An In-depth Analysis of the Sports Retail Industry: A Case Study of Admiral Sportswear

Assignment Part 2

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Programme:	Pearson BTEC Level 4 Higher National Certificate in Business
Unit:	Unit 1: The Contemporary Business Environment

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Introduction

• This presentation will provide an in-depth analysis of the sports retail industry with the expertise of a Junior Insights Strategist.

• It will examine the macro environment of the UK sports retail industry by executing a PESTLE Analysis of the sector.

The presentation will also discuss the impacts of those macro-environmental factors on Admiral Sportswear, as it is determined for expansion.

LO3 Contemporary examples to show both the negative and positive impact the macro environment has on the operations of business

P4Positive and negative impacts the macro environment has on business operations

Political

Positive

• The UK has a territorial tax system that does not impose any country-specific restrictions on the exemption of overseas dividends or capital gains income.

• This is beneficial for Admiral Sportswear's international operations as it simplifies tax obligations and reduces costs when expanding into new markets.

Negative

• In 2022, the corruption index of the UK was recorded at 73 points that has plummeted to 71 points in 2023 (Trading Economics, 2024).

Figure 1: Corruption Index of United Kingdom

(Source: Trading Economics, 2024)

Decreasing corruption index accounts to rising corruption which means that the country is experiencing high corruption that can affect Admiral Sportswear in the sports retail market. High corruption rate would not allow the sports organisation to maintain a stable operational system and financial status, as they might have to pay bribes to the UK government to continue their seamless operations.

Economic

Positive

The UK's economy is showing signs of resilience with a 0.6% GDP growth in Q2 2024 (Whitbread, 2024). This reflects an expanding consumer base with increased disposable income which bodes well for sportswear demand. It is because the citizens of the UK will have more income to afford a luxurious life and purchase sports equipment for their passion in sports that will be beneficial for Admiral Sportswear.

Negative

The UK faces rising costs for wages and raw materials due to hikes in energy price with around 25 per cent recorded in 2023 (ONS, 2023).It indicates that Admiral Sportswear might have to face increased production and distribution costs. This will be a critical hit for the company as they will not be able to maintain a stable financial status and will ruin its position in the market.

Social

Positive

The government's initiatives to promote physical activity have led to a growing demand for sportswear which is a benefit for companies like Admiral.

• In 2024, nearly 72 per cent of UK adults participated in fitness activities that fall between the age category of 25 and 44 (NHS England Digital, 2023).

Figure 2: Summary activity levels

(Source: NHS England Digital, 2023)

Thus, it shows that the UK has seen an increase in public awareness of health and fitness sectors which are crucial for the success of the organisation.

Negative

• The UK has an aging population which may affect the overall market for sportswear as older demographics tend to buy less sports apparel compared to younger consumers.

• Admiral will need to balance catering to younger and active consumers while considering the needs of older customers in the nation.

Technological

Positive

• The UK has a robust digital infrastructure with high internet penetration at the start of 2024 with 97.8 per cent of the population observed for using the internet (DataReportal, 2024).

It creates an immense opportunity for Admiral Sportswear to expand in the e-commerce market by focusing on digital marketing strategies. Hence, the company will be able to acquire success and generate better revenue through online platforms.

Negative

• There is also an increase in cyber threats with the rise in e-commerce in the country andcan create difficult scenarios for the organisation.

• Admiral must invest in robust cybersecurity systems to protect customer data and avoid costly breaches that could harm its reputation and result in legal action.

Environmental

Positive

There is a growing emphasis on sustainable products in the UK as customers have the will to spend 9.7 per cent more on the goods that are produced in a sustainable way in 2024 (PwC, 2024). Admiral can capitalise on this trend by introducing sustainable sportswear lines and promoting environmentally responsible manufacturing processes.

Negative

However, adopting sustainability will require more investment from the company that can create a destabilisation in the financial capabilities of Admiral Sportswear. High investments in one sector will limit the potential of the organisation to support other areas and initiate funds. Thus, it would not allow the organisation to maintain a stable performance and it might affect their ranking in the industry.

