TED BAKER Lu Ruiqi N0527827 TED BAKER Team Project - Individual part Nottingham Trent University MA International Fashion Business April 20, 2014
GLOBAL EXPANSION
Figure 28: Ted Baker Hong Kong Store Source: http://www.littlealice.hk/
Rachel Lu
Figure 1: Ted’s Journey Of A Lifetime
Carefully managed development of “existing and new international markets Source: Ted Baker Annual Report and Accounts, 2012/2013. Ted Baker PLC
”
2014 January Sales £m
2013 January Sales £m 43.8, 20%
98, 30%
171.8, 80%
223.9, 70%
OVERVIEW
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UK Overseas UK Overseas ed Baker (2013) stated in Interim Results Report that their strategy is to become “a leading global designer brand” and one of the important element is “carefully managed development of existing Figure 2: The 2013-2014 UK and Overseas sales revenue Source: Ted Baker Annual Report and Accounts, 2012/2013. Ted Baker PLC and new international markets”. The oversea sale revenue percentages of Ted Baker is growing gradually, which is from 20% in 2013 to 30% in 2014 (Figure 2). Ted Baker started with a shirting specialist in Glasgow in 1988 and entered the first oversea territory with wholesale business in USA in 1996 (Ted Baker, 2013). Now their presences in global market are more than 22 countries with 341 stores by the August 2013. Global expansion is a viable strategy for Ted Baker to achieve growth and they are at the stage of adapting and consolidating a sustainable strategic advantage through international expansion activities. However, plenty of risks and challenges in different oversea market are still existing. This chapter is going to evaluate how Ted Baker expand globally and examine the oversea market selections and product lines.
METHODOLOGY
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he international strategy framework (Figure 2) has been applied here to analyse how Ted Baker’s international strategy depends on both the external environment as the internationalisation drivers and the organisational capabilities as the sources of competitive advantage, which shapes the market country selections and market entry modes. The analytical models follows by using a wide range of both quantitative and qualitative secondary data. Those doing national or international comparisons, the secondary data would be the main resource including documentary, survey-based and multiple-source secondary data (Saunders, 2012). PESTLE and SWOT analysis provide the context of external business environment and current organization role within it.
INTERNATIONAL DRIVERS
Cost Drivers Global scale economies Steep experience curve effect Sourcing efficiencies Favorable logistics Differences in country costs High product development Fast-changing technology
Goverment Drivers Favorable trade policies Compatible technical standards Common marketing regulations Governmnet-owned competitors and customers Host government concerns
Industry Globalization Potential Market Drivers Common customer needs and tastes Global customers Global channels Transferable marketing Lead countries
Competitive Drivers High exports and imports Competitors from different continents Interdependence of countries Competitoes globalised Transferable competitive advantag
Figure 4: Drivers of internationalisation
Source: Yip, G.S., 2003. Total global strategy II: updated for the internet and service era. Pearson Education, Inc., Upper Saddle River, New Jersey
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arket drivers. The developed societies with a continuing flux of migrant workers, travellers and foreign students produce multicultural consumers (EUROMONITOR, 2014). There are more global consumers within the homogenous and globalised world provide opportunities for international retailers as well as Ted Baker. In addition, there is a changing attitude toward luxury goods and value-conscious shopping in some emerging market like China, which has created new opportunities for premium and contemporary brand (Chu, 2014).
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ost drivers. Operating internationally could increase the volume of product so that it reduces the costs both on the production and in purchasing of supplies (Johnson, 2008). In many cases, the economies of scope would be the push rather than economies of scale to internationalise business (Yip, 2003). Ted Baker not only achieves the gains from spreading activities across multiple licensed product lines, but also may achieve the savings in the cost of production and increase the sourcing efficiencies by entering the suppliers’ market.
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overnment drivers. There are many continued efforts to make business easier around the world as 114 economies implemented 238 regulatory reforms making, which is about 18% more than the previous year (The World Bank, 2013).
ompetitive drivers. British fashion retailers including Ted Baker, Jack wills, All Saints, Karen Millen and Topshop have built up store networks around the world in recent years by taking advantage of British fashion, especially for the mid-market which is perceived as offering the most opportunities (Deloitte, 2013). Most of the direct competitors of Ted Baker in UK are looking for growth potential by oversea expansion (Figure5).
REISS
FRENCH CONNECTION
In 2005, “REISS step into the global arena with its first international store in New York, followed by Dubai” (REISS, 2014).
“The brand has a global reach, operating in over 30 countries through more than 1,000 stockists and with over £400 million of branded retail sales worldwide, either directly through our own retail chain, through wholesale channels or generated from licensed arrangements” (French Connection, 2014).
Reiss French Connection All Saints Aurora Ted Baker 0
100 UK sales
200
300
400
500
International sales
Figure 5: The percentage of British fashion retailers’ international revenue Source: Retail Week, 2013. International Report 2013 [online]. Available via: retailweek.com. Manhattan Associates [Access: 6 March 2014].
KAREN MILLEN
ALL SAINTS
Karen Millen operates “over 350 stores and concessions in 45 countries worldwide, with over 250 stores internationally. The last five years has seen the brand truly emerge globally with international turnover increasing by over 400%” (Karen Millen, 2014).
All Saints offer free international shipping to 40 countries on orders over £250 (All Saints, 2014).
Figure 6: Ted Baker Adelaide
PUSH Factors
Saturation of the domestic market Limited opportunities to diversify Legislative constraints within domestic market International appeal of brand
PULL Factors
Growth potential in emerging markets Underdeveloped competition Response to offers from foreign markets Attractive business environment Opportunities arising from economic conditions Follow the leader mentality Converging consumerism in mass markets Differing cultures becoming increasingly linked
FACILITATING Factors
Technology: no barriers 24/7 Support agencies assisting international set up Lowering of trade barriers Better infrastructure Mass media
Figure 7: Why Global?
