Chapter 6: Industry and Marketplace

6.1 The Industry

Retailing is a commercial transaction in which a buyer intends to consume the good or services through personal, family or household use. Retailers are business firms engaged in offering goods and services directly to consumers.

6.1.2 Shape of the Industry

In Malaysia, the supervision of the wholesale and retail sector falls under the supervision of the Ministry of Domestic Trade and Consumer Affairs (MDTCA) through the Committee on Wholesale and Retail Trade. The Committee was set up in 1995 to regulate and supervise the industry, including foreign participation in the sector. Approval from the Committee is needed for foreign companies wanting to set up wholesale or retail operations locally and for the opening and relocation of branches. FIC and MDTCA show flexibility on the shareholder structure. But exceptions are examined on a case by case basis.

According to the Malaysia Retail Industry Report (July 2010) issued by Retail Group Malaysia, the retail industry is expected to grow by 5.5% this year. Retail has been one of the most active sub-sectors in the Malaysian economy. Retail is the second biggest contributor to the national GDP, contributing RM31,081 million in 2000 (Eighth Malaysian plan, 2001). About 1.6 million people were employed in this sector in 2000 or 17.1% of total employment in Malaysia.

6.1.3 Development of the Industry

The retail industry is ever growing because it provides the every day demands of people. People cannot survive without food, clothes and shelter so this industry will continue to grow and manufacturers will continue to develop new products which will attract the interest of consumers. With this demand of the industry manufactures are flocking to provide consumers with all their needs, this makes the existing manufacturers to find new ways of promoting their products and in return this will work to the advantage of the industry.

As the years go on, people are becoming more materialistic, this will drive them to buy more and more items for their families and personal use. They will be prone to spending their money on these items and in exchange will need to work within the industry to earn the money that they keep loosing. These factors will continue the prosperity of the industry.

6.2 The Marketplace

6.2.1 Current condition of the marketplace

(Clothing and Apparel) Clothes are a basic need to human life, so this is one of the most popular sections of the market place. This market place is also influenced by the human’s need to stay with the times and get new fashionable items which get more expensive in time. The sale of clothes is influenced by factors such as weather, fashion, brands and so on. This industry employs thousands of workers as models, designers, producers and marketers of clothes.

Nike has been successful in market segmentation for selling their soccer boots, which resulted in a significant market share in that particular product category. Professional soccer consists of sportsmen playing football as their career. This sector ranges from the famous to the least famous players. They need soccer boots which can enhance their performance: comfortable when running on the field and playing football and provide them with good ball control.

Price is not a major factor for them when choosing a pair of soccer boots, because they are either having a high salary or they are sponsored by their clubs or even the manufacturers of soccer boots. What they need is a pair of high quality soccer boots which is a combination of well design and good materials. The price of the boots showed that Nike's major target customer groups are those on a high income level, or those who are willing to spend on expensive items. So the ranking of the professional and amateur soccer players are high on the KCV table. The need of a pair of good quality soccer boots in the two groups is high and price is not their major considerations. Young people is also a main target customer group for Nike because the brand has been developed into a famous one and it is well-known for it high price and style. Nike's footwear is said to be an expensive goods today.

6.2.2 Changes in the Marketplace

Positive

• More competition brings growth to the industry
• People’s needs grow which increases the industry
• Development of new products
• Improvement of old products
• Increased innovation

Negative

• More competition results in revenue loss
• As people’s purchases grow, they run out of money for industry
• Old products are forgotten and wasted due to production of new ones
• Inconsistency in marketplace due to rapid changes of products