TOPMAN and Purchasing Strategy
Introduction
According to Rintama¨ki and colleagues (2007), the customer is always the one who identify what is valuable and what is not. With this fact alone, companies are limited in creating value propositions deliberately aimed at sustaining customers in their value-creating consumption activities (Vargo and Lusch, 2004). The retailers’ decisions are then challenged on what to sell and at what price range it should be, as there are similar products that are offered by the competing companies. Aiming for competitive advantage, the retailers’ decision of how to put on the products and services in the market becomes a significant strategic question particularly on what kind of customer experience is offered. Meanwhile, recognizing the current trends in the global business setting is among the most immediate and could be an appropriate antidote against business management failure. Through this process, companies are able to strategically plan on things to carry out or define precautionary measures directed to such. This is common among all areas of management including clothing and fashion retailing industry. Topman, according to their corporate web domain – www.topman.com, is among the most dynamic and innovative brands in the current British high street together with Topshop as counterpart. Topman is a current leader and most established fashion brand for men in the UK and to its emerging European as well as non-European markets. The brand is constantly growing with over 175 stores situated in the UK and over 40 other stores across 13 countries. According to Weekes (2004), Topshop and Topman were examples of most widely patronized retailers. Considering the occurrences in the clothing and fashion retailing industry for the past decades where volume growth has constantly exceeded value growth, there is a need for retailers to look for new growth opportunities and cost savings mechanisms.
This paper discusses the case of Topman in relation to its supply chain management and purchasing strategies. Further, it will also include PEST analysis, where environmental factors are identified as imperative considerations in formulating a new purchasing strategy.
PEST Analysis
Identifying the external environment factors (i.e. Political, Economic, Social, and Technological) affecting Topman and its related areas of operations is predominantly fundamental in formulating a new purchasing strategy.
- Political
Retailing has transformed and became more global because of new industry characteristics, new industry capabilities and new strategic imperatives (Maharajh and Heitmeyer, 2005) that affect the whole niche market and industry. The UK clothing and fashion retail market is guarded with existing business policies and regulations. With this, anyone can do business in the country provided that all companies will succumb on the said policies and regulations. In all its markets, Topman maintained close relationships with government officials and understood local operating requirements, both explicit and unwritten. Topman’s awareness of any changes in terms of government policies and legislations within the operating markets is vital. Constant large-scale legal assessment facilitates opportunity for business expansion and minimizes legal difficulties.
- Economic
The possibility of global economic downturn brought about by various happenings such as national economic issues, dynamic competition among companies especially those that operate within the clothing and fashion retailing market lead to closing down, and the loss of jobs may have a direct impact on Topman strategy of becoming a leader in men’s fashion apparel retail not only in the UK but the world. Also, there are huge differences in terms of the GDP per capita earnings among the countries. This situation should make Topman consider about its brand positioning strategies in certain areas where the company does business (Barlett and Ghoshal, 1989).
- Social
The varying demands of audiences in relation to consumer behaviour and customer culture is a primary determinant of company performance provided that environment is being considered. Not only must the customers’ cultural differences be recognized, but there is also skill in knowing the current incidents inherent within the chosen market. Maharajh and Heitmeyer (2005) noted that consumers are now knowledgeable and responsive of their wants and needs, more mobile and more demanding of product value and service from retailers. In general, the rising middle to upper-middle class households in certain areas of operations requires a strategy formulation that will not mismatch to the potential for consumer market of Topman. Aside from intensifying competition in the markets at home for retailers as well as the slow growth, social responsibility is also important as most consumers regard environmental awareness and protection in association to the brands they are using.
- Technological
The impact of technology as a source of competitive advantage for manufacturing industries is widely accepted by practitioners, governments and academics (Phaal et al. 2001, p. 1116). The recognition of the effective management of technology as a fundamental strategic tool to advance competitiveness and prosperity formation (Li-Hua and Khalil, 2006) is important. The innovations in terms of Topman’s technology are contributory considering that technological advancements are among the primary features of competitive advantage. Investing on new state-of-the-art production and marketing facilities and equipment is essential in the business strategy to be aligned to any revolutionary technological changes affecting the clothing and fashion retailing industry. The ongoing approach on online marketing should be concentrated provided its outstanding beneficial effects to revenue accumulation and savings. E-commerce or doing business online has been the marketing trend and reaped productive effects as it brings convenience to many businesses today including the clothing and fashion retailing industry.
