Report: Analysis of NEXT plc's Retail Strategies and Practices

This report provides a comprehensive analysis of NEXT plc, a multinational British retail company specializing in clothing, footwear, and home products. The report begins with an introduction to the company, its mission, and its values, followed by an examination of the key relevant changes in the macro-environment using PESTEL analysis, including political, economic, social, technological, environmental, and legal factors. The report then delves into the micro-environment, analyzing factors such as suppliers, buyers, new entrants, substitute products, and rivalry among existing firms using Porter's Five Forces. Finally, the report explores various strategies and tactics NEXT plc could employ, including market penetration, market development, product development, and diversification, using the Ansoff matrix to recommend actionable steps for growth and profitability in the competitive retail market.

Retail Theory and
Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
Introduction to company.............................................................................................................1
Key relevant changes in macro-environment..............................................................................2
Relevant changes within micro environment..............................................................................5
Strategies and tactics company could use...................................................................................6
Recommendations.......................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Retail is a word use to define sales of good to customers for consumption rather than
resale of goods (Kitchin and Tate, 2013). Retail sector includes all shops which sell goods to
customers for their personal use or consumption. This sector includes all types of shops such as
large departmental stores, supermarket or small groceries. Retailers are refers as a link between
manufacturers and consumers as they transfer manufacturer goods to ultimate customers. Retail
shops are very important for customers in order to make purchase of goods easy to consumers.
Fashion retail stores consist of shops where customers can purchase clothing as well as other
fashion accessories for their use. Fashion retail stores are responsible for marketing and
merchandising of products once they are designed and manufactured to increase sales of product
in market. Retail sectors have to deal with various changes in micro and macro environment in
which business is dealing and should make relevant strategies to increase sales as well as
profitability of company.
Introduction to company
NEXT plc is a multinational British retail company which deal in a clothing, footwear
and home products. This company was founded by Jiseph Hepworth in 1964. Headquarter of of
NEXT plc is located in Enderby, United Kingdom. This organisation is one of the largest retail
clothing store in UK and have 546 stores. NEXT plc design, manufacture as well as distributes
company products to its retail stores for selling products to end users. This company is dealing in
clothing and other fashion accessories and providing high quality products. Its products are
classified into women, men, girls, boys, shoes home, beauty and sports wears. Primary objective
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Illustration 1: NEXT Plc
Source: Next Plc to Build Digital 'Image
Factory

of NEXT plc company is to provide long term returns to their shareholders through sustainable
growth of company. In order to achieve growth and increase market share of company, it is
continuously focusing on improving NEXT directory customers in UK as well as international
online sales. Company believes its employees are very important part of their business in
achieving objective of business (Cox and Dannehl, 2017). There are more than 19,000
employees working in NEXT plc company to achieve aim of organisation. Values of NEXT plc
is to deliver high quality products to customers with honest, open and consultative approach.
This organisation is working on blocks of honesty, work transparency, responsibility, quality
professionalism and commitment over years (Next Employment, 2019). Mission: NEXT plc mission is to maximise the result of employees or clients by working
in partnership.
 Vision: its vision is to achieve excellence in their working by motivating employees in
order to realise their goals and potentials.
Key relevant changes in macro-environment
For effective and efficient working of organisation it is very important to analyse changes
in macro environment of organisation(Hayes, 2018). Macro environment consist of all external
factors which effect business and its operations. In order to analyse these factors PESTEL
analyse can be use as it contain political, economic, social, technological, environment, legal
factors. All these factors influence decision making of organisation so it is very essential of
NEXT plc company to analyse changes in macro environment.
