The Retail Sector of Market - Coursework Example

? RETAIL MARKET ANALYSIS “VANCOUVER TRADING INCORPORATED” AFFILIATION: Word Count: 2507 Contents Contents 2 Introduction 3 Findings & Analysis 4 Retail trends over recent years 4 Competition 5 Market development 5 Profitability & Consumer Spending 7 Consumer behavior within this sector 7 Potential of retail offering in United Kingdom white goods industry 8 Conclusions 8 Recommendations 9 References 10 Bibliography 10 Introduction The retail sector is an important area of concern for majority of the entrepreneurs. Starting from the small retail divisions, entrepreneurs tend to strengthen their base and then expand their sectors of business into diversified areas. Investing in the expanding businesses of any retail industry tends to be profitable for the entrepreneurs. It has been observed that the retail industry of the United Kingdom is going to expand in size by around 15% in the coming 5 years. A value of around 312 billion pounds may be attained by the United Kingdom. Source: www.cbi.org.uk/.../10%2007%2026%20DTS%20NACE%20note%20final. pdf The retail sector of the United Kingdom has a value of 8% of the total gross domestic product of the country. The different retail industries in the United Kingdom have developed immensely in all areas such as home wear, health and beauty retail industry, electrical goods, garments industry, e-retail, furniture and floor coverings and other such types of retail sectors. Northern Ireland is one of the regions where tremendous amount of retail growth has been observed. Vancouver Trading Incorporated is planning to start its retail operations in the United Kingdom in the industry of white goods. This report is an overall analysis and advice of the level of retail of white goods in the United Kingdom.   Findings & Analysis The findings & analysis section discussed about the recent retail trends that have been observed in the United Kingdom market during the last few years, the competitive climate of the white goods organisations are analyses, the importance of meeting up to the market developments has been highlighted in the market development heading, profitability & consumer spending headings discusses about the aspects on which consumers are willing to invest their purchases on white goods, the consumer behavior aspects are also discussed and following this the advice is given to Vancouver Trading Incorporated for making their investments in the United Kingdom retail market of white goods. Retail trends over recent years In the white goods retail industry, the home appliances and the dishwashers are the main products that have a high share and high value of the total market of the white goods industry. The economical and social state of the United Kingdom is extremely important factors as they may directly impact the white goods retail industry in the market. The demand for white goods is directly related to the housing market of the United Kingdom. The more the consumers plan to shift in houses the more the market will increase for the white goods as many household appliances are needed for doing different chores of the house. The housing market and economical state affect the consumer purchasing power of white goods. If customer’s purchasing power is low then they may opt for cheaper goods and also the white good products will be bought more if there are more people moving into the houses where there is a requirement for white goods. Moving in houses tend to trigger the need and requirement for different types of household products and appliances. The movement into houses can include the category of moving into a house the first time or by replacing the houses and therefore would require a replacement in the white goods products. If the value in growth becomes difficult to achieve then it may highly difficult to attain growth in volume of white goods products. The potential growth areas of the white goods retail industry is in the Central Europe and the Eastern Europe. The population in these areas is above 400 million people and there exists a big market of white goods buyer. The growth potential in the United Kingdom has faced a substantial and rising deficit in trade in the white goods appliances of households. The only area where the exports had exceeded the imports were in the drying machines in the year 2002, and this had been due to the organisation Crosslee PLC, as it is Europe’s largest manufacturer in drying machines category. In the year 2003 the white goods market had been dominated by many small multinational manufacturers that were producing brands that were popular in the consumer market. Then in the coming years of 2008 and 2009 the white goods market faced a decline and now it is gaining momentum at a slow place and focusing on gaining attention of the customers. Competition The competition level within the prices category tends to impact deeply on the smaller organisations. To remain competitive in the market, prices need to be set according to the industry rates so that pressure level can be maintained by all competitive organisations. For new entrants to survive in the market of white goods retail industry they need to have their prices set according to the pressure and competitiveness of the market. The main competitors of Vancouver Trading incorporated would be Indesit Company, Electrolux group, Hoover Candy Group, Crosslee PLC and Haier. Haier has recently entered the market with their award winning products and innovation in the UK white goods market that has caused it to build a good image in the consumer minds. The organisation Haier has a good experience in this industry and it implies all the successful strategies to build their reputation in the UK market (Haier Europe, World’s Number 1 white goods brand sets its eyes on success in the UK market, 2010). Vancouver needs to study the competitive market well so that it can imply the marketing strategies accordingly towards gaining a sustainable market share in the industry of white goods. Market development The market development of white goods in the United Kingdom demands that they must be adaptable to the technological change in the market by the changing consumer demands in the household sector of the United Kingdom. Consumers demands related to white goods are changing on a constant mode and now they don’t expect just box shapes in their appliances but they have high demands such as new features and colour contrasts in the white goods that they are buying. Technological advancements and improvements are becoming common concerns on which all types of organisations are focusing their attention towards so that they can attain success. The market requirements and developments keep on changing for the manufacturing industry and all organisations that want to remain in the competitive industry need to focus on coping up with the market changes. The main challenge that lies in the white goods retail industry is to provide the right pricing on the different types of products with the innovation element involved so that consumers get attracted towards the product and are willing to spend on the white good products in the market. If organisations are able to accomplish this then growth may be an attainable task in the industry of white goods. It is highly important for organisations to build and retain the brand image of the white good products of their organisation as consumers usually have many factors to judge before they plan to buy any specific household appliance, therefore a positive brand image is highly necessary for success and profitability. In the industry of white goods, the value end market can be observed to be highly competitive. Consumers in this retail sector tend to buy new products instead of getting a repair done on their old white goods if the new product costs are reasonable. If products are extremely expensive then consumers opt for a repair. White good products should be giving more value on low prices for consumers to buy them. The white good retail industry has