Strategic Retail Management in Competitive Environment Essay

Strategic Retail Management in Competitive Environment - Essay Example Perception of many people from brand name has moved towards product quality cost and service delivered (Experian, 2011). This has motivated several new retailers to enter into the already competitive market. This has raised survival issues for many new and old retailers, and demands for new strategies and activities to sustain their position in the market (Experian, 2011). The culture of buying has shifted largely towards online viewing and ordering. People visiting the store are easy to urge towards company’s product, and they are the ones who gives the company greater revenue than the online buyers (Experian, 2011). However, this ratio has also taken a 180 degree change in many of the top retail stores, including the ones discuss in this paper, where online buyers makes around 80% of the total income of the company (Experian, 2011). 1. Competitive Environment of UK Retail Industry The retail sector of UK is the only largest private recruiter because it employs around three m illion people. This sector covers a prominent percentage of employment in UK because more than half of the UK population work part time in retail stores. The retail industry of UK is immensely supportive for the economy of the region as it generates abundance of revenue to sustain the economical position of UK. Therefore, the in order to evaluate the environment of this sector Porter’s five forces analysis and PEST analysis of the industry are being done (Obitz, 2009). Porter’s Five Forces Analysis of UK Luxury Retail Sector The analysis of the retail industry of UK is significant for accomplishing the purpose of the paper. Therefore, when it comes to analyze the competitive environment of any industry, Porter’s Five Forces Model appears covering all the areas required for evaluating a competitive environment. i. Threats of Substitute The threat for substitute products in the luxury retail market of UK is quite low as non-food items sold by luxury retailers do n ot have major substitutes. This is due to the fact that buyers purchase luxury items as a result of their perceived luxury associated with their purchases and therefore they do not substitute these products. The threat of substitute is not apparent and the actual threat is only limited to the pricing offered by different retailers for similar products (Nwankwo & Gbadamosi, 2011). ii. Threats of New Entrants In the luxury retail side of the market, there are lower threats of the new entrants in the industry. This is due to the high level of barriers for developing brand and then high level of investment is required for developing brand recognition and its positioning in the luxury brand market. It is difficult for new market entrants to offer product differentiation in the cloth retailing and also change buyers’ attitude which keeps them loyal to already existing luxury brands. Moreover, it has been noted in the luxury retail market that existing brands place barriers for the new entrants by increasing their marketing activities and also undertaking other initiatives that could