Growth “Though stubbornly high unemployment and continued uncertainty over the prospects for job growth will continue to dampen the outlook for industry retail sales growth in 2012, the retail industry will still grow at a rate faster than many other industries. This year, retail industry sales will rise 3. 4 percent to $2. 53 trillion*, according to the National Retail Federation – slightly lower than the pace of 2011, in which sales grew 4. 7 percent. Many economists estimate that real U. S. GDP will rise approximately 2. 1 to 2. percent. Over the last 18 months, retailers have been on the forefront of the economic recovery – creating jobs, encouraging consumer spending, and investing in America,” said NRF President and CEO Matthew Shay. “Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Retailers have played a key role in driving growth, but to continue this momentum we need Washington to act on proposals that will spur job creation and unleash the power of the private sector. [ (Global Labor Rights, 2001) ]

The retail industry will always be very profitable because this industry is extremely high in demand. This statement reinforces the fact that the retail industry is and will always stay saturated due to the necessity of clothes. There will always be rivalry and profitability for the retail industry because there is not just competition in this region or nation; it is based on a global market. As always, competition is important in long-term success because competition is what keeps industries adapting. With a necessity industry such as the retail industry, there will always be competition.

This makes it somewhat difficult for a company’s long term success. Taking into account all the competition, there are few retail companies that will outlast their competition in a long-term setting. The retail industry is a Business to Consumer industry because they provide the goods and services which are directly provided to the customer. The larger companies in this industry also have more of an advantage on the smaller competitors because they can buy in bulk which allows for lower prices in the supplies necessary. Although Apple Computers is a prime example of buying supplies in bulk in order to save money.

The amount of supplies purchased on the global market is enormous. Look at your clothes and you will see that the majority are made from overseas. That is where the reliance on the supplier for this industry is magnified, although this reliance is not always ethical. The Institute for Global Labor and Human right provided evidence when they discussed “the Korean-owned Daewoosa factory in American Samoa, where  251 Vietnamese “guest workers”–more than 90 percent of them women–were held for nearly two years, under conditions of indentured servitude sewing clothing for J.

C. Penney, Sears and Target. The labels read, “Made in the USA” since American Samoa is a U. S. territory. However, the women were not even paid the already very low $2. 60 an hour minimum wage in Samoa. The women were beaten, sexually harassed, threatened with deportation and imprisonment, starved, forced to work 12 to 18 hours a day, seven days a week when rush orders came in, and to live in crowded rat-infested dormitories. The U. S. Department of Labor has assessed the Daewoosa factory a total of $604,225 in back wages and fines” [ (RFID News, 2012) ].

The problem is that most companies in this industry go this route to save money but although this allows for a lower cost and a shortened distribution channel, cheaper might not always be better. According to Technology Evaluation, “It is critical for a retail business to have a vertically integrated strategy with competitive pricing. Organizations with vertical integration strategies control the input and output of the supply chain, meaning it owns the supply of the raw material and has the ability to distribute its finished product.

By having vertical integration, companies are able to have full visibility into their operations at every level of the business, be it growing or finding raw material, manufacturing, transporting, marketing, or retailing. Every one of these processes is managed by the organization when a vertical strategy is used [ (Shopping Centers Today, 2005) ]” Economies of Scale With centralization, the chain (JC Penney) could buy the same assortments for all its stores, creating economies of scale that enabled it to slash prices.

Those lower prices in turn helped JCPenney shed inventory more quickly. “With this new system, they started to play six or seven seasons instead of just three,” Davidowitz said. “It improved their whole fashion cycle” [ (Shopping Centers Today, 2005) ]. So once again the companies that have more money have much more of an advantage because they are saving money when purchasing supplies and in exchange making more money when selling. Number of Rivals “Retail is the business of selling goods made by others to individual consumers.

It is a huge industry, dominated by Wal-Mart, which touches every corner of the globe. Due to the decline in the global economy, the future of many retailers is uncertain as consumers begin to spend less. The retail industry is the last step in the process of getting products to customers efficiently, and should not be confused with the wholesale activities which precede it. The difference between the two is that wholesalers are companies that sell their products to businesses, whereas in retail, the goods are sold directly to the consumer.

Wholesale establishments play an important role for retail establishments, as they generally provide retailers with the resources they need to run their business in addition to the goods and products they sell. Any business that sells goods to individual consumers is a retail establishment. There are many kinds of retail establishments including department stores, discount stores, category killers, E-tailers, specialty stores, grocery stores, and convenience stores. Retail establishments are a huge industry with $4 trillion of revenue in the United States alone (Global Edge)”

According to The Financial Express, “what we are yet to see in our country is ‘product differentiation’ when it comes to malls. Planning and design are an intrinsic part and key differentiators defining the footfalls in future. Retail planning is a specialized discipline. Specialty malls based on different product categories will come into picture. Currently, what we are seeing in the Delhi NCR is jumbling up of mall formats. There is no product differentiation” [ (The Financial Express, 2007) ]. In the retail industry, product innovation and R&D is important because there are always adaptations a company must make in order to survive.

The industry has a whole lot to do with seasons and this means short product life cycles but when it comes to rapid product innovation, there is nothing rapid about knowing that more coats are needed in the winter and t-shirts in the summer. With next-generation products however, there is a chance to gain on key rivals with first-to-market products although the product must be ridiculously unique. A new t-shirt is not going to make a big difference when someone is deciding to go to Kohl’s or JC Penney. To succeed in the new environment, retailers are finding it necessary to adjust their perspectives and command new skills.

