QUESTION

Please explain a recommended solution with rationale describing why selected this solution vs. the other alternatives, and how it links back to the key issue(s).

CASE: Chris James Clothing: at a crossroads during COVID-19 crisis

It was early December 2020, and Christine, the CEO of Chris James Clothing, had some complex decisions to make.

Chris James Clothing is a small high-end clothing store in downtown Kingston, Ontario. The store opened in 2010, and considers itself a full-service boutique for men's and women's fashion. The store is known not only for its high-quality products, but also for the significant added value its employees bring to every shopping trip. Chris James staff are proud to provide a personalized shopping experience. As customers browse the store, the helpful store employees are always nearby, available to provide customized fashion advice and to help the customer pick out the most flattering pieces. Chris James also offers custom-tailored suit services, alteration services, personal stylist services, and by-appointment one-on-one private shopping at the storefront. Chris James has always strived to be more than just a clothing store; the store's mission is to provide fashion and style expertise to the residents of Kingston.

In 2019, Chris James launched a rewards program called CJ Rewards. For every $100 spent in the store, the reward program member accumulates $5 in reward dollars. These reward dollars can only be spent in the month of December in the year in which they were acquired, and do not carry forward. The reward dollars, however, are fully transferrable, meaning a customer can "gift" them to another person to redeem. Approximately 150 customers are currently CJ Rewards members.

Chris James does not have full-time marketing personnel, but the CEO, Christine, takes on a lot of the promotional responsibilities, along with interns and placement students that are occasionally hired for short-term projects. The store has a fairly active Instagram account (1,200 followers), which is used to showcase photos of the newest product arrivals. Approximately 800 customers have signed up for Chris James' email newsletter, which informs subscribers of latest clothing arrivals, provides fashion and style tips, and promotes the CJ Rewards program.

The website for Chris James Clothing is not an e-commerce enabled site, and customers can't currently purchase clothing items there. The website provides a list of fashion brands currently available in store, details about the custom-tailored suit services, and information on how to book a personal stylist or private shopping appointment.

Chris James occasionally advertises in local Kingston magazines, such as Refined Kingston, Kingston Life and Profile Kingston. When the store runs significant promotions, such as its annual Holiday Sale, colour ads are usually taken out in the local newspaper, the Kingston Whig Standard.

In the Fall of 2019, a team of placement students ran a marketing research project for Chris James, in order to better define the store's target audience and their preferences. The 2019 research uncovered the following information:

• 57% of the store's shoppers are female.
• 54% of the shoppers are 55 years old or older, with occupation listed as either working professional or retired.
• The second largest age group (representing 27% of shoppers) are 20-30 years old, with occupation listed as either student (mainly fairly affluent Queen's University students) or working professional.
• The store's central downtown location (close to the city's Tourism Office) also attracts some tourists during the Summer.
• Customers who are frequent shoppers at Chris James state the following as the top reasons for preferring this store: helpful staff (22% of customers selected this reason), high-quality products (19%), and central location (17%).
• Customers who are infrequent shoppers say that the store's high-quality merchandise is attractive to them, especially when on sale. When asked why they don't return more frequently, the following reasons are most commonly provided by the infrequent shoppers: lack of awareness of sales and special promotions (27%), lack of knowledge about how often the store's merchandise is refreshed (26%), feeling intimidated by the overly helpful staff (18%).

An excerpt from Chris James P&L statement is below:

$ in Thousands Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019 2019 2019 2019 2020 2020 2020 Gross Sales 18 14 23 31 7.8 3.4 11 Discounts 0.9 0.7 1.2 3.1 0.4 0.2 0.6 Returns 0.7 0.6 0.9 1.2 0.3 0.1 0.4 Net Sales 16.4 12.7 20.9 26.7 7.1 3.1 10.0 Variable Costs 7 6 9 12 3 2 5 Contribution Margin 9.2 6.4 11.7 14.3 4.0 1.6 5.1 Fixed Costs 1.1 1.1 1.1 1.1 1.1 0.8 0.8 Total COGS 8.3 7.4 10.3 13.5 4.2 2.3 5.8 Gross Profit 8.1 5.3 10.6 13.2 2.9 0.8 4.3 Marketing & Selling 3.6 7.0 4.6 10.9 1.6 1.7 5.5 Expenses Operating Profit 4.5 -1.7 6.0 2.3 1.3 -0.9 -1.2