Strategic Management In The Retail Fashion Industry: A Case Study Of Next

Industry and Competitor Environment

The Retail Fashion Industry in the contemporary business system is highly competitive. Like other industries, it comprises of different brands. Next Retail is a popular brand in the high-end fashion industry. It is a subsidiary of Next Plc, which specializes in the clothing, accessories and home products. Its regional and global competitors in retail clothing includes Marks & Spencer’s, Gap, H & M, and Zara. These are all top-notch high fashion designs. On a wider scale Next is a brand with diverse products in other sectors such as households where it competes with retailers like Tesco and Debenhams. Strategic management looks at the brand objectives, as well as its opportunities and challenges externally. This household name in the UK has target customers such as the high street fashionistas. The brand has a chain of stores in Europe, the Middle East and Asia. Some of the business strategies used by the brand have been a success while others have disappointed. Reasons behind this is that the business market is dynamic and keeps changing. Customers also have diverse preferences, which influence the strategic decisions. The strategic management framework determines the strengths and weaknesses derived by the business. The political, economic, social, and legal issues shape the trends in the industry. Technology factors have brought about sudden changes in the economic sector as retail stores like Next take advantage of e-commerce. Therefore, corporate objectives and functional management continue to feature in the fashion business.

The clothing retailer industry in the UK and around the globe includes the sale of clothing, footwear, and apparel. With a 6% market share, the industry is worth billions. Its growth and development also affects its related industries such as footwear (Daneshkhi, 2016). The Next strategic plan concentrates on efficiency, customer service and financial returns. That is why it’s marketing plan shows customer target strategies for young people within their 20s and 30s. Among them is the pricing plan, which caters for the average customer through moderate pricing. Segmentation of its products to feature houseware and furniture is also a strategy to diversify. Its competitors are Marks & Spenser,, H&M, and Debenhams’s PLC (Reuteurs, 2017).

Marks & Spenser has a net income of 117 GBP against NeXT’s 635 GBP (Reuteurs, 2017). Despite this, Marks & Spenser has a wider product innovation, which includes feet wear, kids’ attire, food, wine, flowers, toiletries and beauty products. Its brand name boats of a large market share. Its marketing strategies include discount promotions and digital marketing. On the other hand, Denham has greater discounts as high as 70% and clearance sales. It also capitalizes on seasonal wear and weekly offers. Unlike Mark $ Spenser, Debenhams also has segments for gifts & toys, electrical, weddings and holiday stores.

Corporate Versus Functional Management

H&M’s discounts have 80% discounts for its selected stores and it has products segments for men, women and kids. Its diversification includes H&M home, which also has free shipping for purchases of more than $40. Its back to school style segment gives it an edge. H& M is also popular for street fashion, which features T-Shirts & Tank Tops. Hoodies and sweatshirts.  It also has lingerie, women wear and men categories.

The flexibility and compatibility of corporate objectives versus functional management continues to feature in the fashion business. This unfolds the dynamics of the internal and external factors. The retail employee’s today search for job satisfaction as a motivation for performance  (Cheng, 2017). Next internal strategies for motivating employees include a friendly working environment, staff discounts, flexible working environment and easy pay. Despite this, there are complaints about its management approaches to leadership (Glassdoor, 2017).  

NeXT’s corporate strategy is the business plan laid out by the   brand. This may be similar to what other brands have also adopted. It includes the brand policies and strategies, its objectives and mission statement. NeXT’s primary objectives are business centered and consist of plans for improved sales, profitability and customer satisfaction (Next, 2017). The purpose for this is to improve its market share and brand equity. However, when a brand focus is highly concentrated on the financial strategies, it compromises its customer experience. The brand also has a significant CSR practices in which it supports good business practices through community, environmental, people, customer and stakeholder initiatives.

On the other hand, functional management strategies are smart plans within specific functions of a brand. Next has marketing strategies like price differentiation and product segmentations functions for best practices. As a large retailer, the company has strategies for Next clothing unit, its household unit and other business ventures. In its style and fashion, Next has adopted new fashion strategies in line with customer changes. For instance, in the 1980s, the company introduced home shopping, in the 1990s, it became online shopping and in 2000s, it became a global retailer with stores and online links.

The macro-environment analysis of corporate management strategies starts with an analysis of the business environment. The PESTLE and SWOT approaches provide an analysis for a sustainable competitive advantage (Eva, et al., 2014). These guides serve as road maps for achieving success.

Physical factors are important because the actual location of a business affects its decisions. The presence of Next in Asia has implications that may not be the same as its existence in Europe because of facilities, access to resources and business opportunities.   

External Analysis

Economically Next as a brand has its financial strengths which support its success. Its 10-year projections highlight drops in per share earnings and retail sales. However, it shows an increase in cash flow, new stores and group sales. Its financial records also show increases in net debt and a fall in profit before taxation. Factors such as economic recess and tax affect the brand strategy (Next, 2017).

Sociocultural influences range from the values that the society holds to religious practices and lifestyle. This explain why Next develops adverts with different languages to suit its Asian and Middle East customers. Some regions like the Middle are resistant to brands from Westernized countries.

