PESTEL Analysis for Retail Sector Across the World

PESTEL Analysis for Retail Sector Across the World

The retail sector is one of the most important sectors in most economies. This is because it provides citizens with easy access to groceries, foods and daily utilities. Like any other sector, the retail sector is affected by several factors and a PESTEL analysis can provide new entrants with important information on what to consider before establishing their set ups. This type of analysis can also be useful for established retail stores as they can learn what aspects to change and which new trends to introduce. The following is a PESTELl analysis of the retail sector in different parts of the world.

Political factors affecting the retail sector

Every country has its own laws regarding establishment and operation of the retail sector. The political factors mostly affect the types of products that retail stores can sell as well as the conditions under which these stores can operate. It is necessary to learn in advance about the foods and products that are acceptable under a particular country’s laws.

Some retail stores also choose to expand to foreign countries. These will often encounter laws regarding establishment including employment laws. Politics may determine the number of establishments a particular retail chain store may have in a country. Ultimately, the political factors are basically requirements by individual governments that retail stores must meet in order to operate successfully.

Economic factors that affect retail sectors

Economic growth of a country may affect the retail stores. This is because when there is a growth in the GDP of a country, there tends to be higher number of consumers of products from retail stores. There are also more investors attracted to the retail sector because of potential profits. On the other hand, economic recession tends to curtail the economic capabilities of consumers hence leading to losses for the retail stores.

Social factors to look out for in the retail sector

The social factors that affect retail stores are mostly based on the consumer preferences. Unlike in the past, consumers today prefer to do shopping in bulk. This has changed the retail sector with many chain stores preferring to stock several commodities instead of one particular commodity. Retailers must also carry out constant research to establish the particular products that their clients prefer to purchase. Carrying out advertisements is also essential because consumers will be more likely to visit the retail stores that are well known than little known stores. In addition to marketing, retail stores should also carry out promotional activities such as offering discounted services for specific products as this appeals to the consumers.

Technological factors to consider in the retail sector

In this technological era, retail stores have had to incorporate technological services in their systems. This comes in the form of offering Wi-Fi services and also updating most machines to digital systems. From weighing scales to shelf labeling, most retail stores are leaning towards automation for the sake of satisfying consumers and making work easier.

Environmental factors for retail sector

The retail sector has been affected by environmental concerns. This is because most retail stores sell food products. In some countries, retail stores have to pay “fat tax” because of the amount of fatty food stuffs they sell to consumers.

Additionally, retail stores must meet certain environmental conditions set out by governments in a bid of enhancing environmental safety for both consumers and employees of the chain stores.

Legal factors that may affect retail sectors

Legal factors mostly entail the legislative conditions that the retail stores must meet before and after setting up shop in the sector. These include taxation laws which every retailer must fulfill before and during operation.

There are also legislative conditions that govern the relationships between suppliers and distributors of products to the retailers. These must be followed to the latter.

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