Macro environment consists of external factors that affect a

business and that are uncontrollable and influence business-

making decisions. The macro environment consists of different
factors that pose opportunities and threats to the company.
There are six factors that macro environment consists of;
demographic environment, economic environment, natural
forces, technological forces, political forces and social &
cultural forces. It’s crucial to identify, understand and analyze
the factors so that the company can reach its optimum
performance. It’s important for companies to study the macro
environment so that they can divide the population into
different target markets and plan which market segment to go
into. One of the most crucial steps in forming a business is
planning and a macro environmental analysis helps them to do
that. Often businesses conduct a so-called PEST-analysis that
helps them to understand market growth and decline, direction
for possible actions and the current business position. Macro
environmental analysis is the first step to a strategic analysis in
business management. The purpose of macro environment
analysis is to point out opportunities and threats that will
impact the industry and business uncontrollably. It’s important
for a business to study…show more content…
An example of a megatrend is the aging population. This
means that some countries will soon have a population where
there are more older people than there are young. People over
60 will outnumber the people under 15 years of age. Another
megatrend is the middle class cometh, where the middle class
is getting larger by quantity each year. Middle class is defined
as households with a daily expenditure of 10-100$ per person
at a purchasing power parity (PPP). This means that for some,
higher earnings income means greater spending power and
higher
In analysing the macro environment, it is important to identify the factors that in turn
affect a number of vital variables that influence organisation’s supply and demand
level and its costs. Business environment comprises of all factors which has an effect
on company’s operation and which includes customers, competitors, suppliers,
industry trends, social and economic factors and technological developments. In
order to achieve the organisational goals strategy formulation is very important
where important decisions are taken. There are various internal and external factors
that have an effect on a business and the overall development of the company is
based on these factors. The process of assessing the external and internal factors of
an organisation is important for the planning function of management. The external
analysis examines the opportunities and threats in the environment. The internal
analysis focuses on the factors which help in meeting the needs of its target market.
Market changes all the time and it does not depend upon the type of product that
business produces; business has to react to the changing environment or else will
loose customers. The report deals with the various factors affecting a business and
the impact on the organisation.

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Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding
market growth or decline, business position, potential and direction of operations.
There are many factors which have an impact on decision making of every
organization and the most important ones are political, social and economic and
technological factors. There are also environmental and legal factors which can take
under political factors. . A pest analysis incorporates many issues and they are how a
company looking at its market, a product looking at its market, a local business unit,
a strategic option which means entering a new market, potential partnership and
investment opportunity. In this each factor is important because they play a major
role in the overall business environment.

The political factors affecting a business greatly depends on the stability of the

government, government type that is whether it is a dictatorship, democratic or
monarchy, economic policies of the government, trade policy and diplomatic events
in the surrounding countries. An example for the political factor affecting the
company has happened in the coca-cola company in Kerala. In this they opened a
plant in Kerala and they are given right to take a certain amount of water by using
tube wells, but they took more water by digging more and as a result there was a
shortage of water in that area. In this case political party take over this issue to make
this problem a serious and as a result government interfered in this matter and
closed and cancelled the licence of the factory. In this case political factor that is the
government’s decision affect the company and it comes under the political factor.
Environmental and legal factor also came in this case and in most cases legal and
environmental factor come under political factor and therefore we go for pest
analysis instead of pestle analysis.

The economic factors are influenced by political and government policy and it plays
a major influence in the government decisions as they provide opportunities and
threats. Economic factors and governmental policies are closely related as they
influence other environmental factors that affect organizations. For example inflation
and international economics will affect the rate of interest charged for the loans,
although the rate may be fixed by the central bank. It is the case of bank of England
and is also influenced by the state government priorities. According to
Thompson(2002),government spending can increase the money supply and make
capital markets more buoyant. Economic factors include the economic growth trends
of various countries, taxation, unemployment rate, inflation and also the production
levels. Most of the multinational companies are not willing to open a branch in
Zimbabwe because economic strength of that country is very poor and they are also
afraid of the profit that they can make from business from the area of low economic
growth.

