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Ancillary Cases and Teaching Notes
Case A12: Simon and Smith
Background information
The partners of Simon and Smith, a medium-size specialty store for women in Brookline, Oregon
(population 250,000) were having their annual after-Christmas heart-to-heart talk about their store's
direction. They had just completed their best year ever, their bank balance was high, and the two men
were looking forward optimistically too more prosperous years.
winner."
Smith was less sanguine. "You know, Bill, the population of Brookline is growing. I just heard a big
high-tech firm is planning to open a plant near here, and that food processor in Eugene is planning to
consolidate operations here. That's going to bring a lot more people to this area, and I wouldn't be
surprised if before long some shopping center developer discovers our area. We've had it pretty easy all
these years, and I'd hate to see us get too complacent and then have to give business away to a competitor.
Our customers are getting older, and we're not doing anything much to attract younger people. Our
customer profile is between 35 and 50, and next year, it'll be between 36 and 51. I suggest we give some
serious thought to attracting younger women, so we'll be prepared when the competition comes."
Discussion Questions
1. Analyze each partner's position. What additional information might be useful to justify each
opinion?
Ancillary Cases and Teaching Notes
Teaching Notes
Case A12: Simon and Smith
Synopsis: Two partners in a medium-sized women's specialty store look at potential changes in
customer base and discuss opportunities to attract younger customers.
Use: Chapter 2 Discuss the impact of a changing environment. Develop a retail strategy for a
specialty store.
Chapter 4,5 Understand the impacts of changing demographics on retail strategy.
Discussion Questions
1. Analyze each partner's position. What additional information might be useful to justify each
opinion?
Bill Jones feels that the store is very successful due to a lack of competition, a good location, and
loyal customers. This success will continue in the future if the partners do the same things they have
Ancillary Cases and Teaching Notes
2. What are the alternative courses of action Simon and Smith can take? Give advantages and
disadvantages of each alternative.
a. Continue to do business as they have in the past focusing on the misses market.
Advantages
Disadvantages
3. Make a recommendation for Simon and Smith's future.
Might be best to stick to your knitting. Continue to focus on misses market, but make sure that they
Ancillary Cases and Teaching Notes
Case A13: Marquette Army/Navy Surplus Store
Irvin A. Zaenglein, Northern Michigan University
Background Information
Faced with declining sales, the Marquette Army/Navy Surplus Store (MANS) must meet several
challenges. Since buying the store approximately 18 months ago, owners Bernie and Shirley Shusta have
learned much about operating a retail store. Being new to the business, they learned as they went along.
Unfortunately, the learning process consumed a considerable amount of cash. Due to a low cash situation,
store inventory is somewhat lower than the owners want.
Target markets aren't well defined, and the advertising reflects that lack of definition. The Shustas are
concerned about the advertising and have experimented with ads in various media since taking over the
store. But the ads failed to use any common theme, and there was no plan set forth for the advertisements.
Pricing had been a major problem when the store was first acquired. In fact, the prior owner seemed to
mark up inventory at a certain percentage with no regard for demand or competition.
Discussion Questions
1. Should the store carry trendy clothes for teenagers?
2. Try to define the target markets by age, sex, and any other variable you think is relevant.
3. What media might you select to reach your target markets?
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45
Teaching Notes
Case A13: Marquette Army/Navy Surplus Store
Irvin A. Zaenglein, Northern Michigan University
Synopsis: Army/Navy surplus store is considering various new strategic directions.
Use: Chapters 1, 2, and 5 Illustrate the set of decisions--strategic and tactical--undertaken by a
retail store.
Discussion Questions
1. Should the store carry trendy clothes for teenagers?
Probably not. There are several reasons why teenagers may not constitute a good target market for
2. Try to define the target markets by age, sex, and any other variable you think is relevant.
Two good targets appear to exist for MANS. They are males from 35 to 45 years of age, and students
3. What media might you select to reach your target markets?
The media selected must key in on the targets. The first target might be reached through local
veterans groups and hunting organizations. A mailing list should be developed in order to use direct
Ancillary Cases and Teaching Notes
Case A14: Bloomingdale’s Customer Service Reaches Abroad
In 1872, brothers Lyman and Joseph Bloomingdale opened their first retail outlet, the East Side Bazaar, in
New York City. Bloomingdale’s, now a division of Federated Department Stores, has grown into a
national chain with 21 stores in Florida, Illinois, Maryland, Massachusetts, Minnesota, New York, New
Jersey, Pennsylvania, and California.
