BSS019-2 Business Research Methodology For National Living Wage

The following report is based on the factors causing the eradication of some businesses in UK.  A concise description of the problem has been provided with the purpose of the research in the report. Based on the problem identified a literature review has been conducted in the report. Eventually, the report provides the findings of the analysis addressing the problem identified.

It has been identified that the business sectors in UK have observed an unexpected shut down. Specifically, the discount stores and the cafes replaced the traditional retailers with the fashion shops. According to Lasson (2011), 15 shops close each day in Britain, which indicate a more deteriorated situation in the coming days.  Wrigley and Dolega (2011) also mentioned that there were 15 shops closures in each day in the first half of 2016 and the number of new opening  has fallen to the lowest level for five years. It has also been identified that high streets across UK are under pressure particularly from the shift in spending from the physical shops to online. On the other side, it has also been identified that a squeeze on household income, increase in business rates as well as national living wage, which have maximized the costs (Hall 2011). Marketers and retailers have mentioned that 2016 has been a toughest market ever and the coming years would be worse. The current research would help to identify the actual factors causing the closure of the shops in UK and develop appropriate solutions.

As put forward by Tamagno (2012), Great London observed the biggest drop in the country because almost 164 shops were closed. The report claimed that retailers could be preparing for an increase in the business rates from the coming years.  However, statistical report shows birth rate of the business is also increasing compared to the death rate (Scruton 2018). In this context, Cullen et al. (2013) commented that continued economic improvement since the recession of 2008 and 2009, the rate of business birth continued to increase over the business death. Nonetheless, it is predicted that uncertainty around the economic outlook toward the end of 2016 because of the outcome of UK and EU referendum’s results (Brown 2013). Even though the statistical result published by UK government mention about the growth of new businesses the, London Data Company and PWC reported that nearly 2556 outlets or shops closed on Britain’s high streets (Bennison, Warnaby and Pal 2010). On the contrary, Jones et al. (2017) mentioned that opening fell from 2,197 to 2153, the lowest since 2011 and this implies that a net 503 stores disappeared from the high streets during the period and this was noted as the largest decline.

Factors considered for the closure for the businesses in the high streets of UK

Even though there have been several factors affecting the closure of several and small and medium size organizations, the marketers and  the business analysts insisted on the growing presence of online shopping. Due to the technological advancement, e-commerce vendors have been able to access the wide markets. Smart-Phone users in UK are rapidly increasing (76.9% of the total population), and the consumers find it easy to buy products (Ons.gov.uk 2018). Findlay, and Sparks (2012) mentioned that brand store or outlets find it difficult to keep all the necessary items in their shops, while the e-commerce vendors keep everything that customers need.  According to Ritala,  Golnam and Wegmann (2014), Amazon.com is arguably one of the most successful online vendors with the market value over $52 billion, which is equal to the market value of two large as well as successful offline retailers.

As put forward by Lasson (2011), customers are switching their spending from goods such as clothes to observe and experience such as hitting the gym and dining out, which leads to hundreds of high streets shops closure. On the other side,  PWC and Local Data Company demonstrates more health clubs, food shops, jewelers, restaurants and food shops opened in 2016, but the departmental store and banks have observed in the fall in the store numbers (Scruton 2018). However, when it comes to buying clothes, the consumers switch to online shopping.

As put forward by Wrigley and Dolega (2011), the current recession has made economic condition dire, which could be one of the major reasons for the massive number of organizations closures. It is certain that economy has a wide impact on the business operations as well as on the consumer spending. The organizations have been seen to be reliant on the economy for the success of the business. Some of the business sector and specially, the clothing sector are more affected compared to others. For example, products and services considered a luxury are the first to be hit and the durable goods, which have a short life span needs larger financial investment that cannot be sustained. Hall (2011) mentioned that general lack of funds at the time of current worldwide recession hit the organizations; even the multinational giants.

In order to conduct the analysis, UK’s industries, business and trade reports will be required. The trade reports help to identify the overall drop rate and closure of businesses. Media channels and blogs report help to identify company’s current state of being. In addition, the peer-reviewed journals on trades help to observe the number of new bossiness and their current market positions. Likewise, the journals published after the Brexit helps to review new trade regulations.  The annual reports of the organizations describe the annual performance of the companies during the recession and Brexit. These large set of data helps to identify the actual solutions of persistent business closure in UK’s high streets. Moreover, statistical data published by the government helps to observe how the government of the nations is going to react to the economic recession and the closure of some businesses.

