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Various Practices & Theories related to Retail Business

9945Downloads1 I Published: 12 Nov ,2019


Retail refers to the process of making sale of goods and services of day to day use to consumers by way of various channels of distribution with the aim of earning increased revenues and profits. In modern world, retail companies meet the needs and requirements of people by way of a supply chain. The present report is based upon Next Plc which is a multinational corporation dealing in a wide range of footwear, clothing, accessories and home products. This enterprise is headquartered in Enderby, Leicestershire, UK. This report will take a look into the changes taking place within fashion retail industry and the retail environment. Also, it takes into account the problems faced by company along with the strategies used to bring changes withinn the enterprise (Berry, Broadbent and Otley, 2016).

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Section 1

Introduction to retail and fashion retail

The term 'retailer' is specifically used only when a service provider provide for the small orders of a big quantum of individuals who are ascertained to be end users instead of providing for large scale orders of a small quantum of corporate, wholesale or government clients. Modern retail entities take a number of strategic decisions inclusive of determination of market, type of store, effective product assortment, customer services, market positioning of retail store, support services and after sale assistance. Retail stores occur in a wide variety of types and contexts such as strip shopping complexes, large store, indoor shopping malls etc.

Fashion retail is a segment of retail market which deals in ascertaining the latest trends and lifestyle needs of people and then rendering products that strive to fulfil those demands and ensure maximum satisfaction being derived from them. Fashion retailers describe their strategies beginning from their value proposition, key positioning factors such as experience, speed, assortment, channels so as to differentiate themselves from other rival companies. The segmentation of fashion brands

1.1 Describe your clothing retail store

NEXT PLC is a British fashion retail company which has its primary operations within UK and has continuously being trading since a long time. This organisation captivates the attention of people by provision of its high-quality and lucrative offerings associated with home-ware, accessories, clothing, footwear to people (Bloom and et. al., 2012).

Features of company: The best features of this company is the commitment and loyalty of its human resources towards making it the topmost brand within retail market.

Location:This organisation has branches spread across geographies such as Europe, Middle East and Asia (Dholakia, Dholakia and Chattopadhyay, 2012).

Business format (Store Based): Next Plc is operating in an effective manner within UK and mainly has three channels, namely, Next Retail (chain of over 550 retail branches), Next Directory (home shopping catalogue and website) and Next International (chain of over 180 international outlets).

Business format (Non-store based): Next Plc takes orders via mail and also deals in online shopping wherein company has introduced initiatives like next day home delivery (with fee of minimum £3.99) for orders placed before midnight. Customers have access to collection and return of items at any nationwide store. Further, new in-house delivery service has been developed so as to deliver large home products easily with the capability to deliver on weekends.

Classification by size: On the basis of size, retail stores can either be high street or departmental. Next is a departmental store having 700 outlets spread across the world of which 500 are found to be in United Kingdom. gross profit margin, stock turnover

Classification by margin- The profit margin of the company is 34.19% and the stock turnover of it is $1,694.

1.2 The changes in the fashion clothing market

Background of retail marketing- Retail marketing is a process by which the retailers promote awareness and interest of their goods and services in an efforts to generate sales from their consumers. It is vital commercial activity which provide an opportunity to purchase goods an services from the different merchants. Now these days, it is a complex and diverse field which involves all types of selling of products.

Traditional distribution channel-Distribution channel is a chain by using it, goods and services are passes or reaches to the customers. It include retailers, wholesalers, distributors and others.

1950’s Manufacturer is king- In 1950, the manufacturer of the products and services are the king. The needs and demands of customers are not much high so as the manufacturer produce, the customer purchase that (Dos Santos, Svensson and Padin, 2013).

1960’s Consumer is king- In it, the customers taste & preferences also include, the companies produce products and services according to the customers needs and demands. So the customers are the king.

