Retail Marketing for Topshop to Enter Argentina - Business Plan Example

Proposal for TopShop to enter Argentina 0 Introduction 1 Nature and role of retail sector at the international level International retail has emerged as an important theme, as businesses have globalized their operations. Home market saturation, advanced communication technology, opening up of economies and the changing face of retailers through mergers and acquisitions are the factors responsible for internationalization in the retail sector (Simpson & Thorpe, 2005). These push (home market saturation, competition and lack of new product development) or pull factors (removal of trade barriers, cost economies and advanced technology) have stimulated the process of globalization (Evans et al, 2008). When foreign retail sectors are weak, they create opportunities for international retailers. Profit motives have been found to be the most dominant motivator in driving internationalization (Evans et al, 2008). Other factors that drive retail internationalization include the size of the host country, host country characteristics, niche opportunities and level of economic prosperity (Johnson & Tellis, 2008). Global expansion has helped retailers identify their niche in the international market place. Global diversification is a way to reduce economic, political and other risks as well as increase firm’s competitiveness (Volgina, 2008). According to Kearney’s (2013) Global Retail development Index (GRDI) the developed markets continue to face flat or anemic growth while the developing markets continue to be important sources of growth. However, deciding on the appropriate market and the right product line for that particular market has to be a strategic decision because every market has unique challenges and requires unique strategies. 1.2 Retail Environment at the International level Retail is fiercely competitive at the local, national and international level. At the international level, retail environment may require retailers to develop core competencies either in the product, process or delivery of services (Simpson & Thorpe, 2005). Retailers also need to assess the macro-environment in the country in which they seek to expand because retail is affected by the wide range of government policies and regulations. Retail is also volatile because of fundamental shifts in retailer/customer relationship management. The economic climate is difficult but the retail sector provides opportunities as well as risks for retailers of all sizes and types and in all markets (Department for Business Innovation & Skills, 2013). Retailers are increasingly moving into multi-channel operations – they need to have an online presence in addition to the brick and mortar stores. The retail sector will continue to evolve and meet the changing needs. Retailers have to be flexible and smart – they must know when to collaborate and when to compete. 2.0 Current Situation Analysis 2.1 Social environment and the retail sector The social environment comprises of consumer demographics, preferences, and it also includes disposable income levels of consumers. Consumers seek convenience of purchase; consumers also seek to experience the enjoyment. Consumption also reflects the self-identity of individuals which lays emphasis on brands, label and marketing (Department for Business Innovation & Skills, 2013). Changes in labor market (longer working hours and more people entering or re-entering the labor market) have impacted lifestyles of people. This in turn leads to increased demand for quality goods and convenience of purchase. These factors place a demand on retailers to keep their shops open for longer hours and to offer online platform as well. Demographic shift has also resulted in older population demanding quality products, which means the retailers have an opportunity to cater to this new segment. This would require changes in product, style, environment and customer services to be more accessible to serve this growth market. 2.2 Inter-relationship between the political, economic, ecological, and legal environment, and retail sector Governments tend to be protectionists towards domestic production and this can impact international retailing. However, presence of international retailers can stimulate and make domestic players competitive and quality-conscious, while the ultimate benefit is derived by the end consumer. The economic environment impacts the retailer because the country GDP and the levels of unemployment affect consumption. At the same time, the retail sector provides employment thereby impacting the local and nation al economies (Department for Business Innovation & Skills, 2013). The retailer has responsibility towards the society and the environment as well. To maintain ecological balance retailers can contribute by using minimal and biodegradable packaging and reducing green house emissions by using technology-efficient transportation. The legal environment of a nation deals with the regulations and licenses necessary to operate in that country; retailers are bound to adhere to regulations concerning consumer protection, health, safety, food hygiene, employment law, age-restricted sales, alcohol licensing and data protection. 