Introduction
The retail market can be defined as that business that reduces the bulk of a commodity for the final sale to the consumer. Retail companies buy goods in bulk from suppliers and they finally sell these to the customer (Levy & Weitz, 2008).
Because the retail market is near the final consumer, retailers must formulate appropriate strategies to attract and retain customers who will in consequence enable the business to gain competitive advantages.
Retailers may be independent businesses or franchises of other large international organisations that are given rights to sell a given product to the final consumer. The main operations performed by most of the retailers are those of buying the products, branding, resell, grading and advertisement.
In the fashion market, the retailers may opt to buy materials and fabric or be involved in the actual production of the clothing design and manufacture (Lusch, Dunne & Carver, 2011). In other cases, the retailers may opt to concentrate on supplying goods to the consumer and contracting the manufacturing works.
In this case, the retailer can be viewed as an intermediary between the manufacturer and the customer. For H&M, most of their fabrics are made by suppliers in China and turkey.
For successful retailing operations, proper distribution channels must be established and the supplier link must be optimised to ensure that they supply products on time (Datamonitor, 2008).
In this paper, two clothing companies that operate in UK and internationally were evaluated. These are; H&M and Top shop. The two businesses deal with retail market and sell to the final clothing to the final consumer.
Company/ Retailer Brief
H&M
The H&M Company is one of the successful clothing retail companies in the UK and internationally. The company is a market leader in the clothing retail business. It is one of the most successful in the fast fashion industry and the main products sold are those that are currently in fashion. The headquarters are in Sweden.
H&M has more than 1500 stores internationally and it operates mostly in the UK, Europe, North America and Asia (H&M Company, 2013). The company main business is that of designer cloths. The company offers competitive prices making their products affordable to the most of the customers.
H&M retailers operate with different brand names such as Stella Mc Cartney, Karl Lagerfeld and Roberto Cavalli (Kroll, 2004).
The principal success of the H&M retail business can be attributed to the use of modern well situated retail outlets where their products can be bought by the final consumer (Kunz, 1998).
The company maximises on the internet advertisements, use of catalogues and well arranged outlets for them to market their products effectively. H&M ensures that the product mix is well formulated such that product quality, price and advertising are appropriately designed so as to attract and retain the customers.
As it is common in most retail markets, H&M faces severe competitions from other retailers in the fashion industry. In contrast to top-shop, H&M focuses on the distributions of quality products at affordable prices (H&M, 2000).
Top Shop
Top shop is another fashion retail company that has stores internationally. Unlike H&M which deals with garments for males, females and kids, top shop mostly specializes with ladies wear.
However, the company has another stores referred to as top man but the core business of the company still remains the supply of ladies wear. This company offers stiff competition to H&M Company as well as other fashion companies such as Zara.
The company operates in over 100 countries and has established itself as a brand in the retail sales as they bring originality and style to the fashion industry (Top Shop Company, 2013).
The company is struggling to maintain its position at the British high street market and is continually expanding to other areas in the UK and the world. This is in line with the retail theory that details the need for company to move their services closer to consumers to improve the distribution channel.
The company main target is the young women who have a passion for new outfits in the market. The products sold by Top shop differs from those offered by H&M in that, while H&M focuses on the new fashionable designs, Top shop focuses on the indie fashion goals. This makes Top shop develop peculiar clothes.
The development of new products can be seen as a way of attracting new customer’s especially the young to buy the fashion outfits that have been developed. In terms of innovativeness, Tops shop has better innovative products as opposed to H&M.
Store Format
H&M Company has well designed stores all internationally. The company has opened many stores in the UK as well as other parts of the world.
In the United Kingdom, the company has numerous stores located in the UK and the main purpose of these is to take the latest fashion clothing closer to the consumer. The numerous stores enable the company to reach its target market with ease (H&M, 2000).
H&M believes that the store is the market place and is the contact point between the company and the customer. The company invest in designing state of the art stores. The guidelines for these stores are formulated at the H&M headquarter and the company ensures that these regional stores take the same format.
It also makes it easy for the customers to access clothes easily without the need to travel. H&M also allows for online shopping where customers can preview products, make orders and the products can be supplied to them (H&M Company, 2013).
Before the internet era, H&M used catalogues that enabled the customers to shop from home. However, with the advent of internet, online shopping is current being offered at these stores. The main point of sale however still remains the H&M store.
