Deck 20: Integrating and Controlling the Retail Strategy

Question 1

How should management respond to the findings of an audit What can happen if the findings are ignored

Answer 1

Management's response to audit findings:
Management reports spontaneously and exactly. Deficiencies of the reports are pointed in the audit. In case the findings of the reports are ignored, risks of management hurt the practices of the company.

Question 2

Why do many retailers not conduct any form of retail audit Are these reasons valid Explain your answer.

Answer 2

Retailers and retail audit:
• Retail audit is very vital for business success, but many retailers do not conduct audits as they have not understood various objectives to be performed.
• Retailers argue that they are very busy to design, implement, and audit with a hired professional consultant.
• These reasons are not valid as benefits of auditing for small and large retailers are plentiful that would attract future retailers.

Question 3

Case 1: After the Recession: Preparing for a Brighter Retail Future
This case summarizes some predictions by Stores magazine's editor with regard to major developments and trends that are involved with the consumer, the store experience, the economy, information technology, marketing, mobile and social media, and E-commerce.
The Consumer
Consumer values will change as people work to get their household budgets balanced by reducing debt and by more use of debit cards instead of credit cards (to stay within their spending limits). Consumers will also look for value in purchases by focusing on product quality, longevity, and price. There are signs that more affluent consumers are already spending more freely. This bodes well for luxury-based retailers.
The Store Experience
Stores will decrease in size as retailers seek to reduce operating expenses and seek opportunities for fill-in sites. Pop-up stores will be used due to the large number of retail vacancies and the availability of clearance merchandise from cancelled orders and retail bankruptcies. Retailers will also seek to increase the quality of the in-store experience via demonstrations, sampling stations, and better sales support.
The Economy
High unemployment and housing foreclosure rates will continue to have a major effect on consumer confidence and the retail sales climate. Unemployment will particularly affect low- and middle-income consumers. Value-based retailers (such as discounters and factory outlets) will increase their market share. Retailers with the most promising outlook include Web-based firms, limited-assortment food stores (such as Aldi and Trader Joe's), and experience-based retailers. Stores magazine expects sales to rise between 2.5 and 3.5 percent annually.
Information Technology (IT)
IT will be used to increase in-store productivity by better inventory rationalization and better matching worker availability and store sales by hour and day. IT will also be used to better understand consumer segments and show how consumer behavior varies among a chain's locations. IT infrastructure needs to be upgraded to reflect the number of people with in-store Wi-Fi access, tablets, and smart phones.
Marketing
There will be additional use of Facebook promotions and more mobile and smart-phone promotions and couponing. Value will be defined in terms of a brand or store experience, not just a low price. Stores will increasingly promote their sustainability efforts and achievements.
Mobile and Social Media
Shoppers may trust their favorite brands; but they trust customer ratings even more. Shoppers will increasingly look up prices, research items, and read product and store reviews via smart-phone apps. QR codes will be increasingly used in ads and commercials.
E-Commerce
"Searchandising," the merger of search technologies and merchandising capabilities, will occur more often. This is the next logical step for the use of Web analytics and product recommendations by progressive retailers. Online sales will grow significantly. Some analysts believe E-commerce will eventually account for 20 percent of total retail revenues as shoppers spend more money online.
Questions
1. How can a retailer respond to the trends identified in this case to best reach consumers who are still having a tough time as a result of weak economic conditions
2. What other trends should retailers consider in planning for the future
3. Discuss the pros and cons of enhanced technology from both retailer and customer perspectives.
4. Describe how a conventional supermarket can upgrade its in-store experience.

