Retail Theory and Practice: A Case Study of JD Sports

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RETAIL THEORY AND PRACTICE

Contents
INTRODUCTION........................................................................................................................2
INTRODUCTION OF THE COMPANY..........................................................................................3
KEY RELEVANT CHANGES WITHIN THE UK FASHION RETAIL....................................................4
RELEVANT CHANGES WITHIN THE MICRO-ENVIRONMENT......................................................6
SUGGEST AND DISCUSS THE STRATEGIES AND TACTICS THAT COULD BE USED......................7
RECOMMENDATIONS...............................................................................................................9
CONCLUSION.......................................................................................................................... 10
REFERENCES........................................................................................................................... 11
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INTRODUCTION
A retailer is an individual who buys goods from the manufacturer in bulk and then sells it in
relatively small quantities to its customers. A fashion retailer knows well how to market, sell,
maintain inventory and know the customer’s needs and wants (MAC, 2019). Fashion
retailing is the selling of clothes that are taken from the manufacturer in bulk. These fashion
clothes are then sold in small quantities to the customers for final use (Caro and Gallien,
2012).
The report includes a brief description of The JD Sports Company, what are the relevant
changes within the UK fashion retail outlets keeping in mind the changes in micro-
environment. Finally, suggestions and discussion will be done based on the relevant changes
and various strategies will be formulated. Lastly, the report will also include the
recommended ways that the retailers should use to meet the challenges in the market.
INTRODUCTION OF THE COMPANY
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The JD Group came up with the sports fashion retail company under the name JD Sports in
1981. The Company is headquartered in Bury, Greater Manchester, England (JDPLC, 2019).
The Company also opened its first store in the north-west of England and has now over 2400
stores all over the world. The company sells brands such as K-Swiss and Mc Kenzie. JD stores
mainly aim for teenage aged 13-19 but also attract other age groups. The company set
smart targets so that they could gain maximum profit.
KEY RELEVANT CHANGES WITHIN THE UK FASHION RETAIL
Macro-environment factors are those factors that cannot be controlled by the company but
create a great impact on their working and operations (Yang et al., 2014). Macro-
environment factors include:
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 Consumer factors: It includes culture, lifestyle, population changes, norms and
demographics. These factors greatly affect the sale of the company (Rick, 2019).
 Technological factors: These are those changes which are caused in fashion retail
stores due to the innovation in new technology and equipment (Rick, 2019).
 Legal and political factors: Child labour law and the rights of workers also affect the
working of retail fashion stores (Rick, 2019). This act may also create negative
publicity about the company.
 Economic factors: Here the company is affected either by a boom in the market or
by the recession in the market for the product (Rick, 2019).
PESTEL ANALYSIS OF UK FASHION RETAIL MARKET
The PESTEL analysis is done to analyse the macro-environment factors present in the
market. Changes in the macro-environment can affect all the players in the fashion retail
sector (Yüksel, 2012).
POLITICAL FACTORS
In recent years there has been a constant change in the UK fashion retail market. One of the
biggest changes is the expansion in EU territory that has facilitated the import and export of
goods among various countries within the EU (Thomas, 2016). Changes in interest rates and
government taxation had also resulted in a global economic recession in the UK. Various
measures were taken by the government to stable the financial market and bring changes in
the economy.
ECONOMIC FACTORS
Recession in the economy is one of the biggest reasons that lead in the fluctuation in
currency rates of UK. With the decrease in the price of the currency, consumers who buy
cheap fashion clothes are only benefited (Thomas, 2016). Spending made on high luxury
items decreased rapidly by the consumers due to the recession in the economy. The fashion
retail was highly affected since consumers' willingness and ability to spend on luxury items
decreased. Also, youth unemployment is majorly observed because of the recession.
SOCIAL FACTORS
Changes in the social factors should be evaluated by the company as it may lead to a
decrease in demand for the product. With the change in beliefs, culture and attitude of the
people their way of shopping have also changed (Thomas, 2016). They now belief in
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spending less on luxury items and have adopted the habit of buying goods in discount. Also
attitude of people have changed since they have started shopping from the less expensive
places. This has also led to the market where prices of the goods are evaluated according to
the consumers.
TECHNOLOGICAL FACTORS
Changes in technology relates to the changes made in distribution, manufacturing, sourcing
and sale of different products in the market. Thus it is very important for the companies to
critically evaluate the market keeping in mind the trending technology coming up (Jonathan,
2016). Use of internet and mobile devices for shopping had also affected the sale and
marketing of the companies in UK market.
