Paper Example on New Look Company: Large Fashion Clothing Retailer

Published: 2022-12-15
Paper Example on New Look Company: Large Fashion Clothing Retailer
Type of paper:  Report
Categories:  Company Fashion Sales SWOT analysis Business strategy
Pages: 7
Wordcount: 1905 words
16 min read
143 views

Introduction

Retailing is the process of selling consumer goods and services to the final customers through multiple distribution channels with the aim of earning profit. The distribution channels may include the internet, home shopping, door to door shopping and store outlet among others (Cox and Dannehl, 2017). Retail typically involves a service provider filling small orders for a large number of individuals who are the final consumers rather than filling large orders for few individuals in the market such as the government, corporations, and suppliers. In the modern market, retailers come up with the product mix which entails the product, the place, price, personnel, presentation, and promotion (Mayer, Melitz and Ottaviano, 2016). This is done by coming up with a strategic plan and decisions on the type of stores, the optimal product assortment, the market to be served and the overall market position. Besides, retailers in the modern market also offer retail support services to the customers such as advisory services, stylist services and provision of credit. Therefore, the main objective of this report is to analyze the key changes in the UK fashion retail market and how they affect New Look Company's growth and development in the market. The paper will also discuss on the strategies and tactics the company can use to cope up with the changes

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New Look Company

The New Look Company is an international company that sells women's wear, teens clothing, and menswear in the United Kingdom. The company was founded in the late 1960s by Tom Singh (Achleitner et al., 2010). Since 2015, the company has been under the ownership of Brait SE, and it has experienced rapid growth and development over the years. The New Look Company has more than 900 stores all over the world including Malta, Russia, Germany, China, Malaysia, South Korea, Singapore, Thailand, Indonesia, and United Arabs among others (Achleitner et al., 2010). However, like any other business organization, New Look has faced many challenges in its development since its success has not just been easy. For example, the company has also closed a total of about 88 stores in the United Kingdom and about ten stores in Indonesia because of poor sales. Despite the challenges the company has gone through over the years, it has been able to flourish till today, and it is recognized as one of the best companies in the fashion industry in the UK and internationally (Achleitner et al., 2010).

Fundamental Relevant Changes within the UK Fashion Retail Market

The modern business environment is dynamic, and any business organization needs to understand that it has to keep updated with the changing climate for it to ensure its survival in the market (Frue, 2017). A macro environment analysis can help show the relevant changes in the UK fashion market and how they affect the New Look Company's operations and performance. A microenvironment is one that influences the entire economy of a business organization. A PESTLE analysis is considered as one of the best models that can be used to analyze the possible threats and opportunities in the organizations political, economic, technological, legal, environmental and social (Yuksel, 2012). Some of the factors from the PESTLE analysis will be used to show the significant changes affecting the external environment of the New Look Company.

Economic Factors

The primary recent economic transformation that has affected not only the New Look Company but a considerable number of retailers in the fashion industry in the UK is the Brexit negotiation. Brexit is the shift of the United Kingdom from the European Union which happened early this year. This has weakened the value of sterling leading to an increase in the import prices. As a result, retailers have to absorb the high costs which will, in turn, raise the retail prices. As a result, the buyer's power will be weakened by higher rates. This means that retailers have to put more efforts to differentiate and produce top quality products that offer excellent value for money.

Political and legal Factors

The UK is still going through a lot of legislative reforms that may affect the performance of the retailers in the market. For instance, the Brexit negotiation led to some changes that affected the UK retailers. New rules were introduced in 2018 to solve the gender pay gap where all the British companies with employees exceeding 250 were required to publish a breakdown of their pay. Besides, the General Data Protection Regulation will also need all retailers to show how they use personal data. Failure to this, the company will be charged about 17.7 million dollars fine. This can be a huge loss to New Look Company if such cases occur during its operation.

Technological changes

Technology is one of the critical factors that are required for the success of any business. It helps a company improve on its competitive advantage and also increase the speed at which it interacts with its customers (Thompson &McLarney, 2017). Also, according to recent business reports, technology has helped reduce the transaction costs for retailers. New Look Company needs to invest in technology for it to be able to cope up with the powerful competition from other companies operating in the same industry. Companies such as Marks & Spenser, Jigsaw, Gymshark, and Fat Face have a significant online presence, and they are one of the major competitors to New Look Company in the UK. The number of internet users has increased, and according to recent studies, it is evident that it will continue growing over time. This means that it can gain more customers through online promotions.

