An Analysis of Next PLC's Retail Strategies and Practices

This report provides a comprehensive analysis of Next PLC's retail strategies and practices. It begins with an overview of the company, its history, and its position in the UK fashion retail market. The report then delves into the relevant changes within the UK fashion retail landscape, utilizing a PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors influencing Next PLC. Further, the report explores the microenvironment, including Porter's Five Forces, to assess the competitive landscape. The core of the report discusses various strategies and tactics employed by Next PLC, such as social shopping, customer influence, and fair trade policies. Finally, the report offers recommendations for Next PLC to maintain its competitive advantage and concludes with a summary of the key findings. The report aims to provide insights into the challenges and opportunities faced by Next PLC and the strategies it employs to navigate the dynamic retail environment.

Retail Theory and Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
OVERVIEW OF COMPANY.........................................................................................................1
KEY RELEVANT CHANGES WITHIN THE UK FASHION RETAIL.......................................2
PESTLE Analysis........................................................................................................................2
RELEVANT CHANGES WITHIN THE MICRO ENVIRONMENT............................................3
DISCUSS STRATEGIES AND TACTICS.....................................................................................5
RECOMMENDATIONS.................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Retailing is the significant commercial activity which is useful for the customers as it
provide suitable opportunities in order to buy products and services from various types of
bourgeois. In addition to this, retailers purchase products and services from the middleman who
is termed as the wholesaler and retailer and they repackage these products for the easier
distribution and marketing (Ko, Phau and Aiello, 2016). Besides from this, retailers are
considered as the last stage of the supply chain before the product end up in the shopping cart.
Along with this, it is considered as the procedure in which goods and services are provided to
customers with the help of multiple channel of distribution in terms of earning more profit.
Retailers are the one who leads to satisfy the demands and requirements of customers with the
help of supply chain. In order to carry forward this report Next PLC is considered which is a
British multinational clothing, home and footwear retailer, headquarter in Enderby and it also has
around 700 stores across the world. Along with this report is going to cover the impact of macro
environmental factors on the fashion retail and also apply prominent theories and concepts.
OVERVIEW OF COMPANY
Next PLC is one of the biggest fashion retailer in UK and it deals in both men and
women clothing and housing products. Along with this, it is established in 1981 and now it has
approximately 700 stores across the world including, UK, Europe, Asia and Middle East. Along
with this it is founded by Joseph Hepworth in Leeds in 1864 and also started in the partnership
with James Rhodes but due to some reasons partnership gets dissolved in 1872. After many years
company has various competitors that forces the company in order to adopt relevant approaches
and achieve competitive advantage for company. Away with this, for the better improvement
regarding the adverse effects in order to decrease the retail sales and for this, company use
flexible operations and cost that leads to increase the growth opportunities for company. Along
with this, Next PLC also focuses on the constant experimentation and do many innovation in
their products in order to preserve from the integrity of the brand. Moreover, Next has three
prominent channels that are Next retail which is a chain of 550 and more retail branches in UK,
Next Directory which is home shopping catalogue and website which is more than 3 million
potential customers and Next international that has 180 more international stores. Despite from
this, in September 2018 company has Irish operations profits that gets separated from Next PLC.
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KEY RELEVANT CHANGES WITHIN THE UK FASHION RETAIL
PESTLE Analysis
It is a framework which is useful in analysing the impact of macro level factors on the
running and operations of business and it also impacts the decision making of company. It is
helpful in order to take entry within the dynamic business environment and also helps in
analysing the risk factor and develop strategies to overcome from risk factor (Kamran-Disfani
and et. al., 2017). Some of its factors are mentioned below: Political: It depicts that the political decisions have major impact on the respective
company in terms of the rate of taxes that were imposed by government. It describe
ability that has prominent impact on the bottom line of company and the political
decisions consider the interest rates. In UK the interest rates are around 0.5% that
positively impact the ability of company and also capable enough to borrow the large
amount of money for their own purpose regarding the capital expansion at the low rates
(PESTLE ANALYSIS OF NEXT PLC, 2020). Moreover, at the international operations in
the Euro Zone the foreign exchange put negative impact as the exchange risk is felt for
the additional transaction cost. Economical: Next face significant impact on the economic environment as they use
premium based differentiation strategy that opposes of being a cost leader. Moreover,
increase in the prices of cotton leads to add the financial strain on the next bottom line
that relatively high in the global inflation (Sit, Hoang and Inversini, 2018). Moreover, the
external environment also helped the company to limit the growth of Next PLC from the
less availability of consumers. Away with this, the recent spike in mortgage rates are also
announced by the mortgage lenders as the indicative for the economic environment to
make the condition remains gloomy. Social: There are many social and cultural changes that occurs within the market of UK
and also have high impact of performance level of fashion retailers like Next. Moreover,
Next PLC have the potential changes that can become threat or opportunity for company.
