Market research and the Company’s experience show that advertising, fittings and display at the point of sale are the most effective means of increasing sales. A range of ELLE shop fixtures and fittings, point of sale material and light boxes has been developed for retail stores. Key retail partners, such as Debenhams, have dedicated ELLE shop fit areas fitted out by the Company resulting in up to 50% uplifts in sales. These “store within store” corners also help to increase customer awareness and recognition of the brand.
Providing high quality customer service and developing a skilled workforce enables ELLE to advertise their customer-devoted image. Increased efficiency in the workforce could increase sales and provide the service highly valued by customers.
The Company intends to continue to strengthen its distribution network throughout the territory in all five product categories by selecting specific distributors where necessary for each product type. The aim is to develop substantial increased sales growth from the business foundation established over the last two years.
DB Actif has been approached by several other international brand names offering to license their products to the Company. Although previously these have not been pursued, the Company would now like to take on another brand and is looking for a suitable opportunity.
Across Europe the Group will be aiming at the major city centres and the target list includes Rome, Geneva, Barcelona, Berlin and Stockholm. Sites will selected based on a number of criteria including:
- Lease premiums payable
- Availability of retail property
- Local demographics
- Response to ELLE wholesale in the market
- Potential joint venture partners
Establishing the niche for ELLE also means developing lifestyle concept stores rather than just clothing outlets. This enables all the values of the ELLE brand to be clearly portrayed to the public. The stores would offer all of the ELLE licensed products and have trading areas for bags, shoes, childrenswear, gifts and homeware as well as the full ELLE clothing range. The non-clothing products would be bought in from other ELLE licensees. To complement the concept, a juice/coffee bar is also being considered, such as in Topshop, Oxford Street, London which offers an indoor restaurant. The Company is also considering a number of lifestyle connections with health and beauty, food and travel links.
The Company also intends to operate three factory outlets in the UK to control the distribution of excess and slow moving stocks which are a result of the wholesale and retail operations.
The Company also has the right to establish its own web site under the DB Actif name, as a distribution channel for ELLE clothing products, though this would be subject to the approval of Hachette. The potential for increasing sales through e-commerce is still uncertain. At present only 14 of the UK’s top 100 retailers transact business through their websites. However, a survey conducted in January revealed that 85% of respondents would consider buying products or services through the Internet. Therefore, has been established to increase sales through the Internet.
Actif Group plc’s preliminary results for the year ended August 2002 show the business’s growth and achievements, reflecting the benefit of concentrating on the core brand: ELLE. Their turnover from continuous operations was up 9.6% to £24.9 million than in 2001 of £22.7 million. Their net debt was reduced to £1.8 million compared to 2001, with £3.1 million. The gearing ratio was also reduced to 47% with 91% in 2001. Their total operating costs were reduced by 7.8% to £9.8 million from £10.6 million. However, their gross profit margins have increased to 42.5% from 41.2% which was a result of the increasing proportion of retail business within the Group. Basic earnings per share amount to 0.74p, whereas in 2001, the loss per share was 3.04p. Costs had been reduced to 39.4% of sales (2001: 43.5% of sales) as a result of the restructuring programme following the closure of the Joe Boxer business. Total profit before tax was £315,000 (2001 had a loss of £1,981,000).
ELLE has also been successful in meeting their objectives and establishing the brand, in that the new store opening programme commenced with 3 flagship stores that have been opened recently in 2003 in Birmingham and Glasgow.
The figures show sales growth, improved margins and reduced costs which result in profitability following the disappointing loss last year in 2001/02. Debt has been reduced, providing a stronger basis from which to expand the business in the forthcoming financial year.
Within ELLE retail, total sales increases by 6.3% to £15 million. Excluding the Joe Boxer business, which was discontinued in 2001, retail sales increased by 21.1 %. The growth in retail sales partly reflects a full period of trading from the stores and concessions opened in the first half of last year, but the main factors behind this growth are improved operating standards in the stores, improved fashionability of the product offer and improved stock availability. Retail gross margins are significantly better than the comparative period at 57% (2001: 53.4%). 2001 margins were impacted by the need to clear stocks from the Joe Boxer concession.
ELLE has traded well and in line with expectations. Overall, the retail selling space has increased by 2,5000 square feet to 49, 000 square feet. Having achieved profitability and focusing on the business, ELLE intends to continue building its platform of a profitable business and to seek opportunities to expand the distribution of the ELLE brand, primarily through opening new stores in major shopping centres within the UK.
