Brexit and online rivals slam UK retailers
by Ivana Kottasova
February 28, 2018.
According to Ivana, retailers are expected to be the biggest casualties of Brexit. This is because most retailers particularly the UK retailers are facing huge challenges from the online competition and the Brexit-fueled economy. She adds that since Britain voted to leave the European Union, the country has lost over 60,000 retail jobs (Kottasova). In general, Ivana explains that there are three things which are bringing retailers to their knees that is the online competition, uncertain future, and Brexit fallout for UK retailers.
First, it is evident that the traditional retailers are facing increasingly intense competition from online stores such as Amazon. In fact, electronics and toys which make up most of the products sold by retailers are becoming the most popular products with the online shoppers. Experts predict that more stores are likely to be closed in 2018 as traditional retailers struggle to keep up with their online competitors. Ivana adds that retailer stores still have a role to play in our societies, but there will be less stores in the future.
Second, the uncertain future of the retail industry is affecting the daily operations of most retail stores. Over the preceding decades, there have been a series of transformations in the retailing business. Emerging macroeconomic issues such as adverse political climates which in this case is Brexit is affecting the normal operations of the retail industry. The UK, for example, is expected to leave the European Union in March 2019. However, the details of the transition have not yet been stipulated. It is clear that this process has left many retailers who sell imported goods in limbo, hence affecting their long-term plans.
Finally, Ivana explains that the British pound drops significantly following the Brexit vote making it more expensive for retailers to acquire products from foreign countries. This process has translated into high prices for the customers. Moreover, the inflation which started last year at 1.7% now stands at 2.8% and is expected to affect the UK's retail industry as well.
How Wal-Mart Model wins with "Everyday Low Prices."
By Rachel Hyde
January 11, 2018
Wal-Mart's rise to prosperity is one of the genuine American success stories. However, Walmart's success in the American retail industry was expected. This is because the company adopted one of the best business models which involved minimization of operating costs and offering low prices (Hyde). Moreover, Wal-Mart has a long-term technique of working directly with suppliers and manufacturers to remove markups and to bring high-quality products to the communities it serves. This company is famous for two main business keys one-stop shopping and everyday low prices. In fact, these two elements are the core components of Wal-Mart's business models.
There are many reasons why many customers choose to shop at Wal-Mart. These reasons range from the price level, customer support, the quality of merchandise, store environment, store hours, to an assortment of goods, and even to the availability of free parking. Wal-Mart is successful in the US because it has maximized the value of shopping for average customers by adopting business models which allow customers to purchase high-quality products at lowest possible prices. The company has focused on two key value drivers, i.e., service and price to provide what customers need. Other drivers of Wal-Mart's success in the American retail industry includes good partnerships with suppliers, relentless cost control, unrivalled distribution and logistics management, and adoption of a culture which reduces agency costs. It is important to understand that Wal-Mart's everyday low prices business model has been a strong source of growth for the organization in the past. However, the company has another business model which is based on cost leadership business approach. This model allows Wal-Mart to focus on experimentation which involves seeing main suppliers as business partners, sharing the business and technical risks, and most importantly incorporating manufacturers into the planning process of the organization. In general, it is important to know that some of the factors which give Wal-Mart a competitive advantage in the American retail industry include its economies of scale and its size.
From the first article, we realized that online competition, adverse macroeconomic issues, and uncertain future are some of the common factors affecting most retailers nowadays. Traditional retailers are facing intense competition from their online rivals, and it is only a matter of time before they are kicked out of the market. Furthermore, macroeconomic factors such as inflation and adverse political climates are negatively affecting the well-being of the retail industry. The second article uses the world largest retail store Wal-Mart to explain how success can be achieved in the retail industry. It is obvious that Wal-Mart adopted a very effective business model which involves minimizing operating costs and offering low prices at the same time. In general, we see that Wal-Mart is successful in the US because it has maximized the value of shopping for average customers by adopting a business model which allow customers to purchase high-quality products at lowest possible prices.
Hyde, Rachael. "How Walmart Model Wins With "Everyday Low Prices"." Investopedia, 11 Jan. 2018, www.investopedia.com/articles/personal-finance/011815/how-walmart-model-wins-everyday-low-prices.asp.
Kottasova, Ivana. "Brexit and online rivals slam UK retailers." CNNMoney, Cable News Network, money.cnn.com/2018/02/28/news/economy/uk-retail-brexit-stores-closing/index.html.
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