RETAIL FASHION MARKETING
CRAIG RAMSAY
CONTENTS: EXECUTIVE SUMMARY - 1 BRAND EVALUATION-1 FINANCIAL SUMMARY - 3 PRODUCT RANGE AND POSITIONING - 5 MACRO AND MICRO ENVIRONMENT - 6 CHALLENGES AND OPPORTUNITIES - 8 CONCLUSIONS AND RECOMMENDATIONS - 8 APPENDIX - 10
BIBLIOGRAPHY - 20
Executive Summary ASOS is a leading global fashion brand that has experienced great financial growth over the past four years, steadily and successfully developing into other international markets since it’s original conception. ASOS is pure play retailer, only trading in e-commerce on the Internet, thus ASOS possess’ no physical retail stores, which when analysing competition for ASOS is a great disadvantage to the brand. ASOS uses many different key strategies to position itself globally, most notably ASOS’ policies on CSR, internationalisation and digital media and communication, with a magazine being created for the brand due to the latter. ASOS has also encountered a variety of problems with implications that they cannot control, such as political and economic implication and the rise in VAT as an example. Additionally, ASOS have worked hard on trying to create an environmentally, devising ideas such as the ‘Made in Britain’ range which sources products from designers that create and manufacture in the UK, thus helping the manufacturing industry in the UK and creating jobs for numerous people and reducing carbon emission by reducing the amount of shipping. Brand evaluation
ASOS is the weakest part of the ASOS’ CSR policy. ASOS states that it works with trade unions and the manufacturing companies in order to maintain and stable and fair working environment in its factories, combining this with regional audit teams in each of nation of key supplier markets: India, China, Turkey and Romania. This is the weakest part of it’s CSR policy and it is more compliant with modern expectations than actual innovation as this policy is shared over a wide part of the market, with companies such as GAP and Primark sharing these policies, with the added addition of a code of conduct, which ASOS also have. When compared to a key ASOS competitor, Topshop, ASOS is very weak in terms of ethical trade. A primary example of this is Toyshops’ traffic light system for its factories, Green being perfect and Red being un-expectable. Due to this system, Topshop were able to shut down 26 of its factories that were working unethically, something ASOS should begin to consider in this very new and modern ethically friendly environment. In relation to ideas surrounding Sustainable Fashion, ASOS prove much stronger; ASOS have strong ties with charity fashion company SOKO Kenya, developing the product range ASOS Africa, exclusively created for SOKO Kenya.
Key Values ASOS aims to be one of worlds leading global online fashion retailers. ASOS is at the front of fashionable young clothes for the 18-25 markets, aiming to be one the leaders in digital marketing technics also. One of ASOS main values is to offer competitive prices, and to some extent low cost when analysing ASOS’ own range, on garments for the 18-25 demographic. Furthermore, ASOS value the importance image to the consumer and therefore posses a very large social networking community where the consumers are able to share there favourite outfits and be inspired by other outfits they see, thus showing how much ASOS values creativity in this younger generation. Key Strategies CSR Policies ASOS divide their policy on CSR into four sections: Ethical trade, Sustainable Fashion, Sustainable business and Community. Ethical trade policy for
An Example of the ASOS Africa collection
Money raised from this range goes towards helping developing fair employment and training programmes in Kenya and for brief period in 2011, £5 of each Africa garment sold was donated to developing eco workshops for SOKO Kenya. However, brands such as SUNO and Choolips, who also work with SOKO have been seen to do a much higher level of work in developing industry in Kenya, with both of them manufacturing and sourcing products within the Kenya community to help boost the economy and employment levels of each area, thus ASOS should once again reconsidering putting more time and effort into this part of the ASOS CSR programme, perhaps by using sourcing certain resources such as fabrics from these regions, into the Africa range. The Sustainable business and Community sections of the ASOS CSR policy are by far the strongest in comparison to the rest of the CSR policy. When compared to Topshop for CO2 emission for sustainability, ASOS have had an 11% decrease in emissions, when compared to Toyshops’ 3.9%, showing a strong advantage over competitors in the ethical market. However, this may be due to lack of a psychical stores ASOS has, thus this number could be vastly improved. ASOS’ main policy for Community is the charity, the ASOS foundation, founded and funded by the company, and the up cycling projects ASOS does in conjunction with the Princes Trust also shows strength in the Community area. However, this idea also lacks in originality as their main competitor Topshop are also involved in similar projects with I:CO. Internationalisation Branching out into the global market is a very key, and strong strategic element within the ASOS brand. Free international shipping has been an integral part of ASOS’ global strategy, showing greater innovation than other competing organisations such as Urban Inc. and Arcadia group, therefore giving ASOS the strong upper hand on the online market in comparison. In addition to this, to further ASOS’ global stratagem, ASOS offer free returns in its two major international markets, USA and Australia, furthering the apparently appeal of the brand aboard in the global market. However, ASOS is seen be showing lack of commitment in this policy to other upcoming international markets in Far East, with other competition expanding into this territory, such as Philip Green recently announcing the move
to expand Arcadia group into china, it would be wise for ASOS to consider expanding this policy to the Chinese and Far east markets.
