The Retail Clothing Sector - Case Study Example

The Retail Clothing Sector Faculty I. Introduction II. Literature Review III. Organisation IV. Conclusion V. Reference I. Introduction The retail clothes segment has been broadly divided into women’s wear, men’s wear and children’s. As per one study the interest of men is slowly increasing towards the clothing. This indicates towards high demand for this segment. The trend of casual clothes is growing for all the segments. The growth in the purchasing power and wealthy people in UK supports sales at the top end of the market. Sale of the accessory has been found to e getting down. The Retailers now are focusing on the middle markets. This is due to the volume coming from this segment. The discount products of large retailers like ASDA and Wal-Mart’s etc are also alluring this segment. The competition is growing along with the growth of various consumer segments. The intensified competition also puts a pressure on the players to offer the customers from every window to sale or market their products and services. The paper covers literature review of the Retail Clothing Sector. The organisation studied for this purpose is asos.com. Various factors of the growing online fashion retailing have been covered in this study. II. Literature Review Retailing sector particularly Fashion retailing has attracted attention of various researchers and scholars. Studies have covered various aspects of retailing from organisation structures to advent of technology within this sector and its impact on overall industry. Davies 1993; McGoldrick 1990 state (as cited in Gillooley and Varley, 2001 pg. 7) “The result is a high level of retail concentration: an industry that is dominated by a relatively small number of extremely powerful, marketing orientated organisations.” According to Gillooley and Varley (2001 pg.7-20) emphasis is on the role of technology, technologist in clothing industry and distribution system. They feel that the dominance of manufacturers brands and the emphasis on product/price promotions is higher in retail clothing industry as compared to food or other retailing. McGoldrick (1990 as cited in Gillooley and Varley 2001, pg 20) provides a summary of these, which includes the following key points: • Increased buying power allows buyers to negotiate better terms with suppliers. • Specialist buyers can devote more time to product/market analysis. • Sales data can be aggregated to improve forecasting. • Economies of scale are achieved as sourcing and selection costs are lower; buyers salaries are comparatively high within a retail business. Retailers are often classified on the basis of amount of service they offer, depth and breadth of the products and services, relative price changes and their organisation structure Retailer may offer self, limited or full service to the customer. Based on category these can be classified as Specialty stores, Department stores, Supermarket, Convenience stores, Superstores and category killers. The latest concept is online retailing or e-tailing that has replaced the need of personal visit, bricks and mortar to a certain extent. Due to the increase in the number of Internet users the traffic towards online marketing is increasing. This is due to two major factors. One that consumer wants conveniences in terms of effort, money spend and quality assurance and the second is organisations are making tremendous efforts to satisfy customer through this mode of selling. The incentives for the companies are the cost factor. They can reduce cost tremendously with online selling while for consumer its convenience and time saving. Retailers need to focus on the buying process of the consumer in order to ensure their success and keep track with current trends and fashion in the clothing industry. Figure 1: Buying Process According to ChÂtel and Hunt (2003, pg 113) advertising have an important role over the performance of the particular brand in retailing. In their words “Retail philosophy of decent, mass-market clothing at cheap prices worked for many years, and in the 1960s everyone went there. But in June 2000 came the news that all 109 UK stores would close. Squeezed by supermarkets such as Tesco and Asda (with its George label), and more stylish, cheapish brands such as Gap and French Connection, C&A could not throw off its downmarket image in a world wanting style-and discounting.” Gillooley and Valery (2001) described the importance of advertising in the retail clothing sector with an example of New Look Brand. “The lack of advertising has left customers who do not have a store nearby unaware of the New Look brand, even though in 1997 the company came second in a nationwide loyalty survey conducted in the clothing retail sector by Taylor Nelson AGB (Bickerton 1997). This lack of awareness prompted the company to launch a publicity campaign to build brand awareness through 1998–9. In a year when much press emphasis has been put on issues such as value for money and rip-off prices, the media responded with enthusiasm, reporting the companys offer in both mass market publications and fashion press. (Gillooley and Valery 2001 pg 239)” According to National Statistics Textile clothing and footwear has experienced a rise of 3.5% in 2006. In the Figure 3 the Global retailing marketing growth has been given on the basis of value. EU has been most valuable on the retail selling price basis and has experienced growth from 1999 to 2003. It has been proven to be better market as compared to the markets in the world for the clothes retailing. Figure 2: The Global Clothes Retailing Market by Broad Region by Value (£ bn at rsp) (1993-2003) For fashion design and branded clothing company’s competition from abroad is less threatening compared to the issue on changing customer needs and difficulty accessing capital. There are certain facts from the UK retailing, clothing and footwear sector. As per Verdict Report E-bays attracts 2 times more Fashion shoppers than other online retailer. The Customer shops known brands or products or well-known designer label. Many retailers like to use the site to clear their stock. Overall UK retail sales grew by 1.5% in 2005 (lowest ever) Online shopping for clothes & footwear grew 28.9% (19 times higher than high street retailer) 1/4 UK consumer buys goods over the Internet… Women are more then Men, spend an average of ￡579/person/year. Figure 3 The Forecast UK Clothing Retailing Market by Sector by Value at current prices (£ m at rsp) 2004-2008 Latest research from Adgrafix study revealed, over 30% of the survey respondents cited the