Source: Davidson, J., 2013. Internationalisation & Individuality. [Lecture to International Fashion Business, Nottingham Trent University]. 15 October.
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ush Factors. The revenue year g rowth of Ted Baker in UK & Europe, US & Canada and Asia & Rest of the world from 2012 to 2013, which is 10.9%, 58.6% and 67.6% respectively (Ted Baker, 2013). By comparing the growth rate, it indicates the most important driver for Ted Baker to internationalise business is the saturation of domestic and Europe market contrast to the growth potential of emerging markets.
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ull Factors. The world economy is projected to have a global growth from 2.4% in 2013 to 3.2% this year, and 3.4% in 2015 (World Bank, 2013). Growth acceleration may muted in emerging and developing market, it still grow at 2.5 times the rate of developed economies (EUROMONITOR, 2014). The economic power shift from developed markets to developing markets and the rapid urbanisation contributing to the growth of middle classes which has more discretionary income to spend (EUROMONITOR, 2014).
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acilitating Factors. UK retailers attracted a large number of interest from oversea online shoppers with a 64% year-on-year increase in the number of searches via smartphone (WGSN, 2014). The technology development facilitates retailers to go global in respects of online sales, marketing and consumer service. The parallel of devices, content and distribution s y s t e m s, a n d t h e o m n i p r e s e n t a r e indispensable for winning brands (BrandZ, 2013). Ted Baker currently operate UK site to serve UK and European consumers, US site and Japan site to provide local content for oversea consumers (Ted Baker, 2014). The 2014 Doing Business reported that “Singapore topped the global rankings for the ease of doing business, followed by Hong Kong, China; New Zealand; the USA; Denmark; Malaysia; South Korea; Georgia; Norway; and the UK. Meanwhile, Ukraine, Rwanda, Russia and the Philippines were amongst the top improvers� (World Bank, 2013).
SOURCES OF COMPETITIVE ADVANTAGE
Firm strategy, structure and rivalry
Factor conditions
The value of Porter’s Diamond in the case of Ted Baker is to “identify the extent to which they can build on home-based advantages to create competitive advantage in relation to others on a global front” (Johnson, 2008, p.302).
Demand conditions
Related and supporting industries
Figure 9: Porter’s Diamond – the determinants of national advantage Source: : Johnson, G., 2008. Exploring corporate strategy: text & cases. Harlow: Financial Times Prentice Hall.
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actor conditions. The UK fashion industry is experiencing the de-industrialisation trend which outsources lower value-added activities such as manufacturing whilst specialises higher value-added activities relate to design and marketing (British Fashion Council, 2010). As stated, Ted Baker manufacture all the products out of UK and 45% of total made in China (Made-By, 2012), which allows them to achieve better business efficiency and profitability.
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ome demand conditions. The UK consumers are relatively cautious about right value and price (Jobling, 2013) while also demand excellent brand experience (BrandZ, 2013), which become a source of competitive advantage for Ted Baker to dealing with sophisticated global consumers.
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elated and supporting industries. The UK based design services, materials, equipment, expertise and information could be a source of competitive advantage which underpin Ted Baker’s British fashion.
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irm strategy, industry structure and rivalry. From the fashion influences of historical eras such as the “Swinging Sixties” and the Cool Britannia image to the rise of modern designer labels as Vivienne Westwood, Paul Smith and Burberry (British Fashion Council, 2010), the British fashion heritages provided a national advantage to their fashion brands as well as Ted Baker.
Figure 8: Ted’s 25 Year Celebration
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hen it comes to the side of organisation’s individual source of advantage, more often refers to the capabilities (Figure 10) which firmspecific abilities to use resources to achieve organizational objective (Peng, 2011). Ted Baker established as a shirting specialist and then diversified to a wide product range with quirky yet commercial detailing and pattern which based on British culture (Ted Baker, 2013). Beyond that, there seems no particular innovative capability could be identified for Ted baker to achieve relevant differentiation or competitive advantage in terms of design, costs and customer responsiveness. For example, UNIQLO has innovation capabilities in product development; ZARA uses just-in-time approach to bring latest fashion trends and response consumer needs; designer brands like Paul Smith has their irreplaceable brand reputation; Nike establishes a strong distribution network across owned-store, franchised store, Nike town chains of retail store, department store, specialist retailers and other fashion retailers; Italian accessories brand Furla succeeded in China by using the capabilities of their partner Fung Capital Asia who has planned to open 100 new stores in the next five years (Chu, 2014). Instead, the particular Ted Baker culture is based on the British background and existing consumer perception that is not easy to be transferred to foreign market. Ted Baker try to use alternative ways like creative window displays instead of marketing, PR or advertising, which is difficult to build brand awareness around the world (Balmford, 2012).
Figure 11: Ted Baker Spring 2013
Capabilities in Innovation
Research Innovation new product development Fast-cycle new product development Design capability
Capabilities in Operations
Flexibility and speed of response Continuous quality improvement in manufacturing Efficiency in volume manufacturing Low cost delivery of customer service
Capabilities in Marketing
Brand management Reputation for quality Responsiveness to market trends
Capabilities in Sales and Distribution
Capabilities in Corporate functions
Figure 10: Functional Capabilities
Efficiency of order processing and distribution Efficiency distribution management Quality and effectiveness of customer service Ability to Strategic Strategic Ability to
attract and manage financial resources management of multiple business innovation interact with governments
Source: : Peng, M.W., 2011. International business. London: Cengage Learning
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he national resources and clearly defined personality of brand create value for Ted Baker. However, it might lead to a competitive parity but not to an advantage. This added value is not rare and easy to imitate or already exist in other brands from different level of markets. The similar brand personality could be found at different market level with different prices (Figure13). Moreover, the British culture based personalities tend to be more dominated by high-profile brand such as Paul Smith. Imitability
Value Creating Does the resource or capabilities add value?
