MASS MARKET LEVEL by Anamaya K

Mass

Market

Mass REPORT FASH30014. 16.11.2020

Market ANN KENDI KINOTI N0948597

Contents 01

02 03

INTRODUCTION

MASS MARKET CHARACTERISTICS

WHAT IS CURRENTLY IMPACTING THE MASS MARKET

04 05

SIMILARITIES AND DIFFERENCES ACROSS RETAILERS/BRANDS WITHIN THEMASS MARKET

COMPETITOR ACTVITY

MACRO & MICRO FACTORS INFLUENCING THE MASS MARKET LEVEL

07 08 09 10

INTERNATIONAL VARIABLES AND THEIR IMPACT ON THE MASS MARKET LEVEL

IDENTIFIED PROBLEMS, SOLUTIONS AND OPPORTUNITIES

CONCLUSION

REFERENCES AND BIBLIOGRAPHY

HAUTE COUTURE

COUTURE

Introduction The

READY TO WEAR LUXURY COLLECTION

international

fashion

retail

environment

involves the sale of fashion products or merchandise for individual consumption; either from a fixed location such as a specialty store, departmental store or stall, or through wide-ranging online networks

HIGH END DIFFUSION BRIDGE BRANDS

(Global

fashion

retailing

market

2016).

This

environment is highly competitive consisting of several international retailers /brands, and can

MASS MARKET HIGH STREET AND ECONOMY Figure 1. Fashion market levels ((Fashion market levels)

generally be segmented into different market levels: Haute Couture, Luxury, High end, and Mass-market (Figure 1-Fashion market levels). Mass-market is positioned at the lowest level of the fashion market hierarchy, thus forming the basis of this report.

According to (Mass-market fashion retailers 2019), the mass-market retailer’s business models are based on high sales volume and consumer traffic with low margins. Notable brands in this market level include H&M, New Look and Primark. The key attributes of the mass-market products are newness, convenience and affordability. Under the findings section, this report attempts to explore what is currently impacting the fashion mass-market level, similarities and differences across retailers/brands within the market level and retail sector, competitor activity within the market level, as well as the macro

micro

influencing

factors.

addition, the report identifies a number of international variables impacting the fashion mass-market.

CHARACTERISTICS OF THE MASS MARKET LEVEL

Market Value

100

Mass Market is the home of fast fashion and mass production. It works efficiently to get trends from sweatshop to store front thus being able to send garments from the design process to purchase

in just two weeks, with exponential growth in the coming years as shown below. (Figure 2. © Statista 2020) In 2019, the global market value of fast fashion was 36 billion U.S. dollars (www.ststista.com) According to Hitwise data, fast fashion retail (compared to mid, premium, and luxury brands) accounted for

66% of all online fashion traffic in the first half of the year. The McKinsey Global Fashion Index forecasts overall fashion industry also identified a growth of 3.5 to 4.5% in 2019(econsultancy.com ›four-factors-fueling-the-growth-of-fast-fashion)

(Figure 2. © Statista 2020)

2009

2019

2029

BRANDS

CUSTOMER

High-street brands within the mass market level are numerous but here are 3 examples: H&M, Primark and New Look. The brands own a wide collection of stores featured in the UK highstreets and around the globe.

MALE A F The consumer in the Mass Market level consists largely with women in the age bracket of 14-30 with diverse range of shapes and sizes. This level also consists of customers who want on trend fashion items at affordable prices .

AGE AGE

PRICE RANGE

14 - 30 Entry prices vary for each shop as they cater for a different niche in the mass market level. However basic t-shirts all retail below £10 with the highest priced garment valued at £40. The prices are low due to the

£10 - £40

manufacturing of the products in bulk. this therefore leads to low quality and short lifespans of products making this the least environmental friendly fashion market level.

WHAT IS CURRENTLY IMPACTING THE MASS MARKET LEVEL

Figure 3.

The Covid-19 pandemic is having a great impact on the fashion mass- market level. Undoubtedly, many factories associated with this market have been shut down indefinitely and workers laid off. The crisis has disrupted the supply chain and massively affected many fast fashion stores. According to (Impacts of COVID-19 on the fashion industry 2020) H&M has recently announced it will be closing around 70% of its stores worldwide. It has been estimated that before the Covid-19 pandemic, about 80% of transactions in the mass-market took place in physical stores. The closing down of manufacturing plants, malls and retail stores, so as to stem the spread of the coronavirus has caused demand to plummet. According to (Global fast fashion market report 2020), the global fast fashion market is expected to decline from $35.8 billion in 2019 and to $31.4 billion in 2020 at a compound annual growth rate (CAGR) of -12.32%. The decline is mainly due to economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. Online marketing, social media platforms, celebrities and influencers are directly helping to increase consumer awareness of the matter, thus aiding its expansion. Also impacting the mass market level is the growth in ecommerce. This has assisted in the growth of sales within the market. For instance: • H&M reported online sales jump of 36% between March and May, 2020. Conversely; there has been a plummet in sales for brands that lack an online shopping service such as Primark. According to (theguardian.com 2020), Primark lost £800m with profits expected to tumble by two-thirds this final year. Despite this, the COVID-19 lockdown has also brought about an increase of sales within the Mass Market level, for instance: • Primark has opened 5 new stores since the beginning of March 2020 and plans for 5 additional outlets in the next few months as claimed by John Bason; the finance director of ABF. Primark has continued to ring up sales at a stronger level than last year. Therefore, an analysis of the afore-going information shows that COVID-19 has and still is; having serious repercussions on the mass-market level. Although the fashion mass-market brand retailers may have seen a deep fall in purchases from their retail stores, this fall is being compensated by the growth of e-commerce.

