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 to Retail.................................................................................................................3
Introduction to the Company.....................................................................................................4
Key relevant changes in the UK fashion clothing market..........................................................5
Relevant changes within the micro environment.......................................................................6
Suggest and discuss strategies and tactics that could be used....................................................9
Recommendations....................................................................................................................11
Conclusion................................................................................................................................12
Reference List..........................................................................................................................13
Appendix..................................................................................................................................15
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Introduction to Retail
Retail is the method of selling goods and services to the customers through a number of retail
channels. This is done in order to gain profits through the sale of products and services to the
consumers. Retail is generally considered as the final stage of selling the products to the
consumers. The manufactures produce the necessary goods and services and then select the
channel of distribution. The channel of distribution can be through agents or middlemen and
wholesalers. This channel of distribution leads to the retailers, he point from where
consumers buy the necessary products and services (Barnes and Lea-Greenwood, 2010).
Fashion retail refers to the concept of selling clothing products and fashion apparel to the
consumers for the purpose of having them buy the products. Fashion retail companies make
necessary products as per the current market trends and the demands and preferences of the
target customer segment.
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Introduction to the Company
The chosen fashion retail company for this report is Marks and Spencer, a UK based fashion
retailer. Michael Marks and Thomas Spencer founded the company in the year 1884. The
company currently has 950 stores all over the UK, with 620 selling only food products. The
company is specialised in mainly selling fashion clothing and apparel, but has moved on to
include food products and other services and products in order to expand their business and
diversify their products.
The company became the most profitable UK based company in the year 1998, when it
became the first company to earn 1 billion pounds in revenue before taxation. After this
period of boom, the company suffered a sudden drop in sales. In 2018, it was announced that
100 stores of M&S in the UK will be closed down by 2020, as a “radical’ plan to implement
change in the organisation and increase profits and revenues by lowering operational costs.
The company became popular in the 1900’s because it sold only British-made groups. All the
products of the brand are sold under the St. Michael brand name (for men’s clothing) and the
St. Margaret brand name (for women’s clothing). The company first started expanding
worldwide by penetrating the fashion markets in countries like Afghanistan and France
starting from the 1960’s (marksandspencer.com, 2019). The company sells their products
through retail outlets like Full line stores (selling a portion of their products based on the
location), food halls (selling food products in the form of a cafeteria) and big departmental
stores.
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Key relevant changes in the UK fashion clothing market.
The key relevant changes in the UK fashion clothing market can be explained by conducting
a PESTLE analysis, such as done below.
Factors Effect
Political As far as political conditions go in the UK, Brexit plays the most
important role in the context of the British industries. The effect of Brexit
will hinder the imports and exports of the company. The attraction of
foreign investors that the UK previously has will be strained by the effect
of Brexit. The corporation tax on the profits is 19 percent, which will be
reduced to 17 percent by 2020, will prove beneficial for Marks and
Spencer (Sinclair, 2019).
Economic UK is the fifth largest economy in world as per their GDP. The serious
issue of inflation in the country, which is at present 3 percent, will
influence the pricing of M&S products, causing them to rise (Hantschze et
al., 2019). This will turn effect the sales of the company. The interest rate
of M&S and other companies increase from 0.25 percent to 0.5 percent.
This will also cause the prices to increase.
Social The UK is one of the most educated countries in the world. This will
allow M&S to attract capable and intelligent employees. The people of the
UK are multicultural, allowing room for capable foreigners to seek
employment. The high costs of living in the UK will affect the lifestyle of
the employees and the company in general.
Technology The technology of the UK is fast changing. M&S and other fashion
retailers are pushing into the territory of digital marketing. The evolution
of technology has allowed this to occur. The company is also affected in
every way by the up gradation of technology apart from digitization, with
production life cycle being lowered and operational costs decreased (Suh
and Suh, 2017).
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Legal The policies set by the government in regards of the business affect the
business culture. The Equality Act of 2010 protects the employees of
M&S to be discriminated. The Wages and Salaries Act of 1998 allows the
employees the right to avail his or her respective salaries (Landon and
Williams, 2019).
Environmental The government and the companies of the UK have taken stances in
reducing pollution and carbon content in the environment. This has kept
the environment relatively low in pollutants, making it a good place for
tourists, increasing sale of products.
Table 1: PESTLE Analysis of Marks and Spencer
The UK fashion industry constantly changes as the trends of the customer’s trend with the
passage of time. The fashion apparel and clothing producers and retailers like Marks and
Spencer and other brands constantly try to change their products in order to survive in the
highly competitive market of the UK. The brands try to constantly create new innovative
products in order to attract more and new customers (Pantano et al., 2017).
