Retail Management

7/15/2019 Retail Management

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MARKS : 80COURSE :MRM

SUB : RETAIL MANAGEMENTN. B. : 1) BOTH CASE STUDIES carries equal marks.

2) All questions are compulsory

CASE NO. 1THE OUTLOOK FOR SOFT GOODS SPECIALITY STORES

IntroductionSoft goods specialty retailers are on a quest to grow, with the high-growth ``stars’’

working to maintain momentum by rolling out successful concepts nationally whileinvesting in new concepts that offer long-term promise. The less stellar performersare reinvigorating tired concepts and strengthening margins via better inventory andpromotion management. A saturated marketplace will motivate more specialists atboth ends of the spectrum to seek growth by building a portfolio of concepts focusedon ever-finer customer groups. Concepts will vie for more attention by developingand applying deep customer insights to their assortment strategy, the shoppingexperience, and store brand building and communication.

The Retail LandscapeMany soft goods specialty retailers have seen recent improvements in sales and

profits, but for most, the recovery is modest in nature and has done little to negatethe pervasive price pressure on retail margins. The sustainability of the recovery isquestionable given poor comparable stores sales performance.

Modest RecoverySince bottoming out in the first part of this decade, sales have steadily improved inboth the apparel and accessories specialty store and shoe specialty store channels.Yet, growth remains modest compared to the late 1990s.

The long-term sales outlook for apparel and accessories specialty stores isstronger than for shoe stores. Apparel stores are forecast to grow in the 4 to 5percent range annually through 2008, while shoe stores are forecast to grow mostly

around 1 percent a year over the same time period. Much of the sale improvementhas gone straight to the bottom line for apparel and accessories specialty stores.Though still well below its performance in the late 1990s, the sector has improvedanother important measure of profitability, return on net worth.

In contrast, the very modest sales improvement among shoe specialty storeshas not translated to improved financial performance, with the average net profitmargin for publicly held shoe retailers declining. The financial struggles facing theshoe store channel are evident in the closing of individual stores and entire divisionsby some of the channel’s leading players.

Pervasive price pressure has contributed to the commoditization of apparel

and footwear, particularly basic styles that are easily sourced and widely distributed.Commoditization has also been propelled by the growth of Wal-Mart(www.walmart.com) and Target (www.farget.com), both of which offer wideassortments of basic and fashion-focused soft goods at sharp price points that

http://www.walmart.com/

http://www.walmart.com/



appeal to a broad swath of consumers. This has increased the pressure on manyretailer margins as their increasingly undifferentiated assortment goes head to headwith price-driven retailer margins as their increasingly undifferentiated assortmentgoes head to head with price-driven retailers off the mall.

While apparel price deflation has made it challenging for soft goodsspecialists, many have proven worthy of the challenge. The availability of cheaper

products allowed many of these specialists to improve inventory turns, resulting in aslight increase in their return on inventory ratio since 1998. This improvementreflects a focus by many apparel specialty store retailers on a combination of better markdown strategies, improved inventory management, and introduction of higher-margin fashion items.

A Challenging EnvironmentSoft goods specialty retailers face a crowded marketplace that is steadily becomingeven more competitive. Most shoe specialty stores are faring far worse than theapparel specialists in the competitive wars. Off-mall retailers, including discountdepartment stores/super centers and Kohl’s (www.kohls.com), are capturing apparel

and shoe share of preference at expense of mall-based retailers, including specialtystores. Consumer preference for purchasing apparel is strongest at discountstores/super centers.

The upward trend for discounters contrasts with a decline in spendingpreference for clothing at apparel specialty stores, value department stores, andtraditional / upscale department stores in the same time period. For shoe purchasing,shoe stores are actually gaining spending preference, although the price-drivendiscount store/super center channel is as well. Shoe, discount, and apparel specialtystores are capturing shoe spending preference from value and traditional departmentstores, particularly Sears (www.sears.com) and Dillard’s (www.dillards.com), as wellas Payless (www.payless.com).

Although department stores have suffered the most at the hands of off-mallretailer growth, many are reinventing themselves. Key elements of the departmentstore reinvention include a stronger, more exclusive, and more differentiated brandand style assortment supported by upgraded, easier-to-shop stores. Thus,department stores now contribute to more competitive intensity in the apparel andfootwear playing filed, particularly for upscale customers. The profile of monthlyshoppers at traditional/upscale department stores is similar to that of monthlyshoppers at apparel specialty stores in terms of higher income and education levels – although apparel store customers skew younger.

Competitive battles are also escalating due to the entry of a number of foreignspecialty store retailers to the marketplace. Though most of the new foreign playersoperate only a handful of U.S. stores at this point in time, several intend to ramp uptheir store openings after establishing an initial base of stores.

Some suppliers are also branching out to target new customers with newspecialty store chains to attain growth in the face of modest prospects at departmentstores. Polo Ralph Lauren (www.polo.com) is launching Rugby, a new brand andchain of stores targeting college-aged consumers. Oshkosh B’Gosh(www.oshoshbgosh.com) is testing a family lifestyle store targeting men and women.

A final factor contributing to heightened competitive pressure is the expansionof full-price specialty store chain s by several soft goods suppliers. A number of catalog retailers that are fairly new to retailing are also rapidly building store chains.

Although the track record of most soft goods suppliers has been spotty when itcomes to operating successful full-price retail stores – and several are closingunsuccessful concepts – it is clear that most of the majors view full-price retail as



another avenue for growth that most be pursued as a consequence of overall retailmaturity.

Suppliers with the most substantial full-price store base include Jones Apparel Group(primarily shoe stores, www.jny.com), Liz Claiborne (primarily via Mexx in Europeand Canada, www.liz.com), and Polo Ralph Lauren. The two soft goods catalog

retailers relatively new to full-price retailing that are most actively building their storechain are Coldwater Creek (www.cp;dwatercreek.com) and J. Jill (www.jjill.com).Growing diversity is making it more difficult for many specialists to adequately

address the needs and expectations of all of their target customers – a criticalrequirement for success in the specialty store arena. Diversity is also propelling moreretailers to tailor assortments and adjust merchandising tactics on an individual storebasis. Previously, many only altered the offer to reflect regional seasonal variationsand market size differences.

Apparel and footwear are steadily capturing less of the consumer’s totalspending, This is in part due to a shift in consumer spending priorities towardnecessities (home, health, and transportation), as well as toward new everyday

``luxuries’’ such as eating out and entertainment – which including products such asconsumer electronics. sporting goods and toys, and the cost of fees/admission tosporting events, concerts, movies, clubs, and other types of events.

Consumers are increasingly willing to cross channels to shop a growingnumber of retailers – from mass to class – for apparel. They are more apt to tradedown on staple wardrobe elements while trading up on aspirational, ego-intensivepurchase and shopping experiences. Thus, value retailers play an even moreimportant role in supplying the core of consumers wardrobes – from basics likeundergarments to wardrobe fashion ``staples’’ such as causal pants, casual shirts,and everyday sweaters. Likewise, a number of soft goods specialty retailers anddepartment stores are taking steps to tap into the shopper’s trade-up mindset by

upgrading store environments, focusing on stronger aspirational store brand images,and introducing more higher-end and ``affordable luxury’’ products and labels to theassortment.

Looking ForwardPolarizing Playing Field Although the soft goods specialty store channels is far more fragmented than mostother retail channels, it will continue to slowly consolidate as big companies growbigger, ``adding more banners to their portfolio. However, the nature of specialtyretailing will also ensure the continual entry of new, smaller, usually more flexibleniche players able to exploit market gaps not being addressed by the majors. Only37 percent to total U.S. Soft goods channel sales are by the top 15 retailers. Thisreflects a large number of independent retailers and the presence of smaller firmsthat operate on a regional of multi-regional basis.

