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US Retailers Shift Gear to Perform Better

US Retailers Shift Gear to Perform Better

Introduction to the Retail Industry

Retail sector is the second largest industry in U.S., accumulating number of businesses and employees. According to the government broad measure of retail sales that consists food service, gasoline sales and automobiles) sales in the U.S. climb nearly 6.6% to $4.16 trillion in 2005, comparing a 3.8% increase in the year 2004. In the last year, retail industry evolved strongly, due to higher gasoline costs and good discounting during the Christmas.

The elimination of the global textile quota system enforced industry players to reorganize their businesses again to thrive in a cut-throat competition in the global apparel market. Last year was significant for the exporters and retailers, who re-organize to take benefit of the free trade era, and the best possible exploitation of resources. New initiatives were put in practice to meet new challenges to give the buyers value-add products at more competitive prices.

As a result, re-arranging the businesses for stiff competition was also witnessed in the American apparel industry. The sections, in which retailers focus on more are – better merchandise and inventory management, consolidating sourcing and more involvement in sourcing the country. The only reason behind all preparation was for a better market reach with wide product range.

The strategies made into practice last year and plans for growth in 2006 brought success for leading retailers like: Wal-Mart, Target, Tommy Hilfiger, JCPenny, Kohl’s, Sears Holding, and Gap Inc., are all sourcing massively from India.

Wal-Mart: Success is a result of expansion strategy

Wal-Mart is considered the leader in value-added market and currently shifting gears to offer better products to its customers. The company was offering limited range in apparel line, but, has introduced the exclusive apparel line, Metr07 collection in Oct 2005. The intention behind launching this collection is to cater the needs of urban buyers with more styles, featuring feminine touches and fashionable looks.

In a move to provide eco-friendly lines, Wal-Mart has just launched durable, hygienic, value-added product, the George Baby Organic cotton clothing line. This would be the first clothing line, for which Wal-Mart is planning for the coming years.

The Wal-Mart management is very optimistic at the record net sales growth with 9.5 percent to $312.4 billion. 537 new international stores have been added and the company is going to sustain a trend this year with more than 600 stores.

Currently, Wal-Mart operates 2,285 international stores, sourcing from 70 countries and is looking to enter into unexploited markets.

Wal-Mart Stores Inc operates Wal-Mart discount stores, super-centers, Neighborhood Markets and SAM’S CLUB locations in the United States. The company operates in Brazil, Canada, Argentina, Germany, China, El Salvador, Costa Rica, Mexico, Honduras, Guatemala, Japan, Nicaragua, United Kingdom, Puerto Rico and South Korea.

JCPenney: Sees growth through high-end merchandising

In previous years, JCPenney’s has marked upbeat enhancement in various commodity ranges and witnessed increase in recognition as a superb place for shopping. The company is optimistic about the future growth with 18 newly added stores, a 22.5 percent climb in operating profits, and more than $1billion in sales generated from jcp.com. Long-term initiatives have been made, which were implemented in mid 2005 to increase growth rate until 2009.

The designed plan has four major objectives to concentrate on, emotional touch with the customers, creating beautiful and easy shop interiors, to make JCPenney the best working place, and to become a premier in performance. Considering these objectives, the company has launched many new brands such as Miss Biou, Lee-work, Nicole, A.N.A., and Solitude.

The new POS system that provides internet connectivity and lessens transaction time to improve the shopping experience was implemented at more than 30 stores in the previous year. The company will implement this system in the remaining stores by the end of this year.

The company aims to add 27 new stores in 2006; most of them are scheduled at off-mall locations. It anticipates mid-single digit increases in sales in the year with re-organized focus on online merchandise and catalogue. JCPenny’s also targets home furnishing area as another area of development.

JCPenney’s is one of America’s largest department store, catalog, and e-commerce retailers, employing approximately 150,000 associates.

Target: Implementing new ideas & innovations for better growth

In a move to comply its strategy to offer exclusive and exquisite designs, Target sustained to pour-in more investments to developing design and source fashionable, precise merchandise with objectives to add more competitively priced ranges along with true value-added goods. The annual sales reached over $50billion last year, and the company is looking for better growth on this performance by utilizing the experiences gained over the year.

