Retail Theory and Practice: Marks and Spencer Case Study

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Retail Theory and Practice
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Table of Contents
Introduction................................................................................................................. 3
Company overview......................................................................................................4
Key relevant changes in the UK fashion clothing........................................................4
Strategies used by retailer to respond to the changes in the fashion clothing market 8
Conclusion................................................................................................................ 12
Reference List...........................................................................................................13
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Introduction
A retailer is a person, a group, or an organisation who sells products in the
market. Their objective is to deliver the products and services manufactured by
the producers to the consumers. The retailer can be a singular person, a group,
or an organisation. In the case of the retailer being an organisation, the primary
goal of the organisation becomes the establishment of shops to sell products to
the customers. The retailers may sell products of other brands, or may sell self-
manufactured products and services.
The chosen organisation of this report is Marks and Spencer, a fashion retail
chain specialising in selling fashionable clothing. The company is based in the
UK, being established by Michael Marks and Thomas Spencer in the year 1884
in Leeds, UK (marksandspencer.com, 2019). This report will identify key changes
in the retail market of fashion products and explain the strategies that the chosen
company can implement to respond to these market changes.
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Company overview
Marks and Spencer is a British fashion retail company established in the year 1884
by Michael Marks and Thomas Spencer. This organisation have opened up
approximately 1500 retail stores worldwide, all specialising in selling clothing and
fashion products among other types of goods. It currently has approximately 1000
stores in the UK, among which 600 of them sell only food products, the most notable
being Kellogg’s Cornflakes. The company became the first British firm to generate
profits of 1 billion pounds before being taxed. In the early 21st century, its revenues
and profits dropped significantly, which led to the company losing a lot of market
share. The sales of clothing products have dropped significantly while the company
saw a rise in the sale of food products.
Recently, it was announced that the company plan to close around 300 clothing
stores in order to implement a “radical” plan by the year 2022
(marksandspencer.com, 2019). This initiative was taken by the company because
their sales have dropped considerably have dropped significantly in the last decade.
The company earned profits of 800 million pounds in the year 2008, which dropped
to a mere 30 million pounds on 2018. Many loss making all over the world are being
closed to cull the operation costs of these stores and focus on online shopping.
Key relevant changes in the UK fashion clothing
The fashion market in the UK is constantly changing every day. With the passage of
time, the trends in the market followed by customers also change. This is because
customers demand for new and unique products after they get tired of wearing the
same kind of clothes every day. For this reason, producers and retailers always try to
forecast what the new trends will be like in the future market. This premonition allows
organisations to make necessary changes in their operations so that they are able to
sell the trendiest clothing and incur more profits. Making profits have always been
the main motive of business organisations.
Fashion and technology are the most diverse products in the market in the sense it is
constantly changing. New trendy products appear every year and those same
products again become generic after a few years. Fashion product manufacturers
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make sure that the products they make are as per the demands of the consumers
and current market trends.
Market Trends
Since the fashion industry is one of the most ever-changing markets, constant issues
like change in fashion trends of the consumers are popping up for retailers to keep
their customers happy and increase their sales. It is important for fashion retailers to
stay trendy in order to attract customers. Trendy clothing has become the norm of
this current age, with customers preferring new types of avant-garde clothing to
stand out from others. This has led to retailers re-think their approach of what
products to store and sell. Marks and Spencer have witnessed a decline in their
sales in the first decade in the 21st century as customers proclaimed that the store
sells old-fashioned “non-trendy’ clothing, which has led to the youth of the UK to
prefer more trendier brands instead of M&S. The retailer also faced trouble in the
market due to not being able to foray into the digital market of e-commerce.
The clothing market in the UK is expected to grow by 17 percent in the period of
2017 to 2022 amounting to 52 billion pounds (Morgan, 2015). The market in the UK
is currently in an inflated state, and prices are still increasing every day. Due to this
inflation, the prices of clothes and fashion-wear will be increased. It is forecasted that
menswear will be the fastest growing sector in the fashion industry, with an
estimated growth of 22 percent, which will overshadow women’s-wear with an
estimated growth of 6 percent (Prnewswire.com, 2019). From here, it can be
understood that menswear will be the most profitable fashion sector in the UK and it
will be beneficial if retail companies like Marks and Spencer make trendy menswear
in the UK during this period. Selling non-trendy clothing will only result in lower sales
for companies, as seen in the case of M&S where their sales have dropped in the
last decade by 2 percent annually (Wood and Butler, 2018).
Rise of Digital Marketing
The evolution of technology have facilitated the growth of digital marketing, as
customers now prefer to buy products online instead of going to physical stores.
