The aim of this investigation is to explore the feasibility of opening a designer wear clothes shop for women in the area of Peckham. The feasibility study will determine whether my business idea might be successful. To find out this Primary and Secondary research will be used to gather the relevant information needed to determine the feasibility of my business idea. The aim of this investigation is to explore the feasibility of setting up a business in my local area. I have chosen to conduct a feasibility study on a clothes shop in Peckham, Southeast London.
This study will help in determining if my business idea is worth pursuing, considering basic market factors and consumer analysis. I have chosen a clothes shop because of my past work experience as a sales assistant in on of the top clothes shop in Central London, and my extensive knowledge of trends and consumer behaviour in the clothes industry. Also, being a young adult, I’m a frequent buyer of clothes, and being as a member of my target market and, in my experience as a sales assistant in a fashion store, I know there’s a need for low priced good quality, latest in fashion.
I think it will be a good business opportunity setting up in this area because; it’s a well-established area for clothes shops, which means there are already, potential customers in the area. However, these shops do not sell designer clothes. Also, there’s potentially, a gap in the market in Peckham for designer women’s wear at low cost, as there is only one designer low cost shop, which is aimed at men. [E1] The generic strategies suggested by Michael Porter in his book, Competitive Strategies (1980) are strategies that any business uses to gain [E2]competitive advantage over rivals in the market.
There are three main generic strategies, and they are; Cost leadership: This is where a business attempts to produce goods or services at a lower cost than its competitors. It will do this to charge lower prices than rivals and to compete in price wars that may take place. Organisation, production, marketing and distribution will all be geared at reducing costs. Firms that adopt this strategy are likely to offer standard, adequate, medium quality products. Differentiation: This is where a business tries to make a product or provide a service that is seen as unique by customers.
For example, a business may add special features or USP’s to their products to give the goods or services a distinctive identity. A business can charge a premium price, higher than other prices, and so gain a competitive advantage. Focus: This is where a business concentrates on a particular segment or consumer group. The business tries to identify, anticipate and meet the needs of this group. The segment could be a geographical area, age group, gender or income group. The segment is often referred to as a niche market.
The generic strategy that my business will adopt is DIFFERENTIATION, as cost leadership and focus is already well catered for in the market. Many businesses in this area aim at low costs and low prices so as to compete with their rivals. The clothes I’ll be selling at my boutique will be differentiated from those in selling female clothes in my area because I’ll be selling brand names and designer wear at discounted prices which no other boutique in the area provides. I think this will be a successful strategy because most consumers in this area have to go to other areas to buy designer wear.
This involves assessing rivals in the industry. It may examine initiatives that they may take to promote their own strategic advantage. It could also evaluate the likely response to such initiatives by other businesses and consumers. The purpose of a competitor analysis is to highlight the strengths and opportunities present in the ‘rest of the field’ and to learn from other businesses in the market. Michael Porter in his book, Competitive Advantage: Creating and Sustaining Superior Performance develops a method by which an organisation can analyse the competitive environment within which it operates in order to create a strategic policy.
Firms need to analyse five factors within an industry in order to understand its nature, which helps managers understand how fierce or how favourable the competitive environment is. The five factors include: Competition within the industry: This examines the nature and extent of the rivalry among organisations operating in a market and implications for this in the future. There are three main competitors in the discount designer wear industry, and the biggest threat is from the factory outlets.
These outlets are located in out of town areas, known as Shopping Villages where they have a huge amount of designer wear on offer at very low prices. There are many of these retailers located in this area, which attracts consumers nationwide as they have a wide variety of choice. However, as they are out of town locations, they are quite difficult to get to. The second type of competitor is the chains that sell designer wear at discount prices. These retailers have chains nationwide and are mostly located in city centres e. g. Proibito and The Outlet.
These outlets have a competitive advantage over the factory outlets because they are located nationwide and on the major high streets. However, they don’t have as much variety as the factory outlets and discounting isn’t as low as the factory outlets because there’s less bulk buying from the suppliers. The last type are the independent discount designer retailers that are one-off shops and can be located in the local areas or high streets with no branches or outlets elsewhere e. g. Kolors. They sell a limited amount of designer wear and only known in the local area in which they operate.