Functions
Human Resource Management
According to the John Storey investigation, the type of human resource managers in ELLE perform more of an “Adviser” role. They leave most of the decision –making and human relations at work to the store managers but would be prepared to give advice if needed.
Responsibility for recruiting new employees is carried out by the store managers who work on an ongoing basis with employees rather than by a specialist within Head Office. When a position is vacant a board is displayed and the shopping centre or outlet where ELLE is situated is notified so that potential employees can apply easily. A CV can be given or a questionnaire is supplied so that the information needed from the employee is more relevant. The selection process is carried out relating to how well a potential employee matches the job description. Attributes such as experience and qualifications increases the chance of being employed in the right circumstances. For example, more experience in the fashion retail sector would suit the position of a sales advisor in ELLE better.
Candidates for a position will be selected for assessment against the set criteria for the job. Their competence, skill and experience will be taken into account. Interviews are organised and the most suitable candidates are given feedback and recruited. When recruited, an induction day is carried out so that the employee can familiarise themselves with how the business works and what their role in the company is. Induction days are useful to introduce a new recruit to the rest of the team he/she will be working with and training is also introduced at that stage.
ELLE have established appraisal systems in order to focus upon the continuing progress and development of staff and their abilities. Their employees are seen to be individuals with potential improvement and to overcome problems of difficulties.
A Performance Review takes place after the employee has been working in ELLE after 3 months and an Action Planning form is also kept up to date for discussion. The employee grades his/herself on performance in certain situations and areas of skill, then the appraiser will evaluate and discuss achievements and/or improvements. Using this method allows ELLE to train employees effectively in order to meet the aims of the business. For example, increasing add-on sales and providing excellent customer service tapered to the needs of a customer.
Promotion is possible when the manager decides whether he/she is capable of handling more responsibility. A promotion entitles an employee to a higher job status, therefore more respect and a higher wage. To become promoted, more training may be needed and ELLE provides that through qualifications such as NVQ’s.
Employment contracts within ELLE can be terminated if the manager feels an employee is not successfully carrying out his/her role and does not attempt to improve. They are usually given 3 warnings on their performance before the termination is carried out.
Health & Safety Laws are made aware to all employees through the use of posters and on the contract given. The Health & Safety Laws are displayed on notice boards and it is emphasised that an employee must familiarise themselves with all the guidelines and procedures relevant to the line of work.
Another policy-making role in HRM aims to ensure an employee will act in a professional manner at all times: the Disciplinary Policy. It is designed to provide a fair and consistent method of dealing with disciplinary problems and to provide an opportunity for improvement in behaviour/ or performance.
The Business Dress Code Policy applies to employees who have regular contact with customers, members of the public and visitors to the company. Those employees must have the professional image representing ELLE and its products. Therefore, an allowance of £200 per season of clothing in RRP is given to an employee to choose an outfit suitable for uniform in the current season.
The effectiveness of HRM could be indicated by sources such as employee turnover, sales and customer feedback. HRM affects ELLE’s objectives by employing efficient employees, improves customer service so customers keep coming back and enabling employees to stay motivated; it increases sales and boosts the company’s image.
Marketing & Sales
Marketing is an essential function in any business and is largely focused upon within ELLE. The Group’s principal strategy is to develop the ELLE brand both in the wholesale and retail sectors, and to acquire clothing rights for other brands. A marketing strategy that was incorporated from the beginning relates to the company name: ELLE. The largely known and widely distributed fashion magazine ELLE has no relation to the fashion outlet stores other than the use of the brand name. Actif Retail takes advantage of ELLE magazine’s position at the forefront of women’s media. It entices customers by relating the two and it gives either side publicity and more recognition. ELLE stores also use the ELLE magazines as part of shop floor displays.
Marketing collects and analyses data on markets and consumers / customers, and then uses this information to guide business decisions as to which products they should produce and the best methods to promote them.
Actif Group’s strategy is to acquire the clothing rights for well-known, quality clothing brands and to use its team’s expertise and skills to profitably develop these brands through a variety of routes to market in the UK and Europe.
Marketing is responsible for knowing what a customer wants and sales is responsible for getting the customer to want what the company produces. The marketing department sets out to identify, anticipate, establish and satisfy a customer requirement profitably. For example, recent product strategies have been to develop and produce “Icon-based/ Fashion statement” styles eg. Farrah Fawcett T-shirts and the “Essentials” for the basis of the collection, embodying “must have” products within the wardrobe.
In applying marketing techniques such as PEST and SWOT analysis, ELLE is able to look outside itself at the environment in which operates, identifying opportunities and threats in the external environment. Whilst internal marketing audits raise awareness of the strengths and weakness of the business. DB Actif Ltd and subsidiary companies present a SWOT analysis as shown.
