Retail Theory and Practice

This document provides an overview of retail theory and practice, focusing on the key changes in the UK fashion retail industry. It discusses the operations of H&M, a multinational retail company, and analyzes the macro and micro environmental factors affecting the industry. The document also suggests strategies and tactics that can be used to navigate these changes and achieve success in the fashion retail sector.

Retail Theory and Practice

Table of Contents
Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction to the company.......................................................................................................1
Key relevant changes within the UK fashion retail....................................................................2
Relevant changes within the micro environment........................................................................3
Suggest and discuss strategies and tactics that could be used.....................................................4
Recommendations.......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Retailing is clearly defines as the selling and buying of various goods and services as by
involving direct interfacing with customers. In this effectual contribution is processed as by
managing various activities from which products are offered as per suitability is customers. In
this delivery post and its services is managed as per demand and requirements of marketplace. A
retailing is an idea that basically examines balanced level of evaluation in which adequate cycle
is transformed that is considered on the basis of low cost and low margin operations and
functions (Buckle and Thompson, 2020). In addition fashion retailing is a business in which
clothes are buying from manufacturers to sellers. In this retailers make sure that initial purchase
of sale is processed as with the ability of customers to buy clothes from stores. The fashion
merchandiser sells its clothes by staying with the latest and emerging trends so that customer
requirements get fulfilled satisfactorily.
MAIN BODY
Introduction to the company
H&M is acronym as Hennes and Mauritz and a Swedish multinational company of retail
that is basically known for its fast fashion clothing on men, women, children and teenagers. The
company operate its business in 74 countries and along with this having 5000 number of stores
and it also consider other products and services of other brands and the company also offered
126000 full time positions that is equivalent as well. It is the second largest clothing retailer in
international level and in behind of Spain -based inditex that is a parent company of Zara that
was founded by Erling Persson and managed by his son Stefan Persson and Helena Helmersson
and along with this company also make online shopping by which its availability is managed by
33 countries. The store was first founded in Vasteras, Sweden and it is also being called as
Hennes and in this clothes are sold exclusively for women's. H&M also listed in Stockholm
Stock Exchange as in 1974 and futhermore company has expands its business in Europe and as
from there retail online is started. In the year 2008 H&M announced in press release that they
have started to furnish its selling and in initial level services is distributed with support of online
catalogue. After that company expand its business at international level and at October 2020,
company announced to plan that they have close 5% of its stored by the end of 2021 all across
world and it is actually the resultant of COVID 19 pandemic attack.
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Key relevant changes within the UK fashion retail
The macro-environmental analysis basically defines the ability to make productive changes
is increases as it has direct impact over the productivity and performance credibility of business.
It furthermore consists of various factors that are as briefly explained below as:
Political: It is a factor that depends on government rules and regulations as H&M as it is
an international company and have operate its function in different countries (Hayes, 2018).
Therefore, it is essential for business to manage political risk that is usually exhibited on the
basis of jurisdiction level. As H&M manage its franchise in Egypt, Turkey, Lebonon and these
are unstable countries. Furthermore, company scan every political environment that keen to
manage political instabilities that affect stakeholder’s goals as well. For this H&M avoid
international political risk by entering in franchising as with this ability of business to avoid
regulatory demand.
Economic: It defines economic condition as due to Brexit it has direct impact over profit
making abilities of businesses. As the labour laws get changes significantly thus the set of
business operation at developing countries is relatively low by which manufacturing unit is
increases and in parallel profit also get enhanced. Due to pandemic attack of COVID disposal
income of public is decreases that reduce spend on trendy and luxury clothing. As Tax policies
changes from country to country by which business align are managed accordingly in this supply
chain also get affected by which company induce various strategies to maximise its sale.
Social: It is factor that is related to customer’s preferences and in terms of clothing
industry it gets influenced in relation to celebrities and social media. As people get connect with
brand on the basis of promotion that is promoted by its favourite celebrity (Heller and et. al.,
2019). The attitude of public get changes as they prefer towards designer clothes by which
customers demand get matched. The buying behaviour of customer is required to match and for
this H&M maintain constant consideration on customer preferences and taste along with make
sure that quality service is offered that enhance productivity ratio of business.
Technological: It is a factor that is related to technological advancement and for this
public interest also gets changes to purchase various merchandise from online platforms. It
provide easy to customer to get order at from own workplace or home as well. H&M make
advancement and provide reward system that is directly dependent on discount that is offered to
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customers in order to enhance potential customer base. It enhances the market capitalisation as
by increasing of profit margin as well.
Environmental: It is a factor that has directly affected business as in textile industry it is
the second most polluting industry as after petroleum and oil industry. In clothing industry water
bodies get suffered in terms of water wastage and in this government norm as emission of air
pollution under which its damage get controlled. In this H&M maintain goal to use recycled
clothes by which production rate get managed (Helm, Kim and Van Riper, 2020). In this
working efficiency and effectiveness of business get controlled by which profit margin is
enhanced and produces favourable outcome for business.
