The Retail Industry in the UK Paper Example

Introduction

The retail industry is crucial to the UK economy. In 2016, it generated PS358billion worth of retail sales. In 2017, the retail sales increased to PS395 billion. This shows that the industry is positively changing after every year. It is the biggest private-sector employer with about 319,125 retail outlets by 2018; 5.6 percent of all businesses. In 2017, the UK retail sector economic output reached PS92.8 billion while the retail sector employment reached 2.8 million (Rhodes 2018, p.2).

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Over the past decade, the UK retail sector's economic output has followed a comparable path to the entire economy. The retail industry entails any enterprise or person involved with selling goods directly to consumers. The retail sector comprises department stores, shops, supermarkets, door-to-door salespeople, market stalls and internet retailers (Rhodes 2018, p.5). The retail industry is related to; the wholesale sector (which supplies retailers, the transportation sector (which links wholesales and manufacturers with retailers) and the production sector (which generates the goods sold by retailers).

Introduction to the Company

Ted Baker Plc is one of the leading organizations in its industry. The retail company was founded in 1988 in Glasgow by Ray Kelvin. Its headquarters are situated in London, UK. Ted Baker Plc is prominent for its high-quality personal and household goods. Ted Baker Plc deals in clothing, shoes, and accessories for children, men and women. In its category are fashion dresses, fragrance, watches, and eye-wears. The company's business is undertaken through some distribution channels that incorporate retail, licensing and wholesale business (Dunne and Lusch 2008, p.78). The company provides products under the brand name of Ted Baker. The firm sells its key products through some corporate-operated and certified retail stores.

The company has numerous stand-alone outlets in the United Kingdom. Ted Baker has 490 stores and franchises across the world: 192 in the UK, 98 in Europe, 111 in the United States and Canada, 80 in the Middle East, Africa and Asia as well as 9 in Australia. The company's collections have expanded quickly from its early stages as a menswear brand in Glasgow in 1987. Over the years, Ted Baker Plc has re-structured the strategies of doing business in consumer goods. The company is listed at London Stock Exchange (LSE) and has a market cap of $1438.50 million. In 2017, Ted Baker bought their headquarters in London for PS58.25 million (Chen 2015, p.1).

Key Relevant Change within the UK Fashion Retail

The changing retail environment in terms of political, economic, social, technological, legislative and environment perspectives has influenced most of the sectors in the retail industry. Changes in the UK retail sector have resulted in the creation of new breaks in the industry.

Political factors play a crucial role in ascertaining the elements that can influence Ted Baker Plc's long-lasting viability in a particular country or market. The Brexit is one of the most crucial political factors that will affect the retail industry. European Agreements ensured that there was free trade among the member countries. However, with Brexit, exporting and importing fashion products are likely to become more challenging because new trade contracts will have to be established. The United Kingdom benefits from positive trade regulations with more than 60 nations and to preserve its relation; the UK will have to mediate new trade treaties with both European and non-EU nations (Collis, Holt and Hussey 2017, p. 34). Political instability in foreign markets where the company has invested is also likely to affect the company. For instance, political tensions in its Middle East market means that the company cannot export its products for fear of insecurity.

The macro environment elements like savings rate, inflation rate, interest rate, economic cycle, and foreign exchange rate determine the total demand and total investment in an economy. The UK apparel industry is seen as one of the UK's most crucial export businesses-accounting to a total of 7.5 billion pounds in 2014. Brexit resulted in the depreciation of the pound thereby reducing the value of exports from the fashion industry. The economic impact also led to a decrease in sales as customers spent more money on basic needs instead of fashion.

Social factors play a crucial role in the growth of the apparel retail industry. In the last decade, numerous social changes have impacted the demand for Ted Baker Plc's products. While the millennials are now the main focus of the fashion retailers, its inclinations are very diverse from the earlier generations. In most Ted Baker Plc's market base, the millennial generation does not just demand suitability, but also low prices and premium quality. The demographic composition of the global populace has transformed a lot in the last one decade. This has impacted multiple crucial changes leaving companies choosing various alternatives and prospects. They are also faced with new problems. Ted Baker Plc is fulfilling different demands and is not expected to push sales bid to attract and involve clients. The apparel industry in the UK has felt the push and rise of fast fashion (Collis 2015, p. 67). Fast fashion brands like Zara have taken the UK fashion industry by storm and are affordable to most clients.

