Changes in UK Fashion Retail: Next Plc Case Study

This report discusses the key changes in the UK fashion retail industry and their impact on Next Plc. It covers the changes in the macro and micro environment, strategies and tactics that can be used to overcome these challenges, and provides recommendations for Next Plc.

Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction to the organisation...................................................................................................1
Key relevant changes within UK fashion retail...........................................................................2
Relevant changes within micro environment...............................................................................4
Strategies and tactics that could be used......................................................................................5
Recommendations........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Retail is a concept or procedure to sell consumer commodities to customers by using
multiple distribution channels for earning revenues (Baker and Saren, 2016). It is all about
displaying commodities, illustrating features as well as benefits of commodities, processing
payments addition to stocking products in order to get accurate product at right price at right time
to right consumer. Similarly, fashion retail is characterised to consumer goods market which
primarily emphasis on clothing, accessories as well as footwear. Fashion retailers are generally
specialised in emerging trends with such sector, gains insights from retail business as well as
inspires conversation with individuals working within Fashion Retail Industry. The market
within such retailing is fast moving as well as changes rapidly due to emerging trends such as
social shopping, instant fashion recognition, exhibitions for sale and many more. To gain
information about fashion retail, Next Plc is selected which is one of company working within
fashion retail industry. The report covers information about company, changes in fashion retail
of UK, changes within micro environment, tactics to be used and recommendations for meeting
challenges.
MAIN BODY
Introduction to the organisation
Next Plc is considered as fast fashion retailer having headquarters at Leicestershire, UK
since 1864. the company has approximate 700 stores, out of which circa 500 are within UK and
rest circa 200 are across Europe, Middle east as well as Asia. It is largest clothing retailer in
terms if sales volume. At present, the entity trades online with more than 70 nations worldwide.
Along with this, company has opened 546 small stores and various large stores along with
employs more than 43900 people at different locations. The company is specialised in retailing
footwear, clothing together with home products (Next Plc. 2019). The objective of the company
is to offer quality accessories, furnishings along with fashionable clothing at good price. Next
Plc operates within five divisions, one is high street shops, second is mail order division that
involves e commerce platform, third is retail outlets through franchise agreements, fourth is
financial service division and last is telecommunication software services as well as property
management. In addition, Next Plc is also considered as an online as well as catalogue shopping
business having around 4 million active customers addition to international websites that serves
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more than 70 nations at single time. The business concern is also listed on London Stock
Exchange as well as is component of FTSE 100 Index. The company is accounted for 75% of
fiscal revenues with the year 2018. In addition, Next directory 25%, Next overseas 2%, Ventura
14% as well as other activities 5%. In the year 2018, the company has achieved more than 90%
sales in UK market.
Key relevant changes within UK fashion retail.
Macro environment is described to set of external circumstances which affects
development efforts of business either in negative manner or in positive manner. The elements
within such environment are considerably uncontrollable as well as have wide impacts on entire
organisational performance (Song and Tong, 2017). To study changes within macro
environment, PESTLE Analysis is best. The relevant changes that has occurred in UK fashion
retail are identified with the elements of the PESTLE analysis which are as follows:
Political: The political environment of UK is quite good as the government is stable as
well as reliable. Despite of this, there are various changes that has taken place within such
environment such as occurrence of no deal Brexit and rate of lax imposed by government that
have put some negative impacts on working of Next Plc. Other than this, it has been analysed
that the political authorities have levied trade barriers within the fashion retail industry due to
which retailers like Next Plc were protected from preventing potential exports as well as harm
from potential trade partners which impacts on business image of company in positive manner.
Economic: UK's economy is considered as highly developed addition to market oriented.
In recent years, some of the changes within economic environment of retail fashion industry are
high global inflation, increase in prices of raw materials like cotton, thread and so on, changing
stages within economic cycle, fluctuating inflation rate and interest rates. For example, changes
in interest rates impacts on the ways people invest as well as borrows. When interest rates are
high, company like Next Plc makes greater investments that impacts positively on its growth.
Other then this, when economic cycle changes, people begin to make purchase accordingly such
as when recession stage occurs, lower sales are ascertained that impacts negatively on business
inventory as more quantity of inventory are stuck due to which fashionable items are sold at
substantially lower prices that impacts negatively on profits and sales volume of the company.
Social: Social macro environmental factors comprises lifestyles, population changes,
cultures, demographics and norms (Pantano, 2015). Within UK, the changes within social
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environment that are analysed are changes in social mobility, increasing awareness among
consumers, growing popularity of social media and ageing population which puts enormous
impacts of operations of Next Plc. Social changes posses potentiality to either be opportunity or
threats for the entity. Such as realising rapid growth of product demand among young consumers
and delivering them products accordingly can benefit the entity to retain the consumer and
improve its sales volume.
