Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 “Taylor”ing for Success Ann Taylor Market Strategy Santa Clara University MBA March 10, 2010 By Kathleen Cronin.

Similar presentations


Presentation on theme: "1 “Taylor”ing for Success Ann Taylor Market Strategy Santa Clara University MBA March 10, 2010 By Kathleen Cronin."— Presentation transcript:

1 1 “Taylor”ing for Success Ann Taylor Market Strategy Santa Clara University MBA March 10, 2010 By Kathleen Cronin

2 2 Background  50 years: Evolved to become nationally recognized brand  Two businesses: Ann Taylor and LOFT  Designs clothes for well dressed woman, “ANN”  Ann Taylor: Chic, professional  Loft: Casual needs of same customer segment  Generates $2B in annual revenue 2 50 Years Designing Clothes for Well Dressed Woman

3 3 Why Strategic Change Required?  Strategic Restructuring Program announced in Feb 2008 Objective: Reduce costs and improving operating margins Primary Focus: Enhance brand value and refine marketing campaigns Totaled $140M in planned investment costs Expected annualized savings of $125M  Harsh decline in Net Income in 2009 Economic conditions Company cost structure issues Failure of design team to meet customer trends Too focused on expansion Excludes $286 M goodwill impairment charge in Jan 09 Strategic Restructuring Program Announced Restructuring Program Expansion 1 Restructuring Program Expansion 2 Kay Krill named as CEO Ann Taylor Quarterly Net Income:

4 4 Specialty Women’s Retail Industry Five Force Analysis MEDIUM / HIGH BUYER POWER -Low switching costs -Rewards program deters switching -Trends easily imitable -Low backward integration MEDIUM THREAT OF NEW ENTRANTS -Create subsidiaries to leverage distribution channels -Word of mouth drives buying decisions -No switching cost -High capital requirements - Import restrictions could drive manufacture in-house Low Power of Suppliers -Asian suppliers cheap; make small profit -Low supplier concentration: multiple manufacturers make clothes -Low threat to forward integrate -Medium for Lack of substitutes Medium Threat of Substitutes -Changing lifestyles allow less time to shop -Increasing usage of e-shopping -Economic decline caused switch to discount stores -V-P tradeoff: Low, but promotions will increase V-P HIGH COMPETITIVE RIVALRY -Multiple competitors -Low industry growth -Low exit barriers due to mfg -Fairly transparent strategies (latest trends) 4 Mature, Fragmented, Unattractive Market Industry Sales in ‘09: $38B 1-Competitive Rivalry 2-Buyer Power 3-New Entrants 4-Substitution Threat 5-Supplier Power High Low

5 5 Macro Economic Analysis Global -Expanding internationally -Asia, Middle East, Russia growing markets -European market continues to lead w/ fashion -International firms entering U.S. Government/Regulatory -Reduced trade regulation -Reduced cost benefit with offshore manufacturing -Free Trade Agreement lowering tariffs -Ship fabric without import duties -Promotion of operations in certain regions (tax breaks) Environmental -Push to “Go-Green” in supply chain, product offerings -Eco-friendly causes transformation on customers -Now part of brand image -Develop brands specific to eco-friendly materials -Causes better material selection -Monitoring supplier qualification processes Technological -Point of sale via use of bar code scanners -Online marketplace allows for real-time transactions -Social networking primary educational tool -Hear of product launches, compare prices, -New sites allow purchases at more of a discount -Less brand loyalty with internet sales Economic Factors Driving Increased Competition

