Executive Summary
This report entails an evaluation of the retailing industry in the United Kingdom. The report takes into account two main companies which include Disney Store and Hamleys Toy Store. It evaluates a number of retailing concepts. Some of these include an analysis of the macroenvironment, microenvironment and competitive environment. In analyzing the macro and microenvironment, two main models were analyzed which include the PESTLE and Porter’s five forces. An illustration of the retailing strategies that the two firms have integrated in an effort to deal with competition and the environment has been discussed. The report also integrates Martineau’s theory in analyzing how the firms are committed to the development of their competitive advantage. Some of the elements considered include the store ambiance, layout, displays, merchandise, communication and overall store ambiance. Additionally, the positioning strategies of the two companies are evaluated in order to assess their operational efficiency.
The evaluation explains the depth of each stores’ distinct features that capture the consumer’s need. This reflects the evaluation of the retail strategies and highlights the way each retail store strategizes towards the competitive environment and adapts to the changing needs. The retailer’s implementation is likewise discussed as part of the main operational issues of the retail stores. The competitive positioning is identified to be able to come up with a substantive evaluation and analysis.
Introduction
This report presents the assessment of business activities of two famous retail firms in the UK, Disney Toy Shop and Hamleys Toy Shop. Secondary methods of data collection by conducting desk research and store visits will be used. The report aims at exemplifying the competitive situation of Disney and Hamley’s retail stores. It presents the effects of the market environment and its impact on the consumers by the use of theoretical references as well as practical experiences. The report will examine the strategies implemented by the two retailers in an effort to attain a high competitive advantage. The report attempts to accomplish an examination of the strategies used by the stores and compare them to prevailing theories and guidelines regarding retailing and consumer decision-making processes. It is assumed that through this investigative study, a revelation regarding the success of each store in terms of being able to capture its target demographic in light of the methods and processes it uses in order to accomplish this.
Competitive environment
Considering the lucrative nature of the toy industry, a large number of firms have ventured into the industry. The ease of entry has made the industry to be highly concentrated (Spark & Burt, 2003, p. 47). The UK toy industry has experienced a significant decline in its growth due to a decline in the population of children (Santander, 2012, para. 1). The sectors’ competitiveness is also enhanced by the existence of large retailers, online retailers and non-specialist stores (Spark & Burt, 2003, p.47). Hamleys faces intense competition from a number of firms such as ASDA Group Limited, Build-A-Bear Workshop Incorporation and Amazon.co.uk Limited (ABI, 2012, p. 2). Firms dealing with toys are also facing a threat emanating from increased competition from other forms of entertainment such as the internet and television (Worthington & Britton, 2006, p. 34). Despite the competitive nature of the UK retail sector, the emergence of new technologies such as online shopping has presented these firms with a unique opportunity for to enhance their competitiveness (Kurtz, MacKenzie& Snow, 2009, p. 53).
The Disney Store Retail Strategy Analysis
Disney store has integrated a number of business models and strategies that are aimed at maximizing revenue hence its competitive advantage. Some of these models entail ensuring effective inventory management, attaining economies of scale and improving the firm’s operational efficiency (Chakravorti, 2012, p.66). The firm has also adopted the concept of product diversification. In an effort to attain a high competitive advantage, Disney ensures that its products are in line with the prevailing market trends (Disney Store, 2012).In most cases, consumers purchase products associated with the latest and popular cultural trends.
Disney has incorporated an effective retail mix as evidenced by a number of elements such as the store’s overall layout, color, sales personnel and symbols.
Disney has incorporated emerging technology in an effort to enhance its competitive advantage. The firm has installed a big screen with flashing fireworks that shows Disney characters. Additionally, the store’s layout signifies its merriment theme while the big screen showing fireworks display adds excitement to customers especially kids. To influence the customers in their purchase decision, Disney ensures that its products are effectively displayed.