H&M retail have stores conveniently located in the most prestigious cities in the UK as well as other parts of the world. These stores are able to generate huge profits for the company. The convenience of the store is imperative as this enables the retailers capture customers within a given locality (H&M Company, 2013).
Similarly, top shop has well designed stores that are used to attract the customers. The stores are mounted at strategic points so as to enhance the distribution network. These stores are used as Point of Sale (POS) for the company and hence they are usually well arranged.
Top shop uses these stores as convenience stores enabling customers living in the different regions of UK to shop for the different designs.
This is imperative as the retail theory documents that there is need for companies to move their products and services near the consumer who is the principle source of income for the company.
Like H&M, Top shop also uses internet for online sales. The company has a site “www.topshop.co.uk” where customers can view their current fashion trends, make orders and pay for them online.
The use of internet is important as the company can be able to reach millions of customers and the purchasing process is made easier enabling the company gain higher sales volume and profits.
Store Design
The company store designs are elegant and appealing so as to attract the customers. The most imperative aspects taken into consideration during the store design are the store and the display windows.
For H&M, these details are done at the headquarters. H&M continuously varies the interior designs of their stores as well as the display windows so as to make them more appealing and to reflect to the current modern trends.
The display window which are also refereed to as the dressing windows are well designed so as to attract customers. The stores have large dressing windows in the front façade and these are designed so as to attract customers. The dressing window serves the purpose of attracting the customers.
The displays in the dressing windows are altered after every 10-14 days so as to inform and attract customers to the stores (Lawrence, 1994).
Most of the dresses in the display window are the latest collection and are meant to inspire the client to purchase the dresses. The display widows and the store layout are carefully designed so as create an environment of association and to enable the customer to focus on the dresses.
This is important in motivating the customers to make the choice of buying the dresses. In the stores, clothes are well arranged and subdivided in simple manner.
This enables the customers to differentiate the different products as well as make comparisons and this enables them make the appropriate choice based on price and quality of the clothing. The arrangements of the stores also enable the customers to get what they are looking for easily.
The clothing display and arrangement is used to depict a certain theme (H&M Company, 2013). Days such as father’s days, Valentine ’s Day and other special occasions are important and the clothing display is usually done so as to depict the themes represented by these days.
The arrangement of the store and the dressing windows is done so as to present H&M as being a trendy company offering affordable prices. In some areas the stores designs represent high end products as well as the cutting edge products.
The design aspects on top shop are also done in an eloquent manner. The design of the store usually represents certain themes that guide the customers into purchasing the products offered by the company.
Advertising and Promotions
In retailing, advertisement and sales promotions are widely used so as to attract the customers and also convince them to buy a particular product.
Top shop advertising methods
Top shop uses several sales and promotion methods. These promotion activities are mainly scheduled depending on the seasonal nature of the fashion industry. Using this strategy, the company has end of season sales, mid-season sales among other sales promotion methods.
Top shop also uses the internet as an effective marketing tool. Through the company website, the company is able to display some of the major cloth line that is available at their stores (Top Shop Company, 2013). Customers visiting this website are able chose the products that they want to buy and they can also pay online.
Another promotional strategy that is used by top shop is the in-store promotion. This enables the consumer and the company to interact at this POS.
Previously, the company had used strategies such as “My wish list” where customers were asked to indicate their preferred merchandise from top shop. Through this promotion, the customers listed clothing they would prefer for their friends and relatives.
To evaluate the customer’s perceptions, Top shop continually evaluates the feedback they get from customers. This feedback information is used to improve the operations of the company as they are able to respond to pertinent issues raised by the customer.
Another advertising method adopted by both top shop and H&M is visual merchandising. Is this strategy, the stores are carefully designed and arranged so as to attract the customers walking on the streets.
For effective visual merchandising, it is important that products that are displayed at the display window be of high quality, elegance and bear good advertisements jargons so as to lure the customers into the store. Both H&M and Top shop use sophisticated methods in their display windows as well as the shop arrangement.
These strategies entice the customers to make a stopover at the store and these results to increased sale (H&M Company, 2013).
Top shop also uses style notes. The notes are signed by the user and the stores receive them. This creates personal contact between the store and the consumers and this enables the marketing and braiding of the fashion product.
In retailing it is imperative that a company creates brands. A brand can be regarded as a name which the customers associate with a given product. In the retailing industry, it is imperative that companies struggle to create brands name that customers can identify with.
