River Island Clothing Co. Ltd. Essay Essay Example

River Island Clothing Co. Ltd. Essay Essay Example River Island Clothing Co. Ltd. Essay Paper River Island Clothing Co. Ltd. Essay Paper The concern started in 1948 as a little lock-up store in East London selling wool and ladies dressing. As the concern increased stores were added under the name of â€Å"Lewis Separates† and the focal point became ladies dressing. By 1968 there were some 70 shops in the UK and â€Å"Lewis Separates† introduced into a few of its shops a trade name new construct and name. Innovative in design and format these shops used strong colorss. bold manner imagination and dad music to make â€Å"Chelsea Girl. † the first UK concatenation of manner dress shops. With continuing enlargement. menswear was introduced in 1983 under the â€Å"Concept Man† trade name and from 1988 farther development took the signifier of the development ofa new trade name construct of a themed shop offering manner for work forces and adult females. The new trade name was called â€Å"River Island† and today the merchandise scope includes men’s and women’s vesture and fo otwear. accoutrements and cosmetics. A dedicated in-house design and sourcing squad creates stylish. fashionable and quality vesture stand foring value for money. targeted at the manner witting 18-35 twelvemonth old market. As at 28 December 2002 River Island had net capital resources of ?85. 5 million and achieved gross revenues of ?377. 6 million for the 52 hebdomads. River Island is a entirely owned subordinate of Lewis Trust Group Ltd. which is the parent of a diversified group engaged in the retailing. belongings. leisure and fiscal services sectors. As at 31 December 2002 Group consolidated net capital resources amounted to ?408 million. Relevant Markets River Island designs and retails men’s and women’s vesture. footwear. accoutrements and cosmetics. The bulk of merchandises are designed in-house and sold chiefly under the River Island trade name. although other River Island owned trade names are used. A little proportion of gross revenues are attributable to thirdparty trade names. River Island has shops in over 180 locations Great Britain and Northern Ireland. 9 stores in the Republic of Ireland and elsewhere in the universe retails through franchise spouses in Kuwait. Saudi Arabia. United Arab Emirates. Bahrain. Malta. Cyprus and Poland. In all districts the mark market is the manner cognizant 18-35 twelvemonth old sector. In add-on to its stores. River Island retails through mail order catalogue and web site. RI/11427 ( updated ) 25/05/2004 1 Within the geographic markets mentioned above. the River Island shop card is available merely in Great Britain and Northern Ireland. In add-on to its shop card. River Island accepts a full scope of payment methods from clients. including hard currency. check. recognition and debit cards. Competition within these markets. Our commentary relates merely to the UK market. Within the retail vesture market there is non merely important competition in footings of the figure and differing nature of retail merchants engaged in the sector ( e. g. big section shops. little independent vesture stores. multipleoutlet vesture retail merchants. specializer footwear retail merchants. etc ) but a significant comprehensiveness of pick of merchandise available to the populace. Unlike some other merchandise sectors ( which participate in shop card issue ) the retail vesture sector is non dominated by a limited figure of retail suppliers and the populace has an extended portfolio of dressing retail merchants with which to put their usage. A big bulk of consumers besides have a broad pick of alternate payment methods and/or beginnings of deferred payment ( e. g. shop cards. recognition cards. personal loans. debit cards linked to borrowing installations ) . We see the proviso of a shop card as offering both an alternate payment method ( where the client has the immediate ability to pay by other agencies ) and an extra payment method ( where the client does non hold the immediate ability to pay by other agencies ) . We try to aline the card to our trade name. and to make benefits for our clients. by offering trueness price reductions and particular offers. For a retail merchant such as River Island. the intent of our shop card is chiefly to supply a convenient method of payment ( whether option or extra ) . Whilst it makes no identifiable difference to us whatever agencies of payment a client chooses. we do hold the ability to pass on with card holders and to offer them benefits which we consider will help trueness. We offer such benefits as: RI/11427 ( updated ) 25/05/2004 Cardholder one-off price reductions Invitations to particular events Loyalty price reductions and wagess Sale previews 2 Discounts on 3rd party services/products Third party offers Forthcoming new merchandise information. These benefits can be promoted by and large. or more specifically targeted based on purchase behavior demonstrated by card disbursement patterns A shop card programme besides provides the retail merchant with a important channel of communicating with clients. a installation non available through other payment mechanisms. The River Island shop card. whilst it includes an optional recognition installation ( i. e. deferred payment ) in common with all recognition cards. is non intended or promoted as a vehicle for longer term adoption. Neither is the