Retail Sector & Trends of Peter Jones Department Store - Term Paper Example

 Table of Contents Executive Summary: ……………………………………………………………… 1. Introduction: ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,…………………. 2. Analysis and Discussion ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,…………. 2.1 Brief Company Background ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,… 2.2 Retail Sector & Trends ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,………… 2.3 Target Market & Buyer Behaviour ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 2.4 Retail Concept, Retail Product ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,… 2.5. Atmospherics & store layout ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,… 2.6 Location Strategy ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,…,,,,,,,,,,,,,,,,,,,,,,,, 2.7. Competition (Direct & Indirect) ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,… 2.8. Merchandise Mix (range,width,quality,value)/Policies ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 2.9. Marketing/Promotion ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,…………… 2.10. Global Market Presence? One size fits all or adaptation?,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 3. Conclusion and Recommendation ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,… 4.References: ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,…………………………. Executive Summary: The retail sector trends which admit a favourable gross margin of 30% and above as average mark-up in the industry allows Peter Jones Department Store to be part of the earning firms in the industry and this is verifiable in the 2006 financial report of the JLP (John Lewis, 2007) which owned Peter Jones Department Store. Although consolidated financial report may include many other stores of John Lewis Partnerships, in the absence of evidence, to the contrary one could take that the Peter Jones must have earned on the average as reflected in the consolidated financial statements. One ground to support the application of the ratios for John Lewis is the application of the latter’s management philosophy to the all its business outlets including that of the Peter Jones Department Store, which is t the value that the company gives to its employees as partners. 1. Introduction: This paper seeks to produce a report on Peter Jones Department Store with due consideration of the following issues: retail sector & trends, target market & buyer behaviour , .retail concept, retail product, atmospherics & store layout, location strategy, competition (direct & indirect), merchandise mix (range, width, quality, value)/policies, marketing/promotion and global market presence, under a ‘one size fits all or adaptation.’ 2. Analysis and Discussion 2.1 Brief Company Background Peter Jones Department Store, located in Sloane Square, London, is part of the John Lewis Partnership (JLP) but its name was preserved after the latter sometime in 1905 acquired it. In 1920, an expansion of earlier power-sharing policies was implemented by a profit sharing plan with the employees. With democratic nature and profit-sharing plans, the present formal partnership structure evolved. As of January 2006, more than sixty four thousand (64,000) partners are working for the John Lewis Partnership, with majority of them on full-time basis. JLP also applied the principle and slogan “Never knowingly undersold” which it adopted starting in 1925 and applied to Peter Jones. Under the principle, a customer who could buy the same item cheaper elsewhere could ask for refund from the difference from JLP. Even today, the company still implements this principle with any UK shop and the same is being done by many of their competitors but may not have the whole UK like that JLP. The pledge however excludes online shopping. The policy serves to monitor local competitors and lessen the shelf edge price if they are being 'undersold' and to implement the same partners or employees also get paid £2 in cases they inform the company that such underselling is being done. Peter Jones were not branded as John Lewis up to this time the company intends still the keep the name although it is part of JLP. For the purpose of this paper therefore our analysis of the Peter Jones indispensably includes or refers to that of JLP (Wikipedia, 2007b) (Paraphrasing made). 2.2 Retail Sector & Trends As to the retail sector & trends, the Peter Jones must have been belonging to the right place at the right time as its financial performance may be within the industry averages in terms of gross margin. A gross margin at thirty percent or higher as could be gleaned from the financial highlight (John Lewis, 2007) of JLP would confirm the profitability of Peter Jones despite its policy on ‘Never knowingly undersold’. About, Inc.(2007a) reported about industry averages in retail trade when its said that the trade accounts for about 12.4 percent of all business establishments in the United States and that gross margin normally runs “between 31 and 33 percent of sales for the industry but varies widely by segment.” Peter Jones which is located in UK may be considered to profitable within US standards. About, Inc. (2007b) also reported that 11% of all enterprises in the UK are retailers operating in 278,365 retail outlets in 2006 and that UK retail sales amounted to more than 250 billion pounds in 2006, which is bigger than the economies of Denmark and Portugal combined. It added the sector brings almost 6% of the Gross Domestic Product of the UK. 2.3 Target Market & Buyer Behaviour As to companies target market it may be pointed that the management of the company is unique and would seem to put everything else below its strategy of having to make all partners happy. Hence the issue of having a target market with the supposed intention of targeting segments where it could maximize profitability would seem not appearing in its strategies. It would therefore appear that the company appears to serve all segments of the market with same degree of vigour as other segments of the retail trade industry. The apparent absence of specific or identifiable target market appears to be obvious in a department store, which try to cater to all