Growth at the ends of the size spectrum will cause the soft foods channel toremain polarized into the very big versus the very small retailers. Those in the middlewill continue to be squeezed by the efficiencies and resources of the big retailers andby the flexibility and customer intimacy of smaller retailers and retail chains.

Firms with strong sales growth tend to fall into one of three camps – hot, high-growth youth retailers like Pacific Sunwear (www.pacsun.com), Urban Outfitters(www.urbanoutfitters.com), Hot Topic (www.hottopic.com), and Aero-postale

(www.aeropostale.com), mature but re-invigorated multi-brand mega-specialists likeGap Inc. (www.gapinc.com) and Limited Brands (www.limitedbrands.com); andChico’s (www.chicos.com), which stands alone within the channel as a result of carving out a very well-defined niche targeting an underserved baby boomer woman.



The strong performance of these retailers indicates that most will be in aposition to further propel performance improvements via continued investments intechnology and processes that enable them to reduce costs, more effectivelyallocate and manage inventory, and more strategically manage price andpromotional activity. These retailers will also be better positioned than their peers to

focus on increasing share of wallet among their highest-prospect customers.The soft goods specialty store channel will also continue to polarize withrespect to new store-opening opportunities, with an expanding number of ``tapped-our’’ retail concepts unable to grow by opening more U.S. stores. With littleinternational experience (or bad experiences in the past), most tapped-out retailersare unlikely to move rapidly or successfully into global apparel retailing, except for opening stores in Canada. Instead, they will focus on growing sales in currentconcepts by getting more share of wallet from existing customers through acombination of a more well-defined and relevant market position and extending their assortment into new products, brands, and services for the target customer.

Despite overall channel maturity, there are several soft goods specialty store

retailers with substantial room to grow, particularly those that have only begun rapidstore expansion within recent years. Strong sales growth reflects both a rapid paceof new store openings and, for players such as Chico’s and Pacific Sunwear, equallyimpressive store-to-store sales growth.

Some soft goods specialists that operate a large base of stores and that havestruggled will continue to weed out unprofitable, low-prospect stores from their portfolio. In a few cases, retailer will divest or close entire chains to focus resourceson higher-profit, higher-growth concepts. This trend has been under way for years,by firms such as Payless, Gap Inc., Limited Brands Inc., Wilsons Leather (www.wisonsleather.com), Charming Shopper (www.charmingshoppes.com), BrownShoe (www.brownshoe.com), and Mother’s Work (www.motherswork.com).

Repositioning for RelevancyThe recent economic downturn has made many retailers loath to invest in major repositioning initiatives. However, as sales gain some momentum and corporatepurse strings sales gain some momentum and corporate purse strings loosen a bit,more aging soft goods specialty stores will undergo a facelift. For some, this willinvolve a long overdue re-assessment of the target customer. Perhaps the highest-profile repositioning has been Gap (www.gap.com), Old Navy (www.oldnavy.com),and Banana Republic (www.bananarepublic.com), and Banana Republic(www.banarepublic.com) chains.

Banana Republic has added more trend-driven fashions to better distinguish itfrom Gap Stores. This includes a stronger emphasis on color, more feminine styles,and clothes for social occasions, as well as its standard work-appropriateassortment. Old Navy is more firmly positioned as a value-focused store for theentire family, with more emphasis on serving the needs of each member of thefamily. The retailer has increased assortment segmentation based on customer group. The chain also has new fixtures that increase selling capacity. Gap has beenrepositioned as the classic specialty store for a range of fashion ``basics’’ for casualoccasions, supplemented by more ``occasion-oriented’’. merchandise for weekends,the workplace, and stepping out. Underperforming Gap stores have been closed,and stores have stricter inventory controls to increase productivity and reduce

markdowns. Gap is reinvesting in marketing, including developing a more consistentmessage across all media.



In line with size-related trends in the overall population, more specialtyretailers will expand their standard size range to include larger sizes, as well aspetite/small sizes. Some may spin special-size concepts off as their own storebanners, but most will choose to simply extend the size range within the existingbanners by adding new sizes or by increasing the breadth of assortment withinexisting special size lines. Ann Taylor (www.anntaylor.com) plans an overall focus on

petites as one of its growth strategies. Plans include extending the product offeringto all categories and more styles, creating a store environment that makes petites apreferred destination, and boosting marketing to generate awareness. The firm hasrolled out petite adjacencies in current stores (including some with separateentrances).

To capture more sales from customers already in the store, a growing number of soft goods specialty store retailers will extend their assortments to includeproducts that provide additional style perspectives and meet the needs of additionalwearing occasions. Express (www.expressfashion.com) strengthened its wear-to-work appeal with the Express Design Studio line of clothing being rolled out to allstores. The line is designed by a New York-based team and focuses on fitted pants,

tailored jackets, and key pieces that ``add sexy sophistication’’ and allow the line tomove from the ``work-place to the weekend.’’ The men’s line also includes suits soldas separates, dress shirts, and ties.

Abercrombie & Fitch (www.abercrombie.com) is repositioning its brand to beless aggressively sexual in its marketing to customers and to include higher pricepoints and fewer promotions. As part of this strategy, the retailer has a new higher price point collection called Ezra Fitch. The collection includes products such as$118 to $148 jeans and cashmere crew necks at $178.…

While the factors having the most influence on trying a new brand or store arethe styling and price, followed by the influence of friends and family, monthly

specialty store shoppers are far more likely than all shoppers to be influenced to try abrand or shop a store based on fashion magazines and celebrity culture. They arealso far more willing than all shoppers to say that wearing designer brands has apositive impact on their self-esteem and self-confidence.

As part of their approach to new customers, most specialist will choose to firstmove up the age spectrum with the intention of leveraging the knowledge they haveabout their customers as they ``outgrow’’ the existing concept and enter a new lifestage. Where this opportunity has already been tapped out, they will be forced tofocus on concepts targeting an entirely new style, lifestyle, or occasion of use.

Driving Growth Through Strategic InvestmentsMore specialty store retailers will invest in initiatives that allow them to not just attaincompetitive differentiation but to also drive profitable top-line growth via higher purchase conversion levels, more multiple-item transactions, and increaseddestination store status with targeted customers. Key areas of investment will includenew technologies and high-value services, as well as alternative marketing andpromotional venues.

New technologies are becoming more mainstream and less cost-prohibitive, atrend that will motivate more specialty store retailers to invest in technologicalsolutions that ensure that the right products are on the selling floor in the rightquantities at the right time and price. Technology will also be used to provide more

alternative shopping and purchasing options for customers (beyond just onlineselling). It will also be used to better track the flow of customer traffic in the store ona real-time basis in order to design stores that have higher sell-through levels andstaff stores in line with customer needs.



Many specialty store retailers will focus on improving their service programsand associate-customer interaction as a way to build top-of-mind status with targetcustomers. In some cases, this will involve more personal shopping services andstronger customer ``clienteling.’’ In others, it will involve creatively responding to theservice and shopping experience needs of the best customers in ways that are moremeaningful to the customer.

Talbots (www.talbots.com) has experimented with a variation on its popular Appointment Shopping service with a service called Wardrobe Express. The servicetargets busy, time-pressed customers with highly efficient shopping appointments byproviding a pre-selected assortment of garments for the customer in the dressingroom at the prescribed time – along with a light snack for lunchtime shoppers. Duringthe visit, the store associate completes a ``wardrobing sheet’’ including what wastried on and possible coordinates. Using credit card information that is on file, theassociate then completes the purchase after the shopper has left the store andarranges for pickup or delivery.

Questions1. What can an independent retailer learn from this case?

Answer Some good ideas for retailers to consider after reading this case are, repositioningold images, continuing to target the youth market, and creating a life cycle of retailingwhereas, when a customer outgrows a particular brand, you have another brand for the consumer to grow into. There are also many ways that our ever-advancingtechnology can be incorporated into retailing to aid companies in increasingrevenues.

