Retail Theory and Practice

This study material explores the concepts of retail theory and practice, focusing on the key changes in the UK fashion retail industry. It discusses the company background of Next Plc and analyzes the relevant changes in the macro and micro environment. The study also provides suggestions and strategies for business growth.

Retail Theory and
Practice
1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Company background and intro:............................................................................................3
Relavant key changes that took place within the UK fashion retail industry:........................4
Considerable changes within the micro environment:...........................................................5
Suggestion and discussion of strategies and tactics for business...........................................8
Recommendation..................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
2

INTRODUCTION
There are many companies which are working exceptionally within the retail sector while
developing products and services meeting quality standards to attain the requirements of
customers (Pantano and Timmermans, 2019). Retail sector is contributing to the growth and
development of the nation as companies are working well enough. There are various elements of
business' micro and macro environment that needs to be systematically analysed to frame
efficient strategies of business to promote growth. The report is based on Next Plc , which is
trading in various countries around the globe with quality products and services in the fashion
industry. This is a leading British company operating in the retail industry with the headquarters
in Enderby, England, United Kingdom. This report includes different factors that define the
performance of fashion in the retail sector of UK. In this various factors of micro environment
are highlighted properly. Different strategies and tactics can be developed for growth and
development of business with respect to the elements mentioned here.
MAIN BODY
Company background and intro:
Next Plc is one of the leading compaies dealing in retail sector, and was established in
1864 and the one who found this company was Joseph Hepworth. Next Plc first women's wear
store was set up by the month of February of 1982 and this company has launched Men wear
products in August of 1984. Next Plc company is creating and developing products and services
meeting quality standards for both men and women (Chudik and Pesaran, 2016). while providing
different types of products and services to various countries across the world. Next Plc is a
multinational organisation which is headquartered in Enderby, England, United Kingdom.
Approximately the company has over 546 store till 2015 and Machael Roney was appointed as
the chairman of Next Plc company in 2017 (About NEXT Plc , 2020). Next Plc company is
selling its products along with services on both online platform and stores/ outlets. Their product
line has varieties such as ready to wear clothing products, accessories, shoes, dresses and so on.
It is also offering several products for kids, home décor, beauty products and many more. There
are various companies such as Marks and Spencer company, H&M etc., who compete as rivals
with Next Plc organisational Mission,vision and objective of this brand are mentioned below.
3

 Objective – Next Plc focuses on making products that suit customer's tastes and
preferences
 Vision statement – To become the market leaders by serving the bigger number of
customers by offering their goods and services.
 Mission statement – To provide products which does not harm individuals or society,
and services that soothe customers and satify their needs. And also taking care of the
welfare of the society.
Relavant key changes that took place within the UK fashion retail industry:
It is important for every organisation to understand and evaluate all the factors of macro
environment which can have direct or indirect impact on business (Lange and et.al., 2018). There
are many external factors that will affect the business and its working efficiency. By identifying
such factors, organisation finds it easier to develop strategies that would contribute to the growth
and development of business. In order to determine these factors of business environment for
identifying changes PESTEL analysis serves as an effective tool. Political factors – political factors directly has an impact on performance and
profitability of business. Political factors majorly include all the elements that are related
to political and government changes of the UK. It consists of trade restrictions, instability
or unsuitability of political units, taxation policies and etc., Decision making gets far
better when the authories take all the above mentioned things into count when in process.
The UK has very strict trade restrictions impacting exports and imports directly. Hence
we can say that political factors will lead to have a significantly proportionate effect on
Next Plc operations. Economical factor – The elements such as inflation rate, foreign exchange rate, gross
domestic product, interest rate, exchange rate etc., come under the consideration of
economic factors that could have an impact on the business. Economic factors could
show the impact on Next Plc It is crucial for organisation to consider economic factors
while taking business related decisions (Lange and et.al., 2018). The UK's rate of
economic growth is mostly on thye fastest pace compared to that of other countries
which is a good sign for all the performing business concerns. High growth of country
will lead to increase the sales of Next Plc company.
4