Diffrences Similarities The brands and companies within the mass market level have similarities that generally, include: • A wide range of products offering newness, reduced prices and convenience. This is largely achieved by adopting a number of key business

models

including

the

Quick

Response

Manufacturing (QRM), Low Cost Model(LCM) and the e-commerce Business to Consumer(B2C). The fashion mass-market is now being supported by the QRM model that facilitates short production–todelivery lead times. This ensures the availability of new products that keep drawing consumers back. The market is also benefiting from the (Low Cost Model) LCM. This is a business strategy where business organizations offer lower costs for their services or products to attract high demand as a result increasing their market share (Low cost model 2017). In addition, the adoption of e-commerce Business to Consumer (B2C). The fashion mass-market retailers

Crucial differentiating factors that exist within the mass market level include: • Marketing strategies • Cost of production • The buy cycle

The Mass-market is driven by the marketing strategies adopted by the retailers. They need to use effective online and off-line marketing tools and strategies that will drive consumer visits to their stores, increase brand awareness and consequently; ensure consumers purchase products frequently. For the retailers the differences lie in: • The amount of financial capital available to support the marketing strategies. • The ability to offer something fast at a low price which will be affected by the cost of production. • The efficiency of the supply chain. The ability of the mass-market fashion retailer to understand the consumer behaviour is crucial so as to comprehend and shorten the buying cycle to determine the sales volume and profit levels.

are able to conveniently sell their products and services directly to the consumer. (Understanding the business-to-consumer (B2C) model 2019).

Competitor Activity within the Mass Market The fashion mass-market is well-established in the fashion industry with several brands such as; H&M, Forever 21, Gap, Primark, Miss Selfridge, New Look and Cotton On in fierce competition. The business strategies that these fashion enterprises have followed to successfully reach their positions in the international retail market could better be understood by analyzing their competitive environment or the competitor activities. For this analysis the researcher

INDUSTRY

uses Porter’s Five Forces of Industry Competition Model. Figure 4. (Porter’s five forces 2013).

RIVALRY

THREAT OF POTENTIAL NEW ENTRANTS Currently, the threat of entry of new competitors may be weak. This can be attributed to entry barriers such as: Licensing fees, Statutory regulations and Potentially heavy initial investments.

THREAT OF

THE BARGAINING POWER OF BUYERS The bargaining force of most buyers is weak. Mass-market consumers are mainly individuals who do not have sufficient bargaining power to influence in their favour. The terms and conditions under which they obtain product and services from the retailers.

ENTRY

BARGAINING POWER OF BUYERS

BARGAINING

THREAT OF

POWER OF

SUBSITUTE

SUPPLIERS

PRODUCTS

THE BARGAINING POWER OF SUPPLIERS The bargaining power of suppliers to the fashion mass-market is weak. The players in this market have the ability to source from an array of substitute suppliers, mostly under their terms and conditions. THREATS OF SUBSTITUTE PRODUCTS To the dominant retailers in the mass- market, the competitive threat posed by substitute clothing product is real. This is because the substitute products may be readily available, attractive, and have comparable or better features.

Figure 4. The five forces affecting industry competition ((Porter’s five forces 2013)

THE RIVALRY AMONG COMPETING SELLERS IN THE INDUSTRY The fashion mass-market retailers have relatively many suppliers for the wide range of products they offer to their customers. This means, the bargaining force of suppliers may be only moderate. From the competitor analysis the likely winners include: Suppliers, Distributors, Retailer’s, Designers, Consumers, Digital media and E-commerce platforms. The likely losers include: Product quality, the environment, General population, Business shareholders are also likely losers as falling business profits means reduced earnings and The government because it seemingly collects less tax when profits for enterprises fall.

s i s y l a n A l e t s e P MACRO FACTORS INFLUNCING THE MASS MARKET

olitical factors include political stability in the target market, country, foreign trade policies, tax policy, trade restrictions and corruption.

conomic factors include the level of the disposable income of the consumers, inflation and exchange rates.

ocial factors include consumer buying habits/trends such as the BLM movement and more diversity and inclusivity within the industry, lifestyles and ethical concerns such as sustainability.

echnological factors include: level of innovation, access and utilization of new and emerging technologies in design, production, marketing and distribution.

nvironmental factors include climate, weather, environmental policies, availability of raw materials, geographical location of markets and their accessibility, pollution, business ethics and sustainability.

egal factors influencing the market are: consumer rights protection laws, employment and labour laws, all will influence the fashion mass-market the most.