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 Political factor: This factor can be refer as impact of government on business and its
activities. Political factor defines the degree of involvement of government and political
party in organisation. It includes factors such as tax policies, trade policy, internation
trade laws, rules and regulation set by government etc. Changes in taxation policy by
political and government party have impact on NEXT plc business. With the changes in
political and government parties in UK, there is changes in rule and policy of
government. New taxation policy leads to increase in rate of NEXT plc products and it
directly affect the sales of company. Economical factor: Economic factor of micro environment includes inflation rates,
interest rate, saving rate, foreign exchange rate etc. This factors also consist of overall
economic condition of country(Shanks and Tilley, 2016). Economic condition of a nation
influences purchasing and buying behaviour of customers. When economic condition are
not good customers will be more focusing in fulling their basic needs. UK is a well
developed country with continuously growing economy of nation. So economical factor
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Illustration 2: PESTEL analysis
Source:PESTEL ANALYSIS, 2019

have positive impact on NEXT plc company as customers of this country can afford
products of NEXT plc. Social factor: There are many social factors which influences NEXT plc company
operations. Social factors includes education level of population, power structure in
society, culture, attitudes and believes of customers, social trend, leisure interests etc.
Social trend of UK market is continuously changing. NEXT plc company is dealing in
fashion retail sectors so it is very important of this organisation to manufacture those
products which are according to society trends in order to increase sales of business. This
is quite difficult for organisation to always match with the changes in trend of society. Technological factor: This factor refers to impact of technology on NEXT plc business
activities. Technology factors includes recent changes in technology, new and innovated
technology, updated and modified technology of nation (Ridley-Duff and Bull, 2019).
UK country is using more updates techniques and technology so it has positive impact on
NEXT plc business. This company can take advantage of innovative and more modified
technology in its business and its operations. This will leads to impact on manufacturing
production of organisation as well as company can use high technology in marketing and
promotional activities. Technological factor will help NEXT plc to gain competitive
advantage over other rival companies. Environmental factor: Environmental factor includes weather condition, climate
changes, law related to environment pollution as well as air and water pollution,
renewable waste or attitudes towards ecology etc. this factor have huge impact on NEXT
plc company as it affect demand and supply of clothing style and fashions on customers.
Changes in climate or weather condition influence purchasing of customers. Customers
clothing style changes with change in weather.
 Legal factor:This factor influence business decision as well as activities of company.
Legal factor have significant impact on retail sector as there are many laws make my
government related to business and employment(Tadajewski and Jones, 2014). Legal
factor includes tax policies, employment laws, safety regulation, competition regulations.
Changes in labour law will influence NEXT plc as company have to follow rules and
regulation set by government. High minimum wages for worker will directly impact on
overall profitability of organisation.
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Relevant changes within micro environment
There are various factor in micro environment of businesses which influence business
activities and its operations. Micro environment of NEXT plc consist of all factors of internal
environment such as its competitors, employees, stakeholders, suppliers etc. Porter's Five Forces
Analysis is management tool which helps to identify competitive market of an industry by
analysing its suppliers, buyers, competitors and substitutes. Five forces model of Next Plc are
such as:
 Bargaining Power of Suppliers: Suppliers of raw materials in fashion industry play a
dominant role as for Next Plc they help to increase margins in market. If goods of
suppliers are less differentiated and low switching cost then buyer like Next Plc can
easily switch from that suppliers, this makes the bargaining power of suppliers weak and
vice versa. By making close relationship with suppliers Next Plc can make benefits.
 Bargaining Power of Buyers: When buyer do not have large choices to purchase then
there is less control over prices. To attract more buyers Next Plc can innovate and
differentiate its products from another, create large customer base and develop cost
advantage by selling at low prices. As the organisation has strong brand image in the
market as well as has a strong customer base thus, the power of buyer is moderate and
low.
 Threat of New Entrants: In a market there are various new entrants which can create
threat for Next Plc by different offering and techniques. Next Plc can handle this situation
by creating new offering and innovative ideas in their designs to sell products and
services. Innovation and creativeness in product can attract more and more customers.