Marks and Spencer can do so in order to generate more interest in their customers when they
come to the retail stores and outlets of the firm. That is why they have implemented the
strategy of Fit and Styling. In this process, the firm has employed a fashion stylist in each of
their major outlets. These stylists offer fashion tips and clothing advices to the customers so
that they can buy the perfect clothes for their desire style. This move is done in order to make
the customers feel more valuable to the organisation (Sebald and Jacob, 2018).
Relevant changes within the micro environment.
All the factors that hold the capacity to influence the day-to-day operations of a company and
are closely related to the company are known as the microenvironment of a business
organisation. In the case of the fashion industry, factors like suppliers, employees, customers,
competitors, shareholders, the government, and many more are considered as their micro
environmental factors. Along with the company, these micro-environmental factors also go
through some changes on its own.
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The employees of a company are affected by the operations of the company they are serving,
and the rules and regulations they have to follow. For example, their working conditions,
wages and salaries will affect the employees of Marks and Spencer, scope for promotions and
increments, their leaders and managers, and many other elements of the organisation. All
these have an impact on the job satisfaction of the employees, which also influences the
company in terms of their productivity and the quality o products and service produced. The
employees are now looking forward to working in a company that has a very modern thought
process, and automated systems. Employees try to seek employment in retail companies that
allow them to pitch in their ideas for product designs, provide personalised services, and
much more (Misra and Walter, 2016). The stability of the company as far CSR is concerned
is also kept in mind by the employees, as they prefer companies that produce less wastes and
have lower carbon emissions.
The shareholders of the company have changed considerably in order to make sure that their
investments are going in the right place. The investors now check the CSR activities of the
firm before investing resources in the firm. They also tend to check the audit reports of the
firm to ensure that the business is not hiding their resources and is not conducting any
malpractices. The shareholders in the fashion sector also prefer to have more control over the
management functions of the company along with influencing key decisions made by the
leaders (Pedersen et al., 2018).
The government is changing after a certain period because elections are being held
frequently every couple of years. The new or old party that comes into power tries to better
and change the condition of every business in the UK (Goworek et al., 2018). The fashion
industry is no exception to this. Depending on the government in power, they might try to
improve economic conditions of the country and of the business, or do the opposite.
Depending on the preferences of the political leaders, the fashion industry can either improve
or decline.
Competitors of the firm are also changing every day as they are upgrading their technology
and implementing new business strategies to gain an advantage in the retail market. They are
inventing new kinds of products to expand their product line and attract more customers. The
UK fashion industry is highly competitive, as the fashion retail brands are always new type of
clothing, apparels, and footwear to gain the bigger share in the market.
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Suggest and discuss strategies and tactics that could be used.
The effect of technology on the external and internal factors of Marks and Spencer is far
reaching and volatile. This can be explained better by using Technological Determinism
Theory. According to this theory, the changes in the market and the business are due to
technological changes. This theory will describe the various ways in which technology
affects the market of the business and any other related factor. It defines how technology has
an effect on the thought and actions of humans. This theory was created by Thorstein Veblen
(Bowmer, 2019).
According to this theory, technology is the biggest influence on humans and their actions,
including the business. The theory states that the fast evolution of technology and its
availability as the most positive or negative elements in the business. Technology is seen as
the driving force of change, and the availability of technology to the business determines the
decisions and operations of the company.
Technology influences the employees of the M&S in lots of ways. For example, improved
and upgraded machinery will help the employees to work faster and more productively. New
and better computers will allow the employees to conduct task more easily. Automation of
processes and systems in the production process will allow the employees to work relatively
stress free and less physically (Dafoe, 2015).
The advent into digital technology has allowed fashion retailers to market their products
online to the customers. Digital evolution has allowed firms to sell products online and also
to market them digitally. Advertisements are now being done through the medium of the
internet, by using social media websites like Facebook and Twitter, along with video
streaming networks like YouTube. The rise of cloud technology has allowed business firms
to digitize their recording and data management processes. The company can simply just
upload their records and data about the operations of the firm, their strategies, employee data,
and any other kind of data that is valuable to the company. This will allow the firm to make
their workplace clutter free and paper free. It will also make financial and accounting
processes to become faster since there will be no paperwork involved (Klinger and Svensson,
2015). Storing information in the cloud will be beneficial to fashion businesses as they can
store inventory management data in cloud. In case the original paperwork and documents gets
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lost or damaged, the data can be retrieved from the cloud services in an instant if the
respective data was stored beforehand.
