Retail Business Context Lecture 2 PDF

The business context The Retail Environment Recognise the importance of understanding the retail environment when making buying decisions Describe how online retailing has changed the retail environment and its impact on decisions made by retail buyers Identify mobile and social media str...

The business context The Retail Environment Recognise the importance of understanding the retail environment when making buying decisions Describe how online retailing has changed the retail environment and its impact on decisions made by retail buyers Identify mobile and social media strategies that can benefit retail buyers Differentiate between multichannel and omnichannel retailing Identify examples of how omnichannel strategies have been implemented by retailers Identify current trends affecting retailing and buying Lets us remind ourselves, what is retail buying? Forecasting the wants and needs of consumers Planning merchandise assortments to satisfy consumer wanted and needs Selecting vendors from whom to purchase merchandise Negotiating contracts with vendors Pricing merchandise Keeping sales and inventory records Reordering merchandise  RETAIL ENVIRONMENTS Fashion retailers trade in different formats but all are for profits businesses Fashion retailers target certain demographics based on their retail typology There is a long history built up over time to create the fashion business we know today Many great success stories such as Gucci ranked one of the top global brands Marks and Spencer evolved from a market stall Asos and Net-a Porter have captured unique positions in the new e-retailing market  DIFFERENT RETAIL FORMATS Luxury fashion leaders e.g. Chanel Department store wide product offer e.g. John Lewis Multiple chains wide distribution e.g. Top Shop Independents/Boutiques Supermarkets e.g. Tu at Sainsbury Discount e.g. Tk max Specialist e.g. Accessorise Niche e.g. Timberland Catalogue e.g. Boden Pure play online e.g. In the style  NATIONAL BRAND V PRIVATE LABEL Retailers either stock products developed and manufactured for them sold in their own business as private label OR. They buy ready designed existing brands from manufacturers or designers. Department stores and small independents often sell a combination of the two  NATIONAL BRANDS V PRIVATE LABEL Branded buying requires the buyer to select the elements of the range that best fits their business customer profile few retailers stock all the lines offered by a brand Private label buying requires a more creative approach the buyer is involved in assisting designers to create ideas after which they select the garments suitable for the seasons range Retailers profit tends to be higher on private label as they source directly from the factory  THE BRAND IS THE LABEL In many cases only one brand exists in the retail shop and that label is used as the company name This branding type is seen in retailers such as Gap, H&M, Pink E Commerce and Online Retailing Today, e-commerce and online retailing continue to grow and thrive worldwide, creating a customer shift from in-store to on-line shopping Evolution of clicks-and-mortar approach  EXERCISE What are the benefits of online retailing for the customer Benefits of online retailing (consumers) Convenience Ability to find best prices efficiently Greater range of merchandise available online (size, colours etc)  EXERCISE What are the benefits of on-line retailing for the retailer  Benefits of online retailing (retailers) Do not require expensive storefronts More cost-effective warehouses Not as much need for heavy advertising and promotion Communicating with consumers costs a lot less Online promotion is a lot more flexible (real-time adjustments) Challenges of online retailing navigating the internet can be frustrating, confusing and time- consuming security/privacy – Inability to see the products Simplicity of making in-store returns Speed of delivery means that this instant access is an added expense Average purchase for in-store shoppers in general is higher In-store shoppers tend to make more impulse purchases Many customers shop as a social activity or a day to browse with friends Online shopper expectations Need to provide experiential services Live chat Social media integration Virtual reality videos Better quality content (images, product info) Quick service (bounce rate) Pages must be optimised for smartphones and tablets Checkout should be simple and quick Future of retailing Despite ease of online shopping, still a significant number of shoppers who prefer shopping in a physical store The line between in-store and online retailing is blurring Customers like to interact with sales associates, learn more about product, try it on and experience its quality Showrooming go to the store then purchase online Webrooming (or reverse showrooming)research online before purchase in store Omnichannel Omnichannel v multichannel  OMNICHANNEL RETAILING.Todays shopper purchases using multiple touchpoints with the retailer. That includes bricks and mortar stores, cell phones, laptop, social media..Retailers must implement a strategy that creates a unified message for their customers across every channel that seamlessly connects these various touchpoints. 25 years ago retailing was synonymous with bricks and mortar stores that changed in the 90s with the internet.  