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Case Synopsis, Uses, Discussion Questions, and Answers

ALL CASES All Cases For Retailing Management, 11th Edition By Michael Levy, Barton Weitz and Dhruv Grewal

NOTES: NOTES:

CASES SYNOPSIS, USES, DISCUSSION QUESTIONS, AND ANSWERS Uses of Cases

CASE 1. Get It, Go, Just Walk Out: Amazon’s Proposed Reinvention of the Checkout Process 2. Making Technology Personal: How Wayfair Is Leveraging High-Tech Tools to Connect with Consumers

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   3. Making Macy’s Meaningful: Moves by the Retail Chain to Maintain Its Competitiveness  

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4. Find ―Good Stuff Cheap‖ at Ollie’s Bargain Outlet 1 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 2: Making Technology Personal: How Wayfair Is Leveraging HighTech Tools to Connect with Customers Synopsis: Wayfair enjoys a strong, enviable position, with a strong market share in the furniture market and digital offerings that distinguish it from many other retailers. It continues experimenting with novel digital channels, an effort that benefitted the retailer during the COVID-19 pandemic. Uses: Chapter 1: Introduction to the World of Retailing Chapter 3: Digital Retailing Chapter 4: Multichannel and Omnichannel Retailing Discussion Questions 1. Is it sufficient for Wayfair to stay online, or should it consider becoming an omnichannel retailer? Defend your answer. Students could take either side of this debate. If they believe it should maintain its digital focus, they might cite the strength of its current positioning, which might be undermined if Wayfair were to invest in opening physical stores, for example. But arguments for an omnichannel approach might cite the need to remain flexible, as well as highlight the ways in which it already operates in various channels, even if they are mostly digital. That is, if Wayfair already differentiates its approaches for its website, Facebook, and Instagram, it might continue to do so by developing alternative appeals for other digital channels and thus expand its omnichannel reach, even if it never opens physical stores. Opening physical stores for furniture may help customers select furniture by providing touch and feel options (e.g., How comfortable is that couch? How soft is the fabric?) that are not available for online furniture purchases. 2. Current evidence suggests Wayfair has not fully penetrated the Millennial cohort. What else could it do to appeal to younger consumers? Wayfair should continue to assess how, where, and when this consumer cohort prefers to shop. It also might want to consider extending its product assortment to include more lower priced items to appeal to buyers, beyond its current market of relatively high earning consumers. Another option would be to invest in new product designs that appeal particularly to the style, residence trends, and preferences of younger buyers. Evaluating social media and home decorating influencers may increase brand awareness. 3. Wayfair offers extra services but doesn’t necessarily charge higher prices. How does it manage to achieve this value position? One key benefit is the company’s lack of (costly) physical locations. In addition, many of the distinctive digital services it offers do not incur ongoing maintenance costs; a digital design tool, once developed and paid for, can be reused continually without requiring many additional resources. 8 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 3: Making Macy’s Meaningful: Moves by the Retail Chain to Maintain Its Competitiveness Synopsis: After surprising sales declines in the latter half of the 2010s, Macy’s developed a new strategy, to build on its current strengths and engage with new retail options. The strategy involves expanding its omnichannel presence, pursuing Millennial target markets, and transforming its supply chain operations. Uses: Chapter 4: Multichannel and Omnichannel Retailing Chapter 5: Consumer Behavior Chapter 6: Retail Market Strategy Discussion Questions: 1. What is Macy’s plan to attract Millennials? Macy’s has implemented a $400 million renovation effort for its flagship New York City store, testing out various options that might attract more of the cohort of shoppers between the ages of 18 and 35 years. The basement level of this massive store is a newly designated ―One Below‖ section that offers a notably different shopping experience. Macy’s also has designed merchandise specifically to appeal to Millennials. Macy’s provides services such as blow-drying stations, jean embroidering, and watch engraving. Shoppers can use a 3D printer to create their own custom jewelry, and a touchscreen wall allows them to take high-quality selfies. 2. How is Macy’s positioned in the fashion market? Who are its main competitors, and how well does it compete against them? Macy’s midrange position in the fashion market seeks to offer good quality at reasonable price points. It offers a wide range of name-brand and exclusive products at prices lower than those charged by designer stores but higher than discount retailers. Its main competitors are other department stores, including higher priced options such as Nordstrom. Macy's also competes against Amazon, Wayfair, Kohl’s, Sephora, and Hudson's Bay Company. To deal better with Nordstrom’s advantages, Macy’s is opening off-price stores that will compete directly with Nordstrom Rack. Furthermore, Macy’s customer service focuses more on technology than sales personnel. Such advanced technology may appeal more to Millennials, though the lack of instore sales personnel can lead to the stores becoming messy. 3. Who are Macy’s target markets? In which targets is it winning, and in which is it losing? Why? Traditionally, Macy’s has targeted Baby Boomers, but declining sales prompted it to target Millennials. It continues to attract Baby Boomers though, with its reasonable prices and wide variety of merchandise; these shoppers tend to have more disposable income and more time to shop and explore the inventory than do younger consumers, especially if they have already 9 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

