Wal-Mart’s Marketside or Tesco’s Fresh and Easy stores in US

January 14, 2008 – Business Management Article

Wal-Mart Stores Inc (WMT), the world’s largest retailer, will open small-format grocery stores named ‘Marketside’. These stores to be set up in Arizona will be roughly 20,000 square feet in size to begin with. This in comparison to Neighborhood Markets, Wal-Mart’s existing stores which are almost double in size. Neighborhood markets sell fresh produce and other groceries and are much smaller than a Wal-Mart Supercenter.

Wal-Mart’s Marketside stores (smaller Neighborhood Markets) will compete with competitor and British retailer Tesco. Tesco recently entered in the U.S. retail market setting up ‘Fresh & Easy’ markets. Some of the Marketside stores Wal-Mart plans to open are quite close to where Tesco is planning its grocery stores.

Wal-Mart’s ‘Marketside’ logo

Wal-Mart entered the grocery market in 1988. Since then Wal-Mart has grown into being the single largest grocer in the U.S. and has a market share of around 20 per cent. Wal-Mart’s new Marketside stores are the first new store banner to be used by Wal-Mart in the US in two decades.

Wal-Mart has unveiled its logo for Marketside, its new store format to take on UK’s Tesco’s new small-format Fresh & Easy discount grocery stores. Wal-Mart though says that the stores represent just another variation on its existing neighborhood market format.

Reports suggest that Wal-Mart’s Marketside logo includes lower-case green lettering, next to a stacked pile of pile of fresh food items – a fancy tomato, egg and grape.

Related Reading:

Retailing, Tesco, Wal-mart. Marketside logo

The adidas-Reebok Merger

Case Study Abstract

This case study highlights the merger between German sportswear-maker Adidas and Reebok to take on market leader Nike in 2005. Will Adidas’ $3.7 billion takeover of Reebok in 2005 be successful or is it hampering the German sportswear-maker’s performance?

     

Table of Contents

  1. Introduction

    2. Taking on Nike – market leader in the U.S.
    Regulatory Issues – EU clears the Adidas-Reebok merger
    Adidas plus Reebok is equal to better competition with giant Nike
    Post-Merger and Integration Issues
    Adidas-Salomon Group five-point strategy in 2005

  2. Exhibit I: Adidas major locations in 2005

    3. Management Case Study on meger between Adidas and Reebok

  3. Adidas-Reebok combo synergy – Did the merger make sense?

    4. Affordable shoes
    Growing the Adidas brand
    Cost Efficiencies
    Cutting-edge technologies, innovative products and celebrity brand ambassadors
    New business opportunities
    A more geographically balanced sales mix

  4. M&As in the sporting goods industry during the late 1990s and the early 2000s
  5. Adidas Reebok Merger Fact sheet
  6. Exhibit II: The Reebok acquisition according to Herbert Hainer, Chairman and CEO of adidas-Salomon AG
  7. Industry Analysis – Athletic apparel and footwear industry, Sporting Goods in the U.S
  8. Competitive Landscape in 2005/6 – Sporting Goods Industry
  9. Is the merger successful?

    10. Strong competition from Nike
    Adidas – Fourth Quarter 2007 performance
    Adidas vs. Reebok unit performance in 2007

  10. Reebok History – Timeline
  11. Adidas History – Timeline
  12. Financial Analysis – Nike, Reebok, and Adidas in 2004
  13. Exhibit III: Market Analysis – Nike, Reebok, and Adidas in 2004
  14. Exhibit IV: Adidas-Salomon – Five year financial summary
  15. Adidas-Salomon – Financial Data – 2004, 2005
  16. Adidas Group – Financial Data – 2007, 2006
  17. Reebok – Financial Data
Case Study Keywords: Adidas, Reebok, Nike, Mergers and Acquisitions, M&A, Sporting goods, Athletic Apparel, shoes, corporate takeover

Case Questions for Discussion

Topshop in U.S. – Will London street style work in the U.S.?

Case Study Abstract

The focus of this case study is the entry strategy of UK’s successful fast-fashion retailer Topshop in the U.S. This case briefly discusses Topshop’s business strategy, its early years and its success in UK fashion market. Can Topshop replicate its success in the U.S. market?

     

Table of Contents

  1. Introduction – British retail chain Topshop’s U.S. debut
  2. The Topshop Brand – a destination for pioneering British fashion
  3. Background Note – Topshop in its early years
  4. Topshop – History/Timeline/Important Events
  5. Topshop’s entry and strategy in the US
  6. Competition – Where will Topshop fit in the US retail scene?
  7. Exhibit I: Typical Business Strategy of Fast-Fashion retailers
  8. Topshop – Awards and Reputation
  9. Exhibit II: Foreign Retailers in the United States
  10. Exhibit III: Future expansion plans of foreign retailers in the U.S.
  11. Exhibit IV: Services offered by Topshop
  12. Exhibit V: Topshop Collections
  13. Exhibit VI: Facts about the Arcadia Group
  14. Exhibit VII: Fashion Brands under the Arcadia Group
  15. Questions for discussion
Case Study Keywords: Fashion Retailing, Sir Philip Green, Topshop, Topman, Arcadia Group, Retailing in US, Fast-Fashion Market, entry strategy, international expansion

Case Questions for Discussion

  1. Analyze Topshop’s entry strategy in the United States. Do you think it is the right move?
  2. Compare and contrast your experience from your visit to a fast-fashion chain and other retail chains. What can Topshop do to add more value to its customers?

