Strategic Management New Look PDF

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The following report is a review of the clothing fashion retailer “New Look” which has been providing fashion trends to customers since 1969. The main objective of this report is to provide strategic solutions to the difficulties that New Look has faced in the past 3-5 years. ...

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STRATEGIC MANAGEMENT REVIEW OF NEW LOOK

Date: 2nd December 2018

Word Count: 2651

TABLE OF CONTENTS Table of Contents EXECUTIVE SUMMARY.......................................................................................................2 INTRODUCTION.................................................................................................................3 STRATEGIC AUDIT...............................................................................................................4 ANALYSIS...........................................................................................................................5 RECOMMENDATIONS.........................................................................................................8 APPENDICES.....................................................................................................................10 REFERENCES.....................................................................................................................11

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EXECUTIVE SUMMARY The following report is a review of the clothing fashion retailer “New Look” which has been providing fashion trends to customers since 1969. The main objective of this report is to provide strategic solutions to the difficulties that New Look has faced in the past 3-5 years. Despite a positive outlook on New Look, the company has suffered several problems which has resulted in their profits to decrease significantly. The following issues have been outlined in the strategic audit in more detail which have included the following; Challenging market conditions, borrowing £100 million worth of their current liabilities, offering high pricing compared to competitors, difficulty in trend spotting, losing connection with current customers and failing with information and data protection. With the several problems that the retailer is enduring, an in depth analysis of the company was conducted Internally and Externally.

The following strategic recommendations have been suggested through prescriptive and emergent approaches:

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To develop and on going national customer feedback strategy. This will enable New Look to establish the customer needs and wants.

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The closure of smaller stores and to sell the current property will generate revenue.

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Redecorating of all stores. This will include a new colour scheme of: dusty rose, turquoise blue and caviar black. In major cities there will be a Nail Bar called “Get the look” and an eyebrow bar. There will be different nail designs for each season and a loyalty card will also be provided.

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A re design of their current website which will include their new colour scheme which will enable fast communication and new customers.

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A new team of merchandisers and buyers will be hired. This will ensure that New Look keeps within the latest fashion trends and that orders are distributed efficiently.

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Using influencer endorsement on their current social media platforms such as; Instagram, YouTube and Facebook. The main use of influencers will be to photograph current fashion trends for the brand.

INTRODUCTION New Look is a privately owned global fashion retailer with a chain of high street stores showcasing 1,000 new lines of clothing weekly. Unfortunately, in June 2018 it had made a £235 million loss with its inability to keep up with trends. (Guardian 2018). Through an Internal and External analysis of the company it will display the key areas of where the retail brand had gone wrong and the aspects which caused their profits to decline. After an analysis has been conducted strategic measures will then be recommended for the company to improve on for the next 3-5 years with the findings summarised in the executive summary. To conclude this report a critical reflection will be displayed which highlights key strengths of undertaking this module and depicts goals which will be set for the future.

The above table illustrates New Look financial year from 2011-2018. From 2015/16 New Look’s revenue has been declining over the years reaching a £1 million loss ending in March 2018. (Statista 2018)

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STRATEGIC AUDIT Problem 1 One of the main problems that New look has faced between 2017/2018 is due to a major financial loss. The company turnover was £1454.7 million total revenue in 2017. However, in 2018 this figure was reduced to £1347.8 million, a drop of £72.3 million. An economic uncertainty created challenging market conditions across the whole retail industry and these figures reflect this situation. (Newlookgroup 2017/2018) Problem 2 The company transferred £100 million from their current liabilities. Additionally, noncurrent liabilities increased by £6 million from March 2017-2018. (Newlookgroup 2017/2018) Problem 3 Another challenge that New Look has faced is that merchandise is priced higher than high street competitors. These include: Zara, Top Shop and River Island. Problem 4 New Look have experienced disappointing outcomes due to risk taking, trend spotting and product development. The company has acknowledged that they have failed to respond swiftly to changing customer preferences and key trends. The customer demand was much lower than expected which lead to a substantial increase in marking down merchandise i.e. sales. (Newlookgroup 2017/2018) Problem 5 There was an additional 20% plunge in the website sales. The CEO of New Look stated “We lost connection with our core customers and got our stock packages completely wrong”. With more consumers now purchasing online New Look faced difficulty to stand out in a competitive clothing market (YouGov 2018). Competitors include online giant ‘Pretty Little Thing’ who is now the fastest growing online fashion company boasting in-trend styles from social media stars such as Kylie Jenner and Sophia Richie (RetailGazette 2018)

