RETAIL MANAGEMENT

UGB232

Joanne Pringle

073080309

MODULE LEADER: ANNE EDWARDS

UGB 232 - Retail Business Report

Introduction

Avon is one of the UK’s leading direct seller of beauty and related products reaching women in over 120 countries. Avon however do not have retail stores but have representatives selling their Products from door to door. They also have online shopping for customers to purchase their products. However in Ian Wheeler -Research Manager -Skillsmart Retail Ltd it states that “Shops and stores remain the dominant retail format throughout the UK despite the growth of internet based shopping.” This shows that opening a store could be a excellent move for Avon.

Avon goods are very reasonably priced and have an extensive range including make-up, skincare, fragrance, jewellery, lingerie, personal care, accessories and gifts. The company celebrated its 50th Anniversary in the UK in 2009 and has dedicated the company to raising nearly £15 million for breast cancer charities. By Avon being involved in charities this helps with their reputation amount new and existing customers.

Opening a retail outlet could definitely benefit the company and increase their product sales. As Avon only sells its products by a representative or online only certain people bother to buy their products so if they had a store in which customers could go in and see the products this might boost sales. Their successes could also depend on the choice of its location.

Location

Location is a very important factor when opening a new business or expanding an existing one. This could be a big issue of whether or not a business is going to be successful or not. If it is in a prime location where the businesses target market is present then the it is more than likely to succeed.

The bridges an in-town shopping location and is situated in the centre of Sunderland. It is a perfect location for opening a new retail store. It has a number of different types of businesses within the shopping mall however there are a lot of the same types of companies such as clothes shops and mobile phone shops. If a small business was to attempt to open within the complex near all the big branded shop it would be likely to fail because they other stores are well known and have a large reputation with loyal customers.

According to Reilly’s Law, more consumers go to the larger city because there are more stores; the assortment makes travel time worthwhile. This means that even though the Metro centre is near people who live in Durham might be more likely to go to Sunderland as it is nearer. This would be classed as Sunderland’s catchment area.

Micro-environment

Competition

“Increasing intertype competition has made it harder for retailers to identify and monitor their competition. In one sense all retailers compete against one another for the dollars consumers spend on goods and services. But the intensity of competition is greatest amount retailers located near each other who sell offerings that are viewed as very similar”

(Retailing Management – sixth edition Levy/ Weitz)

Avon’s main competition in the bridge is Debenhams, Boots and Superdrug. These stores are very successful and seem to do well within The Bridges. However these retail outlets are known for selling top branded product at a range of different prices whereas Avon only sell their own product and at a reasonable price. Most women have already heard about the Avon brand name so opening in a store where other well known brands are located would not be a problem.

Within the Bridges have a number of different vacant outlets all over the shopping centre however the best location for the first Avon store could be situated near its main competitor Debenhams. This could be a successful choice as when people are travel through the shopping centre to get products from Debenhams if they pass the store and see the same products for cheaper this may make more people chose Avon over other top brands. There is a vacant outlet which is located next to H&M this is a prime location for this store as it is right near one of the main entrances where the Park Lane bus and metro station is. One competitive strategy that could be implemented could be to make Avon very environmental friendly. It main competitors such as Boots and Superdrug and also environmental friendly however due to global warming more people want to get involved. By making changes to the company may provide a competitive advantage making customer choose Avon over similar outlets.

Customers

Avon is a very successful company showing a vast number of women in the UK buy their products.

Avon sells more lipstick, nail enamel, eye-make-up, fragrance and skincare than any other brand in the UK (according to independent market researchers TNS).

One in three women in the UK is an Avon customer. Six million women in the UK see an Avon brochure every three weeks. 10,000 Representative orders are processed daily at Avon Cosmetics UK’s distribution

centre.