Cover of the most recent ASOS Magazine
Communication and Digital Media Being a purely online retailer, ASOS strongly utilises digital media to its advantage. The most recent innovation of ASOS’ digital stratagem is the publication it’s magazine in a digital format for the iPad. All items seen in the magazine can also be purchased on the ASOS store, this therefore increasing the chances of purchasing by the consumer on a greater scale, and in this way, this has been a very successful strategy for ASOS as 10% of it’s overall website traffic is on mobile devices. When analysing ASOS’ use of social media, ASOS have been the first retailer to develop an online shop on the social networking site Facebook, illustrated just how strong ASOS’ digital strategies are and how they are utilising there unique selling point of being a pure play online retailer. In addition to this, ASOS have failed with there digital branch off into Twitter, with competitors such as Urban Outfitters and Topshop having a very larger portion of followers in comparison to ASOS, quite a negative prospect for a purely digital and online retailer. However, other competing brands such as Zara
and River Island have a significant lesser following on Twitter when compared with ASOS, thus the branching strategy into Twitter isn’t as strong a fail as it could have been. Financial Summary (All figures taken are from ASOS are from the reclassified figures in the company report)
ASOS are a brand that has experienced a dramatic increase in growth over a three-year period as with a 49% increase in after tax profits form 2011 to 2012 alone. In addition to this an increase in overseas sales by 104% conveys how ASOS is now becoming a larger player on the international markets, showing how ASOS are combatting threats from other company’s, such as Arcadia Groups, expansion into the new Far East market. When analysing the competition, particularly Urban Outfitters in terms of online sales, ASOS’ figures are dramatically better, illustrating how the ASOS is truly utilising it’s unique position of being a pure play retailer. However, when comparing profits before tax, River Islands’ figures may have dropped by 25%, but there figures are still considerably higher than ASOS’, thus conveying that ASOS need to find other methods gain more sales from the lack of advantage they have in not having any form of retail store. In relation to the broader market, ASOS are following the current 4.2% consumer rise in spending on clothing and footwear, showing how ASOS are growing naturally as the market begins to increase and recover from the recent recession.
