Question

RETAIL INDUSTRY .

External Analysis. Complete an external environment analysis (1-Economic, 2- Social Values, Cultural, & Demographics.) You must (1) identify TWO relevant and most-pressing trends for each segment and (2) evaluate the potential impact of those trends on the firm’s future strategy.

Answer 1

Ans. Retail industry is definitely influenced by economic environment. A flourishing and healthy economy will have more disposable income with the people and hence more purchasing power. This would translate into more sale for the retail industry. On the other hand in a sluggish economy, there will be less of disposable income with consumers and hence less sales and profit margins for the retailers. Now a days we see that retail industry has to move with caution as most of the countries have not kept pace with the projected growth rates. Hence, overall growth in countries has got stunted. Retailers have

Social factors also do effect retail industry. Retailers are forced to adopt many things as per the norms of the society in which they are operating. Retailers who do not comply to the norms end up loosing business. The culture also plays an important role. Retailers have to be sensitive about the cultural factors and have to adapt as per the local culture. They have see that they do not keep products which may not be accepted in particular local settings. At the same time keeping those products which are popular or in demand for one particular setting would only add to the profits. One trend which is seen is that people are very senstive about their identies. In some countries religion also plays an important role.

Demographics also play a role. It is important to know the demograhic breakup of the population. If the working population is more retail industry would benefit more or prosper in that area. If the dependent population is more then it would have negative effect on sale and dependent poulation will have less money to spend. Now a days most of the countries are facing an issue of decline in the working population which is negatively effecting the retail industry.

Retails firms have to trend with the changing times. There are host of factors which are under complete flux. The retail industry needs to adjust and adapt as per changes. The firm needs to adapt to new environment in a swift manner. These changes will impact the retail industry but will leave a room for making necessary adjustments. The retail industry needs to gear up to these new trends which have been discussed.