The retail store is the outlet from where the people can buy the products and goods and they can also get the services from that fixed location like departmental store, boutique or kiosk. The customers can also give order on telephone or online for the purchase of their products. You can watch different types of the retail products, which are available at grocery, electrical or electronic products, bakery products, general, cosmetic hosiery and jewelry stores. The PESTEL analysis can help to understand the opportunities of the businesses and help the businessmen to start their business activities at any particular place.

Political Factors

The government forms number of laws and regulations to carry on business activities. The political activities in the country can affect the running position and also the sale and purchase of the retail products in any specific market. There are some trends in the retailing and shopping of the products, are dependent on different national debates and the initiatives, which the government takes through its political process. The politicians and the government have effects through their exercise of power on the retailing system and government controls the supply chain of the retailing products (Professors Steve Burt and Leigh Sparks, 2003).

The retail industry has to face various challenges in the political sector like environmental regulations and its protection, interest rates of commodities and monetary policies of the country, tax policies, consumer protection, employment laws to safeguard the rights of the employees, contract enforcement law, political stability, which needs to consistent supply of the commodities and safety regulations, which can affect the business directly (Abhi Jeet S, 2010).

Economical factors

If the economic situation within the country is strong, then the flow of the household articles and retail business will be smooth. The retail business heavily depends on the effective supply of the products. When the government has made proper regulations for the supply of retail products, then the economic structure of the country will have great effect on the supply and demand of the retailing products. The interaction of political will of government and strong economic situation in the country are important for the smooth and affluent supply of the retailing products (Professors Steve Burt and Leigh Sparks, 2003).

The situation of economy has direct impact on retail industry. The retail businesses are affected with the change in the economic stabilities of the country, change in rate of foreign exchange and the economic recession, as the buying habits of consumers are also changed and the sale and profit of retail industry is also decreased (Analytical Papers, 2015).

Social Factors

The social change and the current lifestyle have created various changes in shopping and retailing business. Now the attitudes and wants of the clients have been transformed and their habits are also changed. They are more educated and well aware of the changing atmosphere of the retailing business. They like the branded products with logo of the multinational brands and like to buy these products at the highly subsidized rates. Now retail items are available in packets and vegetables are also available in the packages, which are considered more safe and healthy for human use (Professors Steve Burt and Leigh Sparks, 2003).

There are different social norms like income distribution, demographics, age distribution and rates of the population growth leave direct effect on this business. Due to massive educated population, their social awareness, leisure and career attitudes and entrepreneurial spirits brought many changes and the buying habits of clients are now shifted. The retail industry has also changed itself and now all retail products are available in excellent and durable packing, which has grown its shelf life (Abhi Jeet S, 2010).

Technological Factors

As this is the time of technological changes and it has changed all aspects of life. The use of technology in retail industry has developed it and new inventions and development have been made in this industry. New and latest technology is used in most of its products and the retail industry has developed its websites and receives order online. They provide the products in excellent packaging, purified from dust and pollution and you can also check the demand and supply of the products in the market (Abhi Jeet S, 2010).

Technology is introducing in every sphere of life and new technological developments have created special place in business sector. You can use new technology in buying, selling and weighing the products. You can introduce your products to the people through online shopping give their details with specific information. The clients visit their site and compare the quality and rates of the retail products then they can make their buying decisions. New technology has developed the minds of people and it brought them closer to their retail industry and people visit the specific retail stores, which have great outreach of their business (Analytical Papers, 2015).

Environmental Factors

The retailers also use different forms of energy and they also become conscious about the environmental changes. The products provided in the retail shops are mostly grown or prepared in this environment and they are also affected with the changing trend of environment so they can affect the health. Government imposes ban on use of various sprays and gases over the food products, which are sold in these retail stores. The use of some chemicals can cause eruption of various diseases. The retail business should follow the environmental laws and regulations, which are made to protect the lives of the people and ensure the rights of consumers and employees (Professors Steve Burt and Leigh Sparks, 2003).