Increasingly managers need access to a global view of supply and demand; they need the capacity to serve customers anywhere and anytime; and they need to move into new markets—with new products—quickly and seamlessly” (Top Retailers Turn to Next-Generation Enterprise Technology to Stay Ahead of Competition, Protect Margins and Boost Service, 2009) Technology Technology advancements will always help the companies that are the quickest to discover them. “Modern technology has meant that retailers can now enhance the experience their customers receive more than ever before.

Store and loyalty cards are one such use of technology as they not only reward shoppers with discounts and money off advantages but they also track spending habits and buying trends of their customers. This means they know who, what, when and how people are buying certain products and they can tailor their promotional campaigns, staffing and stock levels accordingly. Another new way in which forward thinking retailers are embracing technology to enhance their stores safety, security and communication is through the use of Two Way Radios like the Kenwood TK3201.

Two Way Radios like the Kenwood TK-3201, Motorola XTN446 and ICOM F25SR give retailers the perfect way improve their communication and performance. Not only does 2 Way Radio allow members of staff to communicate over a wide area but they can be used as a health and safety tool so workers can report accidents, check stock levels and stay in touch across the entire site from the shop floor to the distribution area” [ (Street Dictionary) ]. This just proves the point that technology upgrades are essential because of the extreme advantage you can gain and like all big time corporations, strong technological capabilities are a must. The learning curve, also referred to as the productivity experience curve, represents the improvement in an employee’s production or work output as he learns the steps involved in each task. As the learning curve takes effect in your retail employees, you can expect to see a nicer-looking, more organized display of merchandise, fewer mistakes made due to lack of experience and an increase in sales. All of these things add up to a more productive business with employees who feel confident in the job they’re doing” [ (Effect of a Learning Curve in Retail) ].

Overall, we realized how important technology and the ability to adapt was when it came to the retail industry. We also discovered that you can save a lot of money when you purchase supplies in bulk and the larger companies have much more of an advantage because they are the ones that have the money to do this. Rivalry among competing sellers The industry growth rate is a slower one because it is a hard area to break in to. The existing firms spend millions and billions of dollars on advertising because of their capability to do so (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007).

Switching cost is the expense that a consumer must expend in order to change from one firm to the next. When dealing with department stores product differentiation is key because consumers have options of choosing among other department stores (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). The fixed cost for the major firms in the industry is high, which puts immense exit barriers on them (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). Even though JC Penney has had much success the competition among competing sellers remains high.

Threat of new entrants Entering in to a new market always poses many problems. In order to enter such a promising industry new firms must be able to provide the right amount of start-up capital. The firms that already exist have not only had more experience, but they have an advantage over newcomers in the economy of scale (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). Larger firms have great relationships with their suppliers, and also receive price breaks and discounts for buying in bulk (J. C. Penney Company, Inc.

Equity Valuation and Analysis, 2007). Newcomer firms would have great difficulty with establishing a relationship with suppliers right away. Firms in other industries offering substitute products Ultimately substitutes are easy to come across in this particular industry. Because the switching costs are so low the firms must do many things to stay competitive. The substitute’s prices are attractive, but the retail industry customers are more concerned with the value that they can receive at a reasonable price (J. C. Penney Company, Inc.

Equity Valuation and Analysis, 2007). Supplier Bargaining Power Bargaining power for suppliers of the departmental retail industry is generally very minute. However, J. C. Penney, Dillard’s, and Belk carry exclusive brands, which cause bargaining power of these suppliers to be relatively higher (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). Major firms of the industry have decided differentiate some product lines which set the supplier bargaining power at a moderate level (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007).

From the outside it seems as though suppliers have low bargaining power over the firms simply because, “firms can easily get the same products, same quality, but with a cheaper price tag from a different supplier” (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). Buyer Bargaining Power The overall buyer aims to provide the absolute best quality for their customers. The creation of private brands and product lines is to instill a greater sense of quality (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007).

The customers have the power in this aspect of the industry because they have the ability to choose where to shop, so the buyer’s demand is high. Customers have low switching costs, and freely choose other stores to shop at their leisure. “The customer is king,” so the buying power is high (J. C. Penney Company, Inc. Equity Valuation and Analysis, 2007). Key Success Factors In today’s aggressively competitive market, the major challenge facing retailers is to master the balancing act of keeping the right product mix on hand while keeping inventory levels low.

We all know that too much inventory leads to huge markdowns, waste or spoilage, while extremely low inventory may cost retailers lost of sales and a huge array of dissatisfied customers. The importance to tackle this challenge has increased drastically in recent studied years, as customer loyalty is growing tougher to come by and with investors demanding to see higher operational efficiency. The new retail environment has made it vital to locating that equilibrium point between the right inventory level of such products and the shelf availability of optimally allocated/priced products.

Combining Art and Science Most retailers use a simple logic for planning, largely founded on past historic data and “gut instinct. ” This simple plan may have operated smoothly in the past, when the industry was far less complex. In today’s global economy, alongside the rapid growing number of products, retailers are now typically outsourcing many phases of their business, manufacturing overseas, coordinating multiple channels of stores, distributing catalogs and utilizing the Web, all have to deal with rising expectations from indecisive customers.

