Gymshark is a clothing entity founded in the year 2012 by Ben Francis and Lewis Morgan to provide solutions for most of the world’s gym enthusiasts. The company specializes in the provision of a range of sports clothing that can be used in athletic activities. This business has grown to become a popular and relevant across the world. The common products at Gymshark include T-shirts, shorts, leggings, hoodies, and tank-tops among other related fitness apparel for men and women (Johnson, 2017). This company has experienced rapid growth since its inception to become the biggest gym apparel company in the United Kingdom. The success of Gymshark can be partly attributed to the utilization of social media (Barano, 2019). This company sponsors advertisements and collaborations with influential Instagramers and YouTubers to push the Gymshark brand. Therefore, Gymshark has a unique customer engagement model that focuses on social media ambassadors. These sponsorships are pegged on an athlete’s positive influence to the target market as well as the number of social media following.
External Analysis
An accurate analysis of Gymshark’s external environment can be done using the PESTEL framework. Political factors
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There are various political factors that are required within the business structure to ensure that it is legally right. For Gymshark Company, the political interest of the UK government is to raise a healthy population with increased daily activities as well as decreased lifestyle diseases. This political interest has a positive effect on Gymshark operations because it encourages the demand for gym apparel as well as involvement in government initiatives through campaigns for good health. In addition, trade restrictions and tariffs also affect Gymshark’s operations because of their direct effect on supply and distribution of gym attire.
Brexit could affect the level of non-tariff and tariff measures that apply to Gymshark products exported from the UK. These are no tariffs for the movement of products between countries that are in the EU. Brexit could, therefore, lead to the introduction of trade tariffs for the movement of UK goods into the EU market, hence affecting the performance of British companies such as Gymshark (Forster et al., 2017). However, the level of these barriers will be determined by the agreements reached between the EU countries and the UK.
Economic Factors
The economic factors that are related to Gymshark’s operations include issues such as interest rates, unemployment levels, and inflation. For example, an increase in the unemployment rates in the UK would affect the ability of people to subscribe to gym memberships hence leading to a decrease in the demand for Gymshark’s products. Similarly, an increase in the rate of inflation in the country would result in budget cuts and decreased spending power (Rothaermel, 2017). As a result, most people would cut down on gym-related expenses such as memberships and purchase of gym clothing from Gymshark. The general stability of the country’s economy translates into the availability of disposable income among many citizens, hence increasing the likelihood of increased purchases from Gymshark Company.
Social Factors
The social factors that affect Gymshark’s operations include; wealth, age, and health. Diversities in the population, as well as differences in social values among different groups of people affect decisions and activities in the organization. For example, the UK has an increasingly aging population (Patrick & Xu, 2018). This fact translates to an increase in the number of people taking up gym programs to improve or maintain their fitness, and hence an increase in the demand for gym apparel from Gymshark. An aging population, therefore, boosts the amount sales made by the company. Conversely, the sales of Gymshark products would be negatively affected by an increase in the number of companies offering lifestyle and diet products. Such an increase would lead to a reduction in the demand for gym activities since most people will be able to keep fit using the diets (Fosher, 2018). If the numbers of people who need gym activities reduce then the demand for gym apparel from Gymshark will decrease.
Technological Factors
The technological factors that affect Gymshark’s operations include developments in the IT industry and the technological expertise. There is a need for the company to make regular adjustments in the IT department in order to ensure that its products are technologically up to date. For example, the company needs to incorporate new technologies in gym apparel such as thermal properties and hydration. (Johnson, 2017). Compliance to technological developments improves the quality of the products hence boosting sales.
Environmental Factors
The failure of a business to adjust and adopt the changes in the environment can lead to closure of business because of the increased emphasis on environmental conservation. In the apparel industry, manufacturing companies are expected to use products that do not have adverse effects on the environment. Issues such as the emission of greenhouse gases, water and soil pollution from industrial effluent should, therefore, be avoided (Fosher, 2018). Furthermore, manufacturers are required to avoid using heavy compounds and heavy metals in their manufacturing processes in order to avoid the related environmental degradation. These environmental factors affect the operations of Gymshark Company by influencing decisions that affect production and, in turn, revenue.
Legal Factors
The legal factors that are relevant for businesses in this industry include legislation on health and safety. Gymshark should, therefore, ensure that all business processes such as manufacturing and sourcing of raw materials fall within the legal provisions. Furthermore, safety and compliant labor practices should be upheld in all activities of the company. Compliance with these legal requirements, therefore, ensures that the company does not get into legal trouble with issues like child labor or exploitation of workers (Fosher, 2018). In addition, entities such as Gymshark are required to have the necessary permits and licenses as well as standard equipment for operation.
Competitor Analysis
Competition in the business environment can occur in various forms that may be direct or indirect. Competition may occur in advertising, pricing, development of new products, or the improvement of existing products. The competition experienced by a business organization affects its profitability as well as the intensity of rivalry in the specific line of business (Koehler, 2016). Therefore, there is a need for businesses to acquire competitive advantage over their rivals in order to maintain or improve profitability and market share (Engeseth, 2019). In many cases, companies achieve this competitive advantage through the creation of unique properties in their products. Branding and imaging are also significant factors in business competition (Getkate, 2015). Branding involves the creation of visually identifiable properties such as color schemes and logos.
