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Menâs
Wearhouse:
Table of Contents
.docx#_Toc445654056″>1.1 Industry Description.2
.docx#_Toc445654057″>1.2â Industry Competitors
Analysis.4
.docx#_Toc445654058″>1.3âFive Forces Analysis
& Industry Attractiveness.8
.docx#_Toc445654059″>1.3.1 âRivalry among
Competitors.8
.docx#_Toc445654060″>1.3.2 âThreat of
Potential Entry.9
.docx#_Toc445654061″>1.3.3 âBargaining Power
of Suppliers.9
.docx#_Toc445654062″>1.3.4 âBargaining Power
of Buyers.10
.docx#_Toc445654063″>1.3.5 âThreat of
substitutes.10
.docx#_Toc445654064″>1.3.6 â Summary of Five
Forces Analysis.11
.docx#_Toc445654065″>2.1 â Organizational
Strategy Analysis.11
.docx#_Toc445654066″>2.2.
Organizational Resources and Capabilities.13
.docx#_Toc445654067″>2.2.1.
Tangible Resources.13
.docx#_Toc445654068″>2.2.1.1 Financial13
.docx#_Toc445654069″>2.2.1.2.
Physical & Technological15
.docx#_Toc445654070″>2.2.2.
Intangible Resources and Capabilities.15
.docx#_Toc445654071″>2.2.2.1.
Human & Innovation.15
.docx#_Toc445654072″>2.2.2.2. Reputation.16
.docx#_Toc445654073″>2.3 â Value Chain
Analysis.16
.docx#_Toc445654074″>2.3.1. Support Activities.17
.docx#_Toc445654075″>2.3.1.1. Infrastructure.17
.docx#_Toc445654076″>2.3.1.2. Logistics.18
.docx#_Toc445654077″>2.3.1.3. Organizational
Culture and Leadership.18
.docx#_Toc445654078″>2.3.2. Primary Activities.19
.docx#_Toc445654079″>2.3.2.1. Input and Output
Materials.19
.docx#_Toc445654080″>2.3.2.2. Operation
Processes.19
.docx#_Toc445654081″>2.3.2.3. Marketing and
Customer Service.20
.docx#_Toc445654082″>References.22
.docx#_Toc445654083″>Appendix.24
1.1 Industry Description
Men’s Wearhouse accomplished these
exceptional budgetary results in an industry that, to understate the obvious,
exhibits some considerable business challenges. It is an industry confronting
next to zero development and exceptional competition. In a report in â1995â,
Needham and Company noted: The men’s custom-made garment market has been
solidified. Men have been spending less on customized apparel. The decrease in
the men’s custom-made garment market has pressed autonomous administrators and
has brought about retail establishments to recoil the space committed to this
stock classification.
There
is another riddle, maybe much all the more interesting. It’s one thing to
discuss making progress through individuals and utilizing an organization’s
human resources in organizations where scholarly capital is basic and the
workforce is exceedingly taught and talented.
Case
in point, some high-innovation organizations, perceiving the significance of
their kin, have included a wide range of comforts, (for example, wellbeing
clubs, attendant services to run errands, and extravagant sustenance) with an
end goal to draw in and hold the general population key to business
achievement. Be that as it may, the Men’s Wearhouse has accomplished the upper
hand by utilizing a workforce that numerous chiefs would portray as not exactly
attractive. Charlie Bresler, one of the main four administrators in the
organization and the individual in charge of regulating the HR capacity,
remarked, âThe retail specialist in the United States is some person who
regularly originated from a useless home, similar to a great deal of us⦠some
individual who didn’t do well in school, who essentially told their instructors
in somehow to go to hellfire.â (Plunkett, 2007)
A great many
people don’t begin with the objective of working and staying in retailing, just
in light of the fact that it is not an extremely attractive livelihood
destination.
