T.K.Maxx Strategic Analysis

T.K.Maxx Strategic Analysis T.K Maxx is one of the famous European off- price retailer with more stores, more variety of products and quality brands. T.K Maxx is part of the TJX companies which is known as the off-price retail chain in the United States. Retail concept of United States came to the United Kingdom in 1994 because the first T.K Maxx was opened in Bristol in 1994. As of June 2009, T.K Maxx had 247 stores across Europe, 212 stores in the United kingdom, 13 in Ireland, 18 in Germany and 4 in Poland (Source: Official website T.K. Maxx).T.K Maxx is the 10th largest fashion retailer in the UK (Source: TNS Fashion Tracker). T.K. Maxx is the UKS fourth favorite retailer, the third favorite clothing retailer and the UKs shoe retailer for 2009 (Source: Verdit Retail Group). III. Strength, Weakness, Opportunities and Threats 3.1 Strengths Affordable price and quality product is the demand of the more customers and T.K Maxx has the positive impact of customers. T.K Maxx encompasses a wide range of sectors and people may have little options but to buy new clothes and other accessories they choose for T.K Maxx. The falling cost of goods over the past decade has encouraged consumers, to buy goods more often than in the past. The UK retail marketing benefits from a strong tradition in fashion and design. T.K Maxx also affected from this. 3.2 Weakness Sales are seasonal, Most of the expensive items like coats, party wear and different gifts are required mainly in Christmas time. Many large retail companies wear established and it is difficult for competition and to established new T.K Maxx stores. The recession has also sparked price war that is further eroding profit margins. 3.3 Opportunities T.K Maxx chain that offer relatively cheap items should do well during the recession. UK residents continue to spend less on clothes than Europeans because there is a potential for continued growth in the overall market. Mainly men spend less on clothing than women, and there is scope to encourage men to take a greater interest in fashion. T.K Maxx provides the quality product in discount price which becomes the opportunity to those people who have low income. Thus, it is easy to make customers change their buying behavior by special characteristics of the products. A product with special features demonstrated in appropriate places can draw customers attention and result in their buying decision. 3.4 Threats The growth of the retail market shows little symbol of slowing in business because of more competition. Then the choices of the customers may decrease. The decrease in the value of the pound could cause the cost of retail market of T.K Maxx also because the imported clothes and other accessories will rise, which could result in lower sales volumes. A prolonged and deep recession may cause shopping habits to change in the long term, with a new emphasis on saving. Consumers may reduce to spend more money on clothing and other areas of consumption. The growth of the cheap production and the higher competition could affect the overall business. IV. PESTLE Analysis The external factors have a great impact in the sector of business. The external factors which affect the business are dealt under PESTLE analysis. PESTLE stands for political, economical, social, technological, legal and environmental factors. 1. Political factors: Politics is the art and science of government. The policy of government directly affect to the company. Similarly, T.K Maxx is affected by the tax policies, trade restrictions, political stability, tariffs restriction etc. 2. Economic factors: The global recession and economic downturn has reduced the sales of retail products and other home accessories. At present most of the people are jobless. The unemployment rate for October to December 2009 was 7.8 per cent, unchanged on the quarter. The number of unemployed people fell by 3,000 over the quarter to reach 2.46 million. The number of people unemployed for more than 12 months increased by 37,000 over the quarter to reach 663,000, the highest figure since the three months to September 1997. The number of people claiming Jobseekers Allowance (the claimant count) increased by 23,500 between December 2009 and January 2010 to reach 1.64 million, the highest figure since April 1997. This monthly increase in the claimant count was preceded by two consecutive monthly falls. (Source: Office for National Statistics ) Increasing in unemployment affect to the business. This is also affecting the T.K Maxx Company. T.K Maxx have branded themselves as selling to everyone and therefore offer a range of products and services from Value to Finest prices thus appealing to all segments of the market. 3. Social factors: Society and culture is an important factor that must be given emphasis by any business. Now a days most of the people are becoming sophisticated and crazy in fashionable clothes and shoes. T.K Maxx provide these fashionable clothes and shoes in afford able price. Also customers have positive effect towards the quality product of the T.K Maxx Company. 4. Technological factors: Technology offer companies a new way to communicate with consumers. Technology can reduce costs and improve quality of product, online shopping, online gift card competition ,T.K Maxx fan from face book , CCTV recording for security etc. are the example of technology which are used in T.K Maxx. Customers can select and order for goods from the nearest T.K Maxx store according to their choice using technological instrument. 5. Environmental factors: To keep the neat and clean environment inside every T.K Maxx stores, cleaners are provided by the Initial Company of UK. Initial company provides training to the cleaners to make tidy as well as to recycle the waste. 