Section 5: The Villains
As examined earlier, TCS specializes in storage and organization solutions to help customers simplify their lives. Although, TCS is in a very niche market, they maintain several key advantages that help to fight off competition and draw customers back time after time.
TCS offers a solutions-based selling approach by hiring knowledgeable, trained employees that are able to help customers with all their storage needs. Full-time store employees typically receive more than 260 hours in their first year of employment which is significantly higher than industry average (TCS website, Stand For). TCS believes that well-trained employees lead to a higher customer satisfaction and an increase in overall ticket spend. Unfortunately, TCS is not currently leveraging this to its fullest advantage since their employee support is not widely advertised and therefore isn’t an asset in driving traffic.
TCS looks at itself as the one-stop
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shop for any and all store and organization needs their customers might be in the market to purchase. They have a vast selection of products with over 11,000 SKUs available in each store and online (10K). In additional to their large product selection, TCS also has exclusive closet solution products like Elfa and TCS Closets. As discussed, TCS works closely with vendors to reduce costs of products and increase exclusive offerings, generating value for customers and benefiting financials through reduction of Costs of Goods Sold. Since TCS is in such a niche market, there are no other companies that solely specialize in the storage and organization solutions market. TCS competitors are much larger retailers like Amazon, WalMart, Target, Bed, Bath, & Beyond and IKEA. Each of these companies presents a different competitive challenge to TCS. For example, Target and Bed, Bath, & Beyond have better traffic since they have a broader offering of home products to draw customers in (come for a lamp, leave with a lamp and a container). The Walmarts and Amazon not only have a broader selection of products to drive traffic but also compete aggressively on price. Meanwhile, a store like IKEA has a complex product offering and also take a more direct “idea generation” approach to the in-store experience. To fight off these villains, TCS uses their dedicated employees, pricing, and exclusive offerings as their weapons for defense to help with bringing in more traffic. TCS believes that by offering a higher level of service and a larger product offering coupled with proprietary and exclusive items, they can compete against the larger stores that have smaller selections and lower levels of customer service. Section 6: The Future Based on the findings from Team Iron Man’s deep dive into TCS’s financials and business model, there are several key areas TCS needs to focus on moving forward in order to fight off competition. Currently, TCS is undertaking a number of initiatives at once and seems to have spread their focus too broadly. Several initiatives are showing positive yields, but the overall company’s financials have suffered due to the cost of the initiatives with diminishing success. TCS will need to continue to focus on their core model while developing a few initiatives that increase sales and decrease overall costs. TCS does many things well and it shows in numerous ways. TCS has a lot of heart and a strong focus on their employees. Their solutions-based selling approach hinges on TCS’s employees understanding the needs of their customers and developing a deep knowledge of available products. With only a 10% annual employment turnover, this is one of TCS strengths and core emphasis (10K). In spite of valuing employees, in an effort to cut costs, TCS has recently implemented a reduction in their payroll and freezing wages. Team Iron Man believes this move is a necessary one to make in order to offset the costs associated with other areas of investment during this transition period. Taking resources away from employees may sound counterintuitive to the company’s well-developed values but TCS pays well above industry average so they will still be competitive while reducing salary expenses. Another way TCS competes against their competition is by providing a differentiated shopping experience by adding new products and services and creating inviting and well-organized stores. While this is a good business model, Team Iron Man recommends that TCS further commits to differentiation both in person and on their website to increase sales. With over 11,000 SKUs available, Team Iron Man would recommend cutting back the number of SKUs available to top sellers, proprietary and exclusive offerings as over half their current sales comes from those sections (10K). While TCS should cut back on certain SKUs, they need to continue to work to develop new ideas and products that excite customers. On TCS’s 3rd quarter FY16 report, the company announced that they started to shift their store model from the traditional 25,000 square foot store to a mid-size 18,000 square foot store. TCS has tested this new mid-size store in New Mexico and they plan to continue this initiative. While the new store will still have all departments represented, the new format will offer edited assortments in certain departments and focus more on the custom closet sections like Elfa and TCS Closet. Based on the finds and our recommendation to reduce the number of SKUs, the new mid-size store appears to be testing this theory. This new strategy seems to make sense considering the “average ticket on TCS Closet purchases so far has been an eye-popping $10,000, dramatically higher than the chain’s average ticket of $60” (Washington Post). The change to a new strategic floor plan and product selection will allow TCS to reduce the operating and inventory costs per store while increasing sales. One of the main areas TCS needs to focus resources is on their website and digital presence. Their website is a vital tool customers can use to see their vast product offerings and research closet solutions. The current e-commerce sales increased by 1.7% in the 3rd quarter of FY16, but Team Iron Man believes there is more ground to gain in this area. For example, in comparing TCS website with that of competitor IKEA, one can see that the software system IKEA is using to help customer create custom closets is far superior to that of TCS. For a lot of consumers, this is the first point of contact and they will be less likely to make a purchase if they become frustrated with the software. Since TCS is focusing more on Elfa and TCS Closets, they should invest in software that allows the customer to easily create a closet