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Icts role in primarks operations strategy - Essay Example

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This paper highlights how a UK fast fashion used ICT to leverage its supply chain and convert it into a sustainable competitive advantage. An industry analysis is conducted using Porter’s five forces and then we see how Primark set up its operations strategy to remain competitive. …
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Download file to see previous pages This paper discusses the operations strategy of Primark Stores Limited, a fast fashion retail company that currently operates in Ireland, United Kingdom, Portugal, Spain, Belgium, Netherlands and Germany. Primark is owned by the diversified British giant, Associated British Foods (ABF) and as at the end of 2011 had 232 stores spread in continental Europe . In 2010 Primark beat Marks & Spencer and ASDA to become was UK’s largest clothing retailer by turnover, with sales of £3,043m. Primark sells a range of fashion items targeted at people under 35 years old who are fashion-conscious. It is identified as the retailer that offers the lowest prices on the high street. Primark is a player in the relatively young retail apparel industry known as fast fashion. Fast fashion refers to the strategy where retailers count on speed of production and adoption to current and emerging design trends to market their merchandise. While fast fashion may be heaven to buyers it can be disastrous to retailers who have to keep changing their inventory rapidly if they are to capture their fashion conscious target market. This however does not prevent the industry from being very profitable. Consider this: in the apparel industry, fast fashion companies have surpassed traditional rivals in growth by seizing their market share. Furthermore, “fast fashion leaders typically earn higher profit margins than their old-guard competitors, averaging 16 per cent, versus 7 per cent for the typical specialty-apparel retailer”. (Sull & Turconi, 2008, p.5).” However, to better comprehend Primark’s industry and resulting strategies we shall first analyse the industry using Porter’s five forces. 2.1. Five Forces Analysis of Primark’s Industry The strengths of Porter’s five competitive forces has an effect on costs, prices, investments and other factors needed to compete thus they affect the average level of profitability for a given industry (Porter, 2008). This implies that these five forces have a direct correlation with the industry participants’ profitability. Using this line of thought one can therefore state that a firm’s industry structure is a major factor that determines an organization’s competitive strategy (Laudon & Laudon, 2009). The first strong force is competitive rivalry. The UK’s retail fashion industry is according to Mintel (2005) is more consolidated than the rest of Europe with the top five UK retailers account for almost 45% of sales. Secondly, following from the effect of 2008 recession on consumer disposable incomes, the industry is not a basic need category and as such has continued to experience slow growth. All the above attributes are symptomatic of industries where intensity of competitive rivalry is great (Porter, 2008). Another strong force in Primark’s industry is the threat of substitutes largely as a result of the following three characteristics: (1) the garments sold in fast fashion are not durable; (2) Primark’s offerings are low-cost; and (3) the cost of switching from one retailer to the other is very low. These three traits make it ...Download file to see next pagesRead More
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