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Teaching Note: Case 10 – Ann Taylor: Survival in Specialty Retail
Case Objectives
1. To investigate the choices of business and corporate-level strategies in a highly turbulent
industry.
2. To examine how external and internal forces affect competitive strategy.
3. To discuss how leadership can use strategic control and organizational design concepts to
See the table below to determine where to use this case:
NOTE: This case can be used as a COMPREHENSIVE CASE, covering almost all the chapters
in the textbook. However, since the primary focus of this case is Corporate-Level Strategy, the
Chapter Use Key Concepts Additional Reading
and/or Exercises
1: Strategy
Strategic management; vision, mission,
Optional Exercise,
2: External
Industry competition five forces; general
NOTE web links,
3: Internal
Value-chain analysis; tangible and
4: Intellectual
Assets
Intellectual and human capital
5: Business-Level
Strategy
Competitive strategy; generic strategies
PRIMARY
6: Corporate-Level
Strategy
Corporate strategy; diversification; synergy;
NOTE additional
9: Strategic
Strategic control; informational vs.
NOTE optional
10: Organizational
Design
Organizational structure
11: Strategic
Leadership NOTE additional
Case Synopsis
The Ann Taylor Case provides information about both ANN, Inc. (ANN) and the overall retail
environment. The case depicts ANN, a women’s specialty clothing retailer that had been
successful in creating a complete product line that appealed to its target demographic of socially
upscale professional women, but that continued to face increasing competition and a challenging
economic environment. ANN had experienced significant growth in the past, but was now
ANN was not the only retailer suffering in a poor economic climate. News
reported at the beginning of the case conrms that the entire retail industry
was still facing an unpredictable environment in the aftermath of the
To generate growth, Krill had identified several distinct areas of opportunity. She continued her
ongoing efforts to revitalize the flagship Ann Taylor (AT) store brand, while not dampening
It was clear that Krill was firmly committed to long-term growth. However, although profitable
in 2014, ANN was just beginning to return to the sales profile of 2007. The basic question of the
case is whether Krill was doing what she should do to regain and retain profitability. Was she
Teaching Plan
The Ann Taylor case is a candidate for a “comprehensive” case that can be used to illustrate
many facets of strategic management. Ann Taylor Stores Corporation (ANN) was a large
specialty retailer facing an extremely competitive environment. Economic conditions had further
complicated competition from rivals. ANN faced a variety of challenges, offering the reader
several strategic options to consider. The addition of the industry and current competitors’
information makes the case a good one to use for strategic analysis and formulation. Information
on ANN’s multiple divisions and operational overview makes it a good candidate for a
discussion of internal resources and capabilities, and the strong presence of CEO Kay Krill leads
to a discussion of strategic leadership and implementation.
For those instructors who like to include a discussion of marketing concerns as part of an overall
business policy course, the branding challenges outlined in Ann Taylor make it possible to use
the case to augment a discussion of marketing strategy.
ICEBREAKER/UPDATE
Since almost every student has shopped for clothing at some point, it might be illustrative to ask:
How do you choose where to shop for clothes? Do you shop based on price, or based on fashion
trends, or based on other factors?
What stores or venues have you frequented during the last year in your search for things to
wear?
Men may find this case hard to swallow, focusing as it does on women’s fashion. Point out that
the challenges in women’s specialty retail are not that different from those faced by Abercrombie
To help identify the challenges in this industry, the instructor may want to put a list on the board
of how students decide where to shop: Price? Fashion or Quality? Location/Quick In & Out?
And what stores they frequented. Any online shoppers? Students might be surprised at
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign,
and also which additional readings or exercises to include to augment each discussion. Refer
back to the Case Objectives Table to identify any additional readings and/or exercises so they can
be assigned in advance.
1. What are key forces in the general and industry environments that affect Ann Taylor’s
choice of strategy?
2. What internal resources and assets did ANN have that gave it a competitive advantage?
3. How did ANN compete?
4. What has Kay Krill done to implement strategy, and what challenges remain?
Discussion Questions and Responses
Prior to answering the specific case questions, the instructor might want to position the
discussion by reviewing what strategic management really is:
Referencing Chapter 1: Strategic Management
Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. See Chapter
1, Exhibit 01: Strategic management consists of the analyses, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages:
●strategy directs the organization toward overall goals and objectives;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate
change, and continually refine changes to their strategies. This requires a certain level of
See Chapter 1, Exhibit 06: The primary role of the organizational leader is to articulate vision,
mission, and strategic objectives. Leaders must communicate their initial vision of the
The organizational mission also needs to be considered: a mission encompasses both the purpose
of the company, as well as the basis for competition and competitive advantages. In writing a
Organizations must respond to multiple constituencies if they are to survive and prosper, and the
mission provides a means of communicating to diverse organizational stakeholders. Although
Anticipating that things might change, an organization’s leadership must then establish strategic
objectives to operationalize the mission statement. That is, objectives help to operationalize the
The original Ann Taylor brand was based on the image of a classic black dress and woman’s
The mission was to serve as the wardrobe source for busy, socially upscale women; professional
women who had limited time to shop and who were attracted to the Ann Taylor stores for their
The company’s strategic objectives revolved around the need to continually evolve and elevate
the brands so they remained “compelling” to ANN’s target audience of fashion-conscious women
These vision and mission statements, with the resulting strategic objectives, have implications
for how to analyze opportunities, manage innovation, and provide leadership to encourage
growth. It requires doing an analysis of the external environment, both relative to general factors
Here is where students can be reminded how the chapters in the book are linked. See Chapter 1,
Exhibit 1.3 for a depiction of the strategic management process. During strategic analysis, the
leader does “advance work” to anticipate unforeseen environmental developments, identify
In strategy implementation, depending on the type of organization structure, the leader might
include key individuals in a discussion around selecting which strategies might be best to
implement at which level within the organization. The leader must ensure proper strategic
The basic question strategic management tries to answer is: How can we create competitive
advantages in the marketplace that are not only unique and valuable but also difficult for
competitors to copy or substitute?
