The objective of this case summary is to provide Sue Koenig, who runs Joggers Universe with an objective analysis of several alternatives that she is considering, with the end goal of increasing sales at her retail shoe store. The alternatives that were under consideration were to either A) change her product line to offer made-to-order high-performance athletic shoes, or B) incorporate Women’s fashionable athletic, casual wear and dress shoes. The conclusion that was reached was to follow the sales strategy outlined in Alternative A, and offers steps to pursue this course of action.
Sue Koenig opened the Joggers Universe retail store in 1987 at the age of 24. For the last 10 years she has mainly offered the sale of high-end running shoes, walking shoes, shoes for aerobic exercise, basketball shoes, tennis shoes, and crosstrainers, with the emphasis on Nike brands. Nike’s superior promotion strategy and name brand recognition has allowed her to maintain good steady sales, with a $5 to $7 premium on every pair of shoes sold. She also has offered the sale of sportswear with the focus on fashion as well as function. As a formerly nationally ranked runner, her passion for running and fitness has allowed her to stay abreast of exercise trends and allowed her to stay competitive in her chosen market.
The issue facing Sue Koenig and Joggers Universe is that despite her on-hand knowledge of running and exercise trends, access to superior name brand products and fashions, and her healthy profit margins, her overall sales have flattened out. She appears to have been able to capitalize on the jogging and fitness trends in the market growth stage, when there were relatively few competitors, and total industry profits were at their peak. Now that the fitness industry as a whole has entered the market maturity stage with the maximum amount of direct competitors, her business has begun to suffer.
The sales at Joggers Universe have faltered due to many factors:
1 – The primary cause for her loss of market share is due to the fact that her current, long-term customers are getting older, and have found that jogging has become too demanding for them, and as a whole are switching to low-stress exercise programs. The merchandise that Joggers Universe offers no longer meets the demands of her loyal clientele, and so they have begun to shop elsewhere. On the other hand, when Sue attempted to change her product lines to accommodate this loyal but dwindling customer base, she found that her sales to younger, hardcore runners began to suffer. Clearly, this trend cannot be allowed to continue, as she will not be meeting the specific needs of any market segment.
2 - Due to changes in consumer culture and activity, younger people are exercising less, and are likely to use their casual day-to-day shoes as their exercise shoes. As such, there are many department, discount, and regular stores that offer these types of shoes, and customers can buy them without paying a premium.
3 - Increased competition from other retailers has cut into her bottom line. In addition to Wal-Mart offering an extended assortment of athletic shoes at deep discounts, Joggers Universe faces competition from Foot Locker, who offers basically the same kind of products as she does. A number of local retail chains have opened that offer lower-quality and lower-cost versions of her products, and she also faces increased competition from online retailers.
A – Made-to-order high-performance athletic shoes
Sue may want to consider revisiting a sales strategy she attempted in 2003 and change her business structure to providing expensive, made-to-order, high-performance athletic shoes. This product line incorporated new technology that was used to capture the specific contours of a person’s feet, which was then sent back to the manufacturer by UPS. The...