UK Fashion Industry: Strategic Analysis

UK dash Industry strategical summaryIntroduction behavior labor is one of the nigh thriving and utile industries of the universe. The advent of globalization has led to greater penetration of forge into the attend of individuals. Mega port shows ar macrocosm held in many acress across the orb which has generated considerable interest among the individuals. The bring out larn deals with the modal value intentness of UK. The extract of the acres assumes significance as it is one of the stupendousst formulate hubs of the world. The nation as wholesome ho using ups some of the most popular stags in the trend attention. A study conducted by look firm Grail puts UK as among the top hubs in the global fashion exertion along with USA, France, Italy and Japan. capital of the United Kingdom contrive hebdomad which happens to be the largest fashion related event in the nation is the simply fashion event that promotes works done by students thus gameylight its co mmitment and figurehead in the global fashion industry. Prestigious awards bid River Island Gold Award cave in their origins in UK (Grail Research, 2009, p.6, 8). The present study would decoct on the industry analysis of the fashion industry particularly that of the UK commercializeplace. The sketch would include an industry analysis along with the analysis of the rivalrous cloth prevailing in the UK securities industry. Subsequently the key succeeder accompanimentors and strategic groups would be analyzed in the field of study. The report would in like manner feature examples of the strategies that devour been choose by the market leaders to continue their sustainability in the industry.Industry compendGlobal Fashion Industry- An OverviewFashion industry includes fashion designer houses, retail chains and the firms eng get alongd in the manu incidenture of app arls. A report create by Levis Strauss Co has pegged the value of the global fashion industry at US $ 1334.1 billion as on 2008. The report excessively predicts a northward trend for this practice in the subsequent years. Apart from being a style statement, fashion also generates creativity, well being and identity. The report also states certain shortcomings of this industry which primarily includes aspects give cargon poor operative condition of workers in the industry, wastage of resources and also encouragement of unrealistic consumption. Certain other shortcomings include unavailability and high prices of sensible materials which also emerge as a major(ip) ch on the wholeenge for the firms engaged in manufacture of fashion apparels across the world. Numerous opportunities also exist for the industry from the emerging markets the like India, China, Brazil and Russia which abide started emerging as fashion hotspots of the world (Levis Strauss Co, 2010, p.5).Overview of the UK Fashion IndustryUK has been among the pioneers in the global fashion industry whose association with the world of fashion dates back to the 1960s popularly known as the sear sixties, the punk and romantic 1970s and Cool Britannia Image of 1990s. Present age fashion designer label brands like Vivienne Westwood, Burberry and Mulbery, to name a few, are some of the numerous brand names housed in the nation (British Council Fashion Oxford Economics, 2008, p.9).A recent trend ob dish upd in the industry is that the nation is shifting from home ground manufacturing units to sourcing products from foreign retailers. This has been attributed to the aspects of high labour be coupled with the rise in prices of raw materials which has forced manufacturers to outsource their occupation units to nations like China which offer a crucial pool of able resources and raw materials at cheaper rates (British Council Fashion Oxford Economics, 2008, p.16).UK is one of the pioneers in the fashion industry, and the nation is accredited with numerous substructures in the industry segment. A research study conducted on the fashion industry in UK states that consumer spending on fashion apparels in UK saw a growth rate of 6.5 percent in 2009 with sales figures reaching 2.5 billion Pound. One of the major market players in the UK market Newberry reported 19.1 percent growth on an yearly basis. The growth of fashion industry has been fuelled by large levels of spending by the local people. Over the last ten years spending levels of individuals grow grown by virtually six percent on a real term basis. The fashion industry also has made prodigious contributions to the economy of the nation. In the year 2009, the industry is said to necessitate contributed approximately 20.9 billion pounds towards the economy of UK which forms most 1.7 percent of the total gross domestic product figure of the nation. Retailer GVA alone has contributed approximately 6.5 billion pounds towards the economy of UK. Indirect contributions to the economy include providing employment options to close to 816,000 individuals in a direct or an indirect manner. This figure represents about 2.7 percent of the total workforce in the nation which highlights the growth and importance of this sector towards the economy of the nation. On a standalone basis i.e., excluding the employees at the retail stores, the sector employed about 155,000 individuals or about 0.5 percent of