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ANALYSIS Internal Analysis SWOT Analysis Strengths  Ability to keep up to date on their website  Shipping worldwide  Awarded the best multi-channel customer service award in 2015

Weaknesses  High prices compared to its competitors  Sizes not always available in store and online.  Clothing items are not in trend

Opportunities Threats  Collaboration with celebrities and  Competitors offering more in influencers trend clothing at a lower price  Expand their social media  No specific types of customers presence  Loosing contact with current  Adopt fair trade products customers

Market Size - The company has a total of 872 stores, 592 within the UK and 280 additional stores globally. This includes countries such as; France, China, Germany and Poland. The clothing company also offers e-commerce in 120 countries which is powered by delivery. (Newlookgroup 2017) Market Growth - New Look Market Growth has decreased over the years. In 2015 their total revenue was £1267.7 million, 2016 it was £1202.3 million. By March 2017, there total revenue hit their lowest of £1085.8 million (statista 2018).

External Analysis PESTLE Analysis Economic- With the current unemployment rate in the UK standing at 4.1 percent which is higher than the expected market expectations, the unemployment rate rose by 21,000 from April- June in 2018.(TradingEconomics 2018).As a result of a high unemployment rate consumers therefore have less money to spend on items that are not a necessity and a result people are less likely to purchase from clothing stores. Social-The main social factor is changing of consumer preferences. Evidently, online shopping continues to outperform everything, this has resulted in stores competing against each other for the best people, location and experience. With consumer demands being higher than ever. When shopping online customers expect to receive 5

24/7 service, item arriving next day and free returns. As it is extremely easy to purchase online customers now expect this to mirror when shopping in store such as; personalised service, excellent packaging and extensive product knowledge while experiencing exceptional customer service. Otherwise consumers will purchase online (Echo-u 2018). With the growing use of technology according to Prasseda Nair “71% of shoppers say they’re now using their mobile devices instores (83% for shoppers aged 18 to 44) — up from 62% in 2017. Shopper activities while using mobile in-stores are diverse, from purchasing to reading reviews” (BusinessAdvice2018).

Environmental- With the increased growth of e-commerce and consumers purchasing online this has resulted in additional cycle of secondary and protective transit packaging materials. With larger amount of packing materials e.g. bubble wrap instead of using environmentally friendly raw material. The issue occurs at the end user’s location where the packaging must be disposed correctly (PackagingAdvice2018).

Five Forces Analysis Competitive Rivalry (HIGH) The market decisions failed to keep up with trends. Aside from online retail store such as Pretty Little Thing their other high street competitor such as ‘Zara’. Zara has several key strengths; It has created a reputation for excellent quality and high-end high-street fashion at affordable prices. This demonstrates their responsiveness to target customers’ expectations. Zara offers Men and Women’s clothing, Zara kids, shoes and accessories (MartinRoll 2018). The profit of £654 million reflected this successful strategy on 30 April 2017 (BBCNews 2017). Supplier Power (LOW) New Look owns a total 658 factories across 26 countries (Newlookgroup2017). Due to the company having several suppliers this means that they reduce costs as they will not have to move suppliers. The high number of potential suppliers is an advantage as they maintain flexible options which reduces costs and maximises profit. Buyer Power (MEDIUM) New Look has a substantial threat of buyer power. Their key customers have a wide range of choice. There are many competitors offering similar merchandise at a lower price i.e. H&M. Threat of substitution (HIGH) New Look offers clothing for men, women, maternity and teens. Footwear, gifts and accessories are also available. The brand does not demonstrate a clear competitive advantage in the high street. Prices are low but not sufficiently low to lure customers to similar organisations. Threat of New Entry (LOW)

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For new entrant to cause a threat to the fashion retailer they would need to offer different products compared to their competitors. As previously stated, their main high street competitor is Zara where they currently offer the same services.

