Avoca now and looking forward

Avoca will need to continuously scan their external environment and to be aware of external forces which may impact on the business and a brief overview of the PESTLE analysis addresses some of these issues. In particular, from a political perspective, the tax rates as low as 9% for services remains low in order to encourage greater spending by Irish consumers and tourists, according to Transport and Tourism Minister Leo Varadkar[1]. Socially, there has been a growth in interest in artisan foods and Irish brands and this has impacted positively for Avoca, with potential for exponential growth in this area. The economic landscape suggests evidence of positive domestic consumer sentiment whilst technologically, there has been considerable growth of online sales across the sector, online shopping for food and groceries has grown from 3% in 2008 to 6% in 2012[2]. However, there are legal challenges for the company regarding upward only rent reviews and environmentally, changing weather may impact the sale of goods in certain areas of the business.

 

Looking briefly at the Porters 5 forces, and taking cognisance of the fact that Avoca is a market leader in the sector, with strong profitability and strong brand identity.  New entrants to the market would likely be hampered by high capital requirements and with challenges to brand recognition and a long lead in time to build an alternative brand.   Purchasers from Avoca, in the ABC1 group, are a limited group and the Company will need to extend their marketing pull to other age groups or to the male population, which are not generally a focus for the Company.  With regard to suppliers, the Company will need to keep a close eye on suppliers scalability and on supply chain consistency.  There would appear to be only a slight impact on product alternatives from cheaper sources and indeed from recent surveys carried out in regard to the Avoca brand, its key demographic customer has indicated that quality over cost is their main driver.

 

 

 

 

 

 

 

 

 

 

 

 

[1] Maintaining 9% tax rate could create 5,000 jobs in restaurant sector | Irish Examiner. 2014. [ONLINE] Available at: http://www.irishexaminer.com/archives/2013/0501/business/maintaining-9-tax-rate-aposcould-create-5000-jobs-in-restaurant-sectorapos-230009.html [Accessed 8 March 2014]

 

[2] Eurostat [ONLINE] available at http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-15102013-AP/EN/4-15102013-AP-EN.PDF [Accesses 6 March 2014]

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2 thoughts on “Avoca now and looking forward”

  1. Great blog Evelyn. Great position Avoca finds itself in when their customers regard quality more of a driver than cost.

    You are right that they will have to start looking at getting younger customers to shop with them as a lot of their customers are the older age bracket and will need to be replaced. That sounds cold!!!

    Ian

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  2. Evelyn,
    It’s not only Avoca who will need to continuously scan their external environment and to be aware of external (possibly negative) forces which may impact on the business. All businesses will need to keep a keen eye on this, and in particular on the political side. The fact that there is a “supposed” rise in business sentiment (I can’t see it though) will surely tempt even the most sanctimonious of our Ministers to tamper with the VAT rates. As to the upward only rent reviews, they were immoral from the get-go, cannot understand why the authorities (not necessarily the Politicians in this case) permitted that to happen.

    They tried an “Artisan” type open air market (food, veg, crafts etc. – locally sourced) where I live, but it petered out after just a few months due to lack of footfall, and (I understand) to some degree the council charges which were higher than neighbouring towns….but there you are … they call that progress..

    I would concur that quality over cost is a significant driver, however is there evidence that some pressure is coming on shop-keepers (old fashioned term I know) now as people want the quality…but at the cheaper price?
    Déaglán de P

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