Some customers go to physical stores in order to test out the clothing and its quality,
but proceed to buy it online. This has led to retailers focus on their online shopping
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services instead of improving physical stores. Realising the potential of online
marketing, many new fashion retailers that are being established have opted to not
construct any physical stores and instead focus purely on online shopping (Balota,
2018). This has led to many employment opportunities to rise in these companies,
especially the need to require personnel in the field of information technology (IT).
Not venturing deeper into digital marketing has caused M&S to lose their market
share from 13.5 percent in 1997 to 7.6 percent in 2017 (Elven, 2018).
Rise of personalised stores
Many changes will be taking place regarding the themes of clothing stores. It has
been seen that many retailers like Marks and Spencer have planned to close 300 of
their stores. This is expected to be done in order to improve existing stores instead
of making new ones. This is done so that those stores satisfy the customers by
improving their shopping experience. Traditional stores of companies like M&S are
losing ground in favour of automated stores, which has become a trend in shopping
in the UK after being inspired by the innovative robot-backed shops in Japan
(Geddes and Perkins, 2019). Customers now prefer a personalised shopping
experience when shopping from physical stores, which have led fashion retailers to
change the execution of stores so that it provides a unique shopping experience. For
example, M&S have introduced the system of Fit and Styling, where every store has
a stylist that helps customers to pick the right clothes to wear based on customer
preferences, and looks (Smith, 2018). This helps the shoppers to have a better
experience in choosing the right products to purchase. The shoppers want
something new in the stores, other than just basic clothes in shelves and a cashier at
the counter. This has led to retailers improving their stores to introduce newer and
unique features to retain customers and increase customer loyalty.
Company Sustainability
Customers have now started to look beyond the products of the retailers and focus
on the retailer’s actions that will affect the customers. The customers are now
focusing on the carbon emission levels of companies. Newspapers and
governmental websites of the UK reveal key information about many organisations
and their levels of carbon emission. This information has allowed customers to judge
a brand based on their carbon emissions. Organisations that either have low carbon
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emissions are viewed by the society in a positive light. Manufacturers with high
carbon emissions have been given a bad reputation by the community. This good
and bad reputation has greatly influenced the sales of the retailers, with eco-friendly
brands achieving higher sales. In the recent years, waste management has been a
hot topic among customers. Customers did not buy products of brands that have
reportedly been accused of burning their clothing products, generating a lot of
unfiltered smoke. His news have caused a scandal in the fashion retail market of the
UK, which has forced retailers and producers to take necessary actions to curb the
emission of carbon from factories and conduct eco-friendly waste management
campaigns in order to gain customer appreciation and support (Chen et al., 2015).
The retailers also need to sustain their operations by maintaining good customer
relations and employee relations. In order to maintain these relations, the concept of
Corporate Social Responsibility (CSR) has been widely implemented by
organisations in the UK like Marks and Spencer.
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Strategies used by retailer to respond to the changes in the fashion clothing
market
In order to mitigate the various issues faced by retailers like Marks and Spencer,
various strategies and theories can be employed by the brands that also boost their
sales and revenues. These strategies and theories are described below.
Strategies to implement change due to market trends
Market trends are constantly changing, especially in the market of fashion and
clothing. In order to accept these changing trends and move towards creating trendy
products, the current market trend needs to be analysed. M&S can carry out
surveys, which contain questionnaires that customers and other people in general
are required to fill up. These questionnaires are set in a way that it can enable the
surveyors to figure out the mentality of the customer, and what they like. For
example, M&S can implement a system of surveys, which can be conducted from
their stores. When the customers leave the store after purchasing products, they can
be asked to participate in a survey. The questionnaires in this survey can ask the
customer to state what they like and dislike, the kind of fashion they prefer and
clothes they wear. It can also have questions, which asks the customers to provide
feedback on the shopping experience. These questions can also ask the customers
to mention what kind of clothing they would like to be available in the stores of M&S
(Pantano et al., 2018). The brand can make new products and improve old products
as per the likings and demands of the customers.
The company can also take into account the products of competitors to see what
they are selling. The brand can then try to fashion new products, which are different
from those of competitors. This will allow M&S to analyse what their competitors are
selling and allow the company to make necessary changes in their product line to
create newer and trendier products. Doing so will help the company to successfully
make their products trendier, which will increase the sales of the brand if advertised
extensively (Rodriguez et al., 2016).
Since M&S have been termed as a “non-trendy” company by customers, selling
trendy products will allow the company to remove that tagline associated with the
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brand name. This will increase brand awareness and brand loyalty among M&S
customers, leading to more sales and profits.
