Levis Retail Marketing Report - Case Study Example

RETAIL MARKETING Contents Contents 1 ABSTRACT 3 INTRODUCTIONAND BACKGROUND 4 Mission statement 4 Target market and position 5 Climate 5 Competitors 7 RETAIL SECTOR DESCRIPTION 8 Environmental/ economic factors 10 Competitive products 11 Competitive pressure 11 Changing demographics and buying preferences 11 Consumer behavior issues 12 E-commerce and technology 13 RETAIL MARKETING STRATEGY 14 Location strategy 15 Retail mix 15 Product 15 Pricing strategy 15 Customer loyalty program 16 Communication image 16 MYSTERY SHOPPER 17 Physical ‘bricks and mortar’ store 17 Customer service 17 Ambience & stock/service availability 17 Layout, design and visual merchandising 17 WEBSITE 18 Benchmark against the two main competitors’ websites 18 Mobile 19 RECOMMENDATION AND CONCLUSION 19 FIGURES 22 REFERENCES 23 APPENDIX 25 ABSTRACT Live’s target market are customer between 18 and 24 years. A big fraction of their customers are students or low-income individuals. The fashion sector has started experiencing tough competition that has prompted by entry of international fashion agglomerates in Australia. Lately, the most exceptional technological advancements that have occurred is information technology. Novel software applications, for example, enterprise resource planning system has helped in revolution of most organizational processes. Live haveprocess-oriented as well as fully integrated ISs. The retail stores needs to increase its marketing strategies so that it can be able to capture individuals who are not between 18 and 24 years. To ensure that it has a large customer base it should needs to customer loyalty program this can entail introduction of shopper card in that customers can earn point for shopping in the store. INTRODUCTIONAND BACKGROUND Live started operating in April 1994 and it had its first store in Murray Street Mall in Perth CBD. Live became successful after it had been opened and most of their customers then were male and female aged between 18 and 24 years who were very conscious about fashion. The first store had a feeling of industrial warehouse that had music as well as lighting associated with nightclubs. Overtime, the store became the preferred choice for cool as well as international labels and the store has since expanded right now it has 9 stores operating in prime locations situated in the unsurpassed shopping precincts of both South and Western Australia. On several occasion the store has won nationwide architectural prizes for merchandizing design. Live is also a key drawcard in most shopping centres in Australia. Mission statement Live has unique products and this makes it’s to stand out from its competitors. “Our concept is confronting, brash, stimulating and very modern and it different from traditional white walls wood floor method which most fashion retailers subscribe to. We push envelop to extreme as well as engage LIVE customer with retail theatre which challenges senses. Product is the most important aspect for our success” (Live, 2013). When one reads Lives’ history as well as mission statement it is evident that this is stores that is very unique and sells clothes that are appealing to the market. The store has also been in the market for a very long time and this is what contributes to their continuous success in the cloth line industry. Live aims at positioning itself to customers by ensuring that its customers dress to look fabulous. Evidently, customers visit the store so that they can look great in the clothes since the store has won national architectural awards and the store is a key drawcard in many shopping centres in Australia. Live store has had numerous changes since it became operational, from being a small store right now it has 9 stores and it is yet to open three more stores at Midland Gate Shopping Centre, Ocean Keys Shopping Centre as well as Cockburn Shopping Centre. At Live the shopping experience include personal customer service from fervent sales team members with wide product training. The store has improved from the one store in 1994 to become the best destination for the best national as well as international labels. Target market and position Since inception Live’s target market has been customer between the age of 18 and 24 years. Most of them are either students or youths who have completed school or individuals who are at the entry level in their respective professions. Evidently, most of these young ladies and gentlemen are usually very conscious of fashion and they would always like to wear trendy cloths. Noteworthy, these young men and women usually depend on their parents for money since at this age most of them do not have enough money to enable them keep trend with fashion. Usually, most youths have a liking for things associated with clubbing. This is the reason why the first Live store had lighting and music which is more suited for nightclubs than retail shop. The store had a feeling of a club and that is why when it was first opened it was common with youths. Climate Evidently, inflation has most parts of Australia and this has resulted in a decline in the number of sales related with fashion since there has been a sudden increase in most cloth and most buyers are spending more on food stuffs compared to clothing and items considered to be luxurious (Dyster & Meredith, 2012). Apparently, the cloth line sector has experienced a sharp decline in sales. Since internet became common and availability of personal computers it hasresulted in an abrupt shift towards technology since most stores have an online presence right now. An online presence is very important in any business at the moment since there are many online shoppers right now compared to previous. Online shopping appears to be very convenient and time saving a shopper is not supposed to visit a shop physically and this also reduces on the cost associated with acquiring the product (Close, 2012). Raising prices of goods can result in increased profitability but these needs to be done very carefully. On other hand, reducing prices of good can result increased profitability when the sales volume is high. However, this needs to be done cautiously since high or low prices can easily affect sales volumes. Any healthy business that is any competitive environment will always be changing. This is exhibited by the five components of profitability as well as inter-relationships. Always change requires compromise and one needs to be ready to attain the best balance among costs, sales volume, product mix, margins as well as capital employed and ensuring the best balance is most impossible (Smith, 2011). There various factors that determine sales volume in any firm. For instance, firms need to consider consumer concerns such as culture and changes in lifestyle. Live has considered changes in trends and has been abreast with most of the changes which take place in their business environment. For instance, the firm has stores that are appealing to its customers and its online presence is also something that cannot be ignored since the internet and computers became common one can easily purchase anything right from the company’s websites without much hustle. Most companies also have an online presence and this has enabled most companies work easily and have higher sales volume and even make sales to individuals who are far away from them (Woessner, 2011). Competitors Apparently, Live is the leading store in Western Australia owing to its outstanding quality of cloths and its large pool of youthful customers in Western and South Australia and the rest of Australia and the world at large. Live has many competitors such as Wardrobe Fashion, Bullzye Australia, Milk Fashion and Lakeside Joondalup among others but it has managed to wade its competitors. Evidently, the present fashion retail stores environment use social media as an approach of maintaining customers and enhancing business. Live fairs well among its competitors. Figure 1 Evidently, from the figure above Live commands a wide market share since it has the highest number of Facebook likes. Live is like to gain more market share since it has unique cloths and it still continues to win several national and international awards. Live’s competitive advantage is that the store has continuously won architectural prizes for retail design(Live, 2014). By winning such an award the firm has been able to be more marketable and most people have become familiar with it. By winning such awards its customers have been able to build their trust on them since they are very creative and competitive. The store seems to have a silent policy of innovativeness and ensure that it is trendy. A quick look on its website you will find a section set aside for new arrivals. New arrivals are usually some of the trending cloths that are preferred by youth and they can be easily found upon checking their website or even before visiting the store’s website. This advantage will make Live to be more marketable in future and it will be preferred by many customers. Live’s advantage is that it has ventured in providing different types of cloths both for men and women unlike some of its competitors who have specialized on either men or female only. The retail store has also specialized on selling clothes to youthful customers since they are one’s who are usually trendy unlike the elderly who care less about what the wear and they do not have time for trendy outfits. RETAIL SECTOR DESCRIPTION Over the years the retail sector in Australia has experienced tough years which have been associated with intense competition, cautious expenditure, and high cost of rent as well as aftermath of global financial crisis that resulted in decline in revenue as well as profit margins. In Australia cloth retailers buy various products as well as accessories in bulk and then sell them without changing it. Most of retail stores sell the goods in more than one shop and also have an online presence. The fashion industry has been growing despite the tough economic moments that have rocked the continent (Wait, 2014). Lately, there has been an influx of retailers from overseas who are killing the Australian fashion sector. Most minor Australian fashion brands are experiencing a “gentle death” while fashion multinationals continue to pitch tent in several parts of Australia. Recently, H&M, a Swedish multinational began operating in Melbourne (Kornberger, 2010). The figure below shows a Melbourne fashion designer whose boutique has been operational for 16 years. According to the lady on figure 2 below, big brands such as Topshop, Zara and H&M have “gently killed most of Australian brands” (Zielinski, 2013). Figure 2 The lady on the figure above complains that she has lost of her young customers to big firms such as Zara since she cannot produce the products in bulk hence she is forced to have higher prices which can only be afforded by mature customers (Zielinski, 2013). Environmental/ economic factors A multitude of economic and environmental aspects affect how Live operates on a daily basis. The economic and environmental factors exist in different stages when buying any product. Different customers have different financial position and this is what determines whether they will buy a specific product since different products have different prices and quality. There are some customers who will prefer high-quality goods while other will buy low-quality goods and this is largely determined by the customers’ financial position. There are also various products in the market that are an imitation of other products. Most counterfeit goods are usually sold at a price lower than the original good or just the same price that an original product will go for. When the market has counterfeit goods it will result in customers losing value for their money. It also results in cut-throat competition since sellers will try to outdo each other with their different products. Competitive products Recently, the fashion industry has started to experience tough competition which has been prompted by entry of international fashion agglomerates. Multinational fashion stores have resulted in tough competition that has led to closure or gentle closure of most of the small retail stores in the country. Multinationals such as Zara, H&M and Topshop have opened their branches in the country (Lea-Greenwood, 2012). Competitive pressure As mentioned before, the fashion industry has been less competitive for quite a while however nonetheless it has experienced a sudden change that has seen more competition being directed towards the hospitality sector in the country. There are various multinationals that have opened their stores in the country and this has resulted in a sudden increase in competition and some local stores have had close business because they cannot cope up with the increased competition which has resulted in decline in profitability. Changing demographics and buying preferences There has been a little change in demographics since most individuals who buy Live’s products are between the age of 18 and 24 years. This is the age bracket that most youths fall and to some extent the age bracket has extended to reach 28 years. As one becomes older he is not very keen with what he or she puts on compared to when one is a youth since most youth prefer being associated with trendy things. Technology has swept most parts of the world and Australia has not been left lagging behind in adoption of technology. There are various technological developments that have occurred in the world, for instance, internet has become very common, different search engines are being used in various sectors, computers and smartphones have become the in-thing and social media such as Facebook, Twitter, WhatsApp and Instagram have just revolutionized everything since right now in Australia most youths and adults are either on Facebook, Twitter, Instagram or WhatsApp. This has caused a sudden change in buying preferences since most youths in Australia right now will either have a smart phone and have enough data plan or have a computer. These gadgets are aimed at ensuring they are in-touch with the friends and they also get to know what is happening around them. Evidently, demand for smartphones, computers, iPad and tablets have hit the roof and the demand is not likely to drop anytime soon. Lately, it is more fashionable to have iPhone 6 or S6 than to have the new fashion cloth. Evidently, many Australian prefer buying gadgets have an advanced technology. Consumer behavior issues Consumer behavior issues refers to physical and mental acts of groups or individuals concerned about the ultimate consumption which concerns acquiring, using as well as disposing economic goods as well as service (Huemer & Setzer, 2011). As mentioned before, consumer behaviors have been shifting with time and most people are buying technologically related gadgets. The retailer’s image appeals to its potential customers who are mostly youths. Most youths prefer things that are unique and have an artistic image. This is the case with Live since their retail store is very appealing and has some artistic values that entice youths. Having national and international and international prizes on several occasions the retail store image has been improved hence this has directed more customers on their side. E-commerce and technology Evidently, the most outstanding technological advancements that have occurred in the recent past has been information technology. New software applications, for instance, enterprise resource planning system has helped in revolution of most organizational processes. Since the advent of internet there have been many changes in which Live operate as well as customers buy goods and services.E-commerce and technology have changed how things are done at Live retail store. With the introduction of technology it has acted as a game changer in the industry since most individuals right now have embraced technology. Live has re-shaped itself so that it can be able to transact online commerce. Live has a process-oriented as well as fully integrated ISs so that it can get the advantages associated with e-commerce. The retail store has been able to increase online business since a customer can buy a product directly from the store without necessarily visiting the store. The figure below illustrates that at Live one can shop online. Figure 3 In the fashion sector, e-commerce is becoming a key retail platform and the importance of e-commerce is developing day-by-day. At the moment there are some retailers that do not have physical location but entirely operate online. E-commerce has helped in fashion retailers reaching and developing a universal customer base. Developing any brand online is not very different from developing it off-line since both platforms require a clear brand vision, the appropriate edit as well as service to the clientele. A strict attitude that lack compromises is very important. The concept of online shopping or e-commerce is at its nuptial stages and most customers are now realizing and taking full advantage of perks and possibilities of online shopping. RETAIL MARKETING STRATEGY There are various aspects that prompt a shopper to buy specific products. One can buy a specific cloth so that he can attain specific goals. For instance, when the buyer would like to associate with a specific class of people. A buyer can also buy so that he replaces his old clothes or buy a cloth for a specific occasion or associate with a particular artistic value. Live is aimed at ensuring that its customers get unique and artistic kind of clothing. Location strategy Live has a total of 9 stores and 3 more stores are yet to be opened. Their stores are mostly found in Western and South Australia. Its stores can be easily accessed and there are signages which have been put on the shop. Retail mix Product Live sells clothing as well as accessories. Live retail store stocks about 100 different brands that have different prices. The retail store keeps itself abreast with trendy fashions and ensures that it has high quality cloths every time. The retail store stocks both men and women cloths. The retail store has won various national architectural awards and this makes it to become a national brand. Pricing strategy Live has a flexible pricing strategy that caters for different classes of customers and is also hinged on the quality of the cloth or accessory being bought. Live has various customers but the bulk of its customers are customers aged between 18 and 24 years. Most individuals in this group are low-income earners or are students. The store also offers discount on some of its products as illustrated in the figure below. The store also offers free express shipping on all orders above $75. The retail store has a good pricing strategy and that is why its more preferred among many customers. Figure 4 Customer loyalty program The store does not have a CRM program. The store needs to have a customer loyalty program, customer loyalty program have simple philosophy since customers who products from a store on several occasion are rewarded and this results in increased business. Live should introduce shoppers card whereby that when buys from the store he earns points and those point can be redeemed and converted into cash. Communication image Live has a good communication mix since their market space and marketplace strategy ensures that the brand image is maintained and one that can entice a potential customer to purchase from their store. The two marketing approaches are consistent since they are very appealing and always maintain then brand image. MYSTERY SHOPPER Physical ‘bricks and mortar’ store Customer service The store has unrivaled customer service. When one enters the retail store he is welcomed by smiling hostess who direct the customer and brief the customer about the new products in the store. Their customer service is so enticing that a customer would always like to come and shop again. Live’s employees are always smiling and they are always ready to help when one is undecided. Ambience & stock/service availability When a customer is inside the store the feeling is so great the coloring on the walls and unique graffiti entices a customer to associate with the store. The store is also well stocked with a variety of clothing and accessories that one can be spoilt for choice. Inside the store one could feel as if he is in a club the lighting was just awesome and I could see many youths all-over the stores and could be reason behind so many youths visiting the store. Layout, design and visual merchandising The layout of the store has fixtures as well as aisles put around symmetrically therefore allowing a more relaxing environment. The layout is very appealing and has high walls which make it more conducive. It has crystal clear glasses that surround the store therefore when passing outside one can view some of the clothing available. There are also some of the awards that store has won that when one enters the store he cannot miss to see them. Their dressing room is very comfortable and good-looking. The fitting room has a homey like environment. The store displays its clothing and accessories through use of straight rack fixture. They also a different section which is set aside specifically for new arrivals this enables customer to have an easy time when shopping. WEBSITE The store still offers quality customer service on their website. The website is very appealing and has some artistic aspects that are very enticing that one can hardly resist having a glance at what they provide. Just like in the retail store, the website has a section dedicated for new arrivals and this makes shopping much easier and of high quality. The website has feedback section and this enables customers to give their feedback regarding their shopping experience or complaint or compliment. The website has different sections that enable easy and faster shopping, for instance, there is a section set aside for men and women. Each of these sections has different types of clothing and accessories. The website layout is just one of a kind since one can see various things that offered by the store and one can navigate easily in the website without any problems. When one find the product that he would like to buy and clicks on it will give a brief description of the product. There is a Facebook linked tab that when a user clicks it he can see what other people are saying about it. Benchmark against the two main competitors’ websites Live’s competitors websites are almost similar and they have almost the same features therefore this makes it hard to determine which is better. But, this issue can be resolved by when one goes ahead to check the number of Facebook likes that its competitors have. Evidently, Live stands out to be the best since it a great online traffic. Mobile It is easy to put an order from a smartphone when ordering products from Live compared to its competitors. Buying from a smartphone is very easy and the site is also user friendly even when using handheld gadgets. RECOMMENDATION AND CONCLUSION Live’s future is very bright and it will be more and better since it has unique products. Considering that the retailer has won several awards in the previous years there is a high likelihood that the retailer will be much better in future. Nonetheless, competition in the fashion industry has become so fierce that small stores are gently quitting. There are prospects for increased growth in the fashion industry since technology