MKT4571-01
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T/Th 1:40-3:15 Malloy
201 WHO SHOULD TAKE THIS CLASS? Retailers lie at the end of the supply chain. They interface with the ultimate consumer as well as with suppliers. Retailers make investments in real estate and solicit funds from the investment community. Importantly, multi-channel retailing has all but revolutionized the retailing scene in the last few years. As a result, this course should appeal to a number of rather different Babson constituencies. Retailing management OBJECTIVES: Familiarize students with the decisions involved in developing a sustainable competitive advantage in retailing and the concepts and principles for making those decisions. NATURE OF CLASS MEETINGS: This course utilizes cases, experiential exercises, and class discussion. Little class time will be devoted to topics that the average student can readily comprehend on the basis of self-study. For some topics, a discussion will precede a written assignment or case. Most of the time, however, students will be required to prepare the assignment or case by studying the material on their own. In either case, you will be encouraged to participate and ask questions. METHOD OF EVALUATION: There will be two exams, a number of written exercises and cases, and several group presentations. Materials covered by guest lecturers will be included on the examination. Students are expected to arrange their personal schedules to be present. Students must inform the professor prior to turning in a late assignment or even valid excuses will not be considered. Assignments should be typed and double-spaced. You will be provided with specific questions to answer for the cases. The assignments will be graded for grammar, style, as well as content, and in the case of presentations, presentation style. Assignments are due at the end of the class. Any assignments submitted after the end of class will be considered late and receive a grade of 0. PARTICIPATIONClass participation is worth 10% or 100 points. If you never contribute in class or if you miss several classes, you will receive a low grade (C, D, or E) for class participation. If you contribute occasionally but rarely add value your grade will be in the B-C range even if you attend every class. Grades of 'A' are reserved for students who participate with insightful comments, experiences, or thoughtful questions in almost every class. If you must miss a class, you can submit an individual written assignment for the missed class at the beginning of the next class session. You can ask for feedback on your participation performance at any time. CASES There are five Harvard cases in this course: Wal-Mart (not a case write-up) IKEA, L.L. Bean, Zara, Mitchells/Richards, plus a merchandise planning case. Each group will be responsible for a two page write-up of the discussion questions. These are all group write-ups, although you are free to do an individual write up of any case. PRESENTATIONS There will be five group presentations: Defining a Retail Strategy, Financial Strategy, Location Analysis, the Retail Game, and Store Layout, Design, and Visual Merchandising. Each group should be ready to make a 15 minute (+or- 5 minutes) presentation. Groups will be chosen at random to present. It is important to have notes to turn in for your PowerPoint presentation in case your group is not chosen to present so that a grade may be assigned. DISABILITIES Any student who is entitled to an academic accommodation based on the impact of a documented disability should contact me privately to discuss his or her specific needs. Please also contact Erin Evans, Coordinator of disability services, at 781-239-4075 or in Hollister Hall to coordinate reasonable accommodations. TEXT AND CASE MATERIALS: Retailing Management, 6th edition, by Levy and Weitz, McGraw-Hill/Irwin, 2007. Students are encouraged to explore the tutorials at www.mhhe.com/levy6e to help prepare for certain assignments and the exams. The CD is particularly useful for chapters 6, 13, and 15. Case packets are available for sale at the Babson Bookstore. ASSIGNMENTS: January 30 Wal-Mart 2005 Case Read and be prepared to discuss the case. February 6 IKEA Case IKEA Case—Discussion Questions 1. Why is IKEA successful globally when other retailers stumble? 2. Is IKEA being too aggressive and optimistic about their growth strategy into the U.S.? 3. Evaluate IKEA’s assortment.
February 8 Defining a Retail Strategy
The purpose of this assignment is to give you an opportunity to get out and examine retailing strategy from an objective, professional, and non-consumer point of view. The assignment is to compare two retailers’ strategy as defined on pp. 128 of Retailing Management.
Choose a store to compare with “your store” that sells the same classifications of merchandise, e.g. Ann Taylor and Talbots. Another alternative would be to choose two departments within different stores as long as they sell the same classifications, e.g. Juniors at Neiman Marcus and Juniors at Target. You could even choose one department within a department store and one specialty store with the same merchandise classifications, e.g. Brooks Brothers and the men’s suit department at J. C. Penney. The important thing is that these two stores/departments cater to two very different market segments.
Collect information on the two stores or departments by posing as a customer and interviewing a manager or buyer. Do not be deceptive about your intent. Most stores will be happy to help you. If they are reticent to help, please thank them and find another store. Some stores have policies against talking with the public about these kinds of things. You will also find that in many small chain stores, the manager has little knowledge about corporate strategy. So, plan ahead in case you have to go to more than one store. In the formal interview, you should be sure to have the questions thought out in advance. You may, of course, supplement your in-store visit with secondary research. February 20 Financial Strategy
Compare financial strategies of “your store” and another store that sells similar merchandise categories, but to a very different target market. If yours is a high margin/low turnover store, compare it with a low margin/high turnover store.
Construct strategic profit models using the excel spreadsheet that can be found on the student side of the Online Learning Center at www.mhhe.com/levy6e. Go to tutorials, and then to strategic profit model. Go through the tutorial until you see the spreadsheet on the lower left side of the screen. There is also a blank SPM on p. 553 of the text. Obtain data from Edgars or the Corporate Reports that are usually found through retailers’ webpage.
Explain, from a marketing perspective, why you would expect gross margin percentage, expenses-to-sales ratio, net profit margin, inventory turnover, asset turnover, and return on assets to be different for the two stores. Assess which chain has better overall financial performance. Your grade will be primarily based on your analysis of why these ratios are different.