The sociocultural environment encapsulates demand and tastes, which vary with

fashion, disposable income, and general changes can gain provide both
opportunities and threats for particular companies.( Thompson ,2002; Pearce and
Robinson 2005). It varies from country to country and it includes attitudes towards
foreign products and services, role of men and women in the society and also the
language impact on diffusion of products into a market. Organizations should be
aware of demographic changes as the structure of population has an important
demand for particular products and services. People are always looking for
differentiation and marketing segmentation will also be emerging. For example we
can take India , India has an unusual number of uneconomic practices and can least
afford them. If United States needs a revolution in its race relations they are getting it
and in case of India it is the cumulative and interrelated effect of all the inhibition
factors mostly on the caste or community that keeps the Indian economy backward.

Technological factors are very important for competitive advantage and it is the

major element for globalisation. It includes whether a company can provide products
of higher quality at a reasonable cost and also it checks for whether the company can
provide innovative products. Technology outside the industry is also influenced by
government support and encouragement. New technology resembles the two sides
of the coin that is new technological advancements result in the formation of new
companies producing quality product at lower cost and it becomes threat to the
existing companies. On the other side it could provide a useful input in service and
manufacturing industries. For example if we consider tourism industry better
communication, transport and safety encouraged people to the tourism.
Improvements in water supply, medicine and knowledge areas are opened up only
after technological advances. The rapid increase in the online booking has given
more chance to the consumers to make a holiday. Nowadays internet is the preferred
method for getting the travel information and this shows the effect of technological
factors in business. (Capron and Glazer, 1987)

Business has to react to the changing environment and for better understanding we
are relating to a case study. It deals with the PESTLE analysis of grocery industry of
Waitrose.

Waitrose , founded in 1904 and is owned by the John Lewis Partnership. It is

operating in the UK’s grocery market and was estimated at £103.4 billion at 2001. It
has 137 stores all over UK and employs more than 27000 staff. Food sales are the
core business of any supermarket in UK and that is the only market proved to be
recession proof. It has non food articles that contribute to its market share. It is
mainly recognized for its focussed differentiation strategy with a wide range of
quality and fresh products.

PEST analysis of Waitrose

Political factors
The political factors affecting business of Waitrose are with the Planning policy
guidance it is very difficult to get out of town planning permissions and therefore
expansions to the towns is limited and it becomes a hindrance for opening new
stores and supercenters. Competition commission reports states that the
supermarkets should not keep prices unduly high. Customers are more emphasised
on healthy eating and organic foods rather than GM food.( key note 2001, marketing
services)

Economic factors
The takeover of safeway is an indicator that many small companies are taken over
and there will be a few companies remaining in the market. The competition will be
intense if there is less number of companies.

Socio cultural factors

In these days the demand for organic and healthy foods has increased and all the
supermarkets know this trend and they began to move into this, but customers are
not ready to pay high price for this and as a result they will go to the store which
supply quality product at reasonable cost. Waitrose has long been offering these
kinds of products.
The public has also become more environmentally aware and Waitrose strategy is
well suited in this. Almost 70% of the women are working and the working time is
more than any other in the European country and most of the shopping is done by
women. About 75% are travelling by car thereby causing a decline in the public
transport.

Technological factors
Online shopping benefits both the society as a whole and the individuals. It is very
convenient and it concludes ease of finding a product and time spent on shopping.
We can compare product price and features and UK offers a good opportunity for
online shopping. Information technology and communication plays a major role in
store management with details statistics of product sold and thereby facilitating
order of new stocks.

PEST ANALYSIS OF WAITROSE

 The Department of the Environment, Transport and the Regions (DETR) (2000):
“The Government remains firmly committed to the objectives of PPG6, which
seeks to sustain and enhance the vitality and viability of our existing city,
town, district and local centres and to make them the focus for retail
investment” …means that it is very difficult to get planning permission for out-
of-town stores.
 ‘The Competition Commission’s report “The Supply of Groceries from Multiple
Stores in the United Kingdom”, published in 2000, stated that the leading
supermarkets do not operate as a cartel to keep food prices unduly high.’3
Although some questionable practices were found (selling product at a loss,
lower prices in areas of high competition), the Commission did not
recommend any corrective actions.
 EU Competition might not be as generous as the Competition Commission
and order changes

CONCLUSION
The strength and weakness of a company is very important and Waitrose also got
various strengths and weaknesses. Waitrose has its own labels “perfectly balanced”
and it has their own farms which produce fresh and quality food products. After M&S
Waitrose was one of the first retailers which produced own brands. The quality of
service is excellent in Waitrose and it also uses work delivery scheme and it also has a
wide range of products. Apart from this it has got some weaknesses too. Although
there is internet shopping system Waitrose lags behind in this and has a market
share of only 3%. The expansion is also very difficult because of the existing store
coverage and also it is also very much dependent on its own labels.
After reviewing the results I came to a conclusion that pestle analysis is an important
tool to identify the various factors affecting business and it helps the manager to get
the feedbacks about the various factors that affects the company and based on these
they can improve the quality of services and products and thereby making the
organisation dominant among the other companies.