Rare How rare is the resource or capabilities?
Figure 12: The VRIO framework
How difficult is it for others to imitate the resource or capabilities?
Source: : Peng, M.W., 2011. International business. London: Cengage Learning
Organization Are other policies and procedures organized to support the exploitation of this resource or capabilities?
Figure 14: Ted Baker's design in Tokyo
1 1988
First store in Glasgow, UK
1 1996
Began wholesale trading in the US
1 1998
First standalone store in New York, US
2 2000
Signed the US licence with Hartmarx Corp
2 2002 2004 2 2005 2 2006 2 2008 2 2012 2 2013 2 2015
Opened stores in Paris, San Jose and Miami Took first steps into Australia, New Zealand as well as opening new stores in San Francisco, Las Vegas Singed three licence agreements for Asia and the Middle East Export partners for Spain, Portugal and Andorra
First store in Athens, Greece
Store in Japan, China, Indonesia, Malaysia and Canada
Two new stores and an outlet in Shanghai Further concessions in US and Europe
Plans to open stores in South America Panama could be first target Figure 27: Ted Baker global expansion timeline Source: Compiled from www.tedbaker.com
MARKET SELECTION AND ENTRY
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arket selection should be determined by three sets of overall factors which are stand-along attractiveness, global strategic importance and synergy (Yip, 2003). Yip (2003) described that a global strategy view of market participation:
"
To have a global level of market participation requires significant global market share, a reasonable balance between the business’s geographic spread and the market’s spread, and presence in globally strategic country-markets
Figure 15: 2012 FDI inflows
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urope: UK, Belgium, France, Germany, Ireland, Netherlands, Portugal, Spain. The high level of economic integration in Europe provide a business environment with least trade barriers as the European Union establish the single market about free movement of goods, capital, people and service (Peng and Meyer, 2011). Even Europe have been through hard years due to the ongoing crisis, it is still the most attractive FDI destination and second attractive investment region (EY, 2013). The retail division of Ted Baker in this region were only up 11.1% while there are 16 stores or concessions more from 2012 to 2013 (Ted Baker,2013), which implicate that the Europe region is about market share rather than market growth.
"
Figure 16: World’s most attractive regions to establish operations
Figure 17: Ted Baker flagship store on Floral Street in London’s Covent Garden
Source: http://www.drapersonline.com/news/ womenswear/news/thats-entertainment-at-tedbaker/5012027.article#.U0_JF_ldWgw
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iddle East: United Arab Emirates, Lebanon, Kuwait, Turkey. The United Arab Emirates (UAE), which is ranked among the wealthiest nations in term of GDP per capita, composed of seven independent city states including Dubai, Abu Dhabi and Dubai has world's highest number of shopping malls per capita (Retail Week, 2013). The prosperous tourism industry and the least demanding tax system in this area (World Bank, 2013) provide more profitability for fashion retailers. The local regulations stipulate that any international retailer have to enter market with a local partner (Retail Week, 2013), which decides the entry mode of Ted Baker with licensing.
Figure 18: Rank shift in GDP 2010 vs 2020 Source: Euromonitor
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orth America: United States, Canada. Peng and Meyer (2011) suggests that firms normally enter first where the cost of entry and the perceived risks are lowest, which is in culturally similar countries. The same language and similar economy system, which both of them are identifies as market economy (Peng and Meyer, 2011), pave the way for the US become the first oversea destination of Ted Baker. In recent years, Ted Baker continued its expansion to the US and Canada by further concession with leading department store and opened Fifth Avenue flagship store in New York (Ted Baker, 2013). However, there were relatively few British success stories in this attractive top destination of British retailers (Retail Week, 2013).
Figure 21: Ted Baker, Turkey, 08 January 2014 Source: http://workhousecollection.co.uk/index.php/articles/cat/ journal/post/tedbaker_turkey/
Figure 19: Ted Baker store in New York Fifth Avenue Source: Retail Week, 2012. Ted Baker opens Fifth Avenue flagship store [online]. Available via: http://www.retail-week.com/stores/ in-pictures-ted-baker-opens-fifth-avenue-flagship-store/5039569. article [Access: 13 March 2014]
Figure 22
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sia: China, Indonesia, Japan, Korea, Malaysia, Singapore, Thailand, Australia, New Zealand. The market size and strong growth in clothing sales remain China at the top of Market attractiveness (Figure 20). Countries in the Association of Southeast Asian Nation (ASEAN) also have a decade of robust growth due to the domestic consumption and urbanization (AT Kearney, 2013). Some countries or cities in this area rank the most easies to do business like Singapore, Hong Kong (World Bank, 2013). Moreover, this region are both market seeking and efficiency seeking for Ted Baker to achieve more resource advantages as there are strong supplier networks and distribution (Figure 22).
