Apparel Sector of the Retail Industry in the United Kingdom - Term Paper Example

The way a business is operated determines the levels of success a company achieves in the present, mid-term and in the long run. In the United Kingdom retail business competition is fierce and the difference among the players in the industry that allows the successful firms to obtain positive net margins is the operating procedures and business practices utilized by the company. The focus of this paper is apparel sector of the retail industry in the United Kingdom. The report demonstrates a business template of how to audit an apparel retail business to determine its operating efficiency and what types of suggestions and strategies can be formulated after completion of the business audit. The appeal industry generates nearly $220 billion in sales annually as well as over 300,000 jobs in the European continent (Plunckett Research, 2007). The business is extremely competitive and the fashion industry and utilization of designing branding strategies is the only way for UK firms to compete against discount stores and imports from developing Asian and South American nations. Technology has also become a critical success factors for companies in this industry illustrated by expenditure in IT services per desktop in the appeal UK industry which is nearly 20% higher than in other industries in the United Kingdom (IT is the must have fashion for UK companies as margins are squeezed, 2007). In order to improve a retail apparel operation the consultant, manager, owner or decision maker must identify the operation problem of a firm to then create a list of alternative solutions to implement in order to improve the operation. The business analyst that wrote this report took into consideration a special request from a newspaper to cooperate on an article project entitled “Understanding and Critiquing Operations strategies on the High Street”. The contribution to the be project the newspaper requested was an investigation on how to identify inefficiencies in a retail apparel establishment in the UK and to build a template on how to perform an audit on a running operating retail store in the region. The retail research template involves gathering data through primary and secondary research techniques. Primary research is data that is directly gather from the source by the investigator and his team. The first step of the proposed procedure to learn audit a retail business is to perform an interview with the management team of the company. Appendix A shows a list of question that should be ask to the manager regarding the operation of the business. One of the questions in the appendix asked what is being done to gather information from the customer. It is extremely important to obtain feedback from the clients since is the only way to know if the customer is satisfied with different aspect of the retail operation. A company can obtain feedback from the customer by sending questionnaires in the mail, by having a suggestion box in the desks of cash register, by having a coupon in the sales receipt that provides a person a discount in the next purchase if the customer participates in an online survey among other techniques. The audit questions mentions the use of ecommerce because this form of selling is the fastest growing sales technique in the retail industry worldwide. In 2001 in the United States the amount of e-sales reached $7931 million during the fist trimester / quarter of the year, in comparison with the first trimester of 2007 eCommerce sales in the US were $27,092 which represents a sales increase of 261% (Plunckett Research, 2007). Technological solutions have become a necessity for business in the 21st century. Companies can enhance their productivity in the information age by implementing radio frequency identification tags into its incoming and outgoing packages of merchandise. Inside the storage room of a firm a company can implement RFID technology to keep track of inventory without the necessity of manually counting the merchandise. Some people might say the scanning codes provide the same utility which is not true because the scanner can not locate a specific item instantly inside of a large warehouse. The purchasing politics of companies in the retail apparel business affect the types of prices a store can offer to its customers on different types of items. It has estimated that the People Republic of China will have control of 50% of all the clothing market by the year 2010 (Plunckett Research, 2007). Choosing buying locally can help have better control over the quality of the merchandise sold. The second primary research technique included in the retail audit template is observation. Observation is the act of carefully watching and recording something (Msn, 2007). In research it is utilize to gather data about something that is being tested. In the retail template observation is applied by mystery shoppers entering a store and observing and taking notes of the store and its employees with the subjects realizing they are being observed. Appendix B illustrates a list of things to look at within the facilities of a retail clothes store. Cleanliness and organization are important since visual presence and presentation give a good first impression or can prevent a sale from ever occurring if the potential client perceives a dirty and unorganized physical environment. Locating scanning devices in a clothing store shows if the company is making any attempt to find ways to automate service functions. The availability of employees on the store’s floor is a way to detect internal work accuracy tracking. The observed data can be compared with the manager’s work log to determine actual vs. budgeted work variances. The customer waiting time test determines employee efficiency and if the company has a customer satisfaction focus since the data is suppose to compare with the industry waiting time standard. The stealing an item experiment is a test to measure the effectives of the security protocols of the store. The second set of observations which are illustrated in Appendix C are geared towards the storage room, inventory room or warehouse of the store’s facility. The team of business analyst measure the inventory facility in order to determine if the storage facilities are being optimized to fit the maximum amount of goods possible. The data gathered which includes amount of items in