According to the National Statistics, the business death rate increased from 283,000 to 328000 between 2015 and 2016, which means a death rate of 11.6% compared to the rate of 10.5% in 2015 (Scruton 2018). The capital of UK was the region with the death rate of 14% (Ons.gov.uk. 2018). On the other side, Brown (2013) mentioned that financial and insurance observed the highest death rate at 17%.  As put forward by Wadsworth, Drummond and Deluca, (2018), the death rate of business increases with the consumer price inflation which persistently increased over 2016. In addition, the depreciation of British currency is affected by high raw materials as well as the import price. Probably, these two factors might have discouraged the birth of new businesses in UK. Even though the GDP has continued to increase for a seventh successive year in 2016 driving the birth rate of the business higher, the decline in GDP growth from 2.2% in 2015 could be indicative of why the increase of birth rate in business remained the smallest in the four years. This factor is also the reason for growing business death rate. In this context, Findlay and Sparks (2012) mentioned that the current trends in economic growth and the labor market indicates a slower but improving economy. On the other side, due to the occurrence Brexit, the pound value has dropped, at one point reaching its lowest range in last three decades against the dollar. After the referendum , the mutual funds dependent on Britain’s property sector observed the strain and prevented the investors from withdrawing their cash in masse.

For example, Softbank, a Japanese internet firm agreed to purchase ARM holdings. In addition, the Chinese company that owns AMC Entertainment purchased the cinema chain based in Britain (Scruton 2018). Qatar Airway maximized its stake in the parent company of British Airway claiming it as an alternative opportunity (Jones et al. 2017). It has also been identified that currency’s decline mainly initiated a best price dispute engaging the supermarkets chain as well as consumer goods giants Unilever, which threats to throw some staples.  The bank of England tried to respond but after the Brexitt, they cut the interest to the lowest levels in its history. Likewise, the central bank could soon move to cut its major programs.

The above-mentioned analysis helps to observe that due to the presence of e-commerce vendors, increasing use of Smartphone and technological advancement have made buyers change their preference and interest in terms of shopping. Due to these factors, offline outlets have observed a tremendous loss in the business. Likewise, the occurrence of Brexit and consistent low pound value has prevented the multinationals to continue the business in the high streets of UK. Moreover, British currency has highly been affected by high raw materials and import price, which have further affected GDP of the nations. However, after the next referendum, the pound value is supposed to increase. Some Japanese automobile organizations are interested to invest in UK and reshape the business. This is because of the high market demand and technological advancement in the nations.

Bennison, D., Warnaby, G. and Pal, J., 2010. Local shopping in the UK: towards a synthesis of business and place. International Journal of Retail & Distribution Management, 38(11/12), pp.846-864.

Brown, J., 2013. Opinion piece The future of the High Street: A tale of two record shops. Journal of Urban Regeneration & Renewal, 6(3), pp.223-225.

Cullen, J., Tsamenyi, M., Bernon, M. and Gorst, J., 2013. Reverse logistics in the UK retail sector: A case study of the role of management accounting in driving organisational change. Management Accounting Research, 24(3), pp.212-227.

Findlay, A. and Sparks, L., 2012. Far from the ‘magic of the mall’: retail (change) in ‘other places’. Scottish Geographical Journal, 128(1), pp.24-41.

Hall, S.M., 2011. High street adaptations: ethnicity, independent retail practices, and Localism in London's urban margins. Environment and Planning A, 43(11), pp.2571-2588.

Jones, P., Jones, P., Comfort, D., Comfort, D., Hillier, D. and Hillier, D., 2017. A commentary on pop up shops in the UK. Property Management, 35(5), pp.545-553.

Lasson, S.A., 2011. Duke of Uke: Why Is One of London’s Quaintest Ukulele Shops Facing Closure?. Independent. co. uk.

Ons.gov.uk. (2018). IT and internet industry - Office for National Statistics. [online] Available at: https://www.ons.gov.uk/businessindustryandtrade/itandinternetindustry [Accessed 18 Jan. 2018].

Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.

Scruton, J. (2018). Business demography, UK - Office for National Statistics. [online] Ons.gov.uk. Available at: https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/bulletins/businessdemography/2016 [Accessed 18 Jan. 2018].

Tamagno, B., 2012. Crisis in the high street: The changing face of retail in the UK. Geodate, 25(3), p.2.

Wadsworth, E., Drummond, C. and Deluca, P., 2018. The adherence to UK legislation by online shops selling new psychoactive substances. Drugs: Education, Prevention and Policy, 25(1), pp.97-100.

Wrigley, N. and Dolega, L., 2011. Resilience, fragility, and adaptation: new evidence on the performance of UK high streets during global economic crisis and its policy implications. Environment and Planning A, 43(10), pp.2337-2363.