2. Premium Denim industry overview The origin of denim jeans had place in 1874, but the premium jeans concept was popularized by Calvine Klein in late 1970’s. Since then premium denim market has been encountered alternately sales growth and slowing down following fashion trends changes, but remains until today highly fragmented industry. Currently Porter’s 5 forces model of premium denim industry is characterized by low entry barriers as there is low initial capital required and high margins and returns. That’s why even if this sector is already saturated, still encounters new players entrances.
The case describes the difficulties the firm is facing in 1994 in Japan, due to the shrinking market and new distribution channels. Japan is a unique market, compared to the rest of the world. Concerning jeans, Levi’s managers had to design their own models, which would fit Japanese taste, and could not rely only on importing American models. Levi’s is not yet a leader in the Japanese market, even though it shows good results. Competitors such as Edwin have twice as many stores as Levi’s.
• Being only known for denim: True Religion is known for their denim and jeans they are not as known for other product categories which limits their profits. • High prices: True Religion products are priced relatively higher than other brands. Many consumers are not willing to spend upwards of one hundred dollars on a pair of jeans. This limits their market and creates a niche market. Opportunities: • Other market prospects: True Religion has a unique opportunity to
Walmart’s low prices are a direct result of their outsourcing of jobs, which negatively affects the United States’ economy, even though may seem beneficial. The company also takes away from many smaller, local businesses, because of its lure of lower prices and benefits. Walmart’s largest principle is that it offers goods at the lowest possible price for their customers. in order to achieve this, not only does Walmart pay its workers low wages, but it also purchases its products from companies that outsource their factories and jobs. Outsourcing refers to sending jobs overseas because it is cheaper to produce the good there instead of in your home state.
By 1996, it had rebounded to become the UK’s most profitable retailer. However, this recovery was short lived, and M&S experienced a significant slump in business in 1999 which continued into the early 2000’s with profits and sales declining significantly. “In 2004, Sir Stuart Rose was brought in to lead the company’s out of a crisis”. In 2007, Rose launched Plan A which was a new eco-plan initiative which he believed would be a cornerstone of the company’s competitive positioning in the years to come. M&S’ vision was to be the standard against which others are
JC Penney was named on this list for its disappointing stock price relative to the retail industry. Its stock price was down almost 45% from January 1 1995 to December 31 1999, while the S&P Retail Department Stores Index increased by almost 43%. Due to declining sales and a deteriorating customer base, CalPERS believes the market has lost confidence in Penney's management.
Exhibit 3: shows that the Metal wood product type sales in 1998 is decreasing by 8% compared to 1997, however, the sales of irons and putter, accessories has gone up. Exhibit 1: shows how the company has steadily increased its R&D expenditure to $36.5M in 1998. Investing in R&D is essential for CGS to stay on top in the industry, so, I will recommend them to continue with their R&D to come up with innovative products. * Retail partnership CGC did not provide volume discounts and their credit terms were also tight compared within the industry. CGC needs to improve its relation with the retail partners by providing volume discounts and relaxing the payment cycle to match the current standard within the industry.
Also the low switching cost and consumer awareness of shopping around to find the best bargains increased competition around stores to capture customers. Corporate stakes were high for Wal-Mart, this can be seen in its earlier years (Ben Franklin stores) where they were losing
The fair-trade shirts were $28.65 each, which is high. The site registers members for $30. If the site’s revenues are only based on membership fee and the number of members is low, it may not have any profit with the cost of $28.65 for each shirt. It is because the company also has fixed costs, such as salaries for employees and rents for the workplace. If the number of new members is very high, then these costs may be covered since average fixed cost declines with the increase of members.
GAP, as many of its close competitors, was quite successful in pursuing integrated strategy by providing customers with premium clothing at reasonable prices. In the view of a recent decline in profits, the company’s management developed a turnaround strategy. In 2002 the major goal was the reduction of long-term debt while in 2007 the company was expanding internationally and worked on improvement of quality of its apparel and brand image. Although its major brands experienced an increase in sales of about 3% in 2010, the strategy was not targeting all the business areas as planned. Therefore, the results achieved were far from perfect.