The case state that in order to drive profitable top-line growth via higher purchase

conversion levels, more multiple-item transactions, and increased destination storestatus with targeted customers independent retailers will have to invest in newtechnologies and high-value services, as well as alternative marketing andpromotional venues

Some of the points to be highlighted include:Adaptation - Adapting such as benchmarking other retailers, pinpointing customer needs & wants, developing a long-term strategy for adaptation. It is imperative thatretailers find ways to draw-in and maintain customers by changing with the market. Also retailers can learn from mistakes that competitors have made as well asthemselves. Changing what is being offered, reassessing what the customers’ needsare, changing and planning differently than in the past are all discussed and can beused to continue generating revenue in the specialty stores. In order to staycompetitive in the soft goods market the independent retailer must remain flexibleand have an innovative approach and compete in a niche market. Businesses needto continue to keep up with trends and find ways to be unique from any other storeand make people want to go to their store time and time again.

Learn from competition - An independent retailer can learn many things from thiscase. First of all it needs to look at the strategies and ideas that have been tried byothers in their area of business. This will allow them to understand better what is

working in their current market and what is not.

Marketing and promotions – extend assortment into new products, brands, andservices for the target customer



Address needs of diverse customers - growing diversity is making it more difficultfor many specialists to adequately address the needs and expectations of all of their target customers. Diversity is also propelling more retailers to tailor assortments andadjust merchandising tactics on an individual store basis

Allocation and assortment planning - retailers have to find ways to move product.This could mean they should carry more different products to attract a wider varietyof customers, or it could mean that they have to advertise on multiple channels inorder to find more customers. Retailers will have to extend their assortments toinclude products that provide additional style perspectives and meet the needs of additional wearing occasions. This could include use of technologies.

New investments – would enable retailers to reduce costs, more effectively allocateand manage inventory, and more strategically manage price and promotional activity

Use of New technologies – have become more mainstream and less cost-

prohibitive. Investing in technological solutions ensures that the right products are onthe selling floor in the right quantities at the right time and price. Technology will alsobe used to provide more alternative shopping and purchasing options for customers(beyond just online selling). It will also be used to better track the flow of customer traffic in the store on a real-time basis in order to design stores that have higher sell-through levels and staff stores in line with customer needs.

Clienteling - focus on improving service programs and associate-customer interaction as a way to build top-of-mind status with target customers. This involvesmore personal shopping services and stronger customer ``clienteling”, creativelyresponding to the service and shopping experience needs of the best customers in

ways that are more meaningful to the customer.Start initiatives like Wardrobe Express. The service targets busy, time-pressedcustomers with highly efficient shopping appointments by providing a pre-selectedassortment of garments for the customer in the dressing room at the prescribed time – along with a light snack for lunchtime shoppers. During the visit, the storeassociate completes a ``wardrobing sheet’’ including what was tried on and possiblecoordinates. Using credit card information that is on file, the associate thencompletes the purchase after the shopper has left the store and arranges for pickupor delivery.

2. What are the positive implications of this case with respect to the useof leased departments in department stores?

Answer

As the sale of soft goods are continuing to decline in the way of specialty stores,

more and more people are finding what they need from the department stores.

This leads to the fact that the people who ran these specialty stores will be

looking to cut cost and one way of doing this is to lease from a department store.

This allows that owner to continue their business without having to pay for aplace to conduct business. This eliminates cost for the owner and allows the



department store to bring in someone who is well versed in that area and overall

it increases the sales of the specialty store and the department store

3. How can a mid-priced apparel store become a destination retailer?

Answer A destination retailer is defined in our book as a firm that consumers view as

distinctive enough to become loyal to it and go out of their way to shop there. There

are several ways in which a mid-priced apparel store can become a destination

retailer. One would be for this retailer to differentiate themselves from competitors.

They could seek differentiation by focusing on customer service to please

customers, seeking a price-orientation, or conversely an upscale orientation to

attract customers, or by focusing on new technology and trends to differentiate

themselves from competitors in the eyes of their customers.

Innovative/ exclusive products: One way for a mid-priced apparel store to becomea destination retailer would be if the store offered innovative or exclusive productsand provided or provide a unique way of operating. The retailer could offer in-storekiosks to enhance the shopping experience. The retailer could also offer product/brands that aren't carried by any other retailer to attract customers who arelooking for something new and different. For example by using Virtual Mirror,customers can try on clothes virtually.

Pricing - mid-priced apparel could be price-oriented and cost-efficient to attract pricesensitive customers or they could go the other direction and be an upscale apparelstore to attract those status conscious consumers.

Superior Customer Service - This would attract customers who seek opinions or information by shopping. This would also differentiate the retailer from other retailerswhose customer service may be considered sub-par by consumers. The apparelstore could offer great customer service to attract those customers that enjoy thisperk while shopping. Also, by providing high-value services that may not cost muchto the supplier but are of great importance to the customer they will attract and retainmore customers. For example, Talbots has an Appointment Shopping program thatallows for busy women to shop over their lunch break without having to handpick or purchase the clothes herself.

Technology - Many mid-priced stores will benefit from investing in new technologiesand high-value services. Using a more developed technologies stores will be able tobetter track their inventory and supply a more extensive purchasing program andcustomer service.

Convenience - The retailer could offer longer store hours, locations close toresidents, and a fairly simple shopping experience. This will attract consumers whoare busy and have to work shopping into their schedules.

4. How is Gap Inc. utilizing the principles of the wheel of retailingthrough its Gap, Old Navy, and Banana Republic divisions?Answer



"The wheel of retailing is grounded on four principles: (1) There are many pricesensitive shoppers who will trade customer service, wide selections, and convenientlocations for lower prices. (2) Price sensitive shoppers are often not loyal and willswitch to retailers with lower prices. However, prestige-sensitive customers likeshopping at retailers with high-end strategies. (3) New institutions are frequently ableto have lower operating costs than existing institutions. (4) As retailers move up the

wheel, they typically do so to increase sales, broaden the target market, and improvetheir image.

The wheel of retailing consists of three basic strategic positions: low end, medium,and high end. A low-end strategy retailer focuses on low prices, limited facilities andservices, and has price sensitive consumers. A medium strategy focuses onmoderate prices, improved facilities, and a broader base of value and serviceconscious customers. A high end strategy focuses on higher prices, excellent serviceand facilities, and upscale consumers.

Gap Inc. is utilizing the principles of the wheel of retailing by appealing to customers

who are price sensitive, prestige-sensitive, and everything in between. They did a re-assessment of their target customers and then tailored their stores accordingly. Theyhave upped the scale of what today's consumers want.

In the wheel of retailing Gap Inc. has three divisions that are distinct and different intheir retailing goals. By differentiating its brand using three distinct divisions, Gap Inc.is able to reach a broad market without cannablizing itself.

Gap Inc. has moved through the wheel from low-end to high-end and offeringsomething at each level. By allowing themselves to expand in this kind of way, GapInc. will be more profitable in the end because they are providing something different

for different people and fulfilling consumers’ wants and needs. This is a smart tacticbecause if consumers understand that Gap is affiliated with these stores, they canremain loyal. For example, maybe a college student with a low budget really enjoysshopping at Old Navy, eventually when they have a salary and a higher budget, theywill then shop at Gap or Banana Republic.

Old Navy falls into the low-end strategy category for Gap Inc. Old Navy has lower prices compared to the Gap and Banana Republic. They emphasize price in their promotions and they have a simple retail personnel organization. Store interiors tendto be crowded and the fixtures are far from elaborate.

The Gap has a medium strategy. Their stores feature moderate prices. Customer service is better than it would be at an Old Navy store. Facilities are also lesscrowded and feature more elaborate fixtures. The Gap attracts more value andservice oriented customers.