kinds of customer needs. This may be evident in the case of Peter Jones entering into a business relationship with a dealer of a product as provided below by the fact that David Jones Limited (DJS) has entered into a strategic alliance pursuant to which: “it will work closely with the owners of Witchery to build Witchery concept stores within 10 David Jones department stores and to promote and grow the Witchery brand.” (Davidjones, 2003). Witchery is known to have a “network of boutiques whose target market is not defined by an age demographic but an attitude and understanding that the Witchery brand offers smart, simple style through quality products at affordable prices.” (Davidjones, 2003). This would confirm lack of target market for Peter Jones. The concept the target market in relation to buyers’ behaviour as far a departments store is concerned would be best appreciated in the design of the department store where all customers are given the chance to find its need. If there is adult section in a department store, there is also children section. If there is women section there is also men section. The name department store would aptly describe the nature of the business. The presence therefore of all categories would seem to deny the essential traditional meaning of target marketing. 2.4 Retail Concept, Retail Product The limited application of the target market & buyer behaviour in a department store would have to logically relation with the ideas of retail concept and retail product. Retail concept connotes the idea the one will try to sell what was predefined and predetermined need by the market. There is the seeming presumption of regular production of the goods and services in the market that are there pursuant to a known demand and the retailer would just have to be there to distribute. This appears to be supported by Wikipedia (2007a) when it said, “Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser (FAS Online,2000)” It is also added that retailing may include lower services, such as delivery. In said business, there are purchasers “from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores.” (Wikipedia, 2007a) Thus having retailers are at the end of the supply chain, they are considered by marketers from manufacturing companies as a necessary part of their overall distribution strategy (Wikipedia, 2007a). In other words, retailers are distributors. 2.5. Atmospherics & store layout As to atmospherics and store layout, the business of JLP must allow the ease and convenience of buying from a department store. The reason that it was called a department store is to departmentalize the different kinds of buyers according to their particular needs. Such appears to be practice by the Peter Jones Department Store. According to the 2006 Corporate Social Responsibility Report of John Lewis Partnership where Peter Jones is a part, the company received major awards based on services delivered to customers. This would therefore serve as living proof of the company having to live according to its nature and pursuant to its strategy of outstanding customer service, treating customers well, making sure they have the products and information they want, listening to their concerns and acting upon that feedback are all crucial to the success of any business. The 2006 Corporate Social Responsibility Report for John Lewis declared that the dedication and expertise of John Lewis’ highly trained Partners is extraordinary and this has brought earned recognition based on customer satisfaction surveys. The same report John Lewis was ranked top after three years in second place as the UK’s much-loved retailer In the Consumer Satisfaction Index 2006 conducted by retail industry analysts Verdict Research. The company was is also the top-ranked department store for both layout and in-store ambience, and features among the top five retailers for product quality for a sixth successive year. (John Lewis, 2007b) (Paraphrasing made). 2.6 Location Strategy Atmospherics and store layout must be very relevant to its location strategy of the company. While the first may refer to store itself, the latter may pertain to the accessibility of the store to customers. Accessibility now where technology could bring distant places closer must therefore deemed to include communication technology and transportation technology, which could help bring the buyer and the seller together. Peter Jones from the perspective of location strategy must be seen as John Lewis, which has a very wide net work of store in the United Kingdom. _ CSR Report of 2006 provided that JLP has benefited from further success in other surveys after coming second, just behind its sister company Waitrose in the in the Benchmarking Retailer Satisfaction survey published by the consumer association. In said survey more than 2,000 shoppers in 80 UK locations were given questions concerning about their recent shopping experiences in 42 of Britain’s top retailers. What do you think was the result? CSR Report of 2006 said almost about two-thirds of respondents declared that John Lewis’ to be ‘excellent or very good’ in-store experience. House Beautiful magazine readers also declared the company (John Lewis, 2007b) (Paraphrasing made). 2.7. Competition (Direct & Indirect) As to competition, the company has it direct competitors and indirect ones. The direct competitors include all department stores within UK and some of these are as follows: . a. Whiteleys in Westbourne Grove which was first to grow to department store size. The company consisted of 17 departments, was operating in a intentionally built department store and had over 6,000 staff employed in the business (Wikipedia, 2007c). b. Barkers in Kensington which can be defined as a department store by 1880, when it encompassed 15 neighbouring stores The company moved into a new, large building in 1889 after eventually taken over by House of Fraser and closed for business in 2006. (Wikipedia, 2007c). c. Harrods which as was given rebirth as a proper department store in 1889, after a devastating fire in 1883 (Wikipedia, 2007c). d. Selfridges, which was opened in 1909 by the American entrepreneur Harry Gordon Selfridge, and thus latter became London's seventh department