1970’s trade is king- In this era, the trade is also include, the firm manufacture products according to the trade and fashion. So the trade is king and the business of the companies will run according to the trade (Fuentes and Hagberg, 2013).

1980’s marketing emphasis- In it, the organisations start to include marketing emphasis. They produce products and goods for the purpose of earn profit and enhance productivity or sales of the company.

2000’s relation/ethical /societal influences on retailing- This is the modern era and the firms start to manufacture products and services according to the customers demands, life styles and also forb the purpose of gain profit.

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New distribution channels-In 2008-10 organisations start to use various channels and modes for the distribution of the products and goods such as direct selling, selling through intermediaries, dual distribution and supply chain or by using internet and websites. For example, E-commerce is a distribution channels that can be used by Next to distribute its products worldwide. But there are various problems that can be faced by the company. When a firm use this channel it is compulsory to follow international trade laws and laws of that nation where it distribute its product. Another problem for e-commerce is maintaining real time stock figures for online clients. If the management department show something in stock, and it is not than that can cost at least one online client and possibly more.

1.3 Changes in the retail environment

PESTEL Analysis

It is an essential tool to monitor and analyse the macro factors i.e. external environment factors that affect an organisation overall performance and productivity. This factor is unpredictable and dynamic in nature. By this tool company can identify their threat and opportunity which enable them to take corrective course of action in order to accomplish organisational goal in n effective and efficient manner. In current scenario, fashion industry is one of the booming sector in retail world (Glover and et. al., 2014). In context of this, Next a British multinational company segmented in clothing, footwear and home product which is commenced in the year of 1864. Its headquartered in England, UK. To identify and evaluate the external factor which impact on Next overall performance, it imply PESTLE analysis which is described below:

Political Factor:These factors are concerned with two elements i.e. how and to what extent government intervene in economy or company. It includes tax policy, interest rate, labour law etc. Recently Next company has faced political decision from its government i.e. impose of new tax rate which impact the company performance as well as customer demand. However UK government is stable in nature which enable Next to take corrective action which help them to capture the market and improves their productivity (Hagberg and Kjellberg, 2015).

Economic Factor: This factor deal with the economic performance i.e. economic growth, inflation rate, exchange rates etc which had great impact on both company and country economy. Currently UK government has undergoes through financial crisis which increases unemployment rate. By this Next overall productivity got affected as it affect its revenue and purchase behaviour of customer i.e. few customer who are employed able to buy the product. As a result such economic pattern help Next to improve its productivity with few customer even if total number of customer falls.

Social Factor: This factor is concerned with social and culture changes. At present UK has many social and cultural changes which affect Next performance i.e. mode of delivering product. However, Next took this challenge as a opportunity and introduce online shopping and home delivery facility. By this customer's demand rises and increases the company's efficiency.

Technological Factor: Under this factor it deals with adapting latest and innovative technology in order to attain higher level of output. Technology became one of the biggest opportunity for Next to grow as it developed the apps for customer's convenience in tracking the information regarding product before they make a physical visit to shop. This generate better relationship and enhanced communication between customer and company. However, it enabled Next to enlarge its growth and profitability.

Environmental Factor:This factor deals with preventing the environment by adapting eco friendly product. This factor impacted greatly on Next profitability as consumer were very much concerned about healthy environment. Thus, the company adapted new ways in order to improve efficiency i.e. minimised wastage of product which enrich Next profitability and add value to company (Hamister, 2012).

Legal Factor: This factor include government policies, regulation etc. for the benefit of country economy as well as company's expansion. Recently Next got modification on minimum standard related to wages which is imposed by government. However, company managed very ethically and provided fair increment in employees salary which enhance their morale and leads to higher level of profitability.

From the above statement, with the help of PESTLE tool Next got several opportunities which enable them to capture the market effectively and efficiently (Hristov and Reynolds, 2015).