OMNICHANNEL v MULTICHANNEL.As more retailers moved to a multichannel approach they merged bricks and mortar with their e-commerce /internet side..Mobile technologies added a new touchpoint and retailers and consumers could now interact in a much different way. A new approach was needed to fully integrate these channels the omnichannel concept was used. The omnichannel concept is focused on consumers being able to interact with the retailer from whatever touchpoints are appropriate to them ( i.e. laptop, smartphone, social media , bricks mortar store)  CHALLENGES OF OMNICHANNEL RETAILING. Same day delivery, buy online , pick up in store ensures the retailer has to have greatly improved visibility of inventory in all channels and better tools for predicting future demand.These services are a cost to the retailer and they must also ensure that stock levels in store are not jeopardized by online orders or pick up in store.Customers want retailers to remember past purchases regardless of touchpoint they are using.If retailer tells customer item is in stock it needs to be in stock.Returns is an issue for retailer as it could be bought online but returned in store and often only half returned items are sold at full price  FUTURE OF RETAILING Customers expectations are rising they want it fast here next day Will need to have quick response to trends Customer in control e.g. demands instant gratification and seeks quality New experience for shoppers e.g. reserve and try use mobile phone to select merchandise to try on schedule a time garments are placed in fitting room for scheduled visit Faster and more efficient shopping e.g. kerbside pick ups so customer reserves items and doesn’t need to car  FUTURE OF RETAILING In 2016 for the first time online shopping outpaced in store shopping during black Friday weekend a strong signal that a real shift in customer shopping habits had occurred ( Clodfelter,2018) Will be greater use of data analysis previously used past sales and customer feedback now have customer database and social media trend reports Retailers will retain bricks and mortar but shrink the size more shopping online with pick up and returns in store Future of retailing The ability to gather data from various points of customer contact A more streamlined and effective engagement with customers Predictive analytics (Business of Fashion, June 27, 2018. Intelligence: Intelligent Retail by Samik Roy) GLOBALISAT ION Globalisation Improved economies of scale and buying power Customers demanding more transparent information about sources from retailers Global dispersion of fashion supply chains Shift of garment production from the industrial core to newly emerging markets Companies seamlessly move from one low cost country to another according to business requirements Fashion product life cycles have sped up  GLOBALISATI0N Buyers can choose suppliers from around the globe The far east –Southeast Asia have become leading importers of textiles to Europe and USA Wage rates have increased in these areas substantially causing prices to increase New markets emerge with lower wages Turkey, Philippines, Vietnam Buyers will constantly need to monitor global markets for the right merchandise at the right price cause changes in the market occur virtually overnight FACTORS FOR BUYERS TO BE AWARE OF IN GLOBAL MARKET Exchange rates fluctuating especially if buying in US dollars as this can affect greatly the cost price of garments when importing Oil prices when oil prices fluctuate this can have a knock on affect to the fashion industry with manufacturing costs increasing and synthetic raw materials made from oil Banking crisis Recession National events royal wedding etc Day to day basics such as weather e.g. very hot sudden rush on shorts DEMOCRATISATION OF FASHION  DEMOCRATISATION OF FASHION Fashion for all Not exclusive for aristocrats or individuals of certain standing Nowadays fashion is accessible to all Digital world has changed everything discover, browse and shop whenever you want True fashion democracy has arrived more people have more access to more fashion and brands can reach a wider audience than ever before Other issues which are impacting on the retail environment The ‘democratisation of fashion’ and fast fashion (FF) Attributed to Zara’s CEO in bringing style to the mass market Fuelled by celebrity culture Speed is of the essence Changing consumer behaviour in-store FF retailers sell approximately 15% of merchandise on markdowns (Shepherd and Pookulangara, 2013) Lots of small orders and frequent deliveries Has raised some ethical issues Luxury Sector Rapid growth in sector due to increasing demand from emerging economies Design houses have become more internationalised flagship stores (Moore et al, 2010) Design houses have merged and/or floated as public companies to gain access to capital Recent difficulties have been experienced by UK department stores such as Debenhams and House of Fraser (caught in the middle) FAST FASHION Fast Fashion Biannual seasonality is becoming redundant Fast fashion brands may issue as many as 52 weekly “micro-seasons” per year To keep up, traditional apparel brands are now debuting around 11 seasons a year Cheap alternatives to high-fashion items remain hot consumer commodities  FAST FASHION PROBLEMS Damage to the environment - watch Stacey Dooley fashions dirty secrets Fashion now one of the worlds top five polluting industries alongside oil Sales expected to reach 160 million tonnes in 2050 more than 3 times today Water in the Aral sea covering 68,000sq km has dried up due to cotton production Toxic chemicals released into the rivers  FAST FASHION Global itinerary of marks spencer suit most garments travel many thousands of miles before they reach us  SUMMARY Retail is ever changing buyers must adapt and deal with the changes Online is growing and the lines between in store shopping and online are blurring Retailers are replacing multi channel with omnichannel approaches Online and mobile shopping has changed the retail environment quickly and social media has empowered the customer Better merchandising will require buyers who not only understand the value of new technologies, but who also  TUTORIAL NEXT WEEK.Read fast fashion article by Baillie Gifford. https://www.bailliegifford.com/en/uk/about-us/insights/?ar ticle=2019-q2-fast-fashion-0619-all-we-0246-social Fast fashion time to kick the habit Its in the sites public sector Give 3 reasons why fast fashion is having negative impact on the world