Global Marketing: Miss Selfridge - Case Study Example

Global Marketing: Miss Selfridge  1. Executive Summary – Miss Selfridge This report outlines international marketing strategy for Miss Selfridge for its market entry into India with a range of its products. The SWOT and PEST analysis show that Miss Selfridge currently has various strengths and capabilities to successfully enter Indian market and implement a market development strategy. Men’s apparel market is 46 percent of the total apparel market in India. Preference for readymade garments is increasing and this has become inevitable with the rise in urbanization. Whereas, women’s apparel market is 17 percent of the total apparel market in India. The preference for the branded Western and Indo-western apparels among the working women is on the rise, which is a welcome relief for the manufacturer and retailers of branded apparel. The following report covers various aspects of apparel retailing in India, starting from global overview to future outlook of Indian apparel market. It also provides an in-depth study of current Indian apparel market scenario. 2. Introduction 2.1 About Arcadia Group Arcadia Group is the UK’s largest privately owned clothing retailer with more than 2,500 outlets. We own seven of the high street’s best-known fashion brands – Burton, Dorothy Perkins, Evans, Miss Selfridge, Topman, Topshop and Wallis – as well as the shopping concept Outfit. Bhs is being integrated operationally into Arcadia Group as one of its brands. Our brands are to be found on all of the UK’s high streets and in major shopping centres as well as online. Our brands also operate in 40 countries across Europe, USA, the Far East and Middle East . (.(Arcadia Group Limited, About Us, 2009, Available at :http://www.arcadiagroup.co.uk/about/index.html, accessed on Dec 04 2009) Miss Selfridge is a nationwide UK high street store which began as the young fashion section of Selfridge's department store in London in 1966. Miss Selfridge is a distinctive brand of the Arcadia Group which aims to sell fashionable clothes, shoes and accessories to young women.1996-established Miss Selfridge has 180 stores globally. Presence of Miss Selfridge in UK (Miss Selfridge, Interactive store locator, www.missselfridge.com, Web, accessed on Dec 08 2009) 2.2 Product Profile The brand retails a distinctive range of women's apparel, accessories and shoes, which are feminine, confident and lively. Variety, individuality and originality are key to the Miss Selfridge brand, which targets feminine and stylish, individual and self-assured customers aged 18 to 24. A few years ago, the designs were targeted toward teenagers, but in recent times Miss Selfridge has extended its fashion portfolio to appeal to the young at heart. The accouterment drawing inspiration from vintage print collections to contemporary styles conceptualized by in-house designers, are a favorite among the maverick fashion lover. .( Miss Selfridge, www.misselfridge.com, accessed on 08 Dec 2009) 2.3 Global presence of Miss Selfridge Miss Selfridge is present in the following countries apart from UK: Bosnia,Croatia,Gibraltar,Indonesia,Ireland,Israel,Malaysia,Malta,SaudiArabia,Serbia,Singapore,Slovenia and Turkey (Miss Selfridge Home Page >Store Locator) 2.4 Financials of Arcadia Group In 2009 , Arcadia posted a 13% rise in pre-tax profits to £213.6 million. The growth marks a turnaround in performance after profits declined in the previous two years by 5% and 1.6% respectively. The amount is nearly four times the annual operating profit of the company, which Green has been lauded for reviving the fortunes of since he took it over in 2002. Arcadia's pre-tax profits grew to £252.79 million compared to profits of £246.33m last year.Operating profit for the year rose 10.1 per cent to £326.1m, while net sales grew 6.8 per cent to £1.77bn. Same-store sales for the year edged up just 1.3 per cent, however, while total sales have risen by a meager 3 per cent since the August year-end. Key numbers for fiscal year ending August, 2008:  Sales: $3,363.0M One year growth: (10.1%) Net income: $298.8M Income growth: 25.5%( Answers.com, Arcadia Group financials 2009, Accessed on Dec 08 2009,Web, Available at:http://www.answers.com/topic/arcadia-group) 2.5 Company’s CSR Policy The Arcadia group has made a commitment of responsible retailing and has thus initiated the fashion footprint wherein we report our progress with respect to our CSR commitments. Its overriding aim is to co-ordinate activity which renews our commitment to being a socially responsible retailer.