Technological elements provide opportunities and challenges for Next. Its successful use of e-commerce supplements losses in the physical retail store and adds value to its marketing ventures. The brand takes advantage of social media to promote and sell though discount offers. Online business comes with its own challenges such as privacy, and security in transactions (Buller & McEnvoy, 2012).

Legal and Political factors affecting business operations include the laws and regulations put in place by the national governments. These are different in all countries within which Next operates in.

The global context within which Next operates gives it broader challenges and competition. As a British brand, it stands up against brands from World economies such as China and the US (Cummings & Worley, 2014).  These are diverse yet similar in some way. Challenges in one region like Chinese regulations may not be the same as cultural barriers in the Middle East. However, the brand will encounter global market competition from all regions.

Next as a fashion brand has gained respect over the years. As a result, it is a trusted brand across the globe. Its creativity and brand quality makes it acceptable across the globe. This provides an opportunity for the second hand clothing resale (Kestenbaum, 2017).  Although the brand has challenges selling in its retail stores, it has a larger market to explore in e-commerce. The brand responds to the external challenges with its internal strengths and abilities.

 Table 2 SWOT analysis for NEXT

Rivalry among competitors shows that there are threats from new entrants. Porter’s theory analyzes this together with the bargaining power of suppliers, threat of substitute, and the bargaining power of suppliers. This framework in the industry determines the business strategy trends. In the fashion industry, emerging markets like China provide amazing opportunities for developed brands like Next (Ramamurti, 2012). On corporate objectives and strategy, this model provides a comprehensive outlook of the market and its attractiveness. Its analysis determines whether the Middle East is ripe for retail fashion and whether Next would succeed (Wolfestone, 2017). In the modern business system, localization helps brands to overcome market penetration challenges. The internet is also an effective tool for online business with the brand.

The concept of strategic management has numerous elements intertwined in its framework. These feature strategic choices, analysis and implementation. The figure below summarizes it (Brodin, 2015). An effective model does not stick rigidly onto one plan but a diverse approach. 

The Internal and external environment in retail fashion acknowledges the significance of branding. Due to the increase in competition, brand quality guides consumer choices. Behaviorists believe that customers form perceptions about a brand, because of the value that they obtain from it.

McKinsey’s 7 S Framework is an interrelated factor that affects the company’s ability to change. This is a functional level organizational approach that covers all departments in NeXT as a business organization (Wright, et al., 2013). It defines the strategy for its HRM, marketing, IT and operational departments. For example, it checks whether Next as a brand is prepared for technology changes such as e-commerce, e-learning and mobile business. The 7 S model highlight complexities within the company and the needs to form a realignment with each other, in order to improve performance during the change process (Buller & McEnvoy, 2012). Its theory revolves around 7 elements which improve organizational development through group activities. The theory explains that strategy, structure and systems as hard or tangible elements influencing strategic management include the IT systems and organizational charts. In addition, there are intangible elements namely, shared skills, style and staff, which relate with the tangible elements for effectiveness.   

The effectiveness of the internal elements depends on NeXT’s values, organizational plan and corporate strategies. The size of the brand, its recognition influence the external markets response to it. When reputable global brands enter into a local market, they cause change. This can be positive and negative. Best practice lies in the ability of the organization to create and maintain reliable processes. Competitiveness comes from internal strategies that create make a difference in processes, and functions for an edge against the competitor. (Hitt, et al., 2012) NEXT business objectives include:

• brand development,
• improved sales
• increased profits
• more customers in UK and globally
• efficiency in product sourcing, financial management and cost effectiveness

The UK market reveals the attractiveness of the Industry depicting a higher rate of investment in the clothing sector (Trishi, 2016). Its style comes out as a British luxury brand and it takes advantage of online fashion, which is worth £ 12.4billion.

Conclusion and Recommendation

Next as a global retailer in fashion has weaknesses and strengths. Its functional strategies explain the brand’s employee management. Since the UK brand has branches in foreign lands of Asia and Middle East. It needs a good HRM plan that caters for expatriates and employees in the host countries. In this case, the corporate strategy of market entry shapes its organizational functions(Kapferer, 2012). The challenge for Next is to connect the brand plans with its corporate strategy. In both corporate and functional management approaches, leadership is an important factor. It guides the processes for change and it determines its success and failure. Future trend projects indicate an increase in online shopping with reductions in traditional advertising modes. This means that Next needs to brace itself for offers that are more competitive and greater discounts because the modern consumer is searching for value and cost. Continuous benchmarking is also important because it represents the improvement of business practices across the age. It weighs the strengths and weaknesses of the brand with specific trends over the years. It is clear that the process of developing internal and external strategies is about Next striving to ensure, customer satisfaction, improved quality, asset utilization and capacity enhancement.  Therefore, the massive explosion of strategic management approaches is evidence of the gaps in the practical limits certain corporate strategies. Therefore, the use of strategic plans is not limited but diverse and multifaceted. 

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