Running head: MANAGEMENT

MANAGEMENT

Name of the student

Name of the university

Author note
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Table of contents

Part 1................................................................................................................................................2

Part 2................................................................................................................................................3

Introduction......................................................................................................................................3

Company background......................................................................................................................4

Changing trends in UK fashion industry.........................................................................................4

Situational analysis..........................................................................................................................5

PESTLE analysis.........................................................................................................................5

SWOT Analysis...........................................................................................................................8

Explaining the retail environment using theories..........................................................................11

The Wheel of retailing concept..................................................................................................11

Life cycle theory........................................................................................................................13

Recommendations..........................................................................................................................14

Conclusion.....................................................................................................................................15

Reference list and bibliography.....................................................................................................16

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Part 1

Draft of the plan

Micro and macro environmental analysis

Analyzing the emerging fashion industry trend in UK, it has been identified that with increasing

opportunities in the UK fashion industry, numbers of challenges have also been increased. In the

tougher economic environment the fashion companies have become more customers centric. In

this situation changing purchasing trends among the customers has brought the changes in

fashion style. The partnership as well others trends in the fashion sector will be analyzed in the

particular section by specifically highlighting Gucci. In the situational analysis, PESTLE and

SWOT analysis will be done for critically analyzing the issues in the market. The purpose of the

assignment is to understand the strategic concern faced by Gucci in the emerging market and

propose a measurable solution to survive in the particular situation.

Theories for environmental explanation

In terms of promoting the potential solution against the Life cycle theory will be linked up with

the company, in terms of understanding the position of Gucci in the UK fashion retail sector. It

can be assumed that using the particular theory it can be beneficial for analyzing the retailing

environment.

Sources

In order to develop the assignment, it is very important to maintain the authenticity of the

information used in the particular assignment. In that case, the journal articles will be only used
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for the assignment. In order to gather the statistical information regarding the particular

organization, only the official websites will be used. However, most of the section will be

covered using the authentic academic journals and articles.

Structure

In order to conduct the assignment, it will be segmented in seven sections. In the first section, the

purpose of the assignment will be shared by adding some required definitions. The second

section will specifically describe the company background. From the third section changing

trends in the fashion sector will be described. The fourth section will describe the situational

analysis. In terms of understanding the retail environment of Gucci, the life cycle theory and

wheel of retailing will be explained. In the sixth section, recommendation against the identified

issue will be provided. In the last stage, the assignment conclusion will be shared. After

completion of the structure preparation, the draft plan will presented to the professors for the

approval and as per the feedback, the assignment will be continued.

Part 2

Introduction

Analyzing the UK retail fashion sector, it can be said that over the year gradual growth has been

seen in the particular sector (Amatulli et al. 2016). Changing consumption trends among the

customers has brought significant impact on the fashion style. By continuing this, it can also be

said that in the tough economy, it has become quite challenging for the fashion retailers to take

the strong strategic decision to survive in the market. Investigating the UK fashion market, it has

been identified that competition and changes are the common factors those are responsible for
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creating the business environment challenging for the retailers (Rashid and Barnes 2017). The

purpose of this study is to critically analyze the key issues faced by the Gucci in the UK market.

In order to analyze the environmental situation PESTLE and SWOT analysis have been

conducted and the retail environment of the company has been assed using the life cycle model

and wheel of retailing. In the end, strategic reconditions have been provided to deal with the

situation.

Company background

Gucci is a popular Italian fashion brand, which was established in the year1921. It can be

considered as the oldest fashion brands based in Italy, which has expanded its business

worldwide (Gucci.com 2020). Initially, it worked for manufacturing the luggage, however

recently it has adopted the product diversification strategy and ensured its existence in different

fashion segments. In case of UK market, it has been identified that with total numbers of 17

stores, the company is serving its luxury products in the market. In order to satisfy the emerging

customers needs, Gucci has continued its product innovation strategies for maintaining the

sustainable position in the market. Investigating the annual revenue of Gucci, it has been

identified that in every year 25% of the revenue is increasing (Gucci.com 2020). In the first

quarter of 2019, the re venue of the company reached 2.3 billion.