Market research is carried out in many forms, for example, investigating trends on the catwalk, questionnaires, sales of certain products so that the next version can be improved or predicted as a good seller. Therefore the right quantities can be produces and less wastage or failures would result. ELLE uses a variety of marketing strategies, eg market segmentation to identify the customer they are selling their products to. This can be done through various ways, eg. socio-economically and behaviouristically. Various marketing activities such as packaging, advertising, promotion and distribution and pricing are carried out in the department of the company.
ELLE’s marketing and sales help achieve objectives by identifying the correct customer and satisfying their needs and wants profitably. Marketing helps to take individuals’ needs and wants into account and it cuts down waste if the product was aimed at everyone. Products can be developed or changed as necessary to consumer tastes. They can then price their products accordingly. Being market-orientated is advantageous in that they can predict or analyse what customer want or need and in that way establish their brand, provide the customer service and increase their sales. ELLE is flexible and adaptable to the demands of the market.
Finance
The finance department functions in that it keeps the records of all financial events that take place in the business. They also need to provide financial summaries e.g. a balance sheet. The accounts section must keep a detailed record of all money paid in and out and present the final balance sheet, sources and use of funds, profit and loss account, and other financial records at regular intervals. As well as keeping Accounts need to be kept of all moneys paid to or by a company, and records must be kept of all debtor and creditor transactions. The payment of wages will also require calculations involving deductions for national insurance, pensions and other factors.
Wages in the finance department are not dealt within ELLE, the holding company: Actif Retail Ltd calculates wages for employees within ELLE as well as those directly employed by Actif Retail Ltd themselves.
The finance department within ELLE helps meet objectives, in that ELLE are aware of the profit, loss, reinvestment figures etc., therefore they can calculate future budgets and expenditure.
Administration
This department within ELLE is concerned with dealing with enquiries, communication within business and also with the paperwork involved. It is important as it is necessary for all business to relieve bureaucracy and to organise documents.
Instead of having a large central office responsible for controlling key aspects of the paperwork, ELLE have separate administration departments within each section i.e. in sales, mail order and production (as seen in the basic organisational structure map).
The administration departments helps achieve objectives in that each department is responsible for their own paperwork, documents and other data handling and it ensures that their tasks are completed. Without the administration function within the business, ELLE would lose sight of its objectives because problems would arise when there is too much “red tape”. Databases need to be maintained, websites need to be updated, filing is always important to be organised and access to information is easier. Mail is also an important aspect, as it contributes to the communication within the business.
Research & Development
Research and development aims to create and improve new or existing products. It can also provide expert advice to the rest of the company and to customers. Without a flow of new and improved products and processes, ELLE could not hope to remain successful within the market. R&D also contributes to extension strategies of various products to lengthen the product life-cycle, however, there would be little point of using extensive R&D into a product with a short product life-cycle. R&D looks into market research findings and directs development accordingly.
The product groups are developed based on the activeness of the consumer and are tapered to different lifestyles eg. home, sport, nightwear and casual. Babywear has also been incorporated and ELLE extends into home interiors, multimedia and merchandising.
R&D is closely related to ELLE’s objectives, in that it helps the company to stay competitive and innovative. It would help to designs products that are cost-effective but with the style and suitable consumer attraction.
Trade-focused marketing, elevates brand awareness at the point of sale.
How meet obj
Management Styles & Cultures
Culture refers to the personality of an organisation, the shared beliefs and the written and unwritten policies and procedures that determine the ways in which the organisation and its people behave and solve business problems. The term “culture” is used to describe the typical approach within an organisation.
ELLE describe their culture in that they seek to provide excellent customer service and to establish the niche for ELLE within the fashion lifestyle market. Their objective is to define a clear position in women’s clothing, they also aim to global motivise. ELLE operates within a very competitive environment, they need to be cost – effective (as in using the cheapest sources available) and they need to cut out waste. They also need to be innovative, to come up with new ideas in order to compete with other businesses. ELLE also pays a lot of attention and focus upon quality of their products. However, I think that there may be conflict between using the cheapest source available and producing high quality products, equilibrium is needed to be reached so that quality does not suffer and costs do not rise.