Legal: It is a factor that is based on legal formalities that get changes and varied as per
different countries. Every country has its own regulations and policies and it is successful for
business if these regulations get followed by company. For instance, H&M get collaborate with
other businesses as by performing franchising with various partners as Oman, Kuwait, UAE etc.
In this intellectual property right is biggest concern for business thus they have attain various
changes as per suitability of customers and ensure that their design didn’t get stole by others.
Relevant changes within the micro environment
A micro environmental factor is the one that affect the decision making and performance
of the business. In the SWOT analysis of H&M is as briefly explained below as:
Strength: H&M has uses effective strategy that is relies on selling of merchandise and in
this company uses fast fashion model by which they are able to design latest trendy clothes. The
global presence of H&M is higher as they sold its product to 5076 stores in 6 continents and at
74 markets by which its operating risk get reduces and long term sustainability and stability is
increases H&M also offer wider variety of goods by which they are able to attract more
customers along with this business also has strong online channel as well and it is biggest
strength of company (Krasnokutska and et. al., 2019).
Weaknesses: H&M and its overdependence on outsource is weakness as company
outsourced its products over 900 suppliers within Asia and Europe. Some of products of H&M
are controversial and customer also boycotts its product in order to promote racism. As H&M
uses a black child in order to promote its hoodie with the phrase “Coolest monkey in the Jungle”.
In reliance with fashion trends designer brand is major weakness that draws radical design.
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Opportunities: The diversification of products assists to promote stability by which
earning capability is increases as H&M improvise its offering and also include sports apparel. As
per comparison to other exploit of e-commerce retailer such as Zara is beyond exploitation of
online sales. The company also maintain suitable focus on emerging trends by which middle
glass fashion enhances market potential and growth. H&M also get expand its services by
making merger and acquisition that enhance market credibility in productive manner.
Threat: H&M get impending the recession and in this trendy clothes and experience of
business is get in decline in prospect of profit and sales (Lee, 2018). As per concern of fashion
industry H&M faces intense competition as from its competitors as like Zara, Gap, Boohoo etc.
In this competitor get increases its market share by which market demand also get decreases. In
relation to fashion industry more fake products is increases by which premium profit share of
brand also get decrease over a future period of time. The operating cost also gets increases and it
is biggest threat for H&M as due to global pandemic un-interruption of raw material and finished
goods by which profit and sales margin is reduced.
Suggest and discuss strategies and tactics that could be used
Strategies
There are several strategies that a fasjion clothing company can adopts as per the changes
mentioned above. In case of H&M, manager can adopt changes by implementing the strategy by
using porter's generic model that can show below:
Porter's generic model
According to analysis of market, it is stated that UK social, technological and
environmental factor need some key changes based on customer preference in which they need
good that are affordable with high quality. Hence, it is very essential to ensure the demand and
supply of market in effective way. For this porter's generic model is applied that helps in
analysing the most appropriate strategic option for growth. That can be elaborated below in
terms of H&M:
 Cost leadership- In this option H&M can aim to manufactures the products and services
at possible low price that helps in increasing the scale of production (Lee and et. al.,
2019). ON major advantage of this factor the products can be produced in bulk that helps
in expanding the business in effective way. But by using this factor company cannot
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enjoy the long term sustainability with this because once the competitors are also start to
offer their goods at low price.
 Differentiation- In this strategy, H&M can introduced the new product and services
within fashion sector that is valuable for the customers in an effective and efficient way
(Pantano and Gandini, 2018). If H&M can apply this option than they can enjoy
maximum profits because they offer the exclusive products that helps in creating
monopoly for the organisation in competitive marketplace. In this firm can focus on
research on regular basis so that they can gain long term benefits.
 Focus- This strategy can be divided into two factors tin which company focus on
satisfying the customer demand. The two factors can be shown below:
◦ Cost focus- In this company can lower their price of their products and services for
targeting the large market. In this firm would carry on this strategy to focus on their
target segments.
◦ Differentiation focus- In this strategy company can produce the variety of products
and services for specific segment in an effective and efficient manner.
From this the major benefits can be taken by the firm by implementing the both strategies
so that more opportunities can be created in marketplace. In this cost of executing this strategy is
to be incurred more that the other two strategies with presenting uncertainties in surroundings in
success.
In this H&M can adopts the cost leadership strategy to grow their market. This would
fulfils the demands of customers by offering quality commodities at reasonable cost (Piotrowicz
and Cuthbertson, 2019). In this to overcome its drawbacks company required to introduce
calculative differentiations that helps in the organisation in gaining competitive advantage.