Figure 23: Ted Baker first store in Shanghai Source: www.tedbakerblog.com
Figure 24: Ted Baker Dubai Marina Mall Menswear Source: Ted Baker 2013 Annual Report
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ntr y modes are chosen according to the stag es of internationalisation processes which organization gradually increases their commitment in new market from contractual agreement such as licensing, then joint ventures, finally owned subsidiaries (Johnson, 2008). In the Middle East, Asia and Australasia, Ted Baker operates territorial licences for retail stores and wholesale business (Ted Baker, 2013), which are the mutually beneficial for both licensor and licensee at the early stage of global expansion. Ted Baker provide their property right whilst take the advantages of the expertise from licensees in particular product or territory (Cioletti, 2014). However, Ted Baker may loss control of manufacturing and marketing their products through licensing and it is also less profitable as returns shared by two parties (Cioletti, 2014).
Market Knowledge
Commitment Decisions
Market Commitment
Current Activities
Figure 25: the Basic Mechanism of Internationalisation - State and Change Aspects
Source: Yip, G.S., 2003. Total global strategy II: updated for the internet and service era. Pearson Education, Inc., Upper Saddle River, New Jersey
North America: Suiting business with licence partner Jack Victor Central America: Licensed partner plans to open one new store in Panama
RECOMMENDATIONS A basis of improvement would be to build an international team to accumulate experiential learning and knowledge acquisition from new market to accelerate the process of internationalisation. This international team at early stage including key members such as: • Merchandiser: to localise the product offer for different markets. • Buyer: to exploit and build global supply network. • Retail Manager: to gather information and learnings from different markets and to adapt different marketing strategy. • Business Partner: to maintain a long-term business relationship. The different characteristics, competitiveness, resources and costs of countries around the world should be systematically conducted and exploited to build a
strategic global network. The current marketing strategy of Ted Baker may not fit for all countries. There are some countries need conspicuous advertising methods to raising brand awareness, for example, China. The quintessential of British culture cannot be transferred simply through the detailing and pattern of clothing as well as store interior. It should consider more different factors influence consumer perception in different countries which requires deeper engagement with foreign markets.
UK: Head office UK: Footwear collection with our licenced partner Pentland Group Turkey: 29% of product manufacture; Territorial license partner Demsa Portugal: 9% of product manufacture
UAE: Territorial license partners RSH Middle East Kuwait: Territorial license partners AI-Mutawa and AI-Khatib Retail Company
China: 45% of product manufacture Singapore, Malaysia, Indonesia & Thailand: Territorial license partners RSH Far East Australasian: Joint venture with Territorial license partners Flair Pty Ltd
Figure 26: Ted Baker global network Source: compiled from Ted Baker Annual 2013 Report
GLOBAL EXPANSION LIST OF FIGURES
Figure 1: Ted's Journey of a Lifetime Figure 2: The 2013-2014 UK and Overseas Sales Revenue Figure 3: International Strategy Framework Figure 4: Drivers of Internationalistion Figure 5: The percentage of British Fashion Retailers' International Revenue Figure 6: Ted Baker Adelaide Figure 7: Why Global? Figure 8: Ted's 25 Year Celebration Figure 9: Porter's Diamond - The Determinants of National Advantage Figure 10: Funtional Capabilities Figure 11: Ted Baker Spring 2013 Figure 12: The VRIO Framework Figure 13: Similar Products with Ted Baker Figure 14: Ted Baker's Design in Tokyo Figure 15: 2012 FDI Inflows Figure 16: World’s Most Attractive Regions to Establish Operations Figure 17: Ted Baker Flagship Store on Floral Street in London’s Covent Garden Figure 18: Rank Shift In GDP 2010 vs 2020 Figure 19: Ted Baker Store in New York Fifth Avenue Figure 20: The 2013 Retail Apparel Index Figure 21: Ted Baker, Turkey, 08 January 2014 Figure 22: AEC Impact on Company Areas Figure 23: Ted Baker First Store in Shanghai Figure 24: Ted Baker Dubai Marina Mall Menswear
GLOBAL EXPANSION REFERENCES
AT Kearney, 2013. 2013 Global Retail Development Index [online]. Available via: http://www.atkearney.com/ consumer-products-retail/ideas-insights/featured-article/-/ asset_publisher/KQNW4F0xInID/content/2013-globalretail-development-index/10192 [Access: 13 March 2014] Balmford, G., 2012. Q&A: Ray Kelvin – Founder &CEO – Ted Baker, Retail Focus [online]. 10 December 2014. Available via: http://www.retail-focus.co.uk/qanda/1034q-a-ray-kelvin-founder-ceo-ted-Baker [Access: 26 February 2014] BrandZ, 2013. BrandZ™ Top 100 Most Valuable Global Brands 2013 [online]. Available via: http://www.wpp. com/~/media/Reading-Room/BrandZ/brandz_2013_ top_100_report_may13.pdf [Accessed 28 February 2013] British Fashion Council, 2010. The Value of the UK Fashion Industry [online]. Available via: http://issuu.com/ britishfashioncouncil/docs/valueoffashionreport?e=0 [Access: 13 March 2014] Chu, S., 2014. Fashion retail: meeting consumer demand, Worth Global Style Network [online]. 22 October 2013. Available via: WGSN.COM [Access: 3 February 2014] Cioletti, A., 2014. Fashion Forward: A Look at Upcoming Trends [online]. Available via: http://www.licensemag. com/license-global/fashion-forward-look-upcoming-trends [Access: 6 March 2014]. Davidson, J., 2013. Internationalisation & Individuality. [Lecture to International Fashion Business, Nottingham Trent University]. 15 October. Deloitte, 2013. Retail Globalisation, Navigating the maze [online]. Available via: http://www2.deloitte.com/content/ dam/Deloitte/global/Documents/Consumer-Business/ dttl-cb-Retail%20Globalization%20-%20full%20report_ Oct%202012.pdf [Access: 6 March 2014].
