JCPenney: Every Day Low Prices Versus Macy’s: Differentiated and Localized 11/29/12 Executive Summary The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic …show more content…
With the instability of the political and economic climates, future trade policies may negatively impact the industry. Potential barriers to trade could result in an increase in costs for department stores. Typically, this increase will be passed on to the consumer in the form of higher prices for the same products. Task Environment To assess the industry structure and profitability, a Five Forces analysis will be conducted on the department store-retail industry. Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers. Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,
On paper, there might not seem much difference between a JC Penney and a Nordstrom. Both are department stores, so they carry roughly the same merchandise categories. They are large, and act as anchors in shopping malls all over America. The shopping experience is actually not that much different between them. Yet, there are subtle differences for those who are willing to search for them. The differences tend to relate to our concept of social class distinctions. Massey (2007) notes that "all human societies have a social structure that divides people into categories based on a combination of achieved and ascribed traits" (p.1). Obviously, we make use of groupings like gender, race and religion, but less explored is the degree to which we use social stratification. Ehrenreich (2001) recounts the story of her journey into the social underclass, starting in the Florida Keys. Florida is a highly stratified society, with a concentration of high wealth individuals who choose to live in the state for things like weather and proximity to the ocean, and low wealth individuals whose role is primarily to serve the upper classes.
Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries
Historically speaking, Canada has never been a great market for American retailers. The Canadian dollar was weak, costs were higher, and with limited real estate development, it was difficult to find space. Not anymore, now the door to Canada is opening wider than ever thanks to a stronger Canadian dollar, a relatively robust economy, and a loosening of the commercial real estate market, in part because of the downsizing of some longtime retailers like Sears Canada. For American retailers, Canada’s allure is simple; sales per square foot at Canadian malls were almost 50 percent higher in 2011 than sales per square foot at American malls. This is a budding market that Nordstrom will need to act
JC Penney in the early 2000s represented a “brick & mortar” retail powerhouse known for its large diverse selection and competed well with similar retailers such as Kmart and Sears. In 2011 JC Penney was exposed by The New York Times in an internet search scandal involving the tampering with rankings on search engine results. Yet, this was not the only shortcoming in the marketing of their stores. JC Penney had also been caught dishonestly pricing their merchandise so that their sales would appear more appealing. Since then JC Penney has undergone many important shifts in focus on how they would attempt to market their products. Now, in 2016 with their new CEO Marvin Ellison they have managed to rebound their sales closer to what they were and have bolstered their stock price for the time being. To understand what had been done to kindle this new fire four key areas should be looked at. These four components are: price, product, place, and promotion. The four P’s allow a segmented view of what changes have been made and how they have been affecting the consumer market.
The retail industry has been highly competitive for many years. JCP, Kohl’s, Macy’s and Sears have been clashing for some time to keep the attention of the avid shopper. It would seem that each company would be on an equal playing field, but according to the strategic group map below, Macy’s is in a group all by itself. Macy’s pricing and number of stores are different for JCP. Macy’s promotes the branding of having high class products that have celebrity names on the tags, which draws the shopper who is attracted to being in the know. The Macy’s customer is willing to pay more for their product because they know that a celebrity made this, which ultimately allows them to connect with their favorite stars. The supplier power is what helps Macy’s stay in a different category than JCP, Kohl’s, and
After researching the backgrounds and company profiles of Costco Wholesale and Macy’s, I learned about their current products and services as well as an analysis of their strengths, weaknesses, threats, and opportunities. I utilized resources that included each company’s corporate websites, company profiles and SWOT analyses from electronic databases, and other reputable online sources. This information, which will be synthesized within the rest of this paper, has better allowed me to make a decision over which company is right for me. Between the two companies, I have found that ???? meets my needs more so than ??? as an ideal workplace. However, neither of the companies meet a
Macy's is one of the premier retailer franchises within the United States. To begin, Macy's Inc. is one of the nation's largest and well known department store chains. Started over 150 years ago, Macy's has continually generated excellent returns for its shareholders and employees. Currently, in the midst of a global recession, Macy's has generated huge profits with same store sales increasing 5.3% year to date. In 2012 same store sales increased 4.6% in the month of February alone (Macy's Inc., 2012). In fact, throughout the duration of 2012, Macy's is projecting even larger profits for its underlying business operations. Even though Macy's has experienced success with both its assortments and brand, its competitors haven't faired so well. Sears, due in part to part to a lackluster holiday season, has been forced to close nearly 120 locations to generate excess liquidity in an effort to shore up its balance sheet (Isadora, 2011).Other competitors who cater specifically to the middle class consumer have also lost significant amounts of market share as consumers trade down due to the economy. Macy's, with its ride array of assortments and products continues to grow as it attempts to capture market share from failing competitors. Macy's is also unique as it operates in a unique market demographic. It is upscale, but not to the extent of Saks Fifth Avenue or a Nordstrom. It is also not as low scale as a JC Penny or Sears. As such, the company occupies a unique
