Kohl’s industry macro analysis – presentation

—Factors affecting industry (PESTLE)

—Economic Factors

  • —Uncertainty due to shortages, rising costs, and fluctuating business cycles (Yuvarani 2009).
  • —Robust economy => high purchasing power due to high disposable incomes (Treadwell 2013)
  • Effects of Sluggish economy after recession:
    • —Preferences for liquidity and capital preservation => low spending in retail (Pomoni 2013)
    • Recovery, but not to pre-recession levels (Plunkett Research Ltd 2013).
    • Survey à consumers preference for savings and debt reduction to expenditure (Farfan 2013).
    • Persistent high unemployment => low retail spending in 2013 (Plunkett Research Ltd 2013).
    • Price sensitive customers due to persisting effects of recession (Plunkett Research Ltd 2013).
  • —Trends to ‘Right-size’ for cost reduction & better quality (Farfan 2013)

—Social Factors

  • —Social responsibility to remove recalled products (Treadwell 2013)
  • Apparel demand affected by cultural norms, and fashion trends (Suttle 2013).
  • —Social factors that influence retailers’ pricing, product and promotion strategies (Bruce 2012):
    • Age – e.g. media for promotion
    • Family size – larger families will seek cost-effective products and services
    • Income – decisions on whether to offer a premium product or focus on low-margin, higher volume products.
    • Trends/fashion/ preferences – e.g. demand for healthier food alternatives, ethical sourcing and fair trade practices.

—Political/Legal factors

  • —Favorable versus unfavorable policies & regulations:
    • —Government-backed loans & subsidies enhance growth of retailers or keep prices low for customers (Treadwell 2013)
    • Stable governance creating infrastructural developments that enable customers to access retailers’ physical establishments (Treadwell 2013).—Favorable versus unfavorable policies & regulations:
  • —Unfavorable regulations such as minimum wages and high taxes – increase cost for retailers (Treadwell 2013).

—Legislative framework:

  • —Increased Legislation affecting the retail business (Yuvarani 2009).
  • Legislation on unfair competition = good for industry (Yuvarani 2009).
  • Legislation protecting consumers from unfair retail practices => increased costs (Yuvarani 2009).
  • —Labor laws and legislation on employee unions => costs implications for retailers and loss of production during employee strikes (Suttle 2013)

—International relations:

  • —Embargo against imports may affect sales for companies (Suttle 2013)
  • Activism against goods produced externally could lead to retailers’ reduced sales (Suttle 2013)

—Determinants of political and legislative environment:

  • —Government’s social responsibility to protect entry of harmful products
  • —Lobbying by interest groups – e.g. Labor unions and Employers
  • Economic situations – e.g. unemployment reduced taxation to encourage enterprise growth

—Technological Factors

  • —Negative aspects:
    • —Disruptive technology – e.g. e-commerce vs. brick and mortar establishment
    • —Cost of adopting new technology may be prohibitive (Yuarani 2009).
    • Information age – customer’s have access to product information and pricing from the Internet – shift in resources that offer competitive advantages (Treadwell 2013).
    • —Online shopping alternatives – convenience (Prasad 2013)
  • —Positive aspects:
    • —Enhanced Ability to track customer preferences thus better capacity to meet their preferences (Prasad 2013).
    • —Increased efficiency e.g. barcoding and near field communication allow easier processing and tracking of inventory and orders (Treadwell 2013)
    • Improved productivity, cost saving and better integration of supply chain stakeholders leading to enhanced efficiency (Negi 2013)

—Ecological factors

  • —Global warming and climate change concerns:
    • —Reduce the industry’s contribution to emissions – ‘Go-green’ initiatives
    • Level of environmental responsibility influences retailers’ reputation (Environmental Leader 2009)
    • —Retailer’s waste-disposal practices, use of plastic packing, recycling, energy-efficient retail buildings   => effect on the environment (Environmental Leader 2009)

pullution

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