Banana Republic has a high end strategy and is known as a mainstream luxuryclothing retailer. The prices are higher than those of the Gap or Old Navy at BananaRepublic. Banana Republic stores feature very elaborate store decoration whichtargets upscale consumers. This strategy caters to the prestige-sensitive shoppers.

5. How can high-priced apparel specialty stores successfully competeagainst full-line discount stores?

Answer



High-priced apparel specialty stores can differentiate themselves from full-linediscount stores by investing in new technologies, offering high-value services as wellas providing alternative marketing and promotional venues. For example, specialtystores may offer a direct marketing tool by allowing customers to shop online as well.In addition, technologies will insure that the right products are sold at the right price. A major difference between specialty stores and full-line discount stores is that fact

that specialty stores are more fashion sensitive. By adding new technology, this willallow the specialty stores to make sure that they are satisfying the needs of particular loyal customers who shop at their stores for certain items. Another important aspect of a specialty store versus a full-line discount store is the fact thatspecialty stores are known for their customer service and interaction. It is importantfor specialty stores to keep in mind the needs of their target market by maintainingclose relationships with their core customers. Specialty stores are also differentiatingthemselves by offering services that will decrease the amount of time spent in theactual store; however, capitalizing on the customer’s purchases.

A quick view of advantages that the Specialty Stores have over the Discounted ones:

Fashion - by offering more fashion sensitive merchandise since full-line discountstores offer less fashion sensitive merchandise.

Quality - High-priced apparel specialty stores can successfully compete against full-line discount stores by having one very important factor, quality. High-priced apparelmust have a high quality, which is the number one factor a customer looks for whenthey must pay a high price for something.

Specialty items - they offer specialty items that may not be found at a discountstore.

Promotions – offer promotions and value adding offers to their customers.Customers will come back if there is some sort of other value added to shopping attheir store

Upscale Environment - quality customer service, employee expertise, and afriendly/helpful environment makes shopping enjoyable. In today’s world, not allcustomers are strictly driven by price, “45 % of customer respondents said theywould pay more for products if they could shop in a nicer environment.” Specialtystores are able to personal and customize opportunities, allowing for a moreenjoyable shopping experience for customers. They can also get more shares fromexisting customers by expanding their brands, new products, and services for thecustomers. The specialty stores are able to offer a pleasant, helpful shoppingenvironment with knowledgable and friendly employees. They are willing to help withanything the customer may need. Customers shop at specialty stores not to just buyitems but also for the experiences they have while shopping there.

Exceptional customer service - by providing superior customer service andknowledgeable associates Specialty stores may even find themselves specializingeven further. For instance, Ann Taylor will focus on petite sizes. However, another specialty store may do better expanding their size range to allow for a broader

customer base. A specialty store would be wise to differentiate their product fromtheir competitions. A store who is like no other will attract customers who want whatthey have, and know no one else does. For instance, Talbots adds value bygathering apparel and preparing a dressing room in advance of the consumer



arriving. This limits the time investment of the consumer and adds value to theconsumer's shopping experience. This added value appeals to the high-endconsumer who is willing to pay a higher price for the added value. If a person has agood experience when they enter the store then they will likely come again despitethe higher prices.

Increased customer loyalty will result in multiple item purchases and destinationretailing. The best way to do this is to have top of the line shopping services,knowledgable and helpful employees and upscale facilities.

Use of technology- Offering ways of ordering online at the convenience of your ownhome and using marketing research to figure out what the customers need and wantare through a database can make retailers more successful at competing againstfull-line discount stores. Overall if the shopping experience is more enjoyable andpersonalized for a customer they are more likely to come back and not consider theprice of the product an issue.

6. What role should the Internet play for apparel retailers?Answer Apparel retailers should utilize the Web in a way that enhances the retailers’ imageand stimulates sales growth. By becoming a multi-channel retailer, apparel retailerscan use the Internet to reach more customers, provide information to consumersabout products carried, store locations, answers to common questions, andcustomer loyalty programs. With a website that is easy to navigate, interactive, andpromotes new products that are fully explained, customers are able to look upproducts they are interested in before heading to an actual retail location. Mostconsumers prefer to browse online and then go to the store so that they can actually

feel and try on products. Advertising through the Internet is also beneficial becauseyou can promote special offers and send coupons to Web customers, and are ableto collect feedback from consumers at a low cost.

It is a great source of marketing and an extremely useful tool for apparelretailers for any company. For apparel retailers, some choose to use the internet aspart of a multi channel strategy and promote the actual store through severalinternet features like view items in several different colors and to view itemscommonly matched, by allowing customers to shop and order online.

Others choose to merely disseminate information via their site like Store Locators.Most shoppers like to search online to see what is available to them, what theprices are, to learn more about the store, return policies and save time inshopping, and some do shop online. Great marketing tool websites can oftenattract customers having a website for customers to access the store’s inventoryhelps get the consumer to visit the store. The internet can send out massiveamounts of information to customers at a very rapid rate. This is alsoconvenient for customers to view new sales coming up and to order onlinewith no complications. Through the use of internet retailers can market their products and increase their profits by allowing customers to order online . Alsowith the help of internet and social media, stores could announce deals and sales

and other such special offers could be offered online along with print outcoupons which will encourage your customers to check out your website andvisit your store to use the coupon where more impulse buying could occur



What I would recommend to an apparel retailer with regards to their website is toload it with highly interactive features. A feature that takes your measurementsand helps you virtually shop based upon them would be a big draw for shoppers. Another feature could include scanning a picture of yourself and being able toput the clothes on to see how they would look on you before purchasing. Aseasonal web cast fashion show is another idea. Outfit coordination online,

where the customer picks a piece and the site chooses other complimentarypieces would be a good idea too. Offering discounts to web site users for bricks and mortar stores is another way to use the internet effectively. Byhaving a relevant, interactive and often updated site, a retailer can remain inthe forefront of a consumers mind when they are not shopping which givesthat retailer the advantage when the consumer is ready to shop. A retailer’swebsite should be very helpful to the consumer and guide them in their shoppingexperience. It should have sizing charts for customers to use so they can order the correct size, it should have a feature where if they order one item somesuggestions could pop up on what goes well with that item, also there shouldbe a place where customers can rate certain items so other customers can

view. Through the internet a retailer can also offer discounts which can makeshopping online more appealing. Also there should be a live chat room for customers to ask sales associates questions whenever they want and get aresponse back.

The internet can be a very successful way of marketing your products andreceiving feedback from customers so you can better improve your operations. Also its cost effective for a company to market online and canreach a large customer base in a short period of time.

Internet communication with consumers is also beneficial to an apparel retailer in

that the retailer can gather marketing research data via this channel and workto better tailor their operations to their consumers. It is a cost effective way of gathering information from customers and reaching them to share informationas well. It is a very inexpensive way to communicate with customers. The internetalso makes it easier for customers to complain, which can be very useful for aretailer

7. Can an apparel retailer prosper in the future if it does not engage inmulti-channel retailing? Explain your answer.

Answer With the advent of globalization and all pervasiveness of internet in our lives, it wouldbe foolhardy for an apparel retailer to stick to single format retailing. Multi channelretailing allows a wider scope for marketing and promotions globally and hencecovers a wider customer base.

Multi-channel retailing offers plenty of benefits to retailers, benefits that makeinvesting in the strategy worthwhile.Improved customer perceptionPeople are watching television and using their tablet at the same time. They expect

the same kind of integration with their shopping experience. Brands who don'tprovide that kind of experience, are likely to lose customers, especially as the digitalgeneration gains even more buying power. Stores who do create a seamlessexperience that integrates all different forms of technology, however, can gain



significant customer loyalty. Those brands are perceived as forward-thinking andresponsive to customer's needs — qualities that will keep customers coming back.That improved perception offers another advantage, as well. In a world of big-boxstores and online shopping, finding the best price is easier than ever for customers. A store that is perceived as responsive to customer needs and gives customers easyaccess to a variety of channels can differentiate itself in a crowded field. That allows

the brand to compete on the experience offered, rather than just price. Customersmight be willing to pay a little more for the convenience, and will come backrepeatedly, and brands don't have to slice their profits just to keep up.

