Retail Theory and Practice: Analysis of M&S Clothing Retail

This report provides a comprehensive analysis of the clothing retail sector, with a specific focus on Marks & Spencer (M&S). It begins with an introduction outlining the research methodology, relying on secondary sources such as books, journals, and articles to analyze trends and developments. Th...Read More

Retail theory and practice

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Summative assessment.....................................................................................................................1
Clothing retail sector .............................................................................................................1
Ways through which M&S will respond to the issues facing in clothing sector in general and
retailer. ...................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
For conducting a research related to course work there are different sources of data have
been used by researcher. In present assessment, significant and bulk research has conducted by
utilizing various secondary sources of research that involves various books, journals and articles
which have been analysed for getting an appropriate information (Stewart and Shamdasani,
2014). Primary research have been conducted to analysed the trends and development in retail
sector and activities performed by clothing retail organisation Marks and Spencer to respond the
issues facing the sector in general and the retailer. Retail sector is analysed as one of the fastest
growing sector in UK which deals various of consumers goods and services Marks and Spencer
is analysed as global organisation which has its business operations at international level. They
are responsible to serve almost thousands of people in different countries and regulate their
business with an aim to satisfy the requirements of customers.
Summative assessment
Clothing retail sector
At present, There are wide variety of retailers can be seen in UK which are having a
range of corporate and organisation objectives. In general terms, Retail sector of country has
been divided and segmented on the basis of various product type that involves food retail,
clothing, and other retail business segments (Yu, Ramanathan and Nath, 2014). These business
segments have achieved a major growth due to continuous changes in market trends and
development of people in country. Clothing retail segment involves a wide range of business
organisation for whom the objective generation of a surplus rather than a profit. Moreover, the
surplus will them be earned and used to accommodate the objectives of these global business
enterprises. Recent development have been considered for clothing retail organisation such M&S
which has provided new and attractive apparels as requirements of customers (Piercy, N.F.,
2016). Sales trends in clothing retail sector in UK is worth an estimated up to £265bn annually
which accounts for 8% of the entire countries GDP and this will further estimate to grow at
increasing rate. Despite this, a down turn in the rate of growth, a more positive view would be
that despite the difficult trading conditions of growth in clothing sector has been maintained.
This sector is not suffering the consequences of contraction in sales. For examples; Tesco and
Sainsbury states that no fashion retailers have done well in the recession as result of fall in prices
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and increase in supply of inputs which has led to a boost in profits. M&S clothing retail
departments are getting in annual revenue of 4.1 billion in 2010 but by the 2015, the revenue
have been fallen down to 4 billion as positive write ups in the fashion press failed to translate in
to sales (Wade Clarke, Perry and Denson, 2012). There are various issues have been analysed
behind reduction in sales of enterprise such as increase in recession, continuous changes in
demands of customers, increase in prices of inputs, continuous rise in competitors in market.
Economic development of UK.
External analysis of clothing retail sector has accomplished for analysing the issues faced
by Marks and Spencer in retail business sector. Porter five force model is important tool used for
the analysing the competition of business of Marks and Spencer in retail sector (Goworek and
et.al., 2012). It involves five forces that usually determines the Apparel industry structure and
level of competition in that industry. It is also analysed that stronger forces in the industry are
considered as less profitable. Further, industry having low barriers to enter, having few buyers
but various substitute products and competitors will be considered as very competitive and thus
not so attractive due to its low profitability (Dawson and Lord, 2012). First force of is level of
competition which states that competition in the retail sector is highly fierce. This issues have
been identified with the fact that organisation are making their efforts to diversify in to non core
fields which has created additional competition. In clothing sector, Marks and Spencer is
considered as vulnerable to competition because it sells wide range of apparel with different
brands and varieties of items. Therefore, it faces competition within the cloth retailers such as
Toyshop, Zara, next and John lewis etc. Theory provides an understanding that organisation
needs to pursue one of three generic strategies such low cost, differentiation as well as hybrid.
Moreover, M&S has made a lot of efforts to differentiate itself from this intense
competition by positioning its business as higher and upper quality product brand. Thus, it has
recently started to cut the prices of clothes and apparels and also making efforts to provide all
things to all type of people which provided risks of devaluing the brand in the country and
market where the market specialization has been considered as more significant (Okonkwo
2016). Another force is threat of substitutes, which has provided an understanding high substitute
in market will create high threat for business in market. In present scenario, it is has been
identified that there are no substitutes of marks and Spencer in apparel industry which has
reduced the threat of substitutes for the enterprise in market (Purvis, Gosling and Naim, 2014).
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Moreover, the M&S Apparels have been substitutes by the products from the other major
retailers within UK. Considerably, the most direct rivals and in the apparel market is probably
John Levis and petter Jones that offers high quality apparels which are not considered as
competitors of company (Gardetti and Torres, 2017). In order to sell their products, company has
target middle class customers with average income rate with the age of above 18 years. The other
retail brands like Tesco and Asda have also entered within the cheaper substitutes and they are
also selling the dinner jackets. Thus, with this respect the threat of substitutes is high.
Threats of new market entries is also major force of this model which provide understand
of chances in decrease the market share of enterprise (Rothaermel, 2015). In this, it is identified
that the threat of new entrants for enterprise in retail sector is low because there is a requirement
of enormous capital investments to establish a successful chain of stores. Further, the market of
Apparel industry is mature and new entrant or organisation will require offering something that
seem to be radically new which is considered difficult to do in apparel retailing. Along with this,
all the international retailers have highly established their brand names in market and so are
enjoying the benefits of customers loyalty which has become increasingly significant in the
homogeneous markets (Dobbs, 2012). The highly competitors are also holding their own
markets shares and they will use all the sources to counter the new entrants. Moreover, it is also
identified that the absence of market experience as well as knowledge of operating in these
important markets and specially for the international business enterprises will be major barriers
to enter in to new markets. Another important factor of porter's models is bargaining power of
buyers or consumers in clothing or apparel industry. According to McColl and Moore, (2014),
the power of consumers in the retail sector within is increasing continuously with a rise in
number of competitors in market. It is a well know fact that consumers will purchase the
products from those organisations in which they will found high quality and variety of clothes at
nominal prices. Management of M&S has provided an information in their report that
concentration buyers in retailer sector is high and due to which they should provide information
about their taste and preferences (Uçmak and Arslan, 2012). In clothing sector of UK, plenty of
alternatives are available for the buyers in the market which has provided them flexibility to
purchase products from different retailers. It is also analysed that consumers will develop their
loyalty towards the organisation which will always provide new and attractive products along
with the effective quality. In present scenario, UK economy has likely to slow down in 2016 and
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forcing the retail business enterprise to reduce the prices and concentrate more on the
requirements of customers. Thus, it can be said that as income of people in country become
more uncertain, then they will also provide their more concentration on shopping. Last force of
porter provides understanding about the power of suppliers in the clothing sector within UK.
Suppliers in this sector are considered as individuals or organisation which provides
inputs to Marks and Spencer at competitive prices (Brenes, Montoya and Ciravegna, 2014).
These are strengths of every business enterprise that which has supported the enterprise in
formulation of business products and services that enable to achieve market share. In present
analysis, the power of company's suppliers to demand high prices for their inputs is considered
as low because Marks and Spencer is the huge listed competitor which has a massive turnover
and suppliers in clothing sector also have need to sell their products company in order to increase
sales as well as promotion products in market (Teeratansirikool, and et.al., 2013). With a
continuous rise in competition in clothing industry, Marks and Spencer has also changed their
focus towards development effective relationship with their suppliers and also considered as
them as stakeholder which are essential part of business. Further more, it is identified that
business of M&S is not dependent on the suppliers as compared to other retail stores because it
mainly sells branded apparel products. It clearly states that it company largely purchase the raw
materials and not the finished products which is considered as favourable and provide high
margin (Kumar, 2016). Thus, it can be said that apparel industry is having high barriers to enter,
having large number of buyers but various substitute products and competitors will be
considered as very competitive and thus not so attractive due to its low profitability. However,
M&S needs to apply some effective business strategies for reducing the impact of intense
competition.
Ways through which M&S will respond to the issues facing in clothing sector in general and
retailer.
In retail business, M&S has tried everything with their clothing business but in increasing
in competition has caused a drop of around 5.8 billion in the sale which is considered as 14 th
consecutive quarter of decline. Another issue is down turn in growth rate which states that sales
within clothing retail sector within UK is facing the lowest growth rate since the 2015 at just
2.3% higher than as compared to previous year (Wood and Farell, 2016). Further, one of the
major consolidation in this sector is also identified as the emergence of modern form of the super
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markets. At present, it has become a major part of retail sector interlinked with the sale of
apparel and other related products. Moreover, increase in technology has also provided major
flexibility for the consumers in the market to make research about various new and attractive
clothes which are suitable for them and available at their prices. Online selling and marketing of
products has also increased the chance for organisation to increase their marketing and sale of
products across the countries but also influenced the sale of international brands like M&S. By
providing wide range of choices and reducing the time to purchase the products, technology has
increased the level of competition between retailers and for increasing the sale of products,
company are forced to cut the prices of products in order to sustain in competitive market.