The competitiveness of Gymshark Company has played a significant role in its profitability. Over time, this company has been able to establish a strong brand within the fitness industry. However, there is a need for the company to embrace other competitive factors such as sponsorships and innovation in order for it to maintain its competitive advantage (Foster, et al. 2017). So far, this company has been able to set itself apart from other manufacturers of gym apparel through the development of high quality material and unique design. In addition to that, Gymshark has embraced the use various social media platforms to advertise its products. The company has been able to run successful social media campaigns by partnering with influential social media profiles and athletes.
The use of social media influencers, product differentiation, as well as an extensive knowledge of the customers’ needs define Gymshark’s competitiveness. The projected growth of the company, according to estimates made with consideration to the rate of increase in online sales, shows the likelihood of overtaking the leading players in the fitness industry (Johnson, 2017). Gymshark’s main competitors include Sweaty Betty and Lulu Lemon, which are niche competitors in the gym apparel sector, as well as Adidas and Nike, which are established brands in the sports industry.
Competitor Map
This map shows organizations that provide similar products and services as Gymshark. The outer ring shows the competitors who provide sport apparel while the middle ring shows those niche manufacturers who provide direct competition in the manufacture of gym apparel.
Although Gymshark has experienced stiff competition from these companies, it has managed to differentiate itself and establish a unique brand in the market. For example, Gymshark products have been identified as more fashionable than those from other gym apparel and sportswear manufactures (Thompson, 2018). The premium nature of Gymshark’s products appeals both to the young and aged customers. Similarly, this company makes products that are more appealing to both male and female users hence increasing its competitive advantage.
Innovation is an important factor in Gymshark’s competitiveness. This company is a market leader in the manufacture of innovative gym apparel such as the Energy seamless leggings that are made with attached underwear to make them squat-proof. Furthermore, innovation improves the comfort factor, which is a major consideration for many users of gym apparel (Porter & Kramer, 2019). In addition to that, this company has utilized the power of social media by using online influencers to push its brand to the customers. For example, a partnership with the influential and globally-known fitness guru Lex Griffins popularized this company’s brand in the global stage. The use of social media influencers is effective for business promotion and increase in competitiveness because of the ability to reach a large portion of the target market in social media (Honkanen, 2019). Consequently, this company has continued to use high-profile social media influencers to make direct engagements with followers and increase its competitive advantage over its rivals. Porter’s 5 Forces
Porter’s 5 Forces is a framework used in business analysis to assess the intensity of competition and how it affects the attractiveness and profitability of a business organization.
Threat of New Entry
The success of a new business is dependent on various terms and conditions such as economies of scale, switching costs, capital, and technology. Therefore, Gymshark Company needs to make some risky upfront capital investments such as in R&D and advertising. In a market with many competitors such as the fitness industry, many existing firms have already established strong brands and customer loyalty (García-Fernández, et al. 2018). Therefore, Gymshark needs to spend heavily on product differentiation to overcome the existing loyalties and penetrate the market.
Threat of Substitution
It is common for most organizations to face the threat of substitution whereby there are various firms offering similar products and services. In some cases, the competitor may offer the product at a lower cost hence affecting the profitability of other companies. This threat is a factor for Gymshark because of the availability of gym apparel produced by other manufacturers. Furthermore, the availability of different types of substitute sports and activities such as Muay Thai and yoga affect gym memberships hence affecting Gymshark’s business.
Buyer Power
This refers to the potential of the buyer to force a price reduction on a product. Gymshark can be affected by this buyer power when there are many suppliers for the consumer to choose, when substitute products are available in the market, or when the switching cost from one supplier to another is low for the customers.
Supplier Power
Suppliers have the ability to influence the market because of their influence on product quality and price. Gymshark outsources most of its manufacturing process to China, and hence benefiting from the availability of many suppliers in that market. Although the suppliers have the power to influence the prices of raw materials for Gymshark, the supplier power is low because of high supplier concentration.
Competitive Rivalry
Since Gymshark’s business is mainly online, the company can enjoy flexibility in its working environment. As a result, the whole world is a potential market for this company. However, this global reach means that the company faces intense competition from new as well as existing players. This competitive rivalry is in the form of price wars and promotions.
Customer Analysis
Customer analysis is important for the identification of the target consumers for a company, understanding the needs of the customers, as well as analyzing the effectiveness of a product in satisfying the expectations of the customers. There are various ways of making a customer analysis. For example, customers can be profiled according to their behavior, whereby the lifestyle of the customer is matched to the product. Customers can also be demographically profiled to match the product with the customer’s demographic characteristics.