Case Snippets/Updates

  • Topshop is present in around 30 countries. The Arcadia Group owned by billionaire Philip Green owns Topshop, Topman and Miss Selfridge brands. Arcadia also owns the Dorothy Perkins, Wallis, Evans, Outfit and Burton chains. By 2009, the Arcadia Group had 3,115 owned and franchised outlets in 34 countries.
  • In 2006, Sir Philip Green, owner of Arcadia Group was knighted by Queen Elizabeth II. In 2002, he bought Arcadia for 850 million pounds. He and his family own about 90 percent of Arcadia. In 2001, he bought department store British Home Stores (BHS) and is known for successful turnarounds in the retail industry.
  • In 2009 (12 months to August 29, 2009), Arcadia posted a 13% rise in pre-tax profits to £213.6 million. The growth marks a turnaround in performance after profits declined in the previous two years by 5% and 1.6% respectively.

McDonald’s – Business Strategy in India

Case Study Abstract

This case study discusses how McDonald’s India managed to buck the trend in a struggling economy, its early years and business strategy to get more out of its stores in India. The case also briefly discusses how McDonald’s adapted to local culture in India, its localization and entry strategy, its strong supply chain and pricing strategy.

     

Table of Contents

  1. Introduction
  2. McDonald’s entry into India
  3. Exhibit I: McDonald’s – Country – Entry Year
  4. The Indian Market – Top 10 per cent of the busiest markets globally
  5. Localization Strategy
  6. McDonald’s JV in India
  7. Initial Challenges – ‘Culturally Sensitive’ Food

    8. Case Study on Mcdonald's in India

  8. Understanding Indian Customs and Culture
  9. An Indianized Menu, Re-engineered operations and no beef burger
  10. Competition – Major Competitors in India and Globally
  11. McDonald’s – Quick Facts
  12. Time line of McDonald’s in India
  13. Pricing Strategy – The Rs-20 trap and ‘Purchasing Power Pricing’
  14. Kiosks at store entrances for customers in a hurry
  15. Home Delivery – McDonald’s Delivery Service or McDelivery

    16. A McDonald's store in India

  16. Out-of-home Breakfast – International McDonald’s format with local taste
  17. McDonald’s Supply Chain Management (SCM)
  18. Unique cold chain
  19. Cutting costs
  20. Exhibit II: McDonald’s Suppliers in India
  21. Exhibit III: The Menu at McDonald’s India
  22. Exhibit IV: McDonald’s – Early History and Growth
  23. Exhibit V: Principles to McDonald’s business success
  24. Questions for Discussion
Case Study Keywords: Fast-food Retailing, McDonald’s India, Joint venture, Amit Jatia, Vikram Bakshi, localization strategy, pricing strategy, McIndia, quick service restaurants, cultural adaptation, local culture, supply chain management, SCM, McDelivery, unique cold chain

Case Questions for Discussion

  1. McDonalds has become the poster brand for recession-resilient business. What is McDonald’s doing right in India? What elements of its business strategy are working for it and how does it manage to get more out of its stores?
  2. Does local adaptation contribute to business growth in a country? Explain McDonald’s efforts to adapt to the local culture in India. What challenges did McDonald’s face in India?
  3. Have you ever visited a McDonald’s store? Compare and contrast your experience with another quick-service restaurant or fast-food joint you visited earlier. How can McDonald’s improve? Should it alter its strategy?

