Primark Stores Limited’s Supply Chain Management

Introduction

The fashion retail industry has undergone rampant growth over the past decades (Richard, 2006, p.36). This has resulted into an increase in its popularity across the world. Fashion retail sector entails the production of clothes and other accessories. Currently, the business environment is characterised by a high level of competition and increased financial challenges. This is due the fact that there has been constrain in the level of consumer spending. On the other hand, the objective of the consumers in making a purchase decision is to maximise their level of utility. In order to attain this, firms in the fashion retail sector are required to supply products that result into consumer value for their money.

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According to Sam (2007, para.1), there has been an increase in the concept of supply chain within the fashion retail sector. Supply chain comprises of a group of retailers, distributors, suppliers and storage amenities that assists in the manufacturing, delivery and sale of a certain product. On the other hand, supply chain management refers to a process that entails planning, control and implementation of various operations involved in the supply chain. Over the past few years, fashion retail sector in the United Kingdom has become very competitive. In addition, the sector is characterised by a high level of fragmentation. An example of a firm that operates within the UK fashion retail sector is Primark Stores Limited. The firm was established in 1969 and has expanded into the international market. It is the second largest retail firm in UK. The firm specialises in the production of fashion products such as apparels and other household products. The firm uses age as the major demographic variable in segmenting its market. It produces a variety of apparel products for consumers under the age of 35 years who are characterised by being fashion conscious thus effectively integrating the concept of fashion conscious. The discussion of this paper involves an analysis of the role of supply chain management in the fashion retail sector. The analysis entails Primark Stores Limited as an example.

Significance of brand in fashion supply chain

According to Joseph and Bret (2004, Para. 1), brand is an important element in the fashion supply chain. The success of firm’s in fashion retail industry doesn’t depend not only on good designing but is affected by the selling ability. In fashion retail sector, effective selling is highly dependent on the brand. This means that firms in this sector have to develop good brands. This is due to the fact that good brands results into creation of a high customer relationship. Joseph and Bret (2004, Para. 1) asserts that brand can result into creation or destruction of a firm’s supply chain.

Brand is significant in fashion supply chain in that it results into creation of value. This is due to the fact that consumers associate their experience upon consumption of a particular product with its brand. Firms in the fashion retail sector should ensure that they develop brands that result into maximum customer experience. Developing a good brand enhances the fashion supply chain. This is due to the fact that brands result into creation of an emotional and functional value for amongst the consumers.The effect is that the firm can be able to market its products effectively thus increasing its sales revenue. In addition, brand also enhances customer loyalty. This is due to the fact that customers like to identify themselves with particular brands that result into high value upon consumption. Brand also results into a high rate of product adoption and increased rate of product awareness in the market.

Market positioning is paramount in supply chain management. Positioning refers to the process of designing a particular firm’s image and offering. The objective of positioning is to ensure that the firm’s product obtains a competitive position within the mind of the consumers. Positioning entails the perception of the consumer towards a particular product (Razamith, 2008, Para. 3). Primark Stores Limited has devised an effective market positioning strategy. The firm’s positioning strategy entails the firm as the most cost effective firm in the fashion retail sector in UK. This has made the firm to attain a competitive advantage due to its competitive pricing model hence integrating the price sensitive nature of the consumer. According to what is the secret of Primark’s current success (Anon., 2009), the firm doesn’t undertake any form of advertisement for its products. In addition, the firm has adopted ‘look good pay less’ as its marketing slogan thus enhancing its supply chain. This model contrasts that of TK Maxx which is its major competitor. This firm has adopted the discounting model in its supply chain.

Marketing mixes appropriate to overseas and UK markets

In order to attain a competitive advantage in the international market, the management of Premark’s Stores Limited should develop an effective marketing mix strategy. There are two options that are available to the firm. According to learning marketing mix (Anon., 2009), these include either standardising its marketing mix strategy or adapt a marketing mix that is unique to each country.

Product

Considering the fact that the consumer’s objective in consumption is to maximise his level of utility, the management of the firm should ensure that it meets the unique needs of the various customers of the global market. Therefore, the management of Premark’s have to take into account the various consumer characteristics such as their cultural background, their level of disposable income, tastes and preferences and their buying habits. There are two main strategies that Primark can incorporate in producing its products for its UK and overseas market. These include the adaptation and standardisation strategy. For a Primark to penetrate the international market effectively, it has to incorporate the concept of thinking globally and acting locally. This will enable the firm to produce its fashion products according to the specific market needs. This is due to the fact that there are diverse consumer behaviours in the market (Mauro, 2009, p.9). For example, in producing its fashion products, the firm should consider integrating a variety of colours. This is due to the fact that diverse cultural association of colours. According to John, Edward and Langley (2008, p.650), this will help the firm to differentiate its products. For instance, white colour in Japan is associated with mourning while red colour fashion apparels are worn by brides during wedding.

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The management of Primark should also consider incorporating the concept of standardisation in the process of producing its fashion products. This will enable the firm to effectively to effectively produce fashion product that will meet the global market demand. Incorporating the standardisation strategy in producing its products is more cost effective for the firm. According to Mauro (2009, p.9), this will enable the firm to maintain its competitive pricing strategy as its market positioning strategy. This means that Primark will be able to attain economies in marketing. In addition, product standardisation will enable the firm to compete effectively in the global fashion market which is characterised by intense competition.