the total workforce based in the nation. The fashion industry is also one of the major contributors to the nations exchequer with contribution figures ranging about 13.2 billion pounds which stands at 2.6 percent on absolute percentage terms. These contributions occupy mainly come from VAT and through the income tax paid by the employees engaged in this industry (British Council Fashion Oxford Economics, 2008, p.14).The magnanimity of the fashion industry can be adjudged from the fact that the contribution of fashion industry towards the GDP of the nation is significantly higher than chemical and publish ing industry. Fashion industry is the fourth largest employment provider in UK and comes only next to exit and tourism, telecommunications and real estate (British Council Fashion Oxford Economics, 2008, p.20). This implies the coarse potential of the fashion industry in UK. The following chapter would provide an analysis of the competitive framework ordinary in the UK market.Porters Five Forces ModelCompetitive framework for any industry can be give outd by using Michael Porters five forces framework. The analysis of a market using the framework proposed by Porter helps an organization to analyse the market potential of other players in the market. This helps in generating sustainable competitive advantage for the firms. According to this framework, the competitive framework can be analysed by using five factors namely, negociate Power of SuppliersBargaining power of Consumers aspiration from existing playersThreat of overbold entrantsThreat of substitutes (Haag, 2007, p.72)B argaining Power of SuppliersSuppliers have a high barraging power when the raw materials are available in scarce quantities. It also rises when the morsel of suppliers for a particular product or raw material is quite limited. In case of fashion industry, suppliers make believe of vendors who provide raw material like cotton and other textiles which serve as raw material for apparels. The UK fashion market is characterised by the bearing of a few suppliers which is oecumenicly referable to high costs of raw materials. The suppliers also use traditional practices which again increases the cost of goods sold (Karra, 2008, p.27). tall cost of real estate also serves as a major source of concern to the fashion retailers. This analysis implies that suppliers have a evenhandedly high bargain power. Market leaders in UK have started outsourcing their manufacturing departments to vendors based in nations like China and India where cheap raw material is present at affordable cost of l abour (PricewaterhouseCoopers, 2004, p.2).Bargaining Power of ConsumersBargaining power of consumers arise when the market is characterised by the presence of numerous players who have a large product tonal pattern. Presence of large number of competitors puts consumers in the drivers seat as they have numerous options. The present status of the consumer market in UK reveals the presence of large number players. Most of these players have high brand values products to suit every type of customers. This provides ample choices for the consumers. accordingly it can be reason that consumers have a high bargaining power in the UK market.Major players in the market like mark and Spencer, Austin Reed have started providing value added services to consumers to woo them to their stores. eminence promotions have also been used to sign consumers like Lane Crawford get in supermodel Maggie Cheung for its promotions.Competition from Existing PlayersUK is characterised by the presence of la rge number of global players like Marks and Spencers, Next, Arcadia, Matalan and Bhs all of which have formidable brand image and an impressive product line to target consumers. Competition exists in almost every segment of the target market. This implies that competition from existing players has a significantly high impact on the fashion industry in UK. Market leaders have formulated policies that tend to win the consumers in favour of their brands. Fierce competition has prompted leading market players to vouch for newer locations like for example Marks and Spencers eyeing the Indian market.Threat of New EntrantsNew entrants do not pose sufficient threats to the existing players. This is mainly due to the fact that the present market in UK is completely saturated with big brands like Marks and Spencers, Next etc. Moreover, high cost of establishing a rail line deters new players from entering the UK market. This implies that new players do not have significant power to challenge the existing players.Threat of SubstitutesSubstitutes are those products which have attributes that are highly quasi(prenominal) to the original products. The customer segments of firms like Marks and Spencers are highly niche in nature and are unlikely to give to substitutes which sanctionedally constitute low priced products. Hence it can be concluded that substitutes do not present significant threats to the existing players present in the market.Key Success FactorsThe key success factors for the fashion industry are stated belowGovernment nominateCustomer Awareness efficiency to bring in continuous innovationsGovernment SupportGovernment support is a key element in the success of the fashion industry. master active policies by the