Executive Summary
Problem Statement
The current economic crisis is one of the worst to hit street outlets in the last two decades. City Styles, a chain of 18 fashion boutiques across south-east England was not spared either. Consequently, dealing with its surmounting challenges has drawn the concern of many experts from various socio-economic disciplines. Equally, it is recognized by this report as an issue that requires adequate professional and legal attentions.
Assignment Statement
This report undertakes the activity of conducting research and inquiry into the effects of the downturn on street outlets with close attention to the City Styles in Chester region. The assignment involves compiling a comprehensive report to the CEO of the City Styles chain of shops.
Purpose of the report
The purpose of this report is to inform the decision making process of the City Styles by putting forward recommendations on how it should deal with the current crisis at various levels.
Introduction
Objectives
The overall objective of this report is to provide a strategic basis on which future postulations of textile industry can be drawn. In addition, the report could serve s a framework for the decision making process by street shops dealing in textile in future.
Hypothesis
The current economic crisis has impacted on the consumer spending habits with regard to clothing and high-end products.
Methods
The report makes use of secondary sources of information. Relevant magazines, journal and article from the internet are used to back the findings before conclusions are drawn from qualitative analysis of the findings based on the current prevailing market conditions.
Problem Discussion: Effects of current Crisis on Street Outlets and City Styles
Findings
The City Style serves many clients most of whom are affluent suburbanites in the various locations where they are situated. These customers are more resilient to the down turn. For instance, the clique of customers in the category of celebrities, local artists and TV presenters form an economic proportion of the chain stores. Similarly, in other street outlets which deal in high-end products such as jewellery, costumes, leather handbags, shoes, expensive outfits, cosmetics, and fast food, consumers’ response to sales is motivated by the social manifestations of the crisis at the household and individual levels. It is under such times of harsh economic conditions that people spend more on relaxation and luxuries at the cost of other material needs.
The crisis affected even other major retailers though at varying degrees. This was seen in the manner in which rent rates increased drastically as sales declined in most major street shops. For instance, the sale of The Second City Style in New York fell by 11.3% while in Paris the sales fell by 11%. On the other hand, economic rent increased almost two fold. The crisis was evident when majority of consumers cut spending on high-end products such as hand bags, shoes, jewellery, and most expensive outfits.
The City Style’s chain model gives it an edge over and above other single stores in the market and general textile industry to fair well during this period of an economic downturn. Certain consumers’ behaviors however seem to conform to the current changes. For instance, the concept of consumerism is a trend that resonates with many people whose actions are informed by the media advertisements.
Consumerism encourages customers to spend more on products and services. This is what led to the credit crunch and eventually, the ensuing economic downturn impacted on the street outlets. Notable failure was brought by “consumer defiance”, which is the contemporary average consumers’ propensity to spend more than they can afford on a particular item. Equally elusive is Kate Sopper’s alternative “hedonism” theory which presumes that people are judged based on what they own. Therefore people tend to spend an item for the sake of prestige and pride.
Conclusions
The variations of effects of the current crisis on different segments of street shops is an important indicator on how consumers of non food items, food items and a class of other high-end product would respond to price fluctuations on these commodities. The price elasticity of these goods is generally more than one. Certain niche of customers who may not prefer goods produced in mass would resort to other suppliers who would customize these products for them. This is the major challenge facing street outlets besides intense competition. It then becomes absolutely necessary for these shops to adopt both general and specific measures if they are to continue operating it strategic zones.
Recommendations
Generally, street shop operators should consider collective leasing of buildings as opposed to renting, in order to bargain for tax reduction from government on such major establishments as shopping malls. As for City Styles, the company should consider revised advertisement of it goods while involving offers on overdue stocks.
Concerning cost of operations, the company can do well by trimming the number of staff or reduced employees’ monthly wages and salaries. With regards to improved efficiency, the company should consider retraining of some of its workforce to acquire new skills and keep the chain stores more adaptable to future changes in the sector and industry. Besides it can take in more volunteers and interns as part their adjustment strategies.
Increase cash flow: during crisis as in the current melt down, maintain a relatively liquid business strategy buffers the business from the volatility of the textile industry, especially in East London.
City Styles should not close down the underperforming stores. Instead the company should consider investing more in their customers and the community as a whole through programs and activities tailored towards social corporate functions. Weathering the storm is part of the company’s image both in the present and in the future. It should ultimately consider redistributing the affected outlets by relocating to new strategic divided streets locations.
Reference List
Bond, C, Global downturn hits the world’s most expensive shopping streets. 2009. Web.
Brown, M, Financial crisis: high noon on the high street, the Telegraph. 2009. Web.
Dwyer, C & Peter, J. Transitional Spaces, Routledge, New Fetter lane, London, 2004, pp.144.
Singleton, J. The World textile industry, Routledge, New Fetter lane, London, 1997, pp. 42.
Wendy, D, & Hufbauer C. World Capital markets: challenge to the G-10. Institute for International Economics Press, Washington DC, U.S.A., 2001, pp. 258.