CBE AS 1

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Lahore University of Management Sciences, Lahore *

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Management

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Nov 24, 2024

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Introduction Through its website and mobile app, its three London stores and its private-shopping townhouse, MatchesFashion.com offers its customers access to more than 450 established and new designers. It also offers 24/7 advice through MyStylist, its dedicated fashion concierge team. It is all designed to ensure a user-friendly and luxury experience so that its customers – both male and female – can access the best in innovation and forward-looking fashion as easily as possible. Although based in London, the business is global in its reach, shipping to more than 176 countries. It’s all about engaging with customer across multiple touchpoints and bringing our brand to life,. Putting the customer at the heart of business and providing them with the best in global style across a variety of platforms has given company a strong customer base on a global scale, and each of these customers, in turn, acts as a brand ambassador. The key challenges that impacted the internal environment of organisations E-commerce is the latest mainstream retail trend to hit the UK over the last decade. Even though e- commerce portals have existed for much longer, they have only started seeing mainstream attention over the previous few years. The growth of online shopping in the UK has been staggering in keeping up with the rest of the world. Strengths Branded Retailer: Matchesfashion is one of the largest independent online, fashion, beauty, and retailer stores based in the UK. The retailer sells fashion and cosmetic items through an online e-commerce website. Business Model: MATCHESFASHION sells over 800 brands as well as its own private label of clothes and other merchandise. The MATCHESFASHION brand offers more than 30 sizes of the same item you select and that at the same price which no other online retailer is doing in the market. Attractive & Appealing Website: The company uses innovative ways to display merchandise to customers and an interactive online experience to shop, including customer-created looks, company- edited fashion trends, and the MATCHESFASHION marketplace. Digital Marketing: It connects and actively engages with its customers through social media platforms including Twitter, Facebook, Instagram, and youtube. MATCHESFASHION has over 27 million active customers that use its platform and this is all possible relationship management with customers. Weakness The company has cited the impacts of the pandemic and the “additional cost and complexity” of Brexit, according to business accounts filed with the UK’s Companies House.

The retailer last year reported a loss of £5.9 million while its revenues have declined for the first time since launching its ecommerce offerings in 2007, dropping nearly 10 per cent to £392 million. The global supply chain disruptions have also squeezed full price selling windows for the fashion retailer as well as a decline in the demand for occasion wear and holiday clothing, two of the most popular categories for Matchesfashion. The company has suffered as a result of major investment in operations, technology and infrastructure as part of a bid to scale the business pre-pandemic, pushing it into the red. As well as the financial challenges the company is facing, Matchesfashion is also on its third chief executive in as many years. In a bid to help ease some of the financial pressures of the pandemic, the retailer raised £45 million from its parent company Apax Partners last year in order to pay brands and creditors. The move helped in reducing the company’s debt to trade creditors to £26.7 million from £83.4 million the previous year. It added to this by raising another £40 million from its parent to boost the company’s liquidity position and “fund future growth” in February. Opportunity 1. Scalability of platform across markets: An extensive social media research by MATCHESFASHION revealed that its consumer (a 20-something) wants a diverse set of styles in products, produced with ethically and sustainably sourced raw material, which can create magic moments at social events. The 20-something of the day also wants a produce which reflects the real world where he lives. Currently the company offers 85,000 products, and with 5,000 new styles launching every week on its platform offers a plethora of choice. The company has a great opportunity to acquire customers as it wants to become the single largest online platform for fashion retail. It can achieve economies of scale by offering more competitive prices. In other words, to achieve existing customer retention and new customer acquisition, the company can use its online-only platform which is easily scalable as compared to a brick- and-mortar store model. 2. Technological investments to improve customer experience: MATCHESFASHION always perseveres to make shopping more intuitive and personalized for the customer. In order to further improve the customer’s digital experience, the company has employed advanced recommendation algorithms which can make better suggestions to the customer based on his/her shopping experience. The company has built its proprietary features like Style Profile Builder, Back in Stock, delivery status push notifications and Fit Assistant recommendations. Apart from the digital experience, the company has also worked to improve the operational experience for the consumer. The company has always been famous for its rapid delivery and hassle-free returns, and is still pursuing further improvements in these areas. The company has invested heavily to make its global infrastructure network even stronger. For example, the fulfillment center in Atlanta, US has been doubled by facility space and automation of the Euro Hub site has been doubled. The Euro Hub site has increased its storage and throughput capacities by more than 60 per cent. These investments made by MATCHESFASHION can become game changers for the company.

Threats to MATCHESFASHION Many factors can affect your business outside its immediate environment. Some of these include factors such as a shortage of skilled workers or a supply chain issue. The threats MATCHESFASHION is facing are as follows  Competitors: Larger retailers existing in both digital and physical domains like Bohol and Nbrown may have more brand recognition than MATCHESFASHION, as they gain consumers through foot traffic as well as their online platform.  Unseen Events: MATCHESFASHION had been closed for six weeks due to the fuel depot explosion at Buncefield in 2005 that caused MATCHESFASHION to lose £5m of stock. The brand had also discontinued offering kidswear in 2010 which has diluted its core young adult fashion market.  Dependent on Products: Most of its revenue comes from the product, since they have a limited product segment which is fashion and cosmetics, declining sales of its product could lead to a decline in revenue.  Market Difficulty: Almost all players come under the fashion and beauty category and differentiation is very difficult. Customers are very anxious about the fashion category so attracting them needs more brand quality and services.  Deadstock: Since MATCHESFASHION deals in the fashion and clothing segment, the problem of dead stock has always been a drawback for businesses like MATCHESFASHION. Increasing deadstock will ultimately lead to inventory expenses and clearing the stock at higher discounts lower than what the actual product cost will always be there. The external environment during the last two years Currently, the global market for online fashion is worth £220 bn+ and is expected to grow to $872bn by 2023. This steep growth in the industry is governed by various factors and social trends like COVID-19 outbreak leading to the shutting down of offline retails consequently increasing online shopping, shopping on the go with voice-based searches, growth in e-commerce sales via mobile, buyers concerned about sustainability demanding ethical brands, surging influence of trending hashtags like #fashion and #OOTD(Outfit Of The Day) on Instagram, etc. The PESTLE tool helps to study more such trends and influencers that impact the online fashion industry and widely MATCHESFASHION. The PE=PEST analysis report is a structure to examine the consequence of external factors on the macro-environment of MATCHESFASHION. The PESTLE analysis is a useful technique to study the impact of factors like political, economic, social, technological, legal and environmental on MATCHESFASHION’ business model, growth trajectory, its business case, and market strategy. Various macroeconomic and geopolitical factors influence the MATCHESFASHION business, its operations, financial conditions, and the ability to trade across borders. Some of the key economic and

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political factors are trade wars, Brexit as a current geopolitical uncertainty, economic crisis due to coronavirus outbreak, and volatility in foreign exchange rates. Digital transformation and technological advancements have been a boon to the fashion industry and largely MATCHESFASHION. In U.K. customers' preferences are changing and online shopping has gained tremendous prevalence over shopping in malls, specially in the wake of the outbreak of the novel Coronavirus. MATCHESFASHION being the leading online player in the U.K. market has gained huge popularity and success. Being one of the most polluting industries, the fashion industry faces strict legal compliances related to the protection of the environment. However, MATCHESFASHION' business model focuses on attaining growth while appending social value and lessening its environmental impacts. Since MATCHESFASHION is purely an online company its biggest environmental impact is carbon emissions from the shipment of their goods, the running of their factories, and packaging waste. Thus, MATCHESFASHION's Carbon 2020 strategy, aims at reducing carbon emission, depreciating energy consumption, and boosting renewable sources of energy. Political factor The UK is a developed country, with the world’s sixth leading economy by nominal GDP and the sixth biggest by purchasing power unity. It was the world’s first industrialised country and the world’s leading power during the 19th and early 20th centuries, but the economic and social cost of two world wars and the decline of its supremacy in the latter half of the 20th century declined its leading role in global affairs. The UK nevertheless remains a superior power with strong economic, cultural, military, scientific and political effect. It is a recognised nuclear weapons state and has the fourth extreme defence spending in the world. It is a Member State of the European Union, a permanent member of the United Nations Security Council, and is a member of the Commonwealth of Nations, G8, G20, NATO, OECD, and the World Trade Organization. As MATCHESFASHION has to operate in the UK market it has to follow the policies of EU and World Trade Organization. MATCHESFASHION businesses are the aid of UK government policies and regulation for example, they are providing good working environment for their employee. 3 This company is also a part of Ethical Trading Initiative (ETI) which deals with the working condition of the employee and Environment. Economic factor The company targets the fashion conscious 16-34 years old.Five year ago MATCHESFASHION had just 550 square meters of warehouse space but at present to meet its growing demand due the growing confidence in online retailing, it has now 32,500 square meters of warehouse space. In April 2005 MATCHESFASHION employed 47 permanent staff and by February 2008 it had 250 employees. Socio-cultural Factor According to the annual report 2009 of MATCHESFASHION the age profile of female shoppers are as follows:- 51% of the female shoppers are of age 16-25 29% of the female shoppers are of age 26-35