Figure 25: The Basic Mechanism of Internationalisation - State and Change Aspects
Hollis, N., 2008. The global brand. US: PALGAVE MACMILLAN.
Figure 26: Ted Baker Global Network
Jobling, A., 2014. Chinese retail 2014: a changing landscape [online]. 24 January 2014. Available via: WGSN.COM [Access: 3 February 2014]
Figure 27: Ted Baker global expansion timeline
Johnson, G., 2008. Exploring corporate strategy: text &
cases. Harlow: Financial Times Prentice Hall. Made-By, 2012. Made-By scorecard: [online]. Available via: http://www.made-by.org/tedBaker [Access: 26 February 2014] Peng, M.W. and Meyer, K.E., 2011. International Business. London: Cengage Learning EMEA PWC, 2013. Paying Taxes 2014 [online]. Available via: http://www.pwc.com/gx/en/paying-taxes/assets/pwcpaying-taxes-2014.pdf [Access: 6 March 2014] Retail Week, 2012. Ted Baker Opens Fifth Avenue flagship store [online]. Available via: http://www.retail-week.com/ stores/in-pictures-ted-Baker-opens-fifth-avenue-flagshipstore/5039569.article [Access: 13 March 2014] Retail Week, 2013. International Report 2013 [online]. Available via: retailweek.com. Manhattan Associates [Access: 6 March 2014]. Retail Week, 2013. International Report 2013 [online]. Available via: retailweek.com. Manhattan Associates. Saunders, M., 1959-, 2012. Research methods for business students. Harlow: Pearson. Ted Baker Annual Report and Accounts, 2012/2013. Ted Baker PLC. The World Bank, 2013. Doing Business 2014 [online]. Available via: http://www.doingbusiness.org/~/media/ GIAWB/Doing%20Business/Documents/Annual-reports/ English/DB14-Full-Report.pdf [Access: 6 March 2014]. Yip, G.S., 2003. Total global strategy II: updated for the internet and service era. Pearson Education, Inc., Upper Saddle River, New Jersey.
THE TED BAKER CONSUMER
Dimension of Culture Rachel Lu
OVERVIEW
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igel Hollis (2008, P.25-26), the chief global analyst of Millward Brown, defined a global brand as one that “has transcended its cultural origins to develop strong relationships with consumers across different countries and cultures�. It's very important for Ted Baker to identify and understand the culture characteristics in different market which impacts their global strategy and marketing strategy directly. The analysis of this chapter bases on Hofstede's dimension of culture framework which provide indices of uncertainty avoidance and individualism to illustrate the consumer needs of appearance in different countries. The TGI's "What the World Thinks Report" (2014) conducted survey across 50 countries to make statements about the attitudes and perceptions of media, shopping and personal appearance. Thus, the challenges and the recommendations for Ted Baker to go global in respects of product offer and marketing strategy will appear.
CULTURES OF APPEARANCE
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he differences in perceptions of appearance and shopping behaviour in different countries could be analysed by two of the Hofstede’s cultural dimensions including the uncertainty avoidance and individualism (Figure 2). Hofstede et al (2008) interpreted how the cultural dimension of uncertainty avoidance affects trade. In term of negotiation behaviour, people in the uncertainty avoiding societies including Central Europe and some Middle Eastern countries tend to express emotion and keep away from strangers; people in the uncertainty tolerant societies including China and Southeast Asian countries tend to suppress emotion and are more easily to engage in new activities (Hofstede et al., 2008). In term of trade goal selection, the former would like to pay a price for certainty which means they will choose cheaper low quality products if they feel uncertain about the high quality; the latter would trade both low and high quality products opportunistically (Hofstede et al., 2008). In term of the trade partner, the former need external justification, sufficient rules and contracts for doing business; the latter would like to strike up business relationship if there are opportunities present (Hofstede et al., 2008). The high individualism and high uncertainty avoidance culture such as France, Italy and Germany tend to be more looking for private opinion, self-actualization and formalization (Buckley, P.J. and Ghauri, P.N., 1999), which implicates a fashion and formal appearance, a personalised engagement are required. On contrary, the low individualism and low uncertainty avoidance culture such as Hong Kong, Malaysia and Singapore are more likely to be concern about the harmony and identity of a collective group (Buckley, P.J. and Ghauri, P.N., 1999) and the willingness to change (Peng, 2011). The Hofstede’s framework has great implication for the global expansion of in terms of marketing methods and entry modes. In the high-context culture like the Arab and Asian countries, it is necessary to establish long-term ambitions. Because business in there have to gradually involve social activities as well as build mutual trust and relationship with consumers (Peng, 2011).
Figure 1: Ted Baker Pinterest StreetWinker Source: http://www.pinterest.com/tedbaker/ streetwinker/
Figure 2: Hofstede’s Dimension of Culture Source: Inspector Insight, 2012. How Different Are Cultures [online]. Available via: 2013http://www. inspectorinsight.com/semiotics/how-different-are-cultures-introduction-to-semiotics-part-1/ [Access: 6 March 2014].
Recommendations. In the countries like German, France and USA, Ted
Baker should focus on the product feature like design and quality to show its valuable. Meanwhile, in the countries like China and other Southeast Asian countries, Ted baker should symbolise the product as a particular social status or identity. Regarding to the product offer, the collections in Japan, South Korea, German and France should be more formal than the collections in Southeast Asian countries where people are more likely to seeking casual wear.
Figure 6: Ted Baker 2014 Spring
Figure 3: What the World Thinks - Media Source: TGI, 2014. What the World Thinks 2014 Report [online]. Available via: http:// www.globaltgi.com [Access: 6 March 2014].