Due to Bloomie’s unique merchandise and service it has become a tourist destination. Foreign
customers are from almost every country with a strong representation from Japan, the United
Kingdom, Brazil, Argentina, Germany, Australia, and Canada. These international patrons are
affluent, educated, and typically from 35 to 55 years old.
The International Club is a special program for foreign customers. Membership is available to any
customer visiting from abroad who signs up in a Bloomingdale’s store. It entitles them to exclusive
benefits not offered to the general public: special in-store offers, gifts, services, and savings;
Bloomingdale’s catalogs mailed directly to their homes; semiannual editions of Bloomingdale’s
International Club Newsletter; notification of special events; private invitations; and more.
Most Bloomingdale’s stores have an International Service Desk/Visitors Center. When a foreign customer
comes to this area and asks for shopping assistance in her native language, the consultant will find an
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47
Discussion Questions
1. What are the unique needs of international customers and what services can Bloomingdale’s offer
to satisfy those needs?
2. Are international customers an attractive market to pursue? Why?
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48
Teaching Notes
___________________________________________________________________________
Case A14: Bloomingdale's Customer Service Reaches Abroad
Synopsis: Bloomingdale's is an upscale department store chain, owned by Federated Department
Stores that takes pride in its superior customer service and unique merchandise. Due to its
positioning, the store attracts a significant number of wealthy customers from foreign
countries.
Use: Chapter 4 Illustrates the importance of customer service in light of the changing demographics
and values. Relate customer service to the consumer buying process.
Chapter 19 Illustrates how retailers can provide better customer service for target markets.
Discussion Questions
1. What are the unique needs of international customers and what services can Bloomingdale's
offer to satisfy those needs?
International customers have a unique set of concerns compared to domestic customers such as an
2. Are international customers an attractive market to pursue? Why or why not?
For an upscale department store like Bloomingdale's, international customers in the US are very
3. Will the needs vary depending on the customer's nationality?
At a basic level, the language needs are going to vary from country to country. However, there are
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49
The norms for how close people should stand together also differ across cultures. For example, the
social zone for Latin Americans is much closer than for North Americans. Latin Americans tend to
conduct business transactions much close together than North Americans. In a business transaction
between the two cultures, the North Americans feel uncomfortable with the close proximity.
4. How can Bloomingdale's market its international services to attract more international
customers?
Perhaps the best approach is to hire people from other countries for a sales associate and customer
Ancillary Cases and Teaching Notes
50
Case A15: Toys “R” Us
“Sandy, will you and Johnny please stop fighting. We’re leaving as soon as we find Glamour Barbie for
the birthday party you’re going to tonight. I just don’t understand why we can’t find them. They should
be here with the other dolls. Now we just need someone to help us find it. Finally I think I see a guy who
works here.”
“Excuse me. Could you tell me if you carry Glamour Barbie and, if so, where I can find it?”
Michael Goldstein, chief executive of Toys “R” Us, approved a $270 million restructuring plan for
1996 to get Toys “R” Us back on the right track. The main agenda was to expand and remodel its
stores to better suit its customers’ needs and wants and to take back its market share from
competitors. First, Toys “R” Us introduced Babies “R” Us to compete directly with Baby
Superstores and other baby-oriented stores. These stores offer parents a one-stop shopping trip for
everything a baby needs from diapers and clothing to nursery furniture and baby food and formula.
Each store provides more than 30,000 items for babies with a floor plan featuring panoramic
viewing, wide aisles, and skylights. The first store opened in May 1996 in Westbury, Long Island,
and the chain plans to launch nine more before the year’s end.
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The increased pressure from competition forces Toys “R” Us to rethink its retail strategy. The consumers
now have control of the steering wheel—they have the power to decide the future of Toys “R” Us.
Parents have grown intolerant of the lack of attention and the haphazard arrangements at Toys “R” Us,
especially when they can go right down the street to a retail discounter and purchase products for the
same price—sometimes even lower. Toys “R” Us must now find new ways to attract customers who have
become accustomed to price wars and their spoils, and who are always searching for fresh concepts and
new merchandise. The “supermarket style” Toys “R” Us has been noted for, broad assortments plus
crowded aisles, toys stacked so high they cannot be reached, and plain decor.
Discussion Questions
1. What do you think of Toys “R” Us expanding internationally?
2. Do you think that Kids World superstores and Babies “R” Us will create a competitive edge for
Toys “R” Us?