In terms of this, by considering the ageing population Next have to adapt its product
portfolio regarding the attempt to make sure the products that are supplied by the
company in order to appeal towards the ageing demographic population (PESTLE
ANALYSIS OF NEXT PLC, 2020). Along with this, the ageing population leads to have
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less mobility instead of younger demographics which is the convenient solution of the
problem. Technological: It is related with the new inventions, modifications and developments
within the information technology that has fundamental impact on the overall
performance of company. Along with this, the technological platforms shows the new
avenues regarding the sales and acquisition for the marketing in order to become vital
when its comes to target their younger consumers. Moreover, various technologies allow
business to develop prominent relationships with their consumers in order to
communicate more effectively (PESTLE ANALYSIS OF NEXT PLC, 2020). Despite from
this, new and advanced technology permits company to develop significant apps for the
convenience of customers and product availability. Legal: Next need to conform the legal standards that are enforceable in the jurisdiction
and for this the operational elements seen as the more complex for the company
considering both UK and EU law. In relation with this, Next adopt minimum wage
legislations in UK that impacts the organisation in terms of large number of low paid
workers for the several minimum wage regulations. For this, legislations requires UK
employers in order to pay their employees a minimum number of around £6.19 per hour
for the aged over 21 (PESTLE ANALYSIS OF NEXT PLC, 2020). Along with this, it also
include the equal opportunities regarding the
 Environmental: Next need to recognise the current trends as the demands of consumers
and governments in order to reduce the carbon foot prints from the environment. For this,
company need to take initiative and reduce their own minimising recycling waste and
also lowering the transport emissions (Hayes, 2018). Along with this, by considering the
physical environment in which Next operates suffers from high intensity considering the
natural disaster like hurricanes, forest fires, earthquakes and many more. Therefore,
before entering into new market organisation need to significantly evaluate the
environmental standards for the successful running and operations.
RELEVANT CHANGES WITHIN THE MICRO ENVIRONMENT
Strategic plans are developed in order to achieve long term objectives and goals and also
helps in achieving future growth and success. Along with this, the strategic plans are developed
considering the competition, profitability, productivity, employee development and so on.
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Despite form this, the objectives should be more realistic, measurable, suitable, motivating and
acceptable. In terms of this, the three forces of porter's five forces are discussed in order to
analyse the competition and threat within the market. Threat from competitors: The fashion industry is more interested in order to analyse the
intensity towards the rivals as there are many organisation who deals in same products.
Along with this, trends are also impacted by brands that allows organisation to sell their
commodities at the low prices. In addition to this, many organisations are fighting for
their market share as the threat and power of competitors are high and due to this,
organisation not only deals in clothing but also start dealing in food and home-ware
products (Bowen, 2016). Despite from this, the competitors of company include Marks
and Spencer, Zara, Topshop and many more. Therefore, company use differentiation
strategy in order to maintain its position within the business environment. Bargaining power of suppliers: Within the fashion retail industry the power of suppliers
are relatively low and the providers does not have more control towards the fashion retail
industry and for this, the bargaining power of suppliers are low that turns into an
opportunity for the company for the easy negotiation (Bradlow and et. al., 2017). In
addition to this, there are lot of suppliers are present within the market that offer raw
materials regarding the clothing and due to this company can switch anytime from their
suppliers. Therefore, Next manage its suppliers by significantly tackling them and
developing prominent supply chain regarding the identification of new designs and
materials.
 Bargaining power of customers: It is considered as the vital force as describes the
negotiation power by which customers prominently cut down the prices of product.
Along with this, customers have more control towards the bargaining power as it is high
that can become threat for company (Dalkir, 2017). In relation with this, customers have
various alternatives in order to purchase their product and considering the clothing
industry there are number of retailers are present within the market and for this, company
provide various offers and discounts in order to attract customers and retain their longer
period of time.
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DISCUSS STRATEGIES AND TACTICS
There are various tactics and strategies that are useful in order to analyse the significant
factors that influences the retailers and some of them are mentioned below: Social shopping: This concept is useful in increasing the number of sales and revenues of
organisation as it is useful in order to identify the requirements and demands of
customers. Along with this, it relies on the trends and fashion which currently runs within
the society and for this, company need to achieve significant growth and success before
introducing their product within the market as per the requirements of customers
(Cleophas and et. al., 2019). In terms of Next PLC, they launch their products and
services after conducting the proper research that leads to defect the requirements
regarding the respective customers in order to satisfy them. Customers influence: Customers are the significant factor that are useful in order to
enhance the sales and development regarding the brand image of company within the
business environment. In terms of this, loyal customers are the one by which company
leads to survive in the market for the longer period of time. In terms of this, Next PLC
need to retain their customers by adopting differentiation strategy as it is useful in
satisfying the requirements of customers (Rao, 2019). In terms of this, retention of
customers is significant because if customers does not get what they want then they can
easily switch from one retailer to another retailer and it can become threat for company.