A smart retailer should supplement the art of planning with science that analyzes multiple factors such as store types and locations, sales profiles, demo-graphic and regional and variations. Retailers can possibly gain valuable insights and plan more effectively and efficiently by leveraging all available data. Process-Centric Without a consistent, disciplined, formalized, and process-based approach, the retailer is destined to inefficiency and lost business.

Thus, it is essential for retailers to create end-to-end processes rather than concentrating on specific functions when they implement new planning solutions, for a process-centric approach will distribute far more flexibility and allow for continuous innovation. The processes must also always be adaptive to constant changing of business needs and market conditions. Managing Irregularity & Complexity A planning system that is difficult to use adds additional layers of complexity. Retailers are in need of new generation planning solutions to help process complexity so they can focus on what really matters: getting he right products to customers at the right price, in the most efficient manner possible and in managing the essential data. Complexity comes with ensuring that everyone is delivering against a common set of goals and also comes from the explosion of data as well as from the processes involved in coordinating across multiple groups within the enterprise. Retailers that are taking the new generation approach are now able to get good, timely information to their key managers and buyers so the latter can create better decisions throughout the assortment management and buying process.

Moreover, with the new generation method, retailers are now able to automate inventory management by focusing on responding quickly to irregular activities and exceptional events, such as excess inventory or major changes in demand after creating business rules and out-of-stock items. These advanced planning methods will help retailers produce correct statistical forecasts for basic items that are transported over from season to season, so that buyers can now focus on more seasonal items or critical fashion. Creating a Dynamic Plan

Companies want a planning process that is dynamic, not static. As more new insights are gained and information readily becomes available, retailers must be and remain flexible in order to revise and update their plans. It is very important to remember that any changes will impact other plans, whether it be both downstream and upstream. For instance, a regional product promotion likely will increase sales in that region, which will result in financial and inventory changes throughout the organization. Supply Chain Visibility

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To create an intelligent supply chain and highly efficient, the retailer needs end to end visibility to see the effect of any choice on all aspects of the supply chain, from vendors and distribution centers forward to POS. New generation planning solutions permit that visibility by tightly integrating with the supply chain, translating plans into execution and operating within any existing constraints. For instance, few retailers ask their vendors to deliver inventory in optimal case packs so it can flow through the supply chain without having to be broken down and repacked for individual stores.

Arrangements such as these lead to better buying and allocation decisions and also help utilize more active use of supply chain assets. Investment New generation planning solutions give retailers the access to the information they need to make more brilliant, better-quality decisions. By automating the basic elements of planning and inventory management, retailers can focus on responding quickly and appropriately to exceptions. Advanced planning is a long journey and very few companies have achieved the total vision.

Most companies find themselves tackling it one step at a time. But the benefits we will reap down the road are well worth the investment now. Many companies that have already embarked on the journey have reported having fewer lost sales, fewer markdowns, greater supply chain efficiency, greater reaction to demand trends, and lower inventory levels throughout the enterprise. Most important of all, better planning delivers a better shopping experience and, in turn, reserves customer loyalty, this is key to business success in the highly competitive retail industry.

History In 2008 there were approximately 8, 813 department stores throughout the United States (Department Stores SIC 5311, 2012). In the nineteenth and twentieth centuries, the department stores were the focal point of consumer shopping (Department Stores SIC 5311, 2012). Department stores from about the mid 1800’s to the late 1900’s carried products ranging across all segments of the retail business from apparel, appliances, home goods, hardware, electronics, and many specialty items (Department Stores SIC 5311, 2012).

As the twenty-first century approached, department stores were losing ground to specialty shops like Gap and discount retailers like Wal-mart (Department Stores SIC 5311, 2012). Several department stores consolidated or restructured to become more competitive beginning in the 1980’s and continuing through today (Department Stores SIC 5311, 2012). Major companies like Federated Department stores merged with Macy’s after acquiring May Department Stores and Sear’s combined with Kmart (Department Stores SIC 5311, 2012). Competitive Characteristics

By the early 2000’s, major retailers struggling against the specialty and discount retailers began adjusting their business philosophies to differentiate themselves even more from the Wal-marts and Targets of the world by narrowing focus to higher quality products and services (Department Stores SIC 5311, 2012). Some companies took stronger positions than others on setting their pricing higher as well (Department Stores SIC 5311, 2012). Because of the greater segmenting by the major retailers, Wild Stag Consulting has chosen to group stores by their product line breadth and their pricing and quality standards.

We feel that consumers look strongly at the variety of products available not only in selection choice but also in various product lines, eliminating the need to visit multiple stores. In addition, stores are targeting certain customer segments more so by the establishment of their pricing and quality standards (Department Stores SIC 5311, 2012). By using these criteria in grouping stores, Wild Stag Consulting hopes to target closer competition retailers to J. C. Penney’s in order to better compare results.

Competitors Neiman Marcus and Nordstom tend to be more on the higher price scale and though they still carry many product segments, they reduced many individual store departments (Department Stores SIC 5311, 2012; Nordtrom Inc. , 2012; The Neiman Marcus Group, Inc, 2012). Sears on the otherhand has probably the widest scope of product lines covering from appliances, tools and other hardware supplies, to jewlery, electronics, home goods, and apparel (Sears Holdings Corp. , 2012).

