River Island Company Business Analysis Report - CW 2, Analysis

This report offers a comprehensive business analysis of River Island, a UK-based high street fashion brand. It delves into the company's current market position, identifying three critical strategic issues: customer relationship management, supply chain and investment risk, and sustainability. The analysis explores the challenges River Island faces in a competitive market, including competition from global brands, supply chain inefficiencies, and the impact of fast fashion on sustainability. The report then evaluates three strategic options: product development (introducing a cosmetic line), diversification (entering the American market with cosmetics), and market development. The SAF (Suitable, Acceptable, Feasible) framework is used to assess the viability of each option, considering factors such as market demand, investment risk, and alignment with River Island's vision for sustainable growth. The report highlights the importance of addressing these issues to maintain customer loyalty, improve operational efficiency, and adapt to evolving consumer preferences and market dynamics. The document is contributed by a student to be published on the website Desklib, a platform which provides all the necessary AI based study tools for students.

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
1
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
2
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
3
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

have affected many organizations. River Island invested its money in strategic
expansion in clothing line due to which the company faced a 7% decrease in the profits
in the year 2018 (Hammett 2018).
Additionally, the last issue facing river island is sustainability.It isone of the main
strategic issue faced byRiver Island in the global market. Sustainability is an important
aspect for the customers and the company as well but with one of themain targets of the
company to earn more revenue sometimes make it difficult for them to be sustainable.
The vision of River Island is to double the size of the business by satisfying the
customers and reducing the environmental impact and grow sustainably. The company
produces clothes, footwear and accessories that take a major part in increasing
greenhouse gases in the community. The carbon emission from the manufacturing
process of the company is increasing day by day that is slashing human health. Further,
it should also be noted that the fashion industry keeps on changing day by day (Rashid,
and Barnes 2017). Companies like River Island play a huge role in changing the face of
the fashion industry so the company faces difficulty in managing the growth while
adopting sustainable fashion changes present in the environment. Already the company
was facing technical issues in initiating online sales and then adopting dramatic fashion
changes affects the sales of the company repeatedly. In this case also, the major
challenge for River Island is to maintain the seamless cash flow required for initiating
sustainable activities. In terms of the sustainable business practices, the major
competitors of River Island are ahead due to the reason that they are having access to
larger financial resources due to their global business operation. Thus it is important for
River Island to increase the cash flow in order to have effective process of sustainable
business practices.
Three strategic options for River Island that are going to be considered are product
development, diversification and market development. Product developmentrefers to the
Ansoff matrix strategy under which the business aims to expand the business by
introducing a new product line in the same market they already operate in. River Island
already serves clothing, footwear and accessories in their domestic and foreign
markets, introducing a new cosmetic line in the market will help the organization to
4
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

successfully grow. Especially because it will allow them to have first movers advantage
for expanding their products line, this is because it hasn’t been done by any of their
competitors, although one of their stronger competitors Zara is known for having their
own successful fragrance line, so River Island could also introduce a fragrance line
alongside a new cosmetics line to widen its product portfolio. They won’t have any first
movers’ advantage for the fragrance line but there is still a demand for it within River
Island’s potential consumer base. The main demographic of River Islands consumer
base are people between the age group 18 to 30 who mostly use make up on a day to
day basis and while going to parties or attending meetings (Robinson, and Hsieh 2016).
So, the company should produce beauty products to target these people so that they
can feel comfortable and confident while wearing clothes and make-up of River Island
clothing company. This will help in attracting and retaining customers by offering new
products to the market (Goworek, Perry, and Kent 2016).
The next strategic option is diversification it refers to the Ansoff matrix strategy under
which an organization aims to diversify the scope of the business by introducing a brand
new product to a brand new market. Considering the relation of diversification strategy
with the River Island clothing limited company, it should be noted that the company
should diversify its scope of business with a new product line of cosmetics to the
American market. The beauty care industry is highly profitable and expanded in the
target market so diversifying the scope of business will help the organization to enter in
a new industry from which they will lower their investment risk by not just operating in
the fashion industry but also operating in the cosmetics industry.(Gardetti, and Torres
2017). The American market is favourable for the company to enter, as it is a tourist
location due to which the economy of the country is favourable to enter. The diversified
target market of America will help the organization to promote the brand in the eyes of
prospective people present in the market. Furthermore, due to the rise in influencers
and celebrities using make up it will have an already existing demand.This process will
subsequently increase brand awareness and can make it easier for River Island to
break into the American market with their main products. However, with their being a lot
of bureaucracy in America River Island will face some barriers of entry before they can
5
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

