Despite the domination of big and multinational companies, small and medium-sized businesses have a promising future in the United Kingdom. The stationery industry has seen a decline in demand over the past decade, leading many major corporations to diversify their offerings or change their product lines. A new research, however, indicates that this pattern is expected to shift in the next five years. According to Verdict Retail, the stationary industry is projected to rise by 2.5 percent over the next five years, from £2.06 billion to £2.1 billion. This expansion provides an incentive for new investors to enter the region. Starting a stationary retail in Manchester City will provide the residents with a convenient shopping point since most of the business offering stationery products are mixing them with other products. A specialized stationery shop will offer products a lower price and under the same roof. One good macro industry indicator is that country GDP is expected to remain stable, and therefore sales will not be adversely affected. However, the primary challenge will be completed from other established stationery business in the United Kingdom such as Amazon. Despite Amazon boasting of over 45% market share, the new establishment intends to employ various tactics to counter the competition. For instance, the establishing high level of customer services and selling more for less strategy are proposed to achieve this purpose. The final recommendation is the first shop to be established in Charlton among other district centers within Manchester City which are less served by supermarkets.
The Business Opportunity
Market Gap Identification
A recent survey report suggests that out of the 54% of the people who visit supermarkets and other retailing shopping centers in Manchester City, 30% have the opinion that queuing for service discourages them to shop (Fu, Helmers and Zhang, 2012). Interestingly 15% of this 30% just goes to the supermarket to purchase stationery only and then have to queue for about ten minutes to get served (Fu, Helmers and Zhang, 2012). These statistics indicate that there is a low level of customer satisfaction. Moreover, it has been observed that at least 20 % of buyers may fail to get all the stationery items they require from one shop and therefore have to visit up to two or three shops to complete their shopping (Fu, Helmers and Zhang, 2012). This situation leads to a lot of time wastage and therefore strain on the side of customers. Finally, most stationary businesses are operating under the market leader Amazon resulting in uniformity of in service provision products depriving the customers the privilege of choosing from a variety (Pascucci, Bartoloni and Gregori, 2016). It is therefore imperative to establish a stationary shop that will bridge the existing market gap by improving customer service quality, satisfaction and offer freedom of choice from a different business (Halkias, Alserhan and Caracatsanis, 2014). This shop will purely deal in stationery and provide a variety of the products under the same roof thus reducing the time wasted in queuing and shopping around many retail centers to complete the purchase. Being a dominant firm in the industry, Amazon is taking advantage of low completion and therefore charging high prices (Pascucci, Bartoloni and Gregori, 2016). The new shop intends to introduce considerably fair prices to relieve the customers the burden of paying, more for fewer goods (Halkias, Alserhan, And Caracatsanis, 2014). However, to close this market gap successfully, it is paramount for the firm to conduct further research on micro and macro market factors and micro and macro industry situations that may affect the operations of the business in the United Kingdom.
Micro Market Analysis
The large population in the U. K especially in the City of Manchester will provide a significant market do the products (Bates, 2013). However, despite this availability of potential buyers, the business will set a comprehensive product promotion team that will ensure that there is an acceptable amount of sales volume (Haberis et al., 2011). The business will target the learning institutions for the writing products and the general public for accessory goods. It also essential for the firm to engage qualified staff in operation to make sure that the customer’s interest is best served (Haberis et al., 2011).
The stationery market has been growing and is expected to increase further in the next five years. For instance, in 2016 alone, the market grew by 3.2%, and this is illustrated in the following graph (Eastham, 2001). This growth rate also matched the average growth for the past five years. Such a market trend is a clear indication of an untapped market potential and therefore establishing a stationary shop will be a highly feasible investment (Pascucci, Bartoloni and Gregori, 2016). The main areas to venture in this business are writing materials and the accessories. Studies Pascucci, Bartoloni, and Gregori, (2016) and Smallbone and Welter, (2006) indicate that in the 2016 and early periods the market has experienced substantial growth in writing stationeries by over 5.9% and 4.8% in accessory (Eastham, 2001). This is a positive sign for entry by a new firm into this market as it is projected that payback period will be shorter than five months.