store (Wikipedia, 2007c). The indirect competitors include all other stores that are not considered department stores and engaged in retailing business include, grocery stores, drapers shops and the like. 2.8. Merchandise Mix (range,width,quality,value)/Policies As to merchandise mix (range, width, quality, value)/policies, Peter Jones Department is expected to act like a department store with a wide variety of products under different categories. Viewing again Peter Jones as part of John Lewis, it could be said that it has “350,000 high-quality product lines, all competitively priced, regularly updated, safe to use and fit for purpose”, “outstanding customer service Friendly, knowledgeable employees plus courteous service equals unrivalled customer satisfaction” (John Lewis,2007b). Moreover, it was also reported that its “customers particularly value Partners’ product knowledge and advice. CSR Report explained that this the reason why they voted John Lewis top in a consumer satisfaction survey by Verdict Research in 2006 and have placed them first for service every year since the survey began” (John Lewis,2007b) 2.9. Marketing/Promotion In terms of marketing/promotion (Churchill, Jr. and Peter, 1995), it could be said that Peter Jones Department Store will just have its store known and available to serve the public at their convenience. Although it is part of John Lewis Partnership, it still has opted to create its own website but said website is linked with John Lewis. It has its name preserved even after John Lewis acquired it in 1905. One of the best promotional strategies of the company it is policy of “Never knowingly undersold” (John Lewis, 2007). The philosophy has served the company as evidenced my more a century existence. 2.10. Global Market Presence? One size fits all or adaptation? We have seen the seen the life of the Peter Jones Department Store to have been there for more than a century already but it has not yet reached the rest of the world by that name up to this time. Thus, it makes sense to say that as to and global market presence, under a ‘one size fits all or adaptation.’ it would seem that the company had not attempted to go global, despite its present level of profitability. This may be explained by the presence of forces that would oppose to such plan and they are follows: (a) The first is the inherent market differences that can exist from country to country. Knowledge@Wharton (2005) cited as example, KFC, formerly Kentucky Fried Chicken, which has 5,000 restaurants in the U.S. and 6,000 in other countries. KFC learned about its failure open restaurants globally based on its U.S. model. (2) The second force is entrenched local brands. Knowledge@Wharton (2005) explained that although conditions favouring local over global brands comprise exclusive market needs; low occurrence of purchase, so that brand devotion passes from one generation to another through family behaviour; and the relative insignificance of advertising, which makes it harder for worldwide companies to change loyalty patterns. (Knowledge@Wharton 2005). (3) The growing concentration of retail buying power, which can direct to discriminating price sensitivity on the part of the buyer Knowledge@Wharton (2005); (4) Lastly, disapproval of global brands by protesters opposed to globalization can also limit global branding. Knowledge@Wharton (2005) explained that a 1999 book titled No Logo supposed that global brands and excessive corporate power were chief contributors to poverty around the world. 3. Conclusion and Recommendation The retail sector trends admitting 30% and above as average mark-up in the industry would point out Peter Jones Department Store is at the right place and at the right time as could be seen in the 2006 financial report of the JLP (John Lewis, 2007) which owned Peter Jones Department Store. Although consolidated financial report may include many other stores of John Lewis Partnerships, in the absence of evidence to the contrary one could take that the Peter Jones must have earned on the average as reflected in the consolidated financial statements. One ground to support the application of the ratios for John Lewis is the application of the latter’s management philosophy to the all its business outlets including that of the Peter Jones Department Store is the value that the company gives to its employees as partners. References: About Inc.(2007b) Merchandise Mix Definition, {www document} URL http://retail.about.com/od/glossary/g/merchandisemix.htm, Accessed May 5.2007 About, Inc. (2007a), Retail Industry, {www document} URL http://retailindustry.about.com/od/abouttheretailindustry/p/retail_industry.htm.Accessed May 5.2007 Churchill, Jr. and Peter (1995) Marketing: Creating Value to Customers, IRWIN. Syndey, Australia Davidjones.com (2003) David Jones Announces Exclusive Strategic Alliance With Witchery, {www document} URL http://www.davidjones.com.au/corporate/pdfs/witchery03.pdf,Accessed May 5.2007 Foreign Agricultural Service (FAS) Online (February 9, 2000), Distribution Services{www document} URL http://www.fas.usda.gov/info/factsheets/China/distribution.html, Accessed May 5.2007 John Lewis (2007a) John Lewis Partnership - Company Website, {www document} URL http://www.johnlewis.com/, Accessed May 5.2007 John Lewis (2007b) 2006 Corporate Social Responsibility Report, {www document} URL , ttp://www.johnlewispartnership.co.uk/Display.aspx?MasterId=81f00253-1639-4749-a590-d2cd32540b62&NavigationId=613, Accessed May 5.2007 Knowledge@Wharton (2005), Managing Brands in Global Markets: One Size Doesn't Fit All, {www document} URL http://knowledge.wharton.upenn.edu/article.cfm?articleid=1206,Accessed May 5.2007 Peter Jones (2006) Peter Jones Department Store - Company Website, {www document} URL http://www.peterjones.co.uk/default.asp, Accessed May 5.2007 Wikipedia (2007a) Retail {www document} URL http://en.wikipedia.org/wiki/Retail#Retail_types, Accessed May 5.2007 Wikipedia (2007b) John Lewis, Partnership , {www document} URL http://en.wikipedia.org/wiki/John_Lewis_Partnership, Accessed May 5.2007 Wikipedia (2007c) Department Store, {www document} URL http://en.wikipedia.org/wiki/Department_store#United_Kingdom, Accessed May 5.2007 Read More