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52
Teaching Notes
Case A15 – Toys “R” Us
Synopsis: Describes changes made by Toys "R' Us to its retail market strategy and explores issues
of adaptation to changing consumer needs and growth strategies.
Use: Chapter 3 Illustrates factors that will affect the growth of electronic retailing.
Chapter 4 Discussion of how a retailer adjusts its strategy to changing consumer needs.
Chapter 5 Development of a retail strategy to cope with changing market conditions. Provides
basis for discussing alternative growth strategies for a retailer.
Discussion Questions
1. What do you think of Toys “R” Us expanding internationally?
International expansion is one form of a market expansion strategy referenced in Chapter 5. Toys
“R” Us is one of many major American retailers including Wal-Mart, The Gap, Home Depot, etc, that
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2. Do you think that Kids World superstores and Babies “R” Us will create a competitive edge for
Toys “R” Us?
Toys R Us has a number of bases of competitive advantage including a well-known and respected
3. How can Toys “R” Us compete effectively against discount stores and electronic retailers?
To compete against other discount stores, Toys “R” Us, needs to do what its competitors have done.
It must arrange its merchandise better and train its associates to make them more customer-friendly.
Ancillary Cases and Teaching Notes
54
Case A16: Retailing in China
Sarah Harrison is president of Retail Expertise Associates (REA), a retail consulting firm based in
Atlanta, Georgia. After 15 years in retailing culminating as a general merchandise manager for a major
department chain, Sarah decided that she wanted to get out of the corporate retailing world and start her
own business. She began REA as a consulting firm offering merchandising expertise to small and
midsized department stores in the eastern United States.
Day 1
Following a 16-hour flight from the United States, I was met at Shanghai airport by Professor Wong (a
business professor from the university of Suzhou) and an interpreter hired by him to work with me during
my stay. After two hours in transit from the Shanghai airport, we finally arrived at my hotel in Suzhou.
It was late at night local time, and I was completely exhausted.
Day 2
When I got up it was overcast, which reminded me that I had forgotten to pack an umbrella. Buying an
umbrella seemed like a good reason to take my first outing in China. I had plenty of time since Professor
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55
I was also struck by the number of employees in the store. Every merchandise area had several
employees standing around. I was served by five different people as I tried to purchase an umbrella. As
for buying the umbrella, what an experience! No one spoke English, despite the store’s billboard
welcoming foreign visitors. Through a combination of head nods and hand signals, I managed to select
the umbrella I wanted. I took out some Chinese money to pay, but instead the sales clerk gave me what
looked like a bill and point frantically toward another booth. It turned out that I had to take the invoice to
Day 3
Early this morning, Professor Wong met me at my hotel and brought me to my first meeting with the
managers of the First Department Store. We were met at the front door by some of the store’s managers
and led to an elevator in the back of the store. The area near the elevator seemed untidy, and I thought we
were taking a freight elevator to go up to the executives offices. However, Professor Wong informed me
that this is the only elevator in the building and that it is used for both freight and customers, though most
customers use the stairs. We entered a meeting room filled with overstuffed sofas and chairs. A table in
My first exposure to a Chinese-style business meeting was an eye opener. I expected to begin with some
questions to get a feel for the store’s situation and where its main problems and challenges lie. Instead,
the general manager pulled out a prepared speech, which he proceeded to read to me. The speech
described the history of the store, how it operates as a state-owned entity, and how it is gearing itself up to
eventually be sold to private investors and run as a for-profit venture. From the speech, I was able to
glean that the store has annual sales of about Rmb 800 million (about $100 million), which is large by
Chinese standards. The building is modern by Chinese standards, having been renovated in the early
Ancillary Cases and Teaching Notes
The general manager finished his speech by talking about China’s 5,000-year-old history and culture, and
how this is a tremendous source of pride for all Chinese people. The presentation took about 30 minutes.
Afterwards, his two assistants gave brief speeches about their determination to make First Department
Store the leading department store in the Suzhou area and about how proud they were of the progress the
store has made to date.