Changing trends in UK fashion industry

In the emerging UK fashion industry, the economic cycle has become an important concern in

the sector. In the rising cost, aggressive growth has become the strategic priority for the

companies to sustain in the competitive business environment (Hodson 2019). In terms of

boosting the productivity, the shift of new ownership has become a new trend. From the last few
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years, the social media has become an important contributor for appreciating the innovation

strategies of the fashion enterprises. It has also been identified that, the purchasing behavior of

the UK people is shifting towards the luxury products after the introduction of improvised

economy. Younger consumers have become more concerned about their fashion preferences. By

continuing this, it can be said that people have become more concerned about the environmental

situations (Rashid and Barnes 2017). In that case, aligning the company values with the products

has become an important trend for dragging the attention of the customers. Technology is highly

leading the fashion industry in UK. The radical transparency has become a common trend in the

fashion industry. Raising trust among the customers has become necessary in terms of surviving

in the competitive business environment. Through the value chain greater transparency has been

maintained by the company.

Situational analysis

PESTLE analysis

PESTLE analysis is the strategic tool that is being used by the marketers for monitoring the

macro environment. In order to understand the external business environment of Gucci in ye UK

fashion industry, PESTLE analysis has been conducted below.

Situation Analysis
Political The political factors in UK have brought the major impact on Gucci.
After the Brexit vote, the government is continuously changing its
regulations, which is directly impacting on the sales rate of the
company. By continuing this, it can be said that the high imposition as
well as tax rate by the government is impacting on the business
operations of Gucci (Bourkiza et al. 2019). Political disturbance and
adversity is negatively impacting on the supply chain of the company.
In this situation, pricing strategy of the company is getting affected.
Dominance of UK based companies in the market, it is quite
challenging for the company to survive in the competitive
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environment. On the other hand, it is true that due to the political

changes, the company has revised its advertising strategies, which has
also brought the positive impact in its sales. Therefore, it can be said
that the political situation in UK is moderate for Gucci.
Economic The purchasing power of the consumers is highly gets controlled by
the economic situation in the country. The demand for Gucci products
in the market is always high due to its brand popularity (Blazquez,
Alexander and Franquesa 2018). However, it is true that UK economy
is still in the recovery stage. After the regression in 2008, people are
fighting for the survival battle for the food. In this situation Gucci only
targets the upper class people, which may harm its growth strategy in
the UK market (Blazquez et al. 2019). As Gucci does not follow the
cost effective business strategy, in that case, surviving in the UK
fashion market is quite difficult as the new organizations are
continuously bringing the similar products in the market. Therefore, it
can be said that the economic environment in UK is not in the
favorable condition for Gucci.
Socio cultural In the emerging fashion sector, young customers have become brand
fascinated (Casadei and Lee 2019). On the other hand, they are also
getting attracted towards the social and environmental sustainable
practices. Being the popular fashion brand Gucci has also contributed
in different sustainability initiatives, which has dragged the attention
of the customers. Following the emerging interest of people in music
videos, Gucci has introduced its advertising strategy based on the
music videos such as ‘Gucci Mane ’, ‘Gucci Gang’, ‘Lil Pump’ and
‘feat migos’. These videos have made the huge impact on the UK
fashion industry (Rashid. and Barnes 2017). Therefore, it can be said
that the UK retail fashion industry is in quite favorable situation for
the company.
Technological In the mobile business environment, technology is leading the entire
fashion industry. Instead of visiting the physical stores, the customers
prefer to buy products from the online stores (Casadei and Lee 2019).
Therefore, it can be said that the UK fashion industry sales gets highly
influenced by the ecommerce business. Due to availability of
technology, internet has brought the ability for large numbers of
entrepreneurs to show their talent in the fashion sector. On the other
hand, rapid innovation in the particular sector it has increased the
fashion updates available to the people. Therefore, in this
environment, the situation is moderate for Gucci.
Legal In the fashion industry, tax restrictions, inflation cost and export
restrictions are the influential factors that contribute in fashion sector.
The worker rights are strictly being followed in the particular sector
and the materials are being collected from the developing countries
(Grassi and Wigley 2018). Analyzing the labor cost in fashion
industry, it has been identified that the labor cost is comparatively low
as most of the labors are being imported from the developing countries
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in low wages.
Environmental It is true that fashion industry does not have a direct impact on
environment as cloths are made by cotton (Grassi and Wigley 2018).
However, for the shipping of the products the airplane and others
vehicles are being used, which causes carbon emission and
environmental pollution. On the other hand, the product packaging is
another important segment that is being covered under the
environmental protection law. As Gucci uses the environment friendly
packaging system, in that case, it can be said that strict environmental
regulations may not harm Gucci to operate in the UK fashion market.
(Created by author)