Aspects of their culture relate to the community of ELLE working as a team and to sell quality products whilst making an emphasis on styles, cost-effectiveness, innovative ideas and customer service. However, they have more of a role culture than a task culture (which emphasises teamwork), it divides the company up, working logically and rationally. The business is divided into various functions eg. accounts, marketing and production. These then have a hierarchical ordering of offices (eg Production Director, Production Managers, Supervisors etc). All members have a defined job or role to carry out. Power is hierarchical and derived from the employee’s strength lies in its functions. Within the functions, what people do at different levels is determined by job descriptions and defined communication procedures. “Position” is the main source of power, and “rules and procedures” are the main source of influence.
The impact of culture on the organisation refers to having respect for all individuals within and outside the organisation. ELLE have a fixed system of working to provide excellent customer service, namely the “8-point Plan” of how to bring in a customer from start till finish. They train the staff to handle problems and how to overcome them. They also provide training courses which allow the staff to have more responsibilities, and thus a higher position. This motivates staff, also in the aspect that they would work for a higher wage. ELLE emphasises that rewards and incentives will be given if the staff or individual constantly work hard and produce effective results. ELLE also works in a way to keep standards of service and products high, guaranteeing the image of their brand.
ELLE use a democratic style of management. It involves empowerment, giving responsibility to employees to make decisions within given boundaries. The manager is comfortable in allowing others to use their initiative and they need to have a good overall understanding of the situations. They also require regular feedback on results.
The organisational structure for ELLE is the traditional hierarchical structure. In a hierarchical structure, the owners or major decision makers are at the top. More employees are involved at the bottom. The lower in the structure you are, the less influence you have in the organisation as a whole. The higher an individual is in the pyramid, the less likely they are to understand precisely how decisions are implemented at the lower levels. They may just have an idea of the overall strategy and base their decisions on the information received. The main feature of this structure is that each layer sees the organisation with different opinions, priorities and interpretations of the overall organisational policy. Because structure is multilayered and complicated, those further down the pyramid find it difficult to understand how and why decisions are made and the organisation may find it impossible to make sure that the employees follow through “corporate decisions” (general statements of policy and procedures). The organisation may also suffer from being “bureaucratic” in that decisions take a very long time to put into operation, and the systems designed to help implement them become more complicated than they need to be because they have to pass through so many layers of the hierarchy. This structure helps ELLE achieve its objectives in that it ensures command and control so that everybody knows what their role is and set out to fulfil tasks set for them.
However, they are recently changing and adapting to the modern world by adopting the “new look” post millennium format, in that ELLE puts customers at top priority. ELLE provides a service to the customer and they put the customer first, in order to satisfy their needs and wants. Otherwise, the business would suffer and so would its objectives. In this way, there would only be one major aim, to satisfy the customer and in doing so would incorporate everybody to work together.
How meet obj( cultue & management) (organisational)
Diagram of new look/flat
Basic Organisation Structure
Shareholders (owners)
Board of Directors (control the company)
Chairman (responsible for the Board)
Managing Director (responsible for overall running of the business)
Department Directors (in charge of specific sections of the business)
Managers (run the business on a day-to-day basis)
Other Employees (who carry out a wide variety of tasks)
Communication Channels
ELLE needs to communicate with their customers, competitors, suppliers and their employees. Effective communication is essential for a business to operate sufficiently. Good communication can be seen as a being a good motivator.
Employees
Formal and internal communication with employees. Certain dates are set for meetings with other teams from other local ELLE branches so that issues can be evaluated. For example, the quality and techniques of customer service, achieving targets, how the new season stock of clothing fits different shapes and sizes, and any problems. It is a way of establishing the needs, opinions or problems of employees and discussing how they may be overcome. It also gives an opportunity for different teams of ELLE to exchange ideas and experiences, which motivates employees.
Formal and internal communication with employees. Training is essential for both the employer and employee so that it can made sure tasks are done properly. Employees would also be motivated to work and it would give them the overall atmosphere of how a business works. It would be essential for them to understand the business and what it wants to achieve through them. Employers can be reassured that employees have the knowledge and confidence in their work, and it would help that they are able to work together to achieve goals. Any queries, difficulties or problems can also be sorted out during training. Good training leads to good external communication with customers.
Formal and internal communication with the working team on the shopfloor. Rotas are given so that the team can be organised and know where they are to work effectively. Rotas provide motivation in that different tasks are given to employees during their shift.
Formal, internal communication between the employer and individual employee. Every month, an appraisal meeting is arranged for an employee. During these half an hour to one hour meetings, certain issues are discussed on both sides. The employer highlights areas where the employee may not be succeeding but also gives feedback on how well they are working. The employee evaluates his/her own progress and it gives opportunities for both parties to give opinions and discuss ideas so that the employee is able to know what to concentrate working harder upon and the employer is able to express his/her thoughts.
