BUSINESS DEVELOPMENT PLAN FOR RETAIL STORE
Business Development Plan for retail store
Introduction
The designer apparel industry is amongst the leading sectors; the craze of fashion clothing is on hype. In 2013, the sale value of designer clothes in the United States of America was $361 billion. However, in term of consumption the United Kingdom, Germany, and Italy are the largest designer clothing markets (Fashion United, 2016). In 2013, the consumption on fashion apparels and footwear was 58.5 billion in the United Kingdom that increased up to 62.009 billion in the next year (The Statistic Portal, 2016). Therefore, it is easy to expect that the trend of fashion clothing will continue in the UK. By realizing the growth and increased craze of utilizing designer clothes, it has been decided that the business development plan for a new retail store, that sells designer clothes is proposed. The aim of the paper is to prepare a business development plan for a new business that sells designer clothes to people from light party dresses to bridal wear.
For the attainment of the objective, it is essential to understand the importance of e-business in fashion retailing industry. Therefore, the first section discusses the importance of e-business. In the second section, PESTLE analysis has been conducted to recognize the restriction that can restrict the growth and competitiveness of the business. The section on macro environment analysis also assesses the opportunities exist for the international expansion and operation of the business. However, the last section presents some recommendations in the light of overall analysis.
The fashion retail industry is going through a revolutionary period due to e-commerce. E-business is improving day by day; it is playing an immense role in increasing the growth of the designer retail industry through improving online sales. Increased competition forces companies to fight against rivals for obtaining a considerable market share. Designer based businesses deploy several technologies for reaping increased profit and having a strong hold over the fashion industry. Once the businesses are successful, with the purpose of growth they try to open more stores, satisfy the demand of customers, and expand their business at the global level. Mostly designer clothing retail stores compete on quality of clothes, new styles, and prices. Setting up new stores results in increased cost and, therefore, prices that lead fashion business to a competitive disadvantage. In such situation, e-commerce helps new organizations in gaining profitability and competitive advantage.
The store through the utilization of internet will reduce the procurement cost, will manage relationships with suppliers, and will develop a strategic advantage. E-businesses make the world smaller and through making the processes faster, easier, and cheaper facilitate the longer distance communications. E-business helps new entrants to gain profits without investing much amount in business activities. Therefore, rather opening new stores, the fashion business house (the retail store) will manage and sell its products through maintaining a website. It will help fashion organization in spreading awareness and creates an identity. Even, the business (the new retail store) can display its products on social networking sites and e-commerce websites. E-business encourages the designer sector to take their products worldwide and attract maximum customers with minimum investment (Fiber2fashion, 2014).
E-commerce provides small fashion businesses equal opportunity so they can make big profits; the retail store will avail this opportunity. E-businesses through improved sales contribute to the overall growth of fashion industry. The Retail store will increase its sales by allowing customers to order their favorite clothes by sitting at their homes. Through websites, it will be easy for customers to make safe payments and get the delivery at home. It has been determined that approximately more than 40 percent of online retail sale come back due to dress fitting issue; therefore, customers through virtual room option can try the clothes. E-business is a high flier in designer clothing industry (Fiber2fashion, 2014). Through the utilization of e-commerce, the store will enhance the communication within its supply chain that will enable the company in improving offerings and therefore the possibilities of competitive differentiation. The online clothing industry is facing fast growth, and e-business enhancement will enable the designer clothing industry to enjoy an important slice of a share of the fashion industry in future (Zhenxiang & Lijie, 2011).
Pestle analysis is an important tool for the assessment of key restrictions that can challenge competitiveness and growth of the business. It is beneficial for finding out the opportunities to expand and operate the business internationally.
Each country has different political situations that can create problems in the growth of the store. However, environmental concerns are increasing around the world, and legislations regarding waste management and production efficiencies pose significant challenges for traditional business. Therefore, it is an opportunity for the retail store (clothes r us) to reduce its waste, cost, and inefficiencies through the adaption of e-commerce strategy. Moreover, Opening physical stores at unknown locations just not demand huge investments; but bring a significant risk of failure as well due to political changes. Therefore, the e-business will prevent the organization (Clothes r us) from facing huge losses through expanding the business without investing a larger amount in business.
Economic factors such as unemployment, inflation, buying the power of customers, etc. has an immense impact on designer retail stores. Due to 2008, financial crisis the buying power of people decreased that negatively affected the sales of apparels. However, the global economic environment is improving, and this improvement is expected to continue. The fashion retail industry is expected to grow 50 percent in next 11 years (Gocklen, 2015). The internationalization will be the bigger opportunity for the retail store in the fashion industry. However, the increased labor cost can be a restriction and can create a challenge for the store (Clothes r us) in its growth and competitiveness. E-commerce will help “Clothes r us” in mitigating this restriction. Through e-business, the store can reduce its labor cost and allow buyers to buy clothes at a lower price.
The social environment has a huge impact on fashion retail industry as socio-cultural trends affect the industry most. For examples, it has been realized that the population of the globe is aging, which is leaving the companies to target teenagers only that would result in more fierce competition (Gocklen, 2015). Teenagers search the information on the internet before making any purchase, compare prices, and features with other brands. These social trends posed the opportunity to the store (Clothes r us) to adapt the e-business strategy. The website will allow the store to market its products internationally and respond customer needs accordingly (Keller et al., 2014).
The technological environment has been challenging for the designer retail industry since years, as technological changes have been the reason for changing production, supply, and delivery practices. Technological advancement facilitated the flow of information regarding new brand to trends from consumers to retail stores. Due to this trend, the responsiveness of fashion retail stores increased to modern impulses of customers (Gocklen, 2015). In result of the advancement, the demands of customers improved as social media advanced the latest fashion and style knowledge of customers. The technological environment is positive for e-businesses (Gocklen, 2015).