MICRO FACTORS INFLUNCING THE MASS MARKET The micro-environmental (internal) factors influencing the market include: customers, employees, supply chains and distribution networks, competitors, and investors, the public and media but not limited to them. These factors are briefly analyzed below. Customers are the central influence to the success of any business. Businesses in this market should therefore, spare no effort to strengthen their customer engagement. Employees play a critical role in driving the productivity of fashion mass-market enterprises.

Supply chain and distribution networks - at the very least, efficient supply chains and distribution networks will help them reduce their operating cost and improve operational efficiency. Competition in the fast fashion market has the effect of lowering the market share of enterprises involved. The level of competition has a major impact on profits. Shareholders and investors greatly influence the growth of many businesses, including those in fashion mass-market. Public and Media- Brand image in fashion mass-market is crucial. It can decide a company’s fortune in the market. Good brands that are continuously improving succeed in consistently attracting customers. Lost reputation due to poor image of a brand in public, main and social media platforms can be extremely difficult to regain.

International Variables and their Impact on the Mass Market The international variables that influence the mass-market include; geographical locations and accessibility of markets, consumer type, climate, body shape and cultural variables. Apparently, all have an economic impact on the market. Below is a brief analysis of the variables. Geographical locations and accessibility of markets- the consumers of mass-market fashion are located far and wide, in all continents around the word. See Figure 5. Efficient and effective supply chains and distribution networks- will be paramount in ensuring availability of products, frequently and at low prices. Consumer types- it is necessary to put into account the type of consumer and their behaviour; as this will impact the product design and production process as well as the deliveries to the stores. Climate-atmospheric conditions, for instance; temperatures and rainfall and weather seasons will impact on the designs, production and availability of trending fashion in various geographical locations. Body shape-creativity and innovation will be needed to design and produce a wide range of products for the various body shapes, especially for women and girls. Cultural variables-the cultural variable in relation to the mass-market consumer may include gender, age, religion, education, family, social organization, values and attitude. In order to address the consumer demands against the background of the varied cultural variables the fashion mass-market enterprises must be innovative and keep abreast of the latest and relevant technologies.

Figure 5. Global shipping routes n.d. (Nicholas Rapp's global shipping routes map, highlighting the sinews of commerce .

Identified Problems, Solutions and Opportunities PROBLEMS Forced child labour Forced labour of illegal immigrants Low wages Poor working conditions Landfills Air pollution Water wastage

SOLUTIONS Improvement of labour laws Use of environment friendly materials Repairing of clothes rather than replacing Less washing of clothes Rewriting rules and regulations governing the fashion industry Buy less, instead buy second hand or quality products

OPPORTUNITIES Creation of new jobs Transparency Workshops for enlightenment Shifting focus to fashionable and more functional pieces Renewable Energy Programs Re-commerce Upcycling Collaborations

CONCLUSION After analyzing the mass-market level home to fast fashion; it can be highlighted that it is well established in the international retail industry. The global fashion industry has many issues related to environmental degradation and social values related to business ethics. The impact of the macro or external factors, commonly known as PESTEL factors, that are influencing the fashion industry need to be vividly understood by the mass-market industry players to enable them carry out their businesses ethically and in an environmentally friendly way to ensure sustainability. Similarly, the factors are needed to ensure improved performance and productivity of the fashion industry. Technology is currently playing a very crucial role in the marketing strategies of the mass-market products, with on/off –line marketing and e-commerce helping to directly increase consumer awareness and competition among international fashion retailing industry players. Businesses in the global fashion industry have to be innovative and adaptable in order to cope with the new issues and emerging phenomenon’s such as COVID-19. It is now apparent that a brand image that is based on ethical business practices and the provision of environmentally friendly products is more likely to survive the fiercely competitive global fashion industry.

REFRENCING AND LIST OF BIBLIOGRAPHY

LIST OF ILLUSTRATIONS Figure 1. Fashion market levels ((Fashion market levels) Figure 2. The five forces affecting industry competition Figure 3. Is It Time To Invest In This Mask Accessory? Figure 4. The five forces affecting industry competition ((Porter’s five forces 2013) Figure 5. Global shipping routes n.d. (Nicholas Rapp's global shipping routes map, highlighting the sinews of commerce .

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