Relevant changes within the microenvironment

Microenvironment describes the factors that are within the organization's immediate area of operation which influences its decision making and the level of performance (McGoldrick, 2002). These elements include the distribution channels, stakeholders such as the suppliers, buyers, and competitors. The primary model that is used to analyze the microenvironment of an organization is called the Porters' five forces which were formulated by Michael Porter (Prasad & Warrier, 2016). The five forces are as shown in the figure below:

  • Buyers power- price sensitivity

The main aim of any retailer is to attract buyers and convince them of why they should purchase their products (McGoldrick, 2002). The UK fashion retail market has been significantly affected in terms of pricing after Brexit. The rapid increase in the retail prices may be a significant threat New Look Company since the company has to strategize on the best pricing policy to avoid making losses. The organization's competitors such as the Marks & Spencer still portray their potential in thriving in the market despite the challenges. New Look needs to employ technology in production where it will produce their products in bulk and at cheaper costs to offer their products at lower costs. They can also have a high bargaining power with the suppliers of their raw materials to acquire them at more affordable prices.

  • The threat of new entry- barriers to entry

New Look Company deals with menswear, womens wear and teens clothing. In case it wishes to introduce a new product such as sportswear and children clothing it may face a massive threat from the competitors in the market. Companies such as Marks & Spencer, Fat Face, and Gymshark are already established in the market and have almost gained a monopoly power in this sector. This means that New Look may have to incur considerable costs in the efforts to make the customers purchase their new products. They will have to be more differentiated, be of higher quality and lower prices. This may result in the making of low profits or no profits at all.

  • Competitive rivalry

UK fashion retail market has a considerable number of large firms that are increasing every year within the sector. This means that New Look Company has a large number of powerful competitors that if it does not be cautious, it may be put out of the market quickly. Some of these competitors are the Marks & Spencers, Asda, Gymshark, and Fat Face among others. These companies have a well-established online presence, and they are known to be one of the fastest growing companies in the United Kingdom's fashion industry.

SWOT Analysis

SWOT analysis is a model that is used to analyze both internal and external environment of a business organization (Phadermrod, Crowder, and Wills, 2019). Internal environment also constitutes the strengths and weaknesses of a firm while the external environment factors consist of the threats and opportunities from the market.

Strengths

New Look is recognized as one of the largest retailers in the United Kingdom and it has been known for its rapid growth and development over the years. It is also known for excellent quality products and that is why it competes with other prolific retailers such as Gymshark and Marks & Spencers. This means that it has a good public image which can be considered as one of the most significant organization's strengths that can assist in maintaining a competitive advantage in the market. Moreover, New Look has more than 900 stores worldwide which means that it is well established in the market since it is able to serve a vast number of customers from all over the world.

Weaknesses

The company's main weakness is poor management from its leaders. In the year 2018, it had a total of 90 stores closed in the United Kingdom and a total of 12 stores closed in Indonesia because of poor sales. In addition, a fire outbreak in one of its branches caused the company to incur huge costs and it was also fined an enormous amount of money which slowed down its growth. The organization needs to improve on its management for it to continue thriving in the competitive market.

Opportunities

Technological advancement in the modern market is continuing to increase the number of internet users worldwide. New Look Company has a great opportunity to invest in online business to increase the number of customers it serves. This means that it can increase its profit margins through fast and easy interactions with its customers through online promotions. Moreover, increased retail prices as a result of Brexit will give the company an opportunity to produce its products at lower costs and offer them at lower prices in the market. This will help them acquire a large market share by attracting more customers, since at this time most of the competitors will be selling their products at higher prices.

Threats

The main threat that the company has is the huge number of powerful competitors in the United Kingdom's fashion retail market. Retailers such as the Marks & Spencer and the Fat Face have a high reputation in the market, good technology, a high online presence and effective management. New Look has to put more efforts to make sure that its competitors do not put it out of the market.

Strategies and Tactics that may be Applied to Cope up with the Changes

This section discusses the key strategies that can be used by the New Look Company to overcome both macro and microenvironment changes discussed above.

Cost leadership strategy

The main aim of this strategy is to assist the organization produce at the lowest costs in the industry. Traditionally, this strategy required the firm to produce in bulk or in large scale for the business to operate within the economies of scale (Levy, Grawal, Kopalle& Hess, 2015). It is linked to large scale firms that deal with standard goods that have relatively little differentiation and are acceptable to more customers.

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