Department Store Industry

When examining competitive advantage, it is also important to consider the market and take into account the existing competition against larger firms.

Because of this rapid growth several challenges can present themselves. A primary challenge that can present itself is the lost of the boutique feel because of the hundreds of locations. Even though each boutique is different and personalized, opening too many locations may cause the retailer to lose its niche in the market. Another challenge is the many changes the company has gone through in upper level management. Because of the changes investors have been discouraged, as mentioned before, and shares were down 16% after the changes.

The aim of this paper is to highlight the strategic position of the company with an overview of its internal and external environment. The study of its strategy, design and other forces, one can easily gauge why and how target has managed to become the retail giant it is today.

Threat of new entrants is relatively low. There are high barriers to entry in the discount retail market, including high capital costs, limited access to investors, and a largely crowded-out market place.

Threat of new entrants: Retail industry has a higher barrier to entry. First, it is difficult to work out a good value chain as it involves a complex process. Second, it is difficult for new entrants to gain competitive advantage and earn above-average returns in such a highly competitive market. Besides,

The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic

It is the sector that brings the real barriers. In David Jones' case, the cost to setting up a department store is in itself a high cost activity, with high risk of failure if not correctly located. Add to that the business of luxury items, which suppliers charge a pretty penny for, and the barriers for David Jones sector become very high.

Companies are growing by bringing in new stores to new locations rather than come up with innovation in the terms of bringing the products to the consumer. As written in business insights, the industry is recession proof but personally we believe that the companies’ sales are

The industry does not possess major threat from new entrants due to strong barriers to entry and strong competition for retail space. There is also a strong rivalry between competitors as limited space is being contested by major players alongside

The intensity of rivalry and the threat of substitutes are strong components for J.C. Penney to consider as they continue to strive for increased revenue and market share. Their two primary competitors are Macy’s and Kohl’s, both of whom have fiercely competitive strategies to be strong retail operations. For instance, while Macy’s offers a multitude of promotional deals and is working hard to choose products based upon demographics and geographic segmentation, Kohl’s is attempting to reduce their inventory levels and improve their marketing strategies in order to become a stronger competitor in the department store segment of the retail industry. In order to compete with their competitors, J.C. Penney aims to focus on their previously successful promotions and home department segmentations by bringing in new reputable designers in order to attract a larger customer base. Due to the fact that the intensity of rivalry and threat of substitutes are both moderately strong in the retail department store industry, J.C. Penney ought to be diligent in their implementation of strategies in order to achieve success in the retail business.

- Retailing industry change, Large chains were expanding their market penetration by offering a more diverse array of product.

Even if Ed has got three different options to value its ending stock at hand, he should keep same method and report same amount as his opening balance for the following year.

The level of threat of new entrants is relatively high because the barriers to start up a store are low. According to IBISWorld, the retail industry is forecasted to be relatively stable and growth by 2.1% per annum for the next five years. Since the industry profits has increased, we would expect additional firms to enter the industry to take advantage of the high levels of profits, and over time driving down the profits for all firms in the industry. The high set up cost such as lease contracts, increase in property prices and wages cost shall act as an obstacle for new firms to entry the industry. In addition to that, SUL has the higher advantage for being the first mover in the industry thus establishing its brand identity and has many accesses to distribution channels.

The department store industry in Mexico functions just like the majority of department stores around the world. They target the middle to upper class people with money to spend on popular brands, food and entertainment. While the department store chains in many countries tend to focus on one line of products (e.g., clothing), the department stores in Mexico have diversified products and services that helps to decrease direct competition, but it also makes it more difficult to predict a competitor’s next move. As the middle class population grows in Mexico, the market becomes more attractive, but many possibly new entrants are kept out by the high barriers of entry.

Retailing is the largest private industry in India and second largest employer after agriculture. This sector contributes to around 10 per cent of GDP and 6-7 per cent of employment. With over 15 million retail outlets, India has the highest retail outlet density in the world. This sector witnessed significant development in the past 10 years – from small unorganized family owned retail formats to organized retailing. Liberalization of the economy, rise in per capita income and growing consumerism have encourage larger business houses and manufactures to set up retail formats; real estate companies and venture capitalist are investing in retail infrastructure. Many foreign retailers have also entered the market through different routes such as wholesale cash-and-carry, local manufacturing, franchising, test marketing, etc. With the growth in organized retailing, unorganized retailers are fast changing their business models and implementing new technologies and modern accounting practices to face competition (Andrews, 2003).