The Future of Retail Sector in UK - Essay Example

 Topics: The Future of Retail Sector in UK Introduction: The present Topic ‘Future of Retail Sector in UK’ provides the insights of observation of a number of key issues like- Retail marketing, Future of the retail sector etc. and a deep view of these concepts will be able to provide a clear idea of the entire factor and to draw a conclusion for further recommendation. What do mean by retailing? Retailing includes all the activities involved in selling products or services directly to the final consumers for their personal, non-business use. Many institutions are retailer but in recent years non-store retailing has been growing faster than the store retailing. That means, non-store retailing includes selling to final consumers through direct mail, catalogs, telephone, internet, TV home shopping shows, home & office parties, door-to-door contact, vending machines & other direct selling approaches.1 Retailing is one of the major economic sectors of UK as retail sales of about 22l billion, about 3 million people are employed here and about 300,000 shops are on operation. At both the business and the store level the scale of polarization is noticed. There are huge retailers & the existence of multinational businesses those are dominating the sector in the country. Retail stores come in all shapes & sizes, & new retail types keep emerging. Thus they can be classified in terms of amount of offered service, the breadth & depth of the product lines, the relative prices that are charged, & the organization module. Future of Retailing Retailers operate in a harsh & fast changing environment which offers threats as well as opportunities, so become successful, retailers will have to choose target segments carefully & position themselves strongly. They will have to follow a number of retailing developments into account as they plan & execute their competitive strategies2, like- New retailing forms & shortening retail life cycles Growth of non-store retailing Retail convergence Rising Mega retailers Importance on retail technology Global expansion of large retailers Retail stores as “Communities” or “Hangouts” etc. In this view, the airlines business of UK is one of the best examples of retail sector. It is more competitive today than ever before, it serves consumers more choice as well as cheaper fares than before. There is no surprising that the number of passengers of UK airports is continuously increasing, from 70 million in 2000, 86 million have been flown in 2004. Analysis of the Entire Factor: Retailer Marketing Decision: Retailers are always searching for new market strategies to attract & hold customers. Service differentiation has also eroded3. So retailers face major market decisions about their target market & positioning, product assortments & services, price, promotion & places as shown in the figure below- Retailer Strategy Target Market Retail Market Positioning Retailers first decide their target markets & then decide how they will position themselves in this market. The product assortment should differentiate the retailer while matching target shoppers expectation. Then the price policy must fit its target market & positioning, service assortment & competition. After, to use one or all-promotional tools – advertising, selling, sales promotion, & direct marketing are required to reach to the customers. Place decision points to three critical factors in retailing success: location, location & location.4 PEST Analysis: The environmental analysis should be a continuous flow of planning aspect. Thus in case of UK based retail market, the environment is completely made up of 3 aspects: - a) Political Factors: - In a number of ways retailer’s activities as well as shoppers are affected by the political structure and trends. Today, retailing and shopping are increasingly dependent on various national contradictions & policies those are initiated by various political processes Major direct impact by the politicians exists on retailing and shopping through the exercise of power at various locations & also by the planning system of land-use levers. Thus, whilst land-use planning is an activity based on local authority, the central government may initiate to provide directions & guidelines on the importance of development scopes & offers. The European dimension has another political aspect in terms of the Euro. Beyond the whilst report, retailers are key motive in the service sector. By this process & acceptance, particular smaller retailers often are less prepared for much positive decision. On the other hand, governments have a general legislation and assessment that is affecting retailing as well as by affecting the supply side of retail market. b) Economic Factors: - The average economic condition of UK will affect to a great extent to the retailers experience from the common activity of shopping & has an impact on this feature through the encouragement or motivation of landscapes for people consumption pattern. The countries retailing sector has been dominated by a number of large corporate chains of which, many corporate headquarters are abroad. In order to meet consumer needs, big retailers are demonstrating the computing power, which will be useful to understand markets. Knowledge management is probably a key module for the future economy5. We can not find out any special cause for the current trends towards the larger foreign traders, like, Wal-Mart or McDonalds are dominating maximum market but this should not continue as the structure of some of the activities on local basis have been initiated. c) Socio-Cultural Factors:- The changed socio-cultural lifestyle conditions, transformed attitude, beliefs as well as needs & wants of the customers accompanied by the attitudes to work & leisure are creating a lot of emphasize on retail marketing. Modern customers are too much contradictory & have ever huge experiences and expectations those are increased by the exploration of new events, ways, horizons of doing something etc. Thus, product advertisement those are shown in TV programs are available in local shapes, at the same time ,the global experience, by the leisure products like- TV or cinema are becoming to reduce products to the least common denominator. The corporate government activities & attitude also lead to change in both shortly individual behavior but mostly to the change in aggregate corporate behavior. As a result of this, there is a continuation of fragmentation of consumer demand of which identification & quick reaction are critically important themes of today’s UK retailers. Within the leisure-work proportion and its persistence in the shopping has a major change that has rose in the working women proportion, as this proportion is rising, and this impact on this is notified on basic shopping being considerable, the retailers have a number of opportunity to provide a clear stimuli that will accommodate the variables of shopping & working behaviors6. d) Technological Factors: - Technology has been considered as critical competitive tools. Information