Increased salesMulti-channel retailing, by offering a variety of engagement points for the customer tomake a purchase, increases the convenience and ease of sales, thus boosting profit. A customer who thinks about buying a pair of pants, for example, may not want todrive to the mall, park, walk to the store, find the pants and try them on. For thatcustomer, she can go online at home and order the pants from the store's website. Another customer, however, might be in the store trying on the pants and decide

she'd like them in a different color. In that case, she can use an in-store kiosk to findthe pants in the preferred color, order them and have them delivered to her home.Still another customer can use her smartphone to take a picture of the pants, send itto a friend and discuss whether to purchase them or not. Having a variety of engagement points gives retailers more tools to make a sale.

Better data collectionKnowing the customer is a key tenant for successful retailing, and multi-channelengagement points provide more opportunities to gather information aboutcustomers.There are two benefits to the data collection offered by multi-channel retail: First, the

possibility for gathering more information exists, and the information can be usedmore effectively.If a retailer can track what a customer is purchasing, and where, more targetedmarketing can be introduced. Someone who tends to browse online and thenpurchase in-store, for example, can be emailed an invitation to a private showing in astore, and the list of products to be shown can be sent before the event, increasingthe likelihood of purchase.Not only is it more likely that the customer will provide important information, but if allthe different channels are communicating, then the information only needs to beentered once.

Enhanced productivityMulti-channel retailing offers benefits for more than shoppers. Workers, too, canbenefit from the use of new technology, by arming them with more information andincreasing their efficiency. A tablet, for example, frees employees from the point-of-sale system, insteadallowing them to carry the register with them. Employees can go directly to the aid of customers, helping them to find out what is in stock, what is available at other storesand when new products might be launching. The tablet also can contain informationabout the loyalty program, so a frequent customer can be given VIP status. Then,when a purchase is ready to be made, the customer does not have to stand in line,

but rather can simply continue talking to the salesperson and make her purchase viatablet.



CASE NO. 2 ‘THE APPAREL SHOPPER’

INTRODUCTIONSeveral general observations can be offered regarding apparel shoppers :

• High – income shoppers and younger shoppers underlie recent salesgrowth.

• Spending changes are more likely to be driven by needs not wants. Although important, the advent of new fashion “looks” is not the mainreason shoppers increase – or decrease – their spending. Instead,changes are far more likely to be related to very practical reasons (e.g., achange in size, replacement of worn clothing, lower household incomes,

more savings / debt reduction).• Also important in prompting changes in clothing spending is te need to

upgrade / update a work wardrobe or respond to a changed work situation.• As own – market shoppers feel the need to pinch their pennies for apparel,

they spend more of their budget at Wal-Mart. Among these shoppers,Wal– Mart is over whelmingly seen as offering the best clothing value,while its clothing styles are a good match for their basic style preferences.

• Clothing specialty stores and traditional department stores benefit fromconsistent or increased spending among up – market shoppers. Thebrands and styles offered at these retail formats are most preferred by up

– market shoppers.• Much of the spending increases among younger shoppers are funneled to

fashion – focused clothing specialty stores, as well as retailers offeringcredible fashions plus a strong price for the quality value.

• Department stores and clothing specialty stores are the top two choices for offering the most – wanted brands and the most – wanted styles, bothoverall and among key segments.

• The majority of Americans wear ordinary/basic styles at work and at play.However, they seem a bit more stylish on the job than off. Younger andhigher-income shoppers skew toward more fashion – driven looks for bothwearing occasions.

Who Is driving Apparel Shopping Growth ? Apparel sales grew 6 percent form 2003 to 2004, following 1.4 percent growth theprior year. We project apparel spending to increase about 4 percent annually duringthe next several years. Margins, however, will be severely tested by acceleratingprice pressure. The 2004 sales increase can be explained by our ShopperScapeTM

data, particularly when viewed through the “liens” of household income. Everymonth, we survey 4,000 shoppers about their recent and planned spending. Wecollect purchasing data for over 150 retailers and more than 100 product categories.

The majority of Shopper Scape TM respondents say they spent about the sameamount on clothes for themselves in 2004 compared with 2003. Twice as many

reported reduced spending than reported increased spending. These proportions,however, drainatically varied by upper-versus lower income households andresulted in a net increase in overall spending.



Consumers with the highest incomes were the most likely to increase their spending for themselves, while those with lower incomes were the most likely toreduce spending. According to U.S. personal consumption expenditure date, thehighest- income shoppers account for one-quarter of all apparel spending, althoughthey make up only 12 percent of all households. The lowest-income householdsaccount for over one-third of all households but only 18 percent of all apparel

spending.

With respect to race / ethnicity, Whites were the most likely to maintain their clothing spending for themselves, compared with African-Americans and Hispanics.Latines, more of whom reported reduced spending. Spending trends on clothing alsovaried notably by both gender and age. Changes in spending – both increases andreductions – were more pronounced among women and younger shoppers thanamong their counterparts. Men and mid – life to older shoppers were most likely tohave an unchanged rate of spending on clothing for themselves. Women were morelikely to have both increased or decreased spending compared with men. Working-age shoppers (ages 18 to 54) were more likely than older shoppers to have

increased their spending on clothing for themselves.

What Underlies Spending Changes ?Spending IncreasesSpending increases were most likely to be related to very practical reasons (e.g.achange in clothing size, replacement of worn clothing). Spending decreases weremost likely to reflect a shrinking wallet. Work wardrobes also were important tospending changes, whether related to updating the wardrobe or a change in workstatus.

Among those spending more on clothing, the most commonly cited reasonswere related to practical needs for new or replacement clothing rather than to having

more discretionary income available to spend on clothing or having a desire for anew fashion look. The need for a new size was mentioned as the most importantreason for spending more on clothing by 28 percent of respondents. Thereplacement of worn – our items was mentioned by 21 percent. Eighteen percentincreased spending to upgrade the work wardrobe. Few shoppers (3 percent)increased spending because fashions were of greater interest than previously. Aslightly larger percentage (9 percent) attributed the increase in spending to higher income.

Specific reasons for increasing clothing spending were highly related to agebut not as much to gender. The only significant gender differences were that womenwere more likely than men to increase spending on clothing due to a change in size,while men were more likely in increase spending because of the need to replace aworn or torn item. Shoppers in older age groups were more likely to spend morebecause they were replacing worn – out clothing. Those in their mid-life “work” yearswere more likely to spend more because they were updating their work wardrobe.Less debts, higher incomes, and more time to shop were more likely to be reasonscited by younger shoppers for higher spending.

Reasons behind increased spending were not well explained by either incomeor race. The most notable differences by income were among shoppers withhousehold incomes of $25,000 to $49,999 and $75,000 to $99,999. Both groupswere more likely than others to spend more to upgrade the work wardrobe. Those

with incomes from $25,000 to $49,000 also were more likely than others to spendbecause they had more income and more free time to shop.

Spending Decreases



Among respondents cutting back on their clothing spending most did so becausetheir clothing budge shrank, either due to a decrease in income (21 percent) or in anattempt to spend less so as to save more or pay down debt (18 percent). Other frequent responses included a change in a workplace situation that resulted in adecreased need for clothing spending a spending shift away from clothing to other items, and a desire to wait to make new purchases until the respondent lost weight.

Only 2 percent said they reduced spending because they were less interested in thelatest fashions.The most frequently mentioned reasons for reduced clothing spending were

closely related to age and gender. Women and shoppers younger than 55 were mostlikely to say a decrease in income caused them to cut back. Mid-life shoppers weremore likely to decrease their budget to save money or pay down debt. Younger shoppers were more likely to reduce spending due to a shift in spending prioritiesaway from clothing toward other types of products. Men and older shoppers weremore likely to say a change in their work situation triggered reduced spending,presumably reflecting retirement among the oldest shoppers. Women were morelikely to say they were holding off on new clothing purchases until they lost weight.