Customer Analysis New Look main target market is females ages 16-35 years of age. Currently, the brand has 593 stores where customers mainly shop on their online website which features colour schemes of white, grey and black to appeal to both male and females. This is shown in their 14.3% growth on their website (Newlookgroup 2016). New look has had a recent success of a ‘click and collect’ service which offers a free delivery service (Help-Newlook 2018) Ultimately, New Look customers desire the easiest way to shop. This includes an online website which is easy to navigate while putting clothing items together at an affordable price. Customers are now desiring an instore experience when shopping. This includes receiving exceptional customer service from staff, drinks on arrival when entering the store and extra services.

Competitor Analysis ‘Miss Guided’ is on online fashion retailer aimed at woman aged 16-35. They offer fresh styles to all body types with replacing 25% of its range each month while delivering a fast experience for its customers. Their success has been shown in winning “Amazon Digital Business” of the year 2017 (Fashion United 2018). Along with this they have created triger based customer campaigns. This enabled them to engage with different customers during the buying cycle. The following campaigns have included a birthday and welcome campaign. The retailer also partner shipped with ITV hit reality TV Show “Love Island” this year where sales boomed by 40% in the first hour of airing his made it the most effective way for Miss Guided to reach its target audience next to Instagram (Marketing Week 2018). An additional, competitor is ‘Topshop’. They provide over 400 styles across clothing, shoes and accessories with their style collaborator supermodel including; Cara Delevigne, Gigi Hedi and Karlie Klos which has a million visits on their website weekly (Topshop 2018).

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RECOMMENDATIONS To develop an on going national customer feedback strategy A prescriptive approach will first be used in store by conducting a questionnaire with current customers face-to face. This will allow New Look to understand their customer needs and wants as well as establishing their strengths and weaknesses.

Closure of smaller stores Closing of New Look stores which are making the most significant loss will enable the company to sell the property where the store was originally was. This will enable the company to generate money. The creation of new experiences in store An Emergent approach can be added to stores by creating new experiences where there is a higher footfall in larger cities. A nail bar would be a popular and innovative to these stores. An interesting brand name for all the additional services could be “Get the Look”. In addition, there could be an eyebrow bar. A beauty loyalty card will also be provided with offers. Re Design of website The website can be evaluated and recreated. The following will be considered compared and contrasted with other successful websites There will also be a complete redesign of the website the colours which will be mirrored with the colour scheme in store. The colour scheme will be: Dusty rose, turquoise blue and caviar black which will appeal to both male and female. Using a vast colour palette will enable colour to be injected in store. A re design of the website will allow fast track communication, new customers as well as the brand being able to learn about their customers wants. Develop a more effective buying team A prescriptive approach by developing an effective team of buyers and merchandisers. This will ensure that New Look delivers a range that meets and exceeds evolving customer expectations. This will offer the most exciting trends that consumers want to purchase. The merchandising team will ensure that products are priced correctly and stocked efficiently. Expand social media presence As New Look already has a current YouTube account a strategic recommendation would be to use influencer endorsement. Here, major influencers will be used in partnership to photograph new trends that New Look have created seasonally. Moreover, this can be linked to their Instagram account where influencers have the opportunity to upload a photograph of themselves with a New Look clothing piece. This will result in an increased response for their social media pages and inclusively in the hope that customers will more likely purchase the clothing items that they are wearing.

