Srija's blog

During the holiday season, one would think that there would be a huge upsurge in sales for all retailers and department stores with families scrambling to find the perfect gifts for their loved ones. Last year itself, on an average, a shopper spent $900 on just holiday gifts with parents spending around $400 on one child. 

However this year, Americans might not be inclined to spend as much according to a report by creditcard.com. New surveys report that only 53% of customers will spend more than $50 on a gift and 12% are not buying gifts at all during this holiday season. Even higher income groups with annual incomes of $80,000 and over are planning on spending $100 or less on their most expensive gift. With such shocking statistics of a massive decrease in expenditure, it is not surprising that department stores have been so strongly impacted by consumers decisions to keep their holiday season spending under check this year.

With Macy’s sales falling and Kohl’s profits declining at a steady rate, department stores are beginning to question if this holiday season will actually help them to increase their profitability. Even higher end department stores like Nordstrom, saw a slump in their sales ahead of the holiday season which led to their share prices to fall by almost 7.6% to $37. 

https://www.thestar.com/business/2017/11/10/nordstrom-sees-sales-slump-ahead-of-holiday-season.html

This leads us to question why are consumers so elastic in their decision to buy from department stores ahead of the holidays. The key reason is primarily due to consumer’s convenience and ease. It is no surprise that shopper’s prefer ordering online than going through the hassle of visiting an actual store and picking something for their loved ones. Moreover with a large proportion of sales generated from the clothing department of these stores, competition is becoming increasingly rigorous due to the expansion of unique clothing lines in Amazon, TJ Maxx and other online stores hindering the sales generated from stores like  Macy’s, Kohl’s, and Nordstrom.

https://www.forbes.com/sites/panosmourdoukoutas/2017/11/10/macys-and-kohls-need-a-holiday-miracle/#769d89a121a0

But what is causing Americans to so drastically decrease their spending specially during a time of festivities? It is no secret that thousands of Americans live paycheck to paycheck with barely any savings. With 57% of American adults having savings of less than $1000 and 39% having absolutely no savings, it’s no surprise that they can’t afford to shell out big bucks ahead of the holiday season. So it could be that Americans are finally coming to terms with their limited budgets and realizing the importance of savings rather than living so precariously, while also consciously making an effort to not enter the New Year with a huge amount of debt.

 

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Citations 

1. Backman), N. (. (2017, November 11). Looks Like Americans Won’t Be Big Spenders This Holiday Season. Retrieved November 11, 2017, from http://host.madison.com/business/investment/markets-and-stocks/looks-like-americans-won-t-be-big-spenders-this-holiday/article_a9c69023-7f34-5fa8-9e5a-4d20d58944ed.html
2. Press, T. A. (2017, November 09). Department stores: Macy’s sales fall, Kohl’s profit drops. Retrieved November 10, 2017, from https://wtop.com/business-finance/2017/11/macys-beats-3q-profit-forecasts-2/
3. Rupp, L. (2017, November 10). Nordstrom sees sales slump ahead of holiday season. Retrieved November 11, 2017, from https://www.thestar.com/business/2017/11/10/nordstrom-sees-sales-slump-ahead-of-holiday-season.html
4. https://www.creditcards.com/credit-card-news/expensive-holiday-gift-poll.php

In a fiercely competitive market of women’s athletic apparel, top brands are at a constant fight for maximum market share. A popular leading brand in this industry is Lululemon, which has managed to turn sportswear and fitness apparel into everyday chic yet comfortable attire. Known mostly for their high quality sports bras and yoga pants for women, Lululemon has overtaken big retail brands like Nike in the women’s active wear market even with their premium pricing strategy in an extremely overcrowded market.

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But other companies haven’t overlooked the scope for immense growth in this market and brands like Nike and Amazon are ready to tackle the fierce competition involved with entering this market. Nike has taken a step towards creating a new line of stylish women’s athletic attire with new innovative modified designs of sports bras, fitness apparel and sneakers specially focused towards women. Nike has taken a decision to allocate more of their investment in women’s athletic fashion wear. This shows Nike’s evolving strategy towards a more aggressive approach against their competitors. Just the news of Nike’s newly generated interested in this market, immediately had a negative impact on Lululemon’s shares by 2.5% since Bloomberg reported this.

Similarly, Amazon.com is also tapping into this women’s sportswear market by teaming with Makalot Industrial Co, who produced clothing for GAP and Kohl’s Corp, to make apparel. Just the scope of expansion in this industry manages to attract new entrants in such a highly competitive market space. Lululemon was adversely hit by this news as well, as shares fell by 4.9% after reports of Amazon’s sportswear.

With an increasing number of competitors, these brands will need to strengthen their strategy against their competition and adopt different marketing techniques to acquire brand loyalty and a greater market share. Their main goal should be to focus on their points of difference and remodel their value proposition canvas to further satisfy their customer’s need and wants.

With these new entrants in the market will customers really be willing to choose Lululemon in spite of their upscale pricing compared to competitors or will they have to adopt a new strategy quickly enough before they get overthrown in this fiercely aggressive market space?

