QAB020N522S - Adidas: Adapting to Changes in UK Retail Sector

This report provides an analysis of Adidas within the UK fashion retail industry, exploring the company's background, its market position, and the impact of macro and micro environmental factors on its operations. Using PESTLE and SWOT analyses, the report identifies key challenges and opportunities for Adidas, including political, economic, social, technological, legal, and environmental influences, as well as internal strengths, weaknesses, opportunities, and threats. It discusses the strategies and tactics Adidas employs to navigate these factors, such as quality improvement, pricing adjustments, and adherence to legal and ethical considerations. The report also recommends product differentiation strategies to capitalize on market trends and maintain a competitive edge. The document is available on Desklib, a platform offering a variety of study resources for students.

RETAIL THEORY AND
PRACTICE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Company background..................................................................................................................3
Relevant changes within the macro environment........................................................................4
Relevant changes within the micro environment.........................................................................5
Strategies and Tactics..................................................................................................................7
Recommendations........................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Retail is the most appropriate, favourable and convenient way or method to different
companies and businesses to sell their goods and services. Currently retail industry has the
largest market share in the world, because companies which comes under retail industry are
mainly work for fulfilling basic needs and wants of customers. For example; food, clothes, foot
wears, groceries, etc. Demand which has related to these products is basically prime demand of a
person. Retail industry mainly focuses on fulfilling prime needs of people. A customer can’t
survive without retrial sector. On the other side, fashion retail is also a part of whole retail
industry. Companies or businesses which sells fashionable clothes, foot wears and accessories
are mainly known as fashion retailers. This report discusses fashion retail industry of the United
Kingdom. In this report, Adidas is the chosen company to describe the role retail industry.
MAIN BODY
Company background
Adidas is one of the most popular fashion retail companies in the world. Currently it has
very large customer base worldwide. The company was founded in July 1924 by Adolf Dassler,
headquartered in Herzogenaurach, Germany. Adidas mainly offers designable and quality shoes,
clothes and accessories to customers (Blankson, Ketron and Darmoe, 2017). This company is the
biggest sportswear producer in Europe, and the second biggest worldwide, because its competitor
Nike is the biggest sportswear producer or manufacture in the world. This company has great
reputation and goodwill in the international fashion industry because of its quality products and
services. People really like to buy products and services of Adidas, specially its sports shoes,
because company manufactures vey quality and designable shoes for customers.
Research and development team of Adidas is too effective in their job role, because this
team always presents some innovative designs of products for customers. Currently company is
taking huge advantages from different marketing techniques and strategies. Digital marketing
and sponsorship marketing strategies plays great role for this company in its promotional
operations. It has an effective workforce too, because currently company has 59000 employees
who are day or night working in the company for achieving its decided goals (Simshauser,

2018). From establishment to date, top-level management of company always focuses on more
and more expand their business operation in the different market segment. That’s why currently
the company has 460 authorises stores in 55 different countries. This company is capable to give
tough competition to their competitors in the international fashion industry.
Relevant changes within the macro environment
The Adidas is highly affecting by factors which has involved in macro environment of
the company. Macro business environment of the company is also known as external business
environment where it has affected by its external factors of the business environment. There is
PESTLE analytical tool has been used to identify key relevant changes of the micro environment
of Adidas. Some major factors of micro environment have been discussed below;
Political Factors: Political factors are highly influencing the company in both terms positively
and negatively. According to these factors, top-level management of company is responsible to
fulfil all formalities which local government as imposed in different countries (Johnson, 2017).
Currently Adidas runs its business operations in almost 55 countries, so it is necessary to
company that fulfil all formalities to run operations on progressive path. For example;
government of the United Kingdom has imposed taxation on all national and multinational
business, so this company is responsible to always fulfil taxation on time.
Economic Factors: Economic factors are also highly affecting Adidas, because the Adidas is
able to earn high profit in only such countries which has an effective economic conditions. For
example; currently company is able to raise huge profit in the fashion industry of United
Kingdom, because UK is one of the richest countries in the world. That’s why local people can
easily afford products and services which Adidas has offered in this country. Currently it has the
largest market share in European fashion retail industry, because most European countries have
developed economic conditions.
Social Factors: Social factors are too favourable for this company, because a customer always
want to buy quality products on favourable prices (Parsons and Descatoires, 2016). The Adidas
always offers excellent quality products to their customers on favourable price. That’s why
people like to buy products and services from the retail stores and official site of Adidas. It
always tries to provide an effective deal to customers, so they easily get influence for buying

