River Island Business Analysis

River Island Business Analysis
Strategic Leadership in a Changing World
CW 2
ZAKIYY ALAUDDIN (15050798)
CHRISTINA COATES (15041984)

“River Island Company Business Analysis”
The purpose of this essay is to enlighten the reader about the company River Island
Clothing Limited and the issues they facein their current markets. The essay highlights
details about the current position of the company along with three critical problems
affectingRiver Island in theircurrent corporate environment. Next, the essay will go on to
evaluate details about three possible strategic options available toRiver Islandtohelp
resolve their critical problems in the target market. For the purpose of evaluation of the
provided options, SAF framework has been used in the paper. Suitable, Acceptable and
Feasible strategy model clearly analyse the applicability of all the three options in the
business.
River Island is a UK based high street fashion brand that operates primarily in the
domestic market, but additionally in foreign markets as well. It was founded in London in
1948 by Bernard Lewis and his brother, it has still remained privately owned by the
Lewis family since creation. It is a holding company of the Lewis Trust Group. River
Island creates high street fashion clothing for men, women and children as well as
fashion accessories and footwear. In total, there are 350 stores across the UK, Asia,
Ireland, Europe and the Middle East. Alongside the stores, they operate online through
a website, allowing consumers to pay in 4 different currencies, they ship to over 100
countries worldwide. River Island is well known for producing fashionable clothes and
accessories at an affordable price.
Three strategic issues of the company that are going to be considered in this essay are
customer relationship, supply chain and investment risk and sustainability. Ensuring a
healthy customer relationship is a key aspect for River Island as they try to expand their
potential target consumer base. The current market that River Island operates in is a
perfect competition market, which is comprised of many competitors offering similar
high streetaffordable fashion clothing and accessories with an unlimited amount of
potential consumers, some of their main competitors being Topshop (Arcadia Group),
H&M and Zara, all of which operate on much larger global scale with H&M having over
5000 stores and Zara having over 7500 store globally. Thus meaning that River Island
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Zakiyy Alauddin (15050798)
Christina Coates (15041984)

have a much lower market share compared to those 3 competitors. Furthermore, as
these businesseshave more than 10 times the number of stores in comparison to River
Island, so River Island must maintain a healthy customer relation especially when they
aren’t able to reach as many target consumers as their competitors.Furthermore, in an
attempt to better customer relations River Island recently launched a new campaign
‘Labels are for clothes’ this was done to create awareness for ‘100% Gender Free’
movement in which models wore both men’s and women’s clothing. This campaign
allows them to target a new segment of the market that has in the past been overlooked
by their other competitors but also, at the same time allows River Island to increase
their potential consumer base and improve their brand image as they are catering for all
people regardless of gender. It should also be noted that due to the lower penetration in
the market compared to their major competitors, River Island is also facing the issues of
retaining their existing customers. This is due to the reason that their major competitors
such as Zara have achieved global brand status, which is helping them to cater to the
customers in more extensive manner. In addition, the customers are also getting more
attracted due to their global branding. In this case, it is a major challenge for River
Island to retain their customers by having limited branding opportunities in the market.
The next issue facing River Island is supply chain and investment risk. River Island
operates on a small global scale, this means they need to have an efficient supply chain
for their organisations because they need to distribute clothes and accessories to
different countries and even continents across the globe. River Island works with a
motto to put the business on providing original designs, efficient manufacturing and
timely distribution of products to the customers in the market. This results in an increase
in the need of effective supply chain management so that the business can adequately
deliver the products they advertise to the consumers through in-store sales as well as
online sales (Woods 2018).Furthermore, River Island produce and sell high street
fashion clothing and accessories which is a well-known market for how quickly
consumer trends change, so they need to ensure that their supply chain is efficient
because of how quickly fashion trends come and go they are under a lot of pressure to
quickly manufacture their clothes and get them into their stores, while still trying to
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Zakiyy Alauddin (15050798)
Christina Coates (15041984)

maintain the quality of their products Also, as River Island operates on a global scale
they will need to take into account the different fashion trends that are specific to
consumers in their domestic market that may not be as popular to consumers in foreign
markets. Resulting in which, River Island faces this constant fear of losing their
consumers. It has been reported as an issue of customer relationship management
since the company has started trading its products online. Late deliveries and heavy
charges of the products have made the organization suffer in terms of sales
(Santamaria 2018). On the other hand, it should also be noted that the supply chain of
River Island should be effective enough due to the reason that the price
competitiveness of them is dependent on their supply chain. If the supply chain can be
made effective and efficient enough, then it will help them to regulate the pricing and will
also enable them to gain cost leadership advantages over their competitors. However,
in the case of River Island, they are not gaining cost leadership due to the fact they are
operating in small scale. As discussed in the above section, business operation of River
Island is smaller than of their major competitors. Thus, the economies of scale being
gained by the brands such as Zara due to their huge operation are not in the case of
River Island. It can be concluded that increase in the business operation for River Island
will help them to gain the economies of scale along with cost leadership in the market.
The supply chain of River Island is exposed to potentially adverse events such as
physical disruptions, industrial and environmental accidents that easily impact on the
ability of the company deliver its products to the customers on time. The customers
judge the product through its ontime delivery as well. Thus, it can be said that the
supply chain activities of a business affects their brand reputation in the market. One of
the key problems are where the clothes are manufactured, in the past River Island have
come under scrutiny for outsourcing manufacturing to sweatshops with underpaid
workers and awful working conditions often in countries like Bangladesh and China.
Which in the past has caused some consciences, consumers,to boycott River Island
and damaged their brands reputation.Further, it should also be noted that the company
has taken various wrong investment decisions that have affected the supply chain
process of the company. The retail market has been tough in the past few years that
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Zakiyy Alauddin (15050798)
Christina Coates (15041984)