SWOT Analysis

Strength Weakness
 Being a popular fashion brand Gucci  Gucci has faced flak in the advertising
has made its image as the premium due to its sexuality based advertising
product selling company with strong strategy in the UK market. It has
brand equity. In the year 2015, it has brought various criticisms to the
gained the 38th rank amongst all the company, which has impacted on the
fashion companies in the globe. brand image (Grassi and Wigley 2018).
 The brand vale of the company is quite  Continues up gradation is the major
high and it has reached 12.4 billion requirement in fashion industry, which
dollar in 2018 (Amatulli et al. 2017). sometimes create pressure on the
 The company as maintained its company to survive.
commitment by providing the standard  The company has got involved in
quality of products and made those trademark controversies, which is
luxury to the customers. another weakness of the company.
 All over the world Gucci has made its  High employee turnover is another
strong presence with total numbers of issue for Gucci.
500 stores. It has major presence in
Italy, UK, US and Japanese market.
 Strong product portfolio can be
considered as the major strength of
Gucci, which has made it the ultra
premium brand.
 Product diversity is the strength of
Gucci, which has brought advantage for
the company in UK fashion sector
(Armitage, Roberts and Sekhon 2017).
 Involvement of Gucci in different CSR
activities has developed its sustainable
image on the customers’ mind.
Opportunities Threats
 In the emerging UK fashion industry,  Like innovation, competition has
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youths have become more conscious become constant in the particular

about the brand image as well as sector. In the UK fashion industry,
changing fashion trends. Being an Christian Dior, Lauren, Burberry and
innovator in fashion industry, it can be others brands are creating threat for
considered as the biggest opportunity Gucci.
for Gucci to promote its premium  In the fashion industry, everyday new
presence in the market. enterprises are introducing their
 Fashion industry is the huge contributor products, which have created the
in UK GDP, in that case, appreciation availability of substitute products in the
from the government is quite beneficial market in low range.
for Gucci to enhance its business.
 In the 21st century, people have become
quite are of fashion and most of the
people are showing their interest to
make it as the professional choice.
Different academic courses have been
introduced by different government and
non government institutions, which
clearly shows that in the long run this
trend can show noticeable impact on
the Gucci sales (Freitag 2018).
(Created by author)
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Explaining the retail environment using theories

The Wheel of retailing concept

Figure: Wheel of retailing

(Source: Gencer 2017)

McNair introduced the concept of Wheel of retailing for describing the instructional

transformation process in different business environment. In this theory four stages have been

described, such as establishment and market penetration, market expansion, stabilized business

model and entry by the another retail competitor and in the end bring down original.

Step 1: Establishment and market penetration

As per this theory, the new retailing company enters in the market with the low pricing strategy

as well as low profits. Introducing the innovative cost cutting procedure, this strategy helps to
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attract the competitors (Yingying 2017). As Gucci has established its image in the market as the

premium product selling company, in this situation this initiative can be quite challenging for the

company. However, it is true that giving tough competition to the competitors and expanding the

market segment, a separate product range can be introduced by following the cost effective

strategy.

Step 2: Market expansion

This stage describes the situation, when after gaining experience in the market the retailers try to

enlarge the customer base for gaining high profits. This stage can be considered as the significant

stage for the retail companies for enhancing the market share. In case of Gucci, it is true that

from the long time it is operating in the UK fashion industry (Yingying 2017). In order to boost

its profits, it has adopted various promotional as well as product diversification strategies in UK

fashion industry. Following the emerging trends, music videos have been launched for dragging

the attention of the customers. In that case, it can be said that the company has crossed this stage

in the particular market.