Technology is a very crucial element influencing the development of the apparel retail industry. A considerable section of the 21st-century growth narrative of apparel retail can be accredited to the technological advancements that have occurred in this generation. IT, globalization, internet and improved use of mobile equipment for shopping have affected the sales, promotion and consumer preferences in Ted Baker Plc's market. Modern consumers in the UK market are more informed and make purchases after extensive research. The consumers tend to evaluate their selections with other customers and share their opinions. Technology is vital to Ted Baker Plc. It has improved the company's supply chain and brought greater effectiveness to their fashion products. Ted Baker Plc has also benefitted from technology through overseas expansion. E-commerce has enabled the company to extend beyond borders and retail to a broader customer base (Collis, Holt and Hussey 217, p. 80).

Environment and sustainability are very crucial in the UK apparel retail sector. Ted Baker Plc is careful about its carbon footprint and advertises itself in an environment-friendly brand. Ted Baker Plc is investing in ecology and sustainability and utilizing more environment conscious raw materials, operations, and packaging. Ted Baker Plc is also prioritizing on sustainable fashion and working to change product design and production.

Legal issues hold together the fashion retail industry. Ted Baker Plc is expected to adhere to ethics and regulation, The UK retail is the biggest employer and is abound to changing labor laws. Ted Baker Plc is expected to comply with international trade laws and labor laws.

Relevant Changes within the Micro Environment

Ted Baker Plc maintains its dominant position in the market by carefully evaluating and assessing the microenvironment. Management of microenvironment is an extremely interactive procedure and requires proper coordination among various departments within the company, e.g., finance, management, operations, strategic planning, and information systems. Automation of activities has led to reliability of the quality of Ted Baker Plc products and has made the firm to scale up and down on the basis of demand circumstances in the market. Ted Baker Plc has a high attrition rate in the workforce compared to other firms in the industry. This means that the company spends a lot more to train and develop its employees compared to its competitors (Chen 2015, p. 5). New entrants in Personal & Household Goods bring creativity, new approaches of conducting business and put pressure on Ted Baker Plc through lower costing strategy, decreasing cost and offering new value propositions to the clients. The company is expected to manage the challenges and establish strong barriers to protect its competitive edge.

In the personal and household goods industry, almost all firms acquire their raw materials from suppliers. Ted Baker Plc has ensured that the bargaining power of suppliers is low to increase its profit margins. Powerful suppliers in this sector can use their bargaining influence to set high prices for the companies in Personal and Household Good sector. In the UK market, buyers are very demanding. Customers in this market have shifted to buying the best offering available at a low cost. This has put pressure on Ted Baker Plc's profitability in the long run. The bargaining power of Ted Baker Plc's customer base is slowing rising meaning that they are demanding more discounts and offers. There are numerous substitutes in the UK retail market. Ted Baker Plc has resolved to differentiate its products from competitors to reduce competition.

Ted Baker Plc operates in a very competitive Personal and Household industry. Marks & Spencer is the leading competitor in the UK fashion industry. Regarding market share, Ted Baker Plc is not doing so well, and sales have dropped in the last few years. It appears that the company is unable to define customers' demands like its competitors. The new tax policy in the UK retail industry is likely to influence the way of doing business and may open a new opportunity for established players like Ted Baker Pl. to increase its profitability (Rhodes 2018, p. 7). The development of new customers from online channel has opened new sales outlet for Ted Baker Plc. In the subsequent few years, the firm is likely to leverage the prospect by understanding its clients better and fulfilling their demands using big data analytics.

Suggest and Discuss Strategies and Tactics that could be used

The Wheel of Retailing concept

The wheel of retailing concept applies to Ted Baker Plc. In the first step, the theory evaluates the new dealers who usually join the market with low prices, low status, and low-profit margins. The low rates are often the outcome of some innovative cost-reducing processes. After some time, these cost-reducing processes tend to attract competitors in case the entry barriers are not strict enough (Moore 2010, p. 345. In this stage, Ted Baker Plc should build economies of scale to lower the fixed cost per unit.

In the second stage, the company gains more experience of the market and strives to enlarge its customer segment with the motive of accumulating sales, acquiring a bigger profit margin and also attaining a substantial market share. By establishing a broader customer segment, Ted Baker Plc will limit the bargaining influence of the shoppers and will also offer a chance for the firm to modernize its sales and manufacturing processes.

The third stage of this theory notes that the firm is already established and the rates are sufficient to attain a proper margin. To maintain the profit margin, Ted Baker should also be service oriented instead of being just product oriented. The company should also understand the core need of the clients instead of what the client is purchasing.

In stage four, there is an entry of another retail competitor who tests and then brings down the initial firm. By adding premium products or services to the market or shifting to a superior market position, the retail enterprise then targets another subdivision. In that case, operation and facilities increase and become more costly due to extra requirements of labor, expertise, storage, and others. Ted Baker Plc can overcome the entry of another rival through product di...