Research Paper on U.K. Retail Industry Struggles: Entry Barriers for British Firms in U.S. Market

Introduction

The U.S. market has presented many entry barriers to British firms seeking to internalize. These challenges range from a difference in business market, culture, policies and practices among others. This year has been a challenging year so far for the retail industry in the U.K., with many famous high street retailers reporting financial losses, closure of stores, or worse still bankruptcy. There are a potential number of reasons for this, the decline in the value of sterling, Brexit, and lack of consumer confidence; customer behavior continues to change and move online, which is reflected in many e-commerce companies reporting double-digit growth in the sector.

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August 2019 saw Jack Wills temporarily go into administration and was bought out of administration by U.K. retailer SportDirect for PS12.7m. Until recently, Jack Wills had a presence in the U.S., Singapore, and Hong Kong with physical stores and online presence on its websites. Due to pressures of the U.K. retail economy, the company has been forced to close its stores and focus its efforts on wholesaling via a range of partners in the U.S., including Nordstrom to reach scale; a completely new strategic direction for Jack Wills. This report analyses the factors likely to affect the U.K. clothing company, Jack Wills, reentering the U.S. market.

Challenges Facing British Firms in the US Market

The American business culture which involves ways of doing business, consumer behavior, attitudes, and preferences is different from the U.K. For instance, patriotism is one of the cultural aspects that influence the decisions of Americans, they love their country intensely as they grow up learning to respect and love their homeland. This loyalty to the country and its principles directly influences purchasing habits. British firms among other foreign companies have to secure their products and especially to build public loyalty. Most Americans are used to being faithful to the places they are used to, and changing this style requires strategy, patience, and capital. While the British are creative and innovative in their own way, trying to get Americans to accept an unknown product sold differently presents challenges. In this regard, for Jack Wills to reenter the U.S. market, it is necessary to modify its business model as close as possible to the American reality. Adjusting their business to the American customs by treating their products and services accordingly will ensure the U.S. market remains true to the company.

The United States also has different regulatory frameworks concerning business practices. The laws are different in the U.K., some of them may be a magnet for future market or, on the other hand, may offer tax breaks to businesses in certain regions. Knowing the law of each location to choose what is best for the business development strategy can be a crucial point that will decide the success or failure of the business. To undertake in the United States, it is also necessary to seek expert help from local enterprises since they better understand the market.

Another factor that is going to affect Jack Wills reentering the U.S. market is its investment in technology. Technological advances allow for greater and more direct proximity to customers. Major brands in the U.S. have made significant investments in technology such as development and expansion of the Internet and Customer Relationship Management (CRM) systems, which enables them to gather and work with the data of each individual who intends to maintain or start a relationship with their companies (Charoensukmongkol & Sasatanun, 2017). Therefore, Jack Wills becomes will have to provide customer benefits through well-structured, easy-to-handle, and informative virtual platforms, providing a differentiated customer experience. Investing in interactive channels is in harmony with the establishment of an organizational culture centered on the business-customer relationship as it's the case with major US brands.

Jack Wills 2019 Wholesaling Strategy

Jack Wills has changed strategy in 2019 to focus on a wholesaling model to remain in the U.S. market. The wholesale market can be considered as crowded as retail. In general, customers of this type are those who purchase a large amount of the same product, a common practice for companies, retailers, and mixed establishments. Beating the competition and positioning the company in the market using the wholesaling marketing approach must be very well thought out due to the risks and opportunities it presents. With proper marketing actions within the strategic approach, the customer will have the brand set in mind, an essential step for the company to differentiate itself from competitors.

Alternative Strategies to Wholesaling in the U.S. Market

Segmenting the Market

Segmenting the market is subdividing customers into specific groups with relatively similar characteristics. The purpose of this is to differentiate the approach and communication directed to each of these groups. In the past, Jack Wills has focused on university students as part of its target population. However, as time has indicated, the initial student customers have maintained brand loyalty and continue to shop at the company. Therefore, broadening the segment to include the older population would help in customer retention strategies. Each client has their needs which demand a unique approach. The key is to take a position as to which segment the company wants to serve by better identifying the target market.