Step 3: Stabilizing business model attracting margins

In this stage of the wheel, the company stays in the established position and in this case, it can

rate high for gaining the decent margin (Gencer 2017). In case of Gucci, it always keeps the

product range high for maintaining its premium presence in the market. It can be said that due to

its continuous margin in the market, the company has focused on retaining more customers.

However, due to availability of strong competitors, Gucci needs to contribute more to complete

this stage as various controversies related to the company has impacted on its profit gaining

process.
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Stage 4: Entry by another retail competitor and later bring down original

In this stage, for targeting another market segment the retail companies, enter in the new market

by making partnership with the same product selling companies and later comes down with the

original image(Gencer 2017). In case of UK market, Gucci has not reached in the particular

stage. It is true that there are few markets in UK, where Gucci still has not reached, in those

markets; it can adopt this strategy to enter.

Life cycle theory

Figure: Product life cycle

(Source: Ali et al. 2019)

After introduction of products in the market, the products in the market, in the cycle of the

products are being measured in four stages such as introduction, growth, maturity and decline.

Introduction
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In this stage, product is being released in the market and high investments are being done by the

companies for reaching to the customers.

Growth

In this stage, customers already know about the brand as well as product, which significantly

show impact on the sales rate (Ali et al. 2019). In case of Gucci, it has been identified that in the

UK market, it has gained the revenue more than expected, which shows the company now is in

the growth stage in the particular industry.

Maturity

In this stage, the sales rate decreases and the prices begin falling. In this stage, pressure from the

competitors gets increased. This stage last longer than the other stages.

Decline

This stage shows the significant drop in product sales and consumer behavior changes.

Recommendations

Gucci is a famous fashion brand with large customer base. The company is still trying to

maximize its rate of profitability to expand its business. Analyzing the key issues faced by Gucci

in the UK fashion industry, it can be recommended that

 The company needs to revise its wages policies for reducing the employee turnover rate.

The human resource department needs to be more concerned for providing the better

work environment to the employees.

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 The company needs to focus on introducing separate product segment for the idle class

customers, which can help enhancing its customer segment.

 The marketing strategy needs to be revised as per the emerging needs of the customers.

 In order to deal with the pressure from the competitors, unique product selling strategy

can be adopted where the company may add some new product segments in its portfolio.

 The product pricing strategy can be revised for sustaining in the tough regulating market.

Conclusion

In this study, it can be concluded that, Gucci is a popular luxury brand, which has established its

image in the market by introducing its excellent service. Most of the products of Gucci are

expensive, in that case, it can be quite challenging for Gucci to maintain its touch competitive

advantage in the market. In the end it can be said that, as the UK fashion market is huge, in the

market, Gucci has various growth opportunities that can help the company in long run.
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Reference list and bibliography

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Amatulli, C., Mileti, A., Speciale, V. and Guido, G., 2016. The Relationship between Fast

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Amatulli, C., Mileti, A., Speciale, V. and Guido, G., 2017. The Relationship between Fast

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Armitage, J., Roberts, J. and Sekhon, Y.K., 2017. Luxury products and services and the

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Blazquez, M., Alexander, B. and Franquesa, C., 2018. Consumers’ intentions towards

sustainability: an analysis of the Spanish fast fashion industry.

Blazquez, M., Zhang, T., Boardman, R. and Henninger, C.E., 2019. Exploring the Effects of

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Bourkiza, R., Cumberland, P., Abeysekera, H., Parulekar, M., Sagoo, M.S., Rahi, J. and Reddy,

M.A., 2019. Role of ethnicity and socio-economic status (SES) in the presentation of

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Casadei, P. and Lee, N., 2019. Global cities, creative industries and their representation on social

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Freitag, S., 2018. Gucci: Flattening Women Through Patriarchal Heteronormativity.

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Jones, S., Pampaka, M., Swain, D. and Skyrme, J., 2017. Contextualising degree-level

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