This report discusses the retail industry and the strategies and tactics used to adapt to changes. It explores the relevant changes in the micro environment, such as changes in customer behavior and increased competition. The report also provides recommendations for increasing profitability and market share.
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Retail Theory and Practice
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Contents INTRODUCTION...............................................................................................................................4 Introduction to Company...................................................................................................................4 Key relevant change within the UK fashion retail.............................................................................5 Relevant Changes in Micro environment...........................................................................................7 Strategies and Tactics in Adapting Change.......................................................................................7 RECOMMENDATION.......................................................................................................................9 CONCLUSION....................................................................................................................................9 REFERENCES..................................................................................................................................11
INTRODUCTION Retail is considered as an important procedure of selling goods and services to the people with the use of various multiple channels of distribution that directly supports in maximizing the profitability level. In addition of this, it also an effective activity that used by business organization to sell its products and services to the people in a small quantity. One of the main advantage of retailers is to directly satisfy customers needs and wants by providing them best quality products and services as per their needs and wants by using effective supply chain. Thus, it is crucial for company to analysis their actual needs so that they can easily keep them satisfied towards its offerings (Bowen, 2016). Current research is based fashion retain industry that is the manufacturer to the customers and deliver them fashionable products. This can be improving the overall performance of company. This report is based on the ZARA, is one of famous apparel retailers that operate their business in over the world with the aim of increasing their sales and profitability level.The main focus of this company is to analysis all the changes by evaluating both micro and macro environment. By this company easily adopt all the current changes that arise at market place. This report is going to discussed about how company adopted changes and also discussed about various strategies that help them in meeting all the challenges faced by company at market place. Introduction to Company In retail industry, ZARA is one of the leading companies that run their business in over the nation. Mainly, it is Spanish fashion clothing and accessories brand that serve high quality products to its customers at an affordable cost. In addition, company target all the customers men and women between 18-40 years that assist in fashionable clothes and accessories in order to increase their profitability level. Along with this, company was founded in 1975 by Amanico Ortega and Rosalia Mera.Mainly, company has around 7445 stores in entire world. One of the biggest strengths of this company is that it has good presence in the market that directly contributes in inviting more and more consumers over there. Company operate their business in UK, Italy, Germany and many more other countries. The main focus of this organization is to expand their business in over the world with the aim of generating larger profitability. Furthermore, firm also include more stores in UK and also having biggest market along with around 563 stores. In this, the first store of ZARA was opened in Spain and the company also focus on analysing behaviour at the time of deliver quality products and services. For sustaining in market for longer period of time, company analysis environment of company to determine all the current changes that arise at market
place. This will directly contribute in increasing market share by reducing the changes of arising any kind of issues. Company face high and strong competition through Mango, Gucci and another international brand. By performing effective performance company can easily improve their brand image and compete their competitors as well. Key relevant change within the UK fashion retail Retail industry is one of growth sector wherein company operate their business with the aim of generating larger profitability level. As it remains the largest sector that provide huge employment to people that positively contributes on economic condition of the nation. Due to globalisation, there are hire changes in customers demand and lifestyle that also influence their expectation towards the company and its offerings. This is the reason that company is responsible for analysing customers’ needs and wants before providing them products and services (Brigham and Ehrhardt, 2013). With the assistance of this, firm can easily improve their positive performance and competitiveness at market place. Zara is one of the renowned companies across the world dealing in fashion and for its excellent design. in recent years organisation has seen lot of success and heading towards expanding its business internationally. While operating its business in corporate world company has adopted many tools and PESTLE is one of them. This will help corporation to know what are the forces that is putting some kind of effect on business directly or indirectly. Political:As company is operating its business in different parts of the world so political impact on organisation will be financial regulations because different country has different laws and norms. Some of the nation might have easy local laws for entering into the market whereas some of them might have difficult entry option. In context with Zara because of Europe’s free trade agreements they get biggest export market of around 74% for textile and clothing. As a result, Zara has an option of reaching to maximum number of customers without any kind of extra border tariffs. Therefore, it will result in higher sales and profits. Economic:According to the recent times Spain’s have the fast-growing economy and this is favouring Zara for increasing its sales. Reason behind this is cost of labour resulted in low production cost but high product quality. As a result, it is providing commodities at low price which is in turn grabbing attention of more and more customers. Whereas if compared with Britain, after the exit from European Union and deprecation of pounds and increase in inflation rates lead to less disposal income of consumers. Therefore, Britishers cut their