The addition of Kmart stores under the Sears umbrella not only greatly extends the product breadth but also brings more value priced items to consumers placing them apart from most of the other retailers (Department Stores SIC 5311, 2012; Sears Holdings Corp. , 2012). Kohl’s Coproration and Macy’s Inc. lean more towards a value pricing strategy but not quite to the extent of Sears (Department Stores SIC 5311, 2012; Kohl’s Corp. , 2012; Macy’s Inc. , 2012). Both companies also have a large selection of products available but slightly fewer departments than Sears (Kohl’s Corp. , 2012; Macy’s Inc. , 2012).

The overall closest competitors to J. C. Penney’s would be Belk’s and Dillard’s. Though J. C. Penney’s out-performs both Belk’s and Dillard’s in overall sales dollars their general target market segment are the same (Belk, Inc. , 2012; Department Stores SIC 5311, 2012; Dillard’s Inc. , 2012; J. C. Penney Company Inc. , 2012). Product pricing and quality are geared towards middle to upper middle class women for all three companies (Department Stores SIC 5311, 2012). J. C. Penney’s has approximately eighty percent of its customer base as women (Department Stores SIC 5311, 2012). COMPETITOR ANAYLYSIS

When competing within an industry, it is crucial for both growth and strategy of that organization to stay on top of what the competition is engaging in. It’s important to look at your competitor’s products or services offered, and in what ways they are marketed. Find out how the competition treats their consumers, whether it is through reward programs or at the general store level. It’s also beneficial to look at the competitor in a futuristic way so you can depict where they are headed, and what their business strategies are. For J. C. Penney’s, I have chosen two direct competitors to analyze and compare. Since J.

C. Penney’s has a broad growth strategy, and high product line breadth, I have selected companies that follow the same format. With that being said, the following shows my analysis: BELK In relation to J. C. Penney’s, Belk is a top competitor. They compete in a wide range of categories, and have a high breadth (much like that of J. C. Penney’s). Their mission/vision statement is as follows: “The mission of Belk is to be the leader in its markets in selling merchandise that meets customers’ needs for fashion, quality, value and selection; to offer superior customer service; and to make a reasonable profit (Belk, n. ). ” “The vision of Belk is to be dominant in selling fashion merchandise that meets customer’s need for value, quality and service (Belk, n. d). ” At the Corporate Level, Belk is committed to developing the absolute best people to continue their company’s growth expectations, which is a high priority. Belk believes that “leaders who display a strong work ethic, understand team work, know how to develop people, inspire and coach team members, and embrace change and ideas” are the employees they would like to have at their company (Corporate Goals Focus, n. d. ). ”

The Corporate level is devoted to hiring employees who have the ability to work well within teams, understand and commit to change, and represent Belk’s overall mission of customer service. Improving the company’s bench strength is also crucial because it helps ensure a high quality of back-ups for key positions within the company. Lastly, at the Corporate Level they focus on diversity throughout the company. At the Business level, Belk follows five guidelines/paths. The first of these is to target customer focus, which is a primary roll within the whole organization.

Belk targets female customers between the ages of 35-45 with middle to upper level family income. In expanding their consumer levels, Belk also target 18 to 25 year old females. In doing this, they are increasing sales for both present times and future. Belk routinely conducts consumer surveys and research in order to update their product scope and merchandise that will better suit the present times. In hopes of improving customer convenience and overall satisfaction, Belk holds a large amount of inventory within each of their locations, especially during big store sales.

They attempt to retain their highest qualified associates that will provide their consumers with a present store visit, and good customer service. The second guideline is focused merchandise assortments. Belk reviews its highest selling categories and takes advantage of the high profits by providing the consumers with more options within those strategic areas. They stay on top of all the latest fashion and fads, in order to provide their customers with an up-to-date product. The third, is compelling sales promotions.

Routinely, Belk has stay committed to the fact that they provide consumers with the greatest deals while maintaining a quality product. They focus on promoting their merchandise that the target customer most desires. The fourth is their distinctive customer service, which differentiates itself from competitors in that they provide help when needed and quick checkouts at store locations. Lastly, winning store and market strategy helps Belk’s competitive strategy (Edgar Online, n. d. ). Their approach is to invest in new markets, which will expand their customer base.

They also focus on expanding their current stores through painstaking financial measures. Belk’s strategy at functional levels is committed to providing consumers with the maximum of quality, and up-to-date inventory. They are focusing their efforts on merchandising systems to help with demand forecasting and the amount of merchandise for each store (Blair, 9). Some of Belk’s strengths are that it is focused on Market Strategies and their wide product and service portfolio. They have also expanded their Belk. com site and more accessible for consumers.

