Bucking the Trend on the UK High Street - Essay Example

CONTEMPORARY MARKETING RESEARCH - JOHN LEWIS – BUCKING THE TREND ON THE UK HIGH STREET INTRODUCTION It has been observed that some of the High Streetretailers in the UK have witnessed decline in sales due to which the retailers were facing quite difficulties. However on the other hand, it has also been observed that some of the retailers like John Lewis have been able to enhance their sales in the earlier years. The year 2013 is a worrying year for most of the retailers in High Street in UK due to the changes in the economy and the market trends. It has been predicted that Comet and Jessops would be the first of several retailers in UK to face decline in sales revenues. This study would be focused on evaluating the performance of John Lewis in previous years and the marketing strategies adapted by the retailer in order to enhance its sales. Similarly, the marketing strategies for the forthcoming years would also be evaluated to identify the performance and productivity of the company in the worrying time of 2013. This study would highlight the reasons for the exceptional performance of the retailer that is not even in the top 4 retailers in UK i.e. John Lewis. Furthermore, the impact of the adapted marketing strategies on the performance of the company would be evaluated. This would help to identify the remarkable performance of the company in the market. In the end, recommendations would be provided for the retail company i.e. John Lewis, in order to enhance its sales and revenues in the industry and to gain competitive advantage over other competitors in the market. This would help the company to enhance its performance which will eventually lead to increase in sales and revenues. INDUSTRY OVERVIEW The year 2012 was a nightmare for the retailers in United Kingdom. The retail growth in this particular year was just 1.2 percent. This retail growth could be said as the third lowest growth rate in the last 40 years (The Telegraph, 2012). The economic crisis and the recession after 2008 are the core reason for such downturn in the retail industry (O’Donnell, 2011). Due to such recession, it has been observed that the Jessops; one of the retailers in High Streets, has closed down all of its retail stores in the UK due to which almost 1370 people lost their job (BBC News, 2013a). Retail industry in UK is being directly influenced by the growing competition from supermarkets and internet retailers. This is one of the major reasons for the closure of Jessops in UK as the company was not able to cope with the changing trends in the retail industry. With advancement in the technology, the retail industry is moving towards e-retailing which provides the customers with variety of retailers offering the same or alternative products in the market. The decline in the sales is a bit of concern for the retailers as it has been observed in the year 2011, that the people are choosing to save rather than spending on goods and services. In this year the consumer’s income failed to keep pace with the inflation due to which the consumption of goods and services declined to great extent. Moreover, the retailers in the market are struggling with the like-for-like sales. Giant retailers such as Sainsbury and Morrisons in the High Streets of UK reported a decline in sales and this highlights the changing situation of the retail industry. According to a prediction of an analyst at Jefferies and Espirito, Morrisons struggled to enhance its sales. In addition, it was also predicted that the retail giant suffered a decline in the sales of more than 2.5 percent (Ruddick, 2013). Along with this, it has been observed that major retailers in the High Street such as electrical chain Comet and sportswear specialist JJB also disappeared from the retail industry. In such a volatile and fragile market, Marks and Spencer was among some of the retailers that observed decline in the profits due to increasing competition in the market and e-retailing. According to several analysts, the year 2013 has been predicted as one tough year for the retail industry in UK. In a report, the retail analyst at BDO indicated that the economy is still unstable due to which the confidence level of the consumers in the market is still shaky |( BBC News, 2013b).The consumers in the market are limiting their purchase of expensive items which results in the low growth rate of the retail market. However there have been certain changes in the market that have been positive for the retail industry and one change has been the introduction and more usage of online retailing. The sales from online retailing have shown positive changes and consumers have also respondent to this change in a way that more retailers have been attracted. Thus this has also result many retailers to start their online retail store as well. PERFORMANCE OF JOHN LEWIS The performance of John Lewis has been exceptional and outstanding as the company has been able to enhance its sales figure to great extent. During such economic conditions where retailers in the market are winding up their businesses, John Lewis has been able to enhance its performance in the market. The company is able to enhance its sales by 13 percent in just five weeks of December. The Christmas period was the major reason for such enhanced sales and performance. The sales figure of the company in the month of December was £684.8 million (Ruddick, 2013) and it has been observed that the sales figure rose by 14.8 percent in comparison to the last year. In addition, the company did exceptionally great in online sales. It has been recorded that the online sales of John Lewis have grown three times faster than the last year and accounted for quarter of the sales group. In such a volatile market, the company has been able