Fashion Retail Marketing - Essay Example

? Fashion Retail Marketing Contents Contents 2 Executive Summary 3 Brand Value, Strategy and CSR 3 Product Range and Positioning 7 Macro and Micro Environment Analysis 9 PEST Analysis 9 Value Chain Analysis 12 Future Challenges and Opportunities 15 Conclusions and Recommendations 16 References 19 Appendix: Self Reflection 21 Executive Summary Fashion retailing is a global enterprise. As the consumer demands are ever changing, this industry has also constantly evolved over the years. Emergence of new entrants and constant innovation by the existing firms in this industry has induced tough competition. Companies are now planning strategies to increase the sustainability of their organisation’s growth. The present report aims to identify the key macro and micro factors affecting Very online retailer. Very is one of the newest launches on Shop Direct, which is one of the top online retail brands in UK. This online retail brand has emerged as one of the favourite destination for youngsters, looking for fashionable and affordable brands. This report analyses the brand value and the strategies followed by the company. This section discusses the company objectives and the ethical policies it follows. In the next topic the financial details of the company are given. The company’s large product range has been highlighted. The positioning strategies of the company are discussed and analyses of their impact on the company’s operations have also been discussed. To find out the macro environment of the retail brand, PEST analysis is done. This will give a clear understanding of the current economic, social, political and technological changes within the country and how it has impacted the operations of the company. Value chain analysis gives a detailed layout of the flow of raw materials and other products from suppliers, to the warehouse, manufacturing and operational process and finally delivery of products to the customer doorsteps. The report also throws light on the marketing campaigns and strategies followed by the company. Though the online retailer has maintained a continuous growth in the online marketing sector, there are certain risks and challenges that lie ahead. Brand Value, Strategy and CSR Very retailer is one of UK’s prominent online and home shopping brands. It is an arm of One Shop online retailer which has a customer base of over five millions and an annual turnover of over 1.7 billion pounds (Very, 2013). Very online brand was launched in the year 2009. The online retailer deals with categories such as apparels for men women and children, home and electrical appliances. The website of Very retailer in designed keeping high internet users in mind. The website provides customers with the opportunity of shopping across a range of product areas, from footwear and fashion to home and electrical and other accessories. To gain competitive advantage, Very online retailer has introduced a number of interactive marketing services, and innovative online marketing strategies to engage the customers on mobile channels (Wang, 2005). The retail brand believes in creating a workplace having a perfect balance between hard work and having fun. The company’s preferences lie in putting the customer first. The brand believes in treating its customers as well as employees well and making a difference by keeping things simple. The online retail brand thrives on four major brand values. Deliver- The retail brand thrusts upon getting results which satisfies the customer expectations as well as fulfils the organisational needs. Innovate- To make the business better, the company develops innovative ideas in the field of marketing campaigns, innovative advertising and branding ideas, inventing new categories and product range to meet the changing customer preferences. Courage- Courage means doing activities which are of best interest to the company and challenging a process because it is not correct. It can be any process from finance to the supply chain process. Enthuse- The Company believes in creating a supportive and collaborative environment for the employees. The employees work as a team and respect each other. Every employee is encouraged to generate new ideas and succeed in the business. The company believes in inspiring its employees and backing them in every work they perform. The main strategy of the retail brand includes providing innovative and new services to its customers, to increase its revenue and customer base. In this line, recently the company launched a festival delivery service for its savvy festival goers. The social responsibility of the retail brand works on maximising the positive impact of the business and minimising the negative impact. The company is engaged in a number of projects with the aim of supporting local networks. The retail brand is an active member of a progressive group named United Nations Global Compact (UNGC). This group consists of deals in the alignment of the strategies and operations of its member companies. They work on ten principles which are universally accepted. These principles work in the areas of labour, environment, human rights and anti-corruption. The retail brand is also involved in charity services to hospitals. The company is involved in organising corporate enterprises for students studying in schools and colleges. The company is engaged in environmental CSR activities by taking part in initiatives such as North West Climate Change Campaign and creating improved transport links. To decrease the harmful impact of the company towards the environment, the company has taken steps to reduce the carbon footprint to 1000 tonnes in a year. Around 75 percent of the waste from the company is recycled and the company uses 100 percent renewable energy. The company has also achieved Carbon Trust Awards and Green apple award for achieving environmental excellence (Royal Horticulture Society, 2010). Financial Analysis A financial analysis is done to assess the viability, feasibility and profitability of a business (Laitinen, 2011). It involves the analysis financial business of the company. It includes evaluating budgets projects and other finance related entities and analysing company’s investment suitability. Financial statements of the company are analysed to determine the feasibility, efficiency and sustainability business. Very retail brand is an arm of shop direct group of retail chain and one of the leading retail brands of UK. The financial statement of the year 2010 revealed that the company’s