Porter's Five Force Analysis

It is a tool that is used by used by organisation to analyse the competition of the business in the market. In Next Plc, the management department of the company can use this analysis to understand the competitiveness of the business environment. This model identifies five competitive forces that help the company to monitor the weakness and strengths of a firm.

Threats of new entrants-This force determines about to enter in the new market with the in innovative products and services. In Next, by innovation new products and services, the production department of a company can reduce or remove this risk. There are various rules and regulation s of the government to enter in this sector so no small business of enterprises enter. That's why there are no high risk of new entrants.

Bargaining power of suppliers- in retail industry, there are number of organisations and they purchase raw material from number of suppliers. In Next Plc, there are numerous suppliers of the company and they do not pull the firm to increase the rates. So the bargaining power of suppliers are low. The organisation manage it, by building efficient supply chain with multiple suppliers.

Bargaining power of buyers- It is a force that highly affect the business of each company. In Next, the company have a strong potential customer base which will helpful in two ways such as it reduce the bargaining power and increase the productivi9ty of the company. This firm produce quality product at reasonable price so there are low bargaining power of buyers.

Threats of substitute products and services- This force refers to a new product that meet a similar customer needs in different aspects (Nguyen, 2013). In Next Plc, there are high threat of substitute products because there are number of retail store store and brand such as Zara, Lewis and others or they produces various substitute products of Next. This create high level of competition for the bushiness of the company.

Rivalry among the existing competitors-This force refers to the competitors which create competition for other organisations by producing similar products and services. In Next, there are numerous competitor of this company such as Prada, Gucci and others and they create competition by developing similar products according to this firm or at low price so customers can easily switch to them. So there are high level of rivalry among the existing competitors (Spaargaren, Oosterveer and Loeber, 2013).

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1.4 Identify in detail the problems that your organisation is facing in the UK fashion clothing market

SWOT Analysis

It is a strategic tool that is used by the organisations to analyse the strengths, weaknesses, opportunities and threats of the company. The SWOT analysis of Next Plc is as following:



·This company produce or manufacture creative and unique designs that attract consumers and help the organisation to increase the profit and productivity.

·Next Plc, use effective online sales channels such for promotion or online purchase and delivery such as internet, website etc.

·There are lack of focus on positioning for example, the management department of the company does not maintain balance between cost leadership and differentiation.

·There are lack of use new technologies so that the company can fulfil customers needs and demands.



·In UK, the new taxation policy can generate an opportunity for the company to expand its business.

·By making innovation in its existing products the company can get various opportunity to attract more consumers or increase the sales of the organisation.

·There are various competitors in the market such as Zara, Prada, Gucci, Lewis and others or they generate high level of competition for Next plc by manufacturing substitute products (Spaargaren, Oosterveer and Loeber, 2012).

·Change in consumers taste & preferences also a threat for the business of Next.

Competitor Analysis

Next Plc also faces immense competition from big rival brands that are existing within this industry as they emphasize both upon price and quality to attract the attention of customers and retain them for a long duration of time in future prospect. The segmentation of fashion brands that are operating and functioning as a part of global market are illustrated by way of a fashion pyramid where the most expensive brands have gained the top position. In fashion retail market, high price is generally linked with high-quality fabric, excellent customer services, made-to-measure garment and other such optimal attributes which are effective in gaining the attention of customers (Vaara and Whittington, 2012).

Illustration: The Fashion Pyramid

(Source: The Fashion Pyramid, 2019)

Section 2

2.1 Uncertainty in the retail

It refers to the future challenges and problems that can be faced by industry and company. Change in consumers taste & preferences, age, lifestyle, trade and other factors can create the problems and uncertainty for retail and business of any company. For example, in past time, Brexit create uncertainty or issues for this industry and affect the business of Next. Development of various technologies can also generate threats fro the future of a firm (Berry, Broadbent and Otley, 2016).

