Retail Theory and Practice Solution Assignment

Retail Theory and
Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
About company...........................................................................................................................1
Key relevant changes in macro-environment of retail company................................................2
Relevant changes within micro environment..............................................................................4
Strategies and tactics company could use by company..............................................................5
Recommendations.......................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Retail sector includes all those business that provide its goods and services to customers
through several distribution channel in order to earn profits (Kitchin and Tate, 2013). Companies
in retail sectors are directly selling goods and services to end customers so that they can use and
consume it. There are different types of category in retail sector such as departmental stores,
grocery stores and supermarket, warehouse retailers, convenience retailers, mobile and internet
retail company. Business which are dealing in retail sectors are providing goods in small
quantity to ultimate customers. Fashion retail company are those organisation which are
designing and manufacturing cloths and other fashion accessories in order to earn high profits as
well as satisfy needs and wants of customers. This is the business of buying or manufacturing
clothes to customers. In this sector, retailers purchase large quantify of goods from
manufacturers or wholesalers and sells individual item or small quantify of goods to customers.
About company
Hennens & Mauritz AB is a Swedish multinational company which is dealing in fashion
retail industry. This company is manufacturing fast fashion cloths for both women and men.
Hennens & Mauritz company was established in 1947 and founder of this organisation is Erling
Persson. Its headquarters are located in Stockholm, Sweden and it is providing its products and
services all around the world. This is one of the largest retail company all around the globe and it
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Illustration 1: H&M
Source: H&M Logo

is located in approx 60 countries. H&M is manufacturing clothing and other fashion accessories
products. Product portfolio of this company includes women and men clothes, shoes, handbags
as well as kids clothing and other accessories (Morcol and et.al., 2017). Objective of this
company is to manufacture and develop products which are according to customers needs and
requirements. It is offering sustainable clothing products in order to make positive impact on
countless individuals. Short term goal of this organisation is to drive huge positive impact on
society ans customers by providing high quality products through innovative ideas. Long term
goal and objective of H&M company is to share valuable products to customers and bring
systemic changes in their own products as well as industry in order to provide create fashionable
products.
Mission: H&M mission is to bring long lasting positive change and improvement in
lifestyle and living condition of people and communities.
Vision: Vision of H&M is to lead change towards renewable and circular fashion
industry by using ethical and fair business practices.
Key relevant changes in macro-environment of retail company
There are several factors in macro environment of business which have huge impact of
decision making of organisation. H&M is a multinational company and providing its products
and services worldwide (Stewart and Shamdasani, 2014). So it is very important for this
company to identify relevant changes in external environment in order to analyse impact of these
factor on business. For this company needs to evaluate PESTEL analyses that includes political,
economical, social, technological, environment and legal factors. Political: This includes all those factor which are related to government and political
party of country. It includes all rules and regulation set by government and political
parties. Political factor have huge impact on retail sectors as well as company in this
sectors. This factor consist of stability of political party, foreign trade policy, taxation
rules, trade restrictions etc. Political and government party of UK country is focusing on
growth of retail sector and taking various decisions fro welfare of companies in this
sector. Stability of political party as well as rules and regulation set by government will
have positive impact on H&M company. Economical: This factor determines economy performance of UK country. Economical
factor includes economic condition of country, growth, exchange rates, inflation rates,
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interest rates and so on. This factor will heave huge impact on purchasing power of
customers and it will directly affect profitability of H&M. UK county has one of the
largest economy in world and customers are also interested in purchasing high quality
and fashionable products (Cox and Dannehl, 2017). This will leads to increase in demand
and supply of H&M products and enhance revenue of company. Social: Social factor includes population trend such as income distribution, attitude,
belief, lifestyle,age distribution and population growth rate of society. This is very
important factor of macro environment as it directly deals with customers as well as
preferences of consumers. It is very important factors for targeting right and potential
customers. Customers chose is continuously changing and this can will affect business of
H&M. It is essential or company to develop products according to customers requirement
and it is quite difficult for organisation to analyse and evaluate needs and wants of
customers. Technological: This is related to innovation in technology of business and it affect
operation of organisation. Technological factor include new and modified technology
which will help organisation to improves its effectiveness and efficiently. This factor
consist of technological incentives, level of innovation, automation research and
development, technological changes and so on (Bodie, 2015). UK country has most
advance technology in the world which leads to increase in productivity of H&M
organisation. This factor of external environment will be very helpful for company. By
using more advance technology in business and its activities it will leads to increase in
effectiveness and efficiency of H&M organisation. Environmental: This factor includes ecological aspects such as weather, climate,
environmental offsets, climates changes etc. Changes in climate and weather condition
will affect the clothing style of customers. Environment factor will influence apparel
choices of customers. They will purchase cloths and other products as per the weather
conditions. H&M needs to change in their product offering according to environmental
contritions.