on their own and either purchase it directly online or make it seamless for them to visit a store to complete the order. TCS does offer incentives like free shipping and and Click & Pick Up, where customers purchase items online and pick up in store. Click & Pick Up builds a bridge between the interaction online and brick-and-mortar stores and helps to increase sales. TCS is capitalizing on that interaction to drive overall business by allowing their customers to shop with them however they choose. Ultimately creating more, easier options for the customers can lead to more frequent visits and new customers. The focus by TCS in offering these incentives, is to neutralize online competitors like Amazon. Over the course of the last few years, TCS has partnered with several well-known brands to cross-market and introduce their brand to new customers. They partnered with brands like Southwest Airlines, Whole Foods, Total Wine & More, and The Ellen DeGeneres Show. During the holiday seasons TCS partnered with Southwest Airlines to create gift wrapping stations at airport terminals across the United States. TSA requests travelers not wrap gifts before going through security so TCS surprised Southwest passengers with the opportunity to wrap gifts for free with the help of TCS products. TCS also partnered with The Ellen DeGeneres Show to promote their brand and give away $500 gift cards to audience members and people who entered a drawing online. While TCS should carefully select brands to partner with, if done correctly, Team Iron Man believes this could be a great opportunity for them to expose their brand to new customers. Reward programs have been increasing in numbers for years. These programs help to retain customers and increase the likelihood for repeat visits to the store. “The company says that the top 30 percent of TCS’s customers generate about 83 percent of its sales” (Washington Post). By increasing the number of purchases from just the top 30 percent of customers alone, TCS could dramatically increase their sales. TCS’s POP Stars loyalty program tries to do just that by sending customers special offers, event invitations and other incentives to frequent the stores more often. Through 3rd quarter FY16, over 4.5 million people had signed up to the program. Team Iron Man has reviewed this program and recommends TCS should continue to grow this initiative, but continue to focusing on the message of increase the cart size and frequency to current customers and educate new customers on TCS experience. Finally, Team Iron Man’s main recommendation is that TCS dedicate more resources to its general marketing efforts.
They have proven with their high profit margin that once customers come into the store, TCS can do good business. The next step is increasing customers in the store. Adding more stores in one way but marketing is another important strategy toward this goal. Some of the new marketing budget should go towards improving engagement on their social media platforms. TCS does have active accounts on the main social channels and publishes a blog. Engagement on these owned channels should focus not only on deepening customer relationships but also driving awareness. Beyond these owned platforms, TCS should also explore paid channels that promote the employee expertise and exclusive products that set the company apart. Prioritizing marketing as part of the company strategy (to emphasize for potential new customers the things TCS already does well) could help them see renewed returns on their current growth
investments. TCS has had some struggles in recent years due to their increase in operating costs and investment in multiple initiatives. Team Iron Man believes TCS has a strong core and should consider narrowing their focus and tackle a selected few initiatives that will increase sales and decrease costs. Team Iron Man recommends TCS should continue to expand by investing in their new, mid-size store layout as opposed to continuing to build the more expensive full-size stores. TCS should also reduce the amount of SKUs they carry to their best sellers while keeping the most innovative, proprietary, and exclusive products. While we believe they should reduce the amount of SKUs, we still think TCS should work to introduce new ideas and products to excite customers and grow sales. Finally, Team Iron Man realizes the importance of developing a strong digital presence through e-commerce and social media. TCS needs to revamp their website to be more user-friendly and create new closet design software to compete against their competitors like IKEA. Increasing their social media presence will give TCS an additional way to communicate and engage with customers. The goal of all these initiatives should be to drive traffic into the store or to the website. Overall, if TCS takes Team Iron Man’s recommendations and adds their own special touch, we are confident that they can fight off their competition and become a retail hero as successful and strong as Tony Stark.
Opening its doors for the first time in 1946, Lowe’s is now the second largest home improvement chain in the world, operating over 1,800 stores in the United States, generating $56.2 billion in sales and $2.6 billion in net income for 2014 (Lowes Newsroom, 2015). Employing around 265,000 personal making them one of the top employers in the nation, there is no question that Lowe’s must be doing something right. According to Lowes Newsroom, “Lowe’s professional customers represent approximately 30 percent of total sales, approximately 16 million retail and professional customers are served each week. (2015, para 3) “Never Stop Improving”, is Lowe’s slogan; encouraging employees and customers to work together to maximize their in store
can expand through marketing ideas and ways the company can save money by not stocking up on as
Lowe’s grew through strategic choice by heavily focusing on key functional areas involving research and development (R&D), marketing, and logistics. Lowe’s important R&D investments included the creation of two prototype stores. The first prototype with 147,000 square feet catered to large markets and the other with 120,000 square feet catered to smaller markets (Rouse, 2005). Lowe’s used these store prototypes to help guide their continued growth and store placement. The prototypes also aided the company in designing future stores more efficiently with respect to energy and sustainability (Lowe’s Companies, Inc., n.d.). Furthermore, Lowe’s marketing strategy concentrated on attracting new customers and enhancing current customer satisfaction. To bring new customers to the store, Lowe’s engaged in a pull marketing strategy (Wheelen & Hunger, 2012). The com...
