Scenario 5: Traditional Department Store

Traditional Department Store A traditional department store chain is facing greater competition from full-line discount stores, specialty stores, and Web-based retailers. This firm is especially concerned about the heightened vulnerability of its furniture department to competition from a variety of formats. It is worried about the effects of the low prices and immediate availability of goods at stores like Ikea, as well as the availability of in-home decorator services at independently-owned home furnishing stores.

The chains furniture is displayed in room settings. This format better enables shoppers to conceptualize what the furniture will look like in their homes. It also results in the sale of accessories such as lamps, paintings, and throw pillows.

Much of the chains furniture is moderately priced, well-designed, and available in a variety of fabrics and finishes. The chain relies on well-known manufacturers with excellent reputations for product quality, as well as delivery time commitments. Unlike many discounters, all of the chains furniture is available in a variety of sizes, fabrics, and finishes. Also, unlike Ikea or category killers such as Bed Bath and Beyond, the firm does not sell low-quality ready-to-assemble furniture.

To reduce price competition, the department store chain typically requires its suppliers to sell it exclusive merchandise. This often consists of a selection of unique fabrics, finishes, leg designs, and even sizes. In other cases, the firm requires that its vendors assign unique model numbers to its goods. Thus, a customer seeing a sofa in a department store would either be unable to purchase a comparable item at a lower price or have a difficult time locating the good.

The chains employees come from a variety of backgrounds. Some of its staff have either significant experience as interior decorators or have a flair for decorating. While others may be excellent salespeople, they have much less knowledge of fabrics and are less comfortable developing room arrangements or selecting coordinating or contrasting fabrics.

Although many specialty stores offer in-home interior decorating assistance, Web-based merchants and discounters do not provide this service. While the fee for these services vary, many specialty stores charge a fee of $100 to $200 per visit to confirm that the merchandise ordered is appropriate for ones home. This fee may be waived if a purchase exceeds a given level (such as $2,500). The department store chain offers only in-storebased services (such as confirming that the sofa is the proper color based on viewing a fabric sample of a chair that the client owns).

Complete The Overall Strategy for the particular organization:

Overall Strategy Controllable variables

. What is the Goods/service strategy for this particular scenario?

What is the Location strategy for this particular scenario?

. What is the Pricing strategy for this particular scenario?

. What is the Promotion strategy for this particular scenario?

Uncontrollable variables

. What is the Consumer environment for this particular scenario?

. What is the Competitive environment for this particular scenario?

What is the Legal environment for this particular scenario?

. What is the Technological environment for this particular scenario?

. What is the Economic environment for this particular scenario?

Overall Strategy. Overall, this section should provide detailed insight and description as to how the organization is going to reach its objectives. Controllable variables and strategic actions for the retailer should be detailed. Consider what opportunities among the 4Ps that the retailer can capitalize on to grow its business. Provide substantial detail to support your strategic recommendations. Uncontrollable variables should be analyzed for their potential impact on the retailers business decisions. Recommendations as to how the retailer can address uncontrollable variables are crucial.