(Home Page Ethical Policy) The Fashion Footprint Steering Group ensures that social responsibility remains integral to the Group’s strategy, and it monitors its implementation to maintain and improve performance each year. We recognise that how and where we source our products not only has an impact on the people who manufacture them but on the people and communities where the raw materials are sourced and via the materials used. As a large business we are keenly aware of the role we play and the impact we have on our suppliers and their people as well as wider communities, the environment and our own employees . We have been taking positive actions to improve factory conditions worldwide, reduce our environmental impact and raise awareness among our own staff of the need to trade ethically. Some of our CSR initiatives CO2 emissions per store delivery have been reduced by 10% Around 85% of all our clothing now promotes washing at lower temperatures We’ve changed over 185,000 lamps across the business, replacing high-energy versions with energy efficient alternatives We recycled 6,130 tonnes of mainly polythene And cardboard We recycle over 11 million hangers each year waste We reduced the amount of waste that ends up in landfill by 1,667 tonnes (The Arcadia Group Responsibility report, 2009.UK , online,Available at: www.arcadiagroup.co.uk/assets/pdfs/responsibility_report_2009.pdf) 3. Expansion into India 3.1: India as a market: India has a rich and varied textile heritage, where each region of India has its own unique native costume and traditional attire. While traditional clothes are still worn in most of rural India, urban India is changing rapidly, with international fashion trends reflected by the young and glamorous, in the cosmopolitan metros of India. Fashion in India is a vibrant scene, a nascent industry and a colorful and glamorous world where designers and models start new trends every day.Fashion in India has become a growing industry with international events such as the India Fashion Week and annual shows by fashion designers in the major cities of India.Fashion in India covers a whole range of clothing from ornate clothes designed for wedding ceremonies to prêt lines, sports wear and casual wear. (Online article, Rolling the Retail Trolley: Brand building in the Indian Retail, 2009, Available at: www.fibre2fashion.com, accessed on 08 Dec 2009) India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns..(India Retail Industry: Snapshot of Indian Retailer, Indian Consumer, Indian Retail Market Size and Potential, Retail Scene in India, April 2009,online,Available at: www.India- reports.com, accessed on 08 Dec 2009) It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. Organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11. (AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009) Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, Kolkata, Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, A McKinsey report 'The rise of Indian Consumer Market', estimates that the Indian consumer market is likely to grow four times by 2025. Commercial real estate services company, CB Richard Ellis' findings state that India's retail market is currently valued at US$ 511 billion. Further, CB Richard Ellis states that India has moved up to the 39th most preferred retail destination in the world in 2009, up from 44 last year. Favorable demographic and psychographic changes relating to India's consumer class, international exposure, availability of increasing quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate pace. Recently, India is increasingly being looked upon as a major supplier of high quality fashion apparels and Indian apparels have come to be appreciated in major markets internationally. 3.2 Objectives for expansion: At Arcadia Group, we recognize that our responsibilities go beyond providing customers with fantastic fashion that offers excellent quality and great value, sold from inspiring stores and easy-to-use websites. We are acutely aware that the approaches we take and the way we work with our suppliers are integral to our goal to be a responsible retailer. Our objective is to achieve global expansion, becoming a group of specialist retail chains each with a clearly defined market and a distinctive face, keeping in line with our CSR objectives. 3.3. P.E.S.T. Analysis We analyze the Retail Industry in India in a PEST Framework Analysis. A PEST analysis  is concerned with the environmental influences on a business. The acronym  stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business (Philip Kotler and Gary Armstrong [Paperback 2006 ],PRINCIPLES OF MARKETING Eighth Edition) 3.3.1. Political Influences including Legal The political influences in this industry is probably the most burning concern with organizations going global and many countries restricting the growth of companies by many countries. FDI in many countries are still heavily regulated and global companies are yet to set foot into emerging markets like India .Large overseas retailers are currently barred by law at the retail level in India, and are limited to either wholesale, license or franchise arrangements. But the entry of multinational retailers into India along with the growth of domestic mass merchandisers has been steeped in controversy amid fears they will drive the country's 15-million "mom-and-pop" outlets out of business.Under India's tight foreign investment rules, no overseas chains are permitted in the retail sector -- except for single-brand outlets such as Nokia or Reebok -- to protect local retail player s.India does not permit foreign direct investment in multiple-brand retailers, and caps foreign holdings in single-branded retailers at 51 percent.. 