RunningHead:VeraBradleyin2014:WilltheCompany’sStrategyReverseItsDownward
Trend?
VeraBradleyin2014:WilltheCompany’s
StrategyReverseItsDownwardTrend?
Industry:​Women’sluxuryhandbagandaccessories
Professor:AlisonKemper
Bus800
NujhatNabeela500505369
Date:March15,2016
VERABRADLEYIN2014:WILLTHECOMPANY’sSTRATEGYREVERSEITS
DOWNWARDTREND
Table of Content
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VERABRADLEYIN2014:WILLTHECOMPANY’sSTRATEGYREVERSEITS
DOWNWARDTREND
Introduction
VeraBradleywasfoundedbytwofriends,BarbaraBradleyBaekgaardandPatriciaR.Miller,in
1982.Itoperatesinthewomen’sluxuryhandbagandaccessoriesindustry(2.1).It’scolorfuland
distinctivedesignedproductsareofferedprimarilyforwomen.Twosegmentsthroughwhich
thiscompanygeneratesrevenue,aredirectandindirect.DirectchannelsincludeInternet,
fullpriceretailstoresandfactoryoutletstores.Indirectchannelsincludedepartmentstoreand
specialityretailchannels.TheissueVeraBradleywashavingisthatits’traditionalpatternsand
productswereunabletoattractnewcustomersandoveralltrafficwasdecreasing.Themainissue
thatrequiresattention,isitsdecliningdemandforitstraditionalproductoffering. 
Analysis
OneofthemainissuesofVeraBradleyisthatit`straditionalproductofferingisnotattracting
enoughnewcustomerstothebrand(7.2.6).Severalfactorsthatarecontributingtothisissue
involvethenatureoftheindustryitisinvolvedin.Competitionisintense.Bigplayersinvolve
LouisVuitton,Gucci,Prada,MichaelKors,Coach,KateSpadeandmanymore(3.5).These
brandsalreadyhaveaverystrongbrandimageandloyalcustomerbase.VeraBradley`scurrent
strategyistofollowthestrategiesofotherplayersinthemarkettomaintainitsbusiness(6).
Sincethecompetitionisintense,simplycopyingotherswillnotbeenoughtoattainmindshareof
consumers.VeraBradleyisfailingtoinnovateanddifferentiatetheirproductline.Itissimply
notcateringtoitscustomers`needs.
Asaresult,assetturnoverratioofVeraBradleydeclinedby.56%from20132014(9).Net
revenueofVeraBradleyalsodeclinedyeartoyearsince2010(9).Ontheotherhand,netincome
wasincreasingtill2013,howeverthefollowingyear,itdeclinedby15%(9).Grossprofit
marginofVeraBradleyremainedunstablefrom2010through2014.Itincreasedby5.45%over
thecourseof5years,butithasthelowestgrossprofitmarginamongallitscompetitors(9).
Overall,thebrandishavingdifficultystandingoutfromthecrowdandunabletogenerate
consumerattraction.

Anotherfactorthatiscontributingtothisissueisthatduringeconomicdownturn,many
consumershavelessdisposableincome(1.2.2).Duringthistime,theyoptinforsubstitutessuch
asnonluxury,counterfeitoraffordableluxuryproducts(3.4),takingsalesawayfromVera
Bradley.

Moreover,VeraBradleyhasadilutedimageofitsbrand.Ithasaverywidearrayofproduct
linesthatdonotsufficientlymeetthecustomer’s’needs(7.2.4).Someofitsproductlinesinclude
luggage,purses,wallets,cellphoneandcomputercovers,jewelery,lunchsacks,bags,scarves,
beachaccessories,andbabyclothing(6).Outofalltheseproducts,babyclothingseemsquite
irrelevantfortheindustryVeraBradleyiscompetingin.Thistakesawaythefocusofthebrand,
makingthebrandimagediluted.
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VERABRADLEYIN2014:WILLTHECOMPANY’sSTRATEGYREVERSEITS
DOWNWARDTREND
Otherissuesinvolvenotprovidingproductofferingcateringtomen.Men’sproductsaregrowing
inNorthAmericaandAsiaanditcanprovideauniquegrowthopportunityforVeraBradley
(7.3.4).
Intermsofdistributionchannels,ithasawideselection.However,itdoesnotdistributeproducts
throughluxurydepartmentalstoreslikeMichaelKors(7.2.8).Additionally,VeraBradleylacks
presenceonaglobalscalewhencomparedtoitscompetitors(asseeningroupmap5.1).Itonly
focusesinUnitedStatesandJapan(7.2.1),whereas,competitorsoperateinanumberofcountries
(5).ItispredictedthatsalesinChinaandotheremergingmarketswouldgrowfrom2015
through2018(2.7).Therefore,VeraBradleyismissingahugeopportunitytomarketgloballyin
thesecountries.
Alternatives
FollowingaresuggestedalternativesforVeraBradley:
#1.Expanddomestically:​VeraBradleyshouldsolelyfocusonexpandingitsbusinessinNorth
America.AdvantageisthatVeraBradleywouldbeabletofurthercapitalizeonitsalready
existingresourcestoincreaseitsbusinessandworkwiththeconsumerstheyarealreadyfamiliar
with.DisadvantageofthisalternativeisthatVeraBradleywillbeunabletogrowasan
internationalbrand.
#2.PenetrateinAsiaPacificRegion:​Euromonitorforecaststhatby2018,biggestplayersinthe
largestluxurygoodsmarketintheworldwouldbeAsiaPacificregion.Growingmarketslike
ChinaandIndiaisanticipatedtobethekeyplayersandenhancesalesofluxurygoodsinthenext
fewyears(2.7).Withthestandardoflivingrisingintheseemergingmarkets,demandforluxury
goodsisalsogrowing(1.3.4).Notonlytherichhaveadesiretoownluxurygoods,middle
incomeclasstoowantluxurygoods(1.3.5).Advantagewiththisalternativeisthatitfocuses
greatlyononeofthemajordrivingforces,i.e.globalization(4.1).Usingthisalternative,Vera
Bradleywillhavethecapabilitytoreachnewsegments,broadenitscustomerbaseandincrease
sales.Disadvantagewouldbethatifthisexpansionfails,thecompanycouldvirtuallygo
bankrupt.Expandinggloballywouldrequiremajorcapitalinvestmentandifunsuccessful,itcan
turnouttobeamajordisaster.
#3.Rebrandusingmarketingefforts:​FocusonmarketingVeraBradleyproductstocareer
drivenwomen.Marketingeffortswouldinvolve,TVadvertisements,commercialswithcelebrity
endorsements,marketingthroughbillboards,interactingwithcustomersthroughsocialmedia.
OthermethodswouldinvolverebrandingVeraBradleyecommercewebsitetomakeituser
friendly.Accordingtoresearch,onlinesalesarenowgrowingfasterthaneveratarateof28%
annualgrowth(7.3.5).Benefitofthisalternativeisthatitallowsformaximumengagementand
personificationofthebrand.Downsideofthisbrandisthatmanyoftheeffortsarenot
measureableandtherelimitedwaystofindoutitseffectivenessinbringinginrevenueforthe
company.
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VERABRADLEYIN2014:WILLTHECOMPANY’sSTRATEGYREVERSEITS
DOWNWARDTREND
Recommendation
Usingthefollowingevaluationmatrix,alternative(s)thatsuitthebrandfunctionalandbusiness
strategiesbest,willbechosen.
Criteria:Evaluatedoutof5
Alternative#1
Alternative#2
Alternative#3
Reachwideconsumers
2
5
4
Enhancecustomerrelationship
3
4
4
Createexcitementaroundproductlaunch
3
4
5
Cost
4
3
5
Total
14
19
22
SinceAlternative2and3meetthefunctionalandbusinessstrategiesbest,itisrecommendedthat
VeraBradleymoveforwardandexpandinternationallyinAsiaPacificandusecustomized
marketingeffortstocatertointerestofthetargetmarketinthatregion.Intermsoffinancing,
VeraBradleyisinahealthyposition,withnodebtwhatsoever.VeraBradley’scurrentratiois
4.09,thismeansithastheabilitytopayoffcurrentliabilitieswithitscurrentassets4times(9).
Withthisextraasset,thecompanycanexpandandbuycapitalsneeded.Forfurtherfinancial
support,VeraBradleycanalsotakeloantoexpand.Asthedebttoequityratioin2014was0,it
hasabetterchanceofbeingconsideredforloanthanthosewithahigherrate(9).Forexpansion,