Retailing:Just Jewels

Bill Tanaka, vice president of marketing at Just Jewels, sat at his desk, mulling over what he had been reading.The document was a research report which his firm had commissioned three months earlier to determine the feasibility of opening a retail store in which to sell its products.

The idea to sell its "jewels" via retail, in-store distribution was entirely his, and the president, Rick Cherniak, had reluctantly agreed only to this first step, the collection of more information to better analyze the opportunity.

Just Jewels manufactured and marketed costume jewellery, including necklaces, bracelets, earrings, and the like, targeted toward teenaged girls. Rick Cherniak had started the company nine years ago as an Internet "pure play;" that is, as a company that conducted business solely through its website.

This was a relatively new approach at the time it began, and Rick had devoted an enormous amount of time and energy to his new venture. He believed strongly in its potential and, even though it suffered an uncertain beginning, Rick himself never faltered in his belief that the approach was intrinsically viable nor in his determination to make it succeed.

Bill joined the company four years ago, well after Just Jewels had established itself and become financially secure. This was an important issue, as Rick frequently reminded him, because Bill lacked a "sense of history," according to Rick: Bill could not grasp how far Just Jewels had come and what a success story it really was. Although Rick was an entrepreneur by nature, he made it clear to Bill recently that he wanted to enjoy the fruits of his labour for two to three more years before launching in any dramatically new direction.Unfortunately for Bill, Rick viewed in-store distribution in this light.

Rick had hired Bill because of Bill's previous achievements as a marketing manager in charge of the Internet sales division at a major book and music retailer. Rick wanted Bill to expand his business as it currently existed on the Internet. As it turned out, it was precisely Bill's experience at the book and music retailer that had encouraged Bill to recommend an in-store presence for Just Jewels.His previous employer was earning attractive profits from both its in-store as well as its Internet divisions, and the firm believed very few, if any, of its Internet customers were purchasing products from its retail outlets. This was significant, given that the Internet side of that business was slightly more profitable. Overall it was earning far more than if it had an in-store presence only or an Internet presence only.

Thus, Bill had started his campaign to convince Rick to pursue an in-store distribution strategy in addition to its Internet strategy. Beyond several heated discussions, the first real step in this campaign was amassing more information in support of his notion. Rick had agreed to seriously consider an in-store strategy if the research pointed in that direction. So, here Bill sat with the completed research in front of him. As he contemplated the report's contents, he realized that the information did not point in as clear a direction as Bill had either expected or hoped.

The first important point that the research made was that clearly, in principle, a dual retail distribution strategy, in-store and online, could be a highly successful one in the Canadian marketplace.There were numerous examples to prove the point. This of course confirmed what Bill already knew from his experience with his previous employer.

However, the report went on to examine the specifics of the market in which Just Jewels participated. Some of the indicators were positive, and much more was ambiguous. On the whole Bill was not sure how to proceed and, of utmost significance, what to recommend to Rick.

Just Jewels was the only Canadian company marketing jewellery to teenaged girls over the Internet and this, according to the research report, was a key factor in its success.Teenaged girls apparently enjoyed shopping on the Internet. However, it was also true that the products themselves held genuine appeal for the target market, and even in the face of in-store alternatives girls frequently chose Just Jewels. Most of the teenaged girls in the survey liked the jewellery designs and thought they were creative and fun and fashionable enough to meet their needs.

Bill noted one piece of information that would be useful for what he hoped would be his recommendation to move forward with an in-store strategy: when asked which they preferred, online shopping or in-store shopping, the respondents stated that generally they preferred in-store shopping by a 65/35 margin. The research sample was entirely teenaged girls drawn from the city in which Bill hoped establish the Just Jewels store - what he hoped would be the first store of many.

The respondents had all heard of Just Jewels and almost half had purchased a Just Jewels product over the Internet with the assistance of a parent's credit card in the past year.Almost three-quarters of the girls said they would go to a store to buy Just Jewels products because they would be able to purchase something without having to obtain their parents' permission.

An additional reason for the preference was the fact that they could see what they were intending to buy and, therefore, easily determine if the necklace, for example, matched their sweater.As well, it was easier to compare products; going from store to store was better than going from store to Internet.

The research went on to report the kind of shopping experience teenaged girls were seeking in a jewellery store and finally how satisfied they were with the current store offerings.

The overwhelming majority of respondents said that they shopped as a fun activity to do with friends and that they liked the idea of a store designed specifically for them, with the kind of merchandise they wanted to buy and the kind of prices they could afford.Further, location was a critical factor for two reasons. First, a store had to be accessible via public transportation since, although many teenaged girls had a driving licence, few had ready access to a car.Second, the respondents always enjoyed shopping for all sorts of things when they were out with their friends, so a shopping mall, with all the stores in close proximity to each other, was always their destination of choice.

With respect to the teenagers' level of satisfaction with current store offerings, the survey yielded rather mixed responses; this part of the research was the source of most of Bill's concerns.The report's conclusion was that, while it was entirely feasible for Just Jewels to enter the market with a retail shop and be successful, it would have to plan its strategy extremely carefully.

The research identified the competitive environment as the chief threat. There were a great many brands of jewellery for teenaged girls already available in all the major stores. The interviewees in the survey were not particularly brand loyal to any of them; furthermore, they were only moderately satisfied with the design of this jewellery.However, the low prices, much lower than Just Jewels could ever charge, were a very attractive feature and a major factor in their decision to purchase these brands.

There was one jewellery store which catered specifically to teenaged girls with roughly the same products that Bill was tentatively planning for the Just Jewels store. It was a small store in the downtown core, and only 10% of the research respondents had ever shopped there but, of those who had, they were all extremely satisfied with the store and its products.

Q: The attached case topic is about a company name Just Jewels and their desire to grow their business. Just Jewels started and have grown successfully as an On-Line business. Now they are looking at the potential of opening up a retail store ... a big step!Read the attached case information. Just Jewels have asked you for your recommendations on how they would go forward with a retail store.What retailing marketing mix would you suggest?

• For your submission, talk about each of the 4P's and what you would recommend, and (importantly) why you are recommending it.
• In your submission, be specific, be clear.
  • Be sure not to fog up your isubmission with not-value added generalities or unecesary information or details - simply show that you can "connect the dots" of our course topics and apply them to this case.
• Use the content of the case along with the materials, topics and themes in our course as your primary sources of information.