to provide the customers with the products and services that could meet the needs and demands due to which the company was able to emerge as one of the winners in the Christmas trading period whereas; the others in the market struggled to enhance their sales during such period. John Lewis has been able to capture a greater share in the market with the help of emerging technologies. With such an outstanding performance, the 85,000 employees working at John Lewis were awarded a bonus of 17 percent of their salary (Thompson, 2013). To be exact, the bonus was equal to the nine-weeks’ pay. The bonus awarded to the employees accounted for £210.8 million and with this strategy, it would result in further enhancing the performance of the retailer. The remarkable performance of the company could be evaluated from its record profit of £409.6 million excluding the bonus paid to the staff. The recorded profit of the company has increased to a great extent i.e. 15.8 percent. In addition to this, the revenue of the company has increased by 9.3 percent. This indicates that the company has been able to earn revenues to £9.54 billion. Being one of the best known premium brands in the retail industry, John Lewis is able to enhance its online sales growth by 44 percent in last year. In addition, the electronic sales of goods were also worth noticing as the sales made almost 31 percent (BBC News, 2013b). Thus it highlights the fact that the retailer has been able to capitalize on the opportunities from the online retail market. Regarding the performance of the company, Neil Sunders; the managing director of retail consultancy Conlumino, said that the company did well in the season and the performance of the company has set such a high standard in the market that is difficult for the competition in the market to match (Ruddick, 2013). In addition, it has been also noticeable that the company has outperformed the market by a significant degree. MARKETING STRATEGIES OF JOHN LEWIS In order to enhance the sales and revenues of the organization in the retail industry, John Lewis has undertaken some of the major marketing strategies to attract the customers. Some of the marketing strategies undertaken by John Lewis in the retail industry are as follows; a) Click and collect marketing strategy Click and collect is one of the marketing strategies that aim to attract the customers with an additional feature. In earlier marketing strategies the customers are provided with a choice to either purchase the product online and at the same time get the product delivered to personal address or to purchase the product online and get it collected from the store of the retail outlet of John Lewis. In click and collect marketing strategy, the customers can purchase the desired products online and can collect the product later from a defined destination. By understanding the change in consumer demands and by taking full advantage of the advancing technology, the retail company has adapted this marketing strategy. b) Partnership/strategic alliance strategy The retail partnership strategy aims to provide the organization with variety of opportunities and progress that the company could not have achieved by its own. With such a strategy at work, the organization can provide its customers with variety of products and services without any hindrance and hurdles. Such partnerships and alliances help an organization to enhance its operations in the market. By creating a partnership/ strategic alliance with Waitrose, the organization aims to sell non-food items in the market through Waitrose supermarket’s website. The organization alone would not possibly be able to manage all the distribution of non-food items. c) Advertisement strategy The advertisement strategy that the John Lewis has adapted has helped the retailer to be successful. The main aim of the advertisement strategy of John Lewis is to engage the customers. Such strategies are used to create awareness regarding the product offered by the organization in the market. With such a strategy at work, the organization can attract and retain customers at the same time. John Lewis has spent £6 million on an advertisement campaign and these campaigns have encouraged customers and resulted in increasing sales (Baker, 2012). Moreover, the advertisement strategy adapted by the organization helped in increasing the loyalty of the customers. d) Extensive product range strategy John Lewis keeps a wide range of products to encourage customers. The marketing strategy to keep extensive products aims to provide the customers with variety of products under one roof so that the customers could frequently purchase all those products that are necessary (John Lewis, 2013). This marketing strategy is frequently used by John Lewis as the company provides its customers with variety of products. Some of the products that are offered by the company are home and garden accessories, electrical equipments, clothes of men and women, beauty products, baby and child products, toys, sports and leisure equipments and international brands. The organization offers its customers with variety of products in the each category so that the customers could shop all they want at the retail outlets rather than purchasing from the competitors in the market. e) Added value to resonate with the customers In order to attract the customers, the best strategy is to provide them with value added products. Over the years, organizations that have been able to provide the customers with added value were successful in the market. On the other hand, organizations that failed to do so had to windup their business in some years. This marketing strategy has been observed at John Lewis as the retail organization provides its customers with high quality products that could enhance the lifestyle of