Retail Theory and Practice Report: Burberry and UK Fashion Market

This report delves into retail theory and practice within the context of the fashion industry, using Burberry as a case study. It begins with an executive summary and an introduction to retailing, followed by an overview of Burberry's operations and market position. The report then analyzes the external environment of the UK fashion retail market, employing PESTLE analysis to identify political, economic, socio-cultural, technological, environmental, and legal factors influencing the industry. Furthermore, it assesses the macro-environment using Porter's five forces to evaluate the intensity of competition, bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and changes in customer attitudes. Finally, the report discusses strategies and tactics Burberry could employ to gain a competitive advantage in the dynamic UK fashion market, concluding with recommendations and a conclusion.

Running head: RETAIL THEORY AND PRACTICE
Retail theory and Practice
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Executive Summary
This report focuses on retail marketing in the context of retail fashion organisation. Burberry
has been chosen as the organisation. The external environment of the retail fashion industry
has been evaluated. It has been observed extreme uncertainty in the political environment is a
prevailing issue, affecting the fashion industry a lot. At the same time, due to Brexit the
degree of economic uncertainty is increasing rapidly, which is affecting the buying behaviour
of the customers. Maintaining sustainability in running business is also a key issue in the
contemporary times. This is which is putting extreme pressure on the firms to run their
business in an environmental friendly manner. However, from the macro environmental
analysis, it is evident that the degree of competition is extremely high in the retail fashion
industry of UK. Therefore, comprehensive strategies have been suggested for Burberry,
through which they can acquire competitive advantage.

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Table of Contents
Introduction:...............................................................................................................................4
Introduction of the company:.....................................................................................................4
Key changes in the fashion retail market of UK:.......................................................................5
Analysis of the macro-environmental factor in the fashion retail industry of UK:...................8
Discussion of the strategies and tactics that could be used:.....................................................10
Conclusion & recommendation:..............................................................................................12
References:...............................................................................................................................14

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Introduction:
In the highly volatile business environment, appropriate retailing plays a major role in
promoting the national economy of a country. This paves the way for the customers to access
multiple options before framing their purchasing decision. The retailers play a major role in
building strong relationship in between the manufacturers and final customer. Accortding to
Yu et al. (2014) retailing is defined as one of the most convenient and comfortable methods
of selling goods and services and thereby keeping the customers happy and satisfied. It is
imperative to note in this context that, with the assistance of retailing a strong distribution
network can be created, which is the key of enabling the customers to access their desired
products in a timely and cost effective manner.
Fashion retailing is the way of marketing fashion related products and thereby
keeping the customers delighted. Fernie and Sparks 2018) showed that the condition of UK
fashion retail industry is extremely volatile and competitive due to the existence of wide
range of companies such as H&M, Marks & Spencer, and Burberry. Present paper will put
forth the discussion the UK fashion retailer. Burberry has been chosen as the organisation.
The condition of fashion retail industry of UK will be evaluated. The strategies, which are to
be followed by Burberry in order to gain long term success from business will also be
presented in this report.
Introduction of the company:
Burberry Group PLC is one of the largest British fashion house in UK, with multiple
stores across the country. Established in 1856, the company offers multiple products such as
fashion accessories, ready-to-wear outwear, sunglasses and different types of fragrances. In
addition, Burberry also serves cosmetics products. The main focus of the firm is to improve

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the degree of outdoor attire (Burberry United Kingdom 2019). Thus, Burberry is considered
as one of the major companies in the high street fashion market of UK.
Figure 1: Logo of Burberry
(Source: Burberry.com 2019)
The main mission of the company is to provide high quality of products to the
customers and thus keeping them happy and satisfied. Consistent stress on innovation is the
key facto of Burberry, which is playing pivotal role for the firms to secure strong position in
the extremely competitive business scenario of UK fashion industry. As per the report of May
2016, the total number of stores of Burberry throughout the globe is 498. The net income of
Burberry during 2018 was £293.6 million.
Key changes in the UK’s fashion retail market:
The fashion retail industry of UK is changing rapidly due to the inclusion of multiple
companies. PESTLE is a major framework, through which the external environment of
fashion industry of UK can be evaluated appropriately. PESTLE analysis of UK fashion
industry is as follows:
 Political uncertainty is one of the major issues in the contemporary time, which is
largely affecting the fashion industry of UK. Factors such as geopolitical instability,