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CRITICAL REFLECTION Strategic Management is one of the three compulsory modules of the BA Business Degree. The main feature of this module is to formulate an individual management report of a company which has not performed successfully as planned. Initially, I was going to choose “House of Fraser”. This is where I currently work and I therefore already had a background knowledge of the company. However, as the company was bought over from Sports Direct a strategy was already in place. This therefore lead me to researching companies which had underperformed in the last five years which concluded “New Look” being the selected company. I further researched this retailer as I have keen interest in the fashion industry and I was curious on how the company annual profits were decreasing significantly. This was mainly completed by looking at New Look annual report in March 2018. From the first Lecture and Tutorial I was prepared to fully immerse myself within the module. Each week I would read each individual chapter of the “Strategic Management 8th edition”. After this I would write key notes of the important areas. This allowed me to gain a better understanding of each individual topic which helped me further to grasp the lecture content. In lectures I would ensure that I had each PowerPoint slide up while typing up notes under each slide. During each tutorial I would make certain that I contributed to discussion with the tutor and class mates. I found clarifying each section with the tutor helpful as it ensured that I had an excellent understanding of each chapter and refined aspects which were difficult. This made me feel confident in progressing further. Overall, I have enjoyed studying Strategic Management. I feel that I have completed the Individual Report to a good standard. One of the key successes to completing this report was using a diary and to plan in advance. Setting a side an allocated time each individual week to complete one section of the report ensured that I had finished the report a week before the deadline. This was beneficial as I still had a sufficient amount of time to proof read the report along with ensuring it was at a standard that I desired before submitting it in on Turnitin. Moreover, I have improved my academic writing skills with successfully being able to write a Management report. The module has also allowed me to depict principles of strategic management and apply them to a chosen company, critically evaluate strategic options and implement core strategies to the organisation. There are certain areas which I would improve on if I was to conduct this module again. The first being that I would write up the notes that I have taken in each lecture which would enable me to remember the content more accurately. I would also ensure that I completed every single tutorial task as I started to become un motivated. This led me to only concentrating on the report itself. Lastly, I would read the external media and key interviews. I would improve my research skills as I mainly used online research methods through websites and the company annual reports. Instead I would use articles and journals to gain a more in-depth knowledge. I will take this action further with my other compulsory module such as “Business Research Skills”

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REFERENCES The Guardian | ( 2018) | online | Available | (https://www.theguardian.com/business/2018/jun/12/newlook-fashion-chain-slumps-to-massive-annual-loss (Accessed : 15 Nov 2018) Statista | 2018 | online | Available |https://www.statista.com/statistics/492536/new-lookrevenue-unitedkingdom/| Accessed: 28 Nov 2018 |

Newlookgroup | (2017/18) | online | Available | https://www/newlookgroup.com/systems/files/uploads/financialdocs/fy18-annual-report-12-062018.pdf| (Accessed: 15 Nov 2018) Newlookgroup | (2017/18) | online | Available | https://www.newlookgroup.com/system/files/uploads/financialdocs/fy18-annual-report-12-06-2018.pdf | (Accessed : 15 Nov 2018) Newlookgroup | (2017/18) | online | Available | https://www.newlookgroup.com/systems/files/uploads/financialdocs/fy18-annual-reporrt-12-062018.pdf| (Accessed : 15 Nov 2018) YouGov | 2018 | online | Available | https://yougov.co.uk/topics/consumer/articlesreports/2018/03/21/new-look-has-been-outmanoeuvred-cheaper-and-digita| (Accessed : 15 Nov 2018 ) RetailGazette | 2017 | online | Available | https://www.retailgazette.co.uk/blog/2017/06/prettylittlethingcrowned-fastest-growing-online-fashion-retailer/| (Accessed 15 Nov 2018) Newlookgroup | (2017/18) | online | Available | https://www.newlookgroup.com/systems/files/uploads/financialdocs/fy18-annual-report-12-062018.pdf | (Accessed : 15 Nov 2018) Newlookgroup | 2017 | online | Available | https://www.newlookgroup.com/systems/files/uploads/financialdocs/new-look-full-year-results-pressfy17.pdf | (Accessed : 16 Nov 2018 ) Statista | 2018 | online | Available | h...