ENVIRONMENTAL FACTORS
Concern regarding the changes in the environment made due to the disposal of clothes is
one of the major problems faced in the UK. For instance, about 30kgs of clothes per person
is dumped per year as a result of fast changes in fashion (Thomas, 2016). As a result, clothes
contribute significantly to greenhouse gas emission. Packaging and sourcing of the clothes
should also be done properly.
LEGAL FACTORS
There are many laws that affect the working of the organization as well as employment.
Labour law is one of the major aspects for the retailers who wish to maintain low price in
order to remain competitive (Abhijeet, 2017). Various other laws such as law relating to
packaging of goods, discrimination against employees etc also apply to the retail sector in
UK. Hence, retail legal scenario in UK is very complex and should be evaluated by the
companies regularly otherwise may lead to huge losses.
RELEVANT CHANGES WITHIN THE MICRO-ENVIRONMENT
Micro-environment includes competitors, suppliers, intermediaries, organization, market,
and customers (Kessenbrock at el., 2010).
Competitors: The competitors of JD Sports are increasing in the market due to which
customer retention is decreasing (Oxford, 2019). The company should evaluate the price of
the product and also look into the impact of product differentiation. This will help the
company differentiate from its competitors.
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Customers: Since, the taste and preferences of the customer's changes rapidly, the
company should always analyse the market and should evaluate the data on shopping
pattern of last few years (Thomas, 2019).Clothing is observed as one of the major areas in
the UK market where the young generation like to spend money and cut down expenditure
on other products. Also, positive word-of-mouth will be spread in the market by the
customers.
Suppliers: JD Sports should try to choose the best suppliers so that good quality product
could be given to its customers. Slow services provided by the supplier will also affect the
working of the organization (Oxford, 2019). Therefore suppliers play a very important part
for the company's success as raw material provided by them will allow the company to
manufacture good quality products.
Organization: With the coming up of various competitors in the market the company should
know how to deal with them (Casey, 2019). Also, the organization should provide its
customers with the products they need rather than those products which are manufactured
by them.
Market: The demand in the market for the product is increasing at a greater pace (Casey,
2019). The company should critically evaluate the market strengths and weaknesses before
entering so that it could gain profit.
Intermediaries: Intermediaries play a very vital role in providing finished goods to the
customers. These intermediaries are influential and should be provided with the benefits.
Agents, wholesalers, marketing agencies etc all contribute towards the growth and success
of the company (Casey, 2019).
SUGGEST AND DISCUSS THE STRATEGIES AND TACTICS THAT COULD
BE USED
The key relevant changes from the macro-environmental analysis that have the biggest
influence on JD Sports are:
 Technology: The JD Sports should come up with new innovative technology that will
not only help in creating a new product but will also affect the working of the fashion
retail industry (Lauren, 2019). Digital marketing can be a new way of interacting with
the customers and getting to know their demands. Use of artificial intelligence and
customizing the products is also an innovative way to attract customers. Augmented
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reality of letting customers try clothes before they make actual purchase and facial
recognition are some of the new technologies that should be used by the company
to engage customers.
 Social aspect: Social values and trends also affect the working of the company. After
analysing the market, JD Sports should come up with environment-friendly products
and restrict the use of harmful goods (Lauren, 2019). By following the social norms
and rules the company can easily lead to success in the new market.
 Legal aspect: Different countries have their own sets of rules, regulation and policies
(Lauren, 2019). The JD Sports should work deeply in knowing these policies
otherwise it would lead to an increase in the cost of a product and also disturb the
wage system of the company.
 Environment: The JD Sports should analyse the environment in which it operates so
that they does not harm them in any way. The company should keep in mind factors
such as wastage of raw material, air and water pollution caused by the production of
shoes etc. By keeping in mind these measures it would help the company in further
growth and development.
THE THEORIES THAT COULD BE USED BY JD SPORTS ARE:
CYCLICAL THEORY
This theory explains the changes that are taking place in the retailing sector. This theory
state that new organization entering the market often work on low cost, low margins and
offer a unique product that benefits the customers (BMS, 2019). And after a considerable
time, these companies raise the price of their product attracting people at the same time. By
this practice, the company becomes a threat to other market players and increases rivalry.
In case of JD Sports the company can enter new market by keeping low prices of its product
and then increasing its price slowly after a certain period of time. This approach will make
the customers loyal and satisfied towards the product. While in already existing market the
company can come up with innovative products and schemes to attract the customers.
