Background
Retailers with higher socio-economic group/customer, higher price, higher quality:
Kookai
Reiss
FCUK
Retailers with lower price, lower quality, lower socio-economic group/customer, lower fissionability:
Primark
New Look
Dorothy Perkins
Primark is a retail group in the value sector and operates a total of 170 stores in the UK, Spain and Ireland, where it trades under the Penneys brand. Primark employs in excess of 23,500 people. In the UK , in terms of market share, Primark is the 4’th largest ‘ total clothing retailer' and is number one in the ‘ value clothing retail market'. For the first 24 weeks of this financial year, ending 3 rd March 2007, 23 new stores were opened and five smaller stores were closed to give 4.4 million sq ft of retail selling space. A further 8 stores will open in the second half taking the total retailing space to 4.7 million sq ft by the financial year end. Six of these stores were acquired outside the Little woods transaction which demonstrates that Primark's heightened profile makes attractive high street locations easier to secure, as evidenced by the highly successful opening of the 70,000 sq ft store on London 's Oxford Street on Thursday 5’th April 2007.
Primark is successful because it offers:
• Super-competitive prices (the result of technology, efficient distribution, supply and volume buying)
• Mainstream market product quality
• High Street locations
• Superior store fit
• Clear focus on the target market.
Source from
Investigation
I am doing an investigation to find out if Primark have a competitive advantage over FCUK. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.
There are two main types of competitive advantages: comparative advantage and differential advantage. Comparative advantage, or cost advantage, is a firm's ability to produce a good or service at a lower cost than its competitors, which gives the firm the ability sell its goods or services at a lower price than its competition or to generate a larger margin on sales. A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers.
I want to find out where people spend more money. My theory is that people are more likely to shop at Primark and spend more money there because it is cheaper and people are more likely to buy more things. However FCUK add value by having a brand name people think of designer good quality goods with FCUK whereas
Questionnaire
- How often do you shop at Primark?
Every day
Few times a week
Once a week
A few times a month
Once a month
A few times a year
Never
- How often do you shop at FCUK?
Every day
Few times a week
Once a week
A few times a month
Once a month
A few times a year
Never
- On average how much do you spend each time you shop at Primark?
Don’t shop at Primark
Under£10
£11 -20
£21-30
£31-40
£41-50
£51-60
£61-70
£71-80
£81-90
£91-100
£101+
- On average how much do you spend each time you shop at FCUK?
Don’t shop at FCUK
Under£10
£11 -20
£21-30
£31-40
£41-50
£51-60
£61-70
£71-80
£81-90
£91-100
£101+
- Which store do you believe has a competitive advantage?
Primark
FCUK
Please briefly explain ……………………………………………………………………………………………………………………………………………………
Analysis
I have handed out 40 questionnaires to females who follow fashion which are Primark and FCUK’s main customers. Out of the 40 questionnaires I handed out I received 37 back. The first question I asked was how often do you shop at Primark? The results are as follows:
This chart shows the most common amount of time people shop at Primark is a few times a month.
Below are the results to show how often people shop at FCUK. It shows that the most common number of times people shop at FCUK is a few times a year.
The graph below shows the amount of money people spend on average each time they shop at Primark, which is between £21and £30.
This graph shows how much on average people spend when they shop at FCUK, which is between £61 and £70.
I asked people ‘Which store do you believe has a competitive advantage’ the results are below. They show 68% of people think primark have a competitive advantage. When I asked them to explain why people said primark has a competitive advantage because it has good value for money and because it sells clothes from the latest trends, whereas people said FCUK has a competitive advantage because it sells good quality clothes and is a brand name.
Evaluation
The people I asked where all women who follow trends. This is because they are likely to shop at Primark and FCUK; therefore they will be able to answer the questions in my questionnaire.
My results show that people on average shop at Primark a few times a month whereas the most common number of times people shop at FCUK is a few times a year. I believe this is because they cannot afford to shop at FCUK as often as there prices are as much as 10 times higher. Also people spend on average between £61 and £70 at FCUK where as they only spend £21and £30 at Primark. People spend more money at Primark; therefore they are less likely to shop there as often according to my background a top at Primark costs around £8 whereas a top from FCUK coats around £38. Therefore people will be able to buy more things from Primark as it is good value for money.
More people shop at Primark as it has a good reputation with its customers, their products are cheap and good value for money as they have a good relationship with suppliers. Also their products are demanded therefore Primark have a competitive advantage over FCUK as according to my survey they don’t give good value for money.
Bibliography
I have used the following websites for my background:
