Jcp External Analysis

Topics: Retailing, Department store, J. C. Penney Historic District Pages: 30 (9202 words) Published: November 7, 2012
“Though stubbornly high unemployment and continued uncertainty over the prospects for job growth will continue to dampen the outlook for industry retail sales growth in 2012, the retail industry will still grow at a rate faster than many other industries. This year, retail industry sales will rise 3.4 percent to $2.53 trillion*, according to the National Retail Federation – slightly lower than the pace of 2011, in which sales grew 4.7 percent. Many economists estimate that real U.S. GDP will rise approximately 2.1 to 2.4 percent. Over the last 18 months, retailers have been on the forefront of the economic recovery – creating jobs, encouraging consumer spending, and investing in America,” said NRF President and CEO Matthew Shay. “Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Retailers have played a key role in driving growth, but to continue this momentum we need Washington to act on proposals that will spur job creation and unleash the power of the private sector.” [ (Global Labor Rights, 2001) ] The retail industry will always be very profitable because this industry is extremely high in demand. This statement reinforces the fact that the retail industry is and will always stay saturated due to the necessity of clothes. There will always be rivalry and profitability for the retail industry because there is not just competition in this region or nation; it is based on a global market. As always, competition is important in long-term success because competition is what keeps industries adapting. With a necessity industry such as the retail industry, there will always be competition. This makes it somewhat difficult for a company’s long term success. Taking into account all the competition, there are few retail companies that will outlast their competition in a long-term setting. The retail industry is a Business to Consumer industry because they provide the goods and services which are directly provided to the customer. The larger companies in this industry also have more of an advantage on the smaller competitors because they can buy in bulk which allows for lower prices in the supplies necessary. Although Apple Computers is a prime example of buying supplies in bulk in order to save money. The amount of supplies purchased on the global market is enormous. Look at your clothes and you will see that the majority are made from overseas. That is where the reliance on the supplier for this industry is magnified, although this reliance is not always ethical. The Institute for Global Labor and Human right provided evidence when they discussed “the Korean-owned Daewoosa factory in American Samoa, where  251 Vietnamese "guest workers"--more than 90 percent of them women--were held for nearly two years, under conditions of indentured servitude sewing clothing for J.C. Penney, Sears and Target.  The labels read, "Made in the USA" since American Samoa is a U.S. territory.  However, the women were not even paid the already very low $2.60 an hour minimum wage in Samoa.  The women were beaten, sexually harassed, threatened with deportation and imprisonment, starved, forced to work 12 to 18 hours a day, seven days a week when rush orders came in, and to live in crowded rat-infested dormitories.  The U.S. Department of Labor has assessed the Daewoosa factory a total of $604,225 in back wages and fines” [ (RFID News, 2012) ]. The problem is that most companies in this industry go this route to save money but although this allows for a lower cost and a shortened distribution channel, cheaper might not always be better. According to Technology Evaluation, “It is critical for a retail business to have a vertically integrated strategy with competitive pricing. Organizations with vertical integration strategies control the input and output of the supply chain, meaning it owns the supply of the raw material and has the ability to distribute its finished...
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