Wheel of Retailing

It is a theory which is used by the company to explain the institutional change that take place when innovators, including large business house and enter the retail arena. There are four steps within this model, they are as following:

Establishing and penetrating in the market-In this step, this theory pay attention towards the new retailers who enter in the market with low price as low profit margins. The low prices are usually the result off some innovative cost cutting producers.

Expanding in the market-When these retailer gain more experience of the market, they enlarge their customer base with the purpose of increasing sales gaining a higher profit margin to acquiring a significant market share.

Stabilized business model attracting margins- In this step, the company already in an established position and gain or earn profit by using its high pricing strategy.

Entry of another retail competitor- It is the last step of this theory in which the various competitors enter in the market and they create competition for the existing companies.

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2.2 Models used to implement change

Conflict theory

They are the perspectives in sociology and social philosophy that emphasize a materialist interpretation. Conflict theory draw attention to power differentials such as class conflicts and generally dominant ideology. This theory is helpful to understand competitors, revolution, structural inequality and war (Bloom, N. and et. al., 2012). In Next, this theory can be used by the company to analyse the competition in the market and resolve the issues that can be create cause of high competition. Cause of limited resources, there can be high chances to arising the issues and conflict in the business s of a company. So by this theory they can understand them

2.3 Change recommendations for the chosen company

Recommendations for Next Plc are as following:

  • Using various new technologies and distribution channels, the company can increase its sales and attract more customers who help the firm to enhance its productivity.
  • By developing any online shopping application and software, Next Plc can provide online shopping facilities to nits customers because now these days people prefer online shopping cause of lack of time.
  • By using good pricing strategies such as penetration, because the main focus of the customers are on price and quality of the product. So if the company focus on it, they can gain increase the number of their potential customers (Dholakia and Chattopadhyay, 2012).

3. Outline the overall strategy to be adopted

To provide satisfaction to its customers and providing products the company can use various strategies such as for analysing the competition in the market, Next can use market analysis to identify its customers and needs and demands of customers. By using good pricing strategies like premium pricing, they can attract more customers because present time consumer focus on the price and quality of the product. By using all these strategies, they can achieve their organisational objectives (Dos Santos, Svensson and Padin, 2013).


From the above report, it can be conclude that the retail stores are expanding their business at high level and provide or generate employment to the people. In this report briefly;y described about the retire sector and a retail company. Pestle analysis, SWOT analysis and Porter's five force analysis are defined in the report to analyse the comparative market and various kind of changes that are occur cause of various factors. Various strategies and tactics that can be adopt by Next Plc are explained. Recommendations are also provide in the report in context of improvement.


Books and Journals

  • Berry, A. J., Broadbent, J. and Otley, D. T. eds., 2016. Management control: theories, issues and practices. Macmillan International Higher Education.
  • Bloom, N. and et. al., 2012. Management practices across firms and countries. Academy of Management Perspectives. 26(1). pp.12-33.
  • Dholakia, N., Dholakia, R. R. and Chattopadhyay, A., 2012. India’s emerging retail systems: coexistence of tradition and modernity. Journal of Macromarketing. 32(3). pp.252-265.
  • Dos Santos, M. A., Svensson, G. and Padin, C., 2013. Indicators of sustainable business practices: Woolworths in South Africa. Supply Chain Management: An International Journal.18(1). pp.104-108.
  • Fuentes, C. and Hagberg, J., 2013. Socio-cultural retailing: what can retail marketing learn from this interdisciplinary field?. International Journal of Quality and Service Sciences. 5(3). pp.290-308.
  • Glover, J. L. and et. al., 2014. An Institutional Theory perspective on sustainable practices across the dairy supply chain. International Journal of Production Economics. 152.pp.102-111.
  • Hagberg, J. and Kjellberg, H., 2015. How much is it? Price representation practices in retail markets. Marketing Theory. 15(2). pp.179-199.
  • Hamister, J. W., 2012. Supply chain management practices in small retailers. International Journal of Retail & Distribution Management. 40(6). pp.427-450.
  • 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.
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