Avoca Cafe

Sectoral Analysis of Avoca Handweavers -Part 1 – [3 Part Series]

Avoca Handweavers Sectoral Analysis

Blogpost Part 1 gives a high level overview of the sectoral analysis conducted to date on the business environment of Avoca Handweavers Ltd.

Blogpost Part 2 highlights the main points of the PESTLE analysis undertaken, and then guides you through a more detailed PESTLE analysis of the external business environment of Avoca.

Blogpost Part 3 covers the main findings derived from the analysis, how they may impact Avoca’s business and what steps they may need to consider in order to meet these challenges into the future. ______________________________________________________________________________

Sectoral Description – Part 1

The retail sector Avoca operates in includes such as food, textiles, hospitality and tourism. This highlights their willingness to listen to and anticipate the changing retail trends in order to give customers new  innovative products and services.

To put this 3 part blogpost series into the correct context, we’ll be analyzing from an overall retail sector perspective.

The total retail market size is equivalent to 10%of GDP or €16 billion. The growth rate has remained flat in 2013. However, Avoca Handweavers are focused on the niche, high end premium sector.*

While there are approximately 44,000 wholesale and retail enterprises in Ireland, the number of rivals offering similar to what Avoca offer in their retail niche is somewhat limited.

  • Kilkenny
  • House of Ireland
  • Fallon & Byrne
  • Butlers Pantry
  • Donnybrook Fair
  • Kilkenny Design
  • Blarney Woolen Mills
  • Edinburgh Woolen Mills

Buyer needs and requirements are fulfilled by Avoca through their unique customer buying experience. They have created a destination store by building an aspirational lifestyle brand offering quality products in a unique store/cafe ambiance.**

The scope of competitive rivalry centers around other businesses in the premium product end of the retail market. Avoca are not aiming their product at the price conscious market, but those customers willing to pay a premium for a quality locally made product and service experience where provenance is extolled.

The degree of product differentiation is high because Avoca have their own CPU (central production kitchen) in the food offering, meaning they can attest to the provenance as they source the raw   materials locally. Similarly within the textiles arm of the business they produce much of their products on display. This gives Avoca a clear point of difference over rivals and a unique selling point.          It also yields a higher profit margin and gives more control over stock supply.

Product Innovation is evident throughout the Avoca business over the last few decades and it remains the case today. They have multiple offerings in different sub sectors within the business.   As Avoca have grown, supply and demand issues turned from a challenge into an opportunity as they have been able to negotiate better terms with local suppliers and produce their own branded   product in the quantities demanded by customers.

The pace of technological change has seen advances in Point of Sale  technologies with item scanning and self service tills that has improved service for customers and in turn has enabled data collection through loyalty card use. Online shopping for food and groceries by internet users doubled from just 3% in 2008 to 6% in 2012.***

From a high level perspective there appears to be an increased degree of vertical integration with increased market share. For example: large multiples owning their distribution and supply channels. At the lower level we see small producers opening market stalls in farmers markets. ****

Avoca themselves produce much of their own stock to sell themselves, to earn a better profit margin and have more control  over their internal and external business environment. Avoca in turn, also enjoy an economies of scale having grown over the decades.

Bulk buying of materials, branding, and shop fitting costs all costs less as a result of scale. All of these elements allow the experienced retail staff to engage with customers more and meet their customer needs, spending less time on daily operational and administrative tasks which causes positive learning and experience curve effects. *****

______________________________________________________________________________Sources  

*Retail Ireland | Ibec ­ Business sectors. 2014. Retail Ireland | Ibec ­ Business sectors. [ONLINE] Available at: https://www.ibec.ie/IBEC/BA.nsf/vPages/Business_Sectors~retail­ireland?OpenDocument. [Accessed 07 March 2014].

**Ibid

***EuroStat [ONLINE] Available at: http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4­15102013­AP/EN/4­15102013­AP­EN.PDF. [Accessed 06 March 2014].

****Ibid

*****Experience curve effects – Wikipedia, the free encyclopedia.2014.[ONLINE] Available at: http://en.wikipedia.org/wiki/Experience_curve_effects. [Accessed 06 March 2014].

Advertisements

4 thoughts on “Sectoral Analysis of Avoca Handweavers -Part 1 – [3 Part Series]”

  1. Hi Guys,
    While I knew that Avoca were somewhat Niche, I did not realise there were so few “like minded” businesses left and still operating. Looking forward to Parts 2 & 3 of Blog.

    Déaglán de P

    Like

    1. Hi Deaglan, yes it’s tricky to achieve what Avoca have managed to develop over the decades. Delivering a premium quality retail offering like Avoca requires consistent high operational standards, hard work, attention to detail and of course a focus on their valued customers and their customer experience.
      Crucially they have had a management who have embraced changes in the retail landscape and always sought to innovate and iterate their offering. Part 2 & 3 are on the way!

      Like

Go on, leave a Reply :)

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s