 Social factors – Few social factors of the external environment of business are income
distribution, demographic changes, customers attitude and beliefs, lifestyle of customers
and so on. The organisation to needs to understand and evaluate different factors of socio
– cultural dimentions in order to enhance business activities (Piotrowicz and Cuthbertson,
2019). Next Plc company's standardly well developed products and service methods
shows the effect on the running business. Changes in preference with customers may
affect the sales of Next Plc company. Technological factor – Technological factor majorly includes elements of the business
unit where technology is used to run operations and transactions iof the concern. It's
crucial for the organisation to use advance technology in its business processes to boost
the effectiveness and efficiency of organisation. When the technological factors boost the
efficiency of working of the businesses then this contributes to organization's
development and growth. The UK country has more advanced and updated technology in
comparision to that of other countries. Environmental factor – Encironmental factors has all the elements like ecological
balance, climatic changes, location disturbances, natural calamities etc., under its head ,
be it for Next Plc or any other company needs to take precautions like insurance or any
such thing to ensure evasion of losses. As as single natural calamity have the power to
destroy huge amount of investments.
 Legal factors – Legal factors majorly consist of rules, regulations or policies set by
government authorities which may affect working conditions or operations of the
business unit . It includes employment laws, health and safety of customers, intellectual
property rights, consumer protect act and so on (Lin, 2015). By considering all of these
factors organisation can attain its best, Changes in employment laws and regulations may
have effect of employees and organisation's performance, which may in turn make
changes in profitability status of the company.
Considerable changes within the micro environment:
Internal environment of Next Plc majorly includes internal capabilities and strengths of
businesses. Every company must essentially try to determine its strengths and weaknesses to
understand and highlight their strong points to promote business and to work on their weaknesses
5

and grow to become a better version compared to that of before. SWOT Analysis works as an
efficient tool to do so, the following gives the picture of strengths and weaknesses of Next Plc
6

Strength Weakness
Next Plc has successful business record & this
organisation is providing its products and
services for many years. Brand portfolio of
this company is consider as it biggest strength
as this helps in conducting organisational
activities in effective manner (Srivastava
Chaudhuri and Srivastava, 2015). This
organisation has strong distribution network
that helps in offering products and services to
the major part of the market. Next Plc
company is providing products along with
services to various parts of the globe.
Distribution channels of the company
contribute in increasing the performance of
company.
This company is not able to manage its
inventory system in better manner. This affect
the sales of Next Plc company. Ineffective
management of inventory system with affect
the demand and supply of Next Plc products
and services. Lack of financial planing will
have direct impact on liquid asset and current
assets of Next Plc company. Less skilled
employees will not be able to conducting
business operation is required manner.
Respective company is poor in forecasting the
need and customer's demand to develop high
quality products.
Opportunities Threat
Essentially Next Plc must take advantage of
newly developed and launched advance
technology in its process of operating business.
This will help in performing business activities
in better manner. By providing training to
employees of respective organisation, will be
able to improve the overall performance and
capabilities of staff member. Training and
development is an effective method that can be
used by company in order to increase the skills
and potential of organisation. This will lead to
development & growth of the business. Next
There are various threat to Next Plc which
have negative impact on business and its
operations. Next Plc is a part of highly
competitive environment that will have direct
impact on sales and performance of business
(Yakhlef, 2015). Trade barriers and restriction
will lead to have influence over business
performance and profitability.
7

Plc needs to develop marketing team so that
they can understand or determine the
requirement of customers.
Suggestion and discussion of strategies and tactics for business
It is imortant that Next Plc develops effective strategies to achieve set goals of action.
Strategies can be define as the set of action plan that will support business in achieving set goals
(Lund, 2015). There are different models and concepts that will aid Next Plc com pany to take
efficient strategies for development of the organisation. By developing strong tactics and
strategies business can improve daily organisational activities in an efficient way as well as attain
desired objectives. Different models that will helps Next Plc company to develop better
strategies and tactics are mention below in detail.
Ansoff matrix
Ansoff matrix is developed By H. Igor Ansoff in 1957 & the motive behind developing
the model is to guide the organisation. This model will help in creating better strategies that
would lead to growth and development of business. Market penetration – In this strategy respective company will focus increasing the sales
of now running services and products by providing it to existing markets. Next Plc
company will be able to enhance the sales of current products by targeting the existing
market area. To increase sales, respective company can use effective marketing strategies
for the existing markets. Product development – Next Plc company focus on creating and developing products
and services in order to sell it in current market area. Product development strategy is
very effective in developing new or innovative product and service that will lead to meet
the needs and desires of the customers (Bradlow and et.al., 2017). Respective
organization must create vaiety of products which are unique for customers. This strategy
will have impact profitability status of the company. Market development – In the process respective company will focus on entering into new
market segment with their current product line. It is important for the company to
understand the needs and requirement of new market consumers to sale its products.
Market development strategies will help in enchaining the customer base of Next Plc
8