Technological: Technology have power to rapidly dismantle competitive landscape
addition to price structure on a sector in very short durations. Within UK, the technological
environment changes frequently. The key changes within such environment are availability of
new inventions, speed of technological transfers and new technological platforms. Technology is
attaining rapid growth within fashion retail industry due to more use technological marketing
methods as well as online shopping, retailers such as Next Plc are required to consider issues like
high street failure that will improve sales of company and making more profits.
Legal: Wide number of legal factors impacts businesses within clothing sector (Yang,
Hwangbo, Kim and Cha, 2018). There are various legislations whose provisions are changed and
new legislations are implemented by UK's government which influences practices of the
company. For instance, minimum wage act and equal opportunities legislation along with acts of
parliament are designed for ensuring equality at workplace and paying wages as per work. In
context to Next Plc, following these acts results in adding higher costs and spending more on
employee wages that impacts negatively on profit reserves but following these legislations helps
an making good brand image in eyes of government and enjoying various subsidies.
Environment: Within UK, the environment changes rapidly. Environmental factors are
forefront for any nation. Increasing raw material scarcity, carbon footprints that government has
set for mitigating climate changes, pollution, global warming and occurrence of natural
calamities are some changes that have occurred within such environment. In context to Next Plc,
climate changes, enhancement of raw material scarcity are some factors that impacts in negative
manner through posing challenges in coming duration. But at same time, awareness about
environmental risks, minimising recycling wastage as well as lowering transport commissions
impacts positively on business.
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Relevant changes within micro environment
Micro environment is the situation that covers factors that are associated with business
operations along with influences day to day functions (Nandonde, 2019). The micro environment
also changes frequently and involves elements or factors such as customers, shareholders,
competitors, general public and suppliers. All these factors controlled by managers of Next Plc.
The relevant changes which has occurred within micro environment of selected firm as as
identified and discussed:
Distribution channels: Sourcing products used in manufacturing, reselling as well as
distributing inventory to end users is also important (Li and Alexander, 2017). Within such
environment, the existence of distribution channels as well as suppliers have changed to few to
unlimited. Earlier, distribution of products was done by marketers of Next Plc through direct
selling but now they have changed or used wide channels, for example, reverse channels, selling
through intermediaries addition to dual distribution channels. The company has built strong
distribution channels and effective networks with multiple supplier so to overcome the changes
in the policies or practices of such elements that is one of strength of company.
Shareholders and investors: A private institution raises funds from investors and
shareholders. Within micro environment, the rights, preferences and duties of shareholders and
investors are changing in order to maximising their wealth. Company like Next Plc, have to
adopt all the changes in the provisions of investors and shareholders for strengthening financial
position as well as to achieve business growth. The company fails to attract various stakeholders
and investors that is weaknesses for it.
Competitors: The competitive environment involves certain things that all business has
to take note. An organisation in real world generally encounters various competition forms. It is
analysed that the level of competition has changed to moderate to high for Next Plc as it faces
competition from companies like Hobbs Ltd, Topshop Limited, DTLR Inc., All Saints Limited
and new Look Limited. Such competition type is known as brand competition. Understanding
changing competition level is key for entity in order to maintain and improve their position in the
prevalent market. Adopting changes or understanding competitors in order to develop the market
can aid the company to take competitive opportunities for sustaining in fashion retail industry for
long term.
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Customers: Customers are key component of micro environment business tat directly
impact activities and practices of organisation. No company can successfully operate without
grabbing attention of targetted customers (Gupta and Gentry, 2018.). With changes in
population, there are various changes that have evolved within needs of customers. For example,
in context to Next Plc, some customers prefers luxury clothes products while some demand
products at reasonable prices while there are huge customers that have preferences for both
types. The company is primarily dedicated to manage customer relationships in order to meet
satisfaction level of customers and making good brand equity between potential ones. But due to
the changes in their demand and needs, company fails to do so that is threat for it.
Strategies and tactics that could be used.
The relevant changes within macro environment which influences more on selected
retailer that is Next Plc are technological changes and economic changes. The further analysis
and discussion for the changes that influences more to the business are as follows:
Economic environment changes: This type of changes influences workings of clothing
retailers due to changes in economic cycle, interest rates, prices for raw materials and many
more. In context to changes in economic cycle, company faces impacts when recession stage
occurs as it decreases business earnings due to limited consumer spendings which influences
business negatively as more inventory of clothings gets stuck or unsold resulting in decreasing
sales volumes. In order to overcome the challenge, strategy of economy pricing suits best as
the unsold inventory or fashion products will be provided to customers at relative low prices
when there will be recession that will helps in managing inventories in effective manner.