Tactics
To implement the change successful H&M manager can focus on developing some
tactics that can show below:
 Training and development- This technique is related to oldest and effective tactic that
an organisation can adopt to enhance their sales and profits. It is the essential function of
human resource management. In this company can adopts this tactic for identify the best
talent in the employees so that assigning task is to be easy. In this firm will offer training
and development session so that workforce hidden talent can be come out that gives
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effective and efficient results. IN case of H&M, manager can adopts the new technology
in offering the goods and services and for this company provide relevant training and
development sessions to their sales person so that effectively understand the customer’s
needs and wants. This helps in satisfying the customers and gaining high profits and
revenues (Rao, 2019). In this business entity can focus on providing the best friendly
environment to their employees so that they can accept the changes effectively and
efficiently as per the demand of UK customer fashion. In this H&M can also provide
training session to their marketing employees so that they can promote the goods and
services by using technology and attracts large base of customers. This tactic is effective
to capture the market attention for a long period of time.
 Performance appraisal- It defines as a process of constantly examine the employees
performance on their job so that their overall contribution is to be analysed effectively
and efficiently. It represents as a annual review that helps in analysing the staff skills and
capabilities related to achievement and success of the company. Adopting this tactic
helps in do the changes as per the market demand (Roggeveen and Sethuraman, 2018). In
case of H&M manager can regularly evaluate the performance of their employees so that
they can work effectively and efficiently. IN this firm will take follow-ups on continuous
basis of each and every employee so that their performance quality is to be improved and
they feel motivated towards achieving the task on specific period of time. The main
purpose of adopting this tactic by H&M manager is to examine the strength and
weaknesses of their employees so that offering the task according to that and placing
right employees on right place. It also helps in influencing the working habits so that high
profits can be attained by firm.
Recommendations
From the above report H&M can face the several challenges like changing customer
performance on frequent basis, using advanced technology etc. due to this company can accept
the changes by developing several strategies and tactics to overcome this. Further for this it is
also recommend that company can highly emphasis on market research regularly so that they can
effectively analyse the demands of customers and produce and develops that types of goods
which can satisfy the customer’s requirements in appropriate manner. In this organisation can
also focus on their stock as they can manufacture the goods and services as per the demands
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occur not exceed to it so that they can do changes as per requirement of market in effective and
efficient way (Suhartanto and et. al., 2018). Further using the advanced includes high cost and to
overcome this challenge it is to be recommended that they can enhance the customers base by
offering quality products so that high profits can be generate so that firm can manage their
expenses in appropriate way. For this they can provide the training and motivation factor to their
employees so that they can work effectively and efficiently in a specified period of time.
CONCLUSION
It has been concluded from above report that retailing business is the one in which different
products and services have been offered in between manufacturer and customers. The fashion
retailing is always being biggest requirement of marketplace as it provides various clothes to
customers over continuous period of time. For this business must have analysed market
requirement and demand as with support of macro-environmental and micro environmental
factors. Furthermore various strategies and tactics are analysed by which appropriate changes in
business is induced with perfection. For this porter’s generic model is analysed through which
suitable strategy is selected by which ability to gain profitability and productivity is increases in
timely basis.
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REFERENCES
Books and Journals
Buckle, M. and Thompson, J., 2020. The UK financial system: Theory and Practice. Manchester
University Press.
Hayes, J., 2018. The theory and practice of change management. Palgrave.
Heller, J. 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.
Helm, S., Kim, S.H. and Van Riper, S., 2020. Navigating the ‘retail apocalypse’: a framework of
consumer evaluations of the new retail landscape. Journal of Retailing and Consumer
Services, 54.
Krasnokutska, N. and et. al., 2019. Transparency of the enterprise: from theory to practice of
evaluation (on the example of retail networks). Економiчний часопис-ХХI, (1-2), p.58.
Lee, K.C., 2018. Grocery shopping, food waste, and the retail landscape of cities: The case of
Seoul. Journal of Cleaner Production, 172, pp.325-334.
Lee, Z.W. and et. al., 2019. Customer engagement through omnichannel retailing: The effects of
channel integration quality. Industrial Marketing Management, 77, pp.90-101.
Pantano, E. and Gandini, A., 2018. Shopping as a “networked experience”: an emerging
framework in the retail industry. International Journal of Retail & Distribution
Management.
Piotrowicz, W. and Cuthbertson, R., 2019. Exploring omnichannel retailing: Common
expectations and diverse reality. In Exploring Omnichannel Retailing (pp. 1-10).
Springer, Cham.
Rao, S.S., 2019. Engineering optimization: theory and practice. John Wiley & Sons.
Roggeveen, A.L. and Sethuraman, R., 2018. Understanding the JR heritage, publishing in JR,
and the evolving retail field. Journal of Retailing, 94(1), p.1.
Suhartanto, D. and et. al., 2018. The link between tourism involvement and service performance:
Evidence from frontline retail employees. Journal of Business Research, 83, pp.130-
137.
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