Income is modestly indicative of the reasons why shoppers cut back onspending. However, race is not a good indicator. Lower-income households weremore likely to cut back because of a decrease in income. Shoppers in the lowestincome households also were the least likely to postpone new apparel purchasesuntil they lost weight. Shoppers in the highest – income households that cut back onspending were more likely to say they did so because they had less time to shop or were shifting work wear spending toward less expensive, more casual clothing. African – American were much more apt to spend less because they shiftedspending away from clothing to other nonclothing items.

What Retailers Are Benefiting from Spending Growth ?

Overall, Wal-Mart (w.w.w.walmart.com) was the biggest direct beneficiary of recentincreased spending – although primarily from lower – income or mid – life shoppers.Higher income shoppers and those at each end of the age spectrum shifted their spending to more fashion – focused apparel retailers. Regardless of whether their budget to any particular retailer. An equal number of shoppers, however, said theywere shifting more of their clothing budget to Wal – Mart.

The retail recipient of shifting spending on apparel varied notably by age andgender.

• Wal– Mart gained more of the budget of women than of men, as well as of all but the youngest and oldest shoppers.

•

Women were more likely than men to shift their clothing budget toward alltypes of specialty stores, from full – price to off-price and value – pricedOld Navy (www.oldnavy.com)

• Men were more likely than women to shift more of their budget to Sears(www.sears.com)

• Eighteen to 34 years – olds formed a distinctive bloc, that was especiallylikely to shift their budgets to all types of specialty stores, as well as toTarget (www.target.com) They were the most likely to shift their clothingbudget among retailers, reflecting less – ingrained shopping patterns anda greater desire to shop at retailers offering trend-right fashions,particularly at value price points.

• Shoppers age 45 or older were more likely to shift their budget towardtraditional department stores, long the domain of the mid – life to older shoppers.

http://www.oldnavy.com/

http://www.sears.com/

http://www.target.com/

http://www.oldnavy.com/

http://www.sears.com/

http://www.target.com/



Shifts in the budget to various types of retailers also are linked to income andrace. Wal-Mart’s everyday low prices clearly attracted shoppers on a budget; 40percent of consumers with incomes less than $25,000 say they spent more onclothing there. Shoppers with incomes of $25,000 or higher were more likely to shifttheir budget to Kohl’s (www.kohis.com) and Old Navy. The most – affluent shoppers($100,000 and above) were more likely than others to shift their budget to traditional

department stores. African – Americans were more likely than Whites or Latinos to shift their budget to Wal – Mart and clothing specialty stores. Latinos were more apt thanWhites or African – Americans to shift to Target and Sears. African – Americans andLatinos were more likely than Whites were more apt than African – Americans or Latinos to shift to Kohl’s.

Who Has the Right Clothing Quality for the Price ? Apparel shoppers come in all shapes, sizes, ages, incomes, and taste levels. Eventhough there are clear differences in retailer preferences based largely on age andincome, it is safe to say that Wal-Mart is the overall clothing value leader. However,

consumers have different criteria for assessing value, which is evident based on theratings of shoppers by key demographics such as age and income.

The assessment of which retailer offers the best clothing value clearly differsby age but less so by gender. Wal-Mart is seen as a good value by more men thanwomen. Women are more likely to perceive that Target and Old Navy offer a goodvalue, most likely because of the ``fashion right’’ orientation of these retailers, anaspect of value that women are more likely to use in their ratings. Older shoppersare notably more likely than younger shoppers to perceive that J.C. Penney(www.jcpenney.com) and Kohl’s offer a good value. Younger shoppers are morelikely to perceive that Target and Old Navy offer a good value, again likely includingbeing ``fashion right’’ as a more important component of value.

Income has a direct relationship with shopper rankings of quality for the pricepaid. Value retailers receive higher ratings among lower-income than upper-incomehouseholds. Race/ethnicity has less of a relationship to shopper perceptions,although a few differences exists. Wal-Mart’s overall top ranking for clothing value isdirectly linked to its high ranking among lower-income shoppers; no other retailer comes close in terms of perceived clothing value. The gap between Wal-Mart andother retailers also is large in the $25,000 to $49,999 income group but narrowsamong those with incomes of $50,000 to $74,999.

In the highest income group ($100,000 and over), only 7 percent of shoppersfeel Wal-Mart offers the best clothing value. Kohl’s is perceived by the highestpercentage of shoppers in this group to offer the best clothing value. As incomeincreases, traditional department stores, Old Navy, clothing specialty stores, andTarget are more likely to be perceived to offer the best clothing value.

With respect to race/ethnicity, Whites are more likely than African-Americansor Lations to feel that Kohl’s offers the best clothing values. Lations are more likely tofeel that Target offers the best values. This surpasses the percent of Latinos whosay that Wal-Mart offers the best clothing values. Latinos are more likely to feel thatTarget offers the best values. This surpasses the percent of Latinos who say thatWal-Mart offers the best clothing values-which is not the case with Whites or African- Americans, who give Wal-Mart the highest rating on this measure.

Who Has the Right Brands and Styles?The overall ranking of retailers based on whether or not they offer more of thebrands shoppers want to buy is very different from retailer rankings based onwhether or not they offer the best value. Traditional department stores and clothing



specialty stores (excluding Old Navy) are the most likely to offer more of the brandsshoppers prefer. A smaller percentage say Wal-Mart has more of the brands theywant to buy, followed by J.C. Penney and Kohl’s.

Because many brands are aimed at specific age groups and sold at retailerstargeting these groups, brands ratings of retailers noticeably vary by age. There arefew differences based on gender. Older shoppers are the least likely to known which

retailer carries the brands they prefer; they also are the most likely to say thattraditional department stores carry the brands they want. J.C. Penney is rated highlyon this factor by the oldest shoppers. Clothing specialty stores receive high ratingsfor carrying the``right’’ brands by most shoppers, particularly younger ones. Targetand Sears.

At Work or Play, Basics Rule American consumers are not trendy – either at work or play. Regardless of wearingoccasion, ``ordinary, very basic’’ styles were preferred by a wide margin over allother styles although more so far casual / weekend wear than for work. Second inpreference for both wearing occasions were classic and traditional styles that never

go out of fashion. Slightly more shoppers wear this style for work than for weekend.Less than a third of consumers said they wore ``contemporary’’ or ``trendsetting’’fashions for work or for casual wear. The percent wearing the more fashion-focusedstyles for work was higher than the percent wearing these styles for the weekend.

Age has a more noticeable impact than gender on the styles worn by full-timeworkers. Younger adults are more likely to wear work wardrobes comprised of contemporary or trendsetting styles. Roughly half of those younger than 34 areattracted to fashion forward types of work wear, compared with l4ess than a third of all workers. Older workers are more likely to stick to classics and basics for work,with 83 percent and 88 percent of workers in the 55 – to – 64 and 65+ age groupssaving they wear one of these two categories. Workers in the oldest age group are

twice as likely to favor basic styles for work compared with those in the youngest.Women are more likely than men to wear trendsetting styles for work.

Outside of the office, consumers are even more likely to wear basic styles.Half of all shoppers say this is their favorite style to wear on the weekend or on other casual occasions. As shoppers get older they are more likely to prefer basic casuallooks. More than 60 percent of the oldest shoppers cite basic styles as preferred for weekend / casual wear. Classic/traditional styles are less preferred by younger shoppers for casual wear than for workplace attire. Contemporary looks are mostpreferred by younger shoppers for their casual wardrobe, with more than a thirdsaying this is their favorite casual style.

