Retail Theory and Practice

This document discusses the key changes in the UK fashion clothing market and provides strategies and tactics for retailers to respond to these changes. It focuses on ZARA, a fast fashion retailer, and its success in the industry. The document also includes a PESTLE analysis and Porter's five forces model to examine the external factors affecting the fashion industry.

Retail Theory and
Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
(a) Key relevant changes in UK fashion clothing market......................................................2
(b) Strategies and tactics for retailer to respond the major changes occurring in fashion
clothing market.......................................................................................................................3
RECOMMEDATION......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Fashion industry is known as the sector that get attention of large number of people
anywhere and at anytime (Stewart and Shamdasani, 2014). Everyone become so familiar with
the fashion as an individual thinks that this is just a sophisticated and fashionable style. Today,
this get affected by large number of elements and this not only impact on clothing but it affect
almost every aspect of daily live of individuals (Dalkir, 2013). Further, fashion is a valuable tool
for analyse the culture and ascertain the values of that cultures. ZARA, a fast fashion retailer of
clothing is taken under present study. Major changes that arise in fashion industry is all detailed
under this report. In addition to this, what are the major strategies which should be use by retailer
to respond these changes is all given in this.
Introduction to retail:
Retail industry is one of the oldest sector, this industry has grown at 5.5 percent every
year (Shanks and Tilley, 2016). Number of changes are there which take place in this and affect
its growth and rate of profit. To achieve success and growth, it is very essential for manufacturer
and retailer of clothing to first examine the variations takes place in needs and in fashion trends.
Major jobs in industries related with fashion are in the retail sale of clothing. Fashion market of
United Kingdom is growing on continuous basis because large number of retailer move away
from seasonal trends and heavy discounting that have little relation to unpredictable figures.
Introduction to company:
Zara is retailer based which is Spanish fast fashion brand which dealing in clothing and
accessories sectors. It was founded in 1975 by Amancio Ortega and Rosalia Mera which
headquarter situated in Spain. It is flagship brand of Inditex group. In world's it was largest
apparel retailer. It has 2200 store in UK with US$9 revenue. In 2015 , Zara was ranked 30 inter
brand's list of best global brands (Sciacovelli and et. al., 2011). Its sores is dealing in men's ,
women's , as well as children's clothing. Product of this company is designed on the basis of
consumer trends. It is highly responsive supply chain of products. It produces over 450 million
items per year. Now products are also available online with minimum prices .This provide latest
fashion and high quality product at affordable prices. It offer wide range of choices to women.
One of the main idea of firm is to make the luxury products accessible to everyone
1

(a) Key relevant changes in UK fashion clothing market
Zara is a retailer in clothing sector that work with a new approach in the sector. This firm
was founded in Spain in 1963 and was founded by Amancio Ortega. It has about 2000 branches
around the globe (Ruggie, 2017).
Clothing industry summarizes the type of industry with production of clothing, starting
with textile industry. At present approx 555000 people are employed in fashion retail, textiles in
UK. Major external factors that affect the business operations of weather (Karlan and Zinman,
2011). A research revealed that number of retailers give heavy discounts to its customers all this
created an atmosphere of mistrust. Due to this, customers felt that clothing wasn't worth its full
price. Retailers have made various efforts to solve this by focus to get the value from the
discount, this results in enhance confidence of buyers to buy at original price.
Major external factors that affect the business operations of Fashion industry has
significantly develop over specially over the last 20 years. Changing dynamics of fashion sector
have forced retailers and manufacturers to desire low price and flexibility in quality, design, and
speed to market,major tactics and strategies to maintain percentage of profit, in the increasing
demanding market. Number of changes take place in UK fashion clothing market and the main
key drivers of change in the fashion industry can be understood by the points given below: Rebranding sustainability: Digital was an ineffective revolution in fashion sector 10
years ago. But toady if manufacturer and retailer of clothes are not digital then it can not
even survive (Black, 2018). Further, sustainability is another element which enterprises
wants to achieve and for this they do various efforts which also results in change in
fashion industry in UK. Businesses setting bold goals: Today every enterprise require to set bold goals, it is very
important for an enterprise to show the public that firm is able to do that.
 Harnessing the power of industry: Today every enterprise wants to create and maintain a
positive and strong brand image in front of its customers. For achieve this, it is very
essential for enterprises to maintain transparency in supply chain. All this help firm in
attract large number of customers and increase number of its profits.
2

