Retail Theory and Practice: A Case Study of Marks and Spencer's in the UK Fashion Market

This paper examines the key changes within the UK fashion retail market and their impact on Marks and Spencer's (M&S). It analyzes the relevant changes in the macro environment using a PESTLE analysis and the micro environment using a SWOT analysis. The paper then suggests and discusses strategies that M&S could use to adapt to these changes and improve its business performance. Finally, it provides recommendations for M&S to effectively address the challenges and opportunities presented by the evolving retail landscape.

Retail Theory and Practice
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Table of Contents
Introduction to retail........................................................................................................................2
Introduction to Marks and Spencer’s...............................................................................................3
Key relevant changes within UK fashion retail...............................................................................4
Relevant changes within the micro environment.............................................................................6
Suggest and discuss strategies that could be used...........................................................................7
Recommendations..........................................................................................................................10
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................12
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Introduction to retail
Retail is defined as systematic procedure that involves effective sale of products and services to
the end users by the help of multiple distribution channels for achievement of significant profits.
The individuals or entities involved in the process are known as the retailers. The retailers play
an important role in the effective supply of products and services to the eventual consumers for
final consumption. In the supply chain, the retailers purchase goods and services from the
wholesalers in small quantities and sell it to the end-customers for final consumption (Stadtler,
2015). It involves a systematic procedure in which several commodities and services are made
available to the end users through various distribution channels for effective generation of profit.
The retailers are involved in trading of a wide variety of goods and services for improvement of
standard of living of the customers. The retail market in the United Kingdom has contributed
significantly to the development of UK economy by creating employment opportunities and
improving the lifestyle of the people. A proper analysis has been done of the UK fashion retail
market for providing strategies to Marks and Spencer’s so that it can improve its business
operations and meet customers’ demand accordingly.
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Introduction to Marks and Spencer’s
Marks and Spencer’s is regarded as one of the most well developed retail organization
incorporated in London, the United Kingdom. The particular company deals in various varieties
of goods in order to provide a comprehensive range of goods and services to its targeted
customers (Jary et al., 2016). It deals in fashion products, home ware, cookware, footwear and
other accessories. Marks and Spencer’s comprises of personally owned tag named “St Michael”
and almost all its products are sold on the tag owned by it. Marks and Spencer’s possesses
ownership of around 979 retail stores in United Kingdom. Marks and Spencer’s gains large
customer base because of its quality and contemporary products and services sold at an
affordable cost. Along with providing retail goods and services, Marks and Spencer’s has also
diversified its business in the service sector named Marks and Spencer’s Financial Services in
order to provide excellent quality services to the customers such as banking, insurance facilities
and investment services and many more. It possesses 84939 workforces since 2017. The
organization earns annual income of 10622 billion in 2017. This reflects that the following retail
organization is operating its business very successfully can improve more in future.
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Key relevant changes within UK fashion retail
In order to improve its business operations and meet customers’ demands effectively, Marks and
Spencer’s is required to develop a PESTLE analysis in order to identify as well as adapt with the
modifications in the macro environment of UK fashion retail.
Political Factors
Due to the increase in competitive rivalry, the Government of the United Kingdom frequently
changes the regulations and policies related to payment of tax that can have significant impact on
Marks and Spencer’s and other fashion retail industry. The introduction of Brexit has affected
the business operations of fashion industry that resulted in high inflation (Bartlett, 2018). The
sourcing costs have been reduced in UK because of the liberal trade policy creating significant
impact on the country’s fashion retail industry.
Economic Factors
The introduction to Brexit in the United Kingdom has led to a significant rise in price of goods
and services (inflation) that has disrupted the business of the retail industry (Doherty et al.,
2017). This has created immense competition amongst the retailers in UK. Reduction in
purchasing power of customers due to inflation has decreased the sales volume and profitability
of the retail industry in UK. The global depression in the year 2008 has also created an adverse
impact on the UK retail industry leading to sluggish business growth in the industry.
Social Factors
Certain variations in the social factors have brought significant change in the business structure.