the room and the value of the merchandise is stored in log. The dimensions of the facilities are entered into a AutoCAD file to create a physical layout of the room to determine maximum inventory capacity. The computer storage model data is compared with the actual inventory to calculate room utilization capacity. Some of the advantages of implementing RFID were mention earlier and also include the ability to track inventory in-transit either coming or being ship out of the facility. This helps determine actual arrival times and prepare for delay events which provide the ability to immediate implement mitigation plans. The fourth segment of the retail template is the secondary data about a business and the relevant industry benchmark metrics and industry standards to determine the operational areas of a firm that are perfuming in a weak manner in comparison with the enterprise being studied. Appendix D offers a list of secondary sources to analyze. The Dun & Bradstreet intelligence database offers information regarding the industry standards business ratio for all SIC category industries. The apparel and accessories and stores falls under SIC code 56. Appendix E shows the business industry standard ratios for the apparel & accessories store industry. This information is a comparative basis to evaluate the retail store being studied to determine the position of the retail apparel business establishment in comparison with the industry. The financial information and other strategic information can be retrieved from the company’s Annual Reports. Two other sources of internal secondary data that the investigative team must obtain from management are the electronic data gather and produced by the company’s customer relationship system (CRM) and the corporate responsibility report (CRS). The CRM da is great qualitative and quantitative information than can be used to evaluate the customer service of the company and identify the areas that need improvement. The corporate responsibility report shows a company’s strategy and towards dealing with the community, the environment and social activities and policies. The report is a great way to determine if a company’s operating procedures are aligned with their corporate responsibility strategy. The retail industry is very competitive industry that corrects operation that are optimized to run smoothly. The reported provided a business retail research & audit template on how to perform a business analysis of retail business targeting the apparel sector of the industry. Primary and secondary research models are provided to guide the analyst through a process to investigate the operations of retail business. Secondary data also has to utilized to perform a in-depth coverage of all business aspects of a company. The best way to find solution to problems is by finding the roots of the problem. Teamwork is an important element of investigative work. The research team has to work as cohesive unit that demonstrates synergy in its analytical process to perform good research work. References Dun’s & Bradstreet (2007). Apparel & Accessories Store Business Industry Ratios. Available from [Accessed 9 December 2007]. Msn.com (2007). Observation. Encarta. Available from [Accessed 9 December 2007]. Plunkett Research (2007). Ecommerce Industry Trends. Available from [Accessed 8 December 2007]. Plunkett Research (2007). Apparel Industry Trends. Available from [Accessed 8 December 2007]. Appendix A: Interview with the manager 1. What measures is the company taking to obtain feedback from its customers? 2. Does the company have an online sale platform? If so what percentage of the sales are online sales? 3. What technological tools is the company utilizing to enhance its distribution channels? 4. What is the company purchasing policy? Does the firm buy European merchandise or does it depend on import from the Asian and South American markets? 5. Does the company have any control mechanisms in place to handle quality control of the purchases from its vendors? 6. What is the warranty and return of goods policy of the company? Can these areas be utilized to build value for the customer? 7. Does company consider price the most important factor that determines a sale? 8. What is the current composition of marketing mix the company uses to communicate with its customers? What is the pattern of marketing budget expenditure during the last five years? (Up or down) 9. Is R&D a part of the corporate culture of the firm? In what ways can a retail store take advantage of research and development in its operations? 10. Does the company have a functional Customer Relationship Management (CRM) system in place? Appendix B: List of observation in the store • Check for the cleanliness of the store facilities • Verify the size of the dressing rooms and how many of them are available • Verify if there are independent scanning devices in place for customers to double check prices • Count how many employees do you see on the floor. Perform four counts every 30 minutes • Realize 10 independent purchases at different cashiers during the day. When you get to the line start the stopwatch and measure how long it takes to pay for the merchandise. Every time a purchase is made count the number of open cash registers. • Go to the customer service booth and ask for the assistance of a store representative. Measure how long it takes for the employee to reach you • Check the shopper specials. Check one by one all the items in the shopper to see if all of them are available in the store • Intentionally steal an item and leave the store.   Appendix C: Observation inside stockroom Look at the layout and later make a drawing of the layout on paper and in AutoCAD Count the number of rows in each isle How many employees did you see working there? Make four counts in a two hour span of time Search for safety warnings in the walls or other instructions Estimate how high is the roof Measure the distance between walls Look at the boxes, search for RFID labels Locate a computer room inside the storage room or count the number of computers available Appendix D: Secondary Data List Dun’s & Bradstreet – Apparel & Accessories Store Business Industry Ratios (SIC 56) Annual Report company studied Industry qualitative data reports Internal CRM data Internal corporate responsibility report Appendix E: Apparel & Accessories Stores SIC – 56 D&B Business Ratios (Dun & Bradsteet, 2007). Read More