To lure more shoppers, the company launched ‘GO international’, limited edition clothing line, featuring a totally new international designer every three months. Each collection introduced is carefully placed within the format to use sourcing skills and knowledge in designing the product. The company has strengthened product development teams and sourcing destinations are focused more than in the previous years.

The company is also focusing on enhancement in stores’ presentation via the completion of remodeling, renovations and construction at the existing stores.

Target Corporation’s continuing operations include large, general merchandise discount stores, as well as an on-line business called Target.com. The company currently operates 1,418 Target stores in 47 states.

GAP Inc.: Searching success via effective strategic initiatives

Last fiscal year was hostile for GAP, as it slipped 2 percent in net sales and 5 percent in comparable store sales. Despite the poor sales performance, Gap strengthens its financial condition in cash and investments with $3billion, and eliminated $2.9billion in debts since 2002.

For the coming years, strategies had been laid-out to set up operational efficiencies, putting scissors on sourcing vendor base, making better shopping experience for all clothing lines, and adding more space to the stores both in the country and overseas. The first expansion of franchise stores are scheduled to launch in Malaysia and Singapore within the current year.

After the triumph of Forth & Towne, five more operations for the brand are planned at different locations in 2006. The GAP designer team is concentrating on making quality products quicker, enhance merchandising at 200 top adult stores, and create buzz that GAP is again on track. The team is focusing on main products and more amicable fashions in the clothing collection for Banana Republic. GAP Inc. is also shaking hands with the stake-holders to handle the bang in economically challenged areas. The major strategies for the growth are – managing and upholding current brands, with off-shore expansion via franchise systems, creating an online business, and making new brands.

Gap Inc is one of the world’s largest specialty retailers, with more than 3,000 stores and in 2005 revenues of $16 billion. It operates four of the most recognized apparel brands in the world – Gap, Banana Republic, Old Navy and Forth & Towne.

Kohl’s: Success through ideal merchandising concept

Last year was a fiscal triumph for Kohl’s with record net sales up of 14.5 percent to $13.4billion worth of sales. Kohl’s attained favorable outcome in broadening the customer base via launching new brands and merchandising mixed categories.

The success was a result of four initiatives laid out to concentrate on merchandise content, managing inventory, marketing, and enhancing store shopping experience. In the current year Kohl’s plans to expand on the basis of last year’s success and introduce new brands. The store plans to add about 500 more locations within the next five years. This expansion will be made through a strategic blend of existing and new stores, along with taking advantage of real estate opportunities that may climb as the sector continues to uphold. The company plans to operate over 1200 stores throughout US by the end of 2010.

The focus is to control its brand concept, adding value and cater to needs of existing customers. Widen customer base with better management of inventory along with continuously offering of latest and exclusive new clothing lines.

Based in Menomonee Falls, Wis., Kohl’s is a family-focused, value-oriented specialty department store offering moderately priced national and exclusive brand apparel, shoes, accessories, home, and beauty products in an exciting shopping environment. It operates 749 stores in 43 states.

Sears Holdings: Merger to roll-out silk route

Sears Holdings completed its first year of the ‘Sears’ and ‘K-Mart’ grand merger in March 2006. The merger had created great anticipations for better product and value.

The first year after merger, passed in settling down merger integration affairs and putting strategies into practice. However, now all the issues are settled down and the company has shifted its gear to attain for $55 billion in revenue within the next few years.

The integration processes of the two companies are finalized and this is the time to examining and executing the strategies set during the merger. The company is following new format, SearsbraM for clear communication on the quality of product variety.

The popular brands, such as Craftsman, Diehard, Land’s End, and Kenmore are aimed for better product assortments to mark their name as identity of quality and excellence. The stores, which were not performing well, have been shut down.

Sears Holdings Corporation is the nation’s third largest broad-line retailer, with approximately $55 billion in annual revenues, and with approximately 3,900 full-line and specialty retail stores in the United States and Canada.

Tommy Hilfiger: Tightens inventory management

In terms of achieving objectives, last year was encouraging for Tommy Hilfiger, as it successfully expanded its European business, restructured US wholesale operations, re-organized product assortment, while growing the company as a multi-brand recognition.

The company reorganized merchandise mix by removing the junior and young men’s collections, while more concentrated on men’s and women’s clothing lines. It has enhanced its inventory management to get better on the flow of products to the sales floor.

Tