P.E.S.T. Analysis for SOM 122: URBN PDF

Preview

Summary

Completed PEST analysis on Urban Outfitters for SOM 122 ...

Description

Family Clothing Industry P.E.S.T. Analysis Outline CRIN Corp.

SOM 122 September 29th, 2017

TABLE OF CONTENTS Political/ Legal………………………………………………...…………………………………………………...…2

Economic………………………………………………………...…………………………………………………....4 Sociocultural…………………………………………………..………….………………………………………..…5 Technological………………………………………………...……………………………………………………….7 Reference List……………………………………………………..………………………………………………….9 Signature Page…………………………………………………….………………………………………………...11

Political and Legal Factors in the Family Clothing Industry The political and legal landscape of a nation that a business operates in can affect the way that clothing retailers, wholesalers, and manufacturers run their businesses and their profits. 1

I.

II.

III.

IV.

V.

Policy regarding the clothing industry and competition A. The passage of the Wilson Act of 1895 made it illegal to conspire with others to limit the amount of imports in the clothing industry and others (Rivera, 2017). B. The Clayton Act of 1914 made it much more difficult for companies to partake in business practices that lead to a decrease in competition and made it illegal to collude to increase prices (Rivera, 2017). Tariffs A. Tariffs on wholesalers and the manufacturers of clothing can have indirect impacts on the prices that the retailers have to sell their products at (Rivera, 2017). This would force retailers to want to buy clothes manufactured inside of the United States in order to keep some of the costs down. B. In reference to what has been deemed an “economic war” against China, President Trump told his Chief of Staff John Kelly, “I want tariffs. And I want someone to bring me some tariffs” (Bryan, 2017). With China being the largest exporter of clothing in the world (Bromley, 2017), imposing a trade tariff on all goods from China would have a substantial impact on the clothing industry. Increasing the cost of Chinese manufacturers to send clothing to the United States would force retailers and wholesalers to pay more for the goods and as a result cost the consumer more. C. As the trade war between the Chinese and the United States government’s heats up, President Trump has made his intent clear that he wants to impose some sort of tariff on china if they do not change the way they do business. Trump has kept his options open and has the ability to “pursue congressional legislation to impose a 45 percent tariff… on imported Chinese goods” (Applebaum, 2016), in response to China’s manipulation of its currency and other actions. A tariff of this size on any country’s imports into the United States would have an impact, but one on a trading partner with as much importance to the US as China would have massive ramifications. A tariff on all of the goods that China exports to America, including clothing, would change the prices of these goods in America. The tariffs would cause for the retail, wholesale, and manufacturing prices of clothing increase and this could impact the bottom lines of companies and the wallets of consumers. f Taxes A. When a new administration enters the White House change is expected, especially when it is a member of the opposite political party of the former President. With a new President in the Oval Office there has been a push for tax reform and a major part of the proposed tax reform is “a cut in the corporate rate from 35 to 20 per cent” (McCrann, 2017). This change in the tax code could have implication on the retail clothing industry, with the corporate tax dropping fifteen percent there is a major opportunity for a company to retain some of its profits and reinvest in the business. Governmental assistance A. The United States government does not support the retail clothing industry on a large scale with any sort of federal subsidies and/or grants (Rivera, 2017). B. There are a multitude of different retail associations in the United States, for example there is the National Retail Federation. The National Retail Federation, or NRF, helps with things such as research, training, governmental affairs, and other areas relevant to the retail industry in America. Sanctions on other countries 2

VI.

A. As recent as September 16, 2017, the United Nations, with backing from the United States and others, put a trade ban on North Korea. This trade ban has clothing, or textiles, listed as one of the products that countries should not be importing from North Korea. (Fifield, 2017). Minimum Wage A. Across the United States whether it be on an individual state basis or federally, minimum wage has been consistently increases since the turn of the twenty first century. States such as California had “the minimum go to $10.50 an hour” (Perry, 2017), which was an increase from the former minimum wage. The changing of the minimum wage would have an impact on the way that all retail, wholesale, and wholesale clothing stores or companies in the United States. Increases in the minimum wage would cause for there to be more automation in the industry or for companies to have to increase the price of their clothes. The increase in the price of the clothing could cause for more companies from outside of the United States to gain a hold on the American clothing market.

The laws and politics of the United States have a massive impact on the way that the family clothing industry domestically operates.

Economic Factors in the Family Clothing Industry Over the past few years, the family clothing industry has seen gradual growth from its downturn in 2013; this has allowed for the expansion of the market as well as job growth and profit maximization. I.

Per Capita Disposable Income: A. A prolonged level of low unemployment over the past year should lead to wage increases, as well as new tax policies should lead to a higher average disposable income among US households (Rivera,2017). 3

II.

III.

IV.

B. The estimated GDP per capita in 2018 is $41,032.60 with a 2.4% growth change since 2013 (Rivera, 2017). C. The forecasted GDP per capita in 2023 is $47,203.97 with a 2.8% growth change from 2018-2023 (Rivera, 2017). D. This will allow more families to have flexibility over their disposable income, allowing for more purchases in the Family Clothing Store industry (Rivera, 2017). Import Penetration into the Manufacturing Sector: A. The forecasted value in 2022 for import penetration into the US market is valued at 33.2% with an expected growth rate of 0.9% from 2017 (Rivera, 2017). B. The value of the dollar is expected to rise over the next 5 years, meaning imports will be more affordable while exports will be more costly to international markets (Rivera, 2017). World Price of Cotton: A. The world price of cotton has dropped due to overproduction, making accessibility of cotton for clothing cheaper (Rivera, 2017). B. The forecasted value of cotton in 2023 is $82.50 with growth of -0.2% (Rivera, 2017). C. The current value of cotton is $83.10 with growth of -1.4% (Rivera, 2017). D. Due to the relatively low cost of cotton, production will be cost efficient than in prior years, which will allow for a higher yield of profit. Industry Data: A. The annual revenue is $155,354,590,000 with $153,300 per employee (Compare Industries, 2017). B. The economic growth in this sector has been steadily increasing and projects continued growth, meaning investment in this market is both reliable and profitable.

Given GDP per capita growth and recent surpluses in materials, the industry has reached a level of strength and health. This industry health coupled with the rising income of homes is a sign for involvement and expansion in the family clothing industry.

Sociocultural Factors in the Family Clothing Industry It is essential for companies within the family clothing industry to be cognizant and adaptable to sociocultural developments and trends in the family clothing industry in order to appeal to the consumer and have an advantage over competition. I.

Women’s Clothing A. Of all women surveyed, 96% shopped for clothing for themselves in the past year. Of these women, 63% said they enjoyed shopping for clothes (Smith, 2017). B. Media (including direct mail, email, and websites) is the largest influencer to women when buying clothes. 87% of women reported they were impacted by some form of media when 4

II.

III. IV.

buying clothes (Smith, 2017). C. Special sized clothing, both petite and plus size, are in high demand. 42% of women surveyed reported that they want more access to special sizes in retail locations (Smith, 2017). D. Environmentally friendly fabrics are an increasingly important influence in women’s shopping behavior. 25% of women who have spent more on clothing in the past year think environmentally sustainable fabrics are important (Smith, 2017). E. Women appreciate genuine and relatable ad campaigns. 56% of women surveyed said they would support companies that use women in marketing materials that are averagesized and not airbrushed (Smith, 2017). F. Young women are a valuable demographic in the women’s clothing industry. Specifically, women under 35 are proven shop the most often (Smith, 2017). 1. Women in the 18-34 category had the highest likelihood of feeling enjoyment while clothes shopping 75%, with 41% of the 18-24 category strongly agreeing (Smith, 2017). a) Highly engaged customers are likely to spend more, be more loyal, and become active brand ambassadors (Smith, 2017). 2. Social media is a crucial influencer for women in the 18-24 range. 47% of women in this age group reported that social media is in their top three influencing factors that impact their clothing purchases. Additionally, 32% of women in the 18-34 group reported that they would be open to buying clothing directly from a social media site (Smith, 2017). Men’s Clothing A. Men are increasingly interested in personal appearance and therefore spending more money on clothing (Ghosh, 2016). B. The Men’s clothing market is expected to increase by 16% by 2020 (Ghosh, 2016). C. Casual, relaxed, and stable clothing are the most preferred and purchased clothes by men (Ghosh, 2016). 1. Jeans and T-shirts are the most commonly purchased men’s clothing items. 77% of men, who had bought clothing in the past year, reported buying T-shirts and 73% reported buying jeans (Ghosh, 2016). D. The increasingly casualization of society has contributed to a decline in men’s formal clothing (Ghosh, 2016). E. Men are relatively store loyal, with about half of surveyed men reporting that they will return to their same favorite stores when shopping (Ghosh, 2016). F. Smaller and more tailored special sized clothing is in high demand among men. “Big-andtall” clothing makes up 15-20% of the men’s clothing market, white less than 5% caters to smaller and shorter men (Ghosh, 2016). The children’s clothing markets are stagnating as a result of decreasing annual birth rates (Macke, 2017). 21% of older millennials surveyed said they have been buying less of other types of clothes in favor of activewear (Macke, 2017).

By carefully observing the socioeconomic trends of their external environments, companies in the family clothing industry will be apt to predict and prepare for new consumer behaviors, influencers, and trends.

5

Technological Factors in the Family Clothing Industry Advancements in technology create opportunities for business to grow and it is important to stay up to date with the latest advancements and innovation in various industries, especially the family clothing industry. I.

Smart Clothing A. Sport teams and management prefer smart clothing as it helps in prevention of injury and revenue loss. This is because professional sports teams are paying their players so much and there's so much on the line for them to perform staying healthy is vital. Furthermore, trainers are now able to track their players vitals everyday with these clothes on so they can spot a weakness or injury before it becomes detrimental to that player or team. (Global Smart Clothing Market, 2017). B. Wearable technology is expected to be a $19 billion industry by 2018, according to Juniper Research. This shows that not only products like the Fitbit and alike can survive in the modern economy but also that there is room to grow and expand this industry. Furthermore, customers have shown that there is a desire to purchase the latest 6

II.

technology in not only video games and cellphones but also wearable technology. (Global Smart Clothing Market, 2017). C. Smart clothing has found a market in pedestrian safety that has yet to be fully explored. There is a "smart" jacket being developed that will be connected to your smartphone through Bluetooth. This has been marketed towards bikers so they do not have to look away from the road while changing songs or answering a call. This is important because in large cities where there is so much movement between people and cars pedestrian safety has become a big issue. Furthermore, city governments and councils could possibly buy in and promote this type of clothing to increase the safety of those in their cities. This would not only increase sales but also lead to more companies investing more money into companies creating this technology. D. A clothing line is being developed that is transforming the health and tanning industry by making it possible to tan in cold weather. Its patented UVTR technology makes it possible to recharge one’s vitamin D and enjoy the sun’s health boosting benefits any time of year (SolTech+ Apparel Successfully Releases Clothing Technology for Tanning in Extremely Cold Weather. This has huge potential to reach multiple markets across the world. With the growing market of beauty and cosmetic products new technology that can increase the way someone wants to look could be the biggest innovation in wearable technology we have seen. 2017). Retail Technology A. A smart mirror, which is a mirror where shoppers are able to see what different clothes look like on them virtually without actually having to change clothes (Smith, 2017). B. An omnicart is where you are able to add pieces of clothing you find in a retail store in person if you can’t pay in person and want to save it for later (Smith, 2017). C. Farfetch launched a 90-minute store-to-door delivery service with Gucci (Silver, 2017). D. Retail companies have began investing in “sewbots” which remove the distance between the customer and manufacturer decreasing the cost of the product (Barrie, 2017). E. Retail companies are investing in data chips placed in their clothing which can provide further information to the customer after purchased. Having scanned a clothing label with a phone, customers unlock a raft of bespoke digital content. Brands can send over styling tips and recommendations, or offer loyalty points and discounts. A top can present its wearer with some trousers it might suit. A pair of running shoes can signal when they are worn out. Re-ordering replacements will be easy and immediate (Thompson, 2017). F. 3-D printed clothes have become more popular among fashion icons and celebrities however there is a market if the price of these clothes could be brought down to meet the average customer (Hirschmiller, 2017). Advancements in technology has led to new ways to communicate to customers and other businesses. As a final point, technology is advancing so fast that it is vital to any business to stay on top of these advancements in order to stay in business.

7

Reference Page Applebaum, B. (2016, May 4). Trump’s Plan to squeeze China Could Backfire; Raising Tariffs on Imports 8

Would Not Ease Economic Pain in U.S., Experts Say. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Barrie, Leonie. (2017, June). Sewbots Pave the Way for the Apparel Factory of the Future. Just Style Global News. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Bromley, A. (2017, July 27). Not Made in America: Sociologist Looks at the Human Cost of Cheap Clothing. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Bryan, B. (2017, August 28). 'I Want Tariffs': Trump is Reportedly Pushing Hard for a Policy that Could Start a Trade War. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Compare Industries. (2017). Retrieved from Gale Company Intelligence Database. http://bi.galegroup.com/essentials/comparisonTool/industry? u=nysl_ce_syr&entities=448140&metric=revenue Fifield, A. (2017, September 16). Ban on North Korean Clothing Exports Will Hurt Women the Most. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Ghosh, Rupa. (2016, March). Men’s Clothing - US - March 2016. Mintel Academic. Retrieved from http://academic.mintel.com/display/747672 Global Smart Clothing Market (2016-2024), (2017) Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Hirschmiller, Stephanie. (2013, April). The future of fashion; From dresses that display digital messages to 3D-printed clothes, technology is set to revolutionise our wardrobes, says Stephanie Hirschmiller. iIndependent Print Ltd. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Macke, Dane. (2017, April). American Lifestyles: Finding Common Ground - US - April 2017. Mintel Academic. Retrieved from http://academic.mintel.com/display/793137 McCrann, T. (2017, September 27). Cut in Business Tax Rate Spells Budget Turmoil. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com Perry, M. J. (2017). Wednesday Afternoon Linkage. Washington: American Enterprise Institute for Public Policy Research. Retrieved from https://search.proquest.com/docview/1922587759? accountid=14214 Rivera, E. (2017, June). Family Clothing Stores in the US. Retrieved from IBIS World website: http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1069 Silver, Dena. (2017, August). How to Shop Like an Impatient New Yorker. New York Observer. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com SolTech+ Apparel Successfully Releases Clothing Technology for Tanning in Extremely Cold Weather. 9

(2017, March). ICT Monitor Worldwide. Retrieved from http://libezproxy.syr.edu/login? url=http://www.nexisuni.com Smith, Diana. (2017, June). Women's Clothing - US - July 2017. Mintel Academic. Retrieved from http://academic.mintel.com/display/793169 Thompson, Isobel. (2017, January). The Smart Label that Wants to Restyle Your Life. Financial Times. Retrieved from http://libezproxy.syr.edu/login?url=http://www.nexisuni.com

Signature Page By signing below, I acknowledge that I participated and contributed to the best of my ability in the work that has been completed.

10

Noah Chandler

_________________________________________

Nicholas Cunningham

_________________________________________

Raymond Hoerner

_________________________________________

Ian Meier

_________________________________________

11...