Since then, the PESTLE analysis has become a popular strategic tool to assess the macro environment of organisations . Nevertheless, these could be an opportunity for open and more flexible existing fashion retailers. 1.0) Introduction Initially, this move didnt prove to be very sensible since the brand experienced losses due to some mistakes related to sizing. Before We See PESTLE Analysis Examples, Let's Recap on the Basics. to monitor the growth of not only retail sector but also that of the organization. The pandemic of covid-19 has reduced total sales, annual revenue, and the company's net income. The countries in which the clothes are produced, there are significant issues with labour regulations, all to accommodate North Americas demand for fast fashion consumerism. In all six sections; political, economic, social, technological, environmental and legal there are issues that the firm would face. The industry produces world class designs based on creativity and innovation which is functional. In 2015, it achieved global sales of $20.8 trillion. Political factors. 2. More Energy Efficient Systems Will reduce the overheads of gas and electricity and general production costs which could have a knock on effect for Velocity Clothing. Following this trend, it is seen as fashionable. Much of the supply of cotton was wiped out due to floods which causes the price to go up as well. However its not always so easy to do this, it takes time and can cost money to get rid of waste and recycle. Trading Policies any new trading policies formed between countries could make it easier or harder for countries to trade with each other, which could be, For example is an old aged pensioner more likely to buy a brand new latest fashion luxury garment that is extremely popular with the younger generations? As a result, many businesses are trying to cut back on the amount of cotton they use in their clothes. Firms can be protect the natural environment demand by the public. In fact, when the direct, indirect, induced, and 'spill over . This information needs to be considered when selling the products and considering the target audience. Economic growth means that people are going to spend more on shopping. It aims to explore how some of the political, economic, social, technological, environmental, and legal factors influence the UK fashion retail industry. When the prices of commodities increase, customers avoid buying that commodity. The operations of every business are significantly impacted by the technological changes that occur every day. Substitutes level of threat depends on the amount spent per capita on clothing items, as this affects how much emphasis may be placed on either price or brand loyalty. Moreover, Uniqlos operations in different countries can be affected since they highly rely on good political relationships. Abstract. This article is for business owners and executives who want . Open Document. If asked, the fundamental way to tell the meaning of PESTEL Analysis is the study of the six most important external factors that influence a company or an industry. It impacts a lot of people, so in order to do that, trade policy must be properly defined, identify what the roles of government currently are, and their involvement in it, and then analyse what should be their role. Ethical / Environmental Fair Trade Issues by not doing business the correct way and by not abiding by fair-trade prices this could have a knock on effect to Velocity Clothings reputation.However paying fair trade prices is a lot more expensive than not paying them. In the late 1960s, Aguilar published a book titled Scanning the Business Environment in which the now known PESTLE tool was first identified. Zara. The production of some of these materials may be in areas of instability or conflict. For example, intellectual property laws provide security to the brand and make it easier for it to function. Is a new luxury garment going to be even noticed in the culture they live in?Will the culture they live in mean new fashionable luxury garments as Velocity Clothing have to offer going to be a very big thing? The environment we live now are not very stable. This article is about a detailed PESTEL Analysis of the Fashion Industry. A beneficial tool for illustrating. Saturated markets, fierce competition, and the turbulent macro-economic environment have condemned retailers to reconsider their retail strategy. When the central bank increases the interest rate, people increase their savings and avoid spending. In 1884, Michael Marks started his own business in Kirkgate Market, Leeds by opening a penny bazaar stall. Political factors: these are examined from the political stability point of view, which covers government policy intervention in the economy, deregulation, taxation changes, as well as the attitude of political parties on the government policy. 350 5th Ave, New York, NY 10118, USA. production and consumption in the outdoor apparel industry. Overall, the evolution of clothing has been one of the biggest in terms of items for humans and will most likely grow even further into the future with new and better technology. According to Collins (1997), After which, this paper will give emphasis on whether or not green consumerism is framed as a health problem with the aid of such analysis. Political Factors Taxes - business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. York University PESTLE Analysis of Gucci analyses the brand on its business tactics. Welcome to the world of case studies that can bring you high grades! [emailprotected] Trade policy is how a country carries out trade with other countries (Commercial Policy, n.d). To do that, the brand always looks for ways to increase efficiency by minimizing costs. Primark is one of the top leading companies in the