(http://www.avon.uk.com)

The Bridges also provide longer opening hours at Christmas were customers have a chance to come and shop later to the stores. This would benefit Avon as customers that work through the day can come and get their Christmas shopping when they like. The Bridges do see a rise in customer visits around Christmas and see a benefit in staying open later

One Macro-environment factor could be the an economical issue. Due to the credit crunch the bridges have been do.ing deals on rent to fill their vacant spaces. However they do have some empty spaces which are still being paid for so they is no reason for them to be filled if they are already receiving money for it.

The reason for only named branded shops being in the bridges is because to the sheer cost of renting in the area. However Avon should not have a problem with these costs as it is a multibillion organisation.

They figures above show the average cost of locating in within the bridges:

Average Rent - £70,000- £100,000 per year Service 15-30 Council Rates £30,000 - £45,000 Electricity, Heating Rates £50,000 – £100,000

(John Green – liaison retail manager The Bridges)

One disadvantage that the bridges has is that each store has limited space so shops such a Topshop have to limit their range of stock to buy. This could affect the number of customers and visitors to the store at the bridges because similar stores in the metro centre have a bigger range so people might prefer to go to the store which provides the bigger selection. However as this would be Avon’s first store customers would want to travel to visit it.

One of the ways in which they bridges is improving is by changing the way the shopping mall looks. It is changing its signs so it matches they way the website and T.V advert looks. This is to create a more stylist look and so it is appealing to its target market.

Another advantage of being located in the bridges is that it a tracks a lot of customers not only for the range of stores available but the special event that take place there. They provide fashion shows for pasting customers which promotes the clothes or products that you can buy within the bridges. They also have glass casing which any shop in the centre can use to show off a new brand or product that they have in their store. This is an excellent marking feature as it catches passing customers giving the shop strong advertisements.

Being located in the bridges provides stores with shelter and extra security which helps lower the amount of shop lifers in the centre. There are around 22 million visits per a year. They have seen a decline in the amount of people visiting since the credit crunch. However customers may lower the amount they visit but seem to spend more when they do come shopping.

The marketing department at the bridges have changed the look and style of the bridges to attract there two groups of customers which they think are there catchment area. They have created a new slogan and advert for the television.

Gift cards

Another Benefit of being located in the Bridges is that they have gift card which are very popular present at Christmas. This gift card can be used in any one of over 100 stores at the Bridges. They include many high street favourites such as Monsoon Accessorize, H&M and Debenhams. These cards can be have up to £1,000 on and would attract customers into spending money in one a new stores. Avon could also be part of this scheme as customers would be more attracted to spending their gift cards in the store.

There are many types of retailers located within The Bridges and around the city centre. Here is a layout of The Bridges showing every store, each nearest Metro train station and bus station.

( www.thebridges-shopping.com )

As you can on this map there are many ways to travel to Sunderland city centre. The bridges has its own multi story car park with a Parking rate of £1.10 per hour before 6pm however they also provide a Special offer of daily tickets for £20 which is valid Monday to Friday 6am - 8pm. This multi story also provide a valet car service which provides a full wash and wax for customers cars while they shop! With the bridges being in the centre of Sunderland there are many ways in which customers can get to the shopping centre, as there are multiple train and bus stations close by.

There are many attractions in Sunderland that attracted people to come and visit such as the empire theatre and Sunderland museum and winter gardens. However its main attraction is Sunderland University bringing thousands of people from around the UK and the world to come and study. This indicates that The Bridges main types of people shopping in this area would be students and local people.

Student Discount Card

The Bridges also provide a Student Discount Card. The card is available to all students 16-years and over. As Sunderland University is situated next to The Bridges most of their customers will be students. Avon being part of the student discount card it would be an incentive for students to buy Avon’s Products and increasing their sales.

