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out right sale. Next, HBC should discontinue the least profitable product lines, and focus resources and retail space on those that are the highest. Downsizing would improve inventory turnover rate while reducing warehousing cost. Due to the correlation between physical retail and e-commerce, HBC may see an initial decline in online sales after the closure of underperforming buildings. On the other hand, if HBC decides downsize rather than sell, customer satisfaction could decrease due to less merchandise. Both ‘costs’ will be offset by the reduction in debt, increased foot traffic, and the ability to allocate resources to developing online platforms. Additionally, by shrinking square footage, HBC is reducing their operating costs, which as stated in the Financial Segment, where higher than the industry average. To mitigate customer service issues, HBC should utilize their omni channel capabilities and ensure all discontinued products are offered online, and easy to find. Time Frame: Identify underperforming stores and determine whether to downsize or sell by end of Fiscal 2018 Quarter 2. Closure or lease begins in Quarter 3. Appendix A: PESTEL Analysis
Appendix B: Porter’s Five Forces Appendix C: Industry CompetitorsWinners Merchants International L.P Nordstrom Inc. Holt, Renfrew & Co., Limited Barneys New York Inc. -Chain of off-priced Canadian department stores -Offers brand name clothing, footwear, furniture, etc. -Items are usually discounted at ~20-60% -High seasonal variety -Lack of online presence -American-based chain of department stores -Operates in Canada, Puerto Rico & US -Sells clothing, accessories, handbags, jewelry, etc -Select stores have home furnishings and wedding departments -Stores also have in house restaurants and espresso bars -Chain of high end Canadian department stores -Specializes in luxury brands and designer boutiques -Often compared to SAKS Fifth Avenue and Barneys -American chain of luxury department stores -Operates 15 flagships, boutiques, and warehouse stores in US -12 stores in Japan are licensed and operated by 3rdparty Macy’s Walmart Inc. J.C. Penney Company Inc. Target Corporation -American department store chain -Currently has over 660 full-line stores -Operating throughout US, Puerto Rico and Guam -American multinational retail corporation -Operates a chain of hypermarkets, discount department and grocery stores -Over 11,700 stores and clubs in 28 countries (2017) -Most profitable retailer in US -Largest private employer in the world -American department store chain -Over 850 locations in 49 US states, and Puerto Rico -Sells conventional merchandise -Several leased departments, ie) Sephora, Seattle’s Best Coffee -Internet retailer since 1998 -Second largest department store retailer in US -Failed to stay in the Canadian market due to insufficient consumer demand Amazon.com Inc:American e-commerce and cloud computing company, largest internet retailer in the world by revenue and market cap, huge array of products, produces electronics and is the world’s largest provider of cloud infrastructure services.