primark faces challenges from micro environment
factors like:
Competitors and Marketing intermediaries: Primark is dealing in clothing retail industry which
have many strong competitors like Zara, H&M and New Look etc. Primark is renowned for its
good quality products at cheaper rates in high street markets. They usually buy a store and
continue their business. The company works with local community to promote the shop and
products (Primark News & Analysis, 2021).

Strategy of Competitive advantage: The company can produce the products of the processes
that different form the competitors such as product pricing. The reduced prices will attract a lot
of new customers and can reduce the risk of the competition.
Strategy: Product differentiation: Product differentiation means the differences that can be
seen in the products of different companies. This challenge affected the sale of the company n a
large scale.The company can launched its new products which will be carrying a stamp of brand
mark with them which could be easily recognized by the consumers. The company can also try
to change the products trends consistently so that it can reduce the threat of imitation. The
company can use different materials to produce the clothes to create a competitive advantage
over its customers.
RECOMMENDATIONS
Although Primark is operating very well and is generating huge revenues but there are
some issues that the company needs to work on. There are some possible future threats which
can affect the sale of the company in the future. Primark can use various suggestions provided
below to address the different issues faced by the company:
 The majority of the customers today prefer to shop online as they do not want to
physically visit the store. The company can improve its channels of distribution and
provide more focus on the online selling. It needs to be more active on its social media
platforms for sales. Also, through the online selling the company have to less worry about
the factors like global pandemic.
 The customers today wants the products which are different and are innovative. Primark's
some product lines are easily imitated in the market. So the company can improve its
product differentiation more by targeting different segments customers and the markets.
The company can invest more in R&D and innovate their products which are difficult and
expensive to be imitated.
 The company can change the production processes by implementation of technologies
which can save costs and time. The reduced production costs will also reduce the costs of
the products which can be used as pricing strategy by the company to attract more
customers.

CONCLUSION
It can be concluded that the retailing is an important aspect of the business and economy.
Primark is an international fast fashion retailing fashion brand. It is a highly popular brand
providing good quality products at low prices. The external environmental forces like politics,
economic conditions and technology affect the company's sales and revenue generation. There
are some micro environmental factors which are analysed through Porter's five forces model.
They describe the high threats of competition to the company. However, the company is
implementing appropriate strategies and tactics to address the issues of micro and macro
environment factors like environmental sustainability, legal and political environment and
competition in the market. The company can use recommendations like changing the production
process, product differentiation and increases its focus ion its online selling.

REFERENCES
Books and journals
Bruijl, G.H.T., 2018. The relevance of Porter's five forces in today's innovative and changing
business environment. Available at SSRN 3192207.
Camilleri, M.A., 2018. The marketing environment. In Travel marketing, tourism economics and
the airline product. (pp. 51-68). Springer, Cham.
Frue, K., 2017. PESTLE Analysis.
Gorlova, O., 2020. Macro factors influencing the formation of standardized management
systems of an enterprise. European Cooperation. 4(48). pp.68-84.
Grebenshchikova, L.S. and Yakushev, N.M., 2017. Definition of Competitiveness of the
Enterprise Using the Five Forces of M. Porter. Vestnik IzGTU imeni MT Kalasnikova.
20(3). pp.51-53.
Hampden-Turner, C., Trompenaars, F. and Hampden-Turner, C., 2020. Riding the waves of
culture: Understanding diversity in global business. Hachette UK.
Jelassi, T. and Martínez-López, F.J., 2020. External Analysis: The Impact of the Internet on the
Macro-environment and on the Industry Structure of e-Business Companies.
In Strategies for e-Business. (pp. 49-95). Springer, Cham.
Shtal, and et.al., 2018. Methods of analysis of the external environment of business activities.
Thompson, I., 2019. PESTLE. In The Procurement Models Handbook. (pp. 57-59). Routledge.
Online references
Blazquez, A., 2021. Primark - Statistics & Facts. [Online]. Available through
<https://www.statista.com/topics/4684/primark/>
Primark News & Analysis. 2021. Online. Availble Through:
<https://www.businessoffashion.com/articles/tags/organisations/primark>. [accessed on
29 July 2021]
Rahman, M., 2021. PESTEL Analysis of the fashion retail industry in the UK. [Online].
Available through <https://howandwhat.net/pestel-analysis-fashion-retail-industry-uk/>
UK fashion industry statistics., 2021. [Online]. Available through <https://fashionunited.uk/uk-
fashion-industry-statistics/>

APPENDIX
PESTLE ANALYSIS: