Estimating the Growth Challenges of Small Businesses in Retail

This report investigates the growth challenges faced by Small and Medium Enterprises (SMEs) when expanding their businesses within the retail sector, with a specific focus on River Island. The study begins with an overview of the importance of SMEs in economic growth and highlights the challenges they encounter during expansion, including financial, managerial, and legal hurdles. The report includes a literature review that explores the significance of business expansion by SMEs in the retail sector, the specific growth challenges faced by River Island, and the impact of competition and innovation. The research methodology involves both primary and secondary data collection methods, including surveys and literature reviews. The analysis employs a thematic approach to examine the collected data. The findings discuss challenges such as competition, technology, and the need for effective strategies. The report concludes with recommendations for overcoming these challenges and fostering successful business expansion in the retail sector.

Estimating the Growth Challenges of Small

ACKNOWLEDGEMENT
For the accomplishment of the present dissertation I would like to sincerely express by
earnest gratitude to my mentor who has provided me sufficient knowledge and greater support.
Further I would also like to thank my friends, colleagues and family members who have guided me
at every stage while conducting this dissertation. Through their support, I was able to complete my
thesis with effectiveness and in an accurate manner. Lastly in the series, I would also like to state
special thanks to my team members who have provided me huge assistance in collecting relevant
set of data and further analysing .

Table of Contents
CHAPTER 1 - INTRODUCTION...................................................................................................5
1.1 Overview..........................................................................................................................5
1.2 Research problem.............................................................................................................5
1.3 Chapter structure..............................................................................................................6
1.4 Focus and Purpose............................................................................................................6
1.5 Aim and objectives...........................................................................................................7
1.6. Research questions..........................................................................................................7
1.7 Framework and analysis...................................................................................................7
1.8 Potential significance........................................................................................................8
CHAPTER 2: LITERATURE REVIEW.........................................................................................9
2.1 Introduction......................................................................................................................9
2.2 Importance of expanding business by SME in retail sector.............................................9
2.3 Growth challenges faced by River Island in the retail sector.........................................10
2.4 Impact of competition and innovation on the growth of retail sector............................12
Alternative finance proposal and support, advice and resources is the factor to consider for
growth of the firm.................................................................................................................16
Conclusion.....................................................................................................................................17
CHAPTER -3 RESEARCH METHODOLOGY...........................................................................18
3.1 Introduction....................................................................................................................18
3.2 Research philosophy.......................................................................................................18
3.3 Research approach..........................................................................................................18
3.4 Types of research............................................................................................................19
3.5 Research design..............................................................................................................19
3.5 Data collection methods.................................................................................................20
3.6 Sampling.........................................................................................................................21
3.7 Data analysis...................................................................................................................21
3.8 Validity and reliability....................................................................................................21
3.9 Research ethics...............................................................................................................22
3.10 Research limitations.....................................................................................................23
Conclusion............................................................................................................................23
CHAPTER 4: DATA ANALYSIS................................................................................................24
4.1 Introduction....................................................................................................................24

4.2 Thematic analysis...........................................................................................................24
CHAPTER 5: DISCUSSION OF FINDINGS...............................................................................39
5.1 Introduction....................................................................................................................39
5.2 Discussion of findings in relation to literature...............................................................39
5.3 Conclusion......................................................................................................................41
CHAPTER 6: CONCLUSION & RECOMMENDATION...........................................................43
6.1 Conclusion......................................................................................................................43
6.2 Recommendation............................................................................................................45
REFERENCES..............................................................................................................................49
Appendix..........................................................................................................................................4
Questionnaire...................................................................................................................................4

Abstract
Aim: To investigate the growth challenges faced by SME while expanding business in a retail
sector
Methodology: The current dissertation is based on investigating the growth challenges faced by
SMEs while expanding business in retail sector and therefore, both primary as well as secondary
methods will be considered by the scholar. In primary method, information will be gathered from
survey. However, secondary information will be collected through books, journals and articles. A
thorough study of literature work will be done through different author’s books, journals and
internet which will form the base for secondary research.
Findings: From the basis of above research, it has been concluded that SME companies has
facing many up and downs in retail sector as per the research findings. The big challenges facing by
the small business growth in competitive market. Present research was based on River Island which
is the London headquartered high street fashion brand having number of worldwide markets. The
objective of the study were determined the current challenges in retail sector which is faced by
small business scale organisations

TOPIC
Estimating the growth challenges of Small and Medium Enterprise Businesses
CHAPTER 1 - INTRODUCTION
1.1 Overview
SMEs is known as the engine of economy, they play significant role for growth and
development of nations. Growth is known as one of the inevitable phases of a business lifecycle
(Storey, 2016). It started with start-up stage and followed by development and growth. In retail
sector, there are a large number of companies that are operating business in the UK retail sector.
Therefore, small medium companies are facing issues at the time of expanding business. They are
looking for the growth perspective of its intrinsic challenges and strategies for handling it in an
effective manner. However, business environment leads to play an effective role in the growth of
SMEs. Measures are taken most of the time in respect to minimise the administrative burdens
(Curran and Storey, 2016). Through introducing tax calculation, government can easily promote the
growth and make sure that company gets access for finance.
The present study is based on investigating the growth challenges faced by SME while
expanding business in a retail sector. The study will help in developing in-depth understanding
related to selected topic and way to overcome issues. Business expansion leads to present the issues
which have to be addressed because growth leads to cause variety of changes due to finance,
managerial and legal challenges. Growth means company’s management can become less
centralised and it may increase the level of internal politics. For River Island, growth means
expanding shares, dealing with competitors, implementing new strategies, etc. Along with this,
additional capital is needed for the growth of business. River Island is operating business in the
retail sector which is now required to focus on its growth and expansion to accomplish success. It is
important for company to understand the issues which they can face while expansion and overcome
them.
1.2 Research problem
Growing business leads to face a lot of challenges. When the business grows, various
problems and opportunities demand various solutions. It is important to recognise and overcome
common drawback related to the growth for success of business. For small medium organisation, it
is not easy to make good position in the market without effective employees, advanced technologies
and current strategies. There are different types of challenges which company need to face such as
competitors, technology, etc. It is important to overcome them through adopting appropriate
strategies which can help in growth and expansion. Present research will help in understanding all
challenges faced by River Island Company at the time of expanding a business. There are various

solutions which will be provided in respect to make improvement in company so that it can work in
an effective manner. All successful small businesses at the time of start-up face various issues
related to handing business expansion and growth. It is considered as the stage of firm life which is
trouble with both threats and opportunities.
1.3 Chapter structure
At the time of considering an investigation subject, examiner is obligatory to take after a
progressive case by adhering an especially described and reasonable structure. This structure can be
displayed by following a section that can be held as an appropriate construction for the present
research. Here below is the provided structure of study:
Chapter 1: Introduction – Section 1 is one of the important chapters that will provide a clear
framework for the selected subject matter. This section will cover aim and objectives, research
problem along with potential significance of conducting the research.
Chapter 2: Literature Review – It is the second chapter in research that provides detailed outline of
importance of expanding business by SME in retail sector. Growth challenges faced by River
Island in the retail sector’ will be identified. This segment will lay focus on covering the
objectives of investigation. It will be done through undertaking an assessment of the various
research studies. All the published works and articles will be incorporated in this chapter.
Chapter 3: Research Methodology – In third section, the researcher will be provided with detailed
description of the tools and methods which are selected for the present research. Along with
this, validation of the selected technique will be provided. At the last of this chapter, ethical
considerations and limitations faced by scholar will be discussed.
Chapter 4: Data Analysis and Findings- It is the chapter in which information gathered from
different sources will be analyzed.
Chapter 5: Disucssion and findings: In this chapter all the findings will be discusses in related to
the literature reviews which help in concluding valid outcome in next chapter.
Chapter 6: Conclusion and Recommendations – In the last chapter, investigator will present the
findings derived from the analyzing information. Further, recommendations will be given for
the improvement.
1.4 Focus and Purpose
The investigation is conducted with main reason of investigating growth challenges faced by
SME while expanding business with respect to River Island. The reason for conducting
investigation is to identify gap left by previous scholar on selected subject matter. There are many
researches carried out on the growth challenges faced by company and its impact on firm
expansion. For the organisation, it is important to identify challenges and overcome them to expand

business successfully. It is important for retail companies who are operating their business at a
small scale. There are various growth opportunities available which firm should understand and
grab them. It is one of the ways to be successful in retail sector. Due to increase in competition, it
becomes tough for companies to carry out their business at high level and give them tough
competition. Companies should know about the latest trends and try to follow them which helps in
making position and expanding business in market. In this context, the purpose of current research
is to gain understanding related to different aspects of growth challenges and way to overcome
them.
1.5 Aim and objectives
Aim
To investigate the growth challenges faced by SME while expanding business in a retail
sector - A study of River Island
Research Objectives
 To understand the importance of expanding business by SME in retail sector
 To identify the growth challenges faced by River Island in retail sector
 To evaluate the impact of competition on growth of River Island
 To determine the strategies to overcome growth challenges faced by River Island
1.6. Research questions
Q1. What is the importance of expanding business in retail sector?
Q2. What are the growth challenges faced by River Island in the retail sector?
Q3. What is the impact of competition and innovation on the growth of River Island?
Q4. What are the strategies to overcome the growth challenges faced by River Island?
1.7 Framework and analysis
Framework and analysis are considered as one of the important tools while gathering
information from different sources. All these help in providing valid conclusion for the selected
topic. Here below are provided some steps: Design of research – To conduct research in an effective manner, explanatory research
design will be considered by the scholar. It will help in gaining rich and meaningful
information on the subject matter. Research approach – Researcher will make use of inductive approach for the present
research. With the support of this, investigator can easily move from specific information to
general. Present research is on investigating the growth challenges faced by SME while

expanding business in a retail sector. This will lead to determining the growth challenges
faced by SME. Research philosophy- For the current investigation, scholar will select interpretivism
philosophy. Techniques of research – Qualitative method will be applied by the scholar for current
research. Method for data collection – The current dissertation is based on investigating the growth
challenges faced by SMEs while expanding business in retail sector and therefore, both
primary as well as secondary methods will be considered by the scholar. In primary method,
information will be gathered from survey. However, secondary information will be collected
through books, journals and articles. A thorough study of literature work will be done
through different author’s books, journals and internet which will form the base for
secondary research. Sampling technique – For the present research, sample selection will be of probabilistic
nature. In this, research will use random sampling method for evaluating the data.
Questionnaire will be prepared to gain the views of managers of Island River regarding
growth challenges faced by them while conducting study.
 Analysis of data – Qualitative method will be considered for evaluating the collected
information. Data analysis will be carried out through use of thematic technique to
investigate the growth challenges faced by SME while expanding business in retail sector.
1.8 Potential significance
Present research will be effective enough to develop an understanding related to the growth
challenges faced by SMEs while expanding business in retail sector. It will assist in understanding
growth challenges and the way they can be overcome. The present investigation will provide
potential significance for the following areas.
 Retail companies will be provided help from this research, as they will be able to developed
effective strategies to overcome the growth challenges.
 The research will be effective enough for academicians who are preparing for Ph.D. in
respect to develop understanding related to the growth challenges faced by SME while
expanding business in retail sector.
 Further, it will be helpful for both men and women who belong to the same field of literature
as it will help in moving towards the direction of effective approaches to literature.

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
Literature review is known as one of the important chapters in the dissertation which aids in
creating a strong theoretical base for the researcher to carry out entire course of study on selected
topic. In this section, the scholar aims to present the thoughts and views of various authors on
provided topic. Herein, considering nature of the topic, secondary research will be effective enough
in respect to gain desired level of information and data which can be effective for illustrating the
growth challenges faced by SME while expanding business in a retail sector. In accordance to
determine growth challenges which SME are facing at present. Along with this different measures
for improvement will be explained in detailed. Hence, reason for presenting the literature review
chapter is to identify growth challenges faced by SME.
2.2 Importance of expanding business by SME in retail sector
According to the views of McCann and Ortega-Argilés, (2016) SME is known as the
companies that are operating their business at small scale. In this, employees numbers who are
working within the firm are fall below certain limits. Along with this, small or medium-sized
enterprise has annual turnover which is lower and do not exceed 50% million. They operate their
business within the country or state through selling products and services. According to the views of
Storey, (2016), growth is considered as an important factor for SME as it assists in remaining
successful in business world. Along with this, it helps company to survive in the market and
increase profit. After, identifying opportunities it is analysed that for business growth become
priority for long term success. There are different ways through which company can easily measure
their growth such as turnover, profit, sales, market share and staff numbers. In order to make
decision in which measurement is most relevant for business it lead to depend on the type of
business and business life cycle. For instance: if retail business has high sales volumes, but narrow
margin on stock. It means that if company earns low profit then it can weaken the viability of
business.
Growth means that company’s management can become less centralised and it may increase
the level of internal politics. For any company who are operating their business at same level need
to focus on growth and expansion otherwise they cannot survive in market and soon their company
wind up. Curran and Storey, (2016) state that business growth is essential for survival of the
business for longer period of time. If company does not survive then they cannot expand their
business. There is continuous change in the business environment and so, company needs to adapt
changes and grab the opportunities for surviving. Further, growth of business helps in wining
confidence of the society. Further, it helps in creating high goodwill and reputation within the

market. If company has a good image in the market then it can easily grab attention of investors,
employees and customers. Hillary, (2017), argued that company offers different incentives for the
business to grow. They provide subsidies, exemption, tax holidays, financial assistant and other
benefits. Competition is also one of the main reasons due to which company should focus on
expanding business. Business growth helps competition in an effective manner not only at national
level but also at international. There are various brands in the market and therefore, for growth,
company needs to undertake expansion and diversification to face stiff competition in an efficient
manner (Lee, Sameen and Cowling, 2015).
According to the view of Kerzner and Kerzner, (2017) if company expands its business then
it can easily make good position in the competitive market and gain success for longer period of
time. In retail sector, there are large number of companies that are operating business at small and
large level. It is not easy for new companies to survive until they do not have some unique concepts.
Before expanding business, proper market research needs to be conducted and understood business
environment in which they want to expand (Matamanda, and Chidoko 2017). There are various
options of business growth as company can use different ways to expand their business through
investing. For instance: overseas development, there are many firm who choose to expand business
internationally which can be done through setting a location permanently in another country. Either
they can easily trade with other countries. Furthermore, online marketplace is another option which
can be considered by retail firm in respect to growth and expansion of business. Sekaran and
Bougie, (2016) stated that growth has different implications, therefore, it can be defined in terms of
revenue generation, value addition and expansion in terms of volume of the business. Growth can
be measured by company in the form of qualitative features such as goodwill, quality of product,
etc. Business growth can be considered as an important indictor of flourishing enterprise. Different
factors which can affect the growth of firm can be finance, manpower, etc.
2.3 Growth challenges faced by River Island in the retail sector
Growing business stand up to an extent of troubles. As a business creates, unmistakable
issues and wgile starting it ask for various courses of action - that worked multi year back. Seeing
and overcoming the typical drawbacks related with improvement is essential if a business is to
continue to thrive in competitive market. Altogether, a company needs to ensure that the methods
which are considered today don't themselves make additional issues in the future. Convincing
activity will empower a business to exploit the openings and influence moderate improvement for
things to come. According to Eniola, Entebang and Sakariyau, (2015) while sustaining in the
competitive environment, small and medium sized enterprises faced ample of challenges. These
challenges include lack of customer attractions, productivity issues, low market share, supply chain

management issues, etc. The challenges and issues faced by the small and medium sized enterprises
affect the working and organisational functions greatly.
Chimucheka and Mandipaka, (2015), elucidated that every organisation whether small or
large face one or many challenges in the present dynamic economy. The growth challenges refer to
the tests and obstructions that restrict organisational growth and development. Traditionally, these
challenges directly affect the profitability of business. Growth challenges disturb the organisational
functions and force management to devise precise strategies and plans which help them in
sustaining in the competitive environment. Paul, Parthasarathy and Gupta, (2017) said that small
and medium sized businesses are thriving in the market economy due to robust governmental
interventions and investment. Due to increase in these businesses, level of competition got
intensified which affects the overall growth and development of SMEs.
Loader, (2015), said that for small business with hrigingh five to ten employees, to generate profits
is considered to be the biggest challenge. There are numerous reasons but usually comes down to an
inability to remain a low cost leader against the competition. Growing revenues is another challenge
that affects the organisation. The issue can’t be explained in an explicit manner by single root cause
as revenue challenges are generally specific to the business itself. Gaining competitive advantage is
another issue and challenge that affects the growth and development of small and medium sized
businesses. In order to sustain in the competitive environment, it is essential for the management of
SMEs to devise specific plans and strategies. This is crucial and many managers fail to formulate
one and thus, it affects the growth and development of organisation (Love and Roper, 2015).
Bilal, and Al Mqbali, (2015), said that avoiding client dependence is another issue that
affects the management of small and medium sized enterprises. With business employing less than
10 employees, client dependence is considered to be the main issue. There are different ways
through which company can easily measure their growth such as turnover, profit, sales, market
share and staff numbers. In order to make effective decision in which measurement is most relevant
for business it depend on the type of business and business life cycle
There are some possible challenges which can affect the growing business like:
Keeping up with the market
Market research is considered as an important factor at the time of growth and expansion of
the business. Business condition continuously changes and therefore, market research should be
continuous as well (Quartey, Turkson,, Abor and Iddrisu, 2017). If company carries out its business
before conducting market research then it means that the firm is working in a high-risk
environment. Some loyal customers can easily find out alternative suppliers who provide them a
better deal. A company can identify its sales growth, products and profit margins. One of the
growth challenges which can be faced by company and it provide tough competition to other