CONFLICT THEORIES (Evolution through the dialectic process)
This theory states that when there is a competition or conflict between two types of retail
formats, it leads to the development of a new format. It states that retailing evolves through
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a dialectic process that means blending the two opposite retail formats (Citeman, 2012).
Here, thesis and antithesis together create a synthesis.
In case of JD Sports, with the coming up of competitors in the market they can expand to
new markets or either make changes in strategies in existing market.
The key relevant changes from the micro-environmental analysis that have the biggest
influence on JD Sports are:
 Competitors: Competitors not only influences the customers but also bring changes
in the strategies of competitors. JD Sports should try to come up with those
innovative strategies and tactics that are not undertaken by any other competitors
so that it stands out in the market.
 Customers: Customers play a crucial role in the success or failure of the company.
The JD Sports should try to maintain good relations with the customers by providing
them with all the products they expect from the company. The company should fulfil
the needs of the target market so that it leads to satisfied and loyal customers.
RECOMMENDATIONS
From the above discussion, it is very clear that the micro and macro environment plays a
very important role in the success of the company. There are various problems faced by the
company that needs to be analysed. The recommended solutions for the company are:
 The company could come up with new technologies and techniques to compete with
other competitors. This will attract customers and also increase productivity.
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 The company can bring various schemes and incentives for its employees to make
them work efficiently.
 They can bring those products that are eco-friendly and cost-effective for its
customers.
 Proper safety measures should be used by the company so that employees are not
affected by harmful smoke emitted from the industry.
 The company can also raise the wages of its employees. This will make the
employees satisfied and happy towards the job.
 Good quality product should be maintained by the company which in turn will make
the customers loyal.
 Lastly, the company should come up with new ideas and bring innovative products
into the market.
CONCLUSION
The report clearly states the problems that are faced by JD Group from its sub-brand JD
Sports. Different factors have affected the working of the company and relevant changes
should be made accordingly. This would help the company in maximizing their profits and
leading in further growth and development. The report also showed practices undergone by
the retail sectors and their contribution to the organisational structure. It also discussed the
complex retail theory faced by the company. Lastly, alternatives and suggestions are
provided that should be considered by the company for further growth and development.
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REFERENCES
1. BMS, 2019. Explain the cyclical theory of retail (Online) Available at
http://www.bms.co.in/explain-the-cyclical-theory-of-retail/(Accessed on 20th June
2019).
2. Caro, F. and Gallien, J., 2012. Clearance pricing optimization for a fast-fashion
retailer. Operations Research, 60(6), pp.1404-1422.
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3. Citeman, 2012. Cyclical and conflict theory (Online) Available at
https://www.citeman.com/7772-cyclical-and-conflict-theory.html(Accessed on 13th
June 2019).
4. Citeman, 2012. Theories of retail development (Online) Available at
https://www.citeman.com/7770-theories-of-retail-development.html (Accessed on
15th June 2019).
5. FFU, 2019. JD Sports fashion plc PESTEL & environment analysis (Online) Available at
http://fernfortuniversity.com/term-papers/pestel/nyse4/6811-jd-sports-fashion-
plc.php(Accessed on 27th June 2019).
6. Financial times, 2019. About the company (Online) Available at
https://markets.ft.com/data/equities/tearsheet/profile?s=JD.:LSE(Accessed on 19th
June 2019).
7. How and what, 2019. PESTEL analysis of UK (Online) Available at
https://www.howandwhat.net/pestel-analysis-uk/(Accessed on 16th June 2019).
8. IGI, 2019. What is retailing (Online) Available at
https://www.igi-global.com/dictionary/fashion-retailing/40684(Accessed on 19th
June 2019).
9. Jayasankara Prasad, C. and Ramachandra Aryasri, A., 2011. Effect of shopper
attributes on retail format choice behaviour for food and grocery retailing in
India. International Journal of Retail & Distribution Management, 39(1), pp.68-86.
10. JDPLC, 2019. Company information (Online) Available at
https://www.jdplc.com/company-information/history.aspx(Accessed on 20th June
2019).
11. Kessenbrock, K., Plaks, V. and Werb, Z., 2010. Matrix metalloproteinases: regulators
of the tumor microenvironment. Cell, 141(1), pp.52-67.
12. Lauren Treadwell, 2019. The role of the macro environment in the retail industry
(Online) Available at https://smallbusiness.chron.com/role-macro-environment-
retail-industry-33419.html(Accessed on 14th June 2019).
13. MAC, 2019. What is a retailer? (Online) Available at:
https://www.myaccountingcourse.com/accounting-dictionary/retailer(Accessed on
22nd June 2019).
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