Moreover, at present retail sector of UK has provided employment to high proportion of total
number of people in investments, it is also estimated that currently they have employed 3 million
people within retail sector. After identification and analysis of all business issues, M&S has also
tries to use some ways through which they overcome these and issues along with their impact on
sales of apparels. Market segmentation is an important tool for the enterprise to increase their
customer loyalty and increasing sales of products (Okonkwo, 2016). It clearly states that
company can increase their sale of products by changing its market segments. Previously the
company was focusing behavioural segmentation in which they have provided more focus in the
buying behaviour of customers and provided products only for those customers who posses high
purchasing power but at present company needs to change to geographic segmentation in which
they can target people within different geographical segments of countries in order to analyse
their expectation and requirements apparels. Through this, M&S will be able to increase their
customers base by provding products as per customers requirement. Further, company will also
needs to target people of middle income groups and also provide products which are suitable in
terms in quality and prices. Along with this, company also needs to apply porter's generci
strategies which states that organization can retrive its position in its industry by sustaining a
competitive advantage over rivals (Purvis, Gosling and Naim, 2014). There are basically two
types of competitive advantage that a firm can posses such as low cost or differentition. Genaric
strategies of porter have been determine in four quadrants such as cost leadership, cost focus,
differentition and differentition focus. In presenrt scenario,M&S needs to apply differentition
strategies in which the firm seek to be unique in its industry along with some important
dimenions which are highly valued by years. In this, company will selects one or more attibutes
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that larger number of buyers in clothing industry perceived as significant as well as uniquely
positioned it self to meet those requirements, it will be then rewarded for its comittment and
uniqueness with the premium price (Dawson and Lord, 2012). It clearly states that company will
differentite its products and service in terms of prices , quality, innovation and attraction which
are considered as major attribute of attracting people. Further, in order to reduce the impact of
technology on the sale of products and service in clothing sector, M&S can also developed its
own online hopping websites and provide wide range of apparel to customers at competitive
prices. This strategy will provide support in increasing customers and sales of apparels among
the people in overseas nations across globe. It will assist the enterprise to match with the
continuous trends and development and also provide them support in achievement of competitive
advantage over rivals in retail industry.
CONCLUSION
Present report has provided an understanding that their intense competition is faced by
the retailers in clothing sector due to continuous rise in technology and economic development.
Marks and Spencer is identified as major reatil business enterprise which deals in reatil of
varities of products such as food, grocerry and retail products. They have achieved a high
markets share in clothing sector due to their effective marketing strategies and uniques products.
Further, with increasing competition and other issue company has faced a sudden down turn in
sales. Thus, there are various important ways have been provided to organisation through which
they will be able to sustain their competitive position.
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REFERENCES
Books and Journals
Brenes, E.R., Montoya, D. and Ciravegna, L., 2014. Differentiation strategies in emerging
markets: The case of Latin American agribusinesses. Journal of Business Research.
67(5). pp.847-855.
Dobbs, M.E., 2012, January. Porter's five forces in practice: Templates for firm and case
analysis. In Competition Forum (Vol. 10, No. 1, p. 22). American Society for
Competitiveness.
Gardetti, M.A. and Torres, A.L. eds., 2017. Sustainability in fashion and textiles: values, design,
production and consumption. Routledge.
Goworek and et.al., 2012. The sustainable clothing market: an evaluation of potential strategies
for UK retailers. International Journal of Retail & Distribution Management. 40(12).
pp.935-955.
McColl, J. and Moore, C., 2014. Developing and testing a value chain for fashion retailers:
activities for competitive success. The Journal of The Textile Institute. 105(2). pp.136-
149.
Okonkwo, U., 2016Purvis, L., Gosling, J. and Naim, M.M., 2014Dawson, J. and Lord, D. eds.,
2012. Luxury fashion branding: trends, tactics, techniques. Springer.
Okonkwo, U., 2016Purvis, L., Gosling, J. and Naim, M.M., 2014Dawson, J. and Lord, D. eds.,
2012. The development of a lean, agile and leagile supply network taxonomy based on
differing types of flexibility. International Journal of Production Economics. 151.
pp.100-111.
Okonkwo, U., 2016Purvis, L., Gosling, J. and Naim, M.M., 2014Dawson, J. and Lord, D. eds.,
2012Okonkwo, U., 2016Purvis, L., Gosling, J. and Naim, M.M., 2014Dawson, J. and
Lord, D. eds., 2012. Shopping Centre Development (RLE Retailing and Distribution).
Routledge.
Piercy, N.F., 2016. Market-led strategic change: Transforming the process of going to market.
Taylor & Francis.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Stewart, D.W. and Shamdasani, P.N., 2014. Focus groups: Theory and practice (Vol. 20). Sage
publications.
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Teeratansirikool, L. and et.al., 2013. Competitive strategies and firm performance: the mediating
role of performance measurement. International Journal of Productivity and
Performance Management. 62(2). pp.168-184.
Uçmak, F. and Arslan, C., 2012. The Impact of Competition Conditions on New Market
Entrants in Istanbul Hotel Industry: An Analyse by Using Five Forces of Competitive
Position Model of M. Porter. Procedia-Social and Behavioral Sciences. 58. pp.1037-
1046.
Wade Clarke, D., Perry, P. and Denson, H., 2012. The sensory retail environment of small
fashion boutiques. Journal of Fashion Marketing and Management: An International
Journal. 16(4). pp.492-510.
Yu, W., Ramanathan, R. and Nath, P., 2014. The impacts of marketing and operations
capabilities on financial performance in the UK retail sector: A resource-based
perspective. Industrial Marketing Management. 43(1). pp.25-31.
Online
Kumar, R., 2016. “6 Technology Trends That Will Impact Fashion Industry”.[Online].
Available through:<https://www.entrepreneur.com/article/273353>
Wood, Z. and Farell, S., 2016. “Marks & Spencer suffers biggest clothing sales fall in 10
years” [Online]. Available
through:<https://www.theguardian.com/business/2016/jul/07/marks-spencer-suffers-big-
fall-in-clothing-sales>
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