Legal

Positive

The UK provides strong intellectual property protections with the Intellectual Property Office (IPO) which are beneficial for Admiral in safeguarding its brand and designs (International Trade Administration, 2023). This legal environment helps to ensure that Admiral’s innovative products are protected from counterfeiters. Moreover, the UK has well-established e-commerce regulations that offer a clear legal framework for Admiral’s online operations. This makes it easier for the company to comply with consumer protection laws and avoid legal disputes.

Negative

However, Admiral may face regulatory hurdles when expanding into new markets with varying regulations between online and offline retail. For example, environmental regulations may increase production costs due to the need for sustainable materials.

Traffic Light Chart Evaluating Key Factors

Factors	Level of Competition	Funding Activity	Legal Complexity	Investment Opportunity
E-commerce Expansion	Green	Yellow	Green	Green
Physical Retail (JD Sports)	Red	Yellow	Yellow	Yellow
Sustainability Initiatives	Yellow	Green	Red	Green

Table 1: Traffic light chart

(Source: Created by the learner)

Level of Competition: High competition in physical retail is present as established brands like Nike, Adidas, and Puma dominate the industry which is harmful for Admiral Sportswear (IJFMR, 2024). E-commerce provides the company more room for growth in the sector that is essential for the success of the organisation.

Funding Activity: Adequate funding for e-commerce is available but physical retail expansion of the company might face challenges in securing investment due to high upfront costs of the process.

Legal Complexity: Managing data compliance (GDPR) and sustainability laws can be legally challenging in physical stores of the organisation.

Investment Opportunity: The opportunity for investment is high for e-commerce which is driven by digital transformation trends while physical retail shows moderate potential based on the demand of Admiral Sportswear.

M3Application of the model for the analysis of the macro environment on admiral sportswear

Admiral Sportswear operates in a complex and dynamic environment influenced by various external factors.

Political Environment

The UK’s favourable tax structure for businesses in relation to international income is one of the most advantageous aspects for Admiral Sportswear’s operations. On the other hand, the UK’s rising corruption index could create an unstable environment for conducting business.

Economic Environment

As disposable income rises in the UK, there is a greater inclination among consumers to invest in lifestyle and fitness products which positions Admiral favourably. However, inflationary pressures like rising energy and wage costs create a significant challenge for the companies. Inflation increases the cost of raw materials, manufacturing, and logistics which results in shrinking profit margins for companies like Admiral.

Social Environment

One of the most encouraging trends for Admiral is the growing public awareness of health and fitness. Government initiatives aimed at promoting physical activity have had a profound impact on consumer habits with a significant proportion of the population participating in fitness activities.

On the contrary, the UK’s aging population could temper growth prospects in the long term. As older consumers tend to purchase less sportswear compared to their younger counterparts, Admiral may face challenges in appealing to this demographic.

Technological Environment

• The UK boasts one of the most developed digital infrastructures in the world with near-universal internet penetration.

• This creates a fertile ground for Admiral to expand its e-commerce operations and tap into the growing trend of online shopping.

The increasing use of data analytics and artificial intelligence (AI) in retail allows companies to offer personalised shopping experiences, predictive inventory management, and efficient customer service. Admiral can leverage these technologies to optimise its digital marketing strategies, enhance customer engagement, and drive online sales for further growth.

• However, the proliferation of e-commerce also increases the risk of cyber threats within the operations of the organisation (Liu et al., 2022).

The retail sector is a prime target for data breaches and cyberattacks, and Admiral must invest in robust cybersecurity infrastructure to safeguard sensitive customer information.

Environmental Environment

Consumers are increasingly willing to pay a premium for products that are environmentally friendly and ethically produced.

On the contrary, transitioning to sustainable production methods requires substantial financial investment. The high costs associated with sustainable materials, green technologies, and eco-friendly certifications could strain the company’s resources. Thus, it will limit the ability of the company to invest in other areas such as innovation or marketing. Admiral must carefully balance its sustainability goals with its financial performance to ensure long-term viability in the market.

Legal Environment

The UK’s strong intellectual property (IP) laws are particularly beneficial for companies like Admiral as it relies on innovative designs and branding to maintain their competitive edge.

Conversely, handling the complexities of regulatory requirements and expanding into new markets or distribution channels can be challenging. The differing regulations between e-commerce and brick-and-mortar retail can create operational hurdles for Admiral Sportswear when it comes to compliance with environmental and consumer protection laws.