Answer 3

NO ANSWER

Question 4

What can any retailer learn from this case

Question 5

Case 2: Fixing the Gap
In 1997, Gap Inc. (www.gapinc.com) was designated as Advertising Age's "Marketer of the Year." Advertising Age rec-ognized the firm for its success with integrating its marketing and merchandising strategy, in building its brands via TV, and for its message of selling casual and comfortable clothing. The company was (is) the parent of such chains as Gap (www.gap.com), Banana Republic (www.bananarepublic.com), and Old Navy (www.oldnavy.com).
However, the firm's fortunes have declined in recent years. As one retail analyst noted in 2011, the company's management "will need to rekindle the Gap brand. This has been a challenge facing [the company] since 1998, the last time the Gap brand was hot."
Let's look at some evidence of Gap Inc.'s current problems. Between 2006 and 2010, its net sales declined by 8 percent. This was during a time when the retailer's total square footage declined by 1.3 percent and the number of company-operated stores was reduced by more than 2 percent. Over the 2009 through 2010 period, same-store sales were down by 5.0 percent. In contrast, 2010 sales were down 1.4 percent at Coldwater Creek (www.coldwatercreek.com), down 2.6 percent at Urban Outfitters (www.urbanoutfitters.com), up 6.1 percent at Chico's (www.chicos.com), and up 10.0 percent at Aeropostale (www.aeropostale.com). Ross Stores (www.ross stores.com) and TJX (www.tjx.com) both had a 6.0 percent same-store sales increase.
Although Gap Inc. has had many successes over the years, these have been too few in the twenty-first century. Its early denim collection was highly successful (forty years ago), the firm was among the first retailers to launch an iPad app, and the August 2011 edition of Apparel magazine named the Gap store brand (not Gap Inc.) as the tenth-largest retail brand in terms of popularity on Facebook, with 1.7 million fans. The number of fans now exceeds 2 million people.
Some experts believe that the Gap store brand poor performance in particular has been due to a number of factors: too broad a target market (ranging from babies to men and teens to pregnant women), product designs that have been erratic, and even a change in the corporate logo-which was restored to its former status after irking many consumers.
According to Jeff Jones, president of an advertising and public relations firm and a former Gap executive: "Gap is way too big and broad in today's specialty retail business. Are we trying to sell to my wife or my teenage daughter or both I don't think you can do both. The hard marketing decision, business decision, is it needs to be really clear who it's for." Jones adds that "Gap has to shrink to regain relevance. On paper, it still has several hundred too many locations." And too many locations means that anything too fashion-forward may be unappealing because its customers are more mass market oriented.
In 2011, Gap made some major structural changes involving its top management and its advertising agency. Art Peck, who was previously the president of Gap Inc.'s outlet business, became the new president of Gap North America (the Gap store brand). Ogilvy Mather (www.ogilvy.com) was also named its new ad agency. And the former worldwide managing director at Ogilvy Mather became the Gap store brand's first global chief marketing officer. Gap also announced that its global marketing operation would be located in New York. This operation manages Gap's Global Creative Center with centralized global public relations, design, and production. The Gap brand is now sold in 90 countries, up from 25 at the beginning of 2010.
Questions
1. Why do you think that so many other apparel retailers have outperformed Gap
2. Visit the Web sites of Gap, Banana Republic, and Old Navy. Describe the positioning of each brand.
3. What are the pros and cons of the Gap store brand's broad target market strategy
4. What do you think should be done to revitalize the Gap store brand over the next three years

Question 6

Based on the information in the case, would you consider Best Buy to be a high-performing retailer Why or why not

Question 7

Why is it imperative for a firm to view its strategy as an integrated and ongoing process

Question 8

What are the major types of retailers with which Best Buy competes How should best Buy deal with each type

Question 9

Develop a sales opportunity grid for a supermarket planning to add a Redbox DVD rental machine to its services mix.

Question 10

Analyze the data in Table.
Table Supermarket's Sales Opportunity Grid for Two Brands of Salad Dressing

Question 11

Cite five performance measures commonly used by retailers, and explain what can be learned by studying each.

Question 12

Analyze the data in Table.
Table Selected Ownership of U.S. Retailers by Foreign Firms

Question 13

What is benchmarking Present a five-step procedure to do retail benchmarking.

Question 14

Develop a 10-item retail audit form for Best Buy to use in assessing the performance of its sales personnel.

Question 15

What is the value of the global retail development index

Question 16

As it looks to the future, what opportunities and threats does Best Buy need to recognize and act upon

Question 17

How are the terms gap analysis and scenario analysis interrelated

Question 18

Distinguish between horizontal and vertical retail audits. Develop a vertical audit form for an auto repair retailer.

Question 19

What are the attributes of good retail auditing

Question 20

Distinguish among these auditors. Under what circumstances would each be preferred
a. Outside auditor.
b. Company audit specialist.
c. Company department manager.

Question 21

Under what circumstances should a disguised audit be used