6 6 Customer Analysis: Market Penetration ANN Targets 50% of U.S. Market

7 7 Customer Segmentation of Women’s Apparel Industry SEGMENTDEMOGRAPHICBENEFIT SOUGHT (Key Values) 1Fashion Forward, Chic Primary Age Group:  “Hip Singles”  Always up to date on latest trends  Frequent shoppers  Often accessorize w/ outfit  Shops for clothes at primarily specialty retail stores  Embrace new trends, extension of personality  Educated about new fashion  Become knowledgeable before purchase  Top preferred product offerings:  Style, proper fit, style, discounts offered  Spend significant portion of income on clothes 2Modern, Updated Classic Primary Age Group:  “Professional career woman”  Simplicity but occasional wardrobe update  Sometimes accessorize w/ outfit – this increasing  Shops for clothes at mixture of specialty retail stores, department stores, discounted stores  Top preferred product offerings:  Proper fit, style, price, ability to mix/match  Looks for versatile, modern clothing staples  Prefer non-iron pieces and ability to wash versus  Spends discretionary income on clothes  Reside in middle; Stay with moderate updates  Less likely to jump on anything trendy 3Traditional, Conservative Primary Age Group: 35+  “Suburban Mother” or “Conservative Retiree”  Sticks to basics  Rarely accessorizes w/ outfit  Occasional shopper  Desire to save money on clothes  Top preferred product offerings:  Proper fit, versatility, price, location, & durability  Does not follow latest trends  Little desire to stand out or make statement  Looks for all-in-one store at good price  Looks for one clothing that works everywhere Target Segment: Modern / Updated Classic

8 8 Market Share of Top 15 Competitors Very Saturated Market Other Women’s Retail Other Department Stores Total Market Value: $107B Values in % Macy’s (US) Ann Taylor Stores

9 9 Video: THE NEW ANN Classic. Versatile. Fresh.

10 10 Corporate Leadership 10 Kay Krill President and CEO Appointed Oct 2005 Kay Krill President and CEO Appointed Oct 2005 Michael Nicholson Executive Vice President CFO and Treasurer Appointed Jul 2008 Michael Nicholson Executive Vice President CFO and Treasurer Appointed Jul 2008 Barbara Eisenberg Executive Vice President General Counsel and Corp Sec Appointed Mar 2005 Barbara Eisenberg Executive Vice President General Counsel and Corp Sec Appointed Mar 2005 Christine Beauchamp President, Ann Taylor Appointed Aug 2008 Christine Beauchamp President, Ann Taylor Appointed Aug 2008 Gary Muto President, LOFT Appointed Nov 2008 Gary Muto President, LOFT Appointed Nov 2008 Brian Lynch President, Corporate Operations Appointed Jul 2008 Brian Lynch President, Corporate Operations Appointed Jul 2008 Mary Kay O’Connor Wente Senior Vice President Director of Stores Appointed Oct 2008 Mary Kay O’Connor Wente Senior Vice President Director of Stores Appointed Oct 2008 Lisa Axelson Senior Vice President Design Appointed Oct 2008 Lisa Axelson Senior Vice President Design Appointed Oct 2008 Paula Zusi Executive Vice President Chief Supply Chain Officer Appointed Sept 2008 Paula Zusi Executive Vice President Chief Supply Chain Officer Appointed Sept 2008 Michael Kingston Senior Vice President Chief Information Officer Appointed May 2006 Michael Kingston Senior Vice President Chief Information Officer Appointed May 2006 New Leadership Since 2008

11 11 Corporate Timeline Beauchamp becomes Ann Taylor President LOFT Maternity pulled from stores, only online Beauty line introduced Plans for “Modern Boomers” division began Strategic restructuring plan began Kay Krill appointed CEO Celebrations line introduced Axelson became SVP of Design LOFT Outlet introduced Collections line introduced LOFT Maternity line introduced Increased Organic Development

12 12 Ann Taylor Competitive Advantage 12 Competitive Market Drives Need for Strategic Change Jones Apparel Ann Taylor is superior to other clothing lines because it provides the professional woman with a chic, sophisticated look using high quality materials for professional and special occasions. Loft is superior to other clothing lines because it provides the professional woman with casual, fashionable and fun styles for professional and special occasions.

13 13 Sales Growth: Ann Taylor Vs. Competition Future Profitability Dependent on Pace and Quality of Bottom Line Growth

14 14 FCF Across Competitors: ’05 – ‘09 ANN Shows Poor Performance with Negative ROE

15 15 Distribution Channels Total Employees: 18,400 employees Total Stores: 935 stores AnnTaylor Stores Corporation (US & Puerto Rico) Ann Taylor Corporate Businesses (Brands) Distribution Products Wedding Professional and Casual Clothing Accessories 31% of Revenue* 411 Stores Chic, sophisticated feminine clothing for professional & special occasions 320 Stores91 Stores *Based on 2008 revenue; 19% of revenue is “Other” category Provide modern styles that are versatile across all occasions and needs Ann Taylor Online BeautySleepwearLingerie Ann Taylor Ann Taylor Factory LOFT Outlet LOFT LOFT Online Maternity Casual and Professional Clothing 50% of Revenue* 524 Stores Ultimate casual, fashionable & fun retail destination 510 Stores14 Stores Accessories Strong Distribution Channels Distribution channels:  Malls, urban/suburban centers  Outlets centers  Online stores Distribution channels:  Malls, urban/suburban centers  Outlets centers  Online stores