(http://thebridges-shopping.com)

Recommendations

Environmental

By making Avon an environmental friendly company this might have a large impact on sales over its competitors. Avon could recycled a lot of its waste and use energy saving light bulbs. They could also make sure their packaging is environmental friendly. An good example of this is when the well know store Primark changed it bags from plastic to paper bags. As the world is becoming more and more concerned about the environment customers become more interested in what changes companies are taking to be involved in this. This can only Benefit the Avon’s reputation and may be the reason someone chooses them over their normal brand.

Avon’s main way in which they sell their stock is by having representative’s who go from door to door. As there would be a store opening this might have an effect of the representatives sales however they could still sell their products from door to door but receive their products from the store instead of placing a booking form. This would save the company on delivery rates as there would be one delivery to the store and each representative or customer could collect their order products from there

Layout

Main objective it is get a customer into a store so the main exterior of the store should look professional and appealing to its target market. The interior should be consistent with that of the exterior and positively influence consumer behaviour. With Avon’s target market being women the exterior and interior should be attract them. The layout of the store also contributes to the customer shopping mood.

(http://www.westga.edu)

Making Avon’s interior a Free- flow layout would encourage customers to browse and make no defined traffic pattern. With this layout plan it may contribute to customers impulse buying.

This free-flow layout works well for Debenhams and with them being Avon’s main competition as it is situated in the same location this would be a wise choice to apply this layout as well. As you can see in the picture above this store has a very fresh look with bright lights which highlight the products. One recommendation would be to use this kind of lighting in the new Avon store as then a customer walks into the store they are drawn to the highlighted products.

MAC is a very well know cosmetic’s brand as you can see in the picture above they colour coordinate their products. Avon could benefit from this organisation makes it easier for the customer to find the colour they want this is a great way to stop customer from lingering in the store.

The colour of the store can influence a customer’s behaviour. Warm colours have been proven to increase blood pressure, respiratory rate attract customers and gain attention but can also be distracting. Whereas cool colours are relaxing, peaceful, calm and pleasant. By making Avon in cool colours, customers will feel relaxed and want to spend more time in the store. Scent can have a large impact on customers emotions. As Avon sells a number of perfumes having them at the front of the shop creates an pleasant aroma.

Window displays

Window displays can influence a passing customer decision whether to enter the store or not so the products being displayed are very important. By putting Avon best selling products in the window this will attract more customers. Having different themes from different seasons could benefit Avon sales as people need different products for different seasons.

Advertisement

Another recommendation that Avon could benefit from would be to advertise their new stores online as shopping online is a key store of selling their products. Online shopper however have the disadvantage of not being able to see or test their products before they buy with having a store the customer are able to test and try Avon products. This would benefit customers buying lingerie.

Conclusion

The purpose of this report is to select a vacant premises in Sunderland City Centre and suggest a suitable product or service to be sold in the unit. In conclusion the chosen company is Avon, with this being a company that doesn’t have a retail outlet and relies on representatives and online sales to make a profit it would benefit from opening a store. I have chosen the bridges as the best location for opening a new store in Sunderland after finding that the advantages outweigh the disadvantages. Including the many of the incentives such as being part of the Bridges student card as many customers will be Students. As the main target market is women they are always looking for cheaper reliable products which shows a demand for a well known brand to open within the Bridges. By choosing a free-flow layout with colour coordinated products encourages customers to impulse buy and help customers find what they want easily. The advertising suggestion would clearly make the Avon store known by customers giving it a good chance to become popular. Each recommendation I have specified is to make Avon a more popular successful business showing that it can be a thriving retail outlet if these suggestions are put in place.

References

(http://www.westga.edu) Jan 5th 2010

(http://thebridges-shopping.com) Jan 7th 2010

(http://www.avon.uk.com) Jan 12th 2010

(http://www.thebridges-shopping.com) Dec 20th 2010

(Retailing Management – sixth edition Levy/ Weitz) pg 16 - Jan 1st 2010

(Ian Wheeler -Research Manager -Skillsmart Retail Ltd) Jan 1st 2010

(Retail product management – Rosemary Varley) Jan 3rd 2010