Source: https://imagescaler.hbpl.co.uk/resize/scaleWidth/620/cached.offlinehbpl.hbpl.co.uk/news/WOH/stationery-20161010013431565.jpg
Macro Market Analysis
The macro market is an essential aspect that an entrepreneur has to evaluate before deciding to establish any venture in a place. For this business, it is necessary to conduct PEST analysis (Smallbone and Welter, 2006). This report comprises of the political, economic, social and technological factors that affect the operation of the business (Eastham, 2001). Based on the ongoing Brexit negotiations, the economy of the United Kingdom has been projected to slow in 2017 and 2018. The inflation rate is expected to exceed the standard 2%, and the GDP is also likely to drop (The UK Economy: Forecast Summary, 2017). Moreover, the exchange rate is equally projected to worsen as the pound keeps falling in value. However, these occurrences will not affect the market demand for essential goods such as stationery (Smallbone and Welter, 2006). Students will still have to go to schools and offices have to go on with their activities.
Source: http://www.oecd.org/media/oecdorg/directorates/economicsdepartment/economicoutlook/EO101%20United%20Kingdom%20Two.PNG
From the above graph, it is clear that despite the fall in GDP and exports the terms of trade in the country remain stable and therefore internal business activities also remain unchanged (Cloyne and HHrtgen, 2014). This revolution may mean that the stationary market will keep improving in the domestic market. Secondly, the political stability in the United Kingdom is essential for the success of this business. However, there are few issues such as terrorism attacks especially the one that occurred in mid-2017 in Manchester has raised fear among the customers (Cloyne and HHrtgen, 2014). It is therefore vital for the firm to tighten security in the area. The social aspect of the market is not such a big issue provided that the businesses offer customers preferences (French, 2017). Environmental issues are also vital in the social aspect, and therefore there will be no pollution. Finally, it is worth mentioning the technology. Currently, over 60% of the UK citizens have access to personal computers and phones and therefore have access to the internet (The UK Economy: Forecast Summary, 2017). With such technology, the company shall adopt e-commerce such as online order and delivery. This will help in boosting the sales for the firm.
Macro Industry Analysis
This section is mainly concerned with the competitive environment in the retail industry. The main direct competitors are Amazon Company and supermarkets while indirect competition is the technology that is rapidly replacing the use of papers in recording information. Most of the stationary sold in the country are supplied by Amazon, and therefore it will be a challenge to divert its customers (Ibourk and Amaghouss, 2016). Nevertheless, the new firm intends to come up with a different approach to providing a new design of the products. Moreover, by providing all the goods within the same shop and at an affordable cost will give the customers’ ample time to buy affordable and fast (French, 2017). Despite a paradigm shift from paper work to technology, there are still a considerable number of duties that must be conducted using writing materials (Myers and Alexander, 2007). Additionally, to deal with this type of competition, the business will stock printing stationery as well as other accessories to maximize the sales volume.
Micro Industry Analysis
Apart from the external environment of the firm, there are factors within the organization that needs to be properly aligned for it to be successful (French, 2017). These factors include the business structure, dealing with people and product features. For the stationary shop, it is imperative, to begin with, a lean management staff as enters the market. Moreover, the number of employees will be relative to cut on operation costs (French, 2017). The outstanding success factors for the shop are proper customers’ service and product differentiation (Myers and Alexander, 2007). As stated earlier, the business will introduce unique packaging styles that will grant a competitive advantage. Promotion of staff will be done on performance basis and period of service (French, 2017). The firm will establish a development system for staff, and therefore there will be no recruitment of new persons to senior management.