 Threat of Substitute Products: There are few substitutes for the products which are
produced of Next Plc. To reduce threat of substitute product Next Plc can focus on best
quality and differentiated products at lower price. This can reduce use of substitute goods
in comparison to products or services of Next Plc.
 Rivalry Among Existing Firms: When there are lot of firms in market producing similar
products or services then it can result in decreasing profitability of Next Plc. Due to high
competition prevailing in the market the respective company has to deal with a lot of
competitors effectively. Next Plc can differentiate products and services from other to
fight competition.
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Micro environment have positive as well as negative impact on business and these factors
have direct impact on success of organisation(Pantano, 2014). Factors included in micro
environment are competitors, customers, suppliers, employees, stakeholders, social media.
Competitors of NEXT plc influences strategies and decision making of organisation. In order to
gain competitive advantage over other company, NEXT plc should understand how to analysis
strategies of its rival companies. Major competitors of NEXT plc company is Marks and
Spencer, Citi Trends, John Lewis. For example: when competitors of NEXT plc is using more
updated techniques and technology in marketing and organisation working it will affect NEXT
plc market share and sales in market. Employees of organisation are major reason of success and
failure of organisation. NEXT plc have well qualified employees who are working with their best
skills, ability of employees leads to success of organisation.
Strategies and tactics company could use
There are various strategies and tactics which can be used by NEXT plc in order to gain
growth as well as more profits for company. From the macro environmental analysis it has been
analysed that NEXT plc requires to consider some changes that has major influence on its
business practices (Mackellar, 2013). Major essential needs are implementing changes in product
and services of firm which are based on new trends as per influence of social factors. On the
other hand, implementation of more innovative and updated technology can also be a major
aspect that aid firm to get advanced in their business services. In order to identify best strategies
for NEXT plc Ansoff matrix can be used. This model consist for four strategies such as market
penetration, market development, product development, diversification are mention below. Market penetration: This strategies will be helpful when company is planning to increase
sales by offering same product in existing market area. In market penetration NEXT plc
have to increase marketing and promotion of its product in order to attract more
customers towards company. Company can also decrease its price or offer different
promotional tools to attract more customers. By using market penetration strategy
company will be able increase demand and supply of current product in existing market
area. Market development: In this strategies, company is focusing on entering into new market
area by offering same products. Market development strategy leads to increase in market
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share of NEXT plc by targeting new market segment. Expanding market area into other
geographical area is helpful in entering into new internation market and target new
customers (Nepal and Jamasb, 2015). New market area will bring new opportunity for
NEXT plc by catering different customer segment. Product development: This refers to strategies when company is offering new products to
existing market area. By adopting product development strategy, NEXT plc can gain
competitive advantage by offering new and innovative product to current customers. In
order to apply this strategies company needs to understand needs and wants to current
customer and then develop a products which satisfy needs and wants of customers
 Diversification: Diversification is a strategies which is used when company is planning
to offer new product to new market area. This strategies will help company in expanding
its product and services into new market area according to needs and desire of new
market. This strategy is the riskiest strategy as in this company is moving into unfamiliar
market area with complete different product.
NEXT plc should adopt product development strategies in order to gain more market
share. This strategies will help NEXT plc in dealing with social and technological changes in
macro environment. Company should conduct proper market research to identify needs and
wants of customers and then develop product which is matching with requirement of
customers(Bowen, 2016). NEXT plc can take advantage from new and updated technology of
UK as modified technology will help company in performing its business operation in effective
and efficient manner. By using innovative techniques and technology in their business process
company can have competitive advantage over other rival companies.
Strategies and tactics which can be used by NEXT plc to deal with challenges of micro
environment. Company is not able to retain its employees in organisation for longer time period
which directly affect overall performance of organisation. In NEXT plc company its employees
are the most important assets for organisation as they are main reason for success of company.
