What are four to five ways that specialty retailers differ from discounters (a la Wal-Mart)?
Inventory turns: According to the data provided in the Williams-Sonoma Inc. case study (1990) average specialty store turns were just under 2x. If you look at the data from the Wal-Mart Article discount stores have turns many times that, actually turns around the neighborhood of 8x.
Margins: Discounters such as Wal-Mart go for the high volume low margin approach. Sine their whole approach revolves around offering low prices, this goes hand in hand with low margins.
Customer Service: Specialty stores focus on offering customer service. Selling their high prices and high margin offerings requires a high level of customer assistance and service from its sales force. Customers feel like they deserve and are paying for knowledge and service when they shop at stores such as Williams-Sonoma.
Atmosphere/Experience: When someone walks into a specialty store they are being sold on a concept. A specialty retailer selling higher end goods would not prevail if their physical stores had the atmosphere of a Wal-Mart for example. Wal-Marts concept is large selection at low prices. So like-wise, Wal-Mart's clientele would probably question the low prices concept if they walked into a store with displays and fixtures similar to Williams-Sonoma's. Also Williams-Sonoma is selling style, or a lifestyle. Discount retailers however, are not; they are selling the concept of wide selection at low prices.
What is the primary force impacting the company (Porter)?
I believe that Williams-Sonoma's primary force of competition is jockeying for position. Williams-Sonoma is constantly at odds with the competition. The company has to keep careful watch of its competition and continually fight for market share.
Department Stores: According to the case study, department stores maintained substantial purchasing power over wholesalers and manufacturers. These chains also made strides to improve operating performance and have also lowered their margins in order to drive sales. This poses a threat to Williams-Sonoma.
Specialty Stores: These competing retailers pose a number of threats to Williams-Sonoma. According to the case study these stores have expanded more rapidly than Williams-Sonoma has. This has forced the company to compete or even lose out on prime real estate locations at malls and other shopping venues. Also by increasing the share of imported and unbranded merchandise, they were able to improve margins faster than Williams-Sonoma. Also, due to their rapid expansion, these competitors gained more square footage than Williams-Sonoma. This increases the competition's market share.
Crate & Barrel: This competitor was formed with the idea that people who have taste but no money still want to buy house wares that are attractive but are not too expensive. Williams-Sonoma sells style at relatively high prices. Crate & Barrel also sells style but they are offering their goods at lower prices than Williams-Sonoma. Crate & Barrel poses a large threat to Williams-Sonoma's share of the wallet. (Williams-Sonoma, Inc. 1990, pgs 10 & 11).
What is their primary value discipline (Treacy)?
I believe that Williams-Sonoma's primary value discipline is Customer Intimacy. Williams-Sonoma from the very beginning was selling a concept/style or an experience rather, to its customers. The company's early catalogs would include recipes and kichen tips . This action produced intimacy as well as a strategy that would inspire customers to retain the catalogs longer since the catalogs were also providing resources. Williams-Sonoma's sales force also offer a higher level of customer service to its customers. The sales force are trained to be extremely knowledgeable in the company's products as well as being knowledgeable in the products use.
What are the issues facing the company? Focus on the top...
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