customers. By providing the customers with added value products, the company aims to interact with its customers in such a way that the customers would prefer John Lewis over others in the market. This bond and relationship that the organization aims to create can provide the organization with several benefits out of which increase in sales and revenue are the most prominent one. f) Geographic expansion strategy Expansion in the international world is one of the most adapted marketing strategies in the corporate world. It has continuously been observed that organizations tend to expand their business in foreign countries so that the organization could be provided with several opportunities to enhance the performance and productivity of the organization. Such geographic expansion provides the organization with an opportunity to understand the needs and wants of the customers which leads to increase in organization’s customer base. This strategy has also been undertaken by John Lewis. After the success in the UK retail market, the organization is aiming to expand in the Chinese market. With such expansion, the organization aims to provide the Chinese market with substantially different products than the UK market. In addition, the company would focus on premium pricing strategy. g) Customer relationship strategy Customer relationship management is a particular strategy that allows the organization to play an effective role in creating a superior relationship with the customers in the market. With such strategy at hand, an organization can enhance its interaction with the customers. In addition, the customers are provided with high-quality products that can help the organization to retain the customers in the market. This is one of the recent marketing strategies that are adapted by the organization. With the help of such strategy, the organization aims to enhance the customer’s loyalty and commitment towards the business. This will eventually help the business to boost its sales as the customers would be provided with superior service along with high quality products. By adapting such marketing strategies at the organization, John Lewis has been able to boost its sales in the earlier years. In addition, marketing strategies that are adapted by the organization has provided the organization with several opportunities to enhance the business along with the customer’s base in the market. IMPACT OF MARKETING STRATEGIES ON THE PERFORMANCE OF JOHN LEWIS With such marketing strategies at work, the organization has been able to enhance its performance and productivity to a great extent. The impacts of marketing strategies on the performance of John Lewis are as follows; a) Increase in sales and revenues With the implementation of above discussed marketing strategies by John Lewis, the retailer has been able to enhance its sales and profit margin to a great extent. In the earlier year 2012, the retailer was able to set sales record and the company outperformed the competitors in the market. With such high standards achieved with the help of marketing strategies, it has been predicted that soon the organization will outshine High Streets in UK. With the sales of the stores increasing 20 percent, the organization has enabled itself to enhance the performance and to mark the trend in the retail industry. b) Awareness regarding the products offered by the organization John Lewis has nearly spent £6 million particularly for a single advertisement campaign. The aim of such high spending on the campaign was to tighten the situation for rivals in the retail industry. In addition to this, with the push strategy used by John Lewis, it has been able to enhance its performance by focusing on the advertisement during the Christmas period. With such advertisement being telecasted on TV and internet, the customers were provided with an idea regarding the products offered by the company. This helped the organization to enhance its performance which eventually helped the organization to boost its sales in the month of December. c) Ability to provide the customers with products at the right time and place With strategic partnership and alliance with organizations in the market, John Lewis has been able to provide the customers with variety of product under one roof. With efficient partner and employees, the organization can provide the customers with the right product at the right place. Even though the products offered by the company are at premium price, the retail outlets are known for high traffic of customers due to the availability of the products that are required by the customers. d) Decline in waiting lines and queues By implementing click and collect marketing strategy, the organization has reduced the customer’s waiting in lines to a great extent. With such strategy at work, the organization provides the customers with an additional feature that they can purchase the required products online and the products could be collected from the stores at designated time. This marketing strategy has allowed the organization to reduce the waiting lines at the counter which leads the retail organization to increase in performance and productivity. Since the customers do not have to wait in line, the customer traffic in the retail store has increased. Taking advantage of such customer’s traffic, the organization has decided to enhance the variety of products in the retail stores. e) Increase in online sales The marketing strategy implemented by the organization has benefited the organization to a great extent. With the introduction of online service offered by the retail organization, it has been observed that the online sale of goods and services has increased three times as compared to earlier years. This has profited the organization as the organization can now record which