Retailers’ strategy for dealing with competition
Competition can limit a firm’s ability to attain its goals (Campbell & Craig, 2005, p. 37). To deal with competition, Disney Store has adopted the concept of branding. This has arisen from recognition of the fact that branding is one of the major sources of competitive advantages. According to Brooks, Weatherston and Wilkinson (2004, p.5), the adoption of an effective branding strategy is vital in influencing the customers in their purchasing decisions. This is due to the fact that it contributes to the creation of a strong positive reputation. Through effective branding, Disney Store has been able to appeal to a large number of customers. One of the ways through which Disney Store has been effective in its branding strategy relates to the animation of stars (Disney Store, 2012).
To increase its customer base; Disney has integrated the concept of diversification by establishing outlets in different locations in the UK. As a result, the firm has been able to increase its customer base and hence its profit. The firm has also been able to nurture strong customer loyalty with other businesses by undertaking business-to-business relationships.
Hamleys Toy Shop Retail Strategy Analysis
The firm has incorporated the concept of product development to cope with the changes in consumer tastes and preferences (Hamleys, 2012, p. 1). Additionally, the firm continuously undertakes market research through its R & D department to develop high-quality products. As a result, the firm has been able to develop an emporium of toys thus attaining its goal of ultimate customer satisfaction for all customer categories (Dundrum, 2012, para.1). The firm ensures that its products are effectively designed so as to appeal to children. One of the ways through which the firm attains this is through the animation of the toys.
The firm focuses on a diverse area of products and themes within its store. The visual display is vital in sustaining the psychological mood in the minds of the consumers. Hamley’s conditions the consumers in their entrance; there is a psychological strategy in their display. Hamleys have interactive toys to keep the consumers entertained. They know the customers entering the store have to sustain their physiological mood and motivated to enter and buy merchandise. Quality of the products is important to have quality assurance and ensure their products are toxic-free (some children put toys in their mouth), families and children should be provided with the quality.
Martineau states that “the total sum of the image is more than the sum of the functional factors”. This can be attributed to the “experience” that customers feel when shopping at the store and as such contributes to their positive feelings in shopping there (Hartman & Spiro, 2005, p. 1113).
The store’s layout, architecture, symbols, color, advertising and sales personnel collaborate in creating an appealing shopping experience. It is this feeling of shock at the image that the store provides that is the concept that drove it to become the largest toy store in the world and is at the core of its business model.
Retailers’ strategy for dealing with competition
To achieve a unique market position, Hamleys has integrated a unique retail strategy that entails marketing its toys as both playthings and souvenirs (Hamleys, 2012, p.1). This has enabled the firm to increase its customer base by marketing to both children and adults.
To deliver a unique experience to the customers the firm gives kids an opportunity to play with the toys while on its premises. This influences the kids’ perception hence culminating in a purchase decision (Hamleys, 2012, p.1).
The firm has also integrated the concept of innovation and continuous product development. Product development enables a firm to reposition its existing products (Lamb, Hair & McDaniel, 2012, p. 243). This enabled the firm to be successful during the 1980s because it created a new market space for natural products rather than competing head-on with a large variety of toys and placed them in strategic areas for all to see. One of the most effective strategies that organizations can incorporate in an effort to deal with competition is customer focus (Simchi-Levi, Kaminsky&Simchi-levi, 2007, p.454). In an effort to deal with the competition it faces, the management team of Hamleys Toy Store has adopted an extensive marketing strategy that emphasizes creating value for kids and parents to buy the company’s products.
Retail Mix
Disney Store Strategic Implementation
According to Martineau’s theory, developing an appealing store image is one of the retailing strategies that a firm’s management team can incorporate in an effort to attract and retain a large customer base (Hartman & Spiro, 2005, p. 1113). This can be attained by incorporating an effective aura of psychological attributes such as its architectural design and layout (Kaul, 2006, p.3).