(b) Strategies and tactics for retailer to respond the major changes occurring in fashion clothing
market
For achieve success and to maintain its market share, it is very essential for ZARA to first
understand the changes that take place in fashion industry. After that it is very necessary to
formulate and implement strategies to respond to those changes in an effective manner. With
this, firm can achieve its set goals and objectives in an effective manner and at the same time can
attract large number of people towards its offerings. Technology is a factor which play a
influential role in affect taste of customers. Fashion segment of industry indicate faster growth
and all this happen due to affordable luxury brands in this segment. For better understand the
change and to respond it in an effective manner there are some methods and tools which can be
use by ZARA. Here is a pestle analysis examining how various elements such as political,
economic, social, technological, environmental and legal factors impact on fashion industry.
PESTLE Analysis of ZARA Political factors: This element is known as one of the biggest source of uncertainty in
fashion sector. Various geopolitical events have rocked the industry in 2016 and 2017
many things are expected to change but uncertainty still exist. Various factors such as
Brexit and terrorism create a sense of uncertainty in global economy and this directly
affect the firms that operate in UK. Further, number of political tensions are there that
continuous raise the level of uncertainty in fashion sector (Stewart and Shamdasani,
2014). Further various political issues and shifts in UK and US affected the fashion
industry on continuous basis. Number of political issues and events remained unsolved
and enhance the uncertainty of fashion sector. In this way, political instability and large
number of geopolitical events increase the uncertainty in fashion industry. Economic factors: Various economic elements also affect the fashion retail sector.
Economic volatility directly affect the profits and sales of enterprises. This is consider as
one of the major industry in global economy. Slowdown in Chinese economy in 2016, it
was a bad news but now the situation has improved. As recession gone, the condition of
employment has developed better. All this results in increase buying power of customers.
Further, fashion sector is one of the biggest employer. Overall fashion industry gets
affected by the economic elements and at the same time affected economic factors. Level
of competition in this sector affected the individual and their profits.
3

 Social factors: Socio-cultural elements also have a significant role in success and growth
of fashion industry. Various social variation have take place in this sector that largely
affect demand of fashion products (Kitchin and Tate, 2013). Different changes on socio
cultural level have change how individuals shop and take their decisions related with
shopping and what are the major brands they prefer over other brand exist in market.
Demographic change of whole population has changed a lot during recent decade. Fast
fashion brands such as ZARA have brought affordable and good quality fashion products
for its customers. Due to number of changes the fashion industry has grown. Technological factors: Technology is known as one of the most significant element
affect the success and growth of fashion industry. Growth story of fashion in 21st century
can be attributed towards the various development that take place in technology.
Information technology, internet, globalisation and increased use of mobile phones that
affected sales, profit, consumer choices and marketing of products. Today every
individual take decision of purchase after researching everything (Lorenzo-Romero,
Constantinides and Alarcón-del-Amo, 2011). Today customers discuss their decisions
with other and share their opinions. Technology is the factor that disrupted various
elements and at the same time improved production, supply chain and at the same time
enhance the effectiveness of marketing process. This help ZARA in attract large number
of customers towards its fashion products. Environmental factors: Sustainability and environment is known as significant element
in fashion sector. Various fashion brand are there which are careful about their carbon
footprint and do their marketing as a environment friendly brand. They invest more in
environment and sustainability at the same time use environmental friendly raw material,
operations and packaging. Sustainability of fashion brands has become a major influencer
which affect the purchase decision of customers (Joskow, 2014). Various fashion brands
are there such as ZARA and H&M that have formulated their sustainability goals and are
working effectively and actively to achieve the same. All these are working in the
direction of maximise the productivity and minimise carbon footprint.
 Legal factors: Various challenges also abound in fashion sector. Different big brand
which are working in this sector are mainly focus on ethics and compliance. Fashion
sector is one of the biggest employer, further, various labour laws are also applicable on
4