Product Range and Positioning In terms of ASOS’ own collection, the range is board and varied for both men’s and womenswear with strong accessible prices for the 18-25 market, the average opening price point for womenswear being £9.50 and the highest price point £84, and £17.50 and £57 for menswear respectively. In relation to this in terms of other competitors in this market (see figure 1) ASOS proves much stronger than Zara, who’s opening price point for women’s tops is £19.99 where ASOS’ is £9.50, thus conveying that ASOS have the upper hand over this competitor in terms of pricing. However, Zara also has a much broader range of target market, with some consumer being part of generation X, meaning that Zara does not need to completely draw the focus on this younger market, unlike ASOS. ASOS also use strong promotional pricing strategies in order to keep up competition in the market, frequently putting on promotional offers and mark down sales, something which Zara as a brand, does not frequently do, partly due to higher image and calibre the brand holds In addition to this, ASOS also encompasses a much wider choice of product than Zara, which would
therefore draw in more consumers, but ASOS also has a higher price point of £90 for there range of women’s tops, when Zara’s is £69.99. This illustrates weakness in ASOS’ method of pricing as higher pricing isolates the 18-25 market due to the lower incomes of this age group. However, ASOS proves more apt at making the price of there product range more appealing to the 18-25 market than competitor Urban Outfitters, whose highest price point it is £435, therefore furthering the mark of ASOS being a market leader to this age group. When analysing the width of ASOS’ own brand range with primary competitor Topshop, ASOS control wider product range. This can chiefly be conveyed in the selection of dresses for both companies womenswear collection, with ASOS’ having 718 styles, where Topshop only has 643, once again conveying the strength ASOS’ is building up over competitors in attracting consumers with the main obvious disadvantage of not having any actual retail stores. Furthermore, both brands have sub brand ranges for petit and plus sizes, conversely, ASOS also have the ASOS Africa range, a range designed in joint with SOKO Africa for charitable consumers, showing how ASOS are using there product range to tap into the new conscious ethical mind growing in the 18-25 market.
Economic – The governmental increase on VAT from 17.5% to 20%, means retailers are losing more profit to taxation than before, and are often unable to raise the prices of products due to fear of losing customers to higher prices. In addition to this, the predicted decline in oil prices (See Appendix 4) would therefore mean that shipping costs of products would greatly decline, thus allowing two options for the retail market: to drop there costs and make the products on sale cheaper for the consumer, or to allow the prices to remain at the same price, and earn a larger profit margin on each garment on sale.
PESTLE Analysis
Social – According to the office of national statistics, there has been a rise of 4.2% in consumer spending for the year of 2012. This is most likely due to the rise in average yearly salary of 1.4% to £26,500 (See Appendix 3 ) meaning that people have a vaster disposable income than that of four years ago during the period of recession. Furthermore, full time male workers are earning up to £5,600 more than their female counterparts. This relevance is stated by Mink Rath in ‘The Why of the Buy’, where she speaks about the idea of meterosexuality, in which the male market is now a lot more fashion aware than the older generation: ‘Younger men clearly more interested in taking care of themselves than their fathers...metrosexuality has become widely accepted by the masses’. This wage difference therefore impacts the market as male fashion consumerism is becoming a much wider
Political – A variety of issues in the current political climate will directly the current retail market. A primary factor is the recent government issued report by Mary Portas in how to improve the current British high street by using a varied form of different ideas to increase revenue in the British retail market. This report poses a direct threat to online retailers such as ASOS as it should reduce the amount of online retail in the UK, and could work strongly in favour of other retail competitors by increasing the revenue in their highstreet retail shops, and could therefore damage the current UK online market. In addition to this free trade agreements in the EU illustrate positive opportunities to increase profit for all retailers who deliver to EU countries from the UK as tax on shipping and other costs is waved, meaning that retailers such as ASOS are able to gain a higher profit from there EU markets.