Case Updates/Snippets

  • World’s leading food service retailer – McDonald’s has more than 32,000 restaurants serving over 50 million customers each day in more than 119 countries.
  • McDonald’s competitors in India – McDonald’s competes with fast food chains like Pizza Hut, Domino’s Pizza, Papa John’s, Nirula’s and KFC in India.
  • McDonald’s Supply Chain – McDonald’s has a dedicated supply chain in India and sources 99% of its products from within the country. The company has strong backward integration right up to the farm level.
  • Quick service restaurants in India – By October 2009, McDonald’s India had more than 170 quick service restaurants in India. Domino’s Pizza, which began operations in India in January 1996, has over 275 stores across 55 cities in the country. KFC has 46 restaurants across 11 cities in India. (KFC is one of the 5 brands owned by Yum!. KFC is a $12 billion global brand and a leading quick-service restaurant (QSR) in many countries.) Nirula’s, one of India’s oldest food chains (completed 75 years in service in March 2009), has a network of around 62 outlets in five states across Northern India. Nirula’s, established in 1934 has interests in hotels, restaurants, ice cream parlours, pastry shops and food processing plants. Nirula’s was the first to introduce burgers in India.
  • Food Industry in India – In India, food industry and particularly informal eating out market is very small. In India, over quarter of a million customers visit McDonald’s family restaurants every day. The Indian fast food market is valued at $1-billion (Rs 4,547 crore) aprrox.
  • MFY (Made for You) food preparation platform – MFY is a unique concept (cooking method) where the food is prepared as the customer places its order. All new upcoming McDonald’s restaurants are based on MFY. This cooking method has helped McDonald’s further strengthen its food safety, hygiene and quality standards. McDonald’s has around 10 MFY restaurants in its portfolio.
  • How McDonald’s manages to keep its prices down? – Fast-food chains face a tough time balancing between margin pressures and hiking prices which can hurt volumes. Consequently, the chains have to increase rates or rework their strategies. Affordability has been the cornerstone of McDonald’s global strategy. Some of its measures to achieve this include – Bulk buying, long-term vendor contracts, and manufacturing efficiencies.
  • McDelivery Online – In India, McDonald’s first launched home delivery of meals in Mumbai in 2004. McDonald’s now has plans to launch web-based delivery service in India (across 75 McDelivery cities) in 2010, a pilot for which has already been tested by it in Hyderabad. The company hopes to add 5 per cent to sales via Web delivery. McDonald’s web-based delivery model will be based on serving the customer quickly wherein the drive time does not exceed seven minutes because its food has to be eaten within ten minutes of preparation. The footfalls in India are amongst the highest in the world, but the average bill is amongst the lowest. At present (March 2010), Domino’s Pizza (operated by Bhartia Group-promoted Jubilant Foodworks under a master franchise agreement) has a 65% market share in the home delivery segment.
  • Most Preferred Multi Brand Fast Food outlets: In 2009, McDonald’s India won the CNBC Awaaz Consumer Awards for the third time in the category of the Most Preferred Multi Brand Fast Food outlets.
  • McDonald’s India in 2010 – In 2010, McDonald’s India plans to open 40 more outlets. The company has also earmarked a budget of Rs 50-60 crore to market its new products and initiatives for consumers. Its new marketing campaign is titled – ‘Har Chotti Khushi Ka Celebration’ – in other words ‘celebrate little joys of life’ where it positions McDonald’s as a venue for enriching life of consumers. In South India, McDonald’s has 29 outlets and plans to add 10 more by end of 2010.
  • Taco Bell in India – In March 2010, Taco Bell, the Mexican specialty chain owned by US-based fast food brands operator Yum! Restaurants launched its first outlet in Bangalore, India. The company which also operates brands like Pizza Hut and KFC plans for contract farming to open up to 100 outlets by 2015 and also expand into Tier-II and -III Indian cities eventually.
  • Local Vegetarian Menu: In India, McDonald’s does not offer pork or beef-based products. It’s menu is more than 50 per cent vegetarian. The fast food retail chain has separate production lines and processes for its vegetarian and non-vegetarian offerings.
  • High Real-Estate costs in India: In many countries, in a Quick Service Restaurant (QSR) a customer comes in, buys and then leaves. This is known as a revolving door concept. But an Indian customer believes in a dine-in culture. This adds to the real estate costs which goes as high as 20-25 per cent as compared to 10-15 per cent globally. The cost of opening a new McDonald’s restaurant in India costs about 3 crore rupees.
  • The most important meal for QSRs- Morning Meals (Breakfast):According to market research company, the NPD Group, breakfast accounted for nearly 60 per cent of the restaurant industry’s traffic growth over the past five years in the U.S. Quick service restaurants sold 80 per cent of the over 12 billion morning meals served at US restaurants for the year ending in March 2010.
  • OOH Branding: According to Rameet Arora, senior director – marketing, McDonald’s India (West and South), McDonald’s India may be the largest out-of-home branding (OOH) in the country. McDonald’s India has restarted OOH (out-of-home branding) after a 7 to 8 year break to reach to their target group.
  • Employees and Customers: In India, McDonald’s employs 5,000 people and serves half a million customers a day via its 169 family restaurants. (Update) – McDonald’s India employees number 12,000 approximately (most of them students). McDonald’s has 85,000 employees and serves 2.5 million customers a day in the UK.
  • KFC – New Menu “Streetwise” – In February 2011, KFC, the fast food retail chain announced a new menu called “Streetwise” to offer products at more affordable prices to attract the college crowd. KFC has around 108 stores in India and Streetwise would help it compete better against McDonald’s youth brand offering in India (products priced at Rupees 20). KFC’s products were typically priced between Rs 65 and Rs 500 but with the new menu – between Rs 25 and Rs 100.
  • New Business Channels – To boost sales, McDonald’s is looking at new business channels instead of rapid expansion. New business channels include home delivery, kiosks, breakfast, extended hours and drive-throughs. As per estimates, home delivery can increase store sales about 15% and drive throughs by 50%.
  • Spending on food: According to Euromonitor International and Credit Suisse Emerging Consumer Survey, Indian people spend less ($11) compared to the Chinese ($60) on fast food. Indians spend approx 23% of their earnings and the Chinese approx 20% of their earnings on food. The U.S. spends less than 15% on food.
  • Local Sourcing: By 2014, McDonald’s India estimates that it would source 50,000 Metric Tonnes (as compared to the current 30,000 MT) of potatoes from McCain Foods Pvt Ltd. in India. McCain has been working with more than 800 farmers on approx. 4000 acres of land across Gujarat (West India) under contract farming of potatoes.
  • McDonald’s India’s total investment in India would touch 1500 crores by 2014. In June 2012, McDonald’s announced that it would open around 250 new restaurants in the next 3 to 5 years with an investment of 750 crore rupees.
  • Cluster wise expansion strategy: McDonald’s adopts a cluster wise expansion strategy in India. Accordingly, McDonald’s concentrates and consolidates stores in one region before moving to another. The company plans to begin with East Indian region (Kolkata) and then move to cities in other regions like Chandigarh and Ludhiana.
  • All-vegetarian restaurants in various pilgrimage sites: McDonald’s plans to open all-vegetarian restaurants (by middle of 2013) at various pilgrimage sites across India. To begin with, the company plans to target pilgrims at sites like Vaishno Devi in Katra, Jammu and Kashmir and at the Golden Temple in Amritsar. It already has one outlet in Katra.

The Crossword Story – Innovative Strategies in Book Retailing

Case Study Abstract

The focus of this case study are the innovative strategies adopted by leading Indian organized book retailing chain – Crossword Bookstores Limited. This case discusses the constant innovations brought about by the bookstore and how it has brought international standards of book retailing to Indian customers.

     

Table of Contents

  1. Introduction
  2. About the Company
  3. Background Note – A dream of an India-based world-class bookstore
  4. Exhibit I – Most Frequently Visited Book and Music Stores in India
  5. Exhibit II: Achievements and recognitions for Crossword
  6. Crossword – Quick Facts
  7. Crossword – Market Positioning

    8. Crossword Book Retailing Case Study

  8. Exhibit IV – SWOT Analysis of the Indian Book Market
  9. Exhibit V – Book retailing scenario in India
  10. The ‘print then distribute’ model
  11. Driving factors for Market growth in India
  12. Typical Characteristics of the Indian book market in the 80s
  13. Exhibit VI: Journey of Organized Retail in India
  14. Exhibit VII: Population Growth rate and ROI on Retail real estate in India
  15. Exhibit VIII: Typical Bookstore classification in India
  16. Innovations at Crossword
  17. What has shifted shoppers’ loyalties to the up market bookstore?
  18. Crossword – Breaking the rules – Much more than a bookstore
  19. The inaccessible ‘U’ shaped first store
  20. Exhibit IX: Simple innovations at Crossword Stores
  21. Keeping the customers in mind – Understanding buying readers’ psyche
  22. Improving window displays
  23. A welcoming café
  24. Reading tables and chairs
  25. Helping booklovers – ‘Books once sold WILL be taken back’
  26. Crossword Children’s Hour – Book Reading and story-telling sessions
  27. Unique Product Mix
  28. Increasing margins with non-book business category and own private label business
  29. Innovative marketing strategies for book retailing in India
  30. The Crossword Book Award
  31. Exhibit X- Crossword Book Award winners
  32. Shop-in-shop model
  33. Investment in an ERP
  34. Design Innovation – High-and low-impulse sections, Adjacencies
  35. Crossword – Store Formats
  36. Competitor Oxford’s – Store Formats
  37. Exhibit XI: Retailing formats available in India
  38. Summary of Financial Performance of Crossword Bookstores (2007-08)
  39. Competitor Analysis – – Crossword vs. Oxford Bookstore
  40. Crossword – Store Locations in India
  41. List of major book retailing chains in India
  42. Exhibit XII: Book Exports to India from the UK and the USA, 2000–2006
  43. Exhibit XIII: India – Lifestyle, Demographic and economic indicators
  44. Exhibit XIV: India’s income classes (1994-2006)
  45. Exhibit XV: Organized Retail Penetration in India across categories
  46. Popular Book and Author choices in India
  47. Crossword – Best of 2008 list
  48. Overview of the U.S. Bookstore industry
  49. Questions for Discussion
Case Study Keywords: Organized Book Retailing, Crossword, Shopper’s Stop, Landmark, Oxford bookstores, book retailing in India, leading bookstore, retail formats, R Sriram

Case Questions for Discussion

  1. “You can’t take books as any other commodity. If every store has the same kind of books, what’s the fun? In this business you have to know how to select books and build customer relationship.” – How did Crossword change the book retailing scene in India? Analyze the growth of Crossword as a world-class book retailer.
  2. Compare and contrast your experience from your visit to a local bookstore to the innovative services being offered by Crossword at its stores. What can Crossword do different to add more value to its customers?

Case Snippets/Updates:

  • Crossword Bookstores Ltd. is a wholly owned subsidiary Company of Shopper’s Stop Ltd – India’s leading department store chain. Crossword has 55 stores across 11 cities in India.
  • In 2006, Businessworld rated Crossword as the 6th Most Respected Retailer in the country
  • In Dec 2009, Crossword launched its 55th store in India. The store, launched in Hyderabad was the 5th one in the city by the leading lifestyle bookstore chain.
  • According to Assocham, an industry chamber, organized retail in India accounts for $9.23 billion (around Rs 42,000 crore). This is around 5% of the overall retail market. This figure will reach $13 billion (approx. Rs 60,375 crore) by 2010.
  • Organized book retail in India: Organized retail has only a 7% share in the approximately Rs 3,000 crore Indian book retail industry. According to Technopak, the contribution of book retail is only about 1% to the overall retail industry and is expected to grow by approximately 15% yearly.

H&M’s Low-Cost, High-Fashion Supply Chain

Case Study Abstract

The focus of this case study is the supply chain of fast-fashion giant, H&M. H&M – the world’s third-largest retailer by sales – has grown into a profitable force in the global apparel market by offering clothing that is seen as both fashionable and reasonably priced. This case discusses the supply chain management practices of H&M and how it responds quickly to changing fashion trends by renewing its lines. H&M’s logistics, inventory management process, design collaborations, sales channels, online branding and best price strategy are briefly covered.

     

Table of Contents

  1. Introduction – Fast Fashion and Supply Chain Management
  2. Background Note
  3. H&M Quick Facts
  4. Elements of H&M’s Innovative Supply Chain
  5. Double Supply Chain

    6. H&M Supply Chain Management Case Study

  6. H&M’s Three Sales Channels
  7. Logistics
  8. Efficient Central Distribution Center
  9. H&M’s Best Price Strategy
  10. H&M’s rapid reaction supply chain – Flexible Purchasing and the ICT platform
  11. Branding online and the Virtual retail experience
  12. Design Collaborations
  13. ‘The shock of the new’ every day – Building a continuous consumer supply chain
  14. Exhibit I: H&M’s Growth (1974 – 2007)
  15. Exhibit II: H&M’s Global Expansion
  16. H&M Timeline
  17. H&M’s Financial Performance Summary (Revenue and Net Income)
  18. Exhibit VI: Comparison with major global specialty clothing retailers
  19. H&M: Sales Graph by country, 2007
  20. H&M: Store Locations, 2007
  21. H&M: Sales by Country, 2007
  22. Questions for Discussion
Case Study Keywords: Hennes and Mauritz, H&M, Supply Chain Management, SCM, Erling Persson, rapid-reaction, Madonna and Kylie Minogue, Rei Kawakubo, founder of the Comme des Garcons fashion chain, Zara, Gap, Apparel Retailing Case Study, Logistics and Distribution, IT enabled supply chain, supply chain integration, information sharing, inventory management, fast fashion, continuous consumer supply chain, best price strategy, major global specialty clothing retailers, Design Collaborations, sales channels

Case Questions for Discussion

  1. In the past, apparel pipelines in the fashion industry have infamously been long, complex and inflexible. How did H&M improve its buying cycle and responsiveness of its supply chain?
  2. “In modern retailing it is the supply chains that compete rather than companies.” Support this statement using examples from H&M’s supply chain and business model.
  3. Which of the following do you think is the driver of fast fashion that has a distinct impact on the supply chain – the Manufacturer, the Retailer or Consumer Demand?