16 16 Social Media Fan Count Small Presence on Social Media CompanyFan Count Ann Taylor13,000 Loft38,000 Talbots15,000 Macy's374,000 Nordstrom56,000 J. Crew219,000 Gap537,000 Ann Taylor Brands = 4%

17 17 Recommendations: Short-Term  Better communicate refreshed brand image Improve social networking site Offer frequent promotions Increase online advertising Offer in-store networking/product launch events  Build customer relationships Track customer engagement Continue to use MarketWorks to track trends Refine use of ATLAS system  Sustain cost parity Invest in Radio Frequency Identification (RFID) Improve operational efficiencies with inventory  Better communicate refreshed brand image Improve social networking site Offer frequent promotions Increase online advertising Offer in-store networking/product launch events  Build customer relationships Track customer engagement Continue to use MarketWorks to track trends Refine use of ATLAS system  Sustain cost parity Invest in Radio Frequency Identification (RFID) Improve operational efficiencies with inventory Improve Value Position with Customers

18 18 Recommendations: Long-Term  Partner with supply chain management firm Provides company with new process knowledge Diversifies sourcing risk Identify higher quality materials  Expand store size and accessories market Follows trend of outfit diversification Allows for larger variety of accessories Creates destination to find more of their wardrobe  Broaden customer segment into Boomer Market Fast growing market with high discretionary income Leverage resources to achieve expansion  Partner with supply chain management firm Provides company with new process knowledge Diversifies sourcing risk Identify higher quality materials  Expand store size and accessories market Follows trend of outfit diversification Allows for larger variety of accessories Creates destination to find more of their wardrobe  Broaden customer segment into Boomer Market Fast growing market with high discretionary income Leverage resources to achieve expansion Leverage Core Competencies and Resources

19 19 BACKUP

20 20 Vertical Integration: ANN : Competitors

21 21 Value-Price-Cost Wedge Ann Taylor : Competition 21 $290 Average Value Minus Cost Position $105

22 22 Profitability Ratios

23 23 Activity Ratios

24 24 Liquidity Ratios / Z-Scores

25 25 Competitive Price Comparisons

26 26 Ann Taylor VRIO Analysis

27 27 Competitors’ VRIO Analysis 27

28 28 Competitors’ VRIO Analysis 28

29 29 Value Chain Analysis INBOUND LOGISTICS OPERATION S OUTBOUND LOGISTICS MARKETIN G & SALES SERVICE LEGEND: Value driver impact Cost Driver impact INFRASTRUCTUR E HUMAN RESOURCE MANAGEMENT 1. Get finished clothes from outsourced manufacturing suppliers and store in Louisville distribution center 1. Design clothes to meet market trends 1. Customize inventory carried in store 2. Breadth of line 3. Operated under mutiple brands - Ann Taylor, LOFT and outlets 2. Drive in-store operational efficiency 3. Increase inventory turnover ratio 1. Multiple locations 2. Multiple channels 1. In-store customer service 2. Reduced shipping time 3. Personalized recommendations 4. Credit Card loyalty program 2. Reduced shipping time 3. Personalized recommendations and database driven marketing 1. Over 900 store locations 2. Multiple retail channels - stores, online, phone 2. Enforce ethical guidelines with suppliers 3. Young models such as Heidi Klum to target younger customer base 3. Procure non- merchandize items TECHNOLOG Y PROCUREME NT 1. Marketworks, customer-database 2. Partnership with Cisco for inventory management system 1. Leadership focused on operational efficiencies 2. Strong design team 3. ATLAS, in-store operational efficiency monitoring program 3. Employee training 1. Centralized non-merchandize procurement system 2. Centralized distribution center in Louisville 3. Diversified sourcing network with multiple suppliers 4. Credit card loyalty program

30 30 Boomer Implementation Timeline


Download ppt "1 “Taylor”ing for Success Ann Taylor Market Strategy Santa Clara University MBA March 10, 2010 By Kathleen Cronin."

Similar presentations


Ads by Google