LO4 Determination of the internal strengths and weaknesses of specific businesses and their interrelationship with external macro factors

P5 Conducting internal of specific organisations to identify strengths and weakness

• The leadership can be improved in the organisation by making strategic decisions in the workplace

• Admiral Sportswear is spread over 45 countries in Europe, North Africa and the Middle East (admiralsports, 2024)

• This company can expand their distribution channel with e-commerce players like Google Shopping and JD Sports for getting more growth in business

This effective decision in the business has been helpful for focusing on the manufacturing, sports and on sports accessories. The strategic development helped to increase its marketing presence in the market.

Strength A huge competitive advantage in the sports industry has been a major strength of their business Operating the business in 45 countries has been helpful for getting more profit	Weakness Small market share and low business performance Issues and problems in the new entrants and in the sports retail
Opportunity Current licensing opportunities The operation of their business in different countries and the categorisation helped to get more growth in the business	Threats Lack of innovative promotional strategies Huge competition among the competitors

Table 1: SWOT Analysis

(Source: Created by Learner)

The internal or SWOT analysis is highly useful for identifying all the internal information like about the strengths, weakness, opportunities and threats. This analysis helped to get an idea about their potential idea and outcome for identifying their further growth in the business. Being an owner of the Admiral Sportswear brand, it has gained huge growth opportunities and strengths for encouraging its brand and getting an idea about the licensing opportunity (admiralsports, 2024). Spreading the brand in different new nations like Manchester United, Hotspur and others also helped to get more growth and revenue in the competitive business field. Admiral Sportswear works with different industry includes with manufacturing, clothing, footwear and Sports accessories. However, the lack of innovative strategies and little number of employees can create huge problems and issues in increasing the productivity of the business.

Competitor SWOT Analysis

Strength JD has a strong brand recognition Digital advertising helps to reach at the users	Weakness Competitive market can create problem for JD Sport The brand saturation also can create struggle in Google
Opportunity The E-commerce growth and international expansion are also effective for JD Sports Using the cloud computing and AI can help for the targeting capabilities in Google	Threats The rising competition can create problem for the consumer channels Cybersecurity threats can create damage for the Google

Table 2: SWOT Analysis

(Source: Created by Learner)

The SWOT analysis of the two competitors is impactful for the growth and profit of their business.

• Including the two different channels JD Sports and Google Shopping also can help them identify more profit in the business (jdsports, 2024)

• Lack of financial planning can create major problems for getting huge problems in the business

• However, the social media presence of both channels like Google Shopping and JD Sports can help Admiral Sports for reaching at all customers

Using both of the distribution channels JD Sports and Google Shopping helped to increase the promotional activities and to improve their leadership team. Operating the business with different categories and developing the network and licensing can help ingetting a retail-centric campaigning approach. An intense competition with other organisations like Umbro, Gymshark and others can be impactful for Admiral Sports. Using those distribution channels also can help maintain a broader presence in the competitive landscape. It will also help in accessing the new inventory of the business (Chowdhury, 2024). Using AI-driven insights is also useful for reaching new audience with Google channels and networks.

Using customer loyalty and the value improvisation is linked of their offerings. Admiral Sports has spread its business in 45 countries including Europe, North Africa and the Middle East. The company is trying to get ideas about the development of its network with the licensing and with different new territories in the business field. As their company is associated with 11-50 employees, however, it can create huge problems for them in getting growth and profit in the business field. The admiral performance and their expertise have been active in competitive sports (admiralsports, 2024). On the other side, designing the customer kit and customising the colour and pattern can be helpful for attracting more customers.

According to Riyadi and Munizu (2022), in the external environment, political factors like the tax system and corruption index have been impactful for the growth and profit of Admiral Sports

• Reducing the cost and expanding the business in new market areas has been possible for their international operations

• Decreasing the corruption index can create major issues and problems for the operational system

The external analysis helped to focus on the production and distribution costs. On the other side, it also has been required to stabilise the business by increasing production and distribution costs. In the social factor, increasing public awareness has been useful for achieving huge success in the organisation. As proposed by Gaurav et al. (2020), it is required to maintain a proper balance for the customers by considering the needs and requirements of the customers. On the other side, using the technological approach has been useful for implementing digital marketing strategies. Using a robust cybersecurity system can be helpful for mitigating the problems and issues in the technical field and to mitigate the problems in legal matters. As identified by Baieret al. (2020), using the sustainable approach can help Admiral Sports promote and manage the environmental manufacturing process.

