PRINCESSA BEAUTY PRODUCTS
Christopher A. Ross wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail firstname.lastname@example.org. Copyright © 2010, Richard Ivey School of Business Foundation Version: (A) 2010-10-19
“I am not too sure how I should proceed or even if I should do anything,” George Richards said to his wife after reviewing the 2007 financial statements for his store. After two years of no growth, he had noted a significant decline in annual sales. The store, Princessa Beauty Products, was located on Dollard Avenue, an important shopping street in Ville LaSalle, a borough (arrondissement) of Montreal, on the south centre side of Montreal Island (Greater Montreal). Established in 1984, the store sold beauty products, such as hair extensions and wigs, hair and skin care products, cosmetics, other beauty accessories, a few electrical items, and beauty magazines to the black community. The 2007 financial statements also reminded Richards of his growing uneasiness with the increasing competition in the Montreal black beauty products market. He wondered what he should do, if anything, given his limited human and financial resources. THE STORE
Princessa Beauty Products (Princessa) was a retailer of beauty products. The majority of its customers were members of the English-speaking black community in Montreal, particularly the black community located on the western side of the island of Montreal.1 The products sold were largely for the treatment of hair and skin, with hair extensions and wigs being major sellers. Also available at Princessa were bath and shower products, men’s grooming products and colour cosmetics. The store had little presence, however, in the sectors of baby care, fragrances, oral hygiene, depilatories and sun care. In addition to Richards, the store had three part-time employees, all of whom were women of Caribbean descent. Their ages ranged from the early twenties to the early thirties. Princessa, established more than 20 years ago, was one of the oldest beauty stores serving the black community in Montreal. At the time of its founding there were no more than one or two direct competitors. Originally from Barbados, Richards, in his early fifties and the sole shareholder of the store, came into the Traditionally, Montrealers spoke about Montreal in terms of West and East. Most of the English-speaking population lived in the West, while the French-speaking population lived in the East, although native English and French speakers could be found in all boroughs. In the recent past, however, more and more native French speakers had been moving to the Western side of the island. 1
business almost by accident. He had recently resigned from his former job when he was approached to manage Princessa, which was floundering at the time. Richards managed the store for a period of two years and then, using his life savings, purchased the business from the original owners. At the time of the purchase, Richards had no prior experience running a business but did have experience working in the accounting department of an aluminum company that specialized in making sidings for houses. In fact, he had supervised the payroll and payables department. “I used to travel all over...