Mary Portas - founder of Portas Piloit scheme
MACRO and MIRCO Environment Analysis
market. Technology – Development in technology is now a major factor affecting the retail industry. One primary threat to retail stores is the development of smart phones and 3G, which now allows the consumer to access the internet anywhere, this is threat as it allows the consumer to browse for other products online which may be similar to one the retailer may sell for a cheaper price. However, this method works in favour for the growing online retail market, which are also developing technologies to give similar shopping experiences to that of standard retailers. An example of this is the development of online virtual mirrors that allow the consumers to see the garment of product on themselves digitally before they purchase, thus almost removing a major disadvantage of online
have a significant amount of workers under the legal age of working in these nations, something which most always be highly monitored, especially due to the high rise in more ethical fashion sourcing. Environmental – The environment is strongly becoming one of the most important factors in the retail and fashion industry today, with more and more consumers being very aware into how product is sourced and how companies are using CSR to create a sustainable and eco-friendly source for it’s product. Most retail companies are now taking active control to reduce carbon emissions (See key strategies – CSR) in order to gain a strong footing in this new eco-aware market. An example of this new effort can be seen in the ASOS made in Britain range, where garments and product are being sourced from companies that source all products locally within the UK, Kinky Knickers being an example, as this shows less exploitation of the resources of other poorer nations and reductions CO2 emissions vastly due to how the product does not have to be shipped half way around the way to reach the delivery depot. shopping. Micro Analysis Supply Chain
Raybans Virtual Mirror
Legal – Legal issues surrounding the current retail market mainly lie within the supply chain of industry. These issues mainly reflect in the working conditions and age of employees in the nations where a majority of the manufacturing process takes place with many working lying about there age in order to work and earn money to support there under privileged families. It is the company’s responsibility in order to make sure the factory maintains these policies and check the age of the said person in a more in-depth manner. A past example of this is the BBC investigation where the well known brands Nike and GAP were found to
ASOS has an excellent supply chain, being short listed for the supply chain excellence award in the retail category in 2012, thus illustrating how ASOS is a strong retailer in relation to maintaining a high level of stock, a crucial part of being a pure play retailer. However, due to the abolition of the WTO multi-fibre agreement, concern could be raised into the ethical implications of the brand in terms of exploiting the workers to order to maintain such a high standard of constant supply. This point can be seen clearly into the lack of policy that ASOS have implemented into there overseas factories which is very clear when compared with the Arcadia Groups traffic light system, thereby conveying to the consumer ASOS may very will be taking advantage of the workers in there own factories. As Jackson and Shaw state in ‘Mastering Fashion Marketing’ : ‘The fashion consumer is unforgiving of poor style, design, quality and value’ .This idea is highly relevant to the fact that ASOS mostly work with other designers and brands in its supply chain,
and are therefore not in control of a majority of the early stages of the supply chain, and thus take risks in not having control over the products from first stages, meaning they is the possibility of entering partnership with a brand that may not be producing goods up the high standards of the consumer and that may not potentially be high sellers for ASOS. Internationalisation According to Jackson & Shaw’s’ ‘The Fashion Handbook’ : ‘International fashion markets can be distinctly different in terms of consumer demand, competition and market infrastructure’. Relating this piece of information to ASOS, it helps to convey how highly concentrated the product range directly bought and marketing to more of the western market than that of the eastern market. This shows a large problem to ASOS as a brand due to the recent mass migration of a majority of brands to the far eastern market, as this is the fastest current growing market globally, with competitors such as Topshop and River Island looking to expand into these markets. ASOS has the ability to obtain a faster hold of this market than other competitors as it is purely an online retailer, meaning that I does not need to wait for the construction of retail shops to make a strong entry into this market, and would therefore be wise for ASOS to examine this environment and begin develop product ranges highly sort after in this market, thus gaining a stronger holding in the far east than other competitors. Future Challenges and Opportunities ASOS have a number of issues to overcome in the fourth coming years in order to maintain its position as a global leading fashion retailer. Firstly, the aging population of its main UK market (See Appendix 6&7 ) means that ASOS’ primary target market of 18-25 is, and will carry on to grow smaller as the years progress, meaning that there is a high chance of ASOS losing what could become a significant amount of money due to the eventual decrease of this market. However, this gives ASOS a unique opportunity of developing a product range for the 30-40 markets therefore broadening the reach of ASOS as a brand and creating a better rounded age friendly brand, with the reputation among the younger market to still be able to maintain them as customers. Jackson and Shaw state: ‘The higher