retired from the workforce. However, Macy’s has been losing thus far with Millennials, who have less income, more debt, and greater pressures on their time. Still, it is attempting to appeal more to this Millennial market by featuring more technology, teaming up with Best Buy to sell personal electronics (which studies show are a key sector in which Millennials are willing to spend more money), and opening off-price locations. It is still unclear if these strategies ultimately will be successful in winning over Millennial shoppers. 4. Perform a SWOT analysis for Macy’s. Strengths:  Wide variety of merchandise for men, women, and children  Excellent customer relationship management  Valuable brand, ranked 164th by Fortune among Fortune 500 companies in 2021  Strong e-commerce sales, which have increased its revenues from online sales  Event marketing (e.g., Thanksgiving Day Parade)  Investment in automation  Household name Weaknesses:  Poor management  Plans to close around 125 stores over five years across the United States  Failed expansion into other countries  Declining quality of service  Messy and unappealing stores  Low staffing in stores, exacerbated by COVID-19, leading to a decline in the quality of customer service  Overdependence on the U.S. market Opportunities:  Strengthen global presence  Expand e-commerce sales  Diversify products  Focus on emerging markets  Expand through mergers and acquisition Threats:  Global recession  COVID-19 pandemic  Declining retail sector  Competition from Nordstrom, TJ Maxx, Kohl’s, Amazon, StitchFix, and many more  Trade pressures

5. Do you shop at Macy’s? Why or why not Students’ answers will vary.

10 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 4: Find “Good Stuff Cheap” at Ollie’s Bargain Outlet Synopsis: Ollie’s Bargain Outlet describes itself as ―one of America’s largest retailers of closeouts, excess inventory, and salvage merchandise.‖ In 2004, the company had 30 stores and is currently on a tremendous growth trajectory with 219 stores and counting. The company has an ambitious goal to reach 950 stores across the United States in coming years. Uses: Chapter 1: Introduction to the World of Retailing Chapter 2: Types of Retailers Chapter 6: Retail Market Strategy Chapter 17: Store Layout, Design, and Visual Merchandising Discussion Questions: 1. Perform a SWOT analysis for Ollie’s. If you were able to invest in Ollie’s, would you? Why or why not? Strengths    

Weaknesses 

Recession-resistant concept Experienced team of buyers Relationships with vendors worldwide Loyal customers

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Opportunities   

Customers might want to trade-up from this retailer if they feel they can afford to go elsewhere Inconsistent merchandise offerings Bare-bones environment Inconveniences such as often having to wait in long lines to check out Threats

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Plenty of new geographic markets to which Ollie’s could expand Opportunity to leverage relationships with vendors as the retailer grows Word of mouth could generate additional business among members of the core and new target markets

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Competitors such as Big Lots, Family Dollar, TJX, and others sell similar merchandise Intensifying competition for the type of merchandise Ollie’s procures and sells An economic downturn could disrupt Ollie’s growth trajectory

Investment Pros: 11 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

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The retailer is on a strong growth trajectory and has plenty of room for expansion. Ollie’s concept appeals to budget-conscious Americans, reputedly most of the U.S. population. The retailer has formed many valuable relationships that aid its ability to procure merchandise that appeals to its target markets. As it grows, its economies of scale will only strengthen. It has a very experienced team of merchants.

Investment Cons:   

Many of the goods Ollie’s sells are discretionary, so when customers tighten their belts, they likely reduce the purchases they make there. Several other retailers offer similar or substitutable goods, often at competitive prices. Other retailers or vendors may lure away members of Ollie’s merchandising team, which is a tight-knit, small group, and members of this team could retire or depart for other reasons.

