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Ancillary Cases and Teaching Notes

Case A6: Men’s Wearhouse: Adding Complementary Merchandise and Services to

Bring Value to Customers

Men’s Wearhouse, Inc. is one of the largest discount men’s apparel companies in North America. The

first location of this men’s specialty store was opened in August 1973 in a strip shopping center near

Houston, Texas. Thirty years later, Men’s Wearhouse operates 693 stores in 44 states in America and 10

provinces in Canada under the Men’s Wearhouse, K&G and Moore’s brand names.

MERCHANDISE

Men’s Wearhouse sells high–quality men’s clothing at prices 20 to 30 percent lower than department

LOCATION

Men’s Wearhouse stores are located in strip shopping centers adjacent to residential areas. This

PROMOTION

Men’s Wearhouse uses a variety of media to inform and remind customers about its stores, merchandise,

tag line, “You’re going to like the way you look. I guarantee it.”

SERVICES

Men’s Wearhouse is known for having a well-trained sales staff that can assist customers with their

wardrobe selection. In addition to helpful sales associated, each tailored item can be brought back to the

Ancillary Cases and Teaching Notes

GROWTH STRATEGIES

One of the most profitable additions to the services provided by Men’s Wearhouse is the tuxedo rental

DISCUSSION QUESTIONS

1. Men’s Wearhouse successfully added tuxedo rental to its merchandise offerings in 1999. Now

this retailer plans to add women’s bridal wear and the service of dry cleaning. List the pros and

cons for each of these growth strategies.

2. What other merchandise and services could Men’s Wearhouse add to reach a new segment of the

market, benefit customers, and grow its business?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A6: Men’s Wearhouse: Adding Complementary Merchandise and Services to Bring Value to

Customers

Synopsis: Men’s Wearhouse, Inc. is one of the largest discount men’s apparel companies in North

America. Men’s Wearhouse operates 693 stores in 44 states in America and 10 provinces

in Canada under the Men’s Wearhouse, K&G and Moore’s brand names. The retailer

sells high quality men’s clothing at prices 20% to 30% lower than department stores,

specializing in suits and other tailored business apparel.

Use: Chapter 5 Illustrates Men’s Wearhouse’s merchandising strategy.

Discussion Questions

1. Men’s Wearhouse successfully added tuxedo rental to its merchandise offerings in 1999. Now this

retailer plans to add women’s bridal wear and the service of dry cleaning. List the pros and cons for each

of these growth strategies.

Ancillary Cases and Teaching Notes

Pros

Cons

Bridal Wear

Convenience, one stop shopping for the

entire wedding party

New brand name of Bride and Joy,

no brand equity or recognition, will

2. What other merchandise and services could Men’s Wearhouse add to reach new segments of the

market, benefit customers, and grow its business?

Add tuxedo rental in Canada

Business and casual clothes for women

Case A7: Borders Bookstore: A Merchandise Display Problem

Michael Chaim, general manager of the Borders Bookstore in Madison, Wisconsin, was proud of

his store. Located in a city that has one of the highest levels of book purchases per capita, Chaim

felt Borders’ selection; services and location near the 40,000-student university served the

community well. Even with competitive pressure from the newly opened Barnes & Noble on the

west side of town, his bookstore/café was often a busy place.

Chaim was taken aback when an article in a widely read alternative newspaper criticized the bookstore’s

merchandise arrangement as being prejudiced. The store carries a large selection of literature and poetry,

Discussion Questions

1. Although Chaim has several options, one is to duplicate the titles that could be shelved in either the

general literature collection or a specialty collection. What are the advantages and disadvantages of this

tactic?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A7: Borders Bookstore: A Merchandise Display Problem

Synopsis: Manager of a Borders’ bookstore in a college town is confronted by customers criticizing

the arrangement of books as “ghetto–izing” authors who were not white males.

Use: Chapter 17 Illustrates the problems that can confront store managers.

Discussion Questions

1. Although Chaim has several options, one is to duplicate the titles that could be shelved in either

the general literature section or in a specialty collection. What are the advantages and

disadvantages of this tactic?

Stocking duplicate books in a few locations throughout the store may aid customers who misjudge

2. The Borders store described in this case is in a college town. How should the merchandise be

arranged in a different location, such as a suburban residential location or a more urban

setting?

Stocking decisions may be made on the basis of the individual stores’ target markets. Book display

Ancillary Cases and Teaching Notes

Case A8: The Gap and Old Navy

DONALD FISHER AND WIFE launched The Gap in 1969. Initially, The Gap stores were unique in offering

every size and style of Levi’s, arranged by size for convenience. When the teen-jean craze slowed in the

mid-1970s, stores were repositioned for people interested in a fashionable, causal lifestyle. Donald Fisher,

then CEO, and Mickey Drexler, then president, added other chains to The Gap portfolio of specialty

apparel stores: Banana Republic and Old Navy. Banana Republic is positioned at the high end of the

quality/price spectrum that includes the moderately priced Gap and the company’s newest chain, Old

Navy, featuring the least expensive clothing.