the total household income, the more likely the consumer is to have disposable income’. This point reflects a key opportunity for ASOS to gain higher profit from consumers in the 30-40 demographic as there is a higher chance of two incomes coming into one household, meaning that they are willing and able to spend more money than the younger market who are often surviving off of one income. Secondly, the Mary Portas government report poses a direct threat to ASOS. This is mainly due to the fact that this report is focused on improving the UK highstreet and to encourage to consumer to shop more on the highstreet and has already been put into development with the creation of ‘Portas Pilots’, failing highstreets currently testing her ideas to see if would realistically work. This poses a threat to ASOS as it is trying to encourage the consumer to not shop online, therefore damaging the market share ASOS currently holds in the retail market for 18-25 year olds, furthering the primary disadvantage of not having a retail store. In addition to this threat, the increase of VAT means an increase of prices to the ASOS consumer, which already can be classed as one of the least wealthy, meaning that this could pose a loss of profit to ASOS. However, this point can also be challenged by the predicted drop oil prices for 2013, which would create the opportunity to implement a new lower price strategy in order to combat the VAT increase for the ASOS consumer. According to Jackson and Shaw in ‘The Fashion Handbook’ : ‘Japanese consumers regard European products as superior to those in the East’. This statement clearly presents ASOS the opportunity to begin to expand the brand in this global region in order to over come further challenges in the western market, primarily the soon to be aging population. This would also give ASOS a firm holding as a global fashion brand, therefore giving the brand a much higher standing on the international retail stage. Conclusion and Recommendations Overall ASOS is a very strong pure play retailer with a good hold over its target market, proved by its continuous economic growth and extreme growth in the past year into the international markets. However, there are three key points and strategies that ASOS can implement in order to strengthen the brand as a retailer and to further threaten
the competition. The first recommendation is to combat the primary disadvantage of ASOS only being an online retailer without having a physical retail store. This recommendation is for ASOS not to open a retail store, but to open digital retail outlets in department stores, such as Selfridges. These outlets would be large cubes with computer touch screens in each side of the cube, each showing the ASOS’ online shop, thus allowing consumer who are shopping in said retail store to also look at the products that ASOS are selling, thus giving ASOS a more level playing field. In addition to this, to utilise ASOS’ main strength of being a strong digital retailer, within the centre of each of the cubes, virtual mirrors will be installed in order to allow the consumer to try on the garments and get a visualisation as to what they will look like on the consumer. This thereby mimics the actual retail shopping experience, but also allows ASOS to remain as pure play online retailer and will also put ASOS on the front digital technology and working on its strengths, rather than opening a conventional retail store as this could create a high risk factor for ASOS as ASOS would be venturing into a highly competitive market, whereas small digital outlets creates a very powerful unique selling point for the brand. The second recommendation for ASOS would be improvement on the ASOS CSR policy. This can be done in a variety of ways. In order for ASOS to gain a higher level of ethical manufacturing, ASOS should being to adopt the traffic light policy as used by Topshop in order maintain a high level of ethical and legal treatment for factory employees. This idea will also begin to draw in a greater range of ethical consumers, due to the high level of publicity unethical treatment in fashion manufacturing, the fashion consumer has started to become a lot more wary of were the garments are produced and how. In addition to this, to increase the ASOS Africa range is another way ASOS can improve its brand. A primary idea is to follow the current trend of hightreet combining with designer, to create affordable ranges with famous names. The main designer in mind is Katherine Hamnett who is know to be a large producer of ethical product, all her materials being sourced from fair trade means. Additional, her famous slogans can also be altered to reflect the ASOS Africa project, thereby giving the project a much more diverse message and originality.