This would results to customers buying from the store due to the already established names. Due to the personal contact that exists between the stores and the consumer, it is easy to develop brands as the customers are attracted to the products on sale.
H&M advertising strategies
H&M uses a number of advertising and sales promotions methods. As aforementioned, it is imperative that the company uses good advertising strategies for them to gain more customers and competitive edge (David, 1998).
The main method used by H&M in advertisement is the mobile phone based advertising strategy. Using this method, the company uses the social media which is easily linked to the mobile phone to advertise their store and their products. Using this strategy, the company effectively links the customer to the store.
Mobile marketing campaign is the company main method of advertising. Using this method, the customers receive SMS coupons and SMS banners in their mobile applications as they use the social media.
H&M has also teamed up with Adiento which is a company that assist in the marketing of the company’s products. To gain more customers, the company encourages members to join the H&M club by visiting their website and leaving their mobile number (Butcher, 2009).
Other the years, it has been found out that celebrities all other the world influence the dressing and behaviours of people. It would be therefore prudent to use superstars to advertise the latest trends in the fashion world. To do this, H&M uses a number of celebrities who assist in the marketing.
These include Lagerfeld and, Roberto Cavali. The company also campaigns against Aids in the sales promotion of t-shirts with the label “designers against aids”.
Most of the advertising methods used by H&M are centrally developed at headquarter of the company. Most of these advertisements have a central theme, which is “fashion and quality”.
Most of the advertisement messages from H&M don’t focus on the range of products they have, rather, they focus on the styles and attitudes that the company wants the consumer to have.
Price is one of the most important factors in the marketing mix. For H&M, the price of a product plays a significant role and should therefore be reduced so as to attract customers. Most of the advertisement portrays H&M as a convenient clothing store where one can get a decent dress at an affordable price.
This makes it possible for the ordinary customers to walk into their stores in hope of getting a good outfit at a reasonable price. In the long run, H&M strategy is to become a market leader in terms of pricing. In fact, H&M is able to mix affordability with trendy fashions (Nagle & Holden, 2001).
Brand creations and positioning is also another imperative strategy used by H&M (Schmidt & Ludlow, 2002). The company’s aggressive campaigns are aimed at enabling the customers recognize the uniqueness of their brand and differentiate their products as being of high quality and affordable price (Olins, 2001).
For children products, the main emphasis of the advertisement and sale promotions is not to reach the children but rather the parents who buy these products. The company has special guidelines on all children advertisement methods as well as the other advertisements.
Customer Segmentation
For a company to be effective, it is imperative that its market is well identified and the different variations in the market indentified. For retail outlet to be effective, it is essential that the market is segmented effectively (Wright, 2006).
There are a number of ways through which the market can be segmented. These include wealth, age, lifestyle, gender and nationality (Boyd and Walker, 1990).
H&M Company which has stores internationally uses a number of target market segmentation. The segmentation of the market is based on the gender and age. Based on age, the company has the following main classifications (Remaro, 2009).
- Young children: these include children up to the age of 14 years. In this age bracket, the company specialises in the supply of affordable, comfortable and durable dressing. Not much is done to keep up with the fashion trends at this age.
- Teenagers: this age bracket has a great demand for the trendy wear. Clothes that are currently in fashion must be provided for this age bracket.
- Women segment: the clothes at the segment target women between the ages of 18 – 60 years. The clothes in this section target the working class women who have to look fashionable. Clothes in this age bracket address needs such as private evening wear, clothes to wear during leisure activities.
Most of the clothing products are sold to either men or women. H&M market can also be segmented in terms of the gender. Based on this classification, the company’s clothes can be divided into the women and male clothing. The two represent a diverse field with different requirements for each.
H&M Company also segments their products based on casual wear and sportswear. In this classification, there are clothes designated for work and other official wear and those dedicated for the sporting activities or to be worn during free times (Concepcion, 2008).
Another segmentation method is based on lifestyle. Based on this segmentation, people living in high class residential areas are charged more as compared to those living in middle and low class residential areas.
For H&M, this segmentation is usually not used as most of the commodities have a common price and the H&M main strategy is to ensure affordable and trendy fashions to all. The clothes are distributed from the central store to all the regions and hence the products and prices are nearly equal in all the stores.