2. Describe Ollie’s target markets. How are they similar? Different? Core Target Market:      

Middle to lower-middle income households Often do-it-yourselfers (DIYers) Shops Ollie’s before venturing into more expensive retailers Willing to accept less-than-perfect or not the latest and greatest merchandise Likely to stick closely to a shopping list; less impulsive Consider the Brogan family described in the case to be indicative of the core target market

Secondary Target Market:  Middle to upper-middle income  Better educated  Adventurous: Willing to try new brands, unusual flavors, less common goods  Bargain hunters  More apt to impulse buy; may spend more money than anticipated, but will probably visit Ollie’s less frequently than the core target market Similarities:  

Bargain orientation A willingness to try less familiar brands, flavors, and types of merchandise

Differences: 12 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

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The core target comes there because they need to shop at a store such as Ollie’s. Higher-end secondary customers venture in because they’re looking for treasure hunt finds. Higher-end customers may view Ollie’s Bargain Outlet as a place to discover new items they wouldn’t have thought to try, while the core target customer often settles for Ollie’s merchandise because it can’t afford the merchandise it would prefer. As a case in point, one might find Herr’s Baby Back Rib flavored potato chips. The secondary target perceives this as a low-risk find worth trying, while the core target buys it in lieu of the sour cream and chives flavor it prefers because it’s not available there, but the price is attractive.

3. Compare Ollie’s retailing strategy with Macy’s and with Marshall’s. Ollie’s has more in common with Marshall’s than Macy’s. As Compared with Macy’s, Ollie’s Bargain Outlet:     

Has a bare-bones environment; Macy’s shopping environment is more luxurious. Is more self-service oriented; Macy’s has more sales associates to assist customers in the store, offers its own credit card, and caters to customers’ needs in a more overt fashion. Only sells the merchandise currently on the floor (there’s no back stock, no transfers from other others, no online shopping). Offers lower-end merchandise in a spartan environment while Macy’s sells the latest styles, first quality, and designer goods merchandised in a more appealing way. Has off-mall locations while Macy’s stores serve as anchors in many malls, and Macy’s has flagship stores in downtown locations of several major cities.

As Compared with Marshall’s, Ollie’s Bargain Outlet:    

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Both sell end-of-season merchandise, overstocks, and discontinued goods. Both have a treasure hunt environment. Both sell items that may only appear once, adding to the urgency to ―buy now.‖ Ollie’s has a more stripped-down retail atmosphere (bare concrete floors, handwritten signs) with some merchandise sold out of cardboard displays. Marshall’s is a bit more sophisticated with dressing rooms, finished flooring, and more organized checkout lines. Although both retailers sell housewares, books, and toys, Ollie’s sells fewer wearable pieces and more DIY goods. Comparing on a category like food, Marshall’s sells more gourmet specialty items (cookies, candies, snacks), whereas Ollie’s sells more staple items such as brands of soup, side dishes, cereal, cookies, and condiments one would be likely to find in an average supermarket. 13

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 5: Tractor Supply Company Targets the Part-Time Rancher Synopsis: Tractor Supply Company (TSC) is a relatively large but little-known retailer that targets people seeking a rural lifestyle who operate farms or ranches as a hobby. Uses: Chapter 1: Introduction to the World of Retailing Chapter 2: Types of Retailers Chapter 6: Retail Market Strategy Chapter 8: Retail Locations Chapter 18: Customer Service Discussion Questions 1. What is Tractor Supply Company’s growth strategy? What retail mix does TSC provide? TSC targets hobby farmers/ranchers who are fully employed in jobs but want to enjoy a rural lifestyle and operate a farm or ranch in exurbs of a city. The retail mix of TSC is as follows:  Location: stores are in stand-alone locations in commercial corridors in the exurbs.  Merchandise assortment: a wide variety of merchandise provides everything the hobby farmer/rancher needs. Generally shallow assortment.  Pricing: because competition is limited, TSC has flexibility in pricing and offers good, better, best price/quality tiers or EDLP.  Communication mix: emphasis on personal selling.  Store design and layout: spacious layout, informative signage.  Customer service: well-trained sales associates. 2. How have TSC’s target customers changed over time? It originally targeted full-time farmers, but as the farming industry consolidated, large farms bought directly from suppliers, bypassing retailers like TSC. 3. How does TSC’s retail mix provide the benefits sought by its target market? Stores are located near the rural communities where the target market lives. Extensive customer service training ensures that customers receive knowledgeable and efficient service. The target market may not have extensive knowledge of farming or ranching, and sales associates can help fill that gap. TSC’s offerings of both lifestyle clothing and workwear would appeal to both customers who are farmers/ranchers and those who are not. 4. How vulnerable is TSC to competition? Why is this the case? Not very vulnerable, because the target segment is not price sensitive or very knowledgeable about the products it needs. Thus, the target market is unlikely to be attracted to a low-cost, low14 © MCGRAW HILL LLC. ALL RIGHTS RE SERVED. NO REPRODUCT ION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCG RAW HILL LLC.

