Scenario 5: Traditional Department Store Traditional Department Store A traditio

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Scenario 5: Traditional Department Store

Traditional Department Store A traditional department store chain is facing greater competition from full-line discount stores, specialty stores, and Web-based retailers. This firm is especially concerned about the heightened vulnerability of its furniture department to competition from a variety of formats. It is worried about the effects of the low prices and immediate availability of goods at stores like Ikea, as well as the availability of in-home decorator services at independently-owned home furnishing stores.

The chain’s furniture is displayed in room settings. This format better enables shoppers to conceptualize what the furniture will look like in their homes. It also results in the sale of accessories such as lamps, paintings, and throw pillows.

Much of the chain’s furniture is moderately priced, well-designed, and available in a variety of fabrics and finishes. The chain relies on well-known manufacturers with excellent reputations for product quality, as well as delivery time commitments. Unlike many discounters, all of the chain’s furniture is available in a variety of sizes, fabrics, and finishes. Also, unlike Ikea or category killers such as Bed Bath and Beyond, the firm does not sell low-quality “ready-to-assemble” furniture.

To reduce price competition, the department store chain typically requires its suppliers to sell it exclusive merchandise. This often consists of a selection of unique fabrics, finishes, leg designs, and even sizes. In other cases, the firm requires that its vendors assign unique model numbers to its goods. Thus, a customer seeing a sofa in a department store would either be unable to purchase a comparable item at a lower price or have a difficult time locating the good.

The chain’s employees come from a variety of backgrounds. Some of its staff have either significant experience as interior decorators or have a flair for decorating. While others may be excellent salespeople, they have much less knowledge of fabrics and are less comfortable developing room arrangements or selecting coordinating or contrasting fabrics.

Although many specialty stores offer in-home interior decorating assistance, Web-based merchants and discounters do not provide this service. While the fee for these services vary, many specialty stores charge a fee of $100 to $200 per visit to confirm that the merchandise ordered is appropriate for one’s home. This fee may be waived if a purchase exceeds a given level (such as $2,500). The department store chain offers only in-storebased services (such as confirming that the sofa is the proper color based on viewing a fabric sample of a chair that the client owns).

Complete The Overall Strategy for the particular organization:

Overall Strategy Controllable variables

. What is the Goods/service strategy for this particular scenario?

·What is the Location strategy for this particular scenario?

. What is the Pricing strategy for this particular scenario?

. What is the Promotion strategy for this particular scenario?

Uncontrollable variables

. What is the Consumer environment for this particular scenario?

. What is the Competitive environment for this particular scenario?

· What is the Legal environment for this particular scenario?

. What is the Technological environment for this particular scenario?

. What is the Economic environment for this particular scenario?

Overall Strategy. Overall, this section should provide detailed insight and description as to how the organization is going to reach its objectives. Controllable variables and strategic actions for the retailer should be detailed. Consider what opportunities among the 4P’s that the retailer can capitalize on to grow its business. Provide substantial detail to support your strategic recommendations. Uncontrollable variables should be analyzed for their potential impact on the retailer’s business decisions. Recommendations as to how the retailer can address uncontrollable variables are crucial.

This is what I have so far. I need help completing the Overall Strategy for this particular scenario.

Brief Description of Retail Business:
Our retail business is considered to be a traditional department store. One of our main concerns today is the competition our store has in the furniture department. There are a variety of aspects that impose a threat to our business including stores like Ikea, in-home decorator services or independently-owned furnishing stores.
Our stores furniture is moderately priced, well-designed, and available in a variety of fabrics and finishes. We do not sell low quality “ready-to-assemble” pieces.
Our stores employees come from a variety of backgrounds. Some of our employees are very experienced in interior design while others are skilled salespeople. The variety gives us an advantage of product knowledge as well as the skills to close a deal.
Unlike specialty stores we do not offer in-home interior decorating assistance. We only offer in-store-based services such as confirming a color is going to work for the customers needs etc.

Situation Analysis:
Current Organizational Mission: We believe that a customer’s furniture should only be limited by their imagination, not by their options. We strive to offer our customers innovatively designed furniture that can be found exclusively at our stores. Our exceptional selection of unique fabrics, finishes, leg designs, and size options are unparalleled. We strive to uphold our reputation of excellence when it comes to product quality.