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Brexit, terrorism along with the trade deals are leading extreme uncertainty. In
addition, Ennew et al. (2014) showed that other kinds of tensions are also affecting
the fashion retail industry. The political shift in UK and USA is also resulting in
extreme uncertainty in the fashion industry.
 Economic factors can also have significant effect on the fashion industry. The degree
of economic fluctuations can have significant impact on the fashion industry. The
recent recession is one of the major economic factors, which can have significant
impact on the UK retail industry. Baker and Hart (2016) observed that due to
recession, the rate of unemployment and people with low income is increasing rapidly
in UK. This is the most important economic factor, restricting UK fashion industry to
strengthen their financial base. Brexit has resulted in fluctuation in the rate of
currency, which can also have significant impact on the financial condition of UK
fashion industry.
 Socio-cultural factors play a major role in promoting consistent growth of UK fashion
industry. Over the past few years, major social changes have happened, which has
drastically changed the way for the fashion industry of UK to run their internal
functionality. Ramanathan et al. (2017) put stress on the fact that the millennial
generation have become extremely fashion oriented; however, their choice and
preferences are different from that of the previous generation. This trend is creating
major pressure on the fashion industry to put stress on constant innovation. At the
same time, the customers belonging from upper class are no longer addicted to the
high class fashion or products. As discussed by Varley (2014) this trend among the
customers is also driving the fashion industry to keep the price of the products
economic.

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 Technology is one of the emerging factors, playing a pivotal role to promote speedy
growth of the fashion industry. Drastic technological development is the key factor to
make rapid change of the fashion industry. Globalisation, information technology and
increased rate of online shopping are the key factor, accelerating the statistics of sales
and thereby profit margin of the UK fashion industry. The customers now are more
inclined to get necessary information regarding a product before making their buying
decision. Goworek and McGoldrick (2015) shaded light on the fact that this is
creating urgency among the firms to ensure easy access of their official website and
keep updating it regularly to keep the customers informed.
 Protecting the environment, while running the business while running the business is
an important factor of retail fashion industry. Due to intense pressure from
government on maintaining corporate social responsibility, the fashion brands are
showing extreme commitment on the carbon footprint. At the same time, Piercy and
Evans (2014) also discussed that the companies are also putting consistent stress on
making their marketing effort much more environment friendly. The companies are
making comprehensive investment on protecting environment by ensuring
sustainability in terms of using environment friendly raw material and using effective
products, while packaging the products. Due to increasing rate of pollution and other
hazards, it has become the matter of utmost importance for the firms to run their
business in ethical and socially responsible manner. Neupane (2015) put stress on the
fact that the environmental concern is leading the fashion brands to make the
production aware to use environmental friendly products.
 Legal challenges are also prevalent in the UK’s fashion retail industry. In the
contemporary time, UK government is putting extreme pressure on the fashion brands
to maintain ethics and compliance and thus creating urgency for them to run their

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business in an environmental friend manner (Pantano 2015). In addition, effective
laws have been executed in order to protect fundamental rights of the employees.
Employment and Labour Law 2019 has been introduced recently. This law covers
common issues related to terms and conditions along with regulations of employment
(Global Workplace Insider. 2019). The inclusion of such rules and regulations is
creating extreme pressure on the fashion brands to run their business fairly and
ethically.
Analysis of the macro-environmental factor in the fashion retail industry of
UK:
There are various factors, affecting the internal functionality of UK fashion retail
Sector. Porter’s five forces is one of the most effective frameworks, through which the
condition of the macro environment of UK fashion retail sector can be assessed. Porter’s five
forces, affecting the UK fashion retail industry is as follows:
 Intensity of competition:
The degree of competition is extreme high in the fashion retail industry of UK due to the
existence of wide ranges of business giants such as Zara, H&M, Burberry, who are offering
more or less same kinds of products. According to Wrigley and Lowe (2014) this is the
reason, for which the degree of competition is rapidly increasing. Still, the brands such as
Zara and Burberry are putting extreme stress on innovation to make superior quality of
products and thereby generate loyalty among the customers.
 Bargaining power of buyers:
The bargaining power of the buyers is extreme high in the UK fashion industry due to the
presence of wide range of companies, offering same products. Rapid development of
technology is paving the way for customers to acquire necessary information regarding a
product. This is the reason, for which the switching tendency among the customers is