Case Updates/Snippets

  • Reduced time to market – Photos of fashion shows are available online immediately after a show. This has enabled fast-fashion retailers like Topshop and H&M to cut the time span between catwalk and store. Designs of luxury brands can be interpreted to the general public quicker than before. Earlier, it took months for retailers to interpret designs by luxury labels for the general public. Many designers feel that this has led to shoppers desiring for frequent refreshing of stock.
  • Total Stores & Expansion: As of Aug. 31 2011, H&M had 2,325 stores. H&M plans to expand in China, the U.K., U.S. and Germany. (Update: Feb 24, 2012 – H&M has 2, 500 stores in 43 countries with revenues of around $19 billion. It has approx. 94,000 employees. H&M sources 75% of its products from Asia.
  • H&M Top Management: In 2009, at the age of 34, Karl-Johan Persson took over as CEO from father. His father became the Chairman of the company.

Hennes & Mauritz (H&M) in Japan – Hit or Mistake?

Case Study Contents

  1. Introduction
  2. Background Note
  3. Exhibit I: H&M’s Growth (1974 – 2007)
  4. Exhibit II: H&M’s International Expansion
  5. H&M’s Supply Chain
  6. Exhibit III: H&M’s Best Price Strategy
  7. H&M’s Financial Performance Summary (Revenue and Net Income)
  8. Exhibit IV: H&M’s Three Sales Channels – Stores, Internet and Catalogues
  9. Exhibit V: Table showing some major retailers with # of stores in Japan
  10. Exhibit VI: Comparison with major global specialty clothing retailers
  11. H&M Quick Facts – Brief Company profile – Revenues, Industry, Employees, Operations, Total Stores, Sales Channels, Major Competitors, Major Brands/Labels, Business/Growth Strategy, Key Executives
  12. H&M’s Entry Strategy into Japan
  13. Hurdles when entering the Japanese market
  14. Channel Issues – Will H&M’s strategy to go alone work in Japan?
  15. Product Quality Issues — Will H&M’s fast fashion work in Japan?
  16. Design Collaboration, Designer Brands
  17. Understanding the Japanese consumer – group oriented culture, the price factor and the Japanese H&M fan club
  18. In conclusion
  19. Additional Reading and References

     

1. Introduction

“It has been H&M’s dream to open in Japan. I am very proud to say that we now have our very first store in Tokyo. Japan is a very strategic and exciting market with great fashion awareness. We hope that we can offer our Tokyo customers added value through fashion and quality at the best price. We’re not in a hurry in Japan but we see huge potential if we succeed. We’ll go step by step.”
–Rolf Eriksen, CEO of Hennes and Mauritz at the ceremony to open the Japan flagship store.

“Our business concept is really what attracts the H&M customer: Fashion and quality at the best price. Because we do carry all these different lines in our stores, we allow our customer to address [his or her] personality, and that’s really important.”
– Karen Belva, public relations manager and spokesperson of H&M in 2002.

“With H&M’s opening, everybody – the Gap and Zara – will have come to Japan“-
Tadashi Yanai, Chief Executive, Fast Retailing, referring to Inditex’s Zara apparel chain.

In April 2007, Stockholm-based Swedish fashion giant Hennes & Mauritz (H&M) opened its first flagship store in China. About a year later (in September 2008), this strategic move was followed by another first H&M outlet in Tokyo, Japan, the world’s second-largest economy. The H&M store – a four-storey shop was strategically located just a few buildings down from competitors Zara and Gap Inc stores. The new store with a floor space of more than 1,000 square meters was first in a series of stores that H&M planned to open in Japan. The world’s No. 3 clothing retailer had aggressive plans to open stores in Japan, as well as sites in regional shopping centers.

With the European markets saturating, H&M was pursuing a rapid international expansion strategy. But the timing of H&M’s entry strategy into Japan, especially when the economy was struggling with recession and customers were tightening their purse strings was open to discussion. Besides, Japan was regarded as one of the world’s most competitive fashion markets. Market reports also suggested a declining market for clothing and footwear. Some observers called it the toughest trading conditions in decades. However, H&M was confident of differentiating itself and competing with expensive brands like Christian Dior, Giorgio Armani and Chanel, as well as the more reasonably priced Gap and Japan’s hugely popular Uniqlo chain.

Background Note

H&M was founded in 1947 by Erling Persson, a salesman from Västerås – a small town in Sweden. He began his career working for his father delivering cheese to restaurants in Stockholm on a bicycle. He was attracted by the concept of clothes stores selling stylish garments at low prices when he once visited the U.S. He was amazed at the success of retailers like Macy’s in New York. He opened a similar store in Västerås selling clothes for women. He named the store ‘Hennes’ which stood for ‘hers’ in Swedish…

…Today, H&M is the world’s third-largest retailer by sales with around 1,600 stores in 32 countries with 68,000 employees. In the past two decades, H&M grew at an average rate of 20% annually. It managed to grow quickly into the world’s third largest clothing retailer by offering clothing that is seen as both fashionable and reasonably priced. It made its mark on the apparel industry, mixing the latest trends with fashion classics. H&M is popularly known as the king of “fast fashion” and the purveyor of quick-to-market trendy clothing. H&M’s business model is based on “Fashion and quality at the best price.”