this sector (Karlan and Zinman, 2011). Different environmental regulations have
developed and fashion industry are adhere to follow it. In addition to this, different rules
related with international trade are also there. It is very essential for fashion brand to
follow the rules as this help them in create and maintain a ethical image in market and
this provide number of benefits to them.
Porter's five forces model
Competitive framework for fashion sector can be examine with help of Michael Porter's
five force analysis. One of the main feature of using this model is that it help an enterprise to
examine the market, its growth potential and also give information about other players in market.
All this help firm in generate a competitive environment and maintain its market share. As per
this model, competitive framework of an industry can be examined by using five elements which
are a follows: Bargaining power of suppliers: Bargaining power of suppliers increase when the raw
material in which they deal are available in scarce quantities. Further, this also arise when
number of suppliers for a specific raw material is limited. In context with fashion
industry, suppliers known as the vendors who supply raw material like cotton and other
textiles for production of fashion products (Black, 2018). UK fashion market is
characterised by the presence of limited suppliers and all this is due to high costs of raw
materials. Various suppliers are there which use traditional practices which also enhance
the cost of goods sold. ZARA Bargaining power of consumers: Bargaining power of customers arise when number of
players exist in market having large product line. This provide an opportunity to
customers to choose the one from various options. Present status of customers in UK
market highlights the existence of so many players. Most of the players have high brand
value, that suits to large number of customers. So it can be summarised that consumers in
UK market have high bargaining power. Major players in this market are M&S and
ZARA these started providing value added services to its customers. Further, celebrity
promotions also use by firms to target customers. Competition from existing players: Market of UK is characterised by large number of
global players like ZARA, M&S and many more. All these have a strong brand image
due to its impressive product line. Competition exist in almost every segment. All this
5

indicate that competitions from existing rivals have a high impact on fashion industry in
United Kingdom. Due to this, market leaders have formulated effective policies to win
trust of customers in favour of their brands. Threat of new entrants: New players in this sector does not serve as a threat to existing
players (Ruggie, 2017). One of the main reason behind this is that current market of UK
is fully saturated with various big brands such as ZARA, M&S and many more. Further,
establish business require high cost which deter new players from entering in this market.
Overall, new players do not have a influential power to challenge the existing players.
 Threats of substitutes: Substitutes are known as those products that have high similarity
with the original products (Porter's Five Forces. 2018). Market segments of firms like
M&S and ZARA are niche in are unlikely switch to substitutes which constitute low
priced goods. Overall, it can be concluded that substitutes do not present a significant
threat to the existing players in UK market.
Due to changes take place in external business environment, ZARA face the challenge
to make products as per the requirements of customers.
Reflection
It is clear that Fashion sector is one of the sector in which changes arise or take place in
a fast speed and for all the players in this field, it is very essential to identify, examine and
respond to those changes in order to be competitive and to sustain in market for long run. I
understand that customers are the only profit makers of a business organisation so manager
should have better information about their needs and wants in order to manufacture products as
per their requirements. With this company can retain customers for a long time period. Different
tools and techniques are there that can be utilise by manager to identify and examine the changes
that take place in external environment and strategies can be formulated accordingly. ZARA is
one of the popular and effective player in fashion sector and according to me, for maintain its
position in market and to increase its market share, it is very essential for firm to respond to the
changes that arise in business environment. PESTLE is one of the effective tool that can be
utilise by manager of ZARA for carry out environment analysis. With help of this, enterprise can
identify the trends in fashion sector and can do changes in their operations accordingly. In this
way, enterprise can get a competitive benefit and can generate more number of profits as
compare to its rivals. According to me, another tool that can be use by firm is Porter’s five force
6