The final recommendation for ASOS is the continued expansion into the international markets. A way to begin two attract different markets, with particular concentration in the far east, is to create a new exclusive ASOS range for this region taking inspiration from traditional far eastern and modern western design called ASOS Harajuku, named after the district in Tokyo famed for its eccentric fashion. Making the range exclusive to this region is also for promotional purposes as, according to Maslow’s theory of self-actualisation, it will create a feeling of superiority to the dominant western market for the Far Eastern consumers. This range will also help the new consumer relate more to ASOS, as it will forecasts fashionable ideas that they understand rather than intimidating the Far Eastern consumer who has only recently began to shop it international high street brands, not luxury. Yohji Yamamoto would be a designer to primarily colaborate with in this collection due to high standing reputation in the east and west, and could be used a key promotional
Harajuku District - Tokyo
Topshop - £150
Urban Outiftters - £435
ASOS - £90
River Island - £90
HnM - £29.99
Zara - £69.99
Appendix
Figure 1 - Like for Like
Topshop - £8
Urban Outiftters - £15
ASOS - £9.50
River Island - £8
HnM - £3.99
Zara - £19.99
Topman - £14
Urban Outiftters - £35
ASOS - £18
River Island - £20
HnM - £14.99
Zara - £19.99
Topman - £170
Urban Outfitters - £110
ASOS - £32
River Island - £60
HnM - £24.99
Zara - £59.99
Figure 2 - Competition
Low Price
Primark
HnM
High Fashionabilty
ASOS River Island
Low Fashionabilty
Topshop
Urban Outfitters
Zara
Net-a-porter
High Price
Figure 3- BBC Wage article Average earnings rise by 1.4% to £26,500, says ONS Pay rises fastest for the wealthy UK economy sees return to growth Incomes 'down 13% in four years' The average annual earnings of full-time workers in the UK rose by 1.4% to £26,500 in the year to April 2012. The figures have been published by the Office for National Statistics (ONS) in its annual survey of hours and earnings. There was a cut in the real value of pay, however, as inflation was higher during the same period, at 3.5%. And the ONS data also reveals that inflation has outstripped the rise in average pay for the past 12 years. The survey results show that since April 2000, average annual pay for full-time workers has risen by 40%, from £18,848 to £26,500. In that time, inflation, as measured by changes in the retail prices index, has gone up by 43%. However, the trend has accelerated in the past five years since the onset of the international banking and financial crisis, the consequent recession in the UK and the imposition of austerity measures by the government. In just five years since April 2007, prices have risen by 18%, while average annual earnings have gone up by just 10%. That has left wages and salary increases lagging behind inflation by 8% in just five years. Stagnant progress The pay gap between men and women shrank in the year to April 2012, from 10.5% of men's full-time hourly earnings to 9.6%. The ONS said the shrinkage of this gap continued the trend of the past few years. Full-time male workers earned on average £28,700 in the year, while women earned £23,100, a difference of £5,600. Among part-time workers, though, most of whom are female, the position was reversed. Looking at their weekly earnings, female part-timers earned on average 8% more last year than their male counterparts, with women earning an average of £158 a week and men £146. Looking at their hourly pay rates, part-time women earned 5% more than their male counterparts, at £8.12 an hour compared to £7.72 an hour. The TUC's general secretary, Brendan Barber, said: "The pay gap between full and part-time workers is actually getting worse." "This is terrible news for the millions of people who need to work part-time to balance work and caring responsibilities, or who simply can't find full-time jobs," he added."
Daisy Sands, of the Fawcett Society, said progress in closing the gender gap had become slow and stagnant. "In an age of austerity and declining living standards it's more important than ever that we tackle it," she said. "We are concerned about plans on the table that will worsen an already difficult situation for women - moves to regionalise public sector pay and plans to enable workplace rights to be "sold off " via the employee ownership scheme could all impact negatively on the pay gap." Public and private The ONS survey found that the average weekly pay of staff in the public sector was still noticeably higher than for staff in private sector employment, despite the government pay freeze on most employees in the public sector. Full-time staff there saw their weekly pay rise by 1.6% to £565, while those in the private sector saw their earnings go up by 1.5% to £479. The ONS said the long standing difference in pay levels was due to the preponderance of low-paid jobs in the private sector and the concentration of better educated workers in the public sector. "Consequently, differences in gross weekly earnings do not reveal differences in rates of pay for comparable jobs," it said. "For example, many of the lowest-paid occupations, such as bar and restaurant staff, hairdressers, elementary sales occupations and cashiers, exist primarily in the private sector, while there are a larger proportion of graduate-level and professional occupations in the public sector," the ONS added. Low pay Average weekly earnings were highest in the London region at £653 and lowest in Wales at £453. In districts around the UK, the highest average full-time earnings were in the City of London, at £917, while the lowest earnings were in Torridge in Devon, at just £348 a week for full-time employees. The ONS survey found that in April this year, there were 287,000 people in jobs paying less than the national minimum wage, who amounted to 1.1% of all workers in the UK. However, it warned that this did not mean they were all being paid illegally. "This is because it is not possible to determine from the survey data whether an individual is eligible for the minimum wage," the ONS said. "For example, it is not possible to identify people such as apprentices and those undergoing training who are exempt from the minimum wage rate or are entitled to lower rates. "In addition, if employees receive free accommodation, employers are entitled to offset hourly rates," the ONS added.