In order for this to happen, they expanded merchandise assortments, online shop enhancements, and increase interactive marketing for the social community. Weaknesses are that Belk is privately owned and they have a very limited Global presence. Some opportunities for Belk are to innovate outlets, and provide more events at store locations. This would help draw more customers. Some threats are the rising cost, and constantly changing consumer preferences. (“Statmyweb: Belk,”) HORIZONTAL ANALYSIS: 453. 40M – 585. 93M = -132. 53 = (-132. 53/585. 93) x 100 = – 22. 62% Year 1 456. 27M – 453. 4M = 2. 87 = (2. 87/453. 4) x 100 = 63. % Year 2 Ratio Anaylsis: Return on Assets: 8. 49% Return on Capital: 12. 33% Return on Equity: 16. 74% (“Belk inc-cl b,” 10) FINANCIAL DATA| 2012| 2011| 2010| Cash and Equivalents| 456. 27| 453. 40| 585. 93| Receivables| 39. 43| 31. 12| 22. 43| Inventories| 887. 03| 808. 50| 775. 3| Other Current Assets| 0| 0| 0| Total Current Assets| 1. 41B| 1. 32B| 1. 41B| Property, Plant & Equipment, Gross| 2. 46B| 2. 31B| 2. 26B| Accumulated Depreciation and Depletion| 1. 47B| 1. 35B| 1. 25B| Property, Plant & Equipment, Net| 993. 12| 951. 12| 1. 01| Intangibles| 0| 0| 0| Other Non-Current Assets| 32. 97| 36. 77| 44. 4|

Total Non-Current Assets| 5. 0| 3. 6| 2. 0| http://www. thestreet. com/quote/BLKIB/details/balance-sheet. html Key elements for Belk’s business strategy and their overall identity are as follows: (1. ) a target customer focus; (2. ) focused merchandise assortments; (3. ) compelling sales promotions; (4. ) distinctive customer service; and (5. ) a winning store and market strategy (“management’s discussion,” 1). Belk is a customer friendly firm, and provides merchandise at a reasonable price for its consumers. They offer a wide variety of merchandise that are both easily accessible in the stores or on their ecommerce site.

Belk also follows four key indicators to assess their performance and growth, they are: (1. ) comparable store sales, (2. ) gross profit rate, (3. ) expense rate, and (4. ) net square footage growth (same as above). The strategic commitment and performance of Belk’s position is to make Belk an all-encompassing organization that promotes diversity throughout the company (Diversity, n. d. ). At each store location Belk strives to hire a unique bundle of employees which will in turn help them better meet the needs of consumers in that location. Belk follows the demands of its consumers, and tries to relate.

They also compete for low prices and accessibility. Compared to J. C. Penney’s, Belk has the same product breadth. They both offer online orders, and assessable merchandise at reasonable costs. Kohl’s Corporation Mission “To be the leading family-focused, value oriented, specialty department store offering quality exclusive and national brand merchandise to the customer in an environment that is convenient, friendly and exciting (Fact Book, 2012). ” Scope Kohl’s Corporation is a retail sales company organized in 1988 but has history spanning the last fifty years (Fact Book, 2012).

The Kohl’s product line features apparel and accessories for men, women, and children (Form 10-K, 2012). Stores also sell home products such as towels and linens, as well as housewares (Form 10-K, 2012). Branding strategy includes both private and national brands (Form 10-K, 2012). Kohl’s has seen their merchandise mix remain fairly consistent over the last three years (Form 10-K, 2012). | | 2011| 2010| 2009| Women’s| | 31%| 31%| 31%| Men’s| | 19%| 19%| 19%| Home| | 19%| 19%| 19%| Children’s| | 13%| 12%| 13%| Accessories| | 10%| 10%| 10%|

Footwear| | 8%| 9%| 8%| Total| | 100%| 100%| 100%| Kohl’s operates 1126 retail stores, three E-commerce centers, and nine distribution centers within the continental United States, and one store in Alaska (Fact Book, 2012). Their primary value chain activities include inbound product logistics from suppliers, distribution operations, marketing sales, and service (Fact Book, 2012). Secondary value chain activities include Human Resources, IT and Infrastructure support, and a strong procurement department (Fact Book, 2012). Corporate Level Strategy

Kohl’s corporate strategy would be categorized as a single business (Black, Domke-Damonte, and Keel, 2012). The strong focus of Kohl’s singularly on the retail industry has been a key factor in their positive sales growth, especially during the poor economy of the last few years (Fact Book, 2012). Business Level Strategy Kohl’s focuses on a low-cost structure strategy to be competitive in the market (Form 10-K). The company operates on a low cost strategy so that in turn can pass the savings on in product pricing to customers (Form 10-K). Kohl’s uses smaller staffs, unique store design, superior information ystems, and operational efficiencies to keep operational costs low to help increase profits (Fact Book, 2012; Form 10-K, 2012). In 2011, Kohl’s began a campaign to differentiate itself more from its competitors by increasing exclusive brands (Fact Book, 2012). The impacts from these changes are expecting to provide even larger increases on profits (Fact Book, 2012). International Level Strategy Kohl’s has focuses entirely on the domestic market of the United States and has not tried to compete in international markets (Fact Book, 2012; Form 10-K, 2012).

