MARKS : 80COURSE :MRM

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

marks. 2) All questions are compulsory

CASE NO. 1

THE OUTLOOK FOR SOFT GOODS SPECIALITY STORES

Introduction

Soft goods specialty retailers are on a quest to grow, with the high-

growth ``stars’’ working to maintain momentum by rolling out

successful concepts nationally while investing in new concepts that

offer long-term promise. The less stellar performers are

reinvigorating tired concepts and strengthening margins via better

inventory and promotion management. A saturated marketplace will

motivate more specialists at both ends of the spectrum to seek

growth by building a portfolio of concepts focused on ever-finer

customer groups. Concepts will vie for more attention by developing

and applying deep customer insights to their assortment strategy,

the shopping experience, and store brand building and

communication.

The Retail Landscape

Many 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 negate the pervasive price pressure on retail

margins. The sustainability of the recovery is questionable given

poor comparable stores sales performance.

Modest Recovery

Since bottoming out in the first part of this decade, sales have

steadily improved in both the apparel and accessories specialty

store and shoe specialty store channels. Yet, growth remains

modest compared to the late 1990s.

…2…

The long-term sales outlook for apparel and accessories

specialty stores is stronger than for shoe stores. Apparel stores are

forecast to grow in the 4 to 5 percent 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 improvement has

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 improved another important measure of

profitability, return on net worth.

In contrast, the very modest sales improvement among shoe

specialty stores has not translated to improved financial

performance, with the average net profit margin for publicly held

shoe retailers declining. The financial struggles facing the shoe store

channel are evident in the closing of individual stores and entire

divisions by 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 wide assortments

of basic and fashion-focused soft goods at sharp price points that

appeal to a broad swath of consumers. This has increased the

pressure on many retailer margins as their increasingly

undifferentiated assortment goes head to head with price-driven

retailer margins as their increasingly undifferentiated assortment

goes head to head with price-driven retailers off the mall.

While apparel price deflation has made it challenging for soft

goods specialists, many have proven worthy of the challenge. The

availability of cheaper products allowed many of these specialists to

improve inventory turns, resulting in a slight increase in their return

on inventory ratio since 1998. This improvement reflects a focus by

many apparel specialty store

…3…

retailers on a combination of better markdown strategies, improved

inventory management, and introduction of higher-margin fashion

items.

A Challenging Environment

Soft goods specialty retailers face a crowded marketplace that is

steadily becoming even more competitive. Most shoe specialty

stores are faring far worse than the apparel specialists in the

competitive wars. Off-mall retailers, including discount department

stores/super centers and Kohl’s (www.kohls.com), are capturing

apparel and shoe share of preference at expense of mall-based

retailers, including specialty stores. Consumer preference for

purchasing apparel is strongest at discount stores/super centers.

The upward trend for discounters contrasts with a decline in

spending preference for clothing at apparel specialty stores, value

department stores, and traditional / upscale department stores in

the same time period. For shoe purchasing, shoe stores are actually

gaining spending preference, although the price-driven discount

store/super center channel is as well. Shoe, discount, and apparel

specialty stores are capturing shoe spending preference from value

and traditional department stores, particularly Sears

(www.sears.com) and Dillard’s (www.dillards.com), as well as

Payless (www.payless.com).

The upward trend for discounters contrasts with a decline in

spending preference for clothing at apparel specialty stores, value

department stores, and traditional / upscale department stores in

the same time period. For shoe purchasing, shoe stores are actually

gaining spending preference, although the price-driven discount

store/super center channel is as well. Shoe, discount, and apparel

specialty stores are capturing shoe spending preference from value

and tradition al department stores, particularly Sears

(www.sears.com) and Dillard’s (www.dillards.com), as well as

Payless (www.payless.com).

…4…

Although department stores have suffered the most at the

hands of off-mall retailer growth, many are reinventing themselves.

Key elements of the department store reinvention include a

stronger, more exclusive, and more differentiated brand and style

assortment supported by upgraded, easier-to-shop stores. Thus,

department stores now contribute to more competitive intensity in

the apparel and footwear playing filed, particularly for upscale

customers. The profile of monthly shoppers at traditional/upscale

department stores is similar to that of monthly shoppers 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 foreign specialty store retailers to the marketplace.

Though most of the new foreign players operate only a handful of

U.S. stores at this point in time, several intend to ramp up their store

openings after establishing an initial base of stores.

Some suppliers are also branching out to target new customers

with new specialty store chains to attain growth in the face of

modest prospects at department stores. Polo Ralph Lauren

(www.polo.com) is launching Rugby, a new brand and chain 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 expansion of 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 it comes

to operating successful full-price retail stores – and several are

closing unsuccessful 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 retail maturity.

…5…

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 Europe and 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 store chain 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 critical requirement for success in the

specialty store arena. Diversity is also propelling more retailers to

tailor assortments and adjust merchandising tactics on an individual

store basis. Previously, many only altered the offer to reflect

regional seasonal variations and market size differences.

Apparel and footwear are steadily capturing less of the

consumer’s total spending, This is in part due to a shift in consumer

spending priorities toward necessities (home, health, and

transportation), as well as toward new everyday ``luxuries’’ such as

eating out and entertainment – which including products such as

consumer electronics. sporting goods and toys, and the cost of

fees/admission to sporting events, concerts, movies, clubs, and

other types of events.

Consumers are increasingly willing to cross channels to shop a

growing number of retailers – from mass to class – for apparel. They

are more apt to trade down on staple wardrobe elements while

trading up on aspirational, ego-intensive purchase and shopping

experiences. Thus, value retailers play an even more important role

in supplying the core of consumers wardrobes – from basics like

undergarments to wardrobe fashion ``staples’’ such as causal pants,

casual shirts, and everyday sweaters. Likewise, a number of soft

goods specialty retailers and

…6…

department 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 the assortment.

Looking Forward

Polarizing Playing Field

Although the soft goods specialty store channels is far more

fragmented than most other retail channels, it will continue to slowly

consolidate as big companies grow bigger, ``adding more banners

to their portfolio. However, the nature of specialty retailing will also

ensure the continual entry of new, smaller, usually more flexible

niche players able to exploit market gaps not being addressed by

the majors. Only 37 percent to total U.S. Soft goods channel sales

are by the top 15 retailers. This reflects a large number of

independent retailers and the presence of smaller firms that operate

on a regional of multi-regional basis.

Growth at the ends of the size spectrum will cause the soft

foods channel to remain polarized into the very big versus the very

small retailers. Those in the middle will continue to be squeezed by

the efficiencies and resources of the big retailers and by 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 like Gap Inc. (www.gapinc.com) and Limited Brands

(www.limitedbrands.com); and Chico’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.

…7…

The strong performance of these retailers indicates that most

will be in a position to further propel performance improvements via

continued investments in technology and processes that enable

them to reduce costs, more effectively allocate and manage

inventory, and more strategically manage price and promotional

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 with respect to new store-opening opportunities, with an

expanding number of ``tapped-our’’ retail concepts unable to grow

by opening more U.S. stores. With little international experience (or

bad experiences in the past), most tapped-out retailers are unlikely

to move rapidly or successfully into global apparel retailing, except

for opening stores in Canada. Instead, they will focus on growing

sales in current concepts by getting more share of wallet from

existing customers through a combination 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 rapid store expansion within recent

years. Strong sales growth reflects both a rapid pace of new store

openings and, for players such as Chico’s and Pacific Sunwear,

equally impressive store-to-store sales growth.

Some soft goods specialists that operate a large base of stores

and that have struggled 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 resources on higher-profit,

higher-growth concepts. This trend has been under way for years, by

firms such as Payless, Gap Inc.,

…8…

Limited Brands Inc., Wilsons Leather (www.wisonsleather.com),

Charming Shopper (www.charmingshoppes.com), Brown Shoe

(www.brownshoe.com), and Mother’s Work

(www.motherswork.com).

Repositioning for Relevancy

The recent economic downturn has made many retailers loath to

invest in major repositioning initiatives. However, as slaes gain some

momentum and corporate purse 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 will involve 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 it from Gap Stores. This includes a stronger

emphasis on color, more feminine styles, and clothes for social

occasions, as well as its standard work-appropriate assortment. Old

Navy is more firmly positioned as a value-focused store for the

entire family, with more emphasis on serving the needs of each

member of the family. The retailer has increased assortment

segmentation based on customer group. The chain also has new

fixtures that increase selling capacity. Gap has been repositioned as

the classic specialty store for a range of fashion ``basics’’ for casual

occasions, 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 consistent message across all media.

…9…

In line with size-related trends in the overall population, more

specialty retailers will expand their standard size range to include

larger sizes, as well as petite/small sizes. Some may spin special-

size concepts off as their own store banners, but most will choose to

simply extend the size range within the existing banners by adding

new sizes or by increasing the breadth of assortment within existing

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 offering to all categories and more styles,

creating a store environment that makes petites a preferred

destination, and boosting marketing to generate awareness. The

firm has rolled out petite adjacencies in current stores (including

some with separate entrances).

To capture more sales from customers already in the store, a

growing number of soft goods specialty store retailers will extend

their assortments to include products that provide additional style

perspectives and meet the needs of additional wearing occasions.

Express (www.expressfashion.com) strengthened its wear-to-work

appeal with the Express Design Studio line of clothing being rolled

out to all stores. 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 to move from the ``work-

place to the weekend.’’ The men’s line also includes suits sold as

separates, dress shirts, and ties.

Abercrombie & Fitch (www.abercrombie.com) is repositioning

its brand to be less aggressively sexual in its marketing to

customers and to include higher price points 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.

…10…

While the factors having the most influence on trying a new

brand or store are the 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 a brand or shop a

store based on fashion magazines and celebrity culture. They are

also far more willing than all shoppers to say that wearing designer

brands has a positive impact on their self-esteem and self-

confidence.

As part of their approach to new customers, most specialist will

choose to first move up the age spectrum with the intention of

leveraging the knowledge they have about their customers as they

``outgrow’’ the existing concept and enter a new life stage. Where

this opportunity has already been tapped out, they will be forced to

focus on concepts targeting an entirely new style, lifestyle, or

occasion of use.

Driving Growth Through Strategic Investments

More specialty store retailers will invest in initiatives that allow them

to not just attain competitive differentiation but to also drive

profitable top-line growth via higher purchase conversion levels,

more multiple-item transactions, and increased destination store

status with targeted customers. Key areas of investment will include

new technologies and high-value services, as well as alternative

marketing and promotional venues.

New technologies are becoming more mainstream and less

cost-prohibitive, a trend that will motivate more specialty store

retailers to invest in technological solutions that ensure that the

right products are on the selling floor in the right quantities at the

right time and price. Technology will also be 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

…11…

and staff stores in line with customer needs.

Many specialty store retailers will focus on improving their

service programs and associate-customer interaction as a way to

build top-of-mind status with target customers. In some cases, this

will involve more personal shopping services and stronger customer

``clienteling.’’ In others, it will involve creatively responding to the

service and shopping experience needs of the best customers in

ways that are more meaningful 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 service targets busy, time-pressed

customers with highly efficient shopping appointments by providing

a pre-selected assortment 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 store associate completes

a ``wardrobing sheet’’ including what was tried on and possible

coordinates. Using credit card information that is on file, the

associate then completes the purchase after the shopper has left

the store and arranges for pickup or delivery.

Questions1. What can an independent retailer learn from this case?2. What are the positive implications of this case with respect

to the use of leased departments in department stores?3. How can a mid-priced apparel store become a destination

retailer?4. How is Gap Inc. utilizing the principles of the wheel of

retailing through its Gap, Old Navy, and Banana Republic divisions?

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

6. What role should the Internet play for apparel retailers?7. Can an apparel retailer prosper in the future if it does not

engage in multi-channel retailing? Explain your answer.

…12…

CASE NO. 2 ‘THE APPAREL SHOPPER’

INTRODUCTION

Several general observations can be offered regarding apparel

shoppers :

High – income shoppers and younger shoppers underlie

recent sales growth.