There is a direct relationship between income and style preferences for workattire, with preferences becoming less basic as incomes increase. Race / ethnicity isalso related to work wardrobe preferences. Higher-income workers are most likely toprefer a classic work wardrobe. They, along with those in the middle-income range,also are more likely to favor contemporary, but not trendy, work wardrobes. Thelower workers’ incomes, the more likely they are to wear basic styles to work. Basicstyles also are more favored by White workers than by African-American and Latinoworkers. Latino workers are the trendiest race/ethnic group with respect to workclothing.

Questions

1. What overall conclusions do you reach after reading this case?Answer The Apparel Shopper mainly discussed the industry and spending trends. Spending

changes can be organized by different demographics such as race/ethnicity, income,



age and gender. A spending decrease is more contingent upon a shoppers budget,

whereas spending increases were mostly due to a need for new sizes or replacing

items. Also, an interesting topic covered is that Americans are not as trendy, they

tend to stay with the basics. This case shows how to use different demographics to

the retailers benefit as to what styles, prices and quality to provide to which markets.

Apparently when it comes to fashion, younger consumers are more likely to be

fashion conscious when making purchases than older consumers. As well as women

are more likely to shop for fashion purposes than men. Older consumers are more

likely to stick to the basics when it comes to clothes and that is why they prefer

Walmart over other stores. Also when it comes to income, higher income households

are more likely to spend more on clothes each month than lower income households.

Men were more likely to increase spending on clothing due to the need to replace

worn clothing, while women were more likely to increase spending due to a change

in size. There is a direct relationship between income and style preferences for work

attire, with the preference becoming more basic as income decreases.

The apparel industry is a very competitive field to get into and in order to prosper

companies must find their own personal niche within the industry. A company cannot

survive in the apparel industry by providing what is already available in other stores.

It is important to define a target market and appeal to their needs and wants. For

instance, Wal-Mart appeals to low income individuals, Target and Old Navy appeal

to more fashion sensitive customers, and so on. Ultimately, stores must relate anddirect efforts towards specific apparel shoppers demographics and preferences.

2. How can apparel retailers compete with Wal-Mart?Answer Apparel retailers can compete with Wal-Mart by targeting to customer’s that are notdistinct customers of Wal-Mart. Wal-Mart appeals to lower income shoppers who areWhite or African-American or mid-life shoppers. Lower income shoppers rank Wal-

Mart as number one for perceived clothing value. In order for an apparel retailer todirectly compete with Wal-Mart they can compete on price. Though this would betough, by offering low prices, some retailers would be able to take some of Wal-Mart’s customers by offering the same prices.

Another way a retailer could compete with Wal-Mart is by appealing to mid to higher income shoppers by offering product assortments and prices that would appeal tothat customer segment. A niche strategy that could be used is a retailer who appealsto lower income Latinos because this is a customer segment not captured by Wal-Mart. Apparel retailers can compete with Wal-Mart by focusing on the higher incomesector, being more fashion sensitive, and providing the right brands. Wal-Mart is

shown to lack in all of the previously described categories. Therefore, to properlycompete with Wal-Mart would be to seek different customer segments/demographicsby providing different characteristics and services.



The most effective way for other apparel retailers to compete with Wal-Mart is toincrease their customer's perceptions of the value they receive from purchasing their products. Another option is to increase the depth of assortment being offered thatmay target a different customer group. This could be by selling Fair Trade products,Organic products, “Buy Local” campaigns, providing customers with extra value anda customer friendly environment and not a large cluttered store.

To compete with Wal-Mart, apparel retailers can use two strategies. The first wouldbe to appeal to the shoppers that want the brands that give them the best clothingquality. To these shoppers price is not nearly as important as style and assortment of brands. The second strategy apparel retailers could pursue is one very much like OldNavy. Old Navy provides moderate product quality and low prices. While the pricemay be a bit higher than Wal-Mart's, these retailers are able to lure Wal-Mart'shigher income consumers in by providing better quality

3. Does cross-shopping affect apparel retailing? Is this good or bad? Why?Answer Cross-shopping is defined as the act of either shopping for a product category atmore than one reatil formart during the year or visiting multiple retailers on oneshopping trip. This type of shopping does affect apparel retailing and it can be either good or bad depending on how the retailer reacts to it. If they realize many of their shoppers are cross-shopping and proactively are competitive with similar retailers, itcould be beneficial to them. Prices and quality of clothing both come into play for aretailer when dealing with cross-shopping.

Cross-shopping affects apparel retailers because consumers who cross-shop

typically only go to a certain retailer for a particular reason. Part of the cross-shopping definition states that a consumer will visit multiple retailers on oneshopping trip. For instance, a mother who has to shop for her three children mayhave to cross-shop in order to find what she needs. Price comparisons, differentstyles, as well as brand names may be taken into consideration when the mother chooses where to shop for her children. In this example, retailers do not benefit;however, the consumer does. This can affect retailers who do not offer qualityclothing for a lower price because the mother may choose not to shop there. Inaddition, each family’s values and reasons for shopping at stores are different. It isimportant for the retailer to identify these reasons and determine why the consumer shops at their store. However, retailers are now beginning to realize the concept of cross-shopping. Many shoppers, especially retail are looking for the best bargain.This is good for retailers in the sense that they will gain loyal customers if they havecontinuous low sales and reliable products because even when a shopper goes toother similar stores they will always return knowing you have the lowest prices. It canbe bad if retailers don't keep up-to-date on the latest sales and products that arebeing sold at other retail stores. It is important to stay informed of what the shoppersare looking for and at what price they are being offered. Some stores offer pricematching which is nice for retailers to continuously have the best offer, which bringscustomers back. If a cross shopper sees how often your store has the best offer, it ismore likely they will become a regular. If your store does not offer the best deals,

cross shoppers enable you to learn from that and work on offering better sales andlower prices.



Customers can shop for a certain product category at more than one kind of retailformat or visit multiple retailers during one shopping trip. I think it's both good andbad for apparel retailing. One aspect that is good is that the shopper has manydifferent forms to shop from, whether it be an actual store, a web site, or a catalog,the company is still reaping from those profits. Also, a good thing about this is that if the shopper is visiting multiple retailers lets say Macy's and Bloomingdale's

department stores, the consumer can expect to find some of the same brands inthese stores. A bad thing about cross-shopping is that customers who shop atdepartment stores also shop at factory outlets and full-line discount stores that carrythe same merchandise. This takes away from the revenue that could be earned onthe higher priced items at the department stores.

Stores such as Old Navy are now incorporating clothing for toddler through middle-age people into their stores. This allows the customer to remain in the store longer as well as purchase clothing for a reasonable price. Stores also have to staycompetitive with their prices in order to keep loyal shoppers.

4. What are the retail implications of this statement ``Americanconsumers are not trendy – either at work or play?’’ Do you agreewith the statement? Explain your answer.

Answer I do not agree with the statement as it is much generalized and does not sum up all

American consumers. It is making a generalization for only those who work or socialize but leaves out a vast population in between that does many other things. American consumers, as a whole, may not be trendy, but certain consumers withinthat whole, which propel sales growth, can be very trendy. Roughly half of younger adults are attracted to fashion-forward types of work wear. Also Latino workers,Latinos being the fastest growing minority in the United States, are the trendiest

race/ethnic group with respect to work clothing. Lationo workers are the trendiestrace/ethnic group with respect to work clothing." That statement states how Lationworkers actually will dress in the latest fashions for their workwear. Also, younger women also will dress in trendy clothes from specialty stores. So, though in general American consumers are not trendy whether at work or play, there are importantgroups, such as young adults and Latinos, who can be very trendy.