Functional Level Strategy Marketing is one of the most important functional activities in setting Kohl’s apart from its competition. In 2012, Kohl’s will be campaigning to grow their market share by targeting the shopper that still wants quality while trying to be cost conscious (Fact Book, 2012). The plan entails not only pushing the values of Kohl’s regular low pricing and even more sensational promotions but also expanding the media channels to target new markets of customers (Fact Book, 2012). Strengths

Kohl’s focus on keeping operational costs down will help prevent overhead from eating away profits (Form 10-K, 2012). Using E-commerce to offer additions to product lines without having to tie up store inventories can help keep costs down (Form 10-K, 2012). Growing exclusive brand lines helps create stronger customer loyalty and also creates stronger relationships with suppliers (Fact Book, 2012). Weaknesses Operating a store with smaller staffing can create customer service problems. Customers feeling neglected may look to a competitor who provides more ndividual attention. Also smaller staffs require additional training as they will typically need to cover multiple departments. Also relying on E-commerce too heavily to keep inventory down may force customers not willing to wait on product delivery to purchase from competitors with product in stock. FINANCIAL DATA| 2011| 2010| 2009| Net Sales (dollars in Millions)| 18,804| 18,391| 17,178| Cost of Merchandise Sold| 11,625| 11,359| 10,680| GROSS MARGIN| 7,179| 7,032| 6,498| Net Income| 1,167| 1,120| 973| | | | | Gross Margin as a percent of net sales| 38. 2%| 38. 2%| 37. %| Operating income as a percent of sales| 11. 5%| 11. 4%| 10. 8%| Horizontal Analysis Kohl’s has seen increases in sales dollars over the last three years. $413 million was achieved from 2010 to 2011 and $1213 million from 2009 to 2010 (Form 10-K, 2012). The efforts of Kohl’s costs savings are also seen in their increases in Net Income, $47 million from 2010 to 2011 and $147 million from 2009 to 2010 (Form 10-K, 2012). COMPETITOR ANAYLYSIS When competing within an industry, it is crucial for both growth and strategy of that organization to stay on top of what the competition is engaging in.

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It’s important to look at your competitor’s products or services offered, and in what ways they are marketed. Find out how the competition treats their consumers, whether it is through reward programs or at the general store level. It’s also beneficial to look at the competitor in a futuristic way so you can depict where they are headed, and what their business strategies are. For J. C. Penney’s Wild Stag Consulting has chosen to analyze a few of their top competitors. Since J. C. Penney’s has a broad growth strategy, and high product line breadth, I have selected companies that follow the same format.

With that being said, the following shows our analysis. BELK In relation to J. C. Penney’s, Belk is a top competitor. They compete in a wide range of categories, and have a high breadth (much like that of J. C. Penney’s). Some minor changes in Belk’s business strategy could move them even closer to compete with J. C. Penney’s. Mission: to satisfy the modern Southern lifestyle like no one else, so that our customers get the fashion they desire and the value they deserve Vision: for the modern Southern woman to count on Belk first. For her, for her family, for life.

Corporate- The Company seeks to maximize its sales opportunities by providing quality merchandise assortments of fashion goods that differentiate its stores from competitors. Belk merchants and buyers monitor fashion merchandising trends, shop domestic and international markets and leverage relationships with key vendors in order to provide the latest seasonal assortments of most-wanted styles and brands of merchandise. Through merchandise planning and allocation, the Company tailors its assortments to meet the particular needs of customers in each market.

The Company conducts customer research and participates in market studies on an ongoing basis in order to obtain information and feedback from customers that will enable it to better understand their merchandise needs and service preferences. Business- The Company’s marketing and sales promotion strategy seeks to attract customers to shop at Belk by keeping them informed of the latest fashion trends, merchandise offerings, and sales promotions through a combination of advertising and interactive media, including direct mail, circulars, broadcast, Internet, social media (including Facebook, Twitter and YouTube) and in-store special events.

Belk uses its proprietary database to communicate directly to key customer constituencies with special offers designed to appeal to these specific audiences. The sales promotions are designed to promote attractive merchandise brands and styles at compelling price values with adequate inventories planned and allocated to ensure that stores will be in stock on featured merchandise. Belk strives to attract and retain talented, well-qualified associates who provide a high level of friendly, personal service to enhance the customer’s shopping experience.

Belk associates are trained to be knowledgeable about the merchandise they sell, approach customers promptly, help when needed, and provide quick checkout. The Company desires to be an inclusive Company that embraces diversity among its associates, customers, and vendors. Its ongoing diversity program includes a number of company-wide initiatives aimed at increasing the diversity of its management and associate teams, increasing its spend with diverse vendors, creating awareness of diversity issues, and demonstrating the Company’s respect for, and responsiveness to, the rapidly changing cultural and ethnic diversity in Belk markets.

Belk made progress on many fronts last year as they pushed ahead with major investments in key strategic initiatives that are strengthening its business capabilities and providing a solid foundation for sustained growth and profitability. Over a five-year period that began in fiscal year 2011, Belk is investing approximately $600 million in a number of key strategic initiatives described briefly below. Store Improvements Keeping stores modern and attractive and providing a compelling shopping experience for customers is a top priority at Belk.

To this end, the Company is investing $270 million in store improvements over a three-year period that began last year. The projects include new store openings, expansions and remodels of existing stores, expansions and remodels of key merchandise departments, and the rollout of new merchandising concepts in targeted demand centers. eCommerce Belk plans to invest approximately $53 million in eCommerce over a four-year period that began last year to create a new systems platform and functionality enhancements to make shopping online at belk. om easier and more engaging. They are investing $4. 5 million to open a new 515,000-square-foot eCommerce fulfillment center in Jonesville, SC that is expected to begin operating in June 2012 and will generate 124 new jobs over the next five years. The center is in addition to the current 259,000-square-foot Belk eCommerce fulfillment center in Pineville, NC. | Fiscal Year Ended|  | |  | January 28, 2012|  |  | January 29, 2011|  |  | January 30, 2010|  |  | January 31, 2009|  |  | February 2, 2008|  | |  | (in thousands, except per share amounts)|  |