Case Synopsis, Uses, Discussion Questions, and Answers

service retailer like Walmart. In addition, each rural area is relatively small, and thus, there is probably not enough business for multiple retailers targeting the small market with the same offering. Thus, after TSC enters a market, there would not be enough business in the market to entice a competitor to enter. 5. Why does TSC place so much emphasis on training employees? Customer service is critical because the customers in the target market may not be very knowledgeable about the ranching/farming tasks to be performed and the equipment needed to perform those tasks.

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 6: Fast Fashion and Fast Digital Upgrades by H&M Synopsis: With its existing efforts to allow consumers to buy anywhere, anytime, H&M was well-positioned to respond to the retailing implications of COVID-19. But it also is not resting on those laurels; this case outlines some cutting-edge experiments involving novel payment methods, digital avatars, and cross-channel capabilities. Uses Chapter 2: Types of Retailers Chapter 3: Digital Retailing Chapter 4: Multichannel and Omnichannel Retailing Discussion Questions 1. What is H&M’s digital strategy? It would be a good idea to visit https://www2.hm.com/en_us/index.html to better understand their digital marketing strategy – how they are segmenting the marketplace (e.g., women, men, baby, kids). It’s important to understand how they use up-to-date images of merchandise, and are employing the latest technology, such as Google Assistant, augmented reality, streaming, and realistic holograms. They are actively testing new approaches to improve customer experiences, such as digital fitting rooms and providing customers access to in-store app to locate merchandise and determine availability. Customers can also buy online and pickup in store, 2. Does this strategy match H&M’s positioning in the fast-fashion market? Their positioning allows them a prestigious position as is evident by the various P’s: Product - Fast-fashion, on-trend clothes, and accessories - European-influenced fashion Price - Best price possible - High quality fashion at a low price Promotion - Multichannel promotion strategy using advertising, sales promotion, and Internet promotion - Strong brand awareness Place - Global brand with 5000+ stores in 73 countries 3. Should other fashion retailers mimic H&M’s efforts? Why or why not? Rival fashion retailers will need to strategically decide whether to compete or not in the fastfashion industry.

Case Synopsis, Uses, Discussion Questions, and Answers

CASE 7: Home Depot Is Winning on Nearly Every Metric. How Is It Doing So? Synopsis: Home Depot shows successful outcomes on various retail metrics, achieved through various efforts, including a dedicated omnichannel effort that it refers to as ―One Home Depot.‖ This initiative spans mobile, online, in-store, and supply chain operations, and it reflects the retailer’s strategic attempt to move beyond a price-oriented positioning to become the means by which ―Doers Get More Done.‖ Uses Chapter 3: Digital Retailing Chapter 4: Multichannel and Omnichannel Retailing Chapter 6: Retail Market Strategy Discussion Questions 1. Which metrics are most indicative of Home Depot’s success, in your view? Why did you choose them and not others? Some illustrative metrics are provided next: - Revenue growth - Market share - Same-store sales (renovated stores, trained staff, new products) - Online sales (seamless omnichannel experience, mobile app, expanded inventory) - Growth in high-value transactions - Operating margin Individual prioritization will vary and can be justified based on growth, profitability and ROI. 2. How can Home Depot account for the costs associated with its improvement initiatives, as well as its necessary responses to the COVID-19 pandemic, accurately? The firm focused on the safety and well-being of associates and customers during the pandemic, while providing customers with needed products and services. In addition, it invested in technology and infrastructure to facilitate and improve the customer experience. These investments helped Home Depot extend its buy online, pickup in store or curbside offering in a matter of days. The increased cost can be seen by the growth in operating expenses. It also improved its direct fulfillment operations and reduced its online delivery lead times. The business grew by more than $21 billion in fiscal 2020. Source Home Depot Annual Report 2020, https://ir.homedepot.com/~/media/Files/H/HomeDepotIR/2021_Proxy_Updates/2020_AR_IR_Site_Combined_Document_v2.pdf, assessed 2/22/2022.