product are being frequently purchased by the customers in the market. This online sale has supported the organization to set record in the earlier year during the Christmas period. f) Innovation and creativity Marketing strategies had great impact on the innovation and creativity at John Lewis retail organization. It was observed that in order to attract the most of the customers in the market, the retail organization offered the customers free access to Wi-Fi service at the outlet. Along with this, the organization was able to provide the customers with variety of innovative products at premium price that were not available at any other store in the retail market. With the help of marketing strategies, the organization was able to enhance its performance to a great extent with the help of innovative and creativity. g) Increase in customer traffic The marketing strategies helped the organization to increase the customer traffic as compared to earlier years. With several competitors out of the industry, the organization was able to attract most of the customers due to similar products at John Lewis. With major competitor out of the picture, the organization was able to increase the customer traffic in the store which leads the organization to increase in performance and the satisfaction of customers in terms of products offering. In addition, the products offered by the retail organization were at warranty; a special feature that attracted most of the customers. h) Satisfaction of both employees and customers The marketing strategies influence the satisfaction of customers and the employees to some extent. With such marketing strategies, the customers were provided with variety of products under one roof which led to the satisfaction of customers. On the other hand, employees were also satisfied as they were provided with bonus of 17 percent. In this way, both the employees and the customers were satisfied with the organization which eventually will help the organization to enhance its performance and sales in the forthcoming years. CONCLUSION & RECOMMENDATIONS Some recommendations for the business to enhance its performance in the forthcoming years are as follows; a) The organization should track of the goods and services bought by the customers so that they can be provided with all the required goods based on earlier purchases. This would help the organization to reduce its time and will help the organization to enhance the satisfaction level of customers. b) The organization should introduce loyalty cards as done earlier by the retailers in the industry. This would give the company a chance to create a bond with the customers. With this loyalty cards, the customers should be provided with discounts on certain items. This will help the company to enhance its sales and revenues in the market. In addition, this will provide the organization with an opportunity to gain competitive advantage over others in the market. c) John Lewis should introduce the concept of self-checkout and self-service at certain retail outlets in UK High Street. This would help the organization to further enhance the customer traffic in the retail stores. By taking full advantage of the advancing technology, the retail store should innovate its stores. d) The company should also work to provide the customers with exclusive brands of the company in the retail stores. This would help the retail stores to gain more popularity in the market and will help the customers to identify high quality brands in the market. In order to conclude, it could be said that with the passage of time, John Lewis did exceptionally well in the earlier year with the help of its marketing strategies. Several analysts have predicted that the year 2013 would be a nightmare for the retail organizations. In order to enhance the performance in this year, John Lewis will have to develop marketing strategies that would allow the organization to have competitive advantage over others in the market. For the organization to again set record in the retail industry, the recommendations should be considered as the recommendations provided are aimed to enhance the performance and sales of the organization in such economic conditions. References Baker, R. (2012). ‘John Lewis teases with Christmas ad trails’. Marketing week , Available from http://www.marketingweek.co.uk/news/john-lewis-teases-with-christmas-ad-trails/4004657.article [Accessed 9 March, 2013] BBC News. (2013a). Jessops camera stores to close with loss of 1,370 jobs. Available from http://www.bbc.co.uk/news/business-20992125 BBC News. (2013b). John Lewis sees December sales jump. Available from http://www.bbc.co.uk/news/business-20889604 [Accessed 9 March, 2013] John Lewis. (2013). Site Map. Available from http://www.johnlewis.com/site-map [Accessed 9 March, 2013] O’Donnell, S. (2011). U.K. Retail Sales Fall More Than Forecast as Outlook Darkens’. Bloomberg Businessweek, Available from http://www.businessweek.com/news/2011-12-15/u-k-retail-sales-fall-more-than-forecast-as-outlook-darkens.html [Accessed 9 March, 2013] Ruddick, G. (2013). ‘John Lewis sales rise over Christmas’. The Telegraph, Available from http://www.telegraph.co.uk/finance/9775437/John-Lewis-sales-rise-over-Christmas.html[Accessed 9 March, 2013] The Telegraph. (2012). Shock fall in UK retail sales as shoppers cut back. Available from http://www.telegraph.co.uk/finance/economics/9679941/Shock-fall-in-UK-retail-sales-as-shoppers-cut-back.html [Accessed 9 March, 2013] Thompson, J. (2013). ‘85,000 John Lewis and Waitrose staff celebrate 17 per cent bonus after record profits’. The Independent, Available from http://www.independent.co.uk/news/business/news/85000-john-lewis-and-waitrose-staff-celebrate-17-per-cent-bonus-after-record-profits-8523909.html [Accessed 9 March, 2013] Read More