Strategic Brand Management of international fashion retailers
Mohammad reza moshkani
Dr.Economic Development
Abstract:
In today’s high street fashion competition fashion retailers are adopting strategies to compete and survive in order to capture and maintain market share. Being a seasonal and highly volatile market the fashion market is always vulnerable to the concept of ‘fading-out’. Everyday a new design, style, fad or fashion develops and becomes hype hence fading out the previous fashion. The retailers that keep up the pace of this fast development and creativity manage to survive, while those left behind, become extinct. This paper examines the brand management strategies that fashion retailers would adopt to compete in the international market. From the process of internationalisation, to devising brand strategies, to taking the right decisions of brand management, all of the issues are equally important and carry immense importance. Although there are many dimensions of brand management, but only three major themes are highlighted in this paper, which prove vital for the success of fashion retail brand.
Keywords:Brand Management, Retail Internationalisation, Fashion Retailing, Retail mix
Introduction:
With the advent of the 21st century, and the new phenomenon of globalisation, the world markets have become closer and are shrinking in size and getting highly saturated yet volatile. This gives rise to competition and survival of the fittest makes the competition even more intense. This is the exact scenario at the current retail sector of the world. With the high street wars amongst the retail giants, the ever increasing competition not only gives rise to more options but much better presentation for a customer to choose from. Hence, the bigger retail giants make low budget retailers difficult for them to survive. Furthermore, in order to survive in this high paced and intensely competitive market place there is a need to design a marketing strategy with a clear differentiating stance.
Global retail sector has seen a tremendous growth in the last few decades. The global retailing industry group grew by 4.9 percent in 2003 to reach a value of $4.68 trillion. (Data Monitor – 2004). Historically retail operation has been limited to a national level, as every country had a distinct national retail system. However, due to expansion of markets and rise in accessibility, the scope of retailing operation is becoming more international. Cross country retail operations has been going on since long and as a result of international exposure, the Internationalisation of Retailing has become a known phenomenon. Although retail internationalisation has been in practice since a long time, the academic contribution towards this subject is somewhat limited.
There has been some quality research on retail internationalisation relating to its diversified fields such as the motivations to go international, the whole process of internationalisation, individual company experiences and the direction of a company towards internationalisation (Alexander 1990). There has been some literature on grocery retailing and brand images of retailers across borders (Myers et al, 1997), but one aspect of retail internationalisation that has remained relatively under researched has been the issue of brand management of international retailers.
While the internationalisation of retailing continues to be the source of much academic and practitioner attention (McGoldrick and Davies, 1995; Akehurst and Alexander, 1996; Sternquist, 1997; Vida and Airburst, 1998), the brand management of internationalised retailers remains an under developed subject.
The following research paper undertakes the subject of brand management of international retailers and explores different aspects of brand management and identifies the level of brand consistency towards the international markets. There has been little empirical research on ‘exporting’ the retail image to the international market whereby the issue of competitive positioning and strategic branding should be taken into consideration. The focus of this paper is international fashion retailers and its brand management strategies.
Fashion retailing is emerging as one of the most challenging areas of business activity in the western world. Uncertainties in demand, shrinking selling seasons, lengthening delivery lead times, increasing competition and thinning margins together make the job of the retailer truly daunting.
This paper starts by examining the different motives and reasons for a fashion retailer to go international and how this process takes place. The literature review would analyse and support the motivation for a fashion retailer going international and expanding its operations in the global market. The focus then dwells onto the marketing strategies of these fashion retailers and in identifying different aspects of branding strategies that position an international fashion retailer in the new global competitive market.
The development of a strong brand in the domestic market, in terms of store image, product, and customer service, would seem to form the basis for long-term viability and success in international markets.
The research questions highlighted in this paper are, how does a fashion brand position itself in the international market, and how does it want the international customer to perceive its brand image. In this regard, key issues concerning strategic brand management would be identified in relation to international fashion retailer in the global market. A conceptual framework would then be developed.
Literature Review:
The literature review would cover two major interlinked topics. First the internationalisation of fashion retailers and second linking it to the brand management strategies to be adopted in the international market. There would be several sub-topics reviews under both the major strands of literary contributions towards the subject. The purpose of this paper is to identify the major international brand management strategies that would contribute towards the success of an international fashion retail brand.
Retail Internationalisation:
Whilst retail internationalization practice has a long history, academic research into retail internationalization is a more recent phenomenon. Hollander’s (1970) early work emphasised the effect of political and economic climate on the development of international operations, highlighting the importance of declining domestic opportunities as a factor in retail internationalisation. Hollander (1970) has been termed as the first important researcher on the subject of Retail internationalization. The largest stream of literature focuses on bilateral flows of investment and concentrates on documenting firms’ moves, stressing the relative advantages which can explain why they enter into a given market thus leading to internationalisation. Waldman (1978), Treadgold (1988, 1990), Salmon and Tordjman (1989), Burt (1991), and more explicitly Robinson and Clarke-Hill (1990), Pellegrini (1991), Alexander, N (1990, 1993, 1994, 1998), and Whithead (1992) attempted to explain the motivation behind going international and explained the process of internationalisation.
