Harrington collection

Topics: Marketing, Retailing, Department store Pages: 35 (5368 words) Published: June 7, 2015
For exclusive use IE Business School, 2015

3258
SEPTEMBER 26, 2008

RICHARD S. TEDLOW
HEATHER BECKHAM

Harrington Collection:
Sizing Up the Active-Wear Market
On January 22, 2008, financial results for Harrington Collection’s 2007 fiscal year were distributed to all senior executives. Harrington, a large manufacturer and retailer of high-end women’s apparel, had posted lackluster sales for the past three years and margins were now at an all time low. Sara Huey, Vice President of Strategic Planning, gathered her strategy team and key operating managers to review the disappointing 2007 results and brainstorm ideas to reverse the negative trends. During the meeting, Blake Myers, the general manager for the Vigor division, proposed his idea to expand into a new product line. Myers stated, “The word I hear from some of our retailers is that stylish, sporty, casual attire is flying off the shelves. There has been tremendous growth in the activewear segment. Harrington is missing a huge opportunity by not offering this kind of line.” Karen Allen, a director in Strategic Planning, responded, “Expanding our lines downstream is not a sound long-term strategy. And a new product launch would probably put a significant drain on our resources. I doubt we could capture enough sales in the first year to break even.” Huey thought for a moment. Expanding into a product line with more casual, lower-priced fashions was not a novel idea, but it had always been dismissed as too big a departure from Harrington’s sophisticated, high-class roots. However, with continued pressure on profits, it was clear Harrington needed some fresh ideas if it was going to continue to remain an industry leader. Huey thought that there might be something to Myers’s idea. She told the group, “Interesting suggestion, Blake. Perhaps the time has come to flesh out this idea. I want you and Karen to gather all the data you can, and then we’ll analyze the opportunity properly.”

The U.S. Women’s Apparel Industry
In 2007, the U.S. women’s apparel market was both mature and highly competitive. The economic downturn that began in the early 2000s significantly impacted the industry. Consumers had become very price-sensitive, and over half of all apparel purchased was sold “on sale.” The trend toward less expensive, casual clothing and the rising supply of low-cost, imported apparel intensified price ________________________________________________________________________________________________________________ HBS Professor Richard S. Tedlow and Heather Beckham prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. All names and key data in this case have been disguised. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration. The authors and HBS are grateful to Suzanne Norris for her assistance. Copyright © 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

This document is authorized for use only in IMBA_Abr2015_A1 - Marketing Management by Prof. A. Rumschisky, IE Business School from April 2015 to April 2016.

For exclusive use IE Business School, 2015
3258 | Harrington Collection: Sizing Up the Active-Wear Market

pressure. Consumers’ discretionary dollars, once earmarked for fashion, were being diverted to technology products, home design, and leisure-activity spending (e.g., travel, spas). In 2007, the women’s apparel industry was estimated at $133 billion in retail sales. Exhibit 1...
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