operate in the American market. This strategy will help the company to target new
customers and maintain a fixed relationship with them by eliminating supply chain issue
and barriers as well. This will also help the company to invest their income in the right
direction by expanding into a huge market that can help River Island achieve their vision
of growing on a global scale. (Todeschini, et. al., 2017).
The final strategic option for River Island is market development it again refers to one of
the Ansoff matrix strategies, under which the business aims to expand their business
operationsby exploring new markets for them to sell their clothes too. It is believed that
market expansion strategies always provide various benefits and profitability to the
companies. So, the company River Island should aim to make use of the Greenfield
Investment strategy to expand its scope of business in the Singapore market
(Henninger, et. al., 2017). The fashion and clothing industry is the biggest revenue
making industry present in Singapore with an expected annual growth rate of 12.5% in
the year 2019. Further, it should be noted that a Greenfield investment strategy will help
the organization to completely start their fashion retail business from scratch and help
develop physical storesas well as having an online store. In this way, the company will
easily eliminate bridges like Zalora coming between the customers and the company.
Further, opening physical stores will increase the faith of the customers in the brand and
will make the company more sustainable in the worldwide market (Statista 2019).
In terms of the product development, it is also recommended that River Island should
consider the introduction of their existing product line in different price points. This can
be effective due to the reason that currently River Island is operating in the premium
clothing segment, which is limited in terms of volumes. This if River Island can introduce
their existing products in lower price levels, then their market share and sales volume
will get increase as more mass market customers will get attracted with the affordable
price points. Moreover, it should also be noted that the premium and favourable brand
value and identity being gained by River Island will be beneficial to push the sales of
their products in the lower price points. Hence, it can be concluded that the issue of
6
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

lower market penetration for River Island can get mitigated with the help of affordable
offerings. In terms of global expansion also, this strategy will be effective due to the
reason that affordable products are having the major chances of getting succeeded in
the global market compared to the premium products. Thus, River Island will face lower
challenges in entering in the foreign markets with the help of their affordable products.
In terms of the market development strategy, it is recommended that they should
first target the developing economies such as India, Brazil and China over the
developed economies for their foreign market operation. This is due to the reason that
in the current global business scenario, developing countries are growing at larger rate
compared to the developed economies. For instance, India and China are the top two
countries in the world in terms of annual economy growth. Moreover, regulations and
standards in entering in these countries are also much easier compared to the business
operation in the developed countries. Hence, it can be concluded that entering in the
developing countries will help River Island to have larger target segments along with
having fewer business challenges. This strategy can further be complemented with
market penetration business strategy. This is due to the reason that the recommended
strategy of entering in the mass market clothing segment will find its pace in the
developing countries due to the reason that these countries are having highest number
of middle class population.
Furthermore, it should be noted that the above mentioned three strategies will
successfully help the organization to promote its sales in the market. The product
development strategy is suitable for the company to maintain an efficient customer
relationship in the market. This strategy will help the company to attract customers
towards new product and then maintain a solid relationship with them. Further, this
strategy is acceptable because it takes calculate risk by introducing the product in the
market in which they are already present. Also, this strategy is feasible because their
consumers are already purchasing clothing, footwear and accessories and the demand
for cosmetics already exists in the market. (Goworek, et. al., 2018).
7
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

Furthermore, the diversification option for investment and supply chain issue, it should
be noted that this option is less suitable to the company according to SAF framework,
because as the organization hasno physical stores in America so they will face difficulty
when introducing a new product line in that market, especially when their three main
competitors Topshop(Arcadia Group), H&M and Zara are all already well established in
America with huge followings and brand loyal customers. Lastly, themarket
development strategy for the sustainability feature will help the company introduce new
markets and actively initiate CSR activities in the market. This strategy will help the
company show its actions on the worldwide level and satisfy customers to a greater
extent (Oxborrow, et al., 2017). Thus, due to which it can be said that this strategy is
suitable, feasible as well as acceptable for the company.
Thus, in the limelight of the above-mentioned events, the fact should be noted that the
paper evaluated information about the strategic issues and options for the company
River Island Clothing Limited. The company is facing three major issues that can be
solved using product development, diversification and market development strategies.
Suitability, acceptability and feasibility of the options are also overlooked in the paper.
Effective implementation of these strategies will help River Island to gain more market
share in the foreign markets and can take the challenge to their major competitors. In
addition, this will also help River Island to the global branding similar to their global
competitors.
8
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