3.3.2. Economic Influences Disproportionate levels of income and consumer spending in developing countries like India and China will impact growth of global companies. Exchange rates affect global sourcing and pricing policies on a day to day basis. Indian consumers now have increased disposable income and purchasing power, which is promising for the foreign retailers to invest in India.(India’s Foreign Trade Policy, Ministry of Commerce and Industry, Government of India, Foreign Trade Policy 2007-2009, Available at website: http://dgft.gov.in, accessed on 08 Dec 2009) 3.3.3 Social Influence Developing countries are not used to push type marketing and aggressive selling. Bulk buying patterns predominantly present in USA, is non-existent in Asian countries. Language and cultural factors is a barrier to globalization. Anti-Globalization movements in the recent past has affected growth of global companies, especially companies originated USA 3.3.4. Technological Influences Technologies such as kiosks and interactive handheld devices provide more information to sales associates and customers, enabling better decision-making and increasing satisfaction. Rich-media displays that provide educational or branding reinforcement are becoming commonplace. The challenges faced by the Indian retail sector include an unprecedented growth in data size and number of users that can cause major system overhauls; accommodating all the supply chain models in the same solution; scaling up IT to support growth plans; dealing with different retail formats; constant shopping experience enhancement and the need for a single customer view; calculating RoI on a retail IT implementation; and proper infrastructure and timely distribution. Retailers adopting these IT trends in India are still in an introductory phase, and are in the process of understanding the benefits of IT in retail..(Website of Ministry of External Affairs, Government of India,Industries and Services, Retailing, Last updated in Dec 2009,Available at:http://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/retailing.htm, Accessed on Dec 08 2009) 3.4 SWOT Analysis: Philip Kotler and Gary Armstrong [Paperback 2006 ],PRINCIPLES OF MARKETING Eighth Edition) Strengths Weakness Internal Brand recognition Purchase from Local merchants as preference. Global presence- Economies of scale CSR commitment in line with company’s objectives Large scale of operations leading to a lower unit cost Diversification into various market segments No formal mission statement. Reduced bottom-line during last FY External Opportunities Elimination of Quota Restriction leads to greater Market Development. Market is gradually shifting towards Branded Readymade Garment. Increased Disposable Income and Purchasing Power of Indian Customer opens New Market Development. Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other segments of the industry. Greater Investment and FDI opportunities are available. Influx and adaptation of western culture by young people Threats Competition from other developing countries, especially China. Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. Opposition from Unorganised retail sector Threat for Traditional Market for Powerloom and Handloom Products and forcing them for product diversification. Geographical Disadvantages. International labor and Environmental Laws. To balance the demand and supply. Threat from Local apparel retailers 3.5 Five Forces Analysis: ( M.E Porter, Competitive Strategy, Free Press, 1980) The competitive environment for Miss Selfridge definitely looks competitive. Competition is characterised by many factors, including assortment, format, products, advertising, price, quality, service, location, reputation, credit and availability of retail space etc. New entrants (business houses and international players if foreign participation is further liberalised) are expected to further intensify the competition. Threat of new entrants remains low in the home market and globally . The entry scene is limited to existing retail chains as the cost of setup is substantial. Regulatory restrictions are also a concern here. Threat of substitute products is low to medium with consumers having a choice from different stores to buy the same product at highly competitive prices. Bargaining power of buyer in India would be more as he has a lot of options to choose from. The bargaining power of suppliers varies depending upon the target segment, the format that they follow and the products they offer. The unorganised sector has a dominant position. There are few players who have a slight edge over others on account of being established players and enjoying brand distinction.  