turnover for the year was 1.7 billion Euros with year on year sales. The EBITDA went up 38 percent from 96 million Euros to 132 million Euros in 2009 and further 132 million Euros in 2010. The loss from taxation also decreased drastically from 114 million Euros loss in 2009 to 21 million Euros in 2010. Greater efficiency in the operational procedures resulted in lower bad debts and reduction in cost base. Continuous improvements in the product ranges supported by operational efficiencies are expected to increase the overall profit for the company. Product Range and Positioning The online retail website is created keeping in mind customers who are internet savvy. The website provides customers with the opportunity of shopping across a range of product areas, from footwear and fashion to home and electrical and other accessories. Very offers stylish and fashionable clothing from various designers and celebrities including Cotton Holly Willoughby, Jasmine Guinness, Steve Jones and Diana Vickers etc. The online retailer is an arm of Shop direct, leading online retailer in UK. The product categories of Very retailer ranges from Apparels for men women and kids, accessories, home and kitchen appliances, electronic appliances, gifts and jewellery, baby products and beauty products and sports equipments. The online website alone has more than 1000 brands for its diverse range of customers. The company website has a brand directory site which boasts of a wide range of national and international brands. The company operates in four business areas. The warehouse division of the company deals with the production and storage of the goods. The financial department looks after all the financial activities such as payment solutions, credit of accounts and monitoring and maintenance of other financial accounts. The head office works as a marketing and support operations taking care of operations such as advertising and branding, monitoring of the supply chain process. The online retail brand has positioned its products as fashionable and affordable (Hines, and Bruce, 2006). Since it is an online website, the target customers are internet savvy and young customers looking for stylish, fashionable and affordable range of products. These include product categories such as apparels and accessories targeted at customers between the age group of 18-30. Apart from this, categories like home and electrical appliances and baby products are included to target customers of age group 25-45. Since it is an online site it caters to national as well as international customers. The website developed by the company is user friendly and very easy to navigate. The company focuses on high customer satisfaction and needs fulfilment and for this the website is designed to connect with the customer in various innovative ways (Semeijn et al, 2005). Very talks and responds to its customer’s queries through a range of innovative and creative social media tools like Facebook, VBlog, twitter, and an interactive online magazine, VStyle is full of style advice and fashion. Very online retailer also showcases their product ranges by bringing the latest fashion designs direct from the catwalk. The website is open 24 hours and shopping can be done at any time in the website. Apart from the wide range of products the company also provides financial services in terms of insurance to differentiate itself from the competitors. The online retailer offers pet insurance, home insurance, accident insurance and rack breakdown insurance. Macro and Micro Environment Analysis PEST Analysis Political UK falls in the category of developed economies. Political situation is stable in UK. The UK government is mainly concerned with the financial crisis and ways to overcome through viable and sustainable strategies. The UK government has taken few crucial measures for the reduction of financial deficit which occurred due to European debt crisis and current economic decision (Gurdgiev, 2011). There has been a 22 percent cut in the budget from sports and culture department and 23 percent cut in the media department (Westfield, 2012). Apart from this, the government has also planned to reduce corporate tax to 23 percent in the coming years, which will result in decreased cost of overall operations in this industry (Marketline, 2012a). To fulfil the employee legislations the UK government has encouraged the retailers to provide job opportunities ranging from lower paid, flexible and locally based to higher paid, higher skilled and centrally located jobs (Browell and Ivers, 1998). This step also meets the demand from categories such as working parents, senior citizens and students. The company has engaged itself in employing a large number of students, elderly and disabled workers. In an industry where staff turnover is typically high, these workers provide a higher level of work loyalty and represent as desirable employees. Economic UK’s economy is powerful and has been successfully able to avoid economic recession in 2008, but the present economic condition is highly uncertain. UK’s economy grew 0.2 percent in 2012 and only 2 percent in 2013 according to CBI Director-General John Cridland (Hamilton, 2012). GDP went down to -0.4 percent in 2008. As per the data by OECD, the GDP of UK was 1.1 percent in 2011 (OECD, 2012). This shows that economic recovery is in full swing in UK. Economic factors are crucial to Very online retailer, because the economic conditions influence costs, prices demand and profits. High unemployment level is one of the most crucial and influential factor on the economy (Levine, 2013). High unemployment decreases the demand for many goods and services, which affects adversely on the demand essential to produce such goods. These economic factors are generally outside the power and control of the online retailer, but they can have profound effect on marketing mix and performance of the company. The company is highly dependent on the market of UK. Hence, the company would be adversely affected by any slowdown in the UK retail market and are constantly exposed to market risks. The retail clothing market of UK is increasing at a constant rate. The UK market showed a 3.3% increase in 2011, and sales reached 43.1 billion pounds (Key Note report, 2012). Women’s garments were the largest sector in terms of sales revenue followed by men and children’s sector (Chakrabarti, Subramanian, Meka, & Sudershan, 2012). Social UK’s population is shrinking and aging. This could lead to decrease in the number of labour in the market place