Environmental factors also have immense impact over the fashion retail store. The legislations of the United Kingdom are strict regarding the environmental protection that will affect the procurement and disposition practices of the store (Clothes r us). Rising awareness regarding the environment such as environment friendly sourcing, waste management, and sustainable production all are the factors that influence the retail sector and therefore, will have impact over the “clothes r us” store (Sanigok, 2012).
Legal factors include taxation, labor practices, export, and import laws, transparency in supply chain etc. the minimum wage rate per hour in fashion retail industry varies according to the age of employees that affect the pat structure and hiring practices of the stores (Gov. UK, 2016). The UK legislation is complex as it has different rules for import and export of diverse sorts of clothes. The Clothes r us store will have to comply with those laws, as they will significantly affect the procurement and overseas sale practices (Gov. UK, 2013).
Therefore, the company will expand its business electronically and deploy information systems inside the organization as well. By being a complete e-business, the company will gain advantages from both buy and sell side. Such as, it will enable the firms to improve interaction and knowledge transfer between retailers, producers, and suppliers. This will result in a distribution that is more efficient. From the buy side, e-business strategy will enable the retail store to reach the wider audience with low cost of marketing and advertisement. Direct reach to customers will reduce the distribution cost that will affect the sales positively through price reduction.
Summary & Recommendations
The objective of the business is to grow internationally and enhance the competitiveness of the store. Through e-business strategy, the retail store will expand its business internationally. Deployment of the latest technology will allow the store to have access to emerging markets and overcoming distances (Chaffey, 2009). The development of the website will enable the store to grow at international level without spending a huge amount of money. Business will be able easily to interact with governments, can provide services from one to other countries, and participate in the value chain.
The designer clothing environment due to multiple new entrants is saturating, the competition is tough for retail stores. Rapid changes in fashion and demand for new styles and latest fashion clothes force stores to discard the old collection that results in increased waste. E-business will help the store in improving communication, forecasting new fashion trends, and operational activities. Improvement in these areas and will enable the store to manage waste. The deployment of information systems will enable the stores to increase innovation and improve managerial understanding. Therefore, the sales and its profitability will improve (Oliveira & Martins, 2010). The store through building website will be able to gain interactivity with the target audience. Through maintaining customer purchase data, the retail store will directly target the most valuable customers. The store will approach them with specific loyalty programs through e-mails. The personalized offerings will just not reduce the advertising expenses, but will generate faster sales.
It has been determined that more than 40 percent of the fashion online sales come back to the stores because of fitting issues. For the resolution of this issue, it has been recommended to the store that it should design a virtual room option where people can virtually test the fitting of their clothes. Retailers are the first in facing the cost cutting pressure and put this pressure on suppliers and producers. Due to cost cutting experience, many retailers have to face business failures. Deployment of information systems will allow retail stores to improve operational efficiencies that result in cost cutting. Through cutting cost, the store will be able to reduce the prices that will enhance the competitiveness of the store and its growth by improving sales (Goel, 2007). E-commerce will allow the store to manage a unique assortment of clothes based on customer demands that will create differentiation. Through e-business strategy, the store will be able to maintain the uniqueness of collection as such collection will not be available to any other store. It will also contribute to having strong control over profit margin.
Internet has made it easy for business to go international and take the advantage of global presence and higher profitability. The “Clothes r us” will be less vulnerable to the changing fashion trends. The store will be able to enhance customer based through exposing business to the wider audience. International business expansion will strengthen the store. However, with lots of advantages it has some disadvantages as well. For example, going international will enhance the competition for the store. By being global, the store will have to ensure the working of 24/7 as at diverse time zones exist on planet. Language can be a barrier in creating brand recognition. For going global, it is essential that the store has full knowledge of the language and culture of other countries that can diverge the focus of business from core activities. Moreover, the currency fluctuation can lead the organization from profit to loss.
List of References
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Fashion United. (2016). Global fashion industry statistics - International apparel. Available from https://www.fashionunited.com/global-fashion-industry-statistics-international-apparel [Accessed 3 January 2016]
Fiber2fashion. (2014). E-business perspective in the fashion sector. Available from http://www.fibre2fashion.com/industry-article/52/5150/e-business-perspective-in-the-fashion-sector3.asp [Accessed 3 January 2016]
Gocklen, L. (2015). Fashion Industry Analysis From the Perspective of Business Model Dynamics. Available from http://essay.utwente.nl/65268/1/Gockeln_BA_School%20of%20Management%20and%20Governance.pdf [Accessed 3 January 2016]
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Gov. UK. (2016). The National Minimum Wage. Available From https://www.gov.uk/national-minimum-wage/what-is-the-minimum-wage [Accessed 3 January 2016]
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Sanigok, Z. (2012). Enhancing Sectoral Competitiveness – A Uk Case Study And Implications For Turkey. University Of Birmingham. Available From http://www.jeanmonnet.org.tr/Portals/0/scholars_database_thesis/zeynep_sanigok_tez.pdf [Accessed 3 January 2016]
The Statistic Portal. (2016). Annual expenditure on clothing and footwear in the United Kingdom (UK) from 2005 to 2014, based on volume* (in million GBP). Available from http://www.statista.com/statistics/300840/annual-expenditure-on-clothing-and-footwear-in-the-united-kingdom-uk/ [Accessed 3 January 2016]
Zhenxiang, W., & Lijie, Z. (2011). Case study of online retailing fast fashion industry. International Journal of e-education, e-business, e-management, and e-learning. Vol. 1, no. 3, p. 195-200. Available from http://ijeeee.org/Papers/031-Z0014.pdfs [Accessed 3 January 2016]