Promotion

In promoting it fashion products in the UK and overseas market, the management of the firm should consider the existence of language barriers. Various languages should be used in promoting its fashion products in the international market through advertisement. According to International promotion policy (Anon., 2003), this will enable the firm to effectively communicate to the market. The management should also adopt a variety of promotion mediums such as radio, television and print media.

Considering the growth in information technology, the management of the firm should also consider integrating the concept of electronic marketing in marketing its products. This can be attained by incorporating electronic marketing such as electronic advertising through the internet. Electronic advertising will enable the firm to reach the international market more effectively. However, the choice of promotion medium should be determined by conducting an analysis of the degree of penetration of the various mediums in a particular market. The management of Primark should adapt the promotion medium that will effectively meet the consumer’s demands.

Pricing strategy

In determining the price to set for its fashion product for both its domestic and international market, the management of the firm should conduct a comprehensive competitor market analysis in the various target markets. The price set by the competitor should form a reference point for Primark in entering these markets. When entering a new market in the international market through exportation, the management of Primark should incorporate the concept of penetration pricing strategy. This can be achieved by setting low price for its fashion products. According to International pricing policy strategies (Anon., 2009), the effect is that the firm will be able to improve on its competitiveness both in the local and foreign market.

Distribution strategy

The management of Primark should incorporate both direct and indirect distributional strategy in its domestic and overseas market. In its domestic market, the firm should establish retail outlets in all the regions of UK. On the other hand, its distribution strategy in the international market should incorporate the use of agents. Use of agents in the international market will improve on the efficiency of the firm’s fashion supply chain since they are conversant with the international market (Eric & David, 1999, p.10). High efficiency in supplying products to the market will result into increased customer loyalty.

External factors affecting fashion supply chain

Increase in the price of aw materials

The rise in the price of fuel is resulting into an increase in the cost of raw materials necessary for the fashion retail sector. This has a negative impact on the fashion supply chain. This is because of the fact that the augment is translated into an increase in the production cost and consequently it increases the price that the consumer buys the finished product. The ultimate effect is a reduction in the firm’s revenue due to a decline in consumer demand.

Changes in consumer purchasing power

The current global financial crisis has resulted into a reduction in the consumer’s purchasing power. The result is that the consumers are more concerned with purchasing basic commodities such as food. This has resulted into a decline in the firm’s financial performance.

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High degree of competition and changes in fashion

The high rate of globalisation has resulted into an increase in the rate of competition. According to the changing dynamics of supply chain in the UK retail sector (Anon., p. 3), the fashion industry has to cope with the ever changing trends in fashion for them to remain competitive. In addition, they have to supply the fashion products to the market in time. This is having a negative impact on the quality of the products in the supply chain.

Commercial implication of fashion businesses on a typical supply chain on fashion retail businesses

The key stages in a typical supply chain in the apparel industry is composed of the suppliers of raw materials, manufacturers, distributors or wholesalers, retailers and the customers.

These parties play a significant role in the success of large fashion retail business. This is due to the fact they result into value addition to the fashion product at each point in the supply chain. The supplier of the raw material has to ensure that there is constant supply of quality raw material to the market. The textile plants add value by producing fashion products that meet the needs of the consumers in terms of quality.. The distributors and retail stores in the local and foreign market ensure that the product is conveniently available to the consumer. This results into increased rate of customer satisfaction which culminates into customer loyalty. The ultimate effect is that the fashion retail businesses are able to attain its profit maximisation objective by meeting the needs of the customers.

Global sourcing of supply

To be successful in the global market, it is paramount for the firms in the fashion retail sector to have a reliable global source of supply. The management of these firm’s should formulate an effective supplier selection criterion that will ensure that they can be able to meet the current and future demands of the firm. According to Joseph, Anna and Ralph (2006, p.171), there are a number of aspects that the management should consider in determining the global source of supply. These include the following.

  • Cost of the supply
  • Location of the supplier
  • Mean lead-time and lead time deviation in the delivery of products.
  • Quality of the supplier’s logistics to ensure efficiency in the supply chain
  • Transaction cost by the freight forwarders and their average processing time.

Conclusion

Supply chain management is an important element in the fashion retail sector. This is due to the fact that it results into effective delivery of value demanded by the consumers. The effect is an increase in customer loyalty towards a particular fashion. The supply chain is also enhanced by the brand of the product. This is due to the fact that a superior brand results into customer satisfaction. To market its products effectively in the domestic and overseas market, the management of Primark should incorporate standardisation and adaptation strategy in its marketing mix. Adaptation will enable the firm to meet the diverse demands of the customers. Use of standardisation strategy will help the firm attain economies in marketing. Despite the success of the fashion retail sector, there are various external forces that are impacting the supply chain. These include the increase in price of raw material, increased competition, the dynamic nature of fashions, and decline in consumer purchasing power. Firms in this sector should select their global source of supply by formulating an effective criterion.

References

EENI. 2009. International pricing policy strategies: export prices, product lifecycle. Web.

Eric, J. & David, F. 1999. Supply chain management.(On-line). Hanover: The Tuck School of Management Dartmouth College. Web.

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Fashion Products. 2009. Fashion apparel industry overview. Web.

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Sam, J. 2007. Meeting the supply chain needs of the fashion retail sector. Web.

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John, C., Edward, J. & Langley, J. 2008. Supply chain management: a logistic approach. (E-book). Boulevard, USA: Cengage Learning Publishers. Web.

Joseph, L., Anna, C. & Ralph, K. 2006. The supply management handbook. [E-book]. New York: McGraw-Hill Publishers. Web.

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