Drexler was well aware of this fact and brought with him new and innovative ideas that the company

desperately needed. Drexler, the Gap’s president since 1983, became the CEO in October 1999 when

Robert Fisher, the president and son of the Gap founders, retired. The company’s stock immediately rose

10 percent on the news of Drexler taking over.

Mickey Drexler developed the concept for the Old Navy chain to cater to the new lifestyle of teens and

young adults who want fashion but do not have much to spend on clothing. He selected the name for the

chain after seeing it on a building during a walk around Paris. Old Navy is consistent with the growing

strength of discount stores in apparel retailing. Consumers were predicted to spend $40 billion—nearly a

third of their apparel dollars—at discount department stores, off-pricers, and factory outlets in 1999. It is

Ancillary Cases and Teaching Notes

In April 1999, Jenny Ming was appointed president of Old Navy. Ming started her career at The

Gap in 1986 as a buyer. Ming has a knack for predicting what hip-looking clothing will appeal to

the masses and making big bets on producing large quantities to ensure that these items will be in

Discussion Questions

1. How do you think the growth of Old Navy will affect the sales in The Gap chain?

2. In the next five years, where should Gap, Inc., place the greatest resources: Old Navy, Gap, or

Banana Republic? Why?

3. In what ways could the Gap chain enhance customer appeal and loyalty?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A8: The Gap and Old Navy

Synopsis: The Gap is a multinational apparel manufacturing and retailing conglomerate. In an

effort to expand and diversify its appeal, the company has in recent years opened up Old

Navy, and Banana Republic. All of the company’s stores have customers of their own,

but they all compete with one another to some extent.

Use: Chapter 1 Provides a general overview of what retailers need to do to be successful.

Chapter 2 Identifies the strategy and operations of a retail conglomerate.

Discussion Questions

1. How do you think the growth of Old Navy will affect the sales in The Gap chain?

One could make a reasonable argument to suggest that the growth of Old Navy will decrease sales in

The Gap chain, but it could be just as reasonable to suggest the opposite. When Gap, Inc. developed

the concepts for both Old Navy and Banana Republic, one of the types of growth strategy they were

Ancillary Cases and Teaching Notes

2. In the next five years, where should Gap, Inc., place the greatest resources: Old Navy, Gap, or

Banana Republic.

Once again, there is no absolute right or wrong approach to this situation. If the economy takes a

downturn, it might seem logical to focus most on the growth of Old Navy. If the trend of economic

3. In what ways could the Gap chain enhance customer appeal and loyalty?

Generally speaking, to Gap Chain could do many of the same types of things that any retailer might

Ancillary Cases and Teaching Notes

Case A9: Blue Sky Surf Shop —Twenty-One Years of Surfing and Still Going Strong

Blue Sky Surf Shop in St. Augustine, Florida, is owned and operated by husband and wife Dave and

Nancy Macri. After surfing in St. Augustine for several years, the Macri’s, who are originally from the

gulf side of Florida, decided to start their business in 1979 in what was then a small, low–key surfer’s

town. Located on Anastasia Blvd. (the main route through Anastasia Island and a direct road to the

beach), the shop is not out of sight but is easily missed if one is not looking for it. This is not a

disadvantage to the store because (unlike most businesses in tourist-dependent St. Augustine) Blue Sky

relies on local surfers and word of mouth for 90 percent of its business. Surfers from Jacksonville,

Gainesville, Daytona Beach, and the west coast of Florida flock to St. Augustine for the consistent waves,

clean water, and wide open beaches, and all rely on Blue Sky for surf accessories.

Customers entering Blue Sky, see surf videos constantly playing on a television monitor, over 200 brand

new surfboards neatly displayed on floor racks, and the best brand name clothing. This quickly tells them

they are in the best possible place to suit their needs. Just as back in 1979, when the store was a mere 600

square feet, it’s dedicated to maximizing every inch for surfers needs. The store is now 1,800 square feet

and Blue Sky consistently carries roughly 250 new and 60 used surfboards, more than any other shop in

northeast Florida. Going into its 21st year of business, Blue Sky has perfected the concept of quality

products and service while staying true to its original clientele, no matter what the rate of expansion.

Ancillary Cases and Teaching Notes

Discussion Questions

1. What is the target market of Blue Sky Surf Shop?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A9: Blue Sky Surf Shop – Twenty-One Years of Surfing and Still Going Strong

Synopsis: Blue Sky Surf Shop is a highly successful specialty store that caters to surfing

enthusiasts. The store, which has been in business for over two decades, draws most of

its business from its loyal customers and word of mouth referrals.

Use: Chapter 1 Provides a general overview of what retailers need to do to be successful.

Chapter 2 Illustrates the strategy and operations of a specialty retailer.

Chapter 4 Identifies the demographic and consumer behavior characteristics of Blue Sky’s

target market(s). Illustrates what consumers think about when they compare

retailers and products to buy, and what retailers can do to maximize repeat business.

