NEXT Plc Analysis - Case Study Example

s result of these figures it is obvious tht the British fshion industry is highly dependent on other countries' textile. lrge number of British consumers hve becme more price sensitive under the slogn 'look good-py less' however some consumers re willing to buy higher priced nd exclusive clothing. The number of millionires in the UK incresed by more thn 80% between 2001(230000) nd 2004(425000) (Finch, 2007). This leds to luxury nd strong brnd wreness. lthough the forml wer is more nd more substituted by csul wer, the UK is still the country with highest mrket shre of forml wer.

The UK retiling mrket is currently highly competitive. Due to high competition the prices of outerwer went down in the mid 90's. The mjor groups in UK clothing retiling re the mixed nd deprtmentl stores, designers clothing, discount stores nd mrket stlls (Lnds' End, Inc., nnul Pper Jnury 2006). The UK economy hs been mong the strongest in Europe. Consumer confidence hs been high s result of low interest rtes, low level of unemployment nd strong increses in house prices. Growth in household expenditure ws driving force behind the UK's GDP growth.

These positive economic dt for the British explin to lrge extent the fct tht UK consumers' most fvourite leisure time ctivity is shopping (Lnds' End, Inc., nnul Pper Jnury 2006).The min fctor in buying decision of British consumers is disposble income which is continuously incresed in recent yers.Clthes retilers fll int tw brd ctegries: firstly, thse selling wn-brnd clthing nd, secndly, thse selling third-prty wer. Mjr retilers such s Mrks & Spencer nd the rcdi Grup re gd exmples f the first grup, s re chin pertins such s NEXT nd Gp.

The secnd grup includes the mjr deprtment stres nd the mjrity f independent retilers in the UK. Clthing retiling is highly diverse industry. The retil sectr rnges frm lw-cst nd discunts retilers thrugh t independents, sprtswer, frml wer nd highly exclusive designer butiques. Hwever, s in mst cnsumer gds mrkets, it is t the middle level where the mjr plyers re t be fund nd mney cn be erned.Porter's Five forces nlysisny compny must seek to understnd the nture of its competitive environment if it is to be successful in chieving its objectives nd in estblishing pproprite strtegies.

Porter's five forces nlysis dels with fctors outside n industry tht influence the nture of competition within it1. The originl competitive forces model proposed by Porter identified five forces which would impct on n orgniztion's behviour in competitive mrket. The bjective f such n nlysis is t investigte hw the rgnistin needs t frm its strtegy in rder t develp pprtunities in its envirnment nd prtect itself ginst cmpetitin nd ther threts (Lynch, R 1997). The pper will use the Prter Mdel t give n ide wht kind f influences exists nd hw cmpny cn del with it, s described in the grph below:Fig.

1Prter's Five Frces MdelBrgining pwer f custmersS fr s the custmer is cncerned he hs prbbly the mst pwer becuse it is he wh buys the prduct nd spends his mney. The impct f