Describe the industry in which these two companies operate and assess the competitive environment? Both Kohl’s Corp and Dillard’s Inc represent retail industry and operate department stores in USA. The US department store industry includes about 20 companies that operate about 3,500 stores with combined annual revenue of about $60 billion. The industry is highly concentrated where the top eight companies generate about 95 percent of industry revenue. What current economic factors affect the company’s operations? Demand in retail clothing industry is tied to personal income and consumer spending which is a main driver for department store sales. The recent recession put a dent in sales for department stores located in developed markets and increasing economic activity has brought an opportunity to emerging world. Who are the main competitors in the industry?
Major industry players include Sears, JC Penney, Macy's and TJX (Marshalls) What threats do the companies face?
* Companies face intense competition from a wide variety of retailers, including discount department stores, mass merchandisers, warehouse clubs, outlet stores and specialty stores. In current economic downturn many of those who were able to shop at department stores chose to make more purchases at specialty apparel retailers. Competitive price pressure has resulted in falling prices for clothing which in turn negatively affects margins. * Seasonality, trends and fashion drive demand for apparel and other closing categories. Fashion trends change quickly, leaving companies with inventory problems. Properly timing discounts and sales can be instrumental in moving product while still remaining profitable. Inability to predict trends and react quickly can result in unplanned markdowns or lost sales due to underforecasting.
What opportunities do the companies face?
* Exclusive brands and labels allow department stores to differentiate from competition and develop customer loyalty....
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