• In the internal factors, using the competitive advantage and focusing on the competitors has been useful

• As stated by Puet al. (2020), using the distribution channel and strategy also can be reliable for reaching the audience

• Lack of financial goals and the lack of development in the brand image can be harmful to Admiral Sports

As identified by admiralsports (2024), Admiral Sports got a huge benefit by improving their supply chain business. It also helped to reach at the goal and objective of the organisation with a skilled workforce. On the other side, implementing the green model of innovation and sustainable strategies can be beneficial for getting huge growth and profit in the business. Collaboration with the new business platforms like Google Shopping and JD Sports also will be helpful for increasing the sales and profit margin of the business. It will also help to improve the promotional method to reach all the customers.

P6Explaining the factors interrelating with the macro factors

• The factors like the improvement of the profit margin are related to corruption and tax in the business

• Using competitive data can be useful for identifying the opportunities and growth in the business industry

• It has been useful for accessing the new inventory with AI-driven insight and to reach the new audience with the Google channels and network (Saaida, 2023)

Both the internal and external factors are interrelated with each other, as external factors like tax rate, corruption, inflation and growth of GDP can be highly impactful for bringing more opportunity and increasing the strength in the business field. The initiative taken by the government also has been positive for Admiral Sports for the growth of other Sportswear organisations and to get ideas about fitness activities.

M4Applying this analysis to influencing decision-making approach

• The decision-making process of Admiral Sports has been influenced and optimised by analysing both the macro and micro factors

• Increasing and focusing on the distribution channel of the business and maintaining the reliability of the product helped get more customers

• The customisation of the products and using sustainable materials can help to optimise the performance of the business

Using Google Ads and campaigns can be useful for increasing the promotion of the products. Using retail-centric campaign management is required to get a direct impact with Google Ads for creating a product group. The broader presence of the organisation can be helpful for reaching the customers. The use of powerful data and reporting with competitive data is useful for increasing growth in a competitive landscape. In order to increase profitability in the business field, admiral Sportswear made a strategic plan for their organisational performance. However, both the external and internal analysis helped to get an impactful insight by managing a strong relationship with the customers (Hanand Niu, 2023). It has been essential to get a profitable approach by improving employment conditions. It is required to manage the labour conditions in Sportswear by improving their well-being and by upgrading the working conditions.

Recommendations

• Admiral Sports can expand its business in the global area by using different technology.

• The collaboration with JD Sports and Google Shopping also has been useful for increasing the sales and profit of the business.

• The issue and threat of cybersecurity and the lack of use of technical support need to be mitigated by increasing technical knowledge.

• The labour issues with child labour need to be improved by managing the legal constraints.

The expansion of the business can be increased by identifying the issues and risks in the other workplaces. Using competitiveness has been useful for reducing the problems and issues in business operations. In order to improve the environmental strategies, using an eco-friendly approach will be useful. It will help to gain the trust of the customers and to expand the distribution channel. Admiral Sportswear needs to interact with its customers by maintaining the potentiality with the target market. Increasing the labour cost is required to avoid problems and issues in the business and to ensure proper pricing in the business field. A low tax rate and a huge corruption index can be useful for getting an impactful vision for the future of the business.

Conclusion

• This presentation analysed the information about the internal and external factors of the sports business industry

• Applying PESTLE analysis helped to get data about the macro business environment

• SWOT analysis helped to determine the internal factors

In the Sports retail, has created a major focus on potential retail business. Using the traffic light chart helped to analyse the competition with investment opportunities in the business. This presentation helped to influence decision-making by identifying business objectives. The examples of contemporary business helped to focus on business operations by supporting the business models. Evaluating different types of business objectives helped in analysing the internal and external factors of the business.

References

(Baier, Rauschand Wagner 2020)Baier, D., Rausch, T.M. and Wagner, T.F.(2020)‘The drivers of sustainable apparel and sportswear consumption: A segmented kano perspective’. Sustainability, vol. 12, no. 7, p.2788.