 Legal: It includes factors which are related to law of country. There are several laws set
by government which needs to be followed by H&M for smooth functioning of
organisation. Legal factor consist of discrimination law, antitrust law, employment law,
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consumer protection law (Nepal and Jamasb, 2015). Changes set by government in
employment law such as increase in minimum wages. This will have direct impact on
business as well as profitability of organisation.
Relevant changes within micro environment
It is very important for H&M organisation to identify key and relevant factors of micro
environment. There are various factor of micro environment which affect business and activities
of business. SWOT analysis will help organisation in order to evaluate internal factor of
company. It will leads to identify strength and weakness of H&M company as well as different
opportunity and threat in business environment. Strengths: H&M is well known and established company and it has strong brand image.
It is providing wide range of high quality products to customers. This company is provide
unique and different products as this is its biggest strength. H&M organisation has highly
diversified global presence and it is providing products and services all around the world
(Mair, Whitford and Mackellar, 2013). Strength of H&M company includes its high
quality and trendy clothing products with affordable prices. Weakness: This company is not very good and forecasting demand and supply of
products. Wrong forecasting of future demand of products in market area will leads to
higher rate of missed opportunity. It is as weakness of H&M that it is producing hight
volume of products and overstocking of goods. This will leads to have negative impact
on organisation as they have to sell products as lower pricing and it will directly affect
profitability of organisation. H&M has put large amount of cost on different types of
machines as well as their maintenances charges. Opportunity: There are various opportunity for H&M in market area that will help
organisation to gain larger market share as well as enhance their profitability. This
company have opportunity to expand its business into new market area and provides
product and services. It is an advantage to use more updated and innovative technology
in order to gain competitive advantage from other rival companies. H&M can improve its
promotional and marketing techniques and use new and creative advertisement and
promotion strategies. This will help company to attract more customers towards
company.
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 Threat: H&M company is quite weak in analysing and identifying competitive situation.
This can be consider as a threat for organisation as it will directly have negative impact
on business and its operations. Biggest treat to H&M has from its rival company. This
company have to deal with highly competitive and strong companies (Hristov and
Reynolds, 2015). Intense competition and new entrants are threat to H&M business.
Changing in choice of customers and evolving new fashion trends will affect
organisation.
Strategies and tactics company could use by company
Micro and macro environment environment have positive as well as negative impact on
business and it will also affect various decision making of organisation. It is very important for
H&M to use effective and efficient strategies in order to gain larger market share and increase
profits of organisation. There are several tactics which will help organisation to increase its
productivity and profitability. Both micro and macro factors will help in developing effective
strategies and tactics for benefit of organisation. In order to achieve growth in business H&M
company should evaluate Ansoff matrix (Shanks and Tilley, 2016). This tool was developed by
H. Igor Ansoff in 1957. this is a tool which help organisation to take various strategic decisions
and developing effective marketing plan that leads to identifying different opportunity for growth
of company. Ansoff matrix will help H&M in identifying best suitable strategies for growing
business. It includes marketing penetration, product development, market development,
diversification. Ansoff matrix in context of H&M is mentioned below.
Marketing penetration: This strategies company is planning to sale its current product in
existing market area. Marketing penetration is a strategies which will help company to increase
sale of existing product in existing market area. This strategies will leads to increase in market
share by sales products in same market area. In order to sale current products in existing market
area company needs to develop effective and efficient marketing strategies that will help in
attracting customers toward organisation. Marketing penetration will help company in improving
loyalty and customer value.
Market development: This strategies includes expanding market area as well as entering
into new market place. Market developing strategies will help company in developing effective
strategies that leads to sale current product of business into new market area (Dalkir, 2013). This
strategies will help company in targeting new market segment in order to sales current products.
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Company can enter into new market area by full filling needs and wants of new customers
through current and existing products. Market developing strategies will leads to expanding
marketing share of company as well as improving profits.
Product development: Product development is a strategies that leads to selling new
products to current market area. Company can use this strategies by improving or modifying
products in order to satisfy needs and wants of current market area. Product development will
help in developing various strategies to full fill needs of existing customers by introducing new
and creative product. It will help in company in offering valuable product to customer and attract
more customers towards organisation. This strategies will help company to gain competitive
advantage from other rival company by selling new and creative product.
Diversification: This strategies refers to gaining growth in business by offering new
product to new market area. Diversification is a strategies which help business to selling
completely new and innovative products to new market area (Klaus and Nguyen, 2013).
Company using this strategies will aims at diversifying business by developing new product for
new market customers. This strategies requires company to focus on both market area as well as
developing new product. Diversification strategies is risky but it is most effective strategies for
increasing business and its operations.