card intended as a agency of recognition for those who find trouble with other beginnings of finance. First. the card is a agency of payment. It may be that users choose to utilize the card because they do non hold another agencies of payment at that minute. However. it does non so follow that they will utilize the card installations since they will non incur involvement if they pay off the balance within up to 54 yearss. We have no fiscal involvement in the card operated for us by GE and we have no influence over our card provider’s statistical recognition hiting standards and mechanism. Nor do we hold any contractual influence over the APR charged. or other footings. We sell manner merchandises. It is our position that our clients base their buying determination on their desire for a specific merchandise. We do non believe that the handiness of recognition is a driver as it might be for furniture or larger family goods. Shop cards are usually tied to a individual trade name proprietor or retail merchant and to that extent shop cards do non straight vie with each other. They do vie with other signifiers of payment. peculiarly mechanisms which include the ability to postpone payment. Any analysis of the benefits/costs associated with shop cards and the competitory place of shop cards in the market place. when compared with other agencies of payment. needs to take history of the entirety of the shop card offering and non merely a individual facet of comparing. Barriers to Entry/Ease of Switch overing Merely one or two retail merchants operate their shop cards in-house. River Island uses the services of GE Capital Bank Ltd. In the context of River Is land sing conveying its shop card operation inhouse ( which could potentially better competition in the 3rd party supplier market ) there are important barriers to entry. including. ( a ) Set up costs for RI/11427 ( updated ) 25/05/2004 3 ( B ) Ongoing costs Name Centre operation Computer systems to pull off card histories Hardware costs for the above Development of recognition hiting system Human resources recruitment Training Department Compliance Department Recognition hiting Human resources Occupancy costs for call Centre Higher selling costs covering design/print issue of shop card certification Card fabrication costs Bad debts Fraudulent card applications and use Against these barriers the lone important advantage would be fiscal if we could bring forth more value. However. it has to be borne in head – whether in relation to a self-operated card or an alternate to GE – that we need to offer our clients continuity and we need certainty that our card supplier is able to execute. Store card operation is a really hard concern. GE have demonstrated that they can execute. To day of the month few others have done this in the UK. There is a little figure of 3rd party store-card suppliers in the UK market and of those suppliers GE Capital Bank is reported to hold over 50 % of the market. Because of differing accomplishments involved in the proviso of shop card and recognition card services. suppliers ( e. g. Bankss and finance houses ) of other consumer cards and other signifiers of episode recognition are non in a place to readily offer shop card services for retail merchants. Therefore there is some inelasticity in the supply side of 3 rd party store-card suppliers. In add-on. easiness of exchanging by a retail merchant can be influenced by Exclusivity clauses in an bing contract Lengthy contract periods Existing supplier has developed a information base of cardholder disbursement and borrowing behavior that is non readily movable to a new supplier. Financial and clip costs involved in exchanging. New cards have to be issued to all bing cardholders. showing a possible break hazard. Customer Information The River Island store card can be applied for in individual at any one of our stores or electronically through our Website World Wide Web. Riverisland. com. The application process is that prescribed by our card supplier. The card is promoted on the River Island Website. in our mail-order catalogue with application for the card being made through either method described above. but chiefly through our stores. Customer information about the shop card is provided through In shop postings A â€Å"please take one† cusp available in our stores During history gap processs when the client is finishing an application signifier with our gross revenues advisor A â€Å"welcome† brochure issued at the clip the shop card is issued to the cardholder. The cusp and brochure in peculiar provide written information in untechnical linguistic communication about the benefits of the shop card in add-on to summarizing cardinal information about the fiscal facets of the card. The full footings and conditions of the card recognition understanding are provided to the client on the contrary of the card application signifier. a transcript of which is handed to the client following its completion. The full footings and conditions are besides repeated when the card and any renewal/replacement of it are despatched to the cardholder. Customers are entitled to take away a clean â€Å"voided† application signifier prior to doing any application and successful appliers are besides offered a â€Å"no quibble† warrant that within 60 yearss of opening their history. they may pay off any outstanding balance. shut their history and non be charged any fees or involvement.