company’s products and services. On the other hand, many times company works in social
welfare as well. For example; company always provides a huge fund as charity or donation to
social organisations which are working for social welfare.
Technological Factors: The top-level management of Adidas is currently taking huge
advantages from the technological factors. Company has implemented those modern and new
technology in their business operations which contributes in increase all over performance of a
business. Currently digital marketing tool plays great role to the company, in which this tool is
also a part of technological factors. In the UK, company is able to use many technological
gadgets, machineries and equipment which can increase its levels of customer service.
Legal Factors: Top-level management of company is responsible to adhere and follow all legal
and ethical considerations in their business environment which local government of any country
has imposed on different businesses. For example; contract law, employment law, environmental
law, agreement act, etc. These all legislations are mainly part of business law which upper
management within Adidas is highly required to adhere in their workplace (Popkewitz, 2018).
The company enables to maintain an ethical environment in their business environment by
following these all legal and ethical considerations.
Environmental Factors: Environment factors are also highly affecting business operations of
this company. Reason is, existing management is responsible to avoid such attempts in their
daily activities which can harm natural environment. Currently many international organisations
which works for protecting natural environment has passed different rules and regulations, so the
company is highly responsible to follow these all rules and regulations in their daily activities.
Company uses many natural resources in its manufacturing operations, so it is prime duty of the
company to take some productive steps towards protecting natural environment.
Relevant changes within the micro environment
Factors which has involved in the micro environment of company are also highly
influencing its business operations (Bellini and et.al., 2017). Reason is, top-level management
always develop their business strategies according to own strengths, weaknesses, opportunity
and threats etc. Basically these are some major factors of company’s micro environment. There
is SWOT analytical tool has used here to analyse relevant changes within the micro environment

of Adidas. This tool includes four major factors of internal business environment, in which these
four factors has been discussed below;
Strengths: Currently Adidas has very high market reputation in the worldwide fashion industry.
It has the largest customer base in European countries in its respective industry. It enables to
produce quality shoes, clothes and accessories etc. Business expansion process of this company
is very strong and effective, because it has highly succeeded in expanding business operations in
different countries. It currently has 460 authorised stores in approx. 55 countries. Company’s
research and development team is too effective in its job role, because this team always
innovates various designable and attractive shoes and clothes.
Weaknesses: Top-level management of company is mainly focuses on producing products and
services for high income groups. A person who comes from low income group can’t affords
designable clothes and shoes of Adidas. On the other hand, sometimes upper management has
taken those decisions within their business operations which not put good impact company
(Elbeltagi and Agag, 2016). It means, decision making abilities of management is not much
effective, so it should improve these abilities. It is able to earn high profit only in those countries
which has a developed economy. Reason is, under developed and undeveloped countries always
give priority to fulfil prime needs, and products and services which this company has offered not
comes under prime needs of people.
Opportunities: Currently Adidas has excellent opportunity to attract lots of new customers
towards brand by implement social media marketing in their different marketing campaigns.
However, company is using social media marketing strategy in their operations, but not at the
large scale. That’s why it need to highly use this strategy to gain hue competitive advantage in
fashion retail industry. On the other hand, it has an another opportunity to increase sales ratio by
start selling products and services through e-commerce sites at the large scale. It needs to
properly maintain own official website to gain attention of lots of people towards brand.
Threats: Day by day increasing market competition within fashion retail industry is the biggest
threat to company (Lang and Armstrong, 2018). Currently Nike, Puma, New Balance, Fila and
Under Armour are giving very tough competition to Adidas in fashion retail industry. It means,
these companies some competitors of the company. On the other side, growing cost of labours

and raw-material is also a big threat company, because now it needs to pay very high amount to
their suppliers to purchase raw-material. Nowadays labours are also asking for increasing their
wages, so these all are some biggest threats to Adidas.
Strategies and Tactics
The top-level management of company still need to employ many strategies in their
business environment to deal with different changes and challenges. Factors which has involved
in the macro environment are highly affecting daily operations of company. The management
always need to do many changes in their business activities because of these factors. Some major
relevant changes have been discussed below;
Relevant Changes
1. Quality Improvement: According macro environment analysis of the company, existing
management should focus on providing the best quality products to customers. Reason is,
most people in the United Kingdom and other European countries are always demanding
for quality products and services. In these countries, most people are completely literate,
and they ready to pay any cost for buying quality products and services. In this case,
existing management should give proper instructions to their production manager to
change traditional quality management strategies with modern quality management
strategies, like; TQM (total quality management). This change will support to company
for increasing its profit ratio in fashion retail industry.
2. High Prices: Currently company operates its business operations in many countries, so it
needs to follow rules and regulation of each country (Pousttchi and Dehnert, 2018). In
this case, different countries have imposed different taxation rate on this company. It
means, some has imposed lower taxation rate on company, and some has very imposed
very high taxation rate. This factor of macro environment is highly influencing top-level
management of company to change prices of their products and services. Currently
company charges high prices on their products in mainly such countries which has
imposed very high taxation rate on it.
3. Employ Legal and Ethical Considerations: According to legal factors of macro
environment, the management is responsible to change their all company policies
according to existing business laws. For example; according to the UK’s employment