helped increasing market for clothing and accessories. From the comfort of your office or home one can easily purchase clothing online with great ease. The store needs to capitalize on promotional activities and winning more awards so that the store can be more competitive and most people will understand how it operates. The stores should also capitalize on ensuring that they continue produce clothing and accessories that are unique. The store needs to devise an approach in which they ensure that they increase their market share by ensuring that individuals who fall outside the 18 to 24 years bracket visit them more and more since most of these customers are high income earners or have stable jobs and cannot mind spending $300 on clothing. In any business the seller should always consider having high sales volumes. Usually, increasing sales volume can appear to be the best approach of increasing business profitability; however this is never the case since there are various aspects that need to be identified: a) Having high sales volumes is not always the key to a lot of profits since profits require turnover, however turnover is not profit since ‘turnover is vanity while profit is sanity’. b) When a business increases its sales volume, it should rigorously control prices, costs, capital employed as well as product/ service mix. The management of the business need to ensure that none of the four aspects of profitability are increased disproportionately; in case they do, increased sales reduces profits. c) When a business increases its sales turnover by having an additional trading in bigger geographical area results in more profits when the additional sales produce that can cover additional costs. d) When a business owner cuts prices as well as margins so that he can generate more sales he needs to attain substantial increase in the sales volume. e) When a business gives credit to its customers so that sales can increase the business is likely to bear the associated costs f) Selling most of the existing services or products lines or introduction of novel ones can increase the sales volume but the business owner is supposed to be aware of the contribution level of each product line. g) There are some cases that a business owner can increase its profits through reduction of its turnover. It is evident that the fashion retail sector in Australia is developing very fast and this has resulted in players in the sector to reap big from customers. Players in the fashion sector have developed ways of ensuring that they remain competitive amidst competition which has been brought about by multinationals that have pitched tent in Australia so that they can reap from the wide customer base. The increased competition has also prompted innovative operations such as adoption of e-commerce so that the enterprise can get more customers. Live has been in the business since 1994 and there long existence and intermittent growth can be attributed to its innovativeness and unique mode of operations which has led to it winning various national prizes. FIGURES Figure 1 Social Media (Facebook) Graph Figure 2 small retail store in Australia retrieved from http://www.smh.com.au/lifestyle/fashion/influx-of-overseas-retailers-is-killing-australian-fashion-industry-20131126-2y7jk.html Figure 3 Retrieved from http://blog.liveclothing.com.au/ Figure 4 retrieved from http://www.liveclothing.com.au/BODY-STRIPE-PRINT-T-SHIRT.aspx?p68809 REFERENCES Close, A. (2012). Online consumer behavior: Theory and research in social media, advertising, and e-tail.New York: Routledge. Dyster, B & Meredith, D. (2012).Australia in the global economy: Continuity and change. London: Cambridge University Press. Huemer, C & Setzer, T. (2011).E-commerce and web technologies: 12th international conference, EC-Web 2011 Toulouse, France, August/September 2011 proceedings.New York: Springer Science & Business Media. Kornberger, M. (2010).Brand society: How brands transform management and lifestyle. Cambridge: Cambridge University Press. Lea-Greenwood, G. (2012).Fashion marketing communications.New York: John Wiley & Sons. Live (2014). LIVE. Retrieved from http://www.liveclothing.com.au/About-Us.aspx Smith, T. (2011).Pricing strategy: Setting price levels, managing price discounts and establishing price structures. Mason: South-Western Cengage Learning. Wait, M. (2014). Australian fashion labels on growth path despite tough economic times. Retrieved from http://www.theleadsouthaustralia.com.au/innovators/australian-fashion-labels-on-growth-path-despite-tough-economic-times/ Woessner, S. (2011).Increase online sales through viral social networking: How to build Website traffic and online sales using Facebook, Twitter, and LinkedIn-in Just 15 steps. Washington: Atlantic Publishing Company. Zielinski, C. (2013). Influx of overseas retailers is ‘killing Australian fashion industry’: The Sydney Morning Herald. Retrieved from http://www.smh.com.au/lifestyle/fashion/influx-of-overseas-retailers-is-killing-australian-fashion-industry-20131126-2y7jk.html APPENDIX Mystery shopper report 1. Number of customers in the shop ____________ 2. Welcomed by hostess when entering the shop____ 3. What were staff doing a) watching for new customers/ anyone needing help b) Ignoring customers c) No staff visible 4. Were you assisted by the staff? 5. What was the first impression of the shop? a) Cold, unfriendly, unwelcoming b) Okay c) Warm, welcoming and friendly 5. Was the layout/ display a) Okay but nothing special b) Unattractive and difficult to find anything c) Attractive, easy to locate goods 6. How is the dressing room 7. Is the store spacious? 8. How visible or accessible is the store? 9. How is the shop stocked? Mystery shopper online reports for the competitors 1. How different is the website from competitors? 2. Which retail store has most Facebook likes 3. How similar are the websites? Read More