20% of the remaining female shoppers are of age 36+ And according to the same report the age profile of the male shoppers are as follows:- 52% of the male shoppers are of age 16-25 30% of the male shoppers are of age 26-35 18% of the remaining male shoppers are of age 36+ MATCHESFASHION has received several awards in the past and recently in march 2010 at cosmopolitan online fashion award it has won an award for being online retailer of the year therefore it shows the growing confidence of customer towards MATCHESFASHION. Technological Factor In today’s UK market more people wants to shop online rather than going to the shopping malls. This new technology has gained immense popularity among the customer in the UK. Therefore MATCHESFASHION which is an online retailer is gaining huge popularity. As MATCHESFASHION is an online retailer it is doing very well in UK market. Roles of the UK government to support the SMEs The small and medium-sized enterprises in the UK have faced a huge loss in their business due to the lockdown periods in the covid-19 pandemic situation. The government has helped the SMEs to recover their losses during the covid-19 lockdown period by allowing them the loans. The government of the UK has provided SMEs with loans of up to 2 million pounds. The UK government enables the SMEs to recover the losses that they have faced during the lockdown period. With the help of the business loan allowances from the government, Matchesfashion has recovered its losses in its business due to the lockdown periods in pandemic situations, and it has increased its profit margin in the market. The British business bank has provided the SMEs the loans of up to 25000 pounds in order to operate their business successfully. The SMEs can raise their capital for business activities from these loans. With the help of the loans for the SMEs, Matchesfashion has expanded its business in the market by maximising its profitability. The UK government has helped SMEs by giving them various tax allowances. One of the most important tax allowances is that they are allowed to claim the tax reliefs for the first year of purchasing various assets regarding their business operation. With the help of this allowance, SMEs can purchase assets for their business at affordable prices, and this will help them to save money. The tax allowances have helped Matchesfashion to claim relief in taxes in order to save more money for their business through claiming for the deduction of tax amounts while purchasing assets. The government of the UK also allows tax reliefs for the SMEs who contribute to the creative industry. The SMEs can save a large amount of money for their business operations by claiming the deduction of a large amount from their taxes. The SMEs also can increase their profit margin and grow their business operations in the market by claiming relief in their taxes. With the help of this tax allowance, Matchesfashion has claimed a large amount of its payable taxes in order to save enough money for their business. The government of the UK has helped SMEs by providing them the investment schemes for business operations. The SMEs can raise their capital up to 5 million pounds each and every year, and

they can also raise their capital up to 12 million pounds for their business lifetime. With the help of these investment schemes, SMEs can gain more capital in order to expand their business in the market. They can implement their new business plans effectively with the help of investment schemes. These investment schemes have helped Matchesfashion to raise enough capital for their business. Conclusion At present MATCHESFASHION is in the growth stage where it will have to face many new competitors. So it has to keep a close eye on its main competitors which are the Next plc, Arcadia group, New look retailer ltd to be a successful retailer in the UK market. As its competitor Next plc is doing so well selling its products online and through its retail shop all over the UK, MATCHESFASHION should also think about opening retail shops in the UK as well.

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CBE AS 1

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