retail clothing industry in the UK. Also see Appendix point 1. to see a graph of how the Pound to the Euro has declined over a six month period during 2009. But these rules and regulations also take part in influencing a company or industry's behavior and return. For example, a PESTLE analysis could help a clothing business to decide . Presence of well-connected Omni-channel in the United States. Macro-environmental factors are those that affect clothing industry and the industry have no control over rather than adapting to it. An environmental analysis, or environmental scanning, is a strategic tool you can use to find all internal and external elements that may affect an organization's performance. Thus, the environmental factors influencing the fashion industry are as follows: Legal factors are the laws implemented in society for its betterment. Competition from very low-cost nations in Africa as well as Vietnam, Sri Lanka, Mauritius, Malaysia, Cambodia, Bangladesh, Pakistan, the Philippines and elsewhere is intense, and a large portion of apparel manufacturing formerly done in China is moving to these areas at a rapid pace. However, if you want to find out about internal and external factors affecting Uniqlo, do look at our Uniqlo SWOT analysis. From changing the background to adding content, you can customize the diagram in any way you desire. However adhering to all of these factors is not cheap and is difficult to maintain. Consequently, many customers have gone green and they are persistently advocating for sustainable and ethical activities of firms (Johansson, 2010; Pookulangara. SWOT Analysis examples #3: Zara. This information needs to be considered when selling the products and considering the target audience. What is PESTLE Analysis? Many workers within the fast fashion business . In that case, the profits of Uniqlo will fall, and the brand wont be able to retain high profits. Consumers seeing lower prices could boost further sales. Political factors involve the ways and extent to which a government intervenes in economies or industries. Therefore, the higher the sales would be, the higher the brands profits. Importance of PESTEL Analysis in Strategy Management & Planning Process. This has increased Uniqlos reach significantly and helped the brand increase its customer base. These external environmental factors are difficult to control or influence whereas the elements explained by SWOT analysis are . The economic factors that can play the role of an influencer in the fashion industry are as follows: Society is a big part of any market. Thus, the social and cultural factors that the fashion industry is dependent on are as follows: Today, technology is no more a choice but a need. Weaknesses. Suppliers of Velocity Clothing may also increase their prices if they are also affected by the price of raw materials going up. Moreover, sudden climatic changes can affect the sales of Uniqlo, which will impact the operations of Uniqlo negatively. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis . As a result, Uniqlo started focusing on selling its own clothing, like Gap. Vertical integration within some manufacturing firms enables them to control entire production processes from textile agriculture through finished goods, lowering costs in comparison to producers who must purchase raw materials. How to secure financing as a small business owner, How to Make a Business Plan for Any Business, 7 Crucial Macro Environment Factors to Include in Your Analysis, Macro Environment Examples in the Real World. As a result, Uniqlo moved abroad in 2002. Pestle Analysis Examples: Apple. The fashion Industry immensely involves anything that has to do with the trending demand for costumes or accessories and luxury brands. But it shouldn't be at the cost of destroying the nature and polluting the environment. Francis Aguilar (1967) is the first known reference to the origin of the PESTEL analysis. The fashion industry is a global industry that involves billions of dollars and work. 6 Effective Content Marketing Strategies You May Have Overlooked, Market Analysis Definition (With Explanation and Examples). The PESTLE analysis was invented over 50 years ago by Francis Aguilar, who was an American scholar whose expertise was in strategic planning. Because the EU textile and clothing industry is a leader in the world market, and its product is required all over the world, the European Union work to ensure a level playing field and inaugurated free trade agreement in the EU-28 through the application of the world trade organization agreement (WTO). (2006), the textile and clothing industry in South Africa: the future of the textile and clothing in Sub-Saharan Africa. It started its operations in Japan, but now it is famous all over the globe. Government protectionist measures such as subsidies, quotas, and tariffs have limited economic success to a fortunate few. However, its not that the brand is only famous in Japan. This analysis is used to evaluate those four factors that can affect the performance of your business analysis and determine how those factors will affect your business in the long run. In this section, we will share a fifth of the five pestle analysis examples. See quote in Appendix point 1. Analyze the Patagonia Initiative external competitive environment to identify opportunities and threats. Free PESTEL Analysis | Free PESTEL Analysis. If Velocity Clothing was to pay a celebrity to do this then that would be another cost Velocity must consider, but the goal is for the celebrity to wear it voluntarily.Advertising using celebrities is a method of increasing sales but is also another cost. This could also benefit Velocity Clothing sales by reputation of being a more green company. 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