M&S can implement the Wheel of Retail Theory in order to improve the cyclical
retail development cycle. As per this theory, there are three phases of marketing –
the entry, trade up, and vulnerable phases. In the entry phase, M&S can sell their
new products at lower prices to increase the market penetration capability of the
product to generate higher sales. As the product becomes in demand and its
marketing mix improves, the trade up phase begins where more variety of that
product along with better facilities start being sold by the brand. In the vulnerable
phase, new products from competitors start entering the market, causing the
products of M&S to lose their market value and share (Ducan et al., 2015). M&S can
follow this product life cycle to ensure timely launch of new products so that the
brand does not face decreasing sales in the vulnerable phase.
Implementing e-commerce strategies
E-commerce has been the main source of growth and technological advancement in
most modern brands. Online shopping has become compulsory for retailers to
increase the sale of their products. In order to do so, M&S must expand its online
shopping facilities by implementing newer technology.
Marks and Spencer can start by improving the availability of products available in
their online websites. In order to attract more online sales, M&S can feature some
new, trendy, and exclusive products that are not found in any physical stores and
can only be bought online. This exclusive availability of a certain product online must
be advertised extensively to attract customers (Ryan, 2016). After interests in the
minds of the customers are generated, they will automatically visit the company
website to know more details about the product.
Once the customer is inside the website, the effectiveness of the website design
comes into play. The website must be designed in a way that is not confusing. All the
various categories of clothing – menswear, female clothing, footwear, apparels, and
others must be classified and segmented under different web pages. This will make
it easy for customers to find their desired products among the variety available to
them. M&S should also present to the customers the option of method of payment.
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After the customers have selected their products, they should have the option of
selecting the mode of payment – whether through net banking or online payment, or
through cash on delivery. The website should also feature advertisements of special
offers and discounts (Chaffey and Ellis-Chadwick, 2019). These advertisements
should be catchy enough to make the customers interested. As per Hawkins Stern
Impulse Buying Theory, catchy and flashy products and advertisements will rely on
the predictable desires and impulses of the customers to generate more sales easily
(Shapiro, 2015).
The website should also have contact details present in case the customer wants to
contact the personnel of M&S. An online feedback and review system should also be
implemented in order to allow the customers to rate the product and provide
necessary suggestions. Analysing these reviews and suggestions will allow the
company to make necessary changes and improvements to their products.
Setting up Personalised Stores
Since technology is evolving constantly, it has become necessary for retailers to
implement new technology in their stores to attract more customers. Electronic
billboards, digital catalogues, and many other forms of modern technology can be
implemented in order to increase sales and improve the customer buying
experience.
In order to personalise the retail outlets of M&S, the company must implement
Targeting and Segmentation Theories. The theories state that customers should be
targeted and categorised as per their likings, behaviour, attitude, buying habits, and
spending power. M&S can make necessary groupings of their customers as per the
characteristics of the customers. For example, M&S can target the youth of the UK
who have a spending power of more than 60 pounds in clothing. This will help the
company make necessary changes to their stores, giving it a “youthful” appearance
to attract the youth (Pappas et al., 2017). The stores can include advanced
technology like digital catalogues and billboards to display advertisements. Special
segments of the shop can be made specifically for a type of product. For example, a
segment of the shop can be dedicated to men’s clothing and apparel while another
can be specifically for women. This allows the customers to feel more comfortable
carousing through the wares of the company (Moorhouse, 2018).
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After a customer has bought a product, an e-mail or a text message can be sent to
the customer, which thanks them for shopping in M&S and gives them a discount on
their next purchase. This action will satisfy customers and improve brand loyalty. The
online shopping experiences of customers can also be personalised. For example,
the website can present an offer on similar goods that the customer purchased
online.
Corporate Social Responsibility
Marks and Spencer should follow CSR regulations in order to keep the community
and the customers satisfied. The company should decrease their carbon emission
and waste generation as much as possible. The brand must also treat their
employees fairly, in regards to giving wages and salaries on time and preventing any
unjust practices being done in the workplace (Crowther and Seifi, 2018). The
employees should also be given a safe place to work in so that they are not injured.
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Conclusion
The fashion industry is changing at a fast pace that has made it necessary for
retailers to change their method of operations in order to follow the market trends
and evolving technology. Customer satisfaction is the key for any business to be
successful. In order to do so, the brands must identify the issues that are present in
their market and how they can address these issues in order to continue on
generating sales and higher profits. Retailers in this era have used digital marketing
and personalised shopping experiences to attract and retain customers. This will
make sure that the business is sustainable.
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