CHAPTER ONE:

INTRODUCTION

  1. Introduction 1.1 Rationale

The research examines the recent growth and developments of the online fashion U.K retail market, the advantages of having an online-offline integration thereby incorporating a consumers’ point of view on the same and the effects of the concept of ‘showrooming’.

According to Chaffey (2011:11) the U.K government defines “…E-commerce as the exchange of information across electronic networks, at any stage in the supply chain, whether within an organisation, between businesses, between businesses and consumers, or between the public and private sector, whether paid or unpaid (Cabinet Office, 1999)”. It has opened up a whole raft of new markets for retailers to explore, as it allows them to expand their reach both domestically and internationally with much greater ease.

The Internet also provides significant opportunities for many businesses to build closer relationships with their existing customers and suppliers online to achieve customer retention. This can be well supported by a quote from one of the leading business magazine article, Fast Company (2013), “…the Internet has turned to what used to be a controlled, one-way message into a real-time dialogue with millions”.

The retail market has become increasingly diverse and fragmented, offering customers increased choices and availability of brands and products. To attract and retain consumers, retailers have explored alternative ways of engaging customer attention. Consequently the concept of retail atmospherics and creating enjoyable experiences has become seemingly more important and apparent (Kotler, 1974. Pine and Gilmore, 1999). Furthermore Wolf (1999) asserts that shopping has become blended into entertainment, which he terms ‘shoppertainment’. Retail marketers must therefore pay increased attention to this concept, and more specifically store aesthetics and the ‘processes by which consumers make meaning out of their physical experience of place’ (Kozinets et al, 2002:17). This can in theory, contribute to and enhance customer experience and increase the probability of a purchase and ultimately revenue. On the other hand, the 21st century has seen the introduction of e-commerce as a retail distribution channel within a wide variety of sectors.

E-commerce is a contradictory business model that provides consumers worldwide opportunity to make a purchase through a website (Pingdom, 2012).

When considering the use of the Internet as a channel of distribution, and its ability to rival the in-store experience, it is evident there are marked differences between ‘real’ world and ‘online’ retailing. There is no physical store location, human interaction nor sensory gratification online (Lindstorm, 2001). In fact, many use the Internet as a way of circumventing the physical act of going into a store and purchasing a product. Consumers see the Internet as a quicker, easier and more efficient method of acquiring a product in a society dominated by deadlines and constraints. Therefore, it would seem intuitive that all brands would attempt to utilize the Internet as a sales medium for proliferating their product. However, despite this, many brands have been reluctant to embrace the e-retail phenomenon especially luxury.

The Internet represents many opportunities for both customers and organizations, providing an effective medium to encourage wider choices of products as well as expansion into new markets and services (Chaffey et al, 2000). Only ten years ago online shopping and buying were considered a rarity. This technological evolution throughout the last decade has changed the fashion landscape forever, with regards to consumer behavior and business practices, (Okonkwo, 2007). It has enabled the creation of a global market place and facilitated the buying and selling of goods without the physical limitations of traditional bricks and mortar stores (Yun and Good, 2007). Consequently, digital business has become a major component of many modern business strategies (Fingar and Aronica, 2001). Furthermore, the prevailing economic conditions promulgate websites as an important channel of revenue (although this is not the main focus of this article).

Coincidentally MasterCard data also recorded that e-commerce spending has jumped in February 2010 (The Independent, 2010). The increase in online spending further indicates that retailers are taking up strategies that look to satisfy the ever- increasing desires of the tech-savvy consumer. This, Brooks (2012) identifies can be generated through using new technology in store and online.

Thus it can be concluded that this field of study was chosen because there is a massively current growing trend of online shopping for fashion goods in U.K, online represents a major opportunity for most retailers. It is estimated that in 2017, the online retail market will be worth almost £50bn, and one pound in every seven spent on retail will be through the online channel wherein clothing and footwear will be among the largest online sectors (Verdict, 2012). Furthermore as multi-channel retailers continue to sell across a variety of platforms, innovative thinking has led to integrating technology as a part of customer relationship management (CRM) so customer’s needs can be tracked and offered the same level of service on each platform.

1.2 Aim(s)

To investigate the growth of the online U.K retail market and understand if the brands having an integrated of online-offline presence have a strategic advantage over brands who have either only online or only physical stores. A further investigation is done to see what the consumers think of the integration.

1.3 Objectives

  • Identify the developments of the growing online U.K retail sector to understand the uptake of e-commerce as a retail distribution channel within the 21st century.
  • Examine the impact of e-commerce with reference to applicable theories and frameworks through a success story of ASOS.
  • Explore the strategic advantages of having an online-offline integration with the help of various examples of retailers who have been successful by adopting this amalgamation. Also, to further back this up with varied literature available in this field through articles, journals, periodicals, books and relevant web sources to generate concrete discussion.
  • Discuss the effects of the not-so-recent phenomenon of Showrooming in today’s retail environment and whether it is a plus for the pure-players and a drawback for the physical retailers.
  • Measure the consumers’ opinion as to whether the strategic implication of online-offline channel integration is advantageous for brands today by conducting primary research in the form of focus groups and observational surveys. To extend this, conduct an interview to gain further insight into the industry expert’s opinion of the same.