management in order to deliver cost & service facility, chain attitude that means, response times or stock level are very important in today’s complex retail business context. For example, in the airlines sector of UK, a high expansion of technology are noticed in order to manage each sort of customer service, controlling inventory cost, ticket pricing etc. Scenario Planning Models: Before going forth to the future position of retail sector, we need to take a glance to the SWOT Analysis. This analysis comprise of strength, weakness, opportunity & threat of retail sector of UK, those are focused below- Development Tools Required for Retailing: As the retailing industry suffers from overcapacity, fierce competition for profit, consumer demographics, lifestyle, shopping patterns & also changed technology, there should be a prefect segmentation & positioning ingredients to become successful in future. Thus the future of retail industry of UK can be discussed as following- New retail forms & shortening retail life cycle: - New retail forms continue to emerge to meet new situations & consumer needs, but the life cycle of new retail form is getting shorter. Rapid rise & fall shows that even the most successful retailers can not sit back with as winning formula. Many retailing innovations are particularly explained by the wheel-of-retailing concept7. According to this concept, many new types of retailing forms begin as low margin, low price & low status operations, they challenge established retailers that have become “fat” by letting their cost and margins increase. Growth of Non-store Retailing: - Consumers now have an array of alternatives, including main-order, television, and phone & online shopping. The airlines sector is one of the best examples of non-store retailing as “click-&-brick” retailers than “click-only” retailers conduct most online retailing. Online retailing is the newest form of non-store retailing. As more & more customers are flocked to the web, some experts even saw a day when customers will bypass stodgy “old economy” store retailers & do all of their shopping via the Internet. 8 Retail Convergence: - The several airlines companies are selling the same services at the same prices to the same customers in competition with a wider variety of the companies, & other types of retailers do the same. The merging of consumers, product, price, & retailers is called convergence. Thus retail convergence is coming together of shoppers, goods & prices. Such convergence means greater competition for retailers & greater difficulty in differentiating offerings9. Mega retailers: - The rise of huge mass merchandisers, the formation of vital marketing systems & a rash of retail mergers & acquisition have created a core of superpower mega retailers. Through their superior information systems & buying power, these giant retailers can offer better services & strong price savings to consumers like-British Airways, BMI and Virgin Atlantic Airways etc. Growing importance on Retail Technology: - Progressive retailers of Britain are using advanced information technology & software system to produce better forecasts, control inventory costs, order electronically from suppliers, send e-mail between stores, & even sell to customers within stores. They are adapting checkout scanning systems, online transaction processing, electronic data interchange, in-store television & improved merchandise handling system. Perhaps, the most starting advance in the retail technology concern the ways in which today’s retailers are connecting with customers, as now they routinely use technologies such as- touch screen kiosks, electronic self levels & signs, handheld shopping assistant, smart cards, self scanning systems & virtual reality displays10. Global expansion of major retailers: - Retailers with unique formats & strong brand positioning are increasingly moving into other countries also. Many UK domestic farms are expanding internationally to escape matured & saturated home markets, over the years, several giant retailers of UK are earning profits from international operations & thus the percentage of multiple retailers have grown from a market share of 23% in 1950 to 65% by 1995. Thus the expense of independent retailers (from 65% to 31% over 1950-1995) as well as co-operative retailers of 12% to 4%. Retail stores as “Communities” or “Hangouts”:- With the rise in the number of people living alone, working at home, or living in isolated & sprawling suburbs, there has been a resurgence of establishment that regardless of the product or service they offer, also provide a place for people to get together. For example- Sony actively builds community among its Palestine customers.11 Conclusion: Retailing is now considered as one of the major sector of the national economy than ever before because of its daily interactions, trends to provide jobs & contribution to GDP. From this point of view, this sector employs somewhere 2.8 and 3 million people while many of them are getting part-time facility. To a great extent, a comparatively low-skill, part-time, low-paid workforce largely dominates retailing. For this, there should be a greater recognition by the government & general suggestions for the present & future development of retailing. Such as- Retailing needs to get higher status within the departments of government for its high contribution. ESR or DLTR should properly investigate the dimensions of accessibility & thus a greater research & retail outlets should be brought. Several restrictions on merger are not promoting the competitiveness of UK retailing, so a looser regime amalgamation should be provided to balance the consumer interest issues. In terms of supply chains & other practices, the British government should investigate on the enhancement of skill of smaller set of retailers.12 The government should take attempt to reduce the obstacles to entry & takeover, & also make argument for the open market regarding UK companies. Research should be conducted to measure the competencies of home & non-UK retailers regarding their capabilities of operating in the home market. Retail market should get benefit from more inclusive and closer collaboration. Home authorities and support agencies should investigate the best way to help smaller retailers at local & national level both. ONS can take an instant review of the quantity & quality of retail information that have been produced officially, whilst this sector should recognize issue based data & information needed to enhance the knowledge of this sector13. At last, it can be said that retailing sector, like-airlines business of UK is very much enriched although it has some minor problems & global or national environmental issues. But if those hindrances can be drawn, the future of retailing sector will be most promising & take a major social, economic, demographic & global contribution in British economy. Bibliography Ansari, S. (2000), Business Process Reengineering, McGraw Hill College Division, ISBN-10: 0072420081. Griffin, R. W. 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