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Citations

1. http://www.bnn.ca/amazon-said-to-make-sportswear-push-in-industry-jolting-move-1-1.884248
2. http://vancouversun.com/news/retail-marketing/nike-coming-for-lululemon-sharpens-focus-on-womens-wear-1/wcm/d57fe707-2126-4dce-ab33-0f374f12aca4
3. http://www.businessinsider.com/nike-launches-new-pants-studio-2017-10
4. https://www.cnbc.com/2017/10/26/nike-reportedly-set-to-open-yoga-pant-studios-in-5000-stores.html

Lush cosmetics, a U.K founded retailer that specializes in homemade, vegetarian skincare, hair and bath products that are organically made and is extremely eye-catchy due to it’s sparkly and colorful products, is adopting a new strategy for maximizing sales. Lush is focussing on creating a unique shopping experience for their customers. With its North American headquarters located in Vancouver, this brand has been constantly expanding in the global market. Having 53 stores in Canada itself, and over 180 stores in various U.S locations, Lush cosmetics has clearly set its footprint in retailing market.

However the company, has recently announced that they will be adopting a new expansion strategy which will focus on sizing up their existing stores. Lush has already managed to increase their Canadian retail footprint from 49,726 square feet to 68,505 square feet, over the last two years. Yet, this new strategy focusses on expansion by increasing the size of their existing stores rather than opening up new stores in different locations. The company has already tested this strategy with the first expansion being at the Lush store on 1020 Robson Street which reopened last month after expanding into the neighboring space that was vacated.

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This new strategy might seem completely bizarre, specially considering the strong e-commerce establishment that other retailers are progressing towards. In my opinion, this new strategy could do wonders for Lush due to the nature of the products they sell. Lush primarily focuses on creating unique and innovative products from gorgeously scented hair and body care products to colorful, glittery bath bombs and soap bars. Therefore this strategy offers customers a whole new experience of not only buying the products but also touching it, smelling it and an opportunity to actually test these products. The bold and vibrantly colored soaps which are designed for displaying the retail stores help to attract customers and offer them a more personalized shopping experience. The staff can also demo new products and this could be the key factor for customers to end up buying more products than they initially planned on. The whole look of the stores are designed in a way to tempt the customers with the sparkly and shiny displays and inducing scents.

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Moreover due to most of the retailers trying to shift towards online selling, many physical stores are vacant which could be an advantage for Lush since they could expand their existing stores into these spaces. Furthermore, a section of the demography could prefer retail shopping rather than through an online platform and Lush could tap into these segments as well. So could this really strategy work in an era where millennials are moving towards e-commerce? Only time will tell.

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Citations

1. Welcome to Lush Oxford Street. (n.d.). Retrieved October 13, 2017, from http://www.lush.ca/en/Stories-Article?cid=article_welcome-lush-oxford-street
2. Shaw, H. (2017, January 18). Lush Cosmetics brushes off downsizing trend with major bricks-and-mortar expansion plan. Retrieved October 13, 2017, from http://business.financialpost.com/news/retail-marketing/lush-cosmetics-brushes-off-downsizing-trend-with-major-bricks-and-mortar-expansion-plan

One of the biggest success stories in the Silicon Valley, with a net worth of over $70 billion and operating in over 70 countries globally-Uber is clearly leading the market today in providing fast and efficient transportation services at the convenience and need of customers. So will the loss of their license to operate in the city where it has been most successful outside the States really affect this company?

On Friday, Transport for London, the agency which oversees the city’s public transportation system declared that Uber’s license to operate in the city would not be renewed due to their scandalous past and several accusations against operating unlawfully and mistreating their employees and workers, which led them to be deemed as not “fit and proper.”

The company has had several allegations in the past year relating to a range of issues, from using a software ‘Greyball’ to avoid the government from getting complete access to their operations, to shoddy background checks against drivers, lack of severity with which they deal with serious criminal offenses, sexism against women and several complaints of sexual assault against employees by managers. Their long history of lack of corporate responsibility in ensuring their customer’s and employee’s safety finally caught up to them and resulted in this ban.

https://i.guim.co.uk/img/media/8ec962a205247845be85a8a4ec64340e2f559f65/0_484_4535_2721/master/4535.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=da03c4b84e78b1a12369398d3f10d2ae

Uber owned the majority of the market share in London by under cutting prices of their competitors like the black-cabs by 30% and Gett and MyTaxi. Uber’s management style where employees are constantly pitted against one another and rewarded solely on their performance irrelevant of the means by which they have achieved them could be the root cause of these claims. Several former employees’ claims of sexual assault by managers and their seniors and the lack of action heeded by Uber’s HR department just goes to prove the company’s disregard for ensuring employee’s safety and the absence of a healthy workplace culture, where there is mutual respect amongst coworkers and between managers and employees. Travis Kalanick’s own style of leadership could be to blame for enforcing this type of a competitive workplace atmosphere. By openly disregarding local laws and being quick to denounce competitors in an attempt to expand exponentially, Kalanick himself has adopted an aggressive style of leadership.