Motives to go international:
The drivers inducing the motive of internationalisation, include saturation within home markets compounded by economic downturns, legislation blocking expansion, shareholder pressures for growth, high operating costs, market driven pressures for growth, opportunities as overseas markets open up and even an element of the ‘me-too syndrome’ (Doherty, 1999). In contrast to manufacturers, however, retailers must be physically present wherever they are doing business, and structural and cultural characteristics make it harder to operate across distinctive national markets. Retailers’ performance in local markets is highly sensitive to variations in consumer behaviour and segmentation: consumer tastes and buying and spending patterns differ considerably across the international market place therefore hampering global sourcing.
Halls worth, Alan (2001), identified further topics and issues to be explored such as different modes of entry, international competition and international retail growth. Further research by Tread gold, (1988, 1990, 1992), Alexander, (1989, 1990) and Wrigley (1989, 1992) suggest that by identifying a gap in the existing research on retail management, one can measure the factors influencing success and failure of international retailing.
The increased visibility of retail internationalisation over the past three decades has stimulated a significant volume of academic research. A number of common themes have emerged, as authors have explored the volume and direction of investment (Hollander, 1970; Hamill and Crosbie, 1990; Burt, 1991, 1993; Myers and Alexander, 1997; Muniz-Martinez, 1998), the motivations for internationalisation (Alexander, 1990, 1995; Williams, 1991; Quinn, 1999), and the role and choice of market entry mechanisms (Quinn, 1998; Doherty, 2000; Gielens and Dekimpe, 2001). Studies of specific retail sectors and geographically determined flows have been accompanied by case studies of ‘‘exemplars’’ of retail expansion (e.g. Treadgold, 1991; Laulajainen, 1991; Wrigley, 1997).
Others have developed frameworks categorizing international retailers on the basis of behavioural criteria—most notably business culture and market responsiveness (Treadgold, 1988, 1990; Salmon and Tordjman, 1989; Simpson and Thorpe, 1995; Helferich et al., 1997; Alexander and Myers, 2000).
Many retailers struggle internationally yet most research explores success (for example the texts and special issues of Akehurst and Alexander 1996; Alexander 1997; Alexander and Doherty 2000; Brown and Burt 1992; Kacker 1985; McGoldrick and Davies 1995; Sternquist 1998; Sternquist and Kacker 1994).
Alexander, A (1999, 2001) and Shaw, G (1999), has significantly contributed on the history of retail internationalisation. It is evident from these studies that past performance can be a very good source of learning, identifying factors of success, and attributes of failure. Thus preventing further failure and identify success factors for the retail industry in the international market.
The considerable expansion of international activity by retailers since the early 1980s has generated an upsurge of academic study of the process. What has become evident from these studies is that retailer internationalization is a very different process from that undertaken by manufacturers. It has also become evident that the established theoretical frameworks in international business require major modification if they are to be applied in a meaningful way to retailing.
Despite the widespread incidence of failure in retail internationalization, the cynosure of academic study has been success. There has been considerable research on retailers like Marks and Spencer, Boots, Wal-mart, and likes of Next and Laura Ashley, but very few contributions have been made towards the brand management of these retail outlets. Hence there is a visible gap in the academic contributions on this subject.
Fashion Retailing:
Fashion retailing is quite different from normal retailing. Typically, the demand for fashion goods develops during the course of a limited fashion season in the shape of a bell-shaped curve representing the beginning, growth, peaking and decline phases of the fashion life cycle. The bell may be skewed to the right or the left depending on the specific characteristics of an item. The demand at each price in each period of the season is uncertain and the sensitivity of demand to price varies during the season. Goods left over at the end of the fashion season fall drastically in value because demand practically disappears when the fashion season is over.
Figure 1: Fashion Life Cycle:
Source: CIM 2005.
In any particular fashion market place, the consumer is faced with choice amongst a varied group of retail outlets, each developing and maintaining its own brand profile. The ability of each of these competitive retailers, and particularly those large chains competing for mass market, is dependent upon the distinct advantage one brand has on the market place. This advantage can be the basic customer perception, brand image, brand positioning, or any other branding attribute.