Through such strategy, company can achieve growth through offering quality products at
reasonable prices that will improve sales volume and profit reserves.
Technological environment changes: This sort of change influences ways to develop
inventions due to various changes in technological aspects such as new technological platform,
technological transfers and many more. When technology to market the fashion wearables
becomes obsolete then company have to face huge challenges for executing their workings in
predetermined manner and communicating with market audience. Technological changes brings
negative repercussions in business. In order to overcome from the challenge, Next Plc is
suggested to adopt tactics of technological marketing modes and online growth strategy.
With this strategy, company can promote various products online and can maximise sales of its
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product through online apps. These strategies will change the aspects of communicating with
market through usage of chat apps, smartphones and social networking sites that will take the
communication to new level through adopting the technological related modes.
In context to micro environment, Next Plc faces challenge due to competitors. When
competitors changes their way of working in market then it impacts on business activities in
huge manner on the prices and profit. Competitors properly analyses market needs and keep
changing their prices and marketing strategies that influences the selected company in negative
manner. To overcome it, competitors pricing strategy will suit best. In order to increase sales
volume and sustain in the market, the strategy will help in setting prices by considering
competitors prices for similar products.
Recommendations
In the modern era, retailers faces diverse challenges and to cope up with them they needs
to adopt various strategies. From the above analysis, selected retailer that is Next Plc is
recommended to adopt some of the strategies and tactics for overcoming challenges from the
changes in micro and macro environment. In context to micro environment, changes in
competitors way to execute activities impacts on selected business business image. In order to
overcome it, Next Plc is recommended to adopt competitors pricing strategy wherein they will
set prices of their fashionable products that are similar with rivals as per the prices set by them or
that will boost sales of the company resulting in making good image in market. Considering
macro environmental changes, the changes that influences more to the business are technological
environment changes and economic environmental changes. To overcome impacts of economic
environment changes, firm is suggest to adopt strategy of economy pricing wherein they will set
prices for the unsold inventory as per the pertaining economic condition that will motivate
consumers to make some spendings and the company will stock out its inventories resulting in
achieve profits when economic situation is not favourable. For overcoming technological
changing environment, the entity is recommended to adopt tactics of technological marketing
modes wherein marketing of products or fashionable wearable will the done through social
media and chat boots that will improve communication among entity and consumers to great
extent.
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CONCLUSION
The above report concludes that the concept of retailing is achieving growth in the
fashion industry. Retail is generally selling products to end users so that they uses and consumes
them despite of resale. Fashion retail industry involves various micro and macro environmental
factors. The changes within macro environment are analysed through PESTLE Analysis tool.
The tool helps an entity to closely look general environment and forecast future. The changes
within the factors of micro environment are competitors, stakeholders, investors, distribution
channels and customers. The macro environment factors that influence more to the entity are
changing in technological factors and economic factors. The recommendations to overcome
challenges are adoption of competitors pricing strategy, technological marketing modes and
economic pricing strategy.
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REFERENCES
Book and Journals:
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Brooks, A., 2019. Clothing poverty: The hidden world of fast fashion and second-hand clothes.
Zed Books Ltd..
Fernie, J. and Grant, D. B., 2019. Fashion logistics: Insights into the fashion retail supply chain.
Kogan Page Publishers.
Franco, J. C., Hussain, D. and McColl, R., 2019. Luxury fashion and sustainability: looking good
together. Journal of Business Strategy.
Gupta, S. and Gentry, J. W., 2018. Examining its micro and the macro perspective. Eco-Friendly
and Fair: Fast Fashion and Consumer Behaviour.
Hwangbo, H., Kim, Y. S. and Cha, K. J., 2018. Recommendation system development for
fashion retail e-commerce. Electronic Commerce Research and Applications. 28. pp.94-
101.
Kaur, B. and Silva, D., 2017. Future growth development Strategies.
Kaur, S. and Wood, B., 2017. Identifying different marketing strategies.
Li, D. and Alexander, P., 2017. Analysis of drivers of customer satisfaction in the clothing
store’s e-commerce.
Nandonde, F. A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
Pantano, E. ed., 2015. Successful technological integration for competitive advantage in retail
settings. IGI Global.
Yang, S., Song, Y. and Tong, S., 2017. Sustainable retailing in the fashion industry: A systematic
literature review. Sustainability. 9(7). p.1266.
Online:
Next Plc. 2019. [Online]. Available through: <https://www.nextplc.co.uk/>
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