Will H&M be successful in Japan?

“I believe that the interest in a new change would be big in Japan. It’s one of the biggest countries we have entered. If we succeeded as we have done in all the other countries,[Japan] could be a huge market for H&M.“- CEO, H&M

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Related Case Studies

Case Keywords: Hennes & Mauritz, H&M, Entry Strategy, Japan, Expansion into global markets, International Business, Competitive Strategies, local culture, Japanese apparel market, Fast Fashion, Best Price Strategy, H&M’s Three Sales Channels, Channel Issues, Product Quality Issues, Design Collaboration, Designer Brands, Japanese H&M fan club, Erling Persson, Zara, Uniqlo, Fast Retailing, Supply Chain

Case Updates/Snippets

  • H&M in Asia– H&M has over 1,800 shops in more than 30 countries. H&M’s principal markets are in Germany, the United Kingdom and Sweden. In Asia (2009 figures), H&M has four stores in Japan, 15 stores in China and 6 stores in Hong Kong. It plans to set up its first store in Korea, sees potential in Taiwan and wants to up its store count in China by 30% in 2009. H&M’s top management considers Asia to be the newest and biggest market for H&M in future.
  • H&M’s business model and focus on low-cost, fast-moving fashions, and geographic spread helped it to weather the economic downturn better than its competitors. During 2009, the Swedish fashion retailer H&M was the top-ranked global fashion retailer.
  • In fiscal year 2009, H&M added a total of 250 new stores, 25 more than originally planned.
  • H&M in China: In 2007, H&M entered China. By 2011 it had 64 stores in China out of a total of 2,410 world-wide. China has been more profitable to H&M than any other market and it expects to treble its store count by opening stores in smaller cities of China.
  • In January 2012, Japan declared its first annual trade deficit in 2011, in 31 years since 1979.

Organization Culture at Wal-Mart

Case Study Contents

  1. Introduction
  2. Wal-Mart – Company Background
  3. Sam Walton and Wal-Mart’s culture
  4. Exhibit: Unique values that support Wal-Mart’s three basic beliefs
  5. The 10-Foot Rule – Wal-Mart’s secret to customer service
  6. The Sundown Rule
  7. Open-Door Policy
  8. Servant Leadership
  9. Rank-and-file profit sharing
  10. Grass Roots Process – Associate Opinion Survey
  11. The Wal-Mart Cheer
  12. Wal-Mart’s efforts to make the company an even better place to work

    13. A Wal-Mart store in Minnesota, U.S.

  13. Employee Development programs
  14. Combining Technology and empowerment
  15. Awards and Recognitions received by Wal-Mart
  16. Wal-Mart – Timeline
  17. Wal-Mart – Quick Facts
  18. Wal-Mart – Various Store Formats
  19. Wal-Mart – International operating formats
  20. Sam Walton’s ten rules for building a business

     

Introduction

“Wal-Mart continues to execute well and deliver solid results in a challenging economic environment“- A Goldman Sachs analyst

“What makes ordinary people do extraordinary things?” Sam Walton once asked. “Aren’t we a group of ordinary folks? We really are. And I think we, together as a team, have done extraordinary things. We’ve all grown, we’ve all accomplished much more than any of us ever thought that we could.“- Sam Walton, founder of Wal-Mart

“We are a people association supported by one million associates. Much of what we do centers around individual stores. We’re in a labor-intensive customer service business. Associates can’t treat customers as number one if they are not treated that way.” – Susan Oliver, Wal-Mart’s SVP of human resources in 2005

In August 2008, Wal-Mart Stores announced that its profit rose 17 percent in the second quarter and that it is raising its full-year forecast. In a challenging economy, the world’s largest retailer benefited from low prices and its moves to cut costs. Wal-Mart’s President and Chief Executive Lee Scott said that, “While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we’re confident that Wal-Mart is well positioned for this economy.” Chief Financial Officer Tom Schoewe attributed the better second-quarter profits to tighter inventory controls, which led to fewer markdowns on merchandise. One of Wal-Mart’s goals – which it successfully met – was keeping inventory growth at half the rate of its sales growth which it successfully met. In contrast, sales at department stores and specialty retailers were lagging behind.

What is the key to such good results? Wal-Mart overhauled its strategy. Instead of announcing any price increases to cope with the tough economy, the company slashed its expansion plans. It refocused on lower prices, improved the mix of merchandise offered, cleaned up its stores and provided friendlier and faster customer service. But there is more to Wal-Mart’s success over the years than just tighter inventory controls and lower prices.

Wal-Mart is truly a great company. A strong organizational culture is the foundation for making a good company a great one. The secret to Wal-Mart’s success has long been attributed to its strong culture. Analysts like Jim Collins believe that Wal-Mart had the kind of ‘cult-like’ culture that is shared by all great companies. Wal-Mart employees are referred to as ‘Walmartians’ which is a sign of a unique culture shared by them. This culture is responsible for a company of this magnitude to be able to sustain its entrepreneurial spirit decade after decade.