Day 4
Professor Wong picked me up immediately after breakfast, and we walked over to the First Department
Store. We were met at the door, as we had been yesterday. This time we were met by three of the store’s
managers and the general manager. From there we were taken on a floor-by-floor tour of the store. I was
again struck by the number of staff in each area, most of whom seemed to have little to do. In both the
men’s and ladies’ apparel departments, for example, sales clerks were posted at each rack and spent most
Another thing that stood out as I toured the store was the displays. Along with being packed tightly,
garments in the Apparel Department were hung on racks still in the protective plastic put on in the
factory. Though this was explained to be a precaution to keep them from getting dirty as a result of
customer handling and the environment, it was unattractive. Fitting rooms were nonexistent. Few
mirrors were available in the apparel, shoes, or accessories areas. However, the store did have a few
alcoves reserved for well-known international designer labels where the displays were more inviting,
mannequins wore simple clothes, goods were hung up without the protective plastic, and there were
fitting rooms with mirrors. In the non-apparel departments, such as toys and personal care products,
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57
After the tour, we returned to the meeting room on the sixth floor. Here, I was introduced to another
assistant manager, who spoke about the store’s wholesale division. This manager noted that First
Department Store acts as a wholesale outlet for several of the store’s local suppliers, including
manufacturers of mattresses, furniture, and clothing. After the assistant manager finished, the general
manager invited me to ask questions and offer my ideas for improving the store’s operations; but first he
wanted to discuss how I could help First Department Store export goods to the United States. I said that I
would have to do some research on that question as this was for me an uncommon feature of retailing. I
did promise that I would get back to him with the names of possible buyers for the Chinese-made goods
within a few weeks after I received from him a full descriptive list of the products First had to export.
This seemed to satisfy him so we were able to move on to the questions and suggestions regarding store
operations.
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Since I wasn’t getting far with questions related to hard data, I decided to ask my next question in an area
that I felt confident the general manager would take great pride. I asked him to describe to me what had
been done to date to advance his goal of improving the store’s image. As I expected, he seemed proud of
the store’s efforts in this regard. They included plans to open an in-store art gallery, a new sales area for
local specialty items such as silk handicrafts, a tea house on the fourth floor offering patrons a sweeping
view of the city, and more floor areas set aside to feature international brand name goods. First
Department Store also sponsors an employee chorus, which performs at local events and a local radio
station. All these are positive steps, but it seemed to me that an image makeover would require more.
When evening came, Professor Wong and I took a taxi to an upscale restaurant where the First
Department Store was hosting the banquet. I was still recovering from jet lag, and my body clock was a
bit off, but I managed to fight off my tiredness by ingesting several cups of Cha, a strong Chinese tea.
During dinner, I asked the general manager to identify the biggest challenges facing the store. He paused
and then said that his main challenges are to improve the quality of the store’s offerings and its customer
service, to expand First’s international activities, and to control costs so that the store can be more
competitive with the city’s many small retailers. In addition, he mentioned training for the store’s
employees as another top priority. I knew from my research that poor service by retail staff is one of
Day 5
Over dinner last night, the general manager suggested that I tour one of the company’s other outlets,
which was in Kunshan, a city of 1 million people about halfway between Suzhou and Shanghai. The
store provided a minivan and driver, and Professor Wong, Miss Tao, and I left Suzhou early in the
morning. Upon our arrival we were met by the branch store’s general manager and led to his office. He
gave a brief speech on the outlet’s history and objectives; then one of his assistants made a few remarks
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The Kunshan store also had computers which were used primarily for inputting the daily sales and
preparing reports. Near the computer room, there was a large room with an extensive security system,
including television monitors and recording cameras. I was quite surprised, since my understanding was
that crime in China was low. When I asked about the security system and the amount of shoplifting, the
general manager explained that shoplifting was almost nonexistent but that the security and monitoring
system had been installed to ensure that store employees were doing their jobs. This was not the answer I
was expecting!
I asked the managers to describe their competition to me. The assistant general manager gave me a
thorough rundown, describing how the store is clearly beating its closest direct rival, another large
multistory department store nearby, but that its main rivals are the thousands of small street vendors, who
are often able to underprice First. One problem First Department Store faces in Kunshan and at all of its
outlets, according to the assistant general manager, is that consumers window shop in the pleasant
environment of their store but then do their buying wherever they can get the best price. According to the
assistant general manager, the typical Chinese shopper operates according to the adage “Never make a
purchase until you have compared three shops.”
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Day 6
Today, I decided to try another approach to gathering information so I went back to the main store to
interview some store employees and department heads. From this I hoped to get a better feel for the day-
to-day routine in the store. This turned out to be an exercise in futility. Many employees didn’t seem to
Discussion Questions
1. What are some of the unique aspects and challenges of doing business in China that Sarah
Harrison has encountered?
2. What are the problems facing the store?