Benchmarking

Benchmarking means "comparison with the competition." Analyze your strengths and weaknesses and view best practices from industry rivals (including those from other industries) to optimize your business practices. The focus is to leverage the market competitiveness and, at the same time, business productivity. The benchmarking research process must be continuous. It is not a copy, but the implementation of learning-inspired changes to strengthen the brand in the industry.

Digital Marketing

The communication and technology revolution, through the advent of the internet and the adoption of e-Business, has significantly changed the business landscape, making interactivity in the virtual world an ally in building and managing relationships (Bilgihan, Kandampully & Zhang, 2016). The increasing use of the internet and social media and, consequently, their massification, have resulted in the emergence of new opportunities for the creation and maintenance of personalized relationships between companies and customers. Boateng and Narteh (2016) point out that platforms such as email, websites, and social media are the central communication and interaction channels, enabling the practice of online relationship marketing. Gurhan-Canli, Hayran, and Sarial-Abi (2016) complement by stating that the practice of increasingly popular social media such as Facebook, Twitter, and YouTube is indispensable. The interactive and conjunctive nature of these virtual platforms is capable of capturing information that is generally not possible through the practice of traditional relationship marketing, due to the separation of time and space between the company and client (Gurhan-Canli et al., 2016).

Digital marketing is a practical approach that will take advantage of the already existing technological infrastructure both in the company and in the U.S. market. Jack Wills has had an online presence since 2005 when it launched its .com site targeting U.K. consumers. Today, the site has over 3k products, spread across 20 categories. The company has a number of websites to support its global and discounted outlet business. Overall, online sales represent 30% share of all Jack Wills revenue. Of total online sales, 90% is transacted through the U.K. site Jackwills.com, which is the online focus for 2018. Between Feb 2017 and Jan 2018 (Jack Wills' financial year), there were just over 18 million sessions (visits) and a conversion rate of just over 3.5%. Just over 8 million of these sessions were new users delivering over 650k transactions. A customer typically spends on average, PS61, and will transact, on average 1.61 times a year. Mobile applications account for 65% of total online traffic, accounting for just over 50% of the total online revenue. The online platform has been tailored to Jack Wills' specification; the front-end of the site is managed in-house by a dedicated e-commerce team that manages the content and product range of the website. This will ensure that online interaction is guaranteed as a way of increasing brand awareness and gaining a competitive edge in the American market.

Making Online Promotions

Every customer likes a good promotion. Launching them on the internet is a great way to spread and reach a massive audience in no time, especially with the so-called "lightning promotions." With them, the consumer will have aroused their sense of urgency. It is possible to invest in exclusive promotions for social networks followers as well. The customers feel like part of a select and unique group. Online advertisements can ensure that Jack Wills increases brand awareness as part of its customer loyalty strategy, for example. Good direct marketing campaigns focus on promoting a specific product or service and invite your customers to take action - to receive more information, register their interests, visit the website, and make a reservation or purchase. Among the advantages of the approach is the opportunity to promote products and services directly to the customers who need them most.

University Students' Target Market Approach

One of Jack Wills' unique marketing approaches is targeting university students, which it indents to continue in the U.S. Brand differentiation is an essential business strategy that allows companies to stand out in the market. Selling products or services to a potential or existing customer who has already shown an interest in the company products or services is a reliable and sustainable business approach. Previously this approach was done by sending direct mail or telemarketing, however, today with the endless communication possibilities that digital marketing presents, other strategies such as email marketing, social media and remarketing campaigns, for example would be even more effective in reaching out to an even larger customer base. Targeting university students will help the company build relationships with new customers in the U.S. market and evaluate the appeal of its products or services. Most importantly, the company will be able to develop a lasting relationship with the customer base by winning and building customer loyalty and make them become brand advocates and marketers.

The approach of targeting university students offers another benefit of becoming a reference in the market, mainly for the good experiences provided to the user. The approach is about more than just sales aids. Jack Wills will not just create customers but generate long-term fans. Business sustainability demands the adoption of strategies that not only acts in the short term but on the contrary, create a continuous and preferably progressive relationship. More than generating new revenue and recurring revenue, the segmentation brings the customer closer to the business, which benefits not only the students - who gets faster, more personalized products - but also the company, which gets more constant feedback and have the ability to learn from this audience and continually tailor their products to changing demand. Also, having a good experience with the company, it is likely that this audience will share this positive experience with others, generating a snowball effect that will influence the acqu...