Since its early days, Wal-Mart achieved remarkable growth rates and was the first trillion dollar company in the world. In 1999, Wal-Mart became the largest private employer in the US with 1,140,000 Associates. But with amazing success also came criticism. Wal-Mart was sued many times and even held the record for being sued the maximum at one time. Its practices and culture were held responsible for killing small local retailers. It was also criticized for gender-based discrimination, its overtime policies and using sweatshop products.
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Meg Whitman and eBay – Leadership Case Study

Case Study Contents

  1. Introduction – eBay CEO Meg Whitman plans to retire
  2. Meg Whitman – Early years and Career Growth
  3. Meg Whitman and Leading eBay
  4. Hiring the right people
  5. Quickly understanding the new business model
  6. Leading eBay’s IPO – a hands-on approach
  7. Changing eBay’s policy
  8. Building one of the most powerful e-commerce systems in the world
  9. Focus on Metrics
  10. Customer Focus – ‘Voice of the Customer’ program
  11. Strategic Decision Making
  12. Exhibit I: eBay stock performance graph
  13. Exhibit II – Quick Facts/Key Information on eBay
  14. Exhibit III – Awards Received By Whitman
  15. Exhibit IV – Major Awards Received By eBay

     

Case Study Abstract

Introduction – eBay CEO Meg Whitman plans to retire

“In the beginning, I was certainly not an entrepreneur who came up with the idea, but I think I was fairly entrepreneurial in trying to figure out how to bring that idea to life and build a backbone for the company that could take it to the next level.”
– Whitman commenting on her journey from a novice to a leader in the dotcom world.

At the beginning of the year 2008, Margaret Whitman (Whitman), the chief executive (CEO) of eBay, announced plans to retire so as to breathe fresh life into the company and also provide a much needed radical reinvention of eBay. By March 2008, Ms. Whitman, 51, had served in the position for 10 years. Whitman joined eBay as chief executive in 1998. She was popularly known as Meg Whitman and ‘darling of the Internet’. In 2007, she accepted the Lifetime Achievement Award for the community of buyers and sellers that make up eBay. Whitman ranked 22nd on Forbes.com’s list of the world’s most powerful women. In October 2002, Fortune Magazine ranked Whitman, as the world’s third most powerful women in business, after Carly Fiorina and Oprah Winfrey.

However, some analysts called Whitman old-fashioned, a low-key manager and a ‘slow-footed CEO’ because even during the dotcom boom, she avoided risk and focused on financial fundamentals. Some felt that she did not possess the ‘star quality’ of Carly Fiorina, CEO of Hewlett-Packard, or the electric energy and charisma of Jeff Bezos, the founder of Amazon.com. But the performance of eBay silenced her critics. When many dotcom businesses crashed in the late 1990s and early 2000s, Whitman steered eBay towards success. EBay was the only Internet Company that had registered continuous growth and profits since its inception in 1995. Under her leadership, eBay’s revenues and profits had doubled every year. With her strong belief in eBay’s business model and its customers, revenues increased from $4 million to $1 billion by late 2002. She truly succeeded where many had failed.

Meg Whitman – Early years and Career Growth

Margaret C. Whitman, the youngest child of a Wall Street executive and popularly known as Meg Whitman was born in August 1956. She grew up in Long Island, New York. She was smart, studious and academically oriented since childhood. She graduated in Economics from Princeton University. Her penchant for business was evident when she had The Wall Street Journal delivered to her dormitory at Princeton University – unusual during the disco era of the 1970s. The business inclination took her to Harvard University, where she received her Masters in Business Administration.

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Case Study Keywords: eBay, Meg Whitman, Leadership case study, Internet auction market, darling of the Internet, powerful women in business, entrepreneurship, eBay’s business model, Pierre Omidyar, eBay’s IPO and policy decisions, metrics and measuring performance, Customer Focus – ‘Voice of the Customer’ program, ‘Buy It Now’ feature, iBazar, PowerSeller program, regional auctions, eBay Motors

Cafe Coffee Day – Brand Strategy in India

Case Study Contents

  1. Introduction
  2. CCD – an established brand image in India
  3. CCD’s wide network – the anytime, anywhere cafe
  4. Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors
  5. 1996 – 2008, CCD’s first store launch to building a strong competitive advantage
  6. Innovative formats to woo new customers
  7. Reinforcing brand image with the cluster approach strategy
  8. Company-owned stores instead of franchises to not dilute brand value
  9. Lower pricing and ‘no-segmentation’ approach
  10. From a largely south Indian retail chain to a national brand
  11. Co-branding
  12. Reinvigorating the brand and taking it to the next level
  13. Projecting a feeling of togetherness
  14. Silent brew masters – special employee program
  15. Background Note (History of Cafe Coffee Day)
  16. Café Coffee Day – Quick Facts
  17. Exhibit 2: Various store/café formats of Café Coffee Day
  18. Exhibit 3: Different divisions of Café Coffee Day
  19. Exhibit 4: Brand Logo of CCD and its significance
  20. Exhibit 5: Sample Consumer profile by Age group at Café Coffee Day

     

Case Study Abstract

This case study covers the following issues:

  • Examine and analyze Cafe Coffee Day’s brand strategy in India, its success and future challenges

Introduction

“CCD today has become the largest youth aggregator, and from a marketing stand point, the success has come by focusing on the 3As: Accessibility, Affordability and Acceptability.”– Bidisha Nagaraj, the Marketing president of Cafe Coffee Day

“Although demographically, a typical consumer would be male or female between 15-29 years of age, belonging to middle or upper middle class, we call our consumers young or young at heart. We are about juke boxes, good and affordable coffee and food. The brand fit is with youth or the young at heart. So we often look out for brands that are aspirational in nature.” – Sudipta Sen Gupta, Marketing head, Café Coffee Day.

CCD – an established brand image in India

Cafe Coffee Day (CCD) has an established brand image in India and ranks No 2 in the Brand Equity’s Most Trusted Brands 2008 survey – in the food services category. Rival Barista is at No 5. CCD has been able to make a connection with the Indian consumers, predominantly among the youth. CCD is the market leader in India and was awarded the ‘Exclusive Brand Retailer of the Year’ by ICICI Bank in its Retail Excellence Awards 2005 for the organized retail sector.