Current Ownership and Management Alternatives: Corporation, Chain Store

Current Goods/Service Category: We sell traditional department store items as well as furniture and decor for every room in the house. Dining Room and Kitchen: tables, chairs, benches, bar and counter stools, buffets and cabinets. Bedroom: beds, headboards, mattresses, night stands, dressers, chests. Living Room: sofas, loveseats, sectionals, chairs, ottomans, coffee and accent tables, benches, bookcases, cabinets. Office: desks, desk chairs, storage, shelving units. Other: rugs for every room, window drapes and curtains, lamps, throw pillows, mirrors, paintings, frames, clocks, and candles are also offered.

SWOT Analysis:

Current Strengths: The company has a very good understanding of the competition and has been making strides to meet the expectations of many customer bases. One strength is the interior design offerings. While not all clients will use this service, many are expecting this from a specialty furniture store. Having custom codes for the furniture and exclusive products also helps to reduce customers buying the same products from a wholesaler or cheaper retailer.

Long term Strengths: There are a few strengths that will hold as strengths for a long period of time. For example, the interior design vs. product educated employees help the clients who are looking to find the right furniture for their home, although some may need designers while others want product specifics to decide themselves.

Current weaknesses: A group of clientele are being missed while not offering the “ready-to-assemble” furniture, but the brand of the company does disregard these kinds of customers. While it is a strength that there are exclusive products, it may be hindering total sales if people feel that they can find something similar online or something else in a different store. There is also no website mentioned in the description, so this worrisome.

Long term weaknesses: The biggest weakness is the absence of a web presence. While most sales may not come from the site, many people will want a preview of the selection before driving to the store. With so many retailers adding to their websites, not having one or not adding the current furniture holdings to the site can drastically decrease traffic and sales.

Current opportunities: We have the opportunity to grow business over the internet as well as develop the interior design services provided. The web is certainly the most critical element that absolutely needs to be developed, while the services are just another area to improve on.
Long term opportunities:
Current threats:
Long term threats:

3. Objectives:
Sales- Our sales objectives includes a goal of $250,000 in sales per month. We strive to maintain a steady income as well as working towards higher sales goals. We strive to make at least 10 sales per day to meet our sales goals.

Profit- Our profit goal is $100,000 per month making our annual profit goal $1,200,000. This goal amount will make sure our company strives and continues with much success.

Positioning- Our furniture is well made and moderately priced. These features attract a certain market that is mostly made up of middle class new homeowners or people looking to redecorate. We strive to always maintain the level of quality in our products as well as our customer service.
Satisfaction of publics-

4. Identification of Customer
Mass Marketing- Our mass marketing strategy to a broad customer base is aimed to attract homeowners from all over the country. Because of our unique products we appeal to many different consumers. People take pride in having products that are hard to come by or one-of-a-kind. We use this feature about our products to draw in customers and drive competition. In order to close a deal with a potential customer across the country, we offer free shipping anywhere in the United States. We also provide warranties and insurance on our products to ensure that our customers will be satisfied with our products for life.

Concentrated Marketing- Our concentrated marketing strategy is focused on new homeowners. This is the main marketing strategy our company uses. Many times when people buy their first home they also need to purchase furnishings to bring it to life and make it their own. We provide just about every type of furnishings you may need for every room in our home. This makes home furnishing a one stop shop and provides a complete ensemble for their new home.

Differentiated Marketing- We wouldn’t really use differentiated marketing as much because we feel like it would limit our potential target market.

Explanation / Answer

Overall strategy:

For this particular scenario, the goods strategy is to provide well designed furniture items with variety of fabrics and finishes. The product consists of exclusive merchandise and is sourced from well-known manufacturers with excellent reputations for product quality. In terms of service, the strategy is to stick to delivery time commitments and provide services like  in-storebased interior decorating assistance.

In terms of location strategy, the chain is a chain of traditional department stores and is present as a brick and mortar outlets.

In terms of pricing strategy, the chain has priced its furniture items moderately. The prices are neither too low nor too high. The emphasis is to sell quality products at moderate prices.

In terms of promotion strategy, the chain sales staff are excellent salespeople. However, they do not have comprehensive knowledge of of fabrics.

Uncontrollable variables:

Consumer environment - The business of the chain is subject to the uncertainty of the acceptance (by its target customers) of the designs of its furniture items. Its unique offerings of fabrics, finishes, leg designs also are subject to the uncertainty of the acceptance.

Competitive environment - The competitive environment is dominated by online sellers and sellers of lower quality items (like Ikea). It is facing direct competition from full-line discount stores, specialty stores, and Web-based retailers.

Legal environment - nothing is mentioned in the case regarding this.

Technological environment -  nothing is mentioned in the case regarding this.

Economic environment - Higher and attractive discounts (especially in the times of economic slowdown) by competition can lower sales.

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