February 27 Location Analysis Presentation Go to “Your Store.” Define and analyze their trade area. Specifically, what are the primary, secondary, and tertiary trade areas? What are their boundaries? Why? Do you believe that the population living in the trade area provides the most potential for this store? Assess the site. Is it a good location in general? Is it good for “your store”? Use Chapter 8 as a guide to prepare this assignment.
March 15 Merchandise Budget Plan Case (Case 22 in text)
March 27 L.L. Bean Case Discussion Question: L.L. Bean is experimenting with bricks and mortar stores. Evaluate what they are currently doing, and make a recommendation about how they should proceed in the future.
March 29 Zara Case Discussion Questions: On what bases has Zara developed a sustainable competitive advantage?Are these efficiencies sustainable for expansion in the U.S.?
April 12 Retail Game
We are fortunate to be able to be the first North American users of the Retail Game developed by John Pal and Mark Stubbs of Manchester Metropolitan University's Business School in the U.K. The game can be found at www.theretailgame.com. But you will need a username and password to play.
You will have one half of a class to work with your group on the game. But preparation will also require time outside of class. In the subsequent class your group will present their strategy and decisions and be prepared to defend it against the other teams. Like the other group presentations, you should prepare a 15 minute (+ or – 5 minutes) PPT presentation.
You need to submit two documents1. Print outs of the www.theretailgame.comWhen you have completed all your decisions you will be able to print out your results page. The results page will list all of your decisions and a blank store layout. You will be asked to defend each of your decisions. On the blank store layout you should identify where you would put all the chosen products and the non-selling areas, such as the cash wrap and the dressing rooms. Use a different color for each product and non-selling area, and include a color-coded legend. When you print out your final results page you will find that the space you have allocated is in both square feet and, in brackets, will be a figure that denotes the number of squares to be allocated on the store layout.
2. Accompanying PowerPoint reportThe PowerPoint report that you hand in should include a print out of your results pages and the store layout plan. (Please submit only your final set of print outs, not every attempt you may have made). The PowerPoint report gives you the opportunity to provide more details on the justification for your choices, highlighting both strengths and potential weaknesses of your decisions. The report should, in particular, cover the key areas of overall strategy, stock selection, space allocation, staffing, and shrinkage prevention. You should note any best practice you may have seen in retail outlets with which you are familiar and used to make your decisions. In making your decisions, consider the following: 1 Have a clear marketing strategy in terms of which customers you are targeting, and making sure your assortment plan reflects that target market. 2 Consider your overall objective. Is it to maximize sales or profit? 3 Be able to justify how you allocated space to products. Try to maximize your space productivity based on profit per square foot. This will require some calculations. You will have to multiply sales per square foot by profit margin, and then rank the products accordingly. 4 The staffing allocation plans: Match the hours allocated against the annual trading pattern (seasonality pattern) and allow for some flexibility, i.e., not 100 percent permanent associates. In the same way, you will need to consider the daily trading (sales) profile and allow for a mix of full and half day workers. 5 Layout plans: Make sure it is easy to differentiate the different areas, probably by using different colors. Make sure you justify the adjacencies. Using best-practices stores to benchmark against will be helpful to justify where you put the three merchandise categories and where and how many fitting rooms and cash wraps are used. 6 Be flexible with the Queen’s English. This game was written in the U.K. and has not been adapted to American English. For instance, in the U.K. the term “turnover” is equivalent to “sales” in the U.S. It does not mean inventory turnover.
April 17 Mitchells/Richards Case How do the Mitchells work toward keeping the four service gaps closed? Which elements of the retail mix will provide a sustainable competitive advantage? How does Mitchells develop and maintain loyal customers?
April 26-May 1 Store Layout and Design (All groups will present)
Go to “your store” and evaluate the store layout, design, and visual merchandising techniques employed. Explain your answers to the following questions: 1. In general, is the store layout, design and visual merchandising techniques used consistent with the exterior of the store and location? 2. Is the store’s ambiance consistent with the merchandise presented and the customer’s expectations? 3. Does the store look like it needs to be redesigned? Do you think it needs a face lift, update, remodel or renovation? 4. To what extent is the store’s layout, design, and merchandising techniques flexible? 5. Notice the lighting. Does it do a good job in highlighting merchandise, structuring space, capturing a mood, and downplaying unwanted features? 6. Are the fixtures consistent with the merchandise and the overall ambiance of the store? Are they flexible? 7. Evaluate the store’s signage. Do they do an effective job in selling merchandise? 8. Has the retailer used any theatrical effects to help sell merchandise? 9. Does the store layout help draw people through the store? 10. Evaluate the retailer’s use of empty space. 11. Has the retailer taken advantage of the opportunity to sell merchandise in feature areas? 12. Does the store make creative use of wall space? 13. What type of layout does the store use? Is it appropriate for the type of store? Would another type layout be better? 14. Ask the store manager how the profitability of space is evaluated; for example, profit per square foot. Is there a better approach? 15. Ask the store manager how space is assigned to merchandise. Critically evaluate the answer. 16. Ask the store manager if plan-o-grams are used. If so, try to determine what factors are considered when putting together a plan-o-gram. 17. Has the retailer employed any techniques for achieving greater space productivity such as using the “cube”, down-sizing gondolas and racks, and minimizing non-selling space? 18. Are departments in the most appropriate locations? Would you move any departments? 19. What method(s) has the retailer used for organizing merchandise? Is this the “best” way? Suggest appropriate changes.
SCHEDULE
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