REFERENCES
1. Kotter, J. and Schlesinger, L. (1991) Choosing strategies for change, Harvard
Business Review, pp.24-29.
2. Capron, N. and Glazer, R. (1987) Marketing and technology: a strategic
coalignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21.
3. Cooper, L. (2000) Strategic marketing planning for radically new products,
Journal of Marketing, Vol. 64 Issue 1, pp.1-15.
4. Kotler, P. (1998) Marketing Management – Analysis, Planning, Implementation,
and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.
5. Pearce, J. and Robinson, R (2005) Strategic Management, 9th Edition, New
York: McGraw-Hill.
6. Porter, M. (1985) Competitive Advantage, New York: Free Press.
7. Robinson, S., Hichens, R. and Wade, D. (1978) The directional policy matrix-
tool for strategic planning, Long Range Planning Journal, Vol. 11, pp.8-15.
8. John LewiByars, L. (1991) Strategic Management, Formulation and
Implementation – Concepts and Cases, New York: HarperCollins.
9. www.andidas.com
10. Keynote, 2001, Own Brands, market report
11. Keynote, 2001, supermarkets & superstores, market report
12. Waitrose environmental report

Chapter 13 – Store Layout and Design I. Introduction to Store Layout Management. Retailers can use
the retail store itself to initiate and continue their relationship with customers.

A. The store itself (e. g. , its layout) has the potential to overcome many of the negative
attitudes/emotions customers may carry as they enter a retailer’s store. 1. 2. In fact, no other
variable in the retailing mix influences the consumer's initial perception as much as the retailer's
store itself.

The two primary objectives around which all activities, functions, and goals in the store revolve are
store image and sales productivity.Store image is the overall perception the consumer has of the
store’s environment. b. Space productivity represents how effectively the retailer utilizes its space
and is usually measured by sales per square foot of selling space or gross margin dollars per square
foot of selling space. In cyberspace, retailers must be concerned with the format of the entire
website. In order to drive repeat visits and encourage consumer purchasing on one’s web site, the e-
tailer should: a. b.
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Keep content current. Make the site easy and enjoyable to use. c.Structure an online community
where consumers can interact with one another or contribute to the site’s content. B. Elements of
the Store Environment – The successful retailer will place a heavy emphasis on designing their
physical facilities so as to enhance the retailer’s overall image and increase its productivity. The
elements that should be considered are: a.

POS signage. b. c. Visual Communications – Retail identity, graphics, and Store Planning – Space
allocation, layout, and circulation. Store Design – Exterior design, ambiance, and lighting. election,
merchandise a. 3.

d. Merchandising – Fixture presentation, and visual merchandising. C. The two primary objectives of
creating the desired store image and increasing space productivity correspond to the general
mission of all retailers, which is to get consumers into the store (traffic) and influence them to buy
merchandise once inside (conversion rate) while operating in the most efficient manner possible
(operating efficiency). The store planner must constantly balance these objectives, as they are
sometimes at odds. 1.Developing a Store Image - the ability to create and change image through the
store environment becomes more important every day as consumers’ time poverty increases.

2. Increasing Space Productivity - a goal summarized in a simple but powerful truism of retailing:
“The more merchandise customers are exposed to, the more they tend to buy. ” To enhance space
productivity, retailers must incorporate planning, merchandising, and design strategies that
minimize shrinkage (the loss of merchandise through theft, loss, and damage). II. Store
Planning.Store planning is the development of floor plans, which indicate where merchandise and
customer service departments are located, how customers circulate through the store, and how
much space is dedicated to each department. A.