government favour the emergence of new players as well as boost up the existing players by creating market conditions that tend to provide greater value to the customers. Creation of competition would automatically generate innovations which is the backbone of the fashion industry.Customer AwarenessThe success of fashion industry depends on high levels of consumer awareness. Consumer awareness implies that consumers get regular updates about the new products that are being stick ind by the fashion industry. Events like London Fashion week, capital of France fashion week and other such festivals have emerged as a platform for fashion designers and retailers to showcase their products and creativity. These festivals are characterised by presence of high profile celebrities who endorse products of different designers and fashion labels. In these events, awards and accreditations are given to talented individuals who generate creativity in their designs (London Fashion Week, n.d.). This also serves to motivate individuals to produce greater creativity.Ability to bring in Continuous InnovationsInnovations are the key to success in the fashion industry. The basic tenets of this industry are based in continuous innovations. Fir ms like Hilfiger have created competitive advantage by introducing continuous innovations in their product line (Manlow, 2009, p.242). Innovations in fashion include amalgamations of modern and traditional fashion. Mega events like Paris fashion week and London fashion week serve as major forums where market players can showcase their products to the target audience. Firms are also roping in celebrities and supermodels to promote their designs. These innovations and subsequent endorsements by popular celebrities generate substantial interest among the target audience with regards to the diffusion of innovation among the general masses. Broad appeal and glamour of these events generate enthusiasm among the target markets with regards to adopting new products.The analysis of key success factors reveals the importance of factors like government, awareness among the target market audience. The aspect of innovation also generates sufficient interest among the firms to innovate their prod ucts. The UK market represents numerous potential for the market players as all the trey key success factors can be achieved by organizations. A adapted premix of the three key success factors would help in generating sustainable competitive advantage for the firms in the highly competitive market.Strategic GroupsStrategic groups are defined as a group of firms and organizations which operate deep down a specific industry who have similar strategies. It has been observed that in most of the cases the difference among the different market players is generally captured by the presence of strategic groups within the industry (Kim Mauborgne, 1999, p.86). The fashion industry in UK is characterised by market players like Marks and Spencers, Next, Arcadia, Matalan and Bhs who are global market players having operating theater in all major markets across the world. All these firms have the aforesaid(prenominal) target market and have a similar marketing mix for their products. The b asis of forming a strategic group is based on the fact that all the above stated market players operate in a similar macroeconomic set up and have a similar target market. These firms intend to have similar positioning strategies. The presence of a strategic group also creates entry barriers for new entrants as well as generates sustainable competitive advantage for these firms in the market. Presence of strategic groups tends to stabilise consumer preferences, it also generates greater competition and rivalries among the market players, as all the players in the strategic group are known to target the alike(p) customer segment. This leads to aggressive marketing by the firms to beat their rivals in the business markets. The scenario in UK market resembles a similar situation with firms trying to use every possible strategy to beat their rivals and capture the market (Hoskinsson, Hitt Ireland, 2008, p.87-88). terminusThe concept of fashion has been prevalent in UK since time immem orial and the nation has been among the pioneers with regards to creativity in this sector. The study reveals that fashion industry is one of the most happening industries in UK. This can be gauged from its contributions towards the economy of the nation twain in direct as well as in indirect terms. The UK market also represents tremendous opportunities for market players as it has a large customer base with high levels of disposable income which makes it an attractive destination for fashion brands across the world. The study also shows certain challenges which mainly arise due high cost of raw materials and labour. Presence of strategic group also tends to increase the competitive rivalry among the market players. In spite of this, the huge potential of the target market serves as an incentive for most of the market players to eye the lucrative market of UK. Hence, it can be concluded that success of an organisation precisely that of fashion, lies in its ability to generate conti nuous innovation and to mould the advantages of the market to generate sustainable competitive advantage.