1.4 Methodology Outline

In order to meet the research objectives and evaluate the aim, both primary data and secondary research was used and analysed throughout the article. Furthermore, a multi-method approach of triangulation model was applied, which employed data collected via three different qualitative research methods (Collis and Hussey, 2009), as schematically illustrated in Fig 1.

Model of Triangulation

Triangulation enables data to be collected and cross-checked from one method to another which was used as it allows for different perspectives surrounding the aims and objectives which is essential for the limited time available (Bell, 2010). This process is also described as qualitative cross-validation process (Wiersma, 2000).

1.4.1 Secondary Research

Due to the nature of the aim and objectives, secondary research was predominantly used to apply and analyse theories and frameworks using a diversity of literature that has been critically reviewed in a systematic manner to synthesize the research question (Saunders et al., 2012).

The main advantage of secondary analysis is that it ‘can enable a comparative element to be incorporated into the research design’ (Bryman and Bell, 2011 p313). Also, research databases such as Mintel and Mckinsey were used to explore the market environment. Market intelligence was sourced from Fame to evaluate the case study on Next and its key financials.

1.4.2 Primary Research

The primary research was used to depict underlying issues and analyse the viability of the data collected. It took form of qualitative approach involving two focus groups, observational survey, two industry expert interviews and a case study. This empirical research will aim to put the secondary research into context and gain an understanding of how retailers have a strategic advantage of having an online presence along with their physical stores.

1.4.2.1 Focus Groups

The two focus groups comprising of 6-8 people each of age groups 18-25, 28-36 were carried out to study people in naturally occurring settings and to capture their social meanings (Brewer, 2000). The focus groups took place in two different locations within the U.K to provide a representative sample of the target segment. A purposive selection of participants was chosen due to their contrast in location and lifestyle.

1.4.2.2 Case Studies

The case study method can be defined as the research strategies that are based on the evaluation of the current and visible facts of the real world (Cooper and Schindler, 2006). It is an exploratory and explanatory method of research to incorporate the valid and reliable data and information for the analysis as per the research objectives. With the help of case study on Next for the chosen topic, it became easy for the researcher to collect contemporary data without assessing behaviour and actual situations (Muijs, 2004).

1.4.2.3 Interviews

Interview with industry professionals are an essential part of this study. It highlights the positives and negatives of the topic and gives valuable practical insight into the advantages of having an online presence that make the integration of both the channels so important. As this is an exploratory study non-standardised (qualitative) research will give more in-depth answer and allow for further study (Cooper and Schindler, 2008).

1.4.2.4 Observational Survey

The observational survey was conducted at Westfield Mall, in London situated at Shepherd’s Bush. The day chosen for the survey was 20th April, Sunday keeping in mind that a weekend attracts maximum crowds in a shopping mall. The researcher spent an entire day from 11 am to 6 pm walking through the mall and stores. Consumers were observed and notes were taken down. Points under consideration were their dressing, their style, the shopping bags in their hand, their thought process in making a purchase and their overall shopping experience.

1.4.2.5 Ethical Consideration

The purpose of ethics is to protect the interest of the research subjects (Easterby- Smith, et al, 2008). According to Easterby-Smith et al. (2012) the control and ownership of the data must exercise ethical responsibility by not publicising any information that could harm the interests of the individuals. These ethical issues were considered and accessed when conducting the research. The study undertaken ensured that the focus group participants understood the purpose of the study and both could withdraw at any time from participating and/or remain anonymous with the help of fully consent forms. This allowed for no deception about the nature of the research and helped to minimise bias.

1.5 Chapter Outline

Chapter 1: Introduction This chapter states what the research topic is going to examine. It is subdivided into Rationale, Aims and Objectives and Research Methodology Outline.
Chapter 2: Recent Developments in the Online U.K Retail Market This chapter talks about the growth of the online retail in the recent years (U.K). It is followed by a short success story on ASOS to showcase advantages of ‘online’ pure-players.
Chapter 3: Strategic Advantages of online-offline channel integration This chapter depicts a wide range of examples of high street and luxury brands successful in integrating the online-offline channels thereby indicating the strategic advantage.
Chapter 4: Showrooming Showrooming is often claimed to be a major problem for store-based retailers in the era of growing online shopping. This chapter talks about the effects of showrooming in the current retail landscape.
Chapter 5: Primary Research Findings This chapter includes focus group and interview analysis and an observational survey are discussed and evaluated in this section.
Chapter 6: Case Study – Next This chapter is a short case study on Next.
Chapter 7: Discussions and Conclusions The ending of the thesis that outlines further areas of research, scope and limitations of the report and concluding recommendations to the thesis.
Chapter 8-9: Bibliography List, Appendix (including Reflective Statement) It includes the bibliography and appendix for extra reading apart from the thesis, followed by the reflective journal maintained by the researcher during the course of writing the thesis.

 

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I'm an eCommerce Project Director at an agency in London and a consultant for a number of eCommerce start-ups. I founded Think etc 9 years ago which now lets me share my research and experience with all the interesting brands, people, places and projects that I have been privileged to work with. My work on crowdsourcing was published by Oxford as part of a journal article and I have been obsessing over eCommerce and Magento over the past several years.

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