Martineaus’ theory asserts that organizations’ functional strategies such as pricing, distribution, promotion and product are very important in a firm’s operation. However, if the store image is not acceptable to the customers, such functional strategies are meaningless (Kaul, 2006, p. 3).
Range of merchandise
Disney appreciates the fact that customers have diverse tastes and preferences in their consumption. As a result, the firm has adopted the concept of product diversification in its operation. To appeal to a large number of customers, Disney has integrated the concept of branding and product differentiation. The specific brands that the firm stocks include those featuring Mickey Mouse and other characters on a range of items from apparel, toys, home decor and books to interactive games, electronics and fine art. The two retail mix strategies have significantly contributed to Disney attaining an optimal market position within its children’s and adult’s market segments. This has arisen from the development of an effective high customer value (Retail Week, 2012, para. 6).
Pricing
Price is one of the retail mix elements that communicate the value of a firm’s brand (Mokokoma Mokhonoana, 2011, para. 1). In an effort to communicate value to its customers, Disney Store has adopted a premium pricing strategy which entails setting the price of a product or service at a relatively high point compared to the competitors. The high price has significantly contributed towards influencing the consumers. This is due to the fact that it is able to communicate the unique nature of its products and hence their value.
This pricing strategy has enabled Disney to appeal to the parents who in most cases make the purchase decision on behalf of their children. Purchasing Disney’s products result in parents generating a feeling of being a good parent (Mokokoma Mokhonoana, 2011, para. 2). Through its premium pricing strategy, Disney Store has been able to maximize its sales revenue hence improving its competitive advantage (Vespi& Turner, 2011). This is due to the fact that the firm is able to attract a large number of customers who are value-conscious.
Service offering
According to Evans and Lindsay (p.157), the development of customer loyalty, attainment of satisfaction and customer value is determined by the store’s service offering (Evans & Lindsay, 2008, p. 157). Ensuring a high level of customer service is one of the factors that firms should consider in order to develop customer loyalty (Needham &Dransfield, 2000, p.463).
To appeal to its customers, Disney has integrated the concept of customer focus. The firm attains this by making the shopping environment very appealing for example by installing televisions whereby the children watch various entertainments. To develop a strong bond with the kids; Disney conducts an opening ceremony in its stores every day. The 1st kid waiting at the stores’ door is given an opportunity to open the shop (Retail Week, 2012, para. 9).
Additionally, the store is increasingly adopting a new format in an effort to appeal to kids thus making the store likable. For example, the firm has established an activity area and a mini-cinema. To develop a unique shopping experience, Disney has introduced touch screens through which customers can choose their favorite Disney film and music clips from the collection of more than 50 songs and video clips that are exclusively written to be played within their premises (Retail Week, 2012, para. 7).
Product Quality
Quality is one of the elements that determine the competitiveness of a firm’s product (Crum & Goldberge, 1998, p.395). The quality of a product should be in line with its intended use. Disney is one of the world’s most renowned brands. One of the factors that have contributed to the firm’s products becoming global brands is their quality. Disney has integrated a quality standards policy that is adhered to in the process of procuring its products. The firm does not tolerate variance with regard to the quality of its products
Customer Communication
Developing effective and efficient customer communication is very vital in the success of firms in different economic sectors. This is due to the fact that it enables a firm to bond with its customers (Evans & Lindsay, 2008, p. 150).
Disney Store has developed an aggressive marketing communication strategy. In an effort to create sufficient awareness of its products, the firm uses various methods of market communication. Some of these include advertising, conducting public relations campaigns and direct marketing. With regard to advertising, the firm uses various mediums such as billboards, print media such as newspapers and magazines and billboards.
Disney has incorporated social media such as Facebook, myspace, IMDB, Twitter and youtube (Rosemont, 2012, para. 7). Disney Store has invested a substantial amount of money in social media. Currently, the firm has over 565,000 Facebook fans and 43,300 Twitter followers (Rosemont, 2012, para. 7).