law, a company is responsible to pay their employees on the basis of its workability.
Company responsible to change their incentive policies, it means management need to
proper pay their employees, when employees has does overtime work. It always need to
remove those all negative aspects from their business environment, like; discrimination
etc. to change unethical environment into an ethical environment in its workplace.
Strategies and Tactics
Product Differentiate Strategy: The management should employ product differentiate strategy in
their business environment to take advantages from social factors of macro environment
(Zellweger, 2017). Reason is, most people in European countries are crazy to buy some different
and exclusive clothes, shoes and accessories etc. This strategy gives opportunity to companies or
businesses to produce some exclusive range of products and services. It means, product
differentiate strategy will help to company for increasing its profit ratio in fashion retail industry.
CSR (Corporate Social Responsivities) Strategy: This strategy is also very productive to the
company, because Adidas can easily fulfil its social responsibilities with support of this CSR
strategy. Socially, most people always like to buy products and services from those companies
which always fulfil their corporate social responsibility on time. This strategy can build heart to
heart relationship between company and customers. That’s why this strategy or tactic is too
productive to the company.
Micro Environmental Challenges
High Market Competition: Currently high market competition within fashion retail industry
factor is giving very tough challenge to company. Company’s some major competitors like;
Nike, Puma etc. are giving too high competition to Adidas. Many new entrants are also coming
in this industry continuously, so it is another major challenge to the company.
High Bargaining Power of Supplier: Due to lack of raw-material, nowadays bargaining power
of suppliers is become very high. Currently company need to invest very high fund for
purchasing required raw-material (Lee and et,al., 2017). Companies and businesses which are
serving in fashion retail industry facing shortage of raw-material. Nowadays, these companies

not able to easily run their manufacturing operations. In this case, these are some major
challenges within Adidas’ micro environment.
Recommendations
The top-level management within all retail companies including Adidas nee to stop
wasting precious resources in their manufacturing operations. Many times companies have
ordered unnecessary items or raw-material to stock them for using in shortage time period. This
attempt of companies is completely unethical. Adidas should adhere and follow each and every
legal and ethical considerations in their daily operations. It is necessary to company for running
all business activities in ethical manner. on the other side, this retail company need to take some
productive steps towards building an effective relationship with their customers. This factors can
support to company for gaining huge competitive advantages within fashion retail industry.
Adidas is responsible to avoid such activities in their business environment which can
negatively impact natural environment. It highly need to maintain an ethical work culture to
improve workability and efficiency of their existing employees (Baldwin, 2017). This company
is highly using many natural resources in their manufacturing process, like; rubber etc. That’s
why it needs to fulfil its corporate social responsibilities (CSR) as well. There is CSR gives
opportunity to company for taking various steps towards protecting and saving lots of natural
resources. All other retailers also need to consider this factor in their daily operations. These all
factors will contribute in increasing profit ratio of company in fashion retail industry.
CONCLUSION
It can be concluded that factors which has involved in micro and macro environment of
Adidas are highly affecting it to change something. Upper management within company always
takes various decisions towards dealing with impact of these all factors. The company has very
large customer base in fashion retail industry, but it still need to develop or innovate some
modern strategies or tactics to gain more customer base. This step is too necessary for company
to deal with high market competition. Currently its competitors called Nike and Puma are giving
very tough completion to Adidas, so it need to use some productive business techniques to gain
huge competitive advantage in the fashion retail industry.

REFERENCES
Books & Journals
Baldwin, J., 2017. Designing the Brand Identity in Retail Spaces.
Bellini, E., and et.al., 2017. Innovation Strategies in Retail Services: Solutions, Experiences,
Meanings.
Blankson, C., Ketron, S. and Darmoe, J., 2017. The role of positioning in the retail banking
industry of Sub-Saharan Africa. International Journal of Bank Marketing. 35(4). pp.685-713.
Elbeltagi, I. and Agag, G., 2016. E-retailing ethics and its impact on customer satisfaction and
repurchase intention. Internet Research.
Johnson, J. P., 2017. Unplanned purchases and retail competition. American Economic
Review. 107(3). pp.931-65.
Lang, C. and Armstrong, C. M. J., 2018. Fashion leadership and intention toward clothing
product-service retail models. Journal of Fashion Marketing and Management: An International
Journal.
Lee, Z. W., and et,al., 2017, July. An Empirical Investigation into the Antecedents and
Consequences of Customer Engagement in Omnichannel Retailing. In PACIS. (p. 158).
Parsons, A. G. and Descatoires, E., 2016. Retail marketing: A novel research
agenda. Australasian Marketing Journal (AMJ). 24(2). pp.102-107.
Popkewitz, T. S. ed., 2018. Critical studies in teacher education: Its folklore, theory and
practice. Routledge.
Pousttchi, K. and Dehnert, M., 2018. Exploring the digitalization impact on consumer decision-
making in retail banking. Electronic Markets. 28(3). pp.265-286.
Simshauser, P., 2018. Price discrimination and the modes of failure in deregulated retail
electricity markets. Energy Economics. 75. pp.54-70.
Zellweger, T., 2017. Managing the family business: Theory and practice. Edward Elgar
Publishing.