Industry & Marketplace

The Industry

The retail industry is interweaved into every part of our daily life.  Anything that can be considered a retail sale which is a measure of broad consumer spending is considered a part of the retail industry.  The United States in fact has a very well established set up of distribution to all types of retail companies.  This industry is a very competitive environment that creates healthy business operations and increases efficiency and reliability ("Retail Trade Industry Spotlight | SelectUSA.gov," n.d.).  Within the retail industry there are sub levels which consist of retailers and franchisers. 

Companies within the industry compete for market share based on the economies of scale, the tight cost controls, and the investment of the brand image itself. This type of competition pretty much eliminates any new possibility of new competitors coming into the marketplace.  Many products within the industry are similar, there is a lower threat of substitute products is high and switching costs for buyers is very low ("J.C. PENNEY CORPORATION, INC. Names of Competitors," n.d.).  These companies try to compete on pricing but maintain the quality of their products. 

Definition of the Industry

The proper definition of the word “Industry” is the economic activity concerned with the processing of raw materials and manufacture of goods in a factory ("Industry | Definition of Industry by Merriam-Webster," n.d.). 

Retail companies try to differentiate their product lines.  J.C. Penney is a very big example of how marketing strategy can help to increase a company’s market share within that certain retail industry.  To explain differentiation does not come without a price.  With many contracts and patents created in this process, the bargaining power of the company’s supplier base jumps from a low to a moderate level ("J C Penney Co Inc Comparisons to its Competitors, Market share and Competitiveness by Segment - CSIMarket," n.d.).   

Key factors that come into play within this industry are the important roles outlines by gaining a competitive advantage.  These key factors are within the department store retail industry and the scale of the economy.  There are other factors like lower input costs, and an increased investment in brand image.  To stay on top of this industry these key success factors allows the company itself to stay one step of the competition, maintaining and even possibly gaining more market share ("J C Penney Co Inc Comparisons to its Competitors, Market share and Competitiveness by Segment - CSIMarket," n.d.). 

With J.C. Penney’s it is very well known that their market share has fallen and with the rebranding our image we are hoping to use the success factors above to increase our profitability and consumer base.  

Shape of the Industry

In 2016, several of the retail chains, including JCPenny, closed the doors on hundreds of their retail stores.  Despite this fact, the overall worldwide retail sales totaled $22 billion in 2016 and the current gross domestic product (GDP) average is 30% of income spent on retail (Farfan, 2016).  Employment in this industry has been on the rise and as of May 2015, 15.7 million were employed by some type of retail company.  These numbers indicate a growth in the retail industry which outweighs the downsizing of physical stores and company bankruptcies (Farfan, 2016).  Perhaps the store closings are less an indication of a decline in the economy and more of a sign that the industry is changing and evolving.

Development of the Industry

The industry has been in a state of transition for the last twenty or so years.  People used to go to malls to hang out and shop around and buy or just see the latest fashions and trends.  This was the hobby but now online shopping has become so popular that former brick and mortar stores which used to easily lead in sales are closing their doors.  The modern shopper is savvy on the internet and can always find a better price.  They love the instant satisfaction of getting and item online instead of going store to store and the opportunity to check and compare prices and keep up with the fashion trends in an instant online.  The market has gone full circle from, catalog sales, to department store and mall shopping and now leaning more and more toward online sales. 

The Marketplace

The fashion industry is a very focused, rapidly changing, and unpredictable marketplace. There are thousands of brands and stores that are selling clothes every day, and not just in store but online retailers as well. Whether it is physically sold or not, there are fashion trends that seem unpredictable in this world, and all it could take is a certain celebrity to wear a piece of clothing to open up a whole new set of doors. Fashion United claims that there are 3.2 trillion dollars focused into the fashion and clothing industry. This represents roughly 2 percent of the gross GDP for the entire world.

Condition of the Marketplace

The condition of the marketplace in the fashion industry has definitely seen better days. With thousands of brands and locations, with online retailing as an additional option, the competition is at an all-time high. (Fashionating World, 2017) Research states that “A report by McKinsey and London-based publication Business of Fashion last month revealed, nearly 70 percent of surveyed fashion executives, investors and industry observers believe conditions for the industry have become worse.” 2016 had been a horrible year for the industry, and because of it new technologies and methods are emerging by retailers. Many retailers have noticed customers want to see the instant gratification of shopping, and online shopping is creating the scene for the industry. An additional report has suspected that online sales for fashion luxury will see a 12 percent increase by 2020. Customers are definitely changing their old ways by now opting to shop by the click instead of browsing in stores.

Changes in the Marketplace

In conclusion, the biggest changes in the marketplace are both in the methods of selling, and the products themselves. As states previously, the customers are leaning towards an online shopping experience, which is no surprise for some tech savvy followers of these brands. It has been observed by marketing teams themselves that products are selling better online, and getting different ideas in front of the consumer is just simply easier and more successful. These changes will reflect on many stores including the future of JC Penney, who have also focused on digital sales in the recent months.

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