In marketing its products, the firm’s marketing personnel’s occasionally attended social functions, school events and other places where they are likely to get the attention of children (Vespi& Turner, 2011). The firm also communicates to the customers through their official websites that can be easily accessed by the public (Hargrave, 2012, para. 6).
Location
In an effort to attract a large customer base, Disney’s management team has ensured that its stores are strategically located along busy streets. This has significantly contributed to easing access to the store. The stores are strategically located in points that can be easily accessed by different methods of transport.
Store ambiance and layout
Disney has also adopted effective in-store design which makes its stores to be more magical thus appealing to different customers (Junior Design Awards, 2012). The firm has also considered its store’s architectural design in an effort to be attractive. In 2012, the firm was the winner of the store with the best shopping experience (Junior Design Awards, 2012).
Physical Environment
Disney has over the years been committed to appealing to its customers. One of the ways through which the firm has been doing this is by ensuring that its physical environment is appealing. For example, the firm has ensured that its interiors are as wide as possible. The firm has adopted effective product displays and background elements. Disney has developed its entrances in a way that appeals to the customers. For example, the entrances leading in-store are designed in such a way that they look like Disney Castles and enchanted forests. This has played a significant role in attracting children (Retail Week, 2012, para. 8).
Psychological Environment
To influence the customers in their decision-making process, Disney has ensured that its shopping environment generates fun. Through its diverse product offering, the firm is able to appeal to the kids. Kids also take part in a variety of activities which aids in creating a connection between the kids and the store. This results in a positive consumer experience hence increased store patronage.
Hamleys Toy Shop Strategic Implementation
Hamley’s Toy Shop has developed a directory board that is located at the front of the shop. The directory is aimed at guiding customers to their desired products in the store. The firm has also ensured that its products are effectively displayed within the 7 floors according to types (WOT Security Group, 2012, para. 2).
In an effort to develop to attain an optimal market position; Hamleys has integrated the concept of branding and packaging. The firm has attained this through the integration of effective product design. This has significantly contributed towards its products being considered as premium gifts for the target customers (Vividbrand, 2012, para. 1-2). Additionally, the firm has also integrated the concept of product diversification.
Location Convenience
To ensures ease of access, Hamley’s has ensured that its stores are conveniently located. For example, its London stores are strategically located at points that can be easily accessed by various public and private methods of transport.
Range of merchandise
Considering the prevailing diversity with regard to customer product preferences, Hamleys has incorporated the concept of product diversification. As a result, the firm is able to address diverse customer demands. This has significantly contributed towards the firm’s competitive advantage in that most customers prefer purchasing from the store.
An evaluation of the store revealed that the firm has incorporated an effective inventory management strategy (Dundrum, 2012, para.5). This has played a significant role in ensuring that the merchandise does not become obsolete. Inventory management has also contributed towards the firm avoidance of high holding capacity.
Service offering
Hamleys has incorporated the concept of Customer Relationship Management in an effort to develop a strong relationship with its target customers (Retail Week, 2008, para. 7). This has significantly contributed to the development of a unique customer experience.
To improve its market position, the firm has outsourced the services of Freedom Communication to help in the development of a Call Center through which it can serve its customers, especially during festive seasons. Hamley estimates that its sales have increased with a margin of 150% since it developed the Call Center (Freedom Communication, 2012, p.2).
Hamleys ensures that its in-store staffs are courteous in executing their duties. To satisfy its customers, Hamleys has ensured that its customers are treated with a high degree of friendliness by the support staff.