Purchasing Strategy
The purchasing strategy to be implemented is online retailing. Although Topman is already using this strategy, it is recommended that the company must reinforce it given the changes on the niche market and consumers. Identification of online consumer buying behavior is the first step in developing strategies. To do this, Topman should first identify their market segment, their needs and demands. Once identified, their needs and buying behaviors will be studied in order to meet these demands. Basically, the barrier on attracting customers is the lack of physical touch on the item to be purchased. Online retailers like Topman can design methods to help consumers make online shopping just like the physical world of shopping clothes.
Consumers usually undergo the buying process when they wanted to make a purchase online. This process includes need identification, development of a consideration set, information search and evaluation of alternatives, and choice/ decision (Novak, 1999). This process, when studied carefully will lead to the determination of the buying behavior of consumers online and will help Topman identify what other aspects of the company should be improved like the site itself, its customer relationship, the products themselves and the services related to the business. On the first stage, the need identification, consumers decides what type of product she is seeking. The need could come from a recommendation or occasions. Online retailers should be ready to influence the customer in identifying her needs. The second stage is developing a consideration set. In this stage, the presentation of the product is necessary including the pricing, the quality and the features of a product. In the stage of information search and evaluation of alternatives, the customer will now make comparisons on other products, make cross-shopping on other sites to be able to have a good judgment and comparison. An online retailer should have a strategy to help the customer decide on buying Topman’s products and services. The last stage is making a decision on which product she will purchased base on the previously gathered information. An online retailer like Topman could have a great influence on the buying process of a consumer depending on the strategies the company implements.
In the traditional supply chain management (SCM) used by companies, there is a lot of people, time and money that are being invested upon to ensure that the demands of the consumers will be handled in the specified date and time required (La Londe, 2002). The SCM is business strategy focusing on the quick response to ever-changing market needs and shortened purchasing lead time, also adding value to increasingly demanding customers at the least cost and time (Baldwin et al., 2002). Before being able to place an order of shipment of products and even services, several transactions are consulted between the product supplier or the service provider to meet the demands of the consumers and clients. The supply flow normally includes the intention of order, quotation, confirmation, delivery, payment and handling of receipts (Croxton et al., 2001). Normally, great amount of time is consumed in the mere planning of the purchase orders of a particular business company. And since most of the time the transactions involve not only a single client or customer, especially in the case of huge product and service providers, business establishments need to deal with sub-suppliers with several forwarders from which a number of consolidations are exchanged (Croxton et al., 2001). As such the workload and time that the inventory managers handle defines the proceeding business processes that follow and thus, predict and maintain the success and profit of the whole business organization. Today, companies like Topman cannot rely on a single party to fulfill the sophisticated needs of customers, instead requiring total commitment and full collaboration, integration and synchronization among all business partners (Bowman, 1999). With the proposed purchasing strategy, Topman will sustain its current financial performance.
Conclusion
Indeed, Kalish (2005) is true in stating that retailers find ways to invest in more attractive and promising markets characterized with potential for high growth, increasing population and consumer spending and emerging economies with less intense competition. In this regard, supply chain management has become a key strategic initiative for companies to improving service and reducing costs in order to remain competitive in today’s global economy (Owens et al., 1998). In general, effective purchasing is not just a matter of price (short-term) but it is about total cost of acquisition (long-term value) (Thompson, 1996). On the case of Topman, the company should emphasize on online retailing as purchasing strategy as it is the most appropriate strategy to be implemented this time considering the benefits of online marketing and the conditions of clothing and fashion retailing market. However, it is also recommended that precautionary mechanisms are to be observed so as to minimize risks and managerial difficulties. The role of consumer feedback system is indispensable and same as true to managerial expertise of Topman executives and entire workforce.
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