For H&M company, diversification is the most suitable strategies for growth of this
organisation. This strategy will help company to enter into new market area by introducing
completely new product. Diversification strategy can be used by H&M by identifying need and
wants of new customers and develop products which leads to satisfy needs to new market
customers. H&M should conduct a proper research so that requirement of new customers can be
analysed and develop product by use of innovative and creative techniques. Company should by
effective and efficient marketing tools which help in informing and communicating with new
targeted customers in order to promote H&M product and services.
There are various strategies and tactics that can be use by H&M in order to deal with
challenges of micro and macro environment. This company is providing high quality products to
different types of customers of different area across the world but Society or customers needs
and wants is continuously changes. It is very different for H&M organisation to evaluate and
analyse needs and wants of customers as well as forecast demand and supply of product in
market area (Yakhlef, 2015). This is a weakness of H&M which leads to overstocking of
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products and selling it with heavy discounts prices. To deal with this challenges company can
use new and innovative technology that will help H&M in accurate forecasting of future
demands of products and developing products as per needs and demand of customers.
Recommendations
On the bases of above report, there are several factor where H&M business needs to
improve in order to gain growth in business. This company have strong and positive brand image
and it is providing its products or services worldwide. So it is very important for this company to
develop effective and efficient strategies that leads to increase profitability of organisation. Some
recommendation are mention below that will be beneficial for H&M company.
 H&M needs conduct effective marketing research which will help in analysing needs and
requirement of customers and develop product which leads to satisfy their requirements.
 Company should take advantage of innovative and advance technology in order to
determine accurate demands of H&M products in market area.
 Company needs to use more creative and attractive promotional tools and marketing
techniques. This will help in influencing customers towards products offered by H&M
organisation.
 It is very important for H&M company to follow all rules and laws set by government for
smooth functioning of business.
CONCLUSION
From the above report it can be concluded that companies retail sector have to face
different challenges of environment in which business is providing its services. It is very
important for organisation to analyse and evaluate each and every factor of micro and macro
environment. These factor includes internal and external environment of business which have
huge impact on retail business and its activities. Retail sector is very important for country in
order to increase economic growth of nation. This sector directly deals sale products to customer
and retailer companies play a crucial role in increase sale and demand of product in market area.
Company have to use different strategies and tactics to deal with various challenges of
environment and these strategies will help in growth of business and enhancing its profitability.
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REFERENCES
Books and Journal
Kitchin, R. and Tate, N., 2013. Conducting research in human geography: theory, methodology
and practice. Routledge.
Morcol, G. and et.al., 2017. Business improvement districts: Research, theories, and
controversies. Routledge.
Stewart, D.W. and Shamdasani, P.N., 2014. Focus groups: Theory and practice (Vol. 20). Sage
publications.
Cox, N. and Dannehl, K., 2017. Perceptions of retailing in early modern England. Routledge.
Bodie, Z., 2015. Thoughts on the future: Life-cycle investing in theory and practice. Financial
Analysts Journal. 71(1). pp.43-48.
Nepal, R. and Jamasb, T., 2015. Caught between theory and practice: Government, market, and
regulatory failure in electricity sector reforms. Economic Analysis and Policy. 46,
pp.16-24.
Mair, J., Whitford, M. and Mackellar, J., 2013. Participant observation at events: theory, practice
and potential. International Journal of Event and Festival Management.
Hristov, L. and Reynolds, J., 2015. Perceptions and practices of innovation in retailing:
Challenges of definition and measurement. International Journal of Retail &
Distribution Management. 43(2). pp.126-147.
Shanks, M. and Tilley, C., 2016. Re-constructing archaeology: theory and practice. Routledge.
Dalkir, K., 2013. Knowledge management in theory and practice. Routledge.
Klaus, P. and Nguyen, B., 2013. Exploring the role of the online customer experience in firms'
multi-channel strategy: An empirical analysis of the retail banking services sector.
Journal of Strategic Marketing. 21(5). pp.429-442.
Yakhlef, A., 2015. Customer experience within retail environments: An embodied, spatial
approach. Marketing Theory. 15(4). pp.545-564.
Das, G., 2015. Retail shopping behaviour: understanding the role of regulatory focus theory. The
International Review of Retail, Distribution and Consumer Research. 25(4). pp.431-
445.
Das, G., 2014. Impacts of retail brand personality and self-congruity on store loyalty: the
moderating role of gender. Journal of Retailing and Consumer services, 21(2). pp.130-
138.
Ford, D. and Mouzas, S., 2013. The theory and practice of business networking. Industrial
Marketing Management. 42(3). pp.433-442.
Online
H&M Logo. 2019. [Online]. Available through:<https://www.gfxmag.com/h-m-vector-logo/>.
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