An interesting question that the instructor can ask at this point is: What IS that “marketplace”?
What business is Ann Taylor Stores in? Students might want to say the “retail” or “clothing”
AS AN EXERCISE, a follow up on the icebreaker, have students list all the variations or types
of retail environments that they might have encountered. The Apparel Retail Industry section of
The reality of ANN’s remaining two primary businesses at the end of the case (i.e., AT and
LOFT) is that both businesses were clothing retailers – specifically, women’s clothing. By the
For advanced students, assigning Michael Porter’s 2008 HBR article “The five competitive
forces that shape strategy” will help students understand why this is an important question:
Porter (2008) uses a definition that incorporates more of an “extended competition” concept. He
points out that an industry is defined by the scope of its products or services – if products have
Answering this question is essential to proceeding with strategic analysis. Once students have
determined what business ANN is in, they can then proceed with scanning the external
1. What are key forces in the general and industry environments that affect ANN’s choice
of strategy?
Referencing Chapter 2: Analyzing the External Environment of the Firm
Organizational leaders must become aware of factors in the overall environment that might affect
their ability to create a competitive advantage. So how do managers become environmentally
Environmental scanning involves surveillance of a firm’s external environment to predict
environmental changes and detect changes already under way. It is a BIG PICTURE viewpoint
Environmental monitoring is a firm’s analysis of the external environment that tracks the
evolution of environmental trends, sequences of events, or streams of activities. Leaders need to
What factors or trends might be most important to ANN? To assess how the external
environment might affect ANN’s strategy, it’s necessary to take a look at the factors in the
general external environment. ANN must consider the political/legal, economic and global,
Political-Legal: Political-legal issues, especially potential trade regulations and supplier
disruptions, have had a potential effect not only on ANN but also on the apparel industry as
Economic: Macro-economic changes are always important. Beyond the generic issues (e.g.,
currency shifts, inflation, interest rates, national income, and unemployment), there appears to be
Demographic: Several issues stand out in this general environment segment. First, there’s the
diversity of the “misses” baby boomer market. Second, there is a changing ethnic composition in
the United States with more Latinas in particular. Third, there are more dual income households
Sociocultural: A primary issue here includes the trend towards more casual work environments.
Students can respond with insights from their own experience. For instance, TV series like “Sex
and the City” encouraged high fashion, brand awareness, but had portrayed a more playful and
individually chic consumer. LOFT was particularly well positioned to respond to this trend.
Technological: Technology, especially the growth of the Internet, has created new opportunities
for marketing of product and for promotion. Continuous innovation in supply chain management
It’s also necessary to assess the segments of the external competitive environment that include
competitors, customers, and suppliers, substitutes and new entrants. Porter’s five forces model
High
Buyers’
Power
Low
Low
Suggested: The industry
has low concentration
Suggested: There are many
supplier firms with a lack of
differentiation between them, so
power is lowered. Some
Suggested: No real
substitutes for a
ANN, like other women’s clothing specialty retailers, was confronting some threats. There was
As the analysis suggests, the environment is challenging. Based on the external environmental
factor analysis, the U.S. specialty retail industry had many challenges to profitability, primarily
from slow industry growth. Equally balanced competitors made it difficult for any one to achieve
NOTE – ADDITIONAL WEB LINKS TO INDUSTRY INFORMATION
See this story from April of 2011:
http://www.fool.com/investing/high-growth/2011/04/28/is-ann-taylors-stock-cheap-by-the-
numbers.aspx
and an update from 2012:
http://www.fool.com/investing/general/2012/04/26/are-these-clothing-stores-a-good-fit-now.aspx
In general, the clothing retailers continually struggle with positioning, as explained in this late
2012 article about “fast fashion”, or the rush of retailers such as Forever 21 to put styles on the
shelves soon after their runway debut. The fast fashion companies tried to encourage shoppers to
Given the volatility of the apparel industry, how did ANN appear to be holding up?
Here’s opinion on the retail sector in 2011: “It’s amazing to think that for an industry that has not
experienced sourcing cost inflation in 30 years, most retailers expect to raise prices and report at
Browse some of the companies on the following list to learn more:
http://en.wikipedia.org/wiki/Category:Clothing_retailers_of_the_United_States
And here’s a link to a set of promotional videos from ANN featuring the 2012-2013
spokesperson Kate Hudson and Ann Taylor “styles”:
https://www.youtube.com/watch?v=DZP-7GLcr94&list=UUFaV3nu8asOxNIMachZ1JKg
What does this tell you about the industry and ANN’s promotional position?