 Fair trade policy: It is used by company in order spread awareness among their
customers by showing their packaging regarding the cost of product and packaging
labelling. As these are the factors that influences the buying power of customers and also
include the cost and packaging before purchasing the product (Waldman and Jensen,
2016). In relation with this, the Next PLC need to take suitable initiatives in order to
make the environment more sustainable as by this they can survive in the market for the
longer period of time. In terms of Next PLC, with the help of this policy they leads to
develop their position and image within the dynamic business environment in order to
increase their customer base.
In order to reflect above discussed factors prominent theories are developed that are
mentioned below:
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 Retail life cycle theory: This theory depicts the importance of social factors that are
trendy within the fashion industry. Along with this, considering the product life cycle that
has various stages including introduction, growth, maturity and decline. As in the fashion
industry firstly every product at the introduction stage and launch as per the demand of
customers and after that it comes to growth, maturity and then decline as it is considered
as the continuous cycle that occurs with every product (Bernon, Tjahjono and Ripanti,
2018). In terms of this, Next PLC face critical issues regarding the social shopping in
terms of online shopping. Along with this, to overcome these factors organisation need to
develop their own market area considering the social media and online websites which is
useful in terms of improving the sales and revenues. Conflict theory: It describes prominent conflict that occurs within the society and due to
lack of resources it leads to generate competition within the market. Moreover, it also
reflects the customers power that can become threat for company and also leads to
develop conflicts from the competitors.
 Environmental evolution theory: It describes the prominent changes that occurs within
the business environment and it also reflects the significant factors that are interconnected
with an organisation. Away with this, it also depicts the significant changes that should
be adopted by considering the environmental changes as it is useful in attaining the
prominent growth and success for the company(Grzeskowiak and et. al., 2016). Along
with this, in relation with Next PLC they can use fair trade policy in order to increase the
awareness among customers regarding the offered products and services and also
consider their packaging, labelling and cost.
RECOMMENDATIONS
By considering the above discussion on the retail theory and practices significant
suggestions are given to the respective company which is helpful for them in order to attain
competitive advantage and success regarding its expansion. Furthermore, social shopping,
influence of customers and fair trade policy put huge impact regarding the success running and
operations of company. Therefore, few opinions are mentioned as under:
 In terms of this, company does not have much control on its fair trade policy as it can be
controlled and directed by public bodies that leads to influence the company and its
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current position in the market. Hence, it is recommended to Next PLC that they need to
represent their manufacturing cost as per the policy that is useful for the customers.
 Moreover, it is suggested to respective company that need to update and make prominent
changes within the social factors considering the research and development that is helpful
in order to gain and take over new market area.
CONCLUSION
From the above discussion it is analysed that retail industry is useful in order to exchange
various types of products and services that are useful in achieving competitive advantage for an
organisation. Along with this, it is quite difficult to survive with the dynamic changing
environment as it comes with various risk factor. The report includes the various key elements
that impact the external business functioning and running of an organisation and they also impact
the decisions of internal factors and their overall running. Besides this, it also describe several
strategies and tactics that reflects the overall condition of company and for this, they also use
prominent theories of retail life cycle, environmental evolution and many more.
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REFERENCES
Books and Journals
Bernon, M., Tjahjono, B. and Ripanti, E.F., 2018. Aligning retail reverse logistics practice with
circular economy values: an exploratory framework. Production Planning &
Control. 29(6). pp.483-497.
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.
Bradlow, E.T and et. al., 2017. The role of big data and predictive analytics in retailing. Journal
of Retailing. 93(1). pp.79-95.
Cleophas, C and et. al., 2019. Collaborative urban transportation: Recent advances in theory and
practice. European Journal of Operational Research. 273(3). pp.801-816.
Dalkir, K., 2017. Knowledge management in theory and practice. MIT press.
Grzeskowiak, S and et. al., 2016. Linking retailing experiences with life
satisfaction. International Journal of Retail & Distribution Management.
Hayes, J., 2018. The theory and practice of change management. Palgrave.
Kamran-Disfani, O and et. al., 2017. The impact of retail store format on the satisfaction-loyalty
link: An empirical investigation. Journal of Business Research. 77. pp.14-22.
Ko, E., Phau, I. and Aiello, G., 2016. Luxury brand strategies and customer experiences:
Contributions to theory and practice. Journal of Business Research. 69(12). pp.5749-
5752.
Rao, S.S., 2019. Engineering optimization: theory and practice. John Wiley & Sons.
Sit, J.K., Hoang, A. and Inversini, A., 2018. Showrooming and retail opportunities: A qualitative
investigation via a consumer-experience lens. Journal of Retailing and Consumer
Services. 40. pp.163-174.
Waldman, D.E. and Jensen, E.J., 2016. Industrial organization: theory and practice. Routledge.
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