The trend of purchasing products and services in UK has changed as the time and generation
passed. Earlier people are had a tendency to purchase goods and services through high street
stores but now people purchase products and services through online sources. This has created a
significant impact on the retail industry including Marks and Spencer’s (Nagle, 2017). Because
of such changes in the society, M&S is required to change its business structure. Changes in
business structure leads to changes in the management of the company, which acts as a challenge
for M&S because it has to reform its management structure again that involves significant time
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and cost. This can disrupt the business operations of the company and also reduce its
profitability.
Technological Factors
Due to the changes in the technology the business operations of the organization in the UK
market has improved. People are now being open towards the technological equipments in order
to develop the quality of performance of its business activities. Technology plays an important
role in the development of retail business industry. There are many industries using robots in
factories for production of goods and services. United Kingdom possesses a very open nature in
terms of adoption of technology. It effectively adapts with the introduction of every kind of
technology (Hakansson, 2015). Hence, while adapting with the technological development and
implementing the technologies to the business operations of its organization, M&S is required to
incur a huge cost for employing the digital technologies.
Legal Factors
The legal rules related to the health and safety, rights of the customer and several other legal
rules and regulations exercise a great impact on the retail industry including Marks and
Spencer’s. M&S has initiated an initiative called “Behind the Barcode”. This initiative provides
the customers with opportunity to purchase goods and services of the company by placing order
for home delivery or collecting goods in the store through proper scanning of the products to be
sold in the store (Womack et al., 2015). Marks and Spencer’s is needed to make sure that it
effectively complies with all the legal rules and regulations in the local as well as foreign market
for sustaining in the changing business environment and improving its business to a significant
level.
Environmental Factors
There are several rules built for conservation of environment that affect the retail industry
including Marks and Spencer’s. Marks and Spencer’s is required to ensure that it follows all the
rules and regulations related to protection of environment, waste management, and reduction of
pollution for ensuring its sustainability in the competitive business retail industry. Marks and
Spencer’s effectively performs activities in relation to the corporate social responsibility to
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follow environmental rules and regulations for gaining a competitive advantage in the industry
(Korschun et al., 2014). However, this requires heavy cost implementation of by M&S in order
to effectively comply with the laws. M&S is required to provide training to its workforce so that
they can perform their activities keeping in view the compliance of the environmental laws.
Relevant changes within the micro environment
M&S faces heavy competition with other well develop retail brands such as Tesco, Sainsbury,
ASDA, ALDI and other UK based retail organizations. The microenvironment of the business
comprises of a particular number of entities. Tesco is well developed brand giving healthy
competition to M&S. It generates an annual income in the year 2017 of “£55917m”.on the other
hand the Sainsbury being one of the biggest competitors of M&S is generates an annual income
in the year 2017 of “£26224m”. The entities exercise great influence over the internal operations
of the organization. The help of the Strength, Weakness, Opportunity and Threats (SWOT)
analysis can successfully evaluate the impact. The SWOT analysis of marks and Spencer’s is as
follows:
Strength
 It is regarded as one of the largest clothing retailer in Britain
 Marks and Spencer’s possess its personal branded labels
 It provides a comprehensive range of excellent quality products and services to the
customers at an affordable rate
 It enjoys 84939 people of effective workforce since 2017
 It possesses more than a thousand retail stores athwart United Kingdom
 In the year 2015 M&S provide quality services to a total of 33 million consumers in and
outside United Kingdom
 M&S keenly participates in the activities related to Corporate Social Responsibility and
has also takes effective participation in the different environment conservation activities
such as reduction of greenhouse emission (Li, 2016)
Weaknesses
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 Since the retail industry is very profitable in the business environment of United
Kingdom, huge number of people forms are entering into the retail business, which
results in cut throat competition faced by Marks and Spencer’s and other retail
organizations
 Increase in the entrants of firms in the industry is plummeting the market share held by
Marks and Spencer’s
 A significant amount of revenue of Marks and Spencer’s is generated from the market of
United Kingdom (Drucker, 2017). Such over dependence of business Marks and
Spencer’s on the UK market limits its business growth and weakens its business
operations because of fluctuations in business environment in UK
 M&S faces huge risks of its offensive utilization of its brand for products’ imitation that
is done by the competitors to reduce its public image
Opportunity
 M&S has remarkable opportunities to expand its business in other countries such as
India, China and many more to reduce dependence UK market (Piercy, 2016)
 It possesses certain opportunities to develop its business over electronic commercial sites
for gaining a large customers base and sell its products in multiple nations
 It can establish fresh segments of market for profit maximization
 By the help of online retailing, M&S expand its business to a significant level
Threats
 M&S encounters with a significant threat from its business rivals who provide retail and
products and services at a reduced cost (Wrigley, 2014)
 Involvement of strict government policies can limit the expansion of business operations
carried by M&S
 Severe globalization hinders the business development of M&S since it is required to
properly follow norms as well as guidelines of different countries where it is going to
establish its business (Deresky, 2017)
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Suggest and discuss strategies that could be used
Owing to the important changes in the macro environment of the business several strategies are
required to be discussed in order to provide M&S with certain recommendation to resolve the
issues and use the changes effectively to improve its business performance as well as increase
the organizational profitability so that it can gain a competitive advantage in the industry in the
long run.