Along with the advent of technology, a host of problems will also creep up. According to this
theory, advancements made in technology will create obstacles for businesses. For example,
the data of Marks and Spencer that is stored in the cloud can be hacked and stolen by hackers,
which will be a leak of confidential documents for the firm. In case the plans and strategies of
the firm are leaked to the competitors, it will undo months of hard work of the firm. Marks
and Spencer must ensure that their data is backed up in secure cloud storages, so that there is
less chances for data being leaked. This can only be ensured if the company has a skilled IT
department.
The economy of the UK is also a big factor in the decision and strategy making of the Marks
and Spencer. According to the Fisherian Theory, it is stated that an excessive amount of
debt of the company relative to the Gross Domestic Product (GDP) is the key factor in
determining the economic plan of the company, as high amounts of debt is bound to give
birth to economic obstacles to the company. In case the fashion retailer does suffer from high
debts, remedies will take a long time to be created, which is a very tough and time consuming
process in itself. The fashion companies must manage their resources well, especially their
finances (Cao et al., 2019). When planning for the operations that are required to be
conducted, the firm must take into account their pre-existing loans so that they can correctly
set their budget as per their available finances, and overdue debts. This will prevent the firm
from reaching a road-block in the middle of operations.
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Recommendations
It is recommended to Marks and Spencer to manage their resources properly. They must keep
well-maintained records of their inventory and sales, along with data on their employees. The
company must also conduct research on their customers so that they can get detailed
information about their buying habits, likes, preferences, average disposable income, age
group and other vital information. This data must be stored in documents online in the cloud.
This data will help the firm to create product designs that will attract the most customers. The
products will thus be aligned to the demands and preferences of the customers. Marks and
Spencer must invest on producing trendy products.
Advancements in technology have changed the entire marketing landscape of the business in
the world and in the UK. New technology has made it possible for fashion clothing producers
like Marks and Spencer to manufacture their products more easily and quickly, with leaving
less space for error and more room for improvement. Automation of processes in the firm has
made it possible to stitch clothing much faster than before. It is important for Marks and
Spencer to manage their debts, using the Fisherian Theory. This will prevent the firm from
closing down more shops in order to decrease operational costs, which can also be done by
implementing newer technology.
Digital technology, especially the computer, mobile phones, and the internet, have allowed
the industry to market their product through these channels. Marks and Spencer can do the
same by advertising their products digitally through the television, and the internet. Internet
channels like the social media (Facebook, Twitter) and the streaming services (YouTube)
must be used for reaching the most number of customers worldwide (Lee and Cheon, 2019).
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Conclusion
The retail industry is none of the most profitable industries in the UK. The companies must
market their products aggressively in order to gain edge in the market. Since the UK is one of
the most educated and technologically advanced countries in the world, it has made the
country a preferable destination for foreign investors to invest their resources of the firms.
Fashion companies can get a lot of investment this way if they can produce a coherent plan
for the investors to bank on. Evolution of technology has made it possible for British fashion
retailers to fasten their production process and reduce their operational costs. Therefore, it
can be said that the fashion industry is very profitable if planned correctly.
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Reference List
Barnes, L. and Lea-Greenwood, G., 2010. Fast fashion in the retail store
environment. International Journal of Retail & Distribution Management, 38(10), pp.760-
772.
Bower, M., 2019. Technology‐mediated learning theory. British Journal of Educational
Technology, 50(3), pp.1035-1048.
Cao, D., Luo, W. and Nie, G., 2019. Fisherian Debt-Deflation Zero Lower Bound.
Dafoe, A., 2015. On technological determinism: A typology, scope conditions, and a
mechanism. Science, Technology, & Human Values, 40(6), pp.1047-1076.
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.
Hantzsche, A., Kara, A. and Young, G., 2019. The economic effects of the UK government's
proposed Brexit deal. The World Economy, 42(1), pp.5-20.
Klinger, U. and Svensson, J., 2015. The emergence of network media logic in political
communication: A theoretical approach. New media & society, 17(8), pp.1241-1257.
Lee, Y. and Cheon, H., 2019, February. A Study on the Factors Affecting the User Intention
of Omnichannel Shopping Based on Information Technology. In Proceedings of the 2019 5th
International Conference on E-Business and Applications (pp. 20-24). ACM.
Marksandspencer.com. (2019). Welcome to Marks & Spencer. [online] Available at:
https://www.marksandspencer.com/ [Accessed 5 Jul. 2019].
Misra, J. and Walters, K., 2016. All fun and cool clothes? Youth workers’ consumer identity
in clothing retail. Work and Occupations, 43(3), pp.294-325.
Okonkwo, U., 2016. Luxury fashion branding: trends, tactics, techniques. Springer.
Pantano, E., Priporas, C.V., Sorace, S. and Iazzolino, G., 2017. Does innovation-orientation
lead to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing
and Consumer Services, 34, pp.88-94.
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