3.6 Competitors for Miss Selfridge in India Marks & Spencer Reliance India is planning to open 35 more stores over the next five years, according to Mark Ashman, CEO of the company. The 51:49 joint venture between UK’s Marks and Spencer and Reliance Retail Ltd already has 15 stores in India. Carrefour SA, Europe’s largest retailer, may start wholesale operations in India by 2010 and plans to set up its first cash-and-carry outlet in the National Capital Region. Mahindra Retail, a part of the US$ 6.7-billion Mahindra Group, plans to invest US$ 19.8 million by 2010 to step up its specialty retail concept 'Mom and Me'. Pantaloon Retail India (PRIL) plans to invest more than US$ 103.3 million to expand its seamless mall Central and the value fashion format Brand Factory over the next two years. Bharti Retail has introduced eight Wal-Mart private labels—including two of its largest, ‘Great Value’ and ‘George’—in its supermarket chain Easyday, hoping to attract more consumers with their international design and packaging. Retail brands such as United Colors of Benetton, Tommy Hilfiger and Puma are opening factory outlets to sell excess stock and woo the price-conscious buyers. (India Brand Equity Foundation, Last updated Nov 2009, Available at: http://www.ibef.org/industry/retail.aspx, Accessed on 08 Dec 2009) 4. Strategy for entry into India The company’s strategy to expand into India is based on the P.E.S.T framework including the legal limits, in line with the company’s objectives and CSR commitment. The company’s objective has been to establish itself globally as a distinctive range of women's apparel, accessories and shoes, which are feminine, confident and lively. The brand has more than 180 stores worldwide. The Arcadia group has several strengths and opportunities as discussed in the SWOT analysis above. Analysis of Miss Selfridges global generic strategy is complex and mystifying .Low cost leadership helps the firm above average returns in the industry despite strong competitive forces (Porter, 1980). The company is striving to achieve low cost with the use of technology drivers. It also has an advantage of economies of scale since we do not have our own factories. We source mainly from countries like India, China, Malaysia, Hong Kong and Turkey etc. (Arcadia Group Limited, Responsibility report,2009, online, Available at www.arcadiagroup.co.uk/assets/pdfs/responsibility_report_2009.pdf, accessed on 08 Dec 2009) Miss Selfridge appears to have a differentiation strategy. The differentiation strategy is one of differentiating the product or service offering of the firm, creating something that is perceived industry-wide as being unique (Porter, 1980). It can be design or brand image, technology, features, customer service, dealer network or other dimensions or the target market. Miss Selfridge has a Multi-domestic approach as a choice of strategic approach since the Group is able to control each of its relatively distinguished brands to local conditions. The company looks for local responsiveness. 5. Mode of Entry: Miss Selfridge has both Ownership advantages as well as Location advantages. Also, keeping in mind the company’s CSR strategy and the PEST analysis, the mode of entry into India could be as follows: Miss Selfridge can enter India via a Franchise agreement with a retail apparel brand in India keeping in mind that 100 per cent FDI is allowed only in cash-and-carry wholesale Franchisee arrangements are also permitted in retail trade in India or Miss Selfridge can invest directly as 51 per cent FDI is allowed in single-brand retail Statistics like 72 % of India's population is below the age of 40, 47% of Indians is under the age of 20 and 10% of the world population is an Indian under 25  is a common assessment of India by all countries now.  It is this population of young people  which constitutes, for India, a potential demographic dividend. It is this segment that Miss Selfridge must target.(Statistics available at:http://www.yionline.org/youthindia.html, last updated in April 2009, accessed on 05 Dec 2009) 6. Conclusion Miss Selfride considering its scale and scope of operations has given a dynamic perspective in analysis of the many frameworks analyzed with. Many strategists do not give concessions for the time the business has started to expand globally. Wal-Mart for instance has grown to such a strong position over 40 years, this would take considerable time to replicate and adapt in international markets. Analysis using Five Forces formula shows the industry and Miss Selfridge in general moving towards globalisation but yet maintaining key aspects to localisation. This could be the way ahead. The Transnational Model illustrates the same key aspect. Marketing strategy and product variation though it can be global, it needs to be tuned to the local market catered considering the emergence of localisation preference in consumers. The market has gone too global, that consumers place an emphasis of localisation. 