model as this help in identify the major forces and their impact on decision making process of
company. I examine that one of the main benefit of environmental analysis is that it provides an
opportunity to manager to formulate better strategies which help in manufacture and provide
products to customers as per their needs and special requirements. As per my point of view, it is
one of the most essential function of human resource manager is to conduct training and
development programmes for the employees as this help worker to perform their roles and
responsibilities at workplace in an effective manner. With this ZARA can provide featured and
quality products to its customers and can retain them for a long time period. Overall examine the
environment and the changes that place in that is very essential for company for generate more
profits and to attain its set goal and objective.
Suggested strategies:
Due to variation take place in needs of consumers in fast speed company face a issue to
meet the requirements of its consumers. So, company needs to conduct market research in order
to determine needs and preferences of customers in more better way. They also needs to hire
more skilled research and development team so that, unique product can be developed which
satisfy customer needs. Zara face high competition in market. So, in order to maintain its
position and stay competitive in market, they need to use effective pricing strategy. They should
set prices of their product according to the competitor's prices. This will assist firm in gaining
competitive advantage over its rivals. Zara require to give more emphasis on create and maintain
good relations with customers as this help in keep them for a long time period. Competitive
benefit of organisation is based on three factors known as reasonable prices, quick response and
quality items.
RECOMMEDATION
 For capture a large market share and to overcome with the issues faced through changes
take place in business environment, firm require to formulate a effective business
strategy.
 It is recommended to firm to conduct training and development program for its
employees as this will develop their skills and support them to offer better services to its
clients.
7

 It is recommended to firm to carry out research on continuous in order to collect
information about the changes take place in fashion trends so it can manufacture and
offer products to individuals as per their specific requirements.
 Evaluation of strategies adopt by its rivals should also done by ZARA to set right price
for its products.
 All efforts should be done by entity to enhance the quality of its products for better
satisfy their needs.
CONCLUSION
From the given project report, it can be summarised that fashion industry is UK is
changing at a fast speed, number of factors are there that are affecting the decision of
manufacturers and retailers. For achieve success, it is very essential for firms to modify its
fashion products as per the requirements and needs of customers as these are the only profit
markers of firm. For identify the factors and to formulate a better strategy to respond to those
changes PESTLE and porter's five force analysis can be used by firm. In order to maintain
number of its profits and market share, it is very essential for entity to keep an eye on the
changes that take place in environment. It is very important for company to examine the changes
that place in needs of customers, in this way firm can retain customers for a long time period and
can sustain in market for long run.
8

REFERENCES
Books and journals
Black, J., 2018. Urban transport planning: Theory and practice. Routledge.
Dalkir, K., 2013. Knowledge management in theory and practice. Routledge.
Joskow, P.L., 2014. Incentive regulation in theory and practice: electricity distribution and
transmission networks. In Economic Regulation and Its Reform: What Have We
Learned? (pp. 291-344). University of Chicago Press.
Karlan, D. and Zinman, J., 2011. Microcredit in theory and practice: Using randomized credit
scoring for impact evaluation. Science. 332(6035). pp.1278-1284.
Kitchin, R. and Tate, N., 2013. Conducting research in human geography: theory, methodology
and practice. Routledge.
Lorenzo-Romero, C., Constantinides, E. and Alarcón-del-Amo, M.D.C., 2011. Consumer
adoption of social networking sites: implications for theory and practice. Journal of
research in Interactive Marketing.5(2/3). pp.170-188.
Ruggie, J.G., 2017. The theory and practice of learning networks: Corporate social responsibility
and the Global Compact. In Learning To Talk (pp. 32-42). Routledge.
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.
Shanks, M. and Tilley, C., 2016. Re-constructing archaeology: theory and practice. Routledge.
Stewart, D.W. and Shamdasani, P.N., 2014. Focus groups: Theory and practice (Vol. 20). Sage
publications.
Online
Porter's Five Forces, 2018 [Online] Available through:
<https://www.mindtools.com/pages/article/newTMC_08.htm>./
9