The ecommerce industry is growing faster than ever. TJ Maxx needs to start focusing more on ecommerce not only to keep up with competition, but also to make sure they do well during weak economic periods. ecommerce, overall, tends to do very well during lackluster economic times. TJ Maxx will be able to cut costs more easily the more they expand their ecommerce business. Our business idea will allow them to expand their ecommerce as we will take over their website and delivery. TJX Companies’ three ecommerce sites accounts for only about 1.0% of the company’s total sales. However, the online channel is a key growth driver and TJX is taking initiatives to improve its online business. The ecommerce sales
Nordstrom can continue providing their exceptional online experience and client focused approach using their online system by offering an unmatched online experience that copies their in-store customer service. This would allow Nordstrom to raise its revenue considerably as well as further improving their brand image. I will also discuss specific ways of successful execution, and the steps required to provide Nordstrom a stunning picture of how to execute strategy.
I would suggest that they incorporate more diversity in their ads and campaigns to reach different ethnicities if they want to continue to expand. Also, in stores, particularly the Willow Grove, PA location, is very large and spacious. Upon entering the store it is primarily women’s apparel and accessories, as well as men’s. Maybe the company can incorporate more of its products in this location, to provide consumers with more of a product assortment.
As a FTSE 100 retail company employing 40,000 people across the UK and Eire it is essential that we employ the best staff possible. The retail market place is increasingly becoming more competitive both on the high street and online. A great Customer experience when shopping at Next PLC has never been so important. The people we employ are a major factor in delivering the service we need to so that we can continue to grow.
The customer support and customer service functions are more than departments; they are part of an essential strategy for growing your business. In the modern business climate, customers expect answers to their questions immediately. When the right information is available anytime, from anywhere in the world, customers are more likely to have a positive experience, thus customer loyalty will be increased. It is a known fact that the cost to obtain a customer is ten times higher than to maintain and keep existing customers. (Gouran, Dennis, W.E. Wiethoff, & J.A. Doelger. (1994). Mastering communication. 2nd ed. Boston: Allyn and Bacon.) Not in Reference Pg.
...e company’s competitiveness. Satisfied customers can help a business gain more customers through word of mouth. Ensuring excellent and consistent service and products will help the business perform better. Tim’s must embrace technology in its human resource management, bookkeeping, as well as its Marketing activities. This will improve efficiency, and reduce man hours considerably. Tim should consider investing more money into the business to allow him expand on product offering, which will help attract new customers.
After conducting a basic 10 year financial analysis of the company, it has become evident that even with a highly competitive market structure they are able to improve on their performance. Ranging from 2004 to 2013 financial information, the company has shown a significant increase in their sales revenue roughly $3865 million sales in 2004 to almost four time that valuing $12970 million in 2013, which was an “increase of 10.4% over the 53 week prior year” The company’s growth strategy has been to diversify its product market and make them...
Some core competencies that must be exploited are: Brand Kmart is an existing well-known and trusted national brand in USA Kmart has private label and designer clothing that is well endorsed Infrastructure Kmart has a large number of well-located, low-cost, leased stores in urban far away from competitors through out the country ( Appendix B ). Staffing Confidence by the market in Kmart is created by the achievements of its staff and management. With the turn-around strategy in place, new blood has been put into the top management structures. In any renewal there will be retrenchment as unprofitable stores are closed. This can be used as an opportunity to retain and move high performing staff to where they are needed and to get rid of non-performing staff. Anderson the chairperson of Kmart is well supported by Wall Street and the board of Directors. These new staff members enter the company with needed skills to address problems in certain areas that previously were poorly managed such as inventory control and merchandising. Store locations, layout and Performance Stores conveniently located away from competitors like Wal-mart and Target therefore less to compete for customers face-to-face. There are 250 non-performing stores who have already been identified as being more cost effective to close than continue with running costs. Expertise exists in-house for the planning of store layout and appearance to meet different customer segments. This concentration of effort will enable focus on key areas Technology Kmart has already invested in good retailing systems. The system can be use to control inventory, supplier payments, track customer buying and monitor income versus profit margins across all stores. Research and Development The planning department is well established and in cross-functional to provide various perspective. The planning department to ensure that strategies at all levels are executed can further use the access to past data and knowledge of changes in buying patterns. Financial Backing JP Morgan Chase has agreed to support Kmart to avert the current threat of closure due to bankruptcy.
This is a point that rings very true. Store development is important, but there are other key features that need to be considered for continued growth
Management experience will also play a large role in the success of the forecast. The current team is quite new and will gain some needed experience over the next year in the hopes of staying on track for success. The ability of management to ensure product is readily available for the client, their training techniques with new and seasoned associates, and general management style will ensure success or spell defeat for the store.
How can McDonalds increase its sales, market share and profits in a fiercely competitive industry?
Assign special key account managers for large customers. Introduce discounting policy and customer loyalty programs.