Financial Analysis
After an evacuation of both the macro and micro market and industry, it is important to consider the expected economic outcome of implementing the venture (Myers and Alexander, 2007). To determine the feasibility of this business, it is necessary for the investor should specify the amount of capital intended for the investment. Pumping an amount of not less than £30,000, it is possible to make sales of over £200,000 in every quarter of the year (Ramakrishnan, 2010). This investment will to the firm breaking even within a short period of one to two years. However, the cash flow will majorly depend on the operating costs and the level of sales per year (Ramakrishnan, 2010). From the analysis, the business may end up having a short payback period of less than one year, and this is a positive occurrence and will allow for room for expansion into other regions in the country and internationally.
Recommendations and Reflections
In a nut shell, opening a stationary shop in the United Kingdom is a very feasible venture. Considering that it will be able to break even within first two years of operation and having a payback period of less than a year, the investor will not regret his investments. In addition to that, there is relatively less competition, and the industry has experienced a stable growth in the past five years and is expected to continue with the same trend in five years to come. The political stability of UK will ensure continuity of the business and the middle-income population will provide a market for the products. I will, therefore, recommend that the business since it will have high returns and there no restrictions for entry into this market.
After completing this feasibility essay, it is clear that before one decides on whether to venture into a business, there are very many factors to consider. These factors are interrelated, and therefore a proper evaluation of each one of them determines the success of the firm. The macro and micro markets and industry analysis have provided a better insight into the external and internal business environment respectively. I have also learned the importance of identifying the market gap in the market as it enables one to understand the problem to be solved by the new nosiness. Finally, this course has equipped me with appropriate entrepreneurship knowledge and skills that are necessary for the making investment both domestically and globally.
References
Bates, J. (2013). The Domestication of Open Government Data Advocacy in the United Kingdom: A Neo-Gramscian Analysis. Policy & Internet, 5(1), pp.118-137.
Cloyne, J. and HHrtgen, P. (2014). The Macroeconomic Effects of Monetary Policy: A New Measure for the United Kingdom. SSRN Electronic Journal.
Eastham, L. (2001). Whitaker's Almanack, The Stationery Office, ISBN 0-11-702261-6. £40.00. Pp 1286. Legal Information Management, 1(03).
French, D. (2017). Financial strain in the United Kingdom. Oxford Economic Papers.
Fu, X., Helmers, C. and Zhang, J. (2012). The two faces of foreign management capabilities: FDI and productive efficiency in the UK retail sector. International Business Review, 21(1), pp.71-88.
Haberis, A., Markovic, B., Mayhew, K. and Zabczyk, P. (2011). Global Rebalancing: The Macroeconomic Impact on the United Kingdom. SSRN Electronic Journal.
Halkias, D., Alserhan, B. And Caracatsanis, S. (2014). Cultural Marketing And Entrepreneurship: New Frontiers For Global Business — Guest Editors' Note. Journal of Developmental Entrepreneurship, 19(02), p.1402001.
Ibourk, A. and Amaghouss, J. (2016). Entrepreneurial Activities and Level of Development in Morocco: Empirical Investigation from Global Entrepreneurship Monitor Data. Global Business Review, 17(2), pp.241-256.
Myers, H. and Alexander, N. (2007). The role of retail internationalization in the establishment of a European retail structure. International Journal of Retail & Distribution Management, 35(1), pp.6-19.
Pascucci, F., Bartoloni, S., and Gregori, G. (2016). Export market orientation and international performance in the context of SMEs. Journal of Small Business & Entrepreneurship, 28(5), pp.361-375.
Ramakrishnan, K. (2010). The competitive response of small, independent retailers to organized retail: Study in an emerging economy. Journal of Retailing and Consumer Services, 17(4), pp.251-258.
Smallbone, D. and Welter, F. (2006). Conceptualising entrepreneurship in a transition context. International Journal of Entrepreneurship and Small Business, 3(2), p.190.
The UK Economy: Forecast Summary. (2017). National Institute Economic Review, 240(1), pp.F2-F2.
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