Legal Factors

There are various legal factors, which has affected this retail industry positively and saved it from manipulation and other smuggling of the products. The government has imposed various legal implications to check the illegal trafficking of retail industry products, which can create scarcity in particular area and the prices of such products go up. The industry has to follow the consumer protection law and policies as well as the law for protection of rights of the labor. This industry has to follow the environmental regulations in order to keep the environment clean and ensure its safety. The government also changes the rules and regulations from time to time ensuring timely transportation of the products and makes them available to the consumers (Analytical Papers, 2015).

References

Professors Steve Burt and Leigh Sparks (2003), Competitive Analysis of the Retail Sector in the UK, available at https://www.google.com/url?q=https://dspace.stir.ac.uk/bitstream/1893/11832/1/Sparks_2002_Competitive_Analysis_of_the_Retail_Sector.pdf&sa=U&ved=0ahUKEwjUxY7P1KLMAhUMm5QKHaLZCNEQFghbMA0&usg=AFQjCNGkN4F60JSRISf4z9p6gcgkXcROFA
Abhi Jeet S (2010), Pest Analysis on Retail Industry, available at http://www.managementparadise.com/forums/principles-management-p-o-m/208682-pest-analysis-retail-industry.html
Armaan Anand (2014), Pestel in Retail, available at http://www.slideshare.net/armaananand16/pestel-in-retail
Analytical Papers (2015), PESTEL Analysis for Retail Sector, available at http://www.essaysexperts.net/blog/sample-essay-on-pestel-analysis-for-retail-sector/#sthash.YYpvxgkp.dpbs

Introduction and Background

Woolworths is an Australian-based retail company, which operates a chain of supermarkets and department stores across Australia and New Zealand. The company was founded in 1924 in Sydney by Percy Christmas and later taken over by his son, Bruce Christmas. Woolworths is one of the largest retailers in Australia and is listed on the Australian Securities Exchange.

The company operates under several brands, including Woolworths Supermarkets, Woolworths Metro, Big W, BWS, Dan Murphy’s, and Cellarmasters. Woolworths Supermarkets is the largest division of the company, operating more than 1000 stores across Australia, and generating the majority of the company’s revenue.

Woolworths also has a strong focus on sustainability and ethical practices. The company has committed to several sustainability targets, including reducing carbon emissions and waste, sourcing sustainable materials, and supporting local farmers and communities.

In recent years, Woolworths has faced competition from other large retailers in the Australian market, such as Coles and Aldi. However, the company has continued to expand its operations and invest in new technologies and innovations to stay ahead in the competitive retail industry.

Company Information

Political Factors

Woolworths is a notable name in the retail industry, fulfilling the needs of its customers through its different retail outlets. The political environment of a country is linked with the performance of an organization and the retail companies are affected by the political climate of a region just like other business entities in other sectors. The political condition shapes the business environment, providing the organization with suitable growth opportunities.

Moreover, the business sector also grows due to political stability as the foreign investors and trading partners show interest in carrying out trading and business related activities. On the other hand, political disturbance discourages the businesses and investors from entering in a market due to the risk of low rate of return and higher risk of business failure. Since Woolworths is functioning in a market that is fairly stable, the risk of business loss is not significant.

Economic Factors

The economic factors such as recession and higher unemployment has a strong effect on the financial performance of a business entity as both of these factors can lead to lower sales, ultimately causing financial decline of the company (Woolworths Limited, 2015).  The condition of the organization has declined due to the global financial crisis, causing serious issues in the financial aspect of the business. Woolworths faced a major loss during the financial crisis when the company had to close its operations in UK, leading to unemployment of around 30,000 people who have been working at the retail store (Hall, 2009).

The financial crisis has hit the company massively which had a major effect on the overall sales earned by the organization. on the other hand, in some of the markets, the company has been able to perform in a better manner despite the financial disruption. For instance, Australia retail industry has maintained more stability than in other parts of the world, supporting Woolworths in continuing the business operations despite the setback in the UK market.