CCD’s wide network – the anytime, anywhere cafe

CCD has been able to make its brand presence felt through the sheer number of stores. CCD has 620 cafes at present and it has ambitious plans to launch more than 900 cafes by the end of the current financial year. This means launching one store every other day which is not surprising from a company which launched a cafe (in 2005) in Vienna, the coffee capital of the world. CCD also has three cafes in Vienna, and two in Karachi, Pakistan. Lagging behind CCD in the Indian market, Barista has about 200 cafés, Java Green (around 75 cafés) and Mocha (around 25 cafés). The Indian organized sector has potential for around 5,000 cafés but fewer than 1,000 cafés exist currently.

Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors

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Case Study Keywords

Cafe Coffee Day, CCD, Amalgamated Bean Coffee Trading Company Ltd., ABCTCL, V G Siddhartha, Café Beat, Brand Equity’s Most Trusted Brands 2008 survey, Bidisha Nagaraj – Marketing president, brand image, brand management, Exclusive Brand Retailer of the Year, Barista, Java Green, Mocha, company owned stores, national brand, south Indian retail chain, Chikmagalur, Co-branding, international brand consultant Landor, Silent brew masters – special employee program, a feeling of togetherness, Coffee Day Exports, Coffee Day Xpress, Coffee Day Take Away (coffee vending machines), Coffee Day Fresh ‘n Ground (ground coffee retail outlets), Coffee Day FMCG (packaged filter coffee powder)

Case Updates/Snippets

  • CCD’s vision: To be the only office for dialogue over a cup of coffee
  • CCD’s Expansion Strategy: Cafe Coffee Day has around 821 outlets in 115 cities in India. CCD plans to take the total number of cafes to 1,000 by March 2010 and double it to 2,000 by 2014. (Update: By Jan 2012, CCD had approx 1,200 cafes and 900 Express outlets) In October 2009, CCD announced that it will increase its international presence from the current six outlets in Vienna and Pakistan to a total of 50 stores across Europe and Middle East in two years time.
  • International coffee chains in India – Recent entrants in the Indian market include Gloria Jeans, Coffee Bean & Tea Leaf and Illy Café.
  • Operating Formats – Café Coffee Day operates in both regular (Coffee Day Square) and premium formats (Lounge).
  • Highway Cafes: In 2004, CCD began cafes on highways. By 2009, the total number of Café Coffee Day highway cafes rose to 30 owing to the overwhelming response it received from travellers.
  • CCD’s new brand identity: In October 2009, CCD unveiled a new brand logo, a Dialogue Box, to weave the concept of ‘Power of Dialogue’. In accordance with this new brand identity, CCD planned to give all its existing outlets a new look by the end of 2009. Cafés would be redesigned to suit different environments such as book, music garden and cyber cafes suitable for corporate offices, university campus or neighborhood. The change plan included new smart menu, furniture design, among others.
  • Coffee consumption in India is growing at 6% per annum compared to the global 2% plus. In India, the per capita consumption of coffee is around 85 grams while it is six kgs in the US.
  • Milk production in India – India is the largest producer and consumer of milk in the world with 98% of milk being produced in rural India.
  • Coffee production in India – India ranks sixth as a producer of coffee in the world accounting for 4.5% of the global coffee production. India has about 170,000 coffee farms cultivating around 900,000 acres of coffee trees.
  • CCD’s International Expansion Strategy – In June, 2010 Cafe Coffee Day chain acquired Emporio for Rs 15 crore. Emporio is a Czech Republic-based café chain present at 11 locations. CCD plans to co-brand the chain as Café Coffee Day Emporio and later transition it to Café Coffee Day. CCD is also present in Vienna. The company wants to expand in the East European region, West Asia and the Asia-Pacific region.
  • Cafe Market in India – Coffee retailers cover only 170 cities out of 3,000 in India (early 2011 reports). In 2008, according to Technopak Advisors, the Indian food servcies market – cafes, full-service restaurants, fast-food outlets/quick-service restaurants was estimated to be $6 billion (Rs 26,000 crore) with organized players taking 13% of the market. (By 2014 this number is expected to increase up to 27%.). According to Technopak Advisors, the café market in India is estimated at $150 million (Rs 678 crore) and growing at 40 per cent over the last five years.
  • Organized coffee market in India: The organized coffee market in India is about Rs 600 crores. This is approximately 20% of the total domestic coffee consumption (Rs 3,000 crores).
  • New Entrants in Indian Coffee Cafe market: In early 2011, Hindustan Unilever, the FMCG giant planned to open a cafe outlet in Mumbai named ‘Bru World Café‘ to popularize its in-house coffee brand Bru (HUL’s only coffee brand sold only in India).
  • CCD to double its human resources count: CCD has 6,500 employees (as per Feb 2011 figures) with each cafe requiring about 6 employees. CCD plans to double its employee count by 2013.
  • Lavazza – Espression store in India: In 2011, Lavazza, the Italian coffee brand opened its first signature coffee shop ‘Lavazza Espression’ in New Delhi, India.
  • CoffeeDay Wakecup: In January 2012, CCD launched its own brand of coffee maker called CoffeeDay Wakecup targeting all coffee lovers. The product will be marketed at its 1125 cafes and 900 Express outlets. Competitor Lavazza had launched its own portable coffee machines (Lavazza Blue 850) already but targeted the premium segment with the price being higher than CCD’s machines.
  • In February 2012, Café Coffee Day announced plans to install interactive touchscreen tablets in 500 cafes across the country.
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