Discussion Questions

1. What is the target market of Blue Sky Surf Shop?

It should come as no surprise that Blue Sky’s target market is surfers. Other surf shops and general

sporting goods retailers that have more diversified merchandise offerings than Blue Sky typically

2. What role has location played in the long-term success of Blue Sky?

Generally speaking, Blue Sky is ideally situated. It is located in St. Augustine, FL, a town where

many people travel relatively long distances to surf. Generally speaking, Blue Sky is ideally situated.

Ancillary Cases and Teaching Notes

3. How has Blue Sky achieved long-term success with minimal advertising?

In short, Blue Sky is located in a surfing town, where it has been for decades, and their customers are

Ancillary Cases and Teaching Notes

Case A10: Cleveland Clinic

For years, Ohio’s Cleveland Clinic has ranked with the top world–class providers of medical care. It pioneered

coronary bypass surgery and developed the first kidney dialysis machine. King Hussein of Jordan used the

clinic, as does the royal family of Saudi Arabia.

Big-name health care institutions like the Cleveland Clinic are after new markets for their state-of-the-art

medical care, and are posing a new threat to local physicians. The expansions are also disrupting

traditional relationships between physicians and their patients, physicians and their hospitals, and

physicians and their fellow physicians.

When the Cleveland Clinic opened an outpatient clinic in South Florida, a war broke out. In a full-page

advertisement in the Miami Herald, Dr. Seropian, a local physician, pulled out the stops. He likened the

clinic to dingoes (wild Australian dogs) that roam the bush, eating every kind of prey. The clinic filed suit

in federal district court in Fort Lauderdale, charging, among other things, that some physicians had

conspired to hamper its entry into Broward County.

Famous medical institutions like the Cleveland Clinic and Mayo are victims of their own success. Many

of the once-exotic procedures that they invented are now routinely available across the country, reducing

patients’ need to travel to the medical meccas. For instance, the Cleveland Clinic might once have had a

hold on coronary bypass surgery, but no more. In 2000, more than 350,000 patients had the operation at

hospitals throughout the United States.

Discussion Questions

1. Compare the Cleveland Clinic to traditional retailers.

2. What was its retail mix?

3. What factors in its environment resulted in it changing its retail mix?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A10: Cleveland Clinic

Synopsis: The Cleveland Clinic is a well-respected health care provider facing a changing

competitive environment. In response to this changing environment, the Cleveland

Clinic is opening facilities in South Florida.

Discussion Questions

1. Compare the Cleveland Clinic to traditional retailers.

The Cleveland Clinic is very similar to traditional store-based retailers. The two major differences are

that Cleveland Clinic offers services rather than merchandise and that the customer decision-making

process is different for selecting a health care provider than retail merchandise. Information from

2. What was its retail mix?

The present strategy of the Cleveland Clinic is to target the Midwestern market by offering high

quality medical services that are not available by local hospitals.

Ancillary Cases and Teaching Notes

3. What factors in its environment resulted in it changing its retail mix?

The declining market in the Midwest and difficulty in differentiating the uniqueness of its services led

Ancillary Cases and Teaching Notes

Case A11: Niketown

Some things don’t need much explanation. When you see the Golden Arches, you think of McDonald’s.

When you see a swirling a swirling red, white, and blue sphere, you think of Pepsi. And when you see

the curvy little swoosh, “Just do it” comes to mind.

With so many nontraditional shopping alternatives competing for the customer’s attention, a key to

survival in the 90s is retailers’ ability to maximize their in-store environments. Customers are bored with

ordinary shopping experiences. Convenience and price aren’t enough. They want to be entertained.

The majority of the pavilions feature the sounds associated with that sport. If you enter one basketball

pavilion (The Flight Pavilion), you’ll hear the distant sound of basketballs bouncing on hardwood floors.

If you enter the tennis pavilion, you’ll hear the sounds of the racket smashing against the little yellow ball.

In the Land of Barkley, named after basketball player Charles Barkley, basketball hoops hold up display

shelves, and basketballs support benches. The sounds being played are shoes squeaking on hardwood.

The actual floor is hardwood so “wannabe” Barkleys can pull on a pair of shoes and squeak them on the

floors like the big guys. The tennis pavilion features a sunken, miniature tennis court; its most popular

piece is John McEnroe’s broken racket. There’s even a kid’s pavilion, with bootie-sized air Jordan

lookalikes and a measure on a wall that shows the height of Jordan’s leap. At 40 inches, it’s higher than

some of his small fans’ heads.

Ancillary Cases and Teaching Notes

Discussion Questions

1. Why are manufacturers like Nike opening their own retail outlets?

Ancillary Cases and Teaching Notes

Teaching Notes

Case A11: Niketown

Synopsis: Nike, the manufacturer of the leading brand of athletic shoes, has opened retail outlets to

showcase their products. These outlets have a unique and highly entertaining store

environment.

Use: Chapters 1,2 Illustrates an innovative retailing approach that emphasizes store design and layout

to entertain customers while they buy merchandise.

Discussion Questions

1. Why are manufacturers like Nike opening their own retail outlets?

While these showcase stores opened by Warner Brothers, Disney, Reebok, and Nike generate

2. What will be the reaction of consumers and retailers who sell Nike merchandise to these new

stores?

These stores typically do not compete with local retailers. They are typically directed toward tourists.