SELECTED STATEMENT OF INCOME DATA:|  | | | |  | | | |  | | | |  | | | |  | | | | Revenues|  | $| 3,699,592|   |  | $| 3,513,275|   |  | $| 3,346,252|   |  | $| 3,499,423|   |  | $| 3,824,803|   | Cost of goods sold|  |  | 2,461,515|   |  |  | 2,353,536|   |  |  | 2,271,925|   |  |  | 2,430,332|   |  |  | 2,636,888|   | Goodwill impairment|  |  | —|   |  |  | —|   |  |  | —|   |  |  | 326,649|   |  |  | —|   | Depreciation and amortization expense|  |  | 122,761|   |  |  | 140,239|   |  |  | 158,388|   |  |  | 165,267|   |  |  | 159,945|   | Operating income (loss)|  |  | 300,910|   |  |  | 245,981|   |  |  | 147,441|   |  |  | (232,643| ) |  |  | 198,117|   | Income (loss) before income taxes|  |  | 250,098|   |  |  | 195,871|   |  |  | 97,190|   |  |  | (283,281| ) |  |  | 138,644|   | Net income (loss)|  |  | 183,148|   |  |  | 127,628|   |  |  | 67,136|   |  |  | (212,965| ) |  |  | 95,740|   | Basic net income (loss) per share|  |  | 4. 04|   |  |  | 2. 72|   |  |  | 1. 39|   |  |  | (4. 35| ) |  |  | 1. 92|   | Diluted net income (loss) per share|  |  | 4. 02|   |  |  | 2. 71|   |  |  | 1. 39|   |  |  | (4. 35| ) |  |  | 1. 92|   | Cash dividends per share|  |  | 0. 550|   |  |  | 0. 800|   |  |  | 0. 200|   |  |  | 0. 400|   |  |  | 0. 400|   | SELECTED BALANCE SHEET DATA:|  | | | |  | | | |  | | | |  | | | |  | | | | Accounts receivable, net(1)|  |  | 39,431|   |  |  | 31,119|   |  |  | 22,427|   |  |  | 34,043|   |  |  | 65,987|   | Merchandise inventory|  |  | 887,029|   |  |  | 808,503|   |  |  | 775,342|   |  |  | 828,497|   |  |  | 32,777|   | Working capital|  |  | 845,418|   |  |  | 924,450|   |  |  | 986,234|   |  |  | 808,031|   |  |  | 750,547|   | Total assets|  |  | 2,514,216|   |  |  | 2,389,631|   |  |  | 2,582,575|   |  |  | 2,503,588|   |  |  | 2,851,315|   | Long-term debt and capital lease obligations|  |  | 523,679|   |  |  | 539,239|   |  |  | 688,856|   |  |  | 693,190|   |  |  | 722,141|   | Stockholders’ equity|  |  | 1,236,230|   |  |  | 1,156,272|   |  |  | 1,094,295|   |  |  | 1,032,027|   |  |  | 1,388,726|   | SELECTED OPERATING DATA:|  | | | |  | | | |  | | | |  | | | |  | | | | Number of stores at end of period|  |  | 303|   |  |  | 305|   |  |  | 305|   |  |  | 307|   |  |  | 303|   | Comparable store net revenue increase (decrease)|  |  | 5. 5| % |  |  | 5. 1| % |  |  | (4. 6| )% |  |  | (8. 7| )% |  |  | (1. 1| )% | (on a 52 versus 52 week basis)| | | | | | | | | | | | | | | | | | | | | Key Strengths & Weaknesses:

Some of Belk’s strengths are that it is focused on Market Strategies and their wide product and service portfolio. Weaknesses are that Belk is privately owned and they have a very limited Global presence. Some opportunities for Belk are to innovate outlets, and provide more events at store locations. This would help draw more customers. Some threats are the rising cost, and constantly changing consumer preferences. Financial highlights of fiscal year 2012 include: Total sales increased 5. 3 percent to $3. 7 billion compared to the prior year. Belk led its key department store competitors in comparable store sales growth for the second consecutive year with a 5. 5 percent increase.

They also marked the eighth consecutive quarter of year-over-year increases in comparable store sales. The growth last year was driven largely by the execution of key strategic initiatives fueled by the companies investments in merchandising, rebranding, eCommerce, store remodels and customer service improvements. The strategic sourcing program launched in fiscal year 2011 produced significant expense savings for Belk and a boost to the bottom line last year. The centralized procurement function delivered $13. 8 million in expense, margin and capital expenditure savings, and Belk achieved a lift in cash flow of nearly $10 million as a result of improved payment terms.

These savings were achieved through a new strategic sourcing group that defines sourcing, contracting and deal approval processes. Standard Belk contract templates were also developed and institutionalized to mitigate supplier risk. Additionally, Belk’s supplier base was upgraded and optimized by creating stronger, more innovative and strategic relationships with key vendors. To win in the marketplace, you must first win in the workplace. Being committed to the success of their associates goes beyond ensuring strong job performance. The company needs to support its associates through continuous feedback, coaching and an environment of encouragement and trust. “We want to build a culture where all associates feel they have a voice.