Spending changes are more likely to be driven by needs not

wants. Although important, the advent of new fashion

“looks” is not the main reason shoppers increase – or

decrease – their spending. Instead, changes are far more

likely to be related to very practical reasons (e.g., a change

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 from consistent or increased spending among up –

market shoppers. The brands 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 offering credible fashions plus a strong

price for the quality value.

…13…

Department stores and clothing specialty stores are the top

two choices for offering the most – wanted brands and the

most – wanted styles, both overall 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 and higher-income shoppers skew

toward more fashion – driven looks for both wearing

occasions.

Who Is driving Apparel Shopping Growth ?

Apparel sales grew 6 percent form 2003 to 2004, following 1.4

percent growth the prior year. We project apparel spending to

increase about 4 percent annually during the next several years.

Margins, however, will be severely tested by accelerating price

pressure. The 2004 sales increase can be explained by our

ShopperScapeTM data, particularly when viewed through the “liens” of

household income. Every month, we survey 4,000 shoppers about

their recent and planned spending. We collect purchasing data for

over 150 retailers and more than 100 product categories.

The majority of Shopper Scape TM respondents say they spent

about the same amount 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 and

resulted 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 to reduce spending. According to U.S.

personal consumption expenditure date, the highest- income

shoppers account for one-quarter of all apparel spending, although

they make up only 12 percent of all households. The lowest-income

households account for over one-third of all households but only 18

percent of all apparel spending.

…14…

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 also varied notably

by both gender and age. Changes in spending – both increases and

reductions – were more pronounced among women and younger

shoppers than among their counterparts. Men and mid – life to older

shoppers were most likely to have an unchanged rate of spending

on clothing for themselves. Women were more likely 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 Increases

Spending increases were most likely to be related to very practical

reasons (e.g.a change in clothing size, replacement of worn

clothing). Spending decreases were most likely to reflect a shrinking

wallet. Work wardcobes also were important to spending changes,

whether related to updating the wardrobe or a change in work

status.

Among those spending more on clothing, the most commonly

cited reasons were 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 a new

fashion look. The need for a new size was mentioned as the most

important reason for spending more on clothing by 28 percent of

respondents. The replacement of worn – our items was mentioned

by 21 percent. Eighteen percent increased spending to upgrade the

work wardrobe. Few shoppers (3 percent) increased spending

because fashions were of greater interest than previously. A

…15…

slightly larger percentage (9 percent) attributed the increase in

spending to higher income.

Specific reasons for increasing clothing spending were highly

related to age but not as much to gender. The only significant

gender differences were that women were 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 a worn or torn item. Shoppers in older age groups were

more likely to spend more because they were replacing worn – out

clothing. Those in their mid-life “work” years were 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 reasons cited by younger shoppers for higher spending.

Reasons behind increased spending were not well explained by

either income or race. The most notable differences by income were

among shoppers with household incomes of $25,000 to $49,999 and

$75,000 to $99,999. Both groups were 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 spend

because they had more income and more free time to shop.

Spending Decreases

Among respondents cutting back on their clothing spending most

did so because their clothing budge shrank, either due to a decrease

in income (21 percent) or in an attempt 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 a

decreased 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 the latest fashions.

…16…

The most frequently mentioned reasons for reduced clothing

spending were closely related to age and gender. Women and

shoppers younger than 55 were most likely to say a decrease in

income caused them to cut back. Mid-life shoppers were more 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 priorities away from clothing toward other types of

products. Men and older shoppers were more likely to say a change

in their work situation triggered reduced spending, presumably

reflecting retirement among the oldest shoppers. Women were

more likely 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 on spending. However, race is not a good indicator. Lower-

income households were more likely to cut back because of a

decrease in income. Shoppers in the lowest income households also

were the least likely to postpone new apparel purchases until they

lost weight. Shoppers in the highest – income households that cut

back on spending 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 shifted spending 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 recent increased 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 they were shifting more of their clothing

budget to Wal – Mart.

…17…

The retail recipient of shifting spending on apparel varied

notably by age and gender.

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 all types of specialty stores, from full – price

to off-price and value – priced Old 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 especially likely to shift their budgets to all types of

specialty stores, as well as to Target (www.target.com) They

were the most likely to shift their clothing budget among

retailers, reflecting less – ingrained shopping patterns and a

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 toward traditional department stores, long the

domain of the mid – life to older shoppers.

Shifts in the budget to various types of retailers also are linked

to income and race. Wal-Mart’s everyday low prices clearly

attracted shoppers on a budget; 40 percent of consumers with

incomes less than $25,000 say they spent more on clothing there.

Shoppers with incomes of $25,000 or higher were more likely to shift

their 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 than Whites or African – Americans to shift to Target

and

…18…

Sears. African – Americans and Latinos 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. Even though there are clear differences in retailer

preferences based largely on age and income, 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

the ratings of shoppers by key demographics such as age and

income.

The assessment of which retailer offers the best clothing value

clearly differs by age but less so by gender. Wal-Mart is seen as a

good value by more men than women. Women are more likely to

perceive that Target and Old Navy offer a good value, most likely

because of the ``fashion right’’ orientation of these retailers, an

aspect of value that women are more likely to use in their ratings.

Older shoppers are 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 more likely to perceive that

Target and Old Navy offer a good value, again likely including being

``fashion right’’ as a more important component of value.

Income has a direct relationship with shopper rankings of

quality for the price paid. Value retailers receive higher ratings

among lower-income than upper-income households. Race/ethnicity

has less of a relationship to shopper perceptions, although a few

differences exists. Wal-Mart’s overall top ranking for clothing value

is directly 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 and other retailers also is large in the

$25,000 to $49,999 income group but narrows among those with

incomes of $50,000 to $74,999.

…19…

In the highest income group ($100,000 and over), only 7

percent of shoppers feel Wal-Mart offers the best clothing value.

Kohl’s is perceived by the highest percentage of shoppers in this

group to offer the best clothing value. As income increases,

traditional department stores, Old Navy, clothing specialty stores,

and Target are more likely to be perceived to offer the best clothing

value.

With respect to race/ethnicity, Whites are more likely than

African-Americans or Lations to feel that Kohl’s offers the best

clothing values. Lations are more likely to feel that Target offers the

best values. This surpasses the percent of Latinos who say that Wal-

Mart offers the best clothing values. Latinos are more likely to feel

that Target offers the best values. This surpasses the percent of

Latinos who say that Wal-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 the brands shoppers want to buy is very different from

retailer rankings based on whether 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 brands

shoppers prefer. A smaller percentage say Wal-Mart has more of the

brands they want to buy, followed by J.C. Penney and Kohl’s.

Because many brands are aimed at specific age groups and

sold at retailers targeting these groups, brands ratings of retailers

noticeably vary by age. There are few 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 that

traditional department stores carry the brands they want. J.C.

Penney is rated highly on this factor by the oldest shoppers. Clothing

specialty stores receive high ratings for carrying the

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``right’’ brands by most shoppers, particularly younger ones. Target

and Sears.

At Work or Play, Basics Rule

American consumers are not trendy – either at work or play.

Regardless of wearing occasion, ``ordinary, very basic’’ styles were

preferred by a wide margin over all other styles although more so

far casual / weekend wear than for work. Second in preference 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-focused styles 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-time workers. Younger adults are more likely to wear

work wardrobes comprised of contemporary or trendsetting styles.

Roughly half of those younger than 34 are attracted 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 groups saving 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 casual looks. 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 most preferred by

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younger shoppers for their casual wardrobe, with more than a third

saying this is their favorite casual style.

There is a direct relationship between income and style

preferences for work attire, with preferences becoming less basic as

incomes increase. Race / ethnicity is also related to work wardrobe

preferences. Higher-income workers are most likely to prefer 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. The lower workers’ incomes, the more likely they

are to wear basic styles to work. Basic styles also are more favored

by White workers than by African-American and Latino workers.

Latino workers are the trendiest race/ethnic group with respect to

work clothing.

Questions1. What overall conclusions do you reach after reading

this case?2. How can apparel retailers compete with Wal-Mart?3. Does cross-shopping affect apparel retailing? Is this

good or bad? Why?4. What are the retail implications of this statement

``American consumers are not trendy – either at work or play?’’ Do you agree with the statement? Explain your answer.

5. How could the information cited in the case be used in a retail information system?

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

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