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Outlook for Specialty Stores

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Retailing is the business activity that is involved in selling goods and services to consumers for their personal, family or household use. It includes every sale to the final consumer- ranging from cars to apparel to meals at restaurant to movie tickets. Retailing is the last stage in the distribution process (Retail management. By Barry Berman and Joel R. Evans).

This case explains about the different types of retail stores of apparel, footwear and accessories. It tells us how high-priced apparel store differentiates itself from departmental stores. It further elaborates what concepts and strategies a high-price retailer must adopt in order to retain and attract new customers.

Soft goods specialty retailers intend to grow better by promotion and inventory management. Implementing innovative concepts would develop deep customer insight. Developing strategies will assort the shopping experience and strong brand building experience.

Despite of trying best, the recovery is modest due to fierce competition. Due to high level of competition for apparel and shoe store, there is always a pressure on the price. Leading stores like Wal-Mart and Target are offering wide assortment of basic and fashion items at sharp prices which gives huge pressure to retailers' margin.

Retailers are deeply affected by the financial crisis. They are willing to take more initiatives to reposition their strategies to retain existing customers and in order to attract new customers, they will be required to understand customers existing knowledge and then bring a complete different concept, which can differentiate them from their competitors.

One factor of buying from specialty store is the influence from the surroundings. People like to be noticed by wearing branded outfits, which has a positive impact on their self-esteem. This is one of the advantages for high-priced apparel store. However there's a shift in the trend of consumers total spending style. They're prioritizing more on their basic necessities as well as luxuries such as hoteling, entertainment like movies, concerts, clubs etc.

As part of the specialty retailers' initiatives to gain competitive advantage and profitable top-line growth, they are investing in new technologies. They are also focusing on improving their interaction with customers, which will help them make a strong statement in customers mind.

Questions and Answers

1. What can an independent retailer learn from this case?

An independent retailer can learn that the retail environment is becoming very challenging and competitive due to the crowded marketplace of retailing. As a lot of consumers prefer buying apparel from discount stores rather than high-price apparel stores. Discount department stores capture apparel share of preference at the expense of mall-based retailers, including specialty stores. Retailers must create new strategies to keep existing customers loyal by repositioning their image and attract new ones by upgrading their store level into differentiating their brand. Due to escalating entry of a number of foreign apparel specialty stores, an independent retailer must learn to act flexible to the changing environment and adapt to the customers' needs and wants since the customers' taste of fashion evolve over time. In addition, apparel and footwear are capturing less of consumers total spending because consumers are shifting their spending priorities toward necessities such as furniture, kitchen appliances, health, transportation and entertainment thus independent retailers must learn how to show strong performance of customer services, price management, use promotional tools, and upgrade store environment. The case clearly highlights that even a successful retailer can drop to the bottom line due to a missed buying opportunity thus, the needs have to be identified and addressed accordingly.

2. What are the positive implications of this case with respect to the use of leased department in department stores?

The positive implication of leasing a department in the department stores is that the cost of the leased department would be much less than actually opening a department store just to conduct business. Another positive implication is that department stores contribute to more competitive intensity in the apparel and footwear in which a lot of customers prefer purchasing from department stores than specialty stores; this would lead to the growth of market share of this leased department in the department store. A vital positive implication is that the leased department benefits from the brand existence of the department store especially if it has goodwill and a strong position in consumers' minds. Another added advantage for the leased department is that within an existing department store, rent is like to be cost effective along with a good flow of customers already established for the departmental store.

3. How can a mid-priced apparel store become a destination retailer?

Adaptation and implementation of higher profit, higher-growth concepts can help a mid-priced apparel store become a destination retailer such as if the retailer offers innovative or exclusive products and provide a unique way of operating, most likely through strategic investment, whereby with the help of new technology the retailer can keep a track of understanding and acting upon the flow of traffic in the store and deploying additional staff on a real-time basis and build a good customer base for the retailer.

By branching out to a new smaller target market or selecting a smaller section of the target market the store has already chosen a mid-priced apparel store that can become a destination store. If the retailer is going to commit to one target group and focus on only their needs and provide good quality products and excellent service then customers will be willing to go out of their way to shop there and will become loyal to the store. The store can have many assortments that will tailor to the target customers needs and prices may be a little higher. But if the entire shopping environment is improved people will be willing to pay the higher prices. Also, the geographic proximity needs to be identified and well researched; for example, Gap's new store in Paris has become a destination retailer for consumers.

4. How is Gap Inc. utilizing the principles of the wheel of retailing through its Gap, Old Navy, and Banana Republic divisions?

Gap Inc. is utilizing the principles of the wheel of retailing which is the theory of retail innovators appearing as low-price operators



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