Allocating Space - the starting point of store planning is determining how the available store space
will be allocated to various departments, based on mathematical calculations of the returns
generated by different types of merchandise. 1. Types of Space Needed - there are five basic types of
space in a store: a. . The back room includes the receiving area to process arriving inventories and
the stockroom to store surplus merchandise. Offices and other functional spaces include a break
room for associates, a training room, offices for the store manager and assistant managers, a cash
office, bathroom facilities for both customers and employees, and perhaps other areas. The amount
of space dedicated to aisles, service areas, and other nonselling areas can be significant, perhaps 15
percent or more of the entire space.
While the store planner always attempts to minimize the amount of nonselling space, customer
service is an equally important part of a store and should not be short-changed. The floor
merchandise space holds many types of fixtures used to display merchandise. The walls are one of
the most important elements of a retail store. They serve as fixtures holding tremendous amounts of
merchandise, as well as serving as a visual backdrop for the merchandise on the floor. c. d. e.

2.Space Allocation Planning - to determine the most productive allocation of space, the store
planner must analyze the productivity and profitability of various categories of merchandise. There
are two situations where this is evident: planning a new store and revising the space allocation of an
existing store. a. Improving Space Productivity in Existing Stores - When a retailer has been in
business for some time, it can develop a sales history on which to evaluate merchandise
performance, refine space allocations, and enhance space productivity.Various quantitative
measures, such as the space productivity index, can be used to develop a more productive space
allocation. Space Allocation for a New Store - When a retailer is creating a new store format, it bases
space allocation on industry standards, previous experience b.

with similar formats, or more frequently, the space required to carry the number of items specified
by the buyers. B. Circulation - there are four basic types of circulation patterns in use today.
Shoppers have been trained to associate certain circulation patterns with different types of stores. .
2. 3.

Free Flow, the simplest type of store layout, is a type of store layout in which fixtures and
merchandise are grouped into free-flowing patterns on the sales floor. Grid Layout is another type of
store layout in which counters and fixtures are placed in long rows or “runs,” usually at right angles,
throughout the store. Loop Layout is a type of store layout in which a major customer aisle begins at
the entrance, loops through the store – usually in the shape of a circle, square, or rectangle – and
then returns the customer to the front of the store.Spine Layout is a type of store layout in which a
single main aisle runs from the front to the back of the store, transporting customers in both
directions, and where on either side of this spine, merchandise departments using either a free-flow
or grid pattern branch off toward the back and side walls. 4. C. Shrinkage Prevention.

When planning stores, the prevention of shrinkage due to theft, damage, and loss must be
considered. Some layouts will minimize vulnerability to shoplifters by increasing the visibility of the
merchandise. III. Planning Fixtures and Merchandise Presentation.In the "theater" of retailing, there
are two basic types of merchandise presentation: visual merchandising displays which are analogous
to the props which set scenes and serve as backdrops; and on-shelf merchandising which represents
“the stars of the performance”. A. Fixture Types fall into three basic categories: 1.

Hardline Fixtures. The workhorse fixture in most hardline departments is the gondola. The gondola
can hold a wide variety of merchandise -- in fact, virtually all hardlines -- by means of hardware hung
from the vertical spine.Tables, large bins, and flat-base decks are used to display bulk quantities of
merchandise when the retailer wants to make a high-value statement. Softline Fixtures. A large array
of fixtures have been developed to accommodate the special needs of softlines, which often are
hung on hangers. The four-way feature rack and the round rack are two of the fixtures most heavily
used today.

The round rack is known as a bulk or capacity fixture, and the four-way rack is considered a feature
fixture, because it presents merchandise in a manner, which features certain characteristics of the
merchandise (such as color, shape, or style).Wall Fixtures. The last type of fixture are those designed
to be hung on the wall. To make a plain wall merchandisable, it is usually covered with a vertical skin
that is fitted with vertical columns of notches similar to that on the gondola, into which a variety of
hardware can be inserted. Shelves, peghooks, bins, baskets, and even hanger bars can be fitted into
wall systems. 2. 3.

B. Merchandise Presentation Planning - With all the various types of fixtures available, there is an
endless variety of ways to merchandise product. . The methods of merchandise presentation include
the following: a. Shelving - The majority of merchandise is placed on shelves that are inserted into
gondolas or wall systems. Shelving is a flexible, easy-to-maintain merchandising method. Hanging -
Apparel on hangers can be hung from softlines fixtures such as round racks and four-way racks, or
from bars installed on gondolas or wall systems.