ATTITUDES AND PERCEPTIONS OF CONSUMER
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n the statement of “I find advertising a waste of my time”, some Europe and Middle East countries have much higher percentage of agreement than global average such France, UAE, Saudi Arabia and Kuwait (Figure 2). The low profile advertising strategy of Ted Baker may be favored in these countries. On contrary, it is difficult for Ted Baker to raise brand equity in some countries like Portugal, Spain, USA and Vietnam (Figure 2). The second graph of figure 2 indicates the preference of advertising by internet, which there is 68% of respondents agree that the internet is the first place for them to get information.
Recommendations. Ted Baker’s marketing strategy
should be diversified according to attitudes of consumer in different countries. For example, in Middle East, it is recommeded to enter market with low profile marketing strategy including consumer service, smart promotion, personal selling and social network. Whilst in Portual, Spain and USA, Ted Baker could raise brand awareness by sponsoring influential events or films, appearing in magzine and television. Moreover, it is necessary to provide suffiicent information on internet and placec fashion compaign through well-known website for Chinese consumers.
Figure 4: What the World Thinks – Personal Appearance Source: TGI, 2014. What the World Thinks 2014 Report [online]. Available via: http:// www.globaltgi.com [Access: 6 March 2014].
In the respect of personal appearance, consumers in Middle Eastern and Asian countries stated that they would like to dress to “stand out in a crowd” and “keep up with latest fashions” (Figure 3). More importantly in Asian countries, consumers are seeking “young-looking”, which implicates that consumers are more likely to purchase clothes younger than their real ages.
Recommendations. Firstly, Ted Baker should do
market research sufficiently for distinguishing themselves with other competitors to establish a unique brand in Middle Eastern and Asian countries where people looking for distinctive dressing and latest fashion. Secondly, as mentioned above, people in uncertainty tolerant societies are “easy travelers” and more easily adjust to the novel actitivities (Hofstede et al., 2008). It would be better for Ted Baker to bring their own brand personality to these market rather than localise their brand image or product (Figure 4). Lastly, Ted Baker should assess the target consumer characteristics differently in Asian countries where people want to make themselves looks younger. Figure 5: The products inspired by Asian culture Source: www.tedbaker.com
LIST OF FIGURES Figure 1: Ted Baker Pinterest StreetWinker Figure 2: Hofstede’s Dimension of Culture Figure 3: What the World Thinks – Media Figure 4: What the World Thinks – Personal Appearance Figure 5: The products inspired by Asian culture
Figure 6: Ted Baker 2014 Spring
REFERENCES Buckley, P.J. and Ghauri, P.N., 1999. The internationalization of the firm, 2nd Edition. London: International Thomson Business Press. Hofstede, G.J., Jonker, C.M. and Verwaart, T., 2008. Modelling Culture in Trade: Uncertainty Avoidance [online]. Available via: http://dl.acm.org/citation.cfm?id=14005 67&dl=ACM&coll=DL&CFID=323466882&CFTOK EN=25171161 [Access: 18 March 2014]. Inspector Insight, 2012. How Different Are Cultures [online]. Available via: http://www.inspectorinsight.com/ semiotics/how-different-are-cultures-introduction-tosemiotics-part-1/ [Access: 6 March 2014]. Ted Baker Annual Report and Accounts, 2012/2013. Ted Baker PLC. TGI, 2014. What the World Thinks 2014 Report [online]. Available via: http://www.globaltgi.com [Access: 6 March 2014].
PESTLE Analysis P The so‐called Bali package hammered out by World Trade Organization (WTO) negotiators which aims to streamline customs procedures worldwide including cutting red tape, speeding up port clearances (Barrie 2013).
E World: The world economy is projected to have a global growth from 2.4% in 2013 to 3.2% this year, and 3.4% in 2015 (World Bank, 2013). The brand value of apparel category increase 21% on the top of a 13% rise a year ago. UK and Europe: As the GDP shows 0.7% growth in the fourth quarter, the UK economy grew by 1.9% in last year which presents its strongest rate since 2007 (BBC, 2014). Also, the retail sales in UK rose 2.6%, up 6.1% on a year ago and this figure shows the strongest annual rise in nine years (EUROMONITOR, 2014). But the Eurozone inflation fell to 0.7% in January and it has raising the concerns of suffering potential deflation (BBC, 2014). The possible deflation could make the price of goods and assets in long‐term decline and also make consumers to delay purchases. The Eurozone manufacturing activity hit a 32‐month high in January, driven by Germany (BBC, 2014). Likewise, the unemployment rates in Europe are showing real signs of improvement. For example, the UK’s dropped from to 7.4% in 2013 down from 8.0% in 2011 (MARKIT, 2014). However, the major problem is that wages are either stagnating or declining in real terms, and not keeping pace with inflation or the rising costs of living (LENNARD, 2014). North America: The Associated Press reported that one in five Americans become affluent with household income of $250,000 or more, which made up mainly of older professionals, working married couples and more educated singles (WGSN, 2013). However, the apparel only accounts for 2.5% of the total Personal Consumption Expenditures (PCE) in 2012 as every man, woman, and child in the US purchase 62 garments and spent around $898 on average (Barrie, 2014). The 2013 clothing and footwear demand in US continued to rise in both value and volume terms, which
was slower than the growth during 2010‐2012 (Textile Intelligence, 2014). In the first, second and third quarter of 2013, the expenditure on clothing and footwear were increase 2.3%, 3% and 1.8% respectively, compared with 4.8% in 2012 (Textile Intelligence, 2014). In Canada, the Leisure Trends reported that the sales for men’s clothing segment are up 18% across all channels, especially the sales of men clothing for aged 20‐35 in department store have increased 64% over the past year (Russell, 2014). Asia: The growth in the East Asia and Pacific is weakening and moderated to 7.2% in 2013 (World Bank, 2014). Growth acceleration may muted in emerging and developing market, it still grow at 2.5 times the rate of developed economies (EUROMONITOR, 2014). Euromonitor International (2014) predicts that the retail growth in Asia Pacific will increase 4.7% in 2014 which is slightly higher than 4.3% in 2013. Most Asian economies are forecast to perform stronger in 2014 lead by China which accounted for 41% of 2013 retail sales in Asia Pacific and follow with Vietnam, Indonesia, India, Thailand (Moreau, 2014).