3.0 Objectives and Goals Consumers seek consumption experience as well as purchase 4.0 Marketing Implementation Plan 4.1 Market Segmentation The fashion retail market is split into number of segments comprising of luxury, high street, supermarkets or our-of-town discounters (Bruce & Daly, 2006). Segmentation in retail helps segregate a heterogeneous group of customers into homogenous groups or segments. Such segmentation is essential as it provides an understanding of consumer characteristics which in turn help design the right marketing mix strategy (Goller, Hogg & Kalafatis, 2002). Today it is no more enough to segment based on demographics, and segmentation helps evaluate the market viability and the needs of consumers differing in their tastes, life styles and motivation (Daneels, 1996). However, the fashion industry is marked with high volatility, shorter product cycles, low predictability and high impulse purchasing (Christopher, Lowson & Peck, 2004). This could translate into several seasons during the year making segmentation difficult. Therefore, fashion retailers would need to analyze the trends, the taste of the people and then adapt the basics of the style relevant to that country. Again, customers differ in their attitudes and attitudes impact behavior, which may not reflect customer preferences (Bond & Morris, 2003). This makes segmentation difficult in which case retailers identify homogenous groups based on characteristics and behaviours (Diaz Martin et al, 2000). Segmentation should create opportunities for growth and diversification. 4.2 Targeting Segmentation helps in targeting a set of customers in an appropriate manner because a store that tries to serve all customers may end up appealing to none (Daneels, 1996). Targeting is the process of renouncing a large number of potential customers but this contradicts the tendency to sell as much as possible. Thus, it helps retailers decide on the product line and optimize the supply process for speed and costs. 4.3 Positioning Positioning is a mix of the retail elements such as marketing, reputation, store layout, sales staff and merchandising (Strategic Direction, 2005). Store image helps retailers in determining their positioning strategies (Birtwistle, Clarke & Freathy, 1998). Because of intense and continuous competition retailers have to keep improving their positioning. It has become a strategic imperative to produce clothing for every season to suit every market and every generation (Bakewell, Mitchell & Rothwell, 2006). Strong retailer brands have developed due to market power concentration and retailers take full advantage of their market strength. 4.4 Customer acquisition & Retention 4.5 Store design within the marketing plan Store image has an unconscious impact over consumer purchase decision. This includes store layout as well. Store ambience also holds importance. The retailers hence tend to project an image that matches the targeted customers’ self-image world as this enhances customer loyalty (Birtwistle, Clarke & Freathy, 1998). Store image also has to be linked to customer perception of the store, customer expectations and previous purchase experience. The store image should be planned based on latent class segmentation which implies segmentation based on the degree of the perception of the brand, of price promotion, of the personnel and the product line (Bond & Morris, 2003). Thus, store location and store front presentation and displays also hold importance. 4.6 Store merchandising within the marketing plan Consumers would be aware of the type and clothes offered by large brand names and hence store merchandise is a critical factor that impacts consumer decision. Trend surrounding fashion is now linked with self image, equality and a sense of individualism (Azuma, 2005). Visual merchandising is the external communication to potential customers and this serves to attract customers (Lea-Greenwood, 1998). The young fashion-conscious consumers are well aware of branding and the image wearing a particular style of clothing would promote. Branding includes staff as the front line staff drive the brand. The service offered by the brand such as exchanges and handling returns can strengthen or weaken any fashion retailer’s positioning. 4.8 Implications of Branding on marketing objectives and strategies 4.9 Implication of future trends on marketing objectives and strategies 5.0 Monitor/Control 5.1Critical evaluation of the marketing budget within the retail marketing plan 5.2 Critical analysis of the advertising budget within the retail marketing plan 5.3 Critical evaluation of the importance of control and monitoring within the marketing plan 5.4 Critical analysis of the importance of contingency planning within the retail marketing plan 6.0 Recommendation Market research should be conducted by TopShop of the consumer trends, customer attitudes and behavior before entering the market. To focus on the target segment, TopShop should make an initial offer, observe the market response and then decided on the appropriate market mix for Argentina. 