It is made sure that employees are thanked at the end of their shift for their work so that they may feel valued and motivated.
Informal, internal communication but external communication with the customer will be needed to achieve bonuses and prizes for exceeding goals. For example, the employee to sell ten gift vouchers independently in one day would receive £20 bonus and a day out shopping in London. The incentives are organised by the employer and they motivate employees to work harder as there would be competition within the team.
Informal, internal communication. A message board is used in each ELLE store in the staff room so that achievements of employees can be highlighted or certain issues can be highlighted, for example the lack of eye contact with customers and change of stock.
Formal, downward internal communication. Newsletters are used so that the company can communicate as a whole and update employees with articles about the progress of the business and fashion news, which may be of interest.
Head Office often arrange shoppers to test the knowledge and customer service of employees. This is to ensure all employees have been trained properly and are constantly improving their level of expertise. Feedback is given so that problem areas can be highlighted but also achievements are rewarded for motivation.
Customers
Customers are priority; it is made sure that eye contact and acknowledgement of their presence is essential. Till service includes serving correctly and politely towards customers. Selling the product to them is the main focus in ELLE customer service. There is an 8-point plan for the entire procedure of customer service from the moment they step inside the store, to the changing rooms and lastly to the till. Alternatives are always offered and extensive product knowledge is essential so that employees can suggest clothes that match the customer and know how a material fits, as well as how it washes. Customer service is valuable to push sales and achieve goals, therefore, it is always made sure the customer is satisfied.
External communication to entice more customers to spend on reduced retail recommended prices. It also helps to introduce new customers to the brand. Vouchers are encouraged to be sold to the customer so that they can be used as presents and it helps to spread brand awareness.
Open communication to customers. The shop floor layouts are arranged so that the customer can receive the view of all or most of the store and the products. Displays and graphics are also placed strategically to attract attention and to face customers. It is also so that customers can find their way easily around the store whilst shopping.
The ELLE website is established, however, it is also linked with the magazine ELLE and provides information on female issues and products. There is also an online shopping service through www.elleshop.com
Leaflets featuring articles about ELLE and its products, the ELLE magazine, word of mouth all contribute to advertising ELLE, its image and its products.
Quality Control
How process adds value to products
Assessments are given on products using question and answer techniques. Extensive product testing e.g. stretch, colour resist, zip, fade to UN trading standards are carried out to ensure the quality of the products and make sure they withstand a considerable amount of time. This adds quality to the product. Washing disclaimer information on the labels provides advice to customers on how to look after their clothing products, therefore, ensuring lasting quality and correct after-care.
Some clothing products contain lycra and certain tags advertise that to show a certification of quality.
Size checks are often carried out in the Design section of the business so that it is ensured they fit the average woman better.
Uses of I.C.T.
Till point – which Head Office can access, shows amount of product sold or refunded, the type of product sold or refunded. Therefore, they can establish what product is more popular and what needs changing or developing.
Trade reports are printed out weekly and sent to Head Office to evaluate how well the company is doing.
Newsletters are printed out monthly to every branch of ELLE for employees; they include information about the fashion trends, reports of how the business is progressing, and it is a way of communication from other areas of the company.
The Company has recently invested over £120,000 in a new computer system developed by ProLogic Computer Consultants. This is a proven system dedicated to the clothing industry and its implementation is now under way. The system supports all aspects of the Company’s activities from design, sourcing, sales, production, warehousing, and distribution through to retail. The system is integrated with the Sun Systems accounting package used by the Group. The system moved the company forward considerably in data management control.
A website is established for ELLE within the main site for its holding company: Actif Group plc. With a website, ELLE is able to communicate with a wider range of audience. It can be regularly updated at little cost and it is cheaper than some forms of communication (e.g. full colour brochures cost more with the need to update every 2/3 months). It also gives access to employees of the business so that they can find out more information about who they work for. However, to make ELLE’s use of I.C.T. better, they could enable the website to become interactive to involve and capture an audience. They could also meet their objectives better if they developed an online Internet shopping system. It allows people to shop online conveniently and therefore, increases sales and awareness. It would also be able to reach more people as all they would need is an Internet connection and delivery service, instead of a store or outlet. However, a disadvantage of this would be the clothes fit differently on each customer and there is no physical contact between the clothes and customer before the purchase, therefore more problems may occur, e.g. refunds and unsatisfied customers. The ELLE website could also be associated with the ELLE magazine sites which provides more advertisement and suitable customers, in that they shop for female clothing.