S World: The economic power shift from developed markets to developing markets and the rapid urbanisation contributing to the growth of middle classes which has more discretionary income to spend (EUROMONITOR, 2014). The developed societies with a continuing flux of migrant workers and foreign students produce multicultural consumers (EUROMONITOR, 2014). Consumers shop clothing from a broad portfolio and different level of brands such as an affordable dress match with a luxury accessory. They sought value which is either good quality at a fair price or an exceptional quality at premium price. They have more realistic expectations of personalised experiences like receiving a thanks on Twitter, attending an exclusive fashion show (BrandZ, 2013). The phenomenon called “Apple Effect”, which delivers a standard for design, functionality and service in both physical and online stores, also indicates that consumers expect excellent, flawless brand experience (BrandZ, 2013). The ethical concerns of sourcing and safe labour standard is increasingly important after the disasters at Bangladesh. According to the survey by KPMG LLP, nearly 70% of consumers older
than age 18 and below age 30 would consider social issues before making a purchase, such as sustainability, human rights and fair trade. This outpaces the less than 50% of consumers overall who feel the same way (WGSN, 2013). UK: The current UK consumers are cautious and prepared to pay more but it is important for retailers to offer products with right quality and price, engagement with consumer online instantly, and easy sale process (Jobling, 2013). The spending of mature buyers who over 50s on clothing, footwear and accessories are accounts for 41% of the total market. For UK, there is an estimated £300bn contributed by over‐50s but 42% of their spend going on discounted items (WGSN, 2014).
T Technology is like breathing now that we cannot live without it. The parallel of devices, content and distribution systems, and the omnipresent are indispensable for winning brands (BrandZ, 2013). The market research of Verdict Retail shows that online spend via mobile and smart devices will grow from £7.9bn in 2013 to £23.1bn in 2018 in UK (Drapers, 2013). UK retailers attracted a large number of interest from oversea online shoppers with a 64% year‐on‐year increase in the number of searches via smartphone. The fastest growth of those searches came from 231% in Germany, 145% Russia and 137% in Argentina (WGSN, 2014).
L The Russian government proposed regulations about international ecommerce which Russian shoppers purchase around £820 and over from non‐Russian brands have a duty charge levied on them (Drapers, 2014) There are some new rules have been published in Version 4.0 of Global Organic Textile Standard (GOTS) including the ban on using genetic engineering, nanotechnology, carcinogenic substances, virgin polyester and angora (Woodard, 2014)
E After a video shot of angora fur extraction process in China released, dozens of retailers halted the sourcing of product containing angora wool and many other retailers suspend the placing
of further orders (WGSN, 2013) Textile Intelligence, 2014. World textile and apparel trade and production trends. Textile Outlook International, No 167 February 2014, p. 9‐10. RUMSEY, A., 2014. Economic outlook: global economy, Worth Global Style Network [online]. Available via: WGSN.COM [Access: 3 February 2014] Jobling, A., 2014. Fashion retail: meeting consumer demand, Worth Global Style Network [online]. 22 October 2013. Available via: WGSN.COM [Access: 3 February 2014] Barrie, L., 2014. Viewpoint: US apparel industry data sheds light on sector shifts, just‐style [online]. 3 January 2014. Available via: Just‐style Apparel archive [Access: 6 March 2014] Barrie, L., 2013. Apparel industry welcomes WTO trade package, just‐style [online]. 13 December 2013. Available via: Just‐style Apparel archive [Access: 6 March 2014] Woodard, R., 2014. US: New Global Organic Textile Standard released, just‐style [online]. 4 Mar 2014. Available via: Just‐style Apparel archive [Access: 6 March 2014] Russell, M., 2014. Canada: Men’s apparel market “primed for prosperity”, just‐style [online]. 5 Mar 2014. Available via: Just‐style Database [Access: 6 March 2014] BBC, 2014. UK economy growing at fastest rate since 2007 [online]. Available via: http://www.bbc.co.uk/news/business‐25926648 [Access: 3 February 2014] BBC, 2014. Fall in Eurozone inflation rate fuels deflation concerns [online]. Available via: http://www.bbc.co.uk/news/business‐25976377 [Access: 3 February 2014] Goldman Sachs., 2014. Outlook: Europe [online]. Available via: http://www.goldmansachs.com/our‐thinking/focus‐on/outlook/2014‐outlook‐ europe/index.html [Access: 3 February 2014] LENNARD, C., 2014. Unemployment Rates Falling in Developed Markets but Wage Declines Persist [online]. Available via: EUROMONITOR INTERNATIONAL [Access: 3 February 2014] MARKIT, 2014. United Kingdom unemployment rate falls to 7.1%, 2014/01/22 [online]. Available via: Markit Economic Research [Access: 3 February 2014] EUROMONITOR, 2014. Retailing 2014: Key Highlights [online]. Available via: EUROMONITOR INTERNATIONAL [Access: 3 February 2014] EUROMONITOR, 2014. 10 Global consumer trends for the next five years [online]. Available via: EUROMONITOR INTERNATIONAL [Access: 3 February 2014]