That’s what our new Associate Engagement Program is all about. ” (Annual Report) Trends in the Retail Industry Retailers are going out of their way to gain attention from US consumers (Asaeda, 2011). This is keeping the industry highly competitive (Asaeda, 2011). Overall consumer spending has drastically slowed down (Asaeda, 2011). This is mainly because of the weakened economy and the change in demographics (Asaeda, 2011). Americans have not been has interested in shopping as they were a decade ago (Asaeda, 2011). Consumers have moved towards a more value oriented way of thinking (Asaeda, 2011). They want the best value within what they are buying. Socio-cultural

Throughout 2011 consumers were up and down with their purchases (Asaeda, 2011). There were high sales in March for spring, but then dropped for the second and third quarters (Asaeda, 2011). In the fourth quarter, assuming back-to-school spending, sales went up (Asaeda, 2011). With sales boosting up from back-to-school, they continued to rise through the holidays (Asaeda, 2011). With this in mind, the retail industry could focus more lowering inventory for off-season and making sure there are enough products for higher quarters. Political/Economic With the presidential election this fall, you can expect it to grab consumer’s attention (Holiday sales, 2012).

The outcome of this election could drastically affect the economy’s health. No matter the outcome though, the 2012 holiday sales are expected to increase (Holiday sales, 2012). It’s possible that the retailers will benefit from a post-election spending boost (Holiday sales, 2012). However, gasoline prices have continued to rise, along with soft housing and job markets which means that there are more sellers than buyers (Holiday sales, 2012). Total holiday sales are expected to climb between $920 and $925 billion, leading to a . 5 percent increase (Holiday sales, 2012). Non-store sales are projected to increase by 3%, which is usually from the internet along with catalogs and television (Holiday sales, 2012).

As a result of rising gas prices, consumers are consolidating and reducing their overall trips (Holiday sales, 2012). This will make them recognize promotions and sales that are happening (Holiday sales, 2012). Technology During this holiday seasons mobile-influenced retail stores are expected to account for $36 billion in retail sales (Holiday sales, 2012). Could a retail store afford not to think about mobile technology? Smartphones could increase retail sales from 17 to 21 percent (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). Nearly half of the population, 49 percent, in the United States owns a smartphone (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012).

Out of these shoppers, 60% of them use their phones while shopping and have stated that it has affected their purchasing decisions (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). Mobile technology makes it possible to be connected to the consumer constantly (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). Even though mobile retailing is just coming about, some universal ideas have been put into place: * The more the customer knows, the more they buy (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012) * Data Analytics is a must have (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012) * Instant gratification is the way to go (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012) * Mobile payments are more fficient (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012) Technology is getting to the point where a tap or a wave of a smart phone will complete a transaction (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). This method is called NFC, it’s a short range radio wave field between two devices (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). This technology has evolved from RFID where a smartphone with an NFC chip can work as a credit or debit card (Paul, Asmundson, Goswami, Mawhinney & Nannini, 2012). Opportunity List| Number| Descriptive Name| Source| O1| Investments| Key Success Factor| O2| Supply Chain| Key Success Factor|

O3| Managing Systems| Key Success Factor| O4| Technology| Pestle Sheet| O5| Performance| Worksheet 9| O6| Quality| Worksheet 9| O7| Combining Arts & Science| Key Success Factors| O8| Process- Centric| Key Success Factors| O9| Dynamic Planning| Key Success Factors| | | | Threat List| Number| Descriptive Name| Source| T1| Rivalry| 5 forces| T2| Bargaining power | 5 forces| T3| Substitute Products| 5 forces| T4| Threat of New Entrants| 5 forces| T5| Economy| Wrksht #9| T6| Locations of Businesses| Wrksht #9| | | | | | | | | | | | | O10 Opportunity Priority Matrix| | Probability of Success| | HIGH| LOW| Potential Attractiveness | HIGH| O5 O3 O6 O1 | O8 O2 O9 | | LOW| O4 | O7 |

The top decisions that we based our opportunity priority matrices are described as followed. T8 Investments would be a main factor because this is where you get the money to start up the business and how you invest in the company. The more investments in the company the better the outcome can be. Supply chain is another opportunity, if you find out who wants your products and you can find out how to get it to them then you can make a bigger profit by selling them your products and making more money that will benefit the company. Managing systems is an opportunity as well because if you have a great way to manage what goes on your more likely to succeed in the business world.

The way you perform can have a positive opportunity on the outcome of the business as well. Performance is a key asset to make a business do well. Quality of products and work is a great opportunity to make sure that the products that are being produced and sold are good. Without a consistent, disciplined, formalized, and process-based approach, the retailer is destined to inefficiency and lost business. Thus, it is essential for retailers to create end-to-end processes rather than concentrating on specific functions when they implement new planning solutions, for a process-centric approach will distribute far more flexibility and allow for continuous innovation.

The processes must also always be adaptive to constant changing of business needs and market conditions. Planning helps keep the company in line and gives them a play by play action to do. We chose these options because our team has decided these are our top opportunities that were presented with this case. Threat Priority Matrix| | T7 Probability of Occurrence| | HIGH| LOW| Potential Severity | HIGH| T5 T3 | T9 T4 T2 | | LOW| | T1 T6 | Threats that our team has discovered are substitute products, they are a big threat because it steals business away from the company and makes people buy other products that are cheaper or better quality. The economy can be a threat to the businesses. If the economy goes down then so will the business.