Globally
menswear has seen 4.5% growth yearly, reflective of $440 billion sales, with an
expected growth of $480 billion, an additional $40 billion by 2019. The rise of e-commerce has led more men to
shop online for clothing and apparel, which has fed the industries growth. The most powerful driver of this growth stems
from China, an emerging market in the menswear industry. âOver 90 percent of the groupâs sales are
from exports, with China being the largest market followed by Europe and the
Americas. The most significant increases
in sales have been recorded in Hong Kong, Macao, the Middle East and in the
most popular parts of Europe and America.â (Wang, 2014)
The
Men’s Wearhouse has succeeded in this industry by breaking these tenets of low
pay, small preparing, and bunches of low maintenance work and really regarding
its kin and additionally, if not superior to, some expert administration firms
treat theirs. The second secret is the way and why the organization has done
this, and why this system, which would appear to raise work costs, has worked.
In
the event that we can comprehend the riddles of how the Men’s Wearhouse has
succeeded in such an antagonistic aggressive environment and how it has
assembled a society and workforce that gives its favorable position despite the
fact that it works in a troublesome work market, we will increase some
imperative understanding as to how incredible organizations accomplish
genuinely uncommon results from conventional individuals. On the off chance
that this organization can succeed given the difficulties it confronts,
consider what you can do by applying its lessons in more good situations.
The
organization trusts that men don’t prefer to shop and structures its
methodology at that presumption. Thus, for the occasion, thereâs a stand out
deal every year, in January. Hence, they havenât clients don’t need to pay
consideration on when a deal or unique been is running – they can shop when
they require something and not stress that they are paying excessively.
Our central goal
at the Men’s Wearhouse is to augment deals, give worth to our clients, and give
quality client administration while having a ton of fun and keeping up our
qualities. These qualities incorporate supporting inventiveness, becoming
together, admitting to our missteps, advancing a glad, sound way of life,
improving our feeling of the group, and endeavoring to wind up self-completed
individuals.
The
Men’s Clothing Stores industry was particularly touchy to the financial
retreat. Sinking purchaser certainty, realized by soaring unemployment and low
per capita discretionary cash flow development, constrained downstream interest
for attire. All things considered, as the economy recoups, spending and request
will fortify. Likewise, an example of merger and obtaining action has described
the business as huge organizations grow their business sector span and item
blends (pro.edgar, n.d.).
1.2â Industry Competitors Analysis
There
are many different direct competitors in the menâs apparel industry. Looking at
the three main companies described in this paper, the main competition to these
companies are mass stores such as Walmart and Target. With stores like these
offering discount suits and formal wear these companies continue to have to
compete for market share. Due to the strong distribution chains of Walmart and
Target they are able to get their products in to multiple markets easily and by
pass the normal barriers to entry. Another main direct competitor with the
menâs apparel industry is the continuation of mergers and acquisitions of
competitors companies. As companies continue to merge together to increase
their market share they will be faced with dealing with other companies as they
continue to grow.
In
the menâs apparel retail industry some of the indirect competition to companies
like Menâs Wearhouse, Macyâs, and Burlington Stores is the change in fashion
trends. With the main portion of their menâs clothing industry being the formal
wear and business wear, as fashion trends change with formal situations their
business will face competition. Many weddings and formal events are becoming
less formal, which can potentially hurt their market share and revenue. Another
indirect factor that will affect this industry is the economic outlook. As the
global economy continues to be inconsistent, the amount of spending power that
consumers has continues to decrease. With spending power decreasing the amount
of market value each company has can continue to be a potential issue in the
future.
The
retail industry is considerably one of the largest industries in the
world. The retail industry is the second
largest employer in the world. The top
competitors for Menâs Wearhouse, Inc. include Burlington Stores, Macyâs, and Brooks
Brothers.
Burlington
is a leading off-price apparel and home product retailer, according to their
site. (Burlington.com, 2016) However, theirnet
income has continued to be inconsistent from 2011 to 2015. From 2011 to 2014
net income would increase and then decrease between the different years. They currently have 567 stores throughout the
United States and Puerto Rico.