6. Bibliography 1. Arcadia group Limited- About us. Available at http:// www.arcadia.co.uk Accessed 8 December 2009. 2. Arcadia Group Limited-Responsibilities Available at http:// www.arcadia.co.uk Accessed 8 December 2009. 3. Marketing Management – Philip Kotler Available 4.Industry-Retail Available at http:// www.ibef.org Accessed 8 December,2009 5.Retail sector in India Available at http:// www.indianground.com Accessed 8 December,2009. 6.Case Studies>Marketing>MKTG114htm Available at http://www.icmrindia.org Accessed on 8 Dec,2009 7. Community>consclub>ppts>retail ppt. Available at http://www.iimcal.ac.in (Press Release >Arcadia Group Results 2008-09 accessed on 8 December,2009 8. Missselfridge-Home-Store Locator Available at http://www.missselfridge.com Accessed 8 December,2009 9. Fashion marketing – Janet Bohdanowicz and Liz Clamp Available at http://www.bing.com Accessed on 8 December,2009 10.Youthindia.html Available at http://www.yionline.org Accessed on 8 December,2009 11. International Marketing –Rajagopal Available at http://www.google.co.in accessed on 9 December,2009 12.The Retail Sector ppt.- KPMG-FICCI Report Available at http://www.iimcal.ac.in Accessed on 9 December,2009. 13. India in business- Available at http://www.indiainbusiness.nic.in Accessed on 8 December,2009 14.Home>Product info>journal list>international market review Available at http://www.journalofinternationalmarketing.com Accessed 8 December,2009 15. Journal of fashion marketing and management. Available at http://info.emeraldinsight.com Accessed on 8 December,2009 16.IJMR Vol.51 Issue 6 2009 Available at http:// www.ijmr.com Accessed on 8 December,2009 17. CRISIL Reports-e-book Available at http:/www.toodoc.com Accessed on 8 December,2009 18. Global Marketing: Foreign Entry, Local Marketing, and Global Management by Johny K. Johansson Available at http://www.bestwebbuy.com Accessed on 8 December,2009 19. Marketing, Tim McGraw-Hill Available at http://www.freshwap.net Accessed 8 December,2009 20. International or Global marketing.aspx Available at http:// www.marketingpower.com Accessed 8 December,2009 21. PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Available at www.rapidshare.com Accessed on 8 December,2009 22. Online Library Available at https:/www.questia.com Accessed on 8 December,2009 23. Lesson International marketing.htm Available at http:// www.marketingteacher.com Accessed on 8 December,2009 24. Open library Available at http://www.openlibrary.org Accessed 8 December,2009 25. Global Marketing by Kotler Available at http://www.pdf.database.com Accessed 0n 8 December,2009 26. Indian Journal of Marketing Available at http:// www.indianjournalofmarketing.com Accessed on 8 December,009 27.Doc/1G1-185430723 html Available at http:// www.encyclopedia.com Accessed on 8 December,2009. 28. India-Retail sector Analysis 2006-07 html Business market reports Available at http://www.bharatbook.com Accessed on 8 December,2009 29.Faculty column>FC742html>Indian Retail industry Available at http:// www.indianmba.com Accessed on 8 December,2009 30.Category>retail Available at http://www.indianeconomy.org Accessed on 8 December,2009 31.Indian Retail sector 11Oct 06.asp Analysis of the Indian Retail sector Available at http://www.valuenotes.com Accessed on 8 December,2009 32.Category >Retail market Available at http:// www.indianrealtynews.com Accessed on 8 December,2009 33.Presenting Retail India Inc.to the World Availale at www.indiaretailforum.in Accessed 8 December,2009 34.India Retail report Available at http:// www.indiaretailing.com Accessed on 8 December,2009 35. Indian Retail-related statistics.html Available at http:// www.buyerbehaviour.blogspot.com Accessed on 8 December,2009 36. Retail reports.aspx Available at http://www.india-reports.com Accessed on 8 December, 2009 37.Microfinance India>India >Retail market >Statistics Available at http:// www. Indiamicrofinance.com Accessed on 8 December, 2009 38. Globalisation Available at http:// www.globalisationguide.org Accessed 8 December,2009 40. Globalisation and its Contents (Vol V, issue 4&5) Available at http://www.littlemag.com accessed on 8 December 2009 __________________ Annexure 1 ( Organised Retail in India : The Next Growth Frontier, Article by Tata Strategic Management group, available at: http://www.tsmg.com , June 2006, accessed on Dec 08 2009) Annexure 2 :Indian retail: share of categories (%) ( India Retail Report 2009 by IMAGES F&R Research, available at: http://www.indiaretailing.com/india-retail-report-2009-detailed-summary.pdf) Annexure 3 Datamonitor’s Industry profile-Apparel Retail in India, available at: http://www.datamonitor.com/store/Product/apparel_retail_in_india, accessed on 08 Dec 2009 Annexure 4 Datamonitor’s Industry profile-Apparel Retail in India, available at: http://www.datamonitor.com/store/Product/apparel_retail_in_india, accessed on 08 Dec 2009 Read More