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increasing rapidly. Now, the customers can easily switch from one brand to the other due to
the high availability of wide rages of different brands in the market. Baker and Saren (2016)
opined that this switching tendency is creating extreme pressure on the fashion brands to put
their utmost effort in order to attract and retain wide ranges of customers.
 Bargaining power of suppliers:
In the fashion retail industry, the bargaining power of suppliers is relatively low. Most of
the fashion retailers like Zara, Burberry, H&N, Bahoo generally source their products from
the third world manufacturers. Due to this trend, the suppliers have very little control over the
fashion industry. In addition, the purchasing power of the fashion brand is extreme high,
which is also leading the companies to switch easily from one suppliers to the other.
Therefore, the power of the suppliers is insignificant.
 Threat from new entrants:
In the fashion industry, the threat from the new entrants is insignificant. High degree of
competition and high cost are making it difficult for the new companies to enter in the
industry. It is imperative for the new companies to explore unique ways, in order to attract the
customers and thereby secure a position in the market. Ansoff et al. (2018) discovered that
apart from the infrastructure, the cost of investing in the marketing activity too is extreme
high, which also restricts the new companies to enter in the market.
 Threat from the substitute products:
The threat from the substitute products is relatively high in UK, due to the high
availability of wide ranges of products with same quality. Due to high competition, all the
firms are constantly putting stress on innovation in order to attract and retain wide ranges of
customers. Thus, it can be said that, the threat from substitute products is extreme high. Thus,
it is imperative for the firms to implement robust business strategy in terms of attaining a
securing a position in the market.

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Changes in the customer attitude:
The attitude among the customers towards fashion oriented is changing rapidly. The
fashion statement is drastically modifying with the passage of time. The customers now have
become more fashion oriented than before. It is the latest trend among the customers to shop
in a sustainable manner. It is imperative to note in this context that the customers are
becoming more fashion oriented in the contemporary times. Lasserre (2017) commented that
engaging the customers has become a new concept in the fashion retail industry. It is the
recent trend among the customers to get necessary information regarding a product before
framing their buying decision. Thus, it is imperative for the companies to give all the
necessary information to the customers as per their requirements. This will help in generating
loyalty among them and thereby maintain long term relationship.
Discussion of the strategies and tactics, to be used by the company:
From the macro environmental analysis, it is evident that, the intensity of competition
is extremely high in the fashion. As highlighted by Morschett et al. (2015) such high degree
of competition is making it difficult for the companies to secure their position in the market
and thereby attain competitive advantage. Being the giant in the fashion retail industry,
Burberry is also facing extreme pressure due to the intense competition in the market. Thus, it
is imperative for the company to implement robust business strategy in terms of gaining
competitive advantage and thereby strengthen the financial base. Ansoff Matrix is a major
framework, which Burberry can follow in order to gain competitive advantage and thus
acquire a strong position in the market.

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Figure 2: Ansoff Matrix Framework
(Source: Baker and Saren 2016)
Subsequent discussion will help in evaluating the strategies, which Burberry can
follow in order to attain competitive advantage. Market penetration:
This is the most significant ways of attaining a strong position in the market. It is
imperative for the company to embrace new technology. The company should put stress on
innovation and make significant investment in digital platform in order to expand their
products. In addition to that, with the assistance of high-end digital platform, Burberry can be
able to ensure high availability of the products among the customers. Stead and Stead (2014)
suggested that new and comprehensive advertisement campaigns must be launched in terms
of engaging customers, which is the key of accelerating the rate of market share. Burberry
should also improve the existing product line for the sake of attracting the customers. Market development:
It is imperative to explore new market with existing products in order to attract new base
of customers. Strong preference must be given to the local customers to keep them attracted. I
addition, Burberry should also make consistent investment on opening more store in order to
strengthen their store network. Burberry can target local customers as the trend of buying
extreme fashionable products is extremely high among them.

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 Product development:
Product development is one of the major factors, through which a company can stay aside
from the hardcore competition in the market. Gamble et al. (2014) perceived that being a
giant in retail fashion industry, it is imperative for Burberry to accelerate their product line.
New accessories such as fragrances, hats and handbags must be offered in order to catch new
base of customers. At the same time, Burberry should also put special focus on the design of
products to generate interest among the customers. Diversification:
As highlighted by Goetsch and Davis (2014) diversification is another major way of
catching the interest among the customers, which is the key of gaining competitive
advantage. Burberry should ensure high availability of runway collection in both physical and
online stores, as it is the most popular product of them.
Conclusion & recommendation:
Based on the discussion, it can be concluded by saying that the degree of competition
in the retail fashion industry is extreme high. This is acting as a driving force for the firms to
put consistent stress on implementing robust business strategy. This is the way, through
which the companies can have a secure position in the market, which is the key of attaining
competitive advantage. However, as the requirements among the customers and their
perception towards the fashion related products is changing rapidly, the fashion giant like
Burberry must execute comprehensive business strategy, as it would help them to gain
competitive advantage.
Initially, it is recommended for Burberry to build strong relationship with the
customers. In-depth understanding about the requirements of the customers is the key of
building and maintaining healthy relationship with the customers. As the customers are
becoming highly fashion oriented, it is suggested for Burberry to put special focus on