Store ambiance and layout
Over the years, Hamleys has been very effective at attracting customers. It is estimated that the firm attracts approximately 5 million customers annually. One of the factors that have contributed towards the firm attracting a large number of customers is its store ambiance (Scottish Qualification Authority, 2004, p. 104). For example, the firm plays soothing music within the store. To develop customer loyalty amongst its customers, the firm demonstrates to the kids how to use the toys. This contributes towards the development of a vibrant and happy atmosphere for the target customers. To enhance the store ambiance, the firm has ensured that it has an appealing layout that is evidenced by the bright and colorful displays, walls, banisters and desks. The store exudes a feeling of activity whereby customers are influenced to move from one point of the store to another. Hamleys has lit its store using ConstantColor CMH Ultra lamps which are specifically designed by GE Lighting for firms in the retail sector. The lamps make the store have superior color (GE Lighting, 2012, para. 1). This has contributed to the creation of an appealing shopping atmosphere. The image below illustrates lighting within the Hamley Toy store using the ConstantColor CMH Ultra lamps.
Product Quality
Considering the fact that Hamleys does not produce its own products, the firm is very committed to ensuring that the products procured are of high quality (WOT Security Group, 2012, para. 2). The firm achieves this by undertaking quality control on the products procured. The high-quality toys appeal to the customers hence gaining a high competitive advantage. Additionally, the high quality of toys contributes towards the psychological, mental and physical satisfaction of kids (Ame Info, 2012, para. 4). In an effort to survive in the future, the firm is guided by the tradition of ensuring ‘the finest toys in the world’ (WOT Security Group, 2012, para. 2).
Customer Communication
Hamleys has appreciated the importance of using signage as evidenced by the visual graphics used to give the customers information regarding the store’s arrangement (Nelson, 2012, para. 2). The firm has also integrated social media in an effort to interact with customers. One of the ways through which the firm has attained this is by developing fan pages on social media such as FaceBook (Rosemont, 2012, para. 8).
Physical Environment
Hamleys has ensured that its store is spacious in order to accommodate the customers. For example, the firm has 7 floors all of which are fully packed with games and toys. The spacious nature of the store enables the firm to undertake interactive demonstrations with the customers (WOT Security Group, 2012, para. 2).
Psychological Environment
To attain an efficient market position, the firm is committed to developing a high level of customer loyalty. The firm has attained this by ensuring that its representatives are customer-focused. This has enabled the firm to develop a feeling of wonder and amazement. This has contributed towards the creation of a positive experience that many people would enjoy.
Conclusion
The contemporary retail industry requires firms to be effective in attracting and retaining customers. This can only be achieved if their needs and wants are met effectively. Retail firms should understand the customers’ needs and wants in addition to ensuring that their human capital is dedicated to offering high-quality and reliable services.
The retail model adopted by a firm determines its ability to achieve its goals. Despite their success, Disney and Hamleys should consider their internal customer and focus on two main aspects. These entail:
- Developing employee coaching and mentorship programs
- Addressing internal customer redress
The management teams of the two firms have to address the internal working environment by incorporating an elaborate employee coaching and mentorship program
Firms should improve their strategic management processes by incorporating the concepts of Total Quality Management and Six Sigma. These management strategies will ensure the firms comply with legal requirements that enforce effective operational standards in addition to facilitating the development of programs that enhance good corporate governance. TQM and Six Sigma mostly deal with the reduction of operational costs and improvement in the quality of a firm’s products.
Reference List
Ame Info, 2012, Hamleys opens the second location in Abdoun. Web.
Crum, R., & Goldberge, I., 1998, Restructuring and managing the enterprise in transition, World Bank, Washington.
eCommera, 2012, Case studies: Hamleys. Web.
Dundrum, 2012, Hamleys. Web.
Evans, E., & Lindsay, W., 2008, Managing for quality and performance excellence, Thomson, Mason.
Freedom Communication, 2012, Christmas is child’s play for Hamleys.
Retail Week, 2012, Disney Store: Transforming UK trading.
Retail Week, 2008, Hamleys lays the foundation for international expansion in 2009.
Scottish Qualification Authority, 2004, Retail environment. Web.
Vividbrand, 2012, Hamleys brand and packaging. Web.
WOT Security Group, 2012, Retail: Recent products. Web.
Appendix
Hamleys Toy Shop
Disney Store