Company is recruiting and hiring well qualified employees with right skill and ability required to
perform job (Hristov and Reynolds, 2015). But company is not able to retain employees within
organisation and this is consider as a weakness of organisation. In order to deal with challenges,
company should identify the reason why people are leaving organisation on frequent bases and
should develop strict rules and regulation to deal with this issue. NEXT plc should provide
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positive and friendly working environment to their customers so that they can work effectively
and efficiently in organisation. Positive and healthy work environment will leads to help in
retaining employees in organisation for more longer time period. Company can also develop
policies regarding retaining employees and can provide extra benefits to employees who are
working for longer time in organisation. These strategies will help in retaining employees in
organisation as well as leads to decrease in staff turnover rate of company.
Recommendations
On these bases of above report it have be recommended that NEXT plc needs to adopt
some strategies to improve organisation overall performance. NEXT plc is a well established
brands so company should needs to maintain brand image by providing high quality products to
customers. NEXT plc needs to work on recommendation given below in order to increase its
sales and profitability.
 Company needs conduct research to identify needs and wants of customers and then
design products which satisfy customers requirement.
 NEXT plc can take advantage of social media as well as digital media to analyse social
trends or fashion trends in society.
 Company should follow all rules and regulation set by government for effective and
smooth working of NEXT plc business operation.
 Company needs to use high and innovation technology in marketing and promotion of
products. This will help in attracting more customers towards NEXT plc company and
stores.
CONCLUSION
From the above report it can be concluded that companies dealing in retail sectors needs
to deal with various factors of environment. Business are covered with micro and macro
environment and these factors influence decision making or organisation. Both internal and
external factors have negative as well as positive impact on overall performance of organisation.
Retail sector have huge impact on economy of country as it help in increasing economic
condition of nation. Company can use different strategies and tactics to improve its supply and
demand in organisation. These strategies will help is dealing which challenges of micro and
macro environment of business.
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REFERENCES
Books and Journals
Kitchin, R. and Tate, N., 2013. Conducting research in human geography: theory, methodology
and practice. Routledge.
Cox, N. and Dannehl, K., 2017. Perceptions of retailing in early modern England. Routledge.
Hayes, J., 2018. The theory and practice of change management. Palgrave.
Shanks, M. and Tilley, C., 2016. Re-constructing archaeology: theory and practice. Routledge.
Ridley-Duff, R. and Bull, M., 2019. Understanding social enterprise: Theory and practice. Sage
Publications Limited.
Tadajewski, M. and Jones, D.B., 2014. Historical research in marketing theory and practice: a
review essay. Journal of Marketing Management. 30(11-12). pp.1239-1291.
Bodie, Z., 2015. Thoughts on the future: Life-cycle investing in theory and practice. Financial
Analysts Journal. 71(1). pp.43-48.
Pantano, E., 2014. Innovation drivers in retail industry. International Journal of Information
Management. 34(3). pp.344-350.
Mackellar, J., 2013. Participant observation at events: theory, practice and
potential. International Journal of Event and Festival Management. 4(1). pp.56-65.
Nepal, R. and Jamasb, T., 2015. Caught between theory and practice: Government, market, and
regulatory failure in electricity sector reforms. Economic Analysis and Policy. 46.
pp.16-24.
Hristov, L. and Reynolds, J., 2015. Perceptions and practices of innovation in retailing:
Challenges of definition and measurement. International Journal of Retail &
Distribution Management. 43(2). pp.126-147.
Bowen, D.E., 2016. The changing role of employees in service theory and practice: An
interdisciplinary view. Human Resource Management Review. 26(1). pp.4-13.
Online
Next Employment,2019. [Online]. Available
through:<https://www.nextemployment.co.uk/mission.php>.
PESTEL ANALYSIS, 2019. [Online]. Available
through:<https://www.kbmanage.com/concept/pestel-analysis>.
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Next Plc to Build Digital 'Image Factory', 2012. [Online]. Available
through:<https://lbbonline.com/news/next-plc-to-build-digital-image-factory/>.
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