With 40,000 drivers and 3.5 million customers in London, this ban is most likely to have a massive setback in the company’s operations. The company will have to change its management style and hope to prevent their brand image from being further tarnished by these severe claims. It is shocking to note how these claims have failed to come in the limelight previously considering Uber’s pervasiveness and popularity.

 

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Citations

 

1. PRASHANT S. RAO and MIKE ISAAC. (2017, September 22). Uber Loses License to Operate in London. Retrieved September 23, 2017, from https://www.nytimes.com/2017/09/22/business/uber-london.html?rref=collection%2Fsectioncollection%2Fbusiness
2. Isaac, M. (2017, February 22). Inside Uber’s Aggressive, Unrestrained Workplace Culture. Retrieved September 23, 2017, from https://www.nytimes.com/2017/02/22/technology/uber-workplace-culture.html?mcubz=0
3. Farrer, M., & Khomami, N. (2017, September 23). More than 500,000 sign petition to save Uber as firm fights London ban. Retrieved September 24, 2017, from https://www.theguardian.com/technology/2017/sep/23/thousands-sign-petition-save-uber-firm-hits-back-london-ban
4. Kirsty Major London. (2017, September 22). Uber had this coming – it was never just a ‘tech platform’. Retrieved September 24, 2017, from http://www.independent.co.uk/voices/uber-ban-london-ride-hailing-app-company-employees-taxi-drivers-customer-safety-women-protect-a7961231.html
5. (2017, September 23). Why Uber lost its licence to ply in London. Retrieved September 24, 2017, from http://www.deccanchronicle.com/business/companies/230917/why-uber-lost-its-licence-to-ply-in-london.html

Any decision made by a company most often have to be guided by few basic principles, values and morals. If a business is to focus on their long term growth and stability and aspire to gain a large customer base while increasing their market share and brand loyalty, they must ensure that all decisions taken are guided by morally acceptable principles.

One would think in the 21st century a well informed, educated branch of society would absolutely refuse to contribute towards the millions of dollars in revenue earned each year bymajor fashion brands in the industry like Forever 21, TJ Maxx, Zara and H&M.

However according to recent reports, most of these major retailers avoid paying factory workers the minimum wage and they are forced to work in extremely poor conditions. In, considerably one of the most wealthy states in America, California, a recent investigation by the California department of labour found that a jaw dropping 85% of the cases and companies were violating the labour laws and minimum wage rates and therefore had to pay millions in damages to their workers.

Owning a whopping 62% brand share in the footwear industry in US is Nike, with a sale of $28 billion per annum. However 2 decades ago this brand was under fire for their use of sweatshops overseas to reduce their costs by employing foreign workers for way cheaper wages. Reports claimed that Indonesian Nike workers were paid as less as 14 cents per hour and forced to work endlessly in extremely unfavorable conditions until they collapsed on their sewing machines. Nike’s strong foothold in the industry begun to fade with numerous protests from the public and massive masses of boycotts. This is just another explicit example of how vital it is for companies to make ethically correct decisions since it can have a direct impact on their sales, brand image and value

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Nonetheless Nike managed make a turnabout on their public image by being brutally transparent about these claims. This led to a raise in minimum wages for workers, improving the worker’s environment and conditions and thus ensured to abide by the labour laws and practices. Till date Nike publishes reports which divulge the conditions in which their workers work in and their pay scales. This has finally helped the brand to knock off its image, which was synonymously linked with extreme labour exploitation, after continuous efforts.

This just goes to show the extreme consequences linked with unethical decision making by big brands and companies and how it might take years for a well reputed company to reinvent their image once exposed to the dark side linked with unethical decision making in a business.

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Lutz, A. (2015, June 06). How Nike shed its sweatshop image to dominate the shoe industry. Retrieved September 13, 2017, from http://www.businessinsider.com/how-nike-fixed-its-sweatshop-image-2015-6

Behind a $13 shirt, a $6-an-hour worker. (n.d.). Retrieved September 10, 2017, from http://www.latimes.com/projects/la-fi-forever-21-factory-workers/

Gurl.com. (2017). 11 Of Your Favorite Clothing Brands That Use Sweatshop Labor – Gurl.com. [online] Available at: http://www.gurl.com/2016/05/01/clothing-stores-and-brands-that-use-sweatshop-labor/ [Accessed 14 Sep. 2017].

Bain, M. (2017, August 01). Nike is facing a new wave of anti-sweatshop protests. Retrieved September 13, 2017, from https://qz.com/1042298/nike-is-facing-a-new-wave-of-anti-sweatshop-protests/

We know which companies sell clothes made by sweatshop workers. Consumers should shop accordingly. (2017, September 08). Retrieved September 13, 2017, from http://www.latimes.com/opinion/readersreact/la-ol-le-sweatshop-workers-apparel-los-angeles-20170908-story.html