Pegging - Small merchandise can be hung from peghooks, which are small rods inserted into
gondolas or wall systems.Used in both softlines and hardlines, pegging gives a neat, orderly
appearance, but can be labor intensive to display and maintain. Folding - Higher-margin or large,
unwieldy softlines merchandise can be folded and then stacked onto shelves or placed on tables.
This can create a high-fashion image, such as when bath towels are taken off peghooks and neatly
folded and stacked high up the wall. Stacking - Large hardline merchandise can be stacked on
shelves, the base decks of gondolas, or "flats," which are platforms placed directly on the
floor.Stacking is easily maintained and gives an image of high volume and low price. Dumping - Large
quantities of small merchandise can be dumped in bins or baskets inserted into gondolas or wall
systems.

This method can be used in softlines (socks, wash cloths) or hardlines (batteries, candy), and creates
a high-volume, low-cost image. b. c. d. e. f. 2.

Different merchandising methods can strongly influence our buying habits and cause us to purchase
more. There is a certain psychology of merchandise presentation. . Value/Fashion Image - One of
merchandising's most important psychological effects is its ability to foster an image in the
customer's mind of how trendy, exclusive, pricey, or value oriented the merchandise is. Angles and
Sightlines - Research has shown that as customers move through a retail store, they view the store
at approximately 45 degree angles from the path of travel, so merchandise placed at 45 degree
angles to the aisle has better visibility.Vertical Color Blocking - To be most effective, merchandise
should be displayed in vertical bands of color wherever possible, so that customers are exposed to a
greater number of SKUs. b.
c. C. Selecting the Proper Fixture and Merchandise Presentation Methods - In selecting which
fixtures and merchandising methods to use, a good guideline is to match the fixture to the
merchandise, not the merchandise to the fixture. This means you should only use fixtures hat are
sensitive to the nature of the merchandise, but all too often, retailers are forced to put merchandise
on the wrong fixture. D. Visual Merchandising is the artistic display of merchandise and theatrical
props used as scene-setting decoration in the store. Visuals don't always include merchandise - they
may just be interesting displays of items somehow related to the merchandise offering or to a mood
the retailer wishes to create.

IV. Store Design - encompasses both the exterior and the interior of the store.There are literally
hundreds of details in a store's design, and all must work together to create the desired store
ambiance, which is the overall feeling or mood projected by a store through its aesthetic appeal to
the human senses. A. Storefront Design. If the retail store can be compared to a book, then the
storefront or store exterior is like the book cover. It must be noticeable, easily identified by passing
motorists or mall shoppers, memorable, clearly identify the name and general market positioning of
the store, and give some hint as to the merchandise inside.

Interior Design can be broken into architectural elements and design finishes, and encompasses
floorcoverings, walls, and ceilings. Lighting is one of the most important, though often overlooked,
elements in a successful store design. Retailers learned that different types and levels of lighting can
have a significant impact on sales. Sounds and Smells: Total Sensory Marketing. Research has shown
that senses other than sight can be very important. Many retailers are beginning to engineer the
sounds and smells in their stores.B.

C. D. V. Visual Communications. Visual communications includes in-store signage and graphics.

When carefully balanced with personal service, visual communications, with its reliability and low
cost, can create an effective selling environment and is therefore an important tool in the store
designer's toolbox. A.

Name, Logo, and Retail Identity. The first and most visible element in a comprehensive visual
communications program is the retailer's identity, composed of the store name, logo mark, and
supporting visual elements.The name and logo must be catchy, memorable, and most of all,
reflective of the retailer's merchandising mission. Institutional Signage. Once inside the store, the
first level of visual communications is known as institutional signage, or signage that describes the
merchandising mission, customer service policies, and other messages on behalf of the retail
institution. Directional, Departmental, and Category Signage serve as the next level of organizational
signage. These signs help guide the shopper through the shopping trip and assist in locating specific
departments of interest.
B. C. D. Point-of-Sale (POS) Signage. The next level of signage is even smaller, placed closer to the
merchandise, and known as point-of-sale signage, or POS signage. POS signage is intended to give
details about specific merchandise items and is usually affixed directly to fixtures. E.

Lifestyle Graphics. Many stores incorporate large graphic panels showing so-called lifestyle images in
important departments. These photo images portray either the merchandise, often as it is being
used, or images of related items or models that convey an image conducive to buying the product.

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