UK’s largest retailer Tesco, as their most admired retailer. The top ten most admired retailers: 1. Tesco (30.3%) 2. John Lewis (7.4%) 3. Arcadia (6.8%) 4. M&S (4.2%) 5. Next (4.1%) 6. Asda including George (3.7%) 7. Primark (2.8%) 8. Virgin (2.5%) 9. Monsoon Accessorize (2.3%) 10. Zara (1.9%) All the top six retailers have online shopping service as an available and effective medium for sale. There is change in consumer buying pattern. More competitor and product offerings have made them price sensitive and impacted their buying behaviour. As seen by the figure 5 the UK e-tail fashion index is growing. It signifies the growth in the e-tailing if the fashion products. Figure 4 The IMRG UK E-Retail Fashion Index The Consumer lifestyle in UK has certain specialities. Population of women are still slightly higher then that of Men. Women are still decision makers for clothing market whether it’s their own clothes, their husbands or male partners or their children. Most of the workingwomen also have long working hours, more disposable income, and late marriage. They are willing to spend more for convenience too. Due to changing in lifestyles, especially for those in there 20s and 30s, beauty, look and appearances needs are more demanding. There will lead to a high demand in beauty products. UK people are more fashion conscious. “Feel good factor” has been affecting their lifestyles, dressing style for years. The plastic money has again given them flexibility to purchase as and when they like. According to Wilson, 1999 apparel spending in UK amounted to £30 billion. As the previous section of the paper indicates the online shopping is increasing with a steady rate for fashion retailing in UK. This has been a significant source of profit for online fashion retailers. The fashion online has some important factors. The number of people who can access the sites The number of transactional sites. The ease and convenient offered by the e-tailer Effective handling of consumer queries and grievances A prominent consumer analysis group believes that 67% of the UK will be online by 2006, and that the Internet take-up will peak at 75% of the adult population. This report suggests that the fashion online has a great potential to grow Consumers usually undergo the buying process when he wanted to make a purchase online. This process includes need identification, development of a consideration set, information search and evaluation of alternatives, and choice/ decision (Hoffman, Novak and Peralta 1999). Such technological innovation makes office works and commercial transactions viable in just a single click on your computer. Nowadays companies worldwide are engaged in e-commerce. E-commerce has become the medium for trade of manufacturing and retail industries. Abrams (2000) of the Gartner Group estimated that e-commerce revenues in 2000 had generated at least $139 billion dollars and at least $ 2,584 billion in 2004 in business-to-business (B2B) and business-to-consumer (B2C) that are in the United States alone. According to Kessler (2003) of Forrester Research, electronic commerce generated sales worth of $12.2 billion in 2003. III. Organisation ASOS.com, One of UK top 5 most popular online fashion shopping website is chosen as a case study on this project. The SWOT analysis of the same website will help understanding the current situation and the areas to work upon for better and effective e-tailing. . Strengths Good products and offers. Better Promotional schemes Database of the customers, potential customers and other reference groups Catering Niche segments within the fashion segment Core focus is apparel, as worn by celebrities at affordable price Discount offers. Weaknesses Graphics of the website especially for the large products like overcoat and long dresses has not been effective and influential. More of the product details are required. Beauty Product category is very limited. Need more customer education section to inform customer about clothing options Opportunities Growing trends of e-tailing offers a good opportunity for the organisation. Overall growth in the clothes retailing is another advantage. Changing lifestyle and consumer behaviour also indicate that consumer will like this option more if the delivery and exchanges are easy and proper Threats Stiff competition: Online clothing chains from overseas are successfully invading UK and at the same time, branded apparel such as Diesel, Guess and Zara are still popular among the market. Other purely online fashion etailers such as Yoox.co.uk, Brandalley.co.uk are also their main threats. Downturn in the economy could also cause buyers to cut back on overall spending. IV. Conclusion Fashion industry is one of the fastest changing industries in the retailing sector, offering new challenges to the business community operating within this sector. These challenges come from various ways; changing trends and fads in fashion, business practices, consumer behaviours and internal and external business environments. To deal with these changes the retailing clothing industry is undergoing various changes. The online retail clothe shops are one of these examples where retailing aspect have changed with changing consumer behaviour, consumer lifestyle and new technology. As previously, the major challenging area of ASOS is the online consumer buying behaviour. Not only does buying apparel online represent a new form of consumer behaviour in the ‘computer-mediated shopping environment’ (Hoffmann and Novak, 1996), apparel online retailers also face intense competition. Attracting consumers and making them stick to the website for final purchase making their purchasing a pleasant experience are other challenges. Based on these reasons of shopping online and ‘not shopping online’, an online retailer can now focus on what to improve on their services and what to guarantee Internet users to attract them and to be prospective customers V. Reference ChÂtel F De and Hunt R (2003) 1st edn Retailisation: The Here, There and Everywhere of Retail, Europa Publication: London. Pg: 113. Gillooley D and Varley R (2001) 1st edn Retail Product Management: Buying and Merchandising. Routledge.: London. Pg: 20. Hoffman, D.L., T.P. Novak, and M.A. Peralta (1999) “Building Consumer Trust Online,” April, Communications of the ACM, Volume 42, Number 4, April, 80-85.. Hofmann, D.L. and Novak, T.P. (1996). Marketing in Hypermedia computer-mediated environments: conceptual foundations. Journal of Marketing, Vol. 60 No.3 (Jul., 1996), pp. 50-68, doi:10.2307/1251841 Hau L. 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