Top shop market segmentation
Top-shop has a number of segmentations. Since the company specialises in the design and sale of women dresses, segmentation of the market in terms of gender is not possible. The company makes ladies wear and they create a wide variety of dresses that customers can choose from (Candice, 2010).
Top shop customers are segmented to cater for the needs of women at different ages. The store has wears for old women, teenagers and the young ladies. The company emphasis on customer loyalty making sure that those who purchase from their stores will always come to purchase there next time (Hawkins, Best, & Coney, 1992).
Top shop, unlike H&M, specializes in designing luxurious wear. This make the company be able to segment their market based on the income and lifestyle of the people. Most of their customers are drawn from the group of customers who enjoy clothing that can be differentiated from the others.
These customers are willing to spend more so as to buy attires which are deemed to be of high quality and are unique (Solomon, 1999).
Multichannel Platforms
A multichannel retails operation entails the use of different methods to link up sales and the ordering process. Using multichannel platforms, the customers can access facilities provided by the company via their mobile phones, internet and online stores.
Both top shop and H&M have online stores where customers can access the clothes. The online services provided by the companies enable the customer to locate a store near him/her. Online sales have been implemented by the two companies.
For H&M, Both catalogue and internet sales are only used to reinforce the store sales. The use of catalogues and online sale are used to make the products accessible to customers and this helps them to make the selection from devices such as the computer.
Most of the clothing products are availed in online shopping and this enables customer who are not able to visit the store select the appropriate clothing.
Catalogues sales are done through mailing the customer with H&M mail order and the customers can choose from the order and send it either online or through the post (H&M, 2000).
The use of online stores enables customers to conveniently search for clothes and also buy them without the need to visit most of the stores.
Problems Eexperienced
The retail market has a number of problems that affect the distribution of products. Some of the main problems experienced by the two companies include:
Intense competition
One of the principle problem experienced by both H&M and top shop is the intense completion by other companies dealing with the same products. The company must adopt strategies to differentiate their products, create a brand and ensure that the gain competitive advantages (Michael & Lewis, 2010).
Product uniformity
Most of the products supplied by H&M are uniform throughout. This means that the clothes being sold in the UK and the same clothing is sold in another country.
This has a potential problem due to variations in the fashion industry based on regions. Customers in the USA may opt for a different design as compared to those in the UK. The company must formulate strategies to deal with such variations
Branding and customer loyalty
Due to the increased competition, branding and product differentiation has become very hard. H&M strategies emphasize on the need for high quality and affordable clothing while top shop advocates for luxurious clothing (Schultz, Antorini & Csaba, 2005).
For the companies to effectively gain competitive advantage, it is necessary that product differentiations methods be improved (Lynn, 1995; Wilson & Gilligan, 1992)
Strategies That the Retailers Can Adopt
Distribution of goods to customers
Both companies have adopted online sales methods. They should be able to deliver the clothes to customers who buy products online. This will enhance the sale process.
Optimisation of the distribution market
In order to reach to the potential market, both companies must continue expanding and opening new stores. Customers need to shop at their own convince and locating these stores near the consumer will enable them sell more clothing.
Currently, H&M buys their products directly from suppliers and buying in bulk results to price reduction due to economies of scale.
Reducing the number of middlemen reduces the final product price and this is beneficial in achieving price leadership. Top shop should also use the same strategies so as to reduce the price of the clothing products they sell (Peter & Klaus, 1999).
Diversifications
Top shop should diversify their clothing line to include male and young children. H&M should also expand their product line so as to include clothes for the elderly people as well as those who are conservative.
Market segmentation based on income and lifestyle
H&M store prices should be adjusted based on the income of the residence where the store is located. In high class residential areas, highly priced products are considered more fashionable and the company can make more profits (Barry & Evans, 2009).
Regional variability
Most of the retail clothing companies such as H&M supply unique products to all their stores. This is not a good as different clients from differing nationality have varying tastes and preferences.
The company should engage in determining taste of different consumers and manufacture clothing based on these tastes. Products for different shops should be unique.
Advertisements
H&M advertisement strategy should be improved. Currently, the company uses mobile phones and social media to market their products.
The advertisement and sales promotion budget should be increased and other advertisement strategies such as the use of print media, advertisement through fashion magazines as well as the use of television network should be adopted (Kotler, 2003).
Working with global designers
Currently, the companies have their own designers and it is prudent that these companies collaborate with other designers so as to develop trendy and unique clothes that will satisfy the consumer wants.
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