Technology plays an important role in the development of retail business industry. There are
many industries using robots in factories for production of goods and services. United Kingdom
possesses a very open nature in terms of adoption of technology. The technological
developments in UK have brought a significant change in its business environment. In order to
face the challenges in relation to the technological developments M&S is required to focus and
adapt with the technological fluctuations by employing different technological equipments such
as robots in factories used for production of goods that can improve the business operations of
the company and enable it to gain competitive advantage in the retail industry (Agostinho et al.,
2016).
Certain variations in the social factors have brought significant change in the business structure.
The trend of purchasing products and services in UK has changed as the time and generation
passed. Earlier people are had a tendency to purchase goods and services through high street
stores but now people purchase products and services through online sources. M&S is required
to focus on the expansion of its business over online sources. Since people are customers are
now being more accustomed to purchase goods and services through e-commerce sites, it will
help the company to gain huge customers base and ensure unlimited business scope (Porter,
2015). The company an easily gain competitive edge by adopting such strategies. Online
retailing will help the M&S to provide wide range of goods and services to large segment of
customers at an affordable rate. Online retailing can reduce cost to company and increase its
profitability to considerable level.
M&S encounters with a significant threat from its business rivals who provide retail and products
and services at a reduced cost. Hence, in order to gain advantage it is very necessary for M&S to
attract customers towards it quality products and services. M&S is required to focus on the
development of customers’ value by providing them standard quality products and services at a
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reduced. It can be done by introducing attractive discount offers to the customers. By selling
goods, online M&S can provide product to the customers at lower cost without incurring losses
(Gomes, 2018).
Severe globalization hinders the business development of M&S since it is required to properly
follow norms as well as guidelines of different countries where it is going to establish its
business. In order to resolve the issue, M&S can achieve information regarding the laws of
different countries where the company is going to expand its business since compliance of laws
and regulations create an essential impact on the business. Proper compliance of significant laws
is very important for a company to gain competitive advantage in the industry (Trevino, 2016).
For that, M&S can effective training and development to its employees to make them aware of
the importance of complying with the rules and ways to follow the laws. Proper training will
help the employees to perform their activities keeping in view the laws and regulations.
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Recommendations
M&S is required to conduct quality research and development process for resolving the issues
related to the technology and gain complete information regarding the effectiveness of the
technology in improving the business operations of the company. Lack of knowledge regarding
the technology can create barriers for the employees to function with the technology. M&S can
provide effective training and development to its employees to make them aware of the ways to
operate the technological equipments before developing it.
In order to gain competitive advantage by expanding business over online commercial websites,
M&S can conduct effective market research. This will provide certain relevant information to
M&S regarding the status of the competitors, the recent trends of the market, ways to effective
performance of business by the market, the strategies related to online retailing used by the
competitors and many more. By the help of gaining relevant information through market
research, M&S can compare the effectiveness of its strategies with that of its competitors to meet
the challenges that can hinder business growth. It will help the company to examine the
effectiveness of using online sources for profit maximization.
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Conclusion
The assignment concludes that in order to improve its business operations, gain competitive edge
in the industry and meet customers demanded effectively, Marks and Spencer’s is required to
develop a PESTLE analysis in order to identify as well as adapt with the modifications in the
macro environment of UK fashion retail. It is regarded as one of the largest clothing retailer in
Britain. Increase in the entrants of firms in the industry is decreasing the market share held by
Marks and Spencer’s. M&S has remarkable opportunities to expand its business in other
countries such as India, China and many more to reduce dependence UK market.
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