Burlington started out as a wholesaler of ladies coats and junior suits. Initially, coats were the primary product
being sold in their stores, over time that changed to a one stop shopping
experience. They offer large selections
of menâs and womenâs suits, sportswear, shoes, and accessories, as well as a
baby and youth departments. According to
Burlington website, they have remained successful by making value a
priority. Burlington is a national
retail chain that offers designer merchandise at prices up to 65% lower than
other department stores. They have
revenue of $4.5 billion dollars. Their goal is to provide exceptional value for
their customers, stockholders, associates, and communities. âWe remain focused on ensuring that
Burlington Coat Factory is the place to find the right combination of style,
selection, and value.â (Reference for business, 2016) Burlington Stores set out to open 25 new
stores in 2015 and has completed this task as well as improving performance in
the stores they currently operate.
Burlingtonâs anticipated strategic moves include the continuation of
expansion of their market reach and improving their sales.
Macyâs
Inc. is one of the nationâs premier Omni channel retailers, with fiscal 2014
sales of $28.1 billion. As of April 4,
2015, the company operates roughly 900 stores in 45 states, the District of
Columbia, Guam and Puerto Rico. Macyâs
stores target the middle to higher priced market, offering menâs, womenâs, and
childrenâs clothing and accessories; home furnishings, furniture, and
housewares. âMacyâs feels that their
greatest strength is their skill, judgment and talent of their people. Their priority of attracting, retaining and
growing the most talented people in the retail industry has been and will
continue to be the greatest advantage.
Corporate
Financial Objectives are:
·
To grow profitable
sales;
·
To maintain a
profitability rate that is among the best in class retailers, as measured by
Adjusted EBITDA as a percentage of net sales;
·
To improve return on
invested capital;
·
To maximize total
shareholder return.
âIn January and
February 2015, Macyâs Inc. announced a series of initiatives to evolve its
business model and invest in continued growth opportunities as consumers change
the way they shop.â (macys.com, 2016)
Also, Macyâs announced their plan to open a store in Abu Dhabi in 2018,
this will be their first international store.
One of the anticipated strategic moves Macyâs has implemented is
changing their customer landscape and investing in processes to see continued
sales growth.
Brooks
Brothers is one of the oldest American retailers, specializing in menâs suits
and outerwear. They now offer women and
childrenâs apparel. They operate roughly
200 upscale retail stores and outlets throughout the nation. Through
partnerships, they have over 100 stores in roughly 15 countries, including
China, Japan, Italy, and Chile. Their
strategy is to attract the young customer and enter new markets as its wealthy
clientele has been effected by the collapse of financial markets. They also partner with other manufacturers
and retailers to attempt to expand their product portfolio. Their anticipated strategy is to expand their
product line into other product categories, they have partnered with Inter
Parfums to make personal care products which will target men and women in their
stores.
In
the menâs apparel industry there are three main strategic groups that control
the majority of the market share. First there are the Mass Market store such as
Walmart and Target. These stores offer a wide variety of lower quality formal
wear at a cheaper price. They have the ability to plant their products in multiple
markets at a time with a strong distribution channel and developed client base.
The second group is the midlevel department stores such as Dillardâs and Belk.
These stores offer higher quality suits and some tailoring options. Most of
their products are in the higher price range but are not necessarily fitted to
each customer. They are able to offset having high price inventory in the store
by bringing customers in with sales promotions and then offering âupgradesâ to
a higher tier product. The third strategic group is the high level department
stores and personal tailors. In this category the stores will often tailor the
suits to their customerâs body type as well as build custom suits. They will
usually focus solely on formalwear with some exceptions. These stores usually
carry high end brand names and will set an atmosphere to invite customers in to
buy more than one suit or tux at a time.
1.3âFive Forces Analysis & Industry
Attractiveness
Focusing
on the global market and where growth is expected to increase over the next 3
years, India and America are the two markets analyzed with the five forces. The
market is fragmented substantially and has a few very large, established
retailers that increase competition within the market. Branding heavily impacts
the market, so advertising and vitality of the clothing tends to make customer
acquisition a source of rivalry.