People try to stay as trendy as possible both for work and for play. Many people relyon celebrities, magazines, talk shows, and television to figure out the latest stylesand how to wear certain styles. Americans actually focus quite a bit on trends,especially younger generations. As it mentions, the younger generation is more aptto choose "trendy" over "classic". There has been a dress code idea that you have tohave a classic look to be presentable. Many of the older people at work wear verysimple, plain clothing, whereas the younger employees tend to wear the latest "instyle" clothing, and then jazz up their outfits with trendy shoes and accessories.Moreover, people are more apt to be trendy with business clothes than in their personal lives..

Having said this, it is also true that most Americans value their dollars and are quitereasonable in their expenditures. Much of the population is looking for a wardrobethat will serve them well for an extended period of time. Something that will not go

out of style soon and that will give them the greatest value for their money. Manyconsumers are more concerned about their comfort, than fashion, and others are justwaiting to fit a certain size before they buy at all



Despite the fact that Cosmo, In Style, and Bazzar bombard their readers with newlooks every month, purchases are driven by necessity, price, and value, least of allby fashion. Also, the demographic differences in age, gender, and race reflect their lifestyle changes. It would seem that despite the many differences in varyingdemographics nearly all Americans want the best value, not the highest fashion.

Moreover, many work places have dress codes to follow. Depending on your job,you may or may not be allowed to dress as you wish. Many companies have a strickdress code. Some say no revealing clothes, or no bright colors, or only blacks, or noopen toed shoes. Then what if you are a waitress and must wear a uniform, or agarbage man, or an electrician, they don’t get to pick what they wear.

The retail implications of this statement have to do with what types of apparel andthe product mix of different types of apparel that are carried in a store and whatpricing strategies are utilized. Overall, most retailers would hope that consumers aretrendy because that would create a steady influx of shoppers every time a trendchanges. New trends will act a stimulus causing a shopper to believe that they have

a problem in that they do not have the latest fashion. This sets off the consumer decision process which would then result in sales for the retailer.

Americans are more conservative than Europeans in their apparel so if a new retailer is trying to break into the market, he/she should consider how they want to markettheir clothing. If they want to stand out, maybe they should invest in newer, trendier clothing. For retailers who want to engage in mass marketing, the implication is thatthey should stock apparel that is deemed "classic". For retailers seeking to appeal toa niche market or differentiate from mass marketers, they should move away fromclassic styles and towards trendy or fashionable apparel. If not, then they shouldkeep their target market in mind

5. How could the information cited in the case be used in a retailinformation system (RIS)?

Answer Inventory planning and forecasting - the information provided in this case couldbe used in a retail information system quite easily. This case mentions age, race,and income levels, reasons for increased or decreased purchasing behaviors all of which are useful in an RIS. A retailer would be interested in this kind of informationso they could plan their inventory according to what age, race, gender, and incomelevel customers are shopping at their location. With an RIS a company could keeptrack of its in-house operations and could track all this information plus whatever elsethey felt to be relevant to sales. A good retail information system (RIS) anticipatesthe information need of retail managers; collects, organizes, and stores relevant dataon a continuous basis; and directs the flow of information to the proper decision.The information cited in this article can be compiled to give target market informationthrough data on who is driving apparel shopping, trends in spending, forecast salesthrough information about respondents cutting back on clothing spending, anddetermine products that are selling well such as popular brands.Customer moods and external factors - This case provides a wealth of important

data on consumers. Consumer shopping data are segmented by age, race, income,gender and buying needs. When incorporated into a retail information system, thisdata can be updated to track changes in spending as well as changes in perceptionof brands and retail outlets. This information can be crucial to the retailer that is



trying to compete with other stores. By using the retail information system, theretailer can adjust their price and store image according to the perceptionsconsumers have about them. This will ultimately result in the retail store being ableto accurately appeal to their customers.

Target Markets - The information in this case could be used by firms after they

establish their target markets. The information will give firms a good idea of thecharacteristics of their target market's age, race, and income. These are all valuablebits of information for any firm competing in the apparel market.

Profile customersThe information in this case could be used by a retailer to help discover how to cater to their target market. Their retail information system can keep track of informationon the types of customers that shop at their stores, such as income level, gender,race, age, ethnicity, and clothing preferences. The retailer then knows if they aretargeting the right customers for their product line and price range or if they need tochange their target market.

Purchasing behaviors - This case presents a great amount of information aboutwhat buying behaviors particular income levels have, the reasons for increased anddecreased spending, what different races/ethnicities view as value, the differences inbuying behaviors from different ages, male and females, etc.. These are all importantfactors that can be used in a retail information system. If a retail information systemcan accurately track buying behaviors and what products are commonly beingpurchased management can more precisely target a particular market that areattracted to their products. Retailers could track information from their customersthrough membership scanning cards. In order to obtain membership card basicinformation like, name, address, birthday, etc. must be given. Once the retailer gets

a hold of this information their information systems can tell the age of the customer as well as their income level by their address. Every time a customer makes apurchase at the store they first scan their membership card, this will allowinformation system to track what that customers is buying.

6. Devise a questionnaire to determine what improvements the loyalcustomers of an apparel store chain would like to see in the chain.

Answer

Basic demographics and profile of customers

1. What is your gender?2. Which category describes your age?3. What is your employment status?4. Which category best describes your household income?5. What is the highest level of education you received?

Experience and room for improvement1. How convenient is our company to use?

Extremely convenient

Very convenient

Moderately convenient



Slightly convenient

Not at all convenient2. How professional is our company?

Extremely professional

Very professionalModerately professional

Slightly professional

Not at all professional3. Compared to our competitors, is our product quality better, worse, or aboutthe same?

Much better

Somewhat better

Slightly better About the same

Slightly worse

Somewhat worse

Much worse4. Compared to our competitors, are our prices more reasonable, lessreasonable, or about the same?

Much more reasonable

Somewhat more reasonableSlightly more reasonable

About as reasonable

Slightly less reasonable

Somewhat less reasonable

Much less reasonable5. How responsive is our company?

Extremely responsive

Very responsive

Moderately responsive

Slightly responsive

Not at all responsive6. How well do the customer service representatives at our company answer your questions?

Extremely well

Very well

Moderately well

Slightly well



Not at all well7. Overall, are you satisfied with the employees at our company, neither satisfied nor dissatisfied with them, or dissatisfied with them?

Extremely satisfied

Moderately satisfied

Slightly satisfied

Neither satisfied nor dissatisfied

Slightly dissatisfied

Moderately dissatisfied

Extremely dissatisfied8. Do you like our company, neither like nor dislike it, or dislike it?

Like a great deal

Like a moderate amountLike a little

Neither like nor dislike

Dislike a little

Dislike a moderate amount

Dislike a great deal9. How likely are you to recommend our company to people you know ?

Extremely likely

Very likely

Moderately likely

Slightly likely

Not at all likely

7. What additional consumer-related information would you like to reviewabout apparel shoppers besides that stated in the Case?

Answer 1. SizeI would be interested in seeing data regarding the most popular sizes for men andwomen. I think it would be wise to factor in size consideration when planning strategyfor an apparel retailer.

2. Location and Demographics

Income, age, gender, and ethnicity all play important factors regarding whereconsumers shop. The location and surroundings of the consumer will also play animportant role when deciding where to shop. For instance, two different employees,who are both earning the same salary and working for the same company in differentlocations, will probably tend to dress differently.

3. Trends and cities



Conduct research on what cities have the most trend conscious consumers and thendo a comparison with each of the cities wherever the company has a presence.

4. Age

I would like to see a study done on the difference between those consumers whobuy clothing as a result of their cash flow from their job and those who use their parents money to buy their clothing.

5. Rural/ urban

I also would like to know the buying trends of people living in an urban settingcompared to sub-urban and rural settings.

6. GeographyIn addition to the gender, age, sex, income level, and ethnicity, I think it may also

help to learn the geographic regions where most is sold.

7. Fashion

If I were studying apparel consumers I would want to know how often trends reallychange. I would also like to know when people start shopping for the next season.

Retail Management

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