Social Factors

The customers are the central source of revenue for a business entity, thus identification of the needs of the target market and the development of a plan that focuses on the fulfillment of those needs is essential for the sustained profitability. Woolworths has recognized the importance of customer’s experience as a part of their sales and profitability. The company has introduced new means of fulfilling the needs of the customers, emphasizing the notion of customer delight (Woolworths Limited, 2015). The management has identified the changes occurring in the social context, concluding that the customers in today’s era are increasingly seeking retail shopping experience that includes availability of wide range of products with prices that are in accordance to the customer’s affordability.

In order to respond to this social factor, the company has offered lowest prices on different items to the store visitors. Moreover, the location of the stores is a critical area as the customers expect the retail stores to offer them with convenience. Another step that the company has taken, keeping the social trends into consideration is the launch of a loyalty program which has earned the organization a set of 900,000 members (Woolworths Limited, 2015).

The company has also been able to identify the shift towards healthy eating, adding the grocery items in the merchandise that appeal the customers seeking healthy food options.  Apart from that, the location of some of the items has been altered to indicate the company’s support for healthy lifestyle choices. For example, the removal of confectionary items from the check-out counters is one step in this regard (Business Tech, 2015).

Technological Factors

In case of technological factors, the newer forms of technologies that enhance the shopping experience of the customers constitute a main area of focus for the retail organizations. The use of RFID has long been a part of the retail stores which helps them in efficient management of the inventory and keep the stock available for the store visitors.

The company has also integrated service oriented architecture (SOA) in its operations, aiming to support this technology  in effective management of the supply of the different items across different retail outlets. The retail sector needs to rapidly identify and incorporate upcoming technologies as it can become a means of gaining a stronger position in the market.

Another innovation that has become a part of the retail sector, is the self-service checkout, which has been adopted by Woolworths as well. However, not every form of technology is readily accepted by the customers and a similar case is evident for self-service check-out arrangement which has created a negative response among a large number of customers (Wynne, 2015). It can be seen that not every type of technology is welcomed by the consumers, therefore, the businesses need to link the technology with the customer needs and preference.

Legal Factors

The taxation policies and recruitment and employee management regulations are a part of the basic legal framework for the retail industry. In addition to these legal aspects, the food licensing requirements are important in the retail sector as the retail companies need to comply with these regulations. The quality of the food items made available at the stores have to be in accordance to the country’s regulations.

Furthermore, the opening of new retail outlets needs approval from the concerned governmental authority, and such plans need to follow the legal requirements (Woolworths Limited, 2015).

Environmental Factors

The environmental aspect of retail industry is reflected in the form of use of environment friendly business practices as well as participating in activities that aim to reduce the harm caused to the environment. Woolworths has been investing its resources in minimizing the carbon footprint of the organization, as well as reducing the wastage of natural resources such as water (Woolworths Limited, 2012).

The organization has also been participating in recycling activities to reduce the amount of wastage in landfill while making the recyclable materials useful by processing them efficiently. Moreover, the sustainability practices of the organization include the sourcing of food items using ethically sound approaches, which establishes the image of the company as a socially responsible business along with supporting the sustainability initiatives of the organization.

References

• Business Tech (2015). Woolworths takes sweets and chocolates off checkout shelves. Retrieved from http://businesstech.co.za/news/general/97057/woolworths-takes-sweets-and-chocolates-off-checkout-shelves/
• Hall, J. (2009). Woolworths: the failed struggle to save a retail giant The Telegraph. Retrieved from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/6570626/Woolworths-the-failed-struggle-to-save-a-retail-giant.html
• Woolworths Limited. (2012). Environment. Retrieved from http://www.woolworthslimited.com.au/page/A_Trusted_Company/Environment/
• Woolworths Limited. (2015). Annual Report. Retrieved from http://www.woolworthslimited.com.au/icms_docs/182381_Annual_Report_2015.pdf
• Wynne, E. (2015, July 22). Self-service checkouts risking consumer loyalty: marketing expert. Retrieved from http://www.abc.net.au/news/2015-07-21/forcing-shoppers-to-self-checkout-risks-consumer-backlash/6636702