1.3.1
âRivalry among Competitors
The apparel industry is an
established one that is still growing very rapidly. Elements influencing degree
of rivalry are competitor size, ease of expansion, low fixed costs, number and
similarity of players, storage costs, undifferentiated products, and lack of
diversity. Lack of diversity is a key factor because there are few
differentiators in the market of menswear. More and more department stores are
expanding their menswear lines. Menswear is becoming trendier, more
contemporary, and more fashionable. Costs of storage may be costly to smaller
retailers, creating the rivalry of which company can run the leanest inventory
in the most storefronts. Because menswear outlets put high emphasis on its
clothing, this also deepens rivalry in comparison to outlets that are more
diversified. Due to these reasons, rivalry is a strong force in the market.
1.3.2 âThreat of Potential Entry
As companies gain the resources and
economies of scale, building a profitable business requires a learning curve to
understand the industry. New Entrants factors include distribution
accessibility, little regulation, low fixed costs, market growth, suppliers
accessibility, undifferentiated products, weak brands, and low cost switching.
Barriers are not high with capital investments being within reach for an
individual. Large chain stores, like Menâs Wearhouse, have such a large market
share it may be very difficult for smaller retailers to gain traction in the
market This organization, alongside contenders, has been around for 30 years
and after some time, client loyalty is built due to the notoriety. New entrants
will have a battle with a distribution network needed. There is little
regulation in the industry of retail, but retailers ethically should ensure the
products theyâre selling are produced in accordance with their working
standards. New entrants will be a strong force because there are very little
forces pushing against them.
1.3.3
âBargaining Power of Suppliers
Drivers of supplier power include
switching costs, supplier size, player independence, player dispensability,
oligopoly threat, importance of cost/quality, forward integration,
differentiated input, and substitute inputs. Key suppliers in this market are
usually small-medium sized manufacturers and wholesalers (Market Line
pg.15,2014). Apparel manufacturing is a
highly vertically integrated industry. For companies not vertically
integrating, the cost to switch to another manufacturer or wholesaler is low
(Market Line pg.15,2014). Also, as
international trade opens further, the opportunity to turn to the global market
for product sourcing further weakens supplier power. Suppliers are also
weakened by their lack of diversity through focusing on apparel in the textile
industry. Due to these reasons listed, supplier power is moderate.
1.3.4
âBargaining Power of Buyers
Drivers of buyer power include price
sensitivity, product dispensability, tendency to switch, undifferentiated
product, buyer independence and low cost of switching. The tendency to switch
and low cost of switching work, together to make the buyer power a legitimate
force to the market. Brand loyalty is not a dominant factor because the cost of
switching is nonexistent (Market Line pg.14,2014). The target market for these brands are more
affluent individuals, so retailers do have the opportunity to influence
consumer behavior as clothes are usually seen as a social status within this
market. As the market is comprised mostly of individual buyers, there is very
limited impact on buyer power by individual consumers (Market Line pg.14,2014).
Buyer power is moderate due to the small
impact each buyer may have, but the low cost of switching is a strong force.
Buyer power is weakened through the ease that retailers can differentiate their
products and adjust the price range to reach a target market (Market Line
pg.14,2014).
1.3.5
âThreat of substitutes
Factors
influencing substitutes include beneficial alternatives, cheap alternatives,
and low cost of switching. There are substitutes to retail purchases such as
buying from a clothier, which increases the threat of low cost switching.
(Market Line pg.17,2014). Custom made clothing provides customers with more
custom ability and the clothes are built to the customerâs specific figure and
wants. With a key factors of a suit looking good being the fit on customers the
desire for custom fit clothing becomes more desirable. Another major substitute
to the retail industry is used clothing. As thrift shops continue to grow in
popularity and websites like Ebay provide convenience and ease to customers,
they will look for slightly used clothing instead of going to a retail outlet
(Market Line pg.17,2014).
1.3.6 â
Summary of Five Forces Analysis
The menâs apparel industry has a low
threat of new entrants but yet is one of the fastest growing industries. With a
strong control over their suppliers but low control over their buys it may
provide some risk but gives businesses in this industry the option to find new
suppliers. Buyers have the option to find used clothing or make or get made
custom clothing which is a medium risk of substitutes. Overall this industry is
one of the fastest growing industries in the world and business that are able
to break through the barriers to entry have a strong chance of success. A summary of the analysis above can be found
in exhibit one in the appendix section.