the potential of products that use intelligent technology that makes the work easier by using the electrical white goods and also gives faster and effective results. There is a high population that requires the advance technology system use in the white good products for their households. Profitability & Consumer Spending For remaining competitive in the white goods retail industry, and also focus on gaining a higher profitability level, the mature market of the United Kingdom is moving towards the high end pricing stage and also providing features that are in additional to the normal white goods tend to increase the price at an exorbitant level. Advance feature availability in convergence appliances are of high attraction to the consumers. Now many of the laundry and cooking has become highly automated with the latest technological advancements and therefore any new market entrant in the white good retail industry cannot neglect these options before launching their product. Now there is a reasonably high market potential of washing machines that consists of high capacity loading. These machines are developed for the consumer household markets where as previously it was just produced for commercial purposes such as hotels or different guest houses. The machines, dryers, and dish washers have some amount of potential market as it is being used in the household sector and therefore customers on and off do need the white good products. The white goods industry demands innovation and value in their products. Also it requires that the products should be produced on low costs and high volumes so that the industry can be profitable. This however does not seem to be the situation at present and if this is not the case then these products would have to leave United Kingdom. Consumer behavior within this sector United Kingdom along with many other developed countries have faced the negative impacts of recession and it has affected the consumer behavior patterns of customers and their purchasing power of buying white goods for their households. A credit crunch situation has been faced by the consumers in the United Kingdom that has caused an immense deterioration in the housing market and now on a very gradual and slow pace the market situation in the white goods category is improving. The decrease in the housing market has forced consumers to unwillingly decrease their purchases on the product category of white goods. Consumers while replacing their white goods have a strong concern of reducing their utility bills and they look for appliances that may consume the least amount of energy. It has been analysed that around two thirds of the adult category tend to opt for household appliances efficient and high energy ratings. There are around 45% of the adult sectors that tend to opt for appliances that may run by using the least amount of water (White Goods-UK-April 2010, 2010). Therefore the new market entrants should launch the white good products that are energy efficient so that consumers can develop interest of buying or replacing the white good products. Potential of retail offering in United Kingdom white goods industry Vancouver needs to focus upon the challenges that are faced in this industry before they plan to make their investments in the white goods industry in the United Kingdom. The main dilemma is that the recession issue has impacted the consumer buying behavior and patterns. There is a potential in the United Kingdom market if competitively low prices are offered with advanced features and designs for attracting customers. Vancouver can enter the UK market with an intensive marketing outlook of their white good products so that need to purchase advance white good products can be distilled in the minds of the consumers. Marketing is one of the main elements of any business and to become successful organisations need to focus on investing a high amount in their marketing activities so that they can attract a wide range of consumers towards their organisation. Like Haier organisation, Vancouver Trading Incorporated can capture the potential level of the consumers by implying excellent marketing activities (Haier Europe, World’s Number 1 white goods brand sets its eyes on success in the UK market, 2010). Conclusions According to the above discussion, it can be concluded that the United Kingdom economy has been impacted strongly by the recession stages and it has affected the retail industry of White goods as well both in economic terms as well as social terms. The housing market has faced decline and this declines has caused the sale of white good products to decrease to a massive level in the years 2008 and 2009. Then gradually the sales faced a positive growth level that still needs to increase further more so that profitability can be attained (White Goods-UK-April 2010, 2010). Therefore Vancouver can invest in this retail sector with a high level of innovative products and market competitive prices. Companies like Haier are entering the market with strong innovation and new product features (Haier Europe, World’s Number 1 white goods brand sets its eyes on success in the UK market, 2010). Therefore if Vancouver wants to enter the United Kingdom retail industry it needs to struggle very hard to make its mark. The industry potential is not very high at present but innovations and low prices can allow the industry to boom in the future as consumers may opt for replacing their worn out white good appliances with the new products that Vancouver or any other company will launch. Haier has conducted a thorough market research and then they are launching their products in the market (Haier aims to crack UK with marketing hires, 2010). Vancouver Trading Incorporated organisation needs to meet the demands of the customers accordingly and produce products with high quality and low prices so that they can succeed in the retail white goods sector in the United Kingdom. Recommendations By analyzing the market competitiveness and the consumer behavior patterns in the white goods retail industry of the United Kingdom the following are some of the recommendations provided to Vancouver Trading Incorporated organisation that they can follow for investing in the United Kingdom retail white goods industry. Consumers want an advanced level of technology in the white goods category and therefore Vancouver must come up with products that have advanced and intelligent technology in them. Technological advances are becoming a common application in almost all types of products and therefore gradually it is becoming a necessity that products should consist of advance technological features. Vancouver must launch products with competitively low prices so that consumers can opt for replacing their white good products and also purchase new ones with advanced features. Low prices tend to be major reasons that customers become interested in buying or replacing their goods. Brand loyalty may take some effort to be built up by the organisation but in the long run the brand loyalty factor will pay off highly for the organisation. Customers also opt for new designs and new features in the white goods with more functions so that their household chores can be conducted at a much faster pace and efficiently as well. The new entrant of white goods organisation that is Vancouver Trading Incorporated need to research about more unique design types so that customers become attracted towards the product. Vancouver must implement marketing strategies in such a way that seeks the maximum attention of the customers. There are many customers that wait for special deals on the products so that they can buy it on a discounted price with deal options. References Haier aims to crack UK with marketing hires, 2010. Available at: http://www.marketingmagazine.co.uk/news/1038915/Haier-aims-crack-UK-marketing-hires/. Accessed on 19th January 2011. Haier Europe, World’s Number 1 white goods brand sets its eyes on success in the UK market, 2010. 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