and rise in expenses in services like education services, medical services. This can force the government to cut down on benefits such as pension, or increase tax to pay higher contributions in sectors such as health insurance. This trend of rising expenses has affected the buying behaviour of the shoppers, and altering their nature and forcing them to compromise on quality. Current trends forecasts indicate that the customers are moving towards ‘one-stop’ and ‘bulk’ shopping, due to a variety of social changes. Demographic alterations such as the aging population, a rise in the number of female workers and a decline in home meal indicate that UK retailers are also focusing on products and services of added advantage. In addition, the focus is now towards the supply chain, own-label share of the total business mix, and other operational improvements, which can possibly reduce costs. National retailers are increasingly showing a reserved attitude towards new suppliers. The category of services and goods demanded by consumers is essentially a function of their social environment and their attitudes and beliefs because of the social change (Wickenden, 2013). Consumer concerns are shifting towards health issues and their attitudes is constantly changing towards food. The company may also be required to change its portfolio, in order to match the growing needs of this ageing population. Technology Consumers expect high tech experience and more convenient facilities during shopping and technology has a vital role in increasing user experience and increasing cost effectiveness. As the companies are shifting to digital and online marketing from traditional in-store retailing, the internet is becoming increasingly important. Therefore, retailers have to plan strategies to attract new customers through sources like e-commerce or the community networks and web blogs. Tablets and Smart phones are increasingly becoming an integral part of our life. The company can create mobile applications for customers. Latest technological advances such as RFID, electronic data exchange and ERP, are used by most of the retailers in UK to decrease operation costs and enhance the value chain process (Pettigrew, 2006). According to the Science and Innovation Investment Framework (2013), there has been only 2% increase in investment in technological advances. This has made the investment condition in UK very inflexible. A further and popular trend is “green” IT. This trend thrusts on changing the way energy is monitored, and consumed in buildings. The objective of these initiatives are bringing down the carbon emissions and reducing costs through effective usage of energy (Faucheux and Nicolai, 2011). Technology is a major external environmental variable which has the capacity to influence the decision on development and procurement of many products. This new technology will benefit both company and customers. Customer satisfaction will rise because goods will be readily available, services will be more personalised and shopping will be more convenient. To gain competitive advantage, Very online retailer has introduced a number of interactive marketing services, and innovative online marketing strategies to engage the customers on mobile channels. Value Chain Analysis For micro environment analysis of the online retailer, value chain analysis of the company has been done. Inbound logistics In an organisation inbound logistics involves the movement of raw materials from vendors and suppliers to the production process or other facilities like storage (Wirawan, 2013). Very online retailer is known for its latest trends of apparels and accessories. The core product team of Very retailer comprises of design, merchandising, buying and quality assurance. The design team is always looking for emerging trends from various fashion shows and catwalks. The products are designed reflecting these trends but keeping in mind the target customers of Very retailer. The buying team is involved in selecting or developing products that will create a competitive and cohesive offer, from the core or initial product to the latest design with highly popular brand (Jackson and Shaw, 2001). These teams travel extensively to various parts of the globe to source the highest quality products at a competitive price. This ensures value for money to the customers as well as generation of enough profit to sustain the business (Fernie et al, 2003). Operations The warehouse division takes the orders and processes. Once the designing for products is completed, the design and buying team collaborates with the manufacturing team for sample as well as mass production. The warehouse and manufacturing facilities consist of the product technologists, engineers, and the quality assurance team who work closely with the suppliers and buyers and set benchmark standards of the corporate. The manufacturing and operations team is responsible for quality and smooth production process across all departments such as materials, sizing, and construction and packaging (Wilson, 1999). Their job is to ensure that the products reaching the customers are good and fit the purpose. Outbound logistics Order is placed by the customer over the phone or through online website. The contact centre team takes the orders from the customer. Once the order is confirmed, the warehouse team packs the merchandiser with other purchases and it is delivered to the customer. Goods are transported through trucks, air or water transport. Marketing and sales The marketing team develops exciting and fresh campaigns to gain customer attention and preference. Celebrity endorsement is one of their major advertising strategies. Celebrity endorsements have been the most popular advertising strategy in the retail industry (Tungate, 2008). The products of the online retail brand are advertised through various channels such as press, television and direct mail. Publications promote the products in the company’s catalogue. Through E-Commerce the products are advertised in the company’s website as well as other crucial online sites such as search engine advertising and pay per click advertising (Rowley, 2004). Services- Apart from a wide range of products, the company also provides value for money to its customers through various add-on services. The online retailer is engaged in providing loans and insurance for product categories such as home and electrical appliances. Future Challenges and Opportunities Though the company has shown steady growth in terms of revenue and profits, the sustainability