With the intensifying competition in the international fashion market, there is a dire need of better marketing strategies to capture the interest and loyalty of customers. The challenge here is the diversification of customer base in the international market. The marketing strategy should target the needs of the customers that come from distinct backgrounds with different taste in fashion. Hence, a fashion retailer has to keep in consideration all aspects of marketing and accessibility of its brand in the international market. The key marketing concepts that a retailer determines, is that of clear definition of target market, accessibility, communication and retail mix. Retail mix is a relatively new phenomenon, which refers to the combination of merchandise, price, advertising and promotion, customer service and selling, store layout and design. These combinations are used to attract and meet the needs of the target market of a fashion retailer (Dunne et al, 2002). Each and every aspect of this retail mix is very important and vital for a retailer. Different retail firms use different combination of retail mix to capture the market share. Some might use pricing and advertising as the dominant theme of retail marketing, while others would use marketing niche and customer services as a key to attract.
Brand Management:
A brand is termed as the key organizational asset. A successful fashion brand would seek to create a distinct brand image and personality (Doyle, 1991). De Chernatony and McDonald (1992) define a brand as “an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs most closely”. Dominant conceptualizations of brands and brand management evolved from unidimensional approaches, focused on role of brands as legal instruments and visual identification and differentiation devices, toward multidimensional views emphasizing holistic conceptions of brands comprising functional, emotional, relational and strategic dimensions (Low and Fullerton 1994; Ambler 1996; de Chernatony and Dall’Olmo Riley 1998a). Several authors have identified a marked shift in branding literature from the importance of image (Boulding, 1956), focusing on consumer’s perception of brand differentiation, to identity (Kapferer, 1997) which is more concerned with how a firm makes a brand unique. Hence a new concept of brand identity has evolved. (Marwick and Fill 1997, Hatch and Schultz 1997, Balmer and Stotvig 1997, Morison 1997, Wilson 1997, Balmer 1995, Melewar 2001, 2002, 2003). So the focus has gone beyond the graphic design and logo of the brand label, to corporate identity which signifies certain values and attributes contributed by the organization towards its brand management.
Brand Premium/Added value:
A retail customer perceives a fashion brand as premium brand that carries added value. This added value can be in terms of design, brand repute, quality, or even hype. There have been two basic values identified by de Chernatony (1999) that contribute towards the brand premium. One is the functional value such as the price, technology, design and store layout. This functional value is a distinct attribute that a customer adds to the brand and distinguishes the brand from the rest. The second form of added value comes from emotional value. This value is derived from notions like advertising, internal branding, translating the retail brand into consumer taste, and even the shopping experience itself at the retail outlet. A customer values all these attributes and attaches these values to a fashion brand. These added values determine the success of a brand and only successful brands can have control over adding brand premiums onto the pricing of the products. If a brand is successful, it can command a premium price, allowing the retailer greater opportunities to maximise profitability with less need to discount prices (Doyle, 1991). Hence, a brand has to be able to differentiate itself positively and have the quality and added value to define a premium price.
Brand Positioning:
The basic strategic advantage a retailer can have in the competitive market is the positioning of their brand. All the marketing programmes should be targeted towards the better positioning of the brand and create a market position amongst its competitors (Ring et al 1980). Urban and Hauser (1993) state, "Positioning is critical for a new product. Not only must a new product deliver the benefits the customer needs, but it must do so better than competition” (p. 202).
The fashion retailers target a particular segment of a market and position its brand accordingly to be perceived by its customers in a distinct manner. A retail brands position is derived from the perception of its product/service mix and its aggregate image among various customer target markets (Sayman et al 2002). This positioning is never permanent as it changes its direction and is time-related. It may change its direction because of several reasons. The major reasons of change in brand position is change/improvement/development of product, change in store design and layout, change of brand image, change of competitor’s brand positioning and even change in fashion theme.
In summary, a brand position is how a retail firm wants its customers to perceive the brand. Brand positioning depends upon how a company wishes itself to be projected in the minds of its target market. This can be in terms of pricing, design, specialty, quality, or the shopping experience. Different customers would perceive the brand position differently. Therefore, an aggregate consumer perception defines the market position of a particular brand.
The concept of value to the customer is central to an effective positioning. Further, the brand must be able to communicate this value effectively to at least one segment of customers to get customers to switch to the brand. Aaker (1998) states, "A differentiation strategy must add value for the customer, and the added value must be perceived by the customer (pp. 164-165)."
There are certain determinants that would define a particular market position of a brand. These include price level, accessibility, customer services, store layout and design, speciality fashion stores, and the shopping experience it offers to its target customers. For example, customers of Debenhams would not mind spending more time and money in the store because of two major reasons. Firstly, Debenhams is reputed for its designer labels with low price tags, and secondly, the store layout is very much attractive for any customer, and they would spend a long time enjoying the very experience of shopping at Debenhams. Hence, Debenhams has positioned itself in the minds of its customers as economic designer brands with high quality shopping experience.