company. By entering into new market area respective organisation will be able to
enhance the market share.
 Diversification – Such strategies are considered to be risky strategies as the company
will enter into a new market with the all new range of products & services. In these
strategies Next Plc needs to identify the market area in which company can sale its new
and innovative product.
Porters generic model
This model helps in understanding the actual position where it stands as an organisation
in the industry. Porter's generic model is an effective way to attain competitive advantage over
other competitors (Morcol and et.al., 2017). This includes four different strategies which are
developed on the basis of competitive advantages and competitive scope. Porters generic model
with reference to Next Plc is mentioned below in detail. Cost leadership strategies – company focuses on minimizing the cost of business and its
operations. Next Plc company will be the cost leaders of the industry by manufacturing
and producing products at lower rates (Elbeltagi and Agag, 2016). This will allow the
company to gain competitive advantage over other competitors. Differentiation strategies – This is an effective strategy as in this Next Plc organisation
will lead to develop better and effective products and services for customers. By
developing this strategies respective company will focus on creating and building new
and unique products and services which meets the absolute requirement of customers.
Next Plc needs to understand and analyse the needs of target customers in order to
innovate products that are different form other rival companies and full fill requirement
of customers. Cost focus strategies – Cost focus strategies can be described as the strategies which
helps in gaining advantage over competitors by getting cost leadership in niche market
area. This strategies is more suitable for company when its is selling its products to
specific customers (Wertheim, Vellema and Spaargaren, 2015). Next Plc is offering its
products and services to larger part of the market.
 Differentiation focus strategies – This strategies is related to developing and offering
new and different products only to small part of targeted customers. This is considered as
9

effective strategies when organisation is planning to compete and take advantage ovr
rivals in the industry.
Recommendation
According to the above mentioned analysis of varius elements of business environment
and models there are some recommendations that will would increase performance of
organisational activities.
 Its important for organisation to follow all all the policies that are developed by political
and government authorities. Which would help in smooth functioning of businesses.
 This company should use market penetration strategies as this will be the most effective
for enhancing business activities and improving the sales percentage product. Next Plc
can use different types of methods that will support in increase the of sale of existing
product in the current market area.
 Next Plc company needs to use differentiate leadership strategy which would help with
achieving desired goals and objective. By creating and developing new and unique
products and services respective organisation will be able to develop strong brand image
of organisation.
 This organisation needs to use new and advance technology in its business process as this
will help in boasting the overall performance of organisation. Next Plc would be able to
conduct business related tasks and achieve objectives in more better and efficient manner
with the help of innovative technology.
 Next Plc company has to train its employees as this will lead to increasing their
capabilities and skills to perform business tasks.
CONCLUSION
With reference to the above mentioned elements of the report, conclusion is that it is
important for the organization develop better and strong strategies that will help in
accomplishing organisational objectives. There are various factors of environment of business
that will affect the performance and growth of business in market environment. It has been
identified that external factors of business can not be control by business and this will have the
significant impact on business' operations. Business needs to determine its strength and
weakness so the effective strategies can be developed. Ansoff and Porters generic model are
10

very helpful in developing better strategies for organisation which help in gaining advantage
over competitors.
11

REFERENCES
Books and Journals
Pantano, E. and Timmermans, H., 2019. Smart Retailing. Springer International Publishing.
Lange, F. and et.al., 2018. Bridging theory and practice in an applied retail track. Journal of
Marketing Education, 40(1), pp.6-16.
Lange, F. and et.al ., 2018. Bridging theory and practice in an applied retail track. Journal of
Marketing Education, 40(1), pp.6-16.
Piotrowicz, W. and Cuthbertson, R., 2019. Exploring omnichannel retailing: Common
expectations and diverse reality. In Exploring Omnichannel Retailing (pp. 1-10).
Springer, Cham.
Lin, H.H., 2015. The effects of price-matching guarantees on consumer response in an online
retail context. Journal of Service Theory and Practice.
Srivastava, S.K., Chaudhuri, A. and Srivastava, R.K., 2015. Propagation of risks and their impact
on performance in fresh food retail. The International Journal of Logistics
Management.
Yakhlef, A., 2015. Customer experience within retail environments: An embodied, spatial
approach. Marketing Theory, 15(4), pp.545-564.
Lund, C., 2015. Selling through the senses: Sensory appeals in the fashion retail
environment. Fashion Practice, 7(1), pp.9-30.
Bradlow, E.T., and et.al., 2017. The role of big data and predictive analytics in retailing. Journal
of Retailing, 93(1), pp.79-95.
Morcol, G., and et.al., 2017. Business improvement districts: Research, theories, and
controversies. Routledge.
Wertheim-Heck, S.C., Vellema, S. and Spaargaren, G., 2015. Food safety and urban food
markets in Vietnam: The need for flexible and customized retail modernization
policies. Food Policy, 54, pp.95-106.
Elbeltagi, I. and Agag, G., 2016. E-retailing ethics and its impact on customer satisfaction and
repurchase intention. Internet Research.
Chudik, A. and Pesaran, M.H., 2016. Theory and practice of GVAR modelling. Journal of
Economic Surveys, 30(1), pp.165-197.
Online
About NEXT 2020. [Online]. Available through:<https://www.nextco.uk/>.
12