(Chowdhury 2022) Chowdhury, H.(2024)‘AI-driven business analytics for operational efficiency’. World Journal of Advanced Engineering Technology and Sciences, vol.12, no. 2, pp.535-543.

(Gaurav, Ray and Sahu 2020) Gaurav, K., Ray, A.S. and Sahu, N.K.(2020)‘Factors Determining the Role of Brand in Purchase Decision of Sportswear’. PalArch’s Journal of Archaeology of Egypt/Egyptology, vol. 17, no.2 pp.2168-2186.

(Hanand Niu2023)Han, Y. and Niu, Q.(2023)‘Enhancing green radical product innovation through sustainable entrepreneurship orientation and sustainable market orientation for sustainable performance: managerial implications from sports goods manufacturing enterprises of China’. Economic research-Ekonomskaistraživanja, vol 36, no. 3, pp.1-20.

(Pu, Sunand Shao2020)Pu, X., Sun, S. and Shao, J.(2020)‘Direct selling, reselling, or agency selling? Manufacturer’s online distribution strategies and their impact’. International Journal of Electronic Commerce, vol 24, no.2 pp.232-254.

(Riyadi and Munizu 2022) Riyadi, S. and Munizu, M.(2022)‘The external environment dynamics analysis towards competitive advantage and company performance: the case of manufacture industry in Indonesia’. International Journal of Productivity and Quality Management, vol. 35, no. 2, pp.143-156.

(Saaida2023)Saaida, M.B.(2023)‘AI-Driven transformations in higher education: Opportunities and challenges’. International Journal of Educational Research and Studies, vol 5, no.1, pp.29-36.

Admiralsports (2024) About the company [Online]. Available at https://admiralsports.com/pages/performance (Accessed 23rd September 2024)

DataReportal (2024)Digital 2024: The United Kingdom[Online]. Available at https://datareportal.com/reports/digital-2024-united-kingdom#:~:text=Internet%20use%20in%20the%20United,at%20the%20start%20of%202024.(Accessed 23^rd September 2024).

IJFMR (2024)Marketing Strategies of Puma[Online]. Available at https://www.ijfmr.com/papers/2024/2/19006.pdf(Accessed 23^rd September 2024).

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Jdsport (2024) About the company [Online]. Available at https://www.jdsports.co.uk/page/mens/ (Accessed 23rd September 2024)

Liu, X., Ahmad, S.F., Anser, M.K., Ke, J., Irshad, M., Ul-Haq, J. and Abbas, S. (2022)‘Cyber security threats: A never-ending challenge for e-commerce’, Frontiers in psychology, vol. 13, p.927398.

NHS England Digital (2023)Adult physical activity[Online]. Available at https://digital.nhs.uk/data-and-information/publications/statistical/health-survey-for-england/2021-part-2/physical-activity(Accessed 23^rd September 2024).

ONS (2023)Analysis of wage and price increases, UK: 2011 to 2023[Online]. Available at https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/analysisofwageandpriceincreasesuk/2011to2023#:~:text=Energy%20prices%20have%20been%20the,than%20raw%20material%20price%20increases.(Accessed 23^rd September 2024).

PwC (2024)Consumers willing to pay 9.7% sustainability premium, even as cost-of-living and inflationary concerns weigh: PwC 2024 Voice of the Consumer Survey[Online]. Available at https://www.pwc.com/gx/en/news-room/press-releases/2024/pwc-2024-voice-of-consumer-survey.html(Accessed 23^rd September 2024).

Trading Economics (2024)United Kingdom Corruption Index [Online]. Available at https://tradingeconomics.com/united-kingdom/corruption-index (Accessed 23^rd September 2024).

Trading Economics (2024)United Kingdom Corruption Index [Online]. Available at https://tradingeconomics.com/united-kingdom/corruption-index (Accessed 23^rd September 2024).

Whitbread, S. (2024)UK economy continues recovery as Q2 notches up second consecutive quarter of GDP growth: reaction[Online]. Available at https://ifamagazine.com/uk-economy-continues-recovery-as-q2-notches-up-second-consecutive-quarter-of-gdp-growth-reaction/(Accessed 23^rd September 2024).

Appendix