6. Legal factors: Age restriction, increasing in the minimum wage, variety of employment law for employee (student 20/10 hours, full time workers 40 hours) are example of recent laws which affect to the company. Change in trade policy, health and safety, product safety are the legal factors. V. T.K Maxx Strategic Marketing To develop a new business strategy T.K. Maxx developed a promotional campaign that emphasized big labels small prices and love T.K. Maxx. To connect customers within the business it provides 60% discount in different items. Also to attract customers T.K Maxx produces products according to the choice and interest of the customers. T.K Maxx is trying to increase number of stores near about 275 in the United Kingdom and Ireland also approximately 300 stores in Germany. While we consider in to the strategic marketing process, T.K Maxx aims at building customer satisfaction .Also for successful market it gives more focus on building brand. T.K Maxx makes sure that all staffs are motivated and all pulling in the same direction to fulfill the objectives of the company. It has a unique business approach .Customers are empowered to buy all sorts of brands and labels, various qualities like big and small, a range of colors ,styles and sizes. The most important part is that customers can get e xceptional value. As a sales promotion technique T.K Maxx organized some monthly promotions. To enter in the promotion customers aged over 18 need to sign up in the online .Every month one person will get the top prize i.e. TK Maxx gift card of  £250 to spend in TK Maxx UK. 1. Sport Relief [emailprotected] competition 2. Sport relief face book competition 3. Sport relief online T-shirt competition The major competitors of TK Maxx are Tesco PLC, Primark stores limited and George clothing. The development of an effective marketing strategy depends upon an understanding of the working of the market place, of customers needs as well as appropriate mix for the market segment and prevailing environmental conditions. Also understanding of the needs, wants and behavior of customers are the most important factors in designing a marketing strategy. T.K Maxx is always trying to fulfill these factors for the development of effective marketing strategy. Advertisement is also one of the effective communication tools for marketing consumer products in T.K Maxx. Television, newspapers and internet are the medium of advertisement of T.K Maxx. Similarly, T.K Maxx fan which is provided in the face book of T.K Maxx is also the attraction of the customers towards this company. For the promotion of the company T.K Maxx has participated in some charity works which are given below: In the UK in 2007, T.K. Maxx was an active participant of Comic Relief, having been the sole retailer of the Red Nose Day t-shirts which generated  £2 million to the Comic Relief cause. In 2009, T.K. Maxx was again the sole retailer of the Red Nose Day t-shirts with exclusive designs by Stella McCartney, raising a total of  £3,200,589. T.K. Maxx also works with the Woodland Trust by starting to charge for plastic carrier bags in August 2008 and donating the proceeds to the Trust. The proceeds have allowed the Woodland Trust to plant 30,000 new trees on a 15acres (60,703m2) site near Elmstead Market, Essex. The usage of carrier bags from T.K. Maxx has reduced by 73% since the scheme was launched. Since 2004, T.K. Maxx has held a Christmas card recycling scheme in conjunction with the Trust. (Source: www.tkmaxx.co.uk) 5.1 Problems 1. Staff availability: It is nearly difficult to get assistance, especially on a Saturday or during a sale. It is a discount designer retailer store which does not offer the same level of service as a Ralph Lauren outlet. 2. Security: The computer systems of T.K Maxx were targeted by hackers in Watford and Massachusetts from which about 45.7 million accounts were stolen. Those customers who used their card between January 2003 and June 2004 were affected from this problem. 3. Stains and holes: some retail items in the T.K Maxx appear worn. So customers should do full check before paying for the item. Returning it with marks could prove tricky. VI. Conclusion From the analysis of the study it can be concluded that T.K Maxx has the positive impact of the customers because it uses a concept called off price to sell designer and high street goods at a discount up to 60 percent on recommended retail price. This will help to T.K Maxx to sell huge amount of its product in a short time and to provide new, fresh and fashion able products to the customers. Since the company is offering clothing designs for all age groups which depend on the needs and demand of their customers. The result of the PESTLE analysis carried out on the macro-environment of T.K Maxx company indicated very significant effect for the industry and company itself, it can be concluded that the business of T.K Maxx Company is expected to be feasible and grow faster. The sector of the retail is one of the most competitive in the business world so that effective marketing strategy is required in order to be successful. Availability of the quality products, good customer service and promotion of the T.K Maxx shows the effective marketing strategy of the company. This will provide a better idea of how to market products and improve customers base. VII. Recommendation From the above analysis and conclusion I would like to suggest some recommendations for the improvement of the T.K Maxx Company. 1. Full check of clothes and goods should be performed before sending the items to the T.K Maxx stores to sell because they may be damaged or worn. 2. T.K Maxx stores are situated in the European countries and United States only. To expand in its business and to provide good customers service it is recommended that the stores of T.K Maxx should open in developing countries also. To reduce the waiting time of customers in queue to pay for items T.K Maxx should increase more staffs. BIBLIOGRAPHY Cartwright, R. (2002) Mastering Marketing Management, Palgrave Frain, J. (1999) Introduction to Marketing 4th edition, London: Thomson Business Press http://www.tkmaxx.com 14 Feb 2010 at 00:35 http://www.tjx.com 17 Feb 2010 at 15:37 About T.K Maxx. T.K Maxx Retrieved 26 Feb 2010 20:26