Moreau, R., 2014. Year of the Horse: Outlook for Retailing in Asia Pacific in 2014 and Beyond, EUROMONITOR [online]. 07 February 2014. Available via: EUROMONITOR INTERNATIONAL [Access: 27 February 2014] BrandZ, 2013. BrandZ™ Top 100 Most Valuable Global Brands 2013 [online]. Available via: http://www.wpp.com/~/media/Reading‐ Room/BrandZ/brandz_2013_top_100_report_may13.pdf [Accessed 28 February 2013] Santi, A. and Knowles. J., 2013. Drapers Top 100 2013. Drapers, Vol. December 7 2013 p. 27. Barat, A., 2014. Don’t be discouraged by new Russian import rules. Drapers, Vol. February 8 2014 p. 27. World Bank, 2014. Global Economic Prospects. January 2014 [online]. Available via: http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2014a/GEP2014a_regional_o utlooks.pdf [Access: 6 March 2014] WGSN Newsteam, 2013. Consumers aged 18‐30 consider social issues before buying products – survey [online]. 11 December 2013. Available via: WGSN [Accessed 14 February 2013] WGSN Newsteam, 2013. One in five Americans becoming affluent [online]. 10 December 2013. Available via: WGSN [Accessed 14 February 2013] WGSN Newsteam, 2013. More UK retailers cease angora wool sourcing after cruelty allegations [online]. 17 December 2013. Available via: WGSN [Accessed 14 February 2013] WGSN Newsteam. 2014. Overseas online shoppers flock to British brands [online]. 4 February 2014. Available via: WGSN [Accessed 14 February 2013] WGSN Newsteam. 2014. UK women aged 50‐plus spending more on fashion [online]. 21 February 2014. Available via: WGSN [Accessed 14 February 2013]
SWOT Analysis S The chief executive Ray Kelvin establishes distinctive style from management to company culture and he has as much a presence on the design floor as in the boardroom, which effectively poses the brand’s alter ego to focus on product design (Taylor, 2012). Founded as a shirting specialist, Ted Baker utilize its British heritage to become a quintessentially British brand through design detail, distinctive pattern and colour, store interior and advertising (Ted Baker, 2013). Ted Baker tailors each store uniquely to reflect their own style and the immediate surroundings and accompanies high level of customer service which they called retail theatre (Balmford, 2012).
W The key part of Ted Baker’s brand identity is the British culture as well as the irreverent sense of humour which may encounter challenges when enter new international market with different culture (Balmford, 2012). Ted Baker does not believe in marketing, PR or advertising and try to use alternative ways like creative window displays, which is difficult to build brand awareness around the world (Balmford, 2012). It may reduce the distribution costs but it also bring risks and limits the scope and pace of market expansion as the 70% of Ted Baker stores opened through concessions in new and existing international markets (Ted Baker, 2013). The Ted Baker online shop mainly serve for UK and only offer delivery within Europe (Ted Baker, 2013)
O The oversea sale revenue of Ted Baker accounts for 30.5% in 2013 and 25.2% in 2012, which still has plenty space to achieve more global presence (Ted Baker, 2013). In China, consumer tastes shift away from conspicuous consumption and more than 75% of consumers favour to try new brands, which generates new market opportunities for premium,
contemporary and fast fashion brands (Chu, 2014). Mickey Drexler, the chairman & CEO of J Crew Group, advocated the approach that rather than focusing on Omni channel, retail businesses should spotlight the strong design and creative product which will give them a competitive edge (Rumsey and Saunter, 2013).
T The Europe economy is complex and uncertain which may bring Ted Baker threats as their year revenue in Europe accounts for 80.2% of total by January 2013 (Ted Baker, 2013). It may lose their authorised identity of quintessentially British brand when Ted Baker enters Chinese market as 45% of their manufacturing made in China in 2012 (Made‐By, 2012). Taylor, A.R., 2012. Ten lessons to learn from Ted Baker, Retail Week [online]. 12 June 2012. ttp://www.retail‐week.com/sectors/fashion/ten‐lessons‐to‐learn‐from‐ted‐ Available via: baker/5037547.article [Access: 6 March 2014]
Annual Report and Accounts, 2012/2013. Ted Baker PLC [online]. 24 May 2013. Available via: http://www.tedbakerplc.com/ted/uploads/results/TedBaker_AnnualReport2013.pdf [Access: 6 March 2014] Chu, S., 2014. Chinese retail 2014: a changing landscape, Worth Global Style Network [online]. 24 January 2014. Available via: WGSN.COM [Access: 26 January 2014] Rumsey, A. and Saunter, L., 2013. WRC 2013: Top 10 quotes, Worth Global Style Network [online]. 24 October 2014. Available via: WGSN.COM [Access: 26 January 2014] Balmford, G., 2012. Q&A: Ray Kelvin – Founder &CEO – Ted Baker, Retail Focus [online]. 10 December 2014. Available via: http://www.retail‐focus.co.uk/qanda/1034‐q‐a‐ray‐kelvin‐ founder‐ceo‐ted‐baker [Access: 26 February 2014] Made‐By, 2012. Made‐By scorecard: Ted Baker [online]. Available via: http://www.made‐ by.org/tedbaker [Access: 26 February 2014] Ted Baker, 2014. Delivery information [online]. Available via: www.tedbaker.com [Access: 6 March 2014]