7.0 Conclusion Appendices Appendix A Company Overview and Analysis Established in 1964, TopShop is one of the most influential brands on the High Street and the flagship brand of the Arcadia Group. TopShop started as a fashion brand within the Sheffield branch of the Peter Robinson Ltd chain. It became a standalone store by the 1970s and in 1994 it moved into its existing permanent store on Oxford Street. The fashion retailer has over 300 stores across the UK and over 250,000 shoppers visiting the Oxford Circus store every week (Arcadia Group, n.d.). Apart from their customers, TopShop also bonds with industry insiders and in 2002, they collaborated with NEWGEN which allowed them to foster new design talent and provided a platform for emerging designers (TopShop, n.d.). Its three main competitors include H&M (Hennes & Mauritz, AB), Next, and Industria de Diseno Textil, S.A. With the introduction of a few lines with Fairtrade or organic cotton, TopShop has achieved positive publicity but this does not demonstrate its commitment to ethical trade. The company has a bold product range and has earned international respect. The company’s mission is to ‘bring style to you, wherever you are’. Thus they respond quickly to catwalk trends and celebrity fashion statements (Strategic Direction, 2005). This strategy ensures they stock the leading fashion styles first at high street price. Appendix B Country Profile Argentina is an open market economy with a highly qualified population and a huge consumer base. Its population continues to grow although at a slower rate. The youth cohort between the age ages of 15 and 24 is the largest consumer segment in Argentina. Majority of the labor force is in the services sector (72%) and the unemployment rate stands at 7.2 percent as of 2013 (CIA, 2014). As the working population is well qualified and gainfully employed, the economy of Argentina is likely to experience an economic boost. The country has a sizeable number of immigrants mainly from Spain and Italy. The Argentina economy experiences an annual 12 percent rise in inflation and if inflation continues at this rate, purchasing power of people is likely to come down, thereby signaling lower levels of consumption (Euromonitor, 2013). Argentina has been home to several international luxury apparel brands but due to restrictions imposed by the government in its economic policy, the world’s most luxurious designer brands are leaving Argentina (Armani, 2012). While Argentina has been an open economy, it has now changes its policy in favor of domestic production. Change in government policy demands that an equal amount of the value of goods imported should be invested in Argentina. Thus brands have to invest in local production or face higher tariffs and longer restocking cycles (Euromonitor, 2013). The currency in Argentina is overvalued which makes it profitable for the country to import goods rather than produce locally (Armani, 2012). The population of Argentina appears to be fashion conscious as they have Fashion & Beauty Weeks and they honor fashion collection debuts for autumn and Winter (The Argentina Independent, 2013). For the first time in 2013, participants of the BAF Week performed spontaneous catwalk. However, fashion clothing currently available in Argentina is of excellent quality but very highly priced. Besides, apparel for the older segment appears to be in demand as most stores stock apparel for the youth. Almost the entire population is situated in urban areas and hence the retail sector has immense potential (Argentina Retail Report, 2014). A rise in disposable income and taste for luxury items are the drivers of growth in the retail sector. Availability of consumer credit is also likely to boost retail sales with clothing and footwear promising 7.9 percent increase. Democratization of fashion in Argentina has enhanced clothing consumption as it now readily available to the rising middle and upper classes (Freeman, 2011). Domestic production needs investment and needs to be modernized as it is unable to meet the local demand for apparel. As the luxury designer brands exit the country, unemployment rates is likely to increase. Tourism is also impacted in the process and the tourists comprise of a high segment that indulges in fashion apparel purchase. SWOT of TopShop Strengths Established global brand with presence in over 100 countries Trendy and moderately priced apparel catering to both men and women Single biggest supporter of emerging design talent In-store ambience and personal shopping experience Diversified portfolio including jewelry, bags and shoes Appeals to different segments Interactive Digital presence Sponsors Charities Keeps improving positioning as it is able to respond to changing trends quickly Opportunities Not many Shops in Argentina with fashion clothes for older people. The older segment prefers classic, elegant clothes. The apparel industry in Argentina is shielded from Asian and Chinese competitors and hence TopShop has potential for growth Rising demand for fashion clothing which domestic production in Argentina is unable to cope with as investment is required. Weakness Accusations of ‘slave labour’ in its supply chain (People & Planet, 2014) No evidence of commitment to ethical trade, which is essential to improve conditions in its supply chain Mostly caters to high end customers Threats Presence of International chains in Argentina include Gucci, Rapsodia, Zara, H&M, Givenchy, Touche Import barriers threaten growth High rate of inflation could result in reduced purchasing power in Argentina Domestic apparel industry in Argentina receives government support and has a steady growth PESTLE Analysis of Argentina Marketing Budget Read More