The target market for Gymshark is mainly made up of young people, especially those in colleges or in the postgraduate phase. The focus on this group of individuals is informed by their tendency to spend most of their time in the gym. Furthermore, most young people have active social media profiles where they follow influential users such as athletes and other celebrities (Juhlin & Soini, 2018). Therefore, these young individuals are most likely to be associated with the Gymshark brand in their quest to live healthy lifestyles. In addition to enabling its customers to lead healthy lifestyles, the Gymshark Company also supports them by providing coaching services. The support provided by the company, coupled with the quality gym apparel, and has benefited Gymshark through a loyal and growing customer base. As a result, the company has been able to expand its operations and create more sponsorship in social media platforms.
Internal Analysis
The internal analysis of a business involves the assessment of the forces originating within the business organization. This analysis of the internal environment can be done using the various methods such as the 7Ps, 7s, as well as Value Chain.
7Ps
These are marketing mix elements that are developed to facilitate the successful execution of a company’s marketing strategies.
| Product |
Core: Gymshark makes gym clothing for gym enthusiasts. Actual: the company uses unique material to make products that have the required functionality. Augmented: support is provided for product delivery as well as returns, if necessary. |
| Price | The pricing of the products is designed for swift market penetration. The affordability of the products makes them acceptable by many gym enthusiasts. |
| Place | Gymshark uses selective distribution strategy for its products. |
| Promotion | The company utilizes various promotion opportunities to increase its customer base. For example, the Black Friday watch list as well as pop-up promotions in selected locations such as Paris. |
| People | Since Gymshark relies on its website, online stores, and social media platforms to market and sell its products, it does not have many personnel. The company has fifty employees, with a key executive leader. |
| Process | The main process of engagement between the company and its clients is through online ordering and purchasing. |
| Physical environment | Gymshark’s business touches the fitness industry, sports business, as well as social media marketing. |
7S
This is a framework that is used to review the marketing capabilities of a business organization using seven different viewpoints. The framework also helps in the identification of properties within an organization that should be maintained or improved.
| Staff | The company has a relatively low number of personnel who are responsible for the maintenance of the internal operations. However, the company also engages with brand ambassadors and partners with large followings in social media platforms. |
| Strategy | Gymshark utilizes a comprehensive plan of action which ensures that the company stays on its path to success in ways that are sustainable. |
| System | Gymshark has adopted an online model that involves most of its engagements with its clients. For example, customer support and the ordering system are all performed online. |
| Structure | Among the few staff in the company, there is a top management team that takes care of project decisions. This top management ensures that there is consistency in the decision-making and implementation processes. |
| Skill | The ability to make effective social media engagements and online selling has provided sustainability for the company. |
| Share Values | Everyone involved in the operation of the company has the values of enthusiasm and visionary nature. These qualities not only help the company in planning for the future, but also help in the differentiation of Gymshark’s brand. The core values of this company focus on progression, family, and vision. |
| Style | Gymshark operates within an energetic and young environment. Furthermore, the company has a visionary leader with the desire and ability to achieve the company’s objectives. |
Value Chain
A value chain analysis helps an organization in the adoption of an external focus. This analysis is done through a process whereby the chain process between suppliers and clients is decomposed into activities that are strategically relevant. Therefore, value chain is a way of managing the cost in the chain of supply (Liu, 2017). Value chain is made up of two major components, the primary activity and the support activity. There is a need for the maintenance of healthy conditions, procurement processes, technology development, as well as infrastructure development within Gymshark Company. All these are support activities that manage costs within the company. The primary activities include marketing, sales, firm operations, inbound and outbound logistics, as well as other related services.
Summary SWOT
Gymshark Company has various strengths, weaknesses, opportunities and threats in its structures and operation. Whereas the strengths and weaknesses are assessment of internal factors, the analysis of opportunities and weaknesses involves external factors.
Strengths
According to Porter’s 5 Forces analysis, this company outsources its supplies from China, and hence has an advantage of bargaining for an affordable supplier. In addition to that, the political analysis in PESTEL shows that Gymshark enjoys the stability of the political environment in the UK, which affects the cost of the factors of production and increase the confidence of its partners. Furthermore, this company has a more affordable pricing model compared to most of its competitors (Johnson, 2017). Gymshark is also in partnership with high-profile social media influencers who help push the brand of the company in various social media platforms.
Weaknesses
The outsourcing of manufacturing to China may come with additional importation costs. The investments that the company makes in R&D may not be significant enough to secure the future of the company in the face of stiff competition (Fosher, 2018). In order to counter the threat of a new entry, this company needs to regularly use funds for R&D to improve on existing products and invent new ones.
Opportunities
According to the analysis of social factors in PESTEL, There is a general increase in the number of aged people who need to use gym services and related products to keep fit and healthy. In addition, most people in the target market range are active social media users, hence giving an opportunity for the company to use social media campaigns to reach them (Johnson, 2017). Furthermore, the analysis of the political environment shows a push by the government for people to lead healthier lifestyles is an opportunity for Gymshark to push its products and increase its market share.
Threats
According to the analysis of Porter’s 5 Forces, the various substitute brands and gym products available in the market are a threat to the survival of Gymshark. Some competitors use copycat methods to attract customers away from Gymshark as an entity.
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