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expenses from new clothes which dramatically decreased the sales of the products and overall profitability. Social:With the change in course of time, online shopping has increased the urge of customers to buy products 24/7. This has enabled Zara to reach out to different countries belongs to different cultures. Therefore, Zara has concentrated on this factor and have developed online websites and outlets in various countries. Social culture itself have an impact on business because people prefer buying clothes that belongs to their culture. Henceforth, Zara before entering into the market conduct primary research and manufacture clothes that are somewhat connected with local culture so as to attract more and more customers. Technology:Technology has played a crucial role in providing companies with maximum profits. Now customers of Zara can see how their outfits will look if they wear such clothes. Application of JIL and Lean Facilities after the collaboration with Toyota in the year 2014 has provided company with a push in manufacturing operations and helped them in maintaining a better coordination between its supply chain and logistic activities (Combs, Ketchen Jr and Short, 2011). therefore, this has enabled Zara in giving quick respond to its customers wherever from the globe. Apart from this, Zara has implemented an RFID system through which they can track inventory or products in different stores and ZARA’s websites in order to provide better customer experience. Environmental:In this changing scenario, sustainability has become one of the main concerns for the companies who are operating its business globally. Zara is also showing its effort by making its stores 100% eco efficient by 2020. Under this company will use less water and energy in comparison with ordinary stores. Zara will also implement better recycling features so that products that are wasted can be used one more time. Along with this, company has invested money in manufacturing clothes made from organic material like recycled wools and Tencel. Legal:While operating business in large area, it is strongly important that corporation has copyright laws before going to launch their products this will help them in eliminating issues and problems like sustaining their brand image. Rules and regulations also come under this which are required to be followed for example: providing appropriate living wages to its labour force.
Relevant Changes in Micro environment In Micro environment, there are various changes that directly affect the company and its products and services. In this regard, it can be related with the change in customers demand towards the company and its specific offerings. In context of ZARA, there are various factors that directly contributes in analysing the consumers behaviour, competition in market, suppliers and market trends as well. All these can be effective for company in improving their customers and profitability level as well. Apart from this, there are some factors of micro environment that may define the relevant and current change in business environment are as follows: Change in customers behaviour: There is an incredible change in shoppers' conduct and disposition as they began requesting quality items once again the cost. As the customers are more concern about having quality items just as they need branded and fashionableclothingitemswhicharepresentinthemarketplace(Dalkirand Beaulieu, 2017). This driving change in clients' conduct has made the design retail businesses to give excellent items just as gives items which are high in pattern and trend at market. Increase competition: Zara is confronting serious rivalry from Christian Dior, Gucci, Prada and some more. Brand ought to break down contender's items and techniques and ought to in like manner produce merchandise so as to pull in more clients. Zara ought to explicitly dissect contenders' system and innovation utilized so as to take choice with respect to their creation procedure. As its rivals are embracing client cantered technique in which individual organization are creating items as indicated by clients' interest. This has made ZARA to break down such contenders' methodology and gives items likewise in order to capture larger market share. Strategies and Tactics in Adapting Change In market place, retail industry is confronting dynamic changes from the different large-scaleconditionandminiaturizedscaleconditionfactorswhichhaveconstrained retailers to want ease for its items just as adaptability in its plan and quality are the key techniques to keep up a beneficial situation in an undeniably requesting market. As by investigating the full-scale ecological elements it has been resolved that there is tremendous increment in innovation with the wide spread utilization of web alongside this it has additionally been examined that expanding request of garments as indicated by singular culture, convictions and mentalities. Organization needs to embrace such changes so as to
catch bigger piece of the pie and improve its efficiency and benefit. Different procedures and strategies received by ZARA so as to embrace and adapt to changes viably. There are different changes distinguished in buyers' conduct and demeanour too in providers' conduct and due to the serious rivalry looked by the particular business and with these progressions organization has embraced to ongoing procedures, for example, as a result of winning rivalry in advertise, separate organization ought to receive to estimating system in which regard brand can bring down the cost of its items yet ought not forfeit with quality (Dant, Grünhagen and Windsperger, 2011). This would help them to catch bigger piece of the pie and in this manner gains more benefit and so as to deliver items as indicated by shoppers requests Zara centres around client cantered procedure as this system centres around giving products agreeing clients wants. Utilization of Appropriate speculations As there are noteworthy changes in complex business dynamic condition it is essential for the organizations to appropriately comprehend the idea of retailing and keep up a critical situation in advertise. This could be clarified with the assistance of Cyclical hypotheses The wheel of retailing hypothesis Philip Kotler has found wheel of retailing hypothesis in which it is examined that retailers need to follow a legitimate cycle so as to keep up maintainability in advertise for longer timeframe (Theories of Retailing - • Retail life cycle hypothesis Wheel. 2018). Right now, stages and steps are referenced beneath •Step 1-Lower costs, lesser edges and lower notoriety. •Step 2-Heavier cost and expanded notoriety for firm •Step 3-In this stage retailer watches expanding benefits with receiving change. This hypothesis sees that retailers need to follow bit by bit cycle so as to build its benefits and catches bigger piece of the pie. ZARA needs to deliberately examine its rivals and in like manner receives to change (Jones and Murphy, 2011). This retailing hypothesis would help the separate organization to investigate the market appropriately and adapt to small scale natural changes and catch bigger piece of the overall industry by following bit by bit of rehearsing retail.