Macy’s have had issues in the past that have forced them to stop what they have been doing and start strategically producing long term goals and strategies that will help position themselves in a better situation. The main long term objectives that Macy’s decided to enforce consists of an increase in sales profitability growth, an improvement in their invested capita return, an effort to maximize the total shareholders return and to preserve a high profitability rate amongst its best in class retailers. (Macys Inc). Macy’s prides themselves in having experienced, creative individuals within the organization that help with producing of the successful strategies implemented. The quality that is generated by those effective tactics gives Macys a major competitive advantage. To continue with their aggressive lead in the competition, Macy’s must follow through with their
Macy's is one of the premier retailer franchises within the United States. To begin, Macy's Inc. is one of the nation's largest and well known department store chains. Started over 150 years ago, Macy's has continually generated excellent returns for its shareholders and employees. Currently, in the midst of a global recession, Macy's has generated huge profits with same store sales increasing 5.3% year to date. In 2012 same store sales increased 4.6% in the month of February alone (Macy's Inc., 2012). In fact, throughout the duration of 2012, Macy's is projecting even larger profits for its underlying business operations. Even though Macy's has experienced success with both its assortments and brand, its competitors haven't faired so well. Sears, due in part to part to a lackluster holiday season, has been forced to close nearly 120 locations to generate excess liquidity in an effort to shore up its balance sheet (Isadora, 2011).Other competitors who cater specifically to the middle class consumer have also lost significant amounts of market share as consumers trade down due to the economy. Macy's, with its ride array of assortments and products continues to grow as it attempts to capture market share from failing competitors. Macy's is also unique as it operates in a unique market demographic. It is upscale, but not to the extent of Saks Fifth Avenue or a Nordstrom. It is also not as low scale as a JC Penny or Sears. As such, the company occupies a
While consolidation and repositioning efforts had their benefits, there were some challenges. Change is often very difficult as most individuals are creatures of habit. Thus, consolidation of department stores to one brand (in this case Macy’s) meant that existing consumers who had regularly shopped at their favorite department stores (such as Marshall Field’s in Chicago) would now have to adjust to new products, prices and services. In fact, the perception of some loyal consumers post consolidation was negative, complaining that Macy’s store had lower quality products and services. In addition, Macy’s had standardized its products and pricing nationwide to lower purchasing cost, however this tactic actually backfired. Standardization resulted in higher prices of products offered at Macy’s compared to the former regional department stores chains, thus consumers were apprehensive to shop at the
The purpose of this report is to develop an in depth understanding of the retail Department Stores industry. This understanding will allow our team to create and implement a strategic plan in order to gain a competitive advantage for firms in the industry. The Department Store industry includes companies that sell a broad assortment of products and also incorporates Discount department stores who offer their products at lower prices than most other retail stores (Carter, 2015). There are five major product categories sold in department stores and they are apparel, drugs and cosmetics, furniture and household appliances, toys and hobby goods, and other (Carter, 2015). Some stores may also have pharmacy and photo services as well as restaurants.
Staying relevant in the market and increase profit within the retail markets in America are very challenged. Especially, it is more difficult in this current economy and highly competitive industry. Macy’s is well-known as a mid to high range department store sells huge variety products from luxury such as Michael Kors, Ralph Lauren, Coach to economic products which is more affordable for people. The main strategy that Macy’s used to stay ahead of their competitors was their ability to sell their merchandise at a lower cost than their leading rivals such as Nordstrom, Dillard’s. This strategy has made the company very successful; however, in recent years that success has declined noticeably. The lacks in innovation and non-trendy assortments, which has resulted in driving their customers to other retail companies within the industry. With the introduction of fast-fashion retailers such as H&M, Zara and Forever 21, which are in the same shopping mall and happened to make Macy’s has lost its ability to stay competitive regarding prices. Fast-fashion retailers are described as retail companies that can produce trendy fashion designs and introduced them to consumers in a timely manner. With the fashion industry 's ever changing trends and competition from other retail department store as Dillard’s, Nordstrom and many other fast-fashion like Zara, Forever 21 and H&M which can be up to pace with the changes cause Macy’s losing the store’s traffic. The first and most major
Bargaining Power of Buyers – High : this is generally because many products are available in this category as an option.
• Buyers’ bargaining power – The bargaining power of the buyers do exist. Buyers demand comparable prices to the brick-and-mortar grocers as well as satisfactory customer and delivery services. If the prices and customer service requirements are not met, buyers will not visit the site.
The bargaining power of customer is likely to be high if there are few buyers chasing too many goods, if the buyer purchases in bulk quantities, if the product is not differentiated, if buyer incur low switching cost and if buyers are price sensitive etc.