Figure 4- Forbes Oil Article Oil Price Forecast for 2013-2014: Falling Prices 9 comments, 8 called-out Comment Now Follow Comments Oil prices are headed down, and I mean down at least $20 a barrel. The key reason is that prices have been high. It’s not a paradox, but a result of the long time lags in oil production. Oil prices were fairly stable from 1986 through 2001, averaging just $20 per barrel. Then prices started rising, spiking to $134 just as the recession began. The price of oil has been above $80 for the past two and a half years. With rising prices has come a dramatic increase in exploration activity. During the era of low prices, the number of drilling rigs in operation around the world was 1,900 on average; now we are at nearly double that pace, and we have been for nearly three years. Drilling activity results in oil production, lasting for many years after the drilling is over. Take a look at the accompanying chart of drilling rigs and total production. Drilling jumped up after the oil price hikes of 1973 and 1979. By 1986, increased oil production brought prices crashing down. Oil exploration quickly followed suit. Production, however, continued to grow long after new drilling declined. When drilling was high, much of the activity was exploratory—trying to find the oil. When prices fell, the riskiest drilling made no sense. What was left was in-fill. The oil field had been identified, and further wells were needed to best utilize the resource. These wells are fairly low risk, with high rewards compared to the cost of the drilling rig. As a result, even low levels of drilling activity led to substantial increases in global production. Today we’ve had moderately strong drilling activity for several years. New fields have been identified and delineated. Now we’ll see fairly mild drilling activity but continually increasing production. In the past year production has been soft, barely growing, but that’s a reflection of weak demand. In the short run, production can be dialed back to save more oil for the future. In the long run, though, production capacity rules the roost. What of demand? Demand should grow a little slower than the global economy. Unless the world starts to boom—an unlikely scenario, given problems in Europe and the United States—production capacity will grow faster than demand, pulling prices down. What of peak oil worries? The concept is often sound when looking at one well—but even a single well will sometimes be re-worked to increase its output. For the world as a whole, the peak oil theory fails to consider that higher prices lead to greater exploration for new oil fields, greater in-fill drilling of established fields, better care of older wells, and development of new technology for all of these functions. The world’s oil production will peak when the cost of finding new oil rises and the development of alternative energy makes the value of oil decline. Over the coming few years, look for oil prices to decline at least below $80 a barrel and quite possibly more.
Figure 6 - Age Graph
Figure 7 - BBC Age Artice The first figures from the 2011 census have been released and show there has been a huge increase in the population of England, Wales and Northern Ireland. The census - carried out in March last year - found there were 53 million people in England; 3.1 million in Wales; and 1.8 million in Northern Ireland. It also revealed there were 33 times as many people over 90 as there were a century ago. Here's a round up of what the first England and Wales data reveals. UK-wide census-based population estimates, including Scotland, will be released in December 2012. More people The population of England and Wales has risen by 3.7 million in a decade, up to 56.1 million, the census shows. It is the largest growth shown by any census since they began in 1801. The growth was fuelled by increased life expectancy, a rise in fertility rates and migration, the Office for National Statistics (ONS) said. Ageing population The figures also indicate the population is ageing, with the median age rising to 39 in 2011 from 35 in 2001. The percentage of the population aged 65 and over was the highest seen in any census at 16.4% - or one in six people. The number of people over the age of 90 also went up. There were 430,000 residents within their 10th decade in 2011, compared with 340,000 in 2001 and 13,000 in 1911.
The census showed that higher percentages of people aged 65 and over lived along the coast of England, in the south west, south east and east. Eastern European emigration European population growth between 2001 and 2011 differed greatly between countries. While some, such as Cyprus, Ireland, Luxembourg, Spain and England, saw big increases, others, mainly in eastern Europe, experienced population losses. Latvia, Bulgaria, Lithuania, Romania, Hungary, Estonia, Germany and Poland all saw their populations decrease.
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