References
Gardetti, M.A. and Torres, A.L., 2017. Sustainability in fashion and textiles: values,
design, production and consumption. Routledge.
Geoghegan., J. (2017) Profits slip at River Island in ‘challenging market’ [online].
Available from https://www.drapersonline.com/news/profits-slip-at-river-island-in-
challenging-market/7026182.article [Accessed on 20 Feb. 19].
Goworek, H., Oxborrow, L., Claxton, S., McLaren, A., Cooper, T. and Hill, H., 2018.
Managing sustainability in the fashion business: Challenges in product development for
clothing longevity in the UK. Journal of Business Research.
Goworek, H., Perry, P. and Kent, A., 2016. The relationship between design and
marketing in the fashion industry. Journal of Fashion Marketing and
Management, 20(3).
Hammett., E. (2018). River Island hopes renewed customer experience focus can help
it see off digital rivals [online]. Available from
<https://www.marketingweek.com/2018/08/01/river-island-customer-experience/>
[Accessed on 20 Feb. 19].
Henninger, C.E., Alevizou, P.J., Tan, J., Huang, Q. and Ryding, D., 2017. Consumption
strategies and motivations of Chinese consumers: The case of UK sustainable luxury
fashion. Journal of Fashion Marketing and Management: An International
Journal, 21(3), pp.419-434.
Oxborrow, L., Goworek, H., Claxton, S., Cooper, T.H., Hill, H. and McLaren, A., 2017,
July. Managing sustainability in the fashion business: exploring challenges in product
development for clothing longevity. In 2017 Global Fashion Management Conference at
Vienna (pp. 376-381).
Rashid, A. and Barnes, L., 2017. Country of Origin: Reshoring Implication in the Context
of the UK Fashion Industry. In Reshoring of Manufacturing (pp. 183-201). Springer,
Cham.
9
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

River Island., (2019) About Us [online]. Available from
<https://www.riverisland.com/inside-river-island/about-us> [Accessed on 20 Feb. 19].
Robinson, P.K. and Hsieh, L., 2016. Reshoring: a strategic renewal of luxury clothing
supply chains. Operations Management Research, 9(3-4), pp.89-101.
Santamaria., B. (2018) River Island challenges social stereotypes in new campaign
[online]. Available from https://uk.fashionnetwork.com/news/River-Island-challenges-
social-stereotypes-in-new-campaign,944766.html#.XGzmXKIzbIV [Accessed on 20 Feb.
19].
Statista., (2019). Fashion [online]. Available from
<https://www.statista.com/outlook/244/124/fashion/singapore> [Accessed on 20 Feb.
19].
Todeschini, B.V., Cortimiglia, M.N., Callegaro-de-Menezes, D. and Ghezzi, A., 2017.
Innovative and sustainable business models in the fashion industry: Entrepreneurial
drivers, opportunities, and challenges. Business Horizons, 60(6), pp.759-770.
Woods., B. (2018) River Island profits down as retailer adapts to online world [online].
Available from <https://www.telegraph.co.uk/business/2018/09/24/river-island-profits-
retailer-adapts-online-world/> [Accessed on 20 Feb. 19].
Meeting Names Date Location Objectives
1. Zakiyy Alauddin
Christina Coates
Jan. 29 LRC
 Reviewed assignment brief.
 Set expectations for group members
2.
Zakiyy Alauddin
Christina Coates Feb. 05 LRC
 Decide on the company
 Discuss useful and reliable sources
3.
Zakiyy Alauddin
Christina Coates Feb. 12 LRC
 Analyse research and agreed on three
issues and options for the report.
10
Zakiyy Alauddin (15050798)
Christina Coates (15041984)

4.
Zakiyy Alauddin
Christina Coates Feb. 19 LRC
 Merge team members report
 Discuss necessary improvements
5.
Zakiyy Alauddin
Christina Coates Feb. 22 LRC
 Made the required changes
 Read over the final report
6.
Zakiyy Alauddin
Christina Coates March 01 LRC
 Finalise referencing
 Add Appendix
Appendix 1: Meeting Log
11
Zakiyy Alauddin (15050798)
Christina Coates (15041984)