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RECOMMENDATION As per above discussed report it can be recommended to the company that, to increase its growth ZARA needs to includes as well as adopts effective strategies and alternative ways that support them in sustaining in market place from longer period of time. As business environment is complex in nature thus, company should analysis the same before expanding their marketing and functional activities. This can be effective in improving the overall performance company and make it more competitive at market. In this context, there are some effective recommendations which ZARA needs to be applied and adopt within their functional activities. All these can be understood by following points: For increasing its profitability and customersbase, ZARA needs to spread its awareness by increasing online presence wherein customers easily get attracted. In this company provide services as per customers needs and wants that allow them in developing its competitive image at market place. ZARA should increase its awareness by using various online platform like social media, Facebook, Twitter, Instagram and many more. By which company easily communicate with their large number of customers and promote its products as well. With the help of this, firm easily capture larger marker share from its competitors and established its positive brand image. In addition of this, company needs to analysis customers needs and wants so that they can easily understand their choice towards its services. This can be beneficial in increasingcustomerssatisfactionoveritsofferings.Satisfiedcustomersalways contribute in making positive image that also influence other customers to buy company products and services. Company should use advance and digital technologies and tool to make customers aware about what company offer and deliver in market place. this will directly contributes in developing competitive and famous brand image. CONCLUSION From the above-mentioned report, it has been concluded that, in globalised world retail industry are one of the fastest growing sectors that help in generating revenue within the country by generating employment opportunities. In addition of this, one of the main aims of retail companies is to capture customers attentions towards its products and services that assist in increasing profitability level of company at market place. along with this, companies
that operate in retail sector needs to analysis macro and micro environment in order to determine all the current changes. With the help of this, firm can easily maximise the positive impact by reducing any kind of negative impact over the company and its brand image. In addition of this, business organization also implement as well as adopted various strategies that help them in managing or cope up with all kind of changes arise at market place. This will directly contribute in increasing market share and at the same time also assist in establishing its competitive image as compare to its rivals.
REFERENCES Books and Journals Bowen, D. E., 2016. The changing role of employees in service theory and practice: An interdisciplinary view.Human Resource Management Review. 26(1). pp.4-13. Brigham, E. F. and Ehrhardt, M. C., 2013.Financial management: Theory & practice. Cengage Learning. Combs, J. G., Ketchen Jr, D. J. and Short, J. C., 2011. Franchising research: major milestones, new directions, and its future within entrepreneurship.Entrepreneurship Theory and Practice. 35(3). pp.413-425. Dalkir, K. and Beaulieu, M., 2017.Knowledge management in theory and practice. MIT press. Dant, R. P., Grünhagen, M. and Windsperger, J., 2011. Franchising research frontiers for the twenty-first century.Journal of Retailing. 87(3). pp.253-268. Jones, A. and Murphy, J. T., 2011. Theorizing practice in economic geography: Foundations, challenges, and possibilities.Progress in Human Geography. 35(3). pp.366-392. Lorenzo-Romero, C. and et. al., 2011. Consumer adoption of social networking sites: implications for theory and practice.Journal of research in Interactive Marketing. 5(2/3). pp.170-188. Sciacovelli, L. and et. al., 2011. Quality Indicators in Laboratory Medicine: from theory to practice.Clinical chemistry and laboratory medicine. 49(5). pp.835-844. Sorescu, A. and et. al., 2011. Innovations in retail business models.Journal of Retailing,87, pp.S3-S16.