of the online retailer is exposed to various risks. As discussed earlier in the macro environment analysis, constant changes in the economic and social factors might interrupt the normal flow of the company’s processes. Strong brand portfolio and a broader product range are the major strengths of the online retailer brand. Strict business operations also result in cost effectiveness. The company depends on consumer credit agreements. Liquid cash flow is very less in case of online retail brands. Thus the company is exposed to risks in situations like decrease in demand or sudden increase in production. The other weakness of online retailing is that it is very difficult to monitor customers in terms of their location, preference, purchase habits. This is because e-commerce is still a small segment of retail industry and most of the customers, who purchase online, also go to traditional markets. The growing prospects of e-commerce offer a huge opportunity for the company, as more and more number of people has started shopping online. The company is also engaged in business initiatives such as financial services. The growth of web based stores can also provide opportunity for the company. The changing preference of customer is an opportunity for online retail brand as they can change and launch new products in their websites much easily and quicker than traditional shopping centres. The counterfeit goods market poses a serious threat to the retail market. With the gaining popularity of online shopping, more and more online shopping sites are opening, which are taking away market share from the online retailer (Cox and Britain, 2004). The present economic environment is also a threat to the revenue of the company because economic slowdown forces customers to cut on their spending habits and switch on to cheaper brands. From the above analysis it is clear that there are few challenges which need attention from the company. The current economic environment is volatile and the company required proper analysis and strategy before any kind of marketing campaign or launching of a new product category or services. Ecommerce is a growing opportunity but at the same time it has brought intense competition from old as well as new brands. Conclusions and Recommendations From the above analysis it is clear that the present market trends in the online retail industry are changing and to remain profitable and gain competitive advantage, the company should focus of an effective marketing plan. The company operates in many countries such as Ireland, UK, and India etc. The culture and choice of apparels and other products vary from place to place. For a continuous and sustainable growth in the online market, the company should perform continuous market research to keep itself updated about the latest trends and preferences in the areas where the online retailer is operating. This will also help in launching of any new product or service category by the company. Economic recession has forced the consumers to cut down on their expense. This has also resulted in people switching to local and cheap brands. Current trends forecasts indicate that the customers are moving towards ‘one-stop’ and ‘bulk’ shopping, due to a variety of social changes. This is in anticipation of getting more quantity with less money. Bulk purchases also save transportation costs. To overcome this and utilise the opportunity, the company can provide offers and seasonal discounts to gain the market share. Rather than opting for traditional mass advertising, retail brand can opt for online and web based advertising and promotion. Online promotion is less costly than traditional advertising and can be personalised according to the target customers. The company can use email marketing, catalogue marketing and other online engaging activities to build attention and consequent interest in the website. This, in turn will result in higher traffic flow and subsequent purchase orders. Constant promotion and customer engagement is necessary in online retail market because until the customer gets a worthwhile experience from the online sites, they will prefer looking for options. Customer loyalty is less in online shopping sites and the company needs to provide customers with continuous new trends and products that are latest. To build relationships with the customers, the company should encourage them to return to the website. This can be done by sending a series of emails to the customers who have purchased from the website, thanking them for the orders and giving them details about the delivery. With the use of technology, number of footfalls and website visitors can be easily tracked. The company should use this opportunity to attract the visitors by redirecting them to their site of preferences. The company can request the customers to provide relevant feedback, or reviews of the products or services they have bought or used, to encourage interaction. At regular intervals, the company can send details of special discounts and offers or extensions of the product range. Suppliers form an integral part of the retail chain. These suppliers provide with good quality raw materials which are the foundation for better end-products (Fernie et at, 2011). To make sure that the business is done with the best suppliers, the company can support them by providing performance incentives. The suppliers with best quality materials and timely delivery of products should be rewarded. This will strengthen the supplier- manufacturer relationship and increase the supplier loyalty which is crucial for long term success of the company. Apart from this, better quality products from the supplier will provide a competitive edge to the company. To gain an edge in e-commerce marketing, the company can engage in many interactive marketing strategies and better website function. The online retail company can build an interactive website providing comprehensive product and services information for the customers, using videos, photographs and texts to demonstrate the features and benefits of the product. Including independent product reviews by other customers make the product or brand more confident. It also helps in building trusts and credibility for the product. References Browell, S. and Ivers, R., 1998. Part-time employees in food retailing, Managing Service Quality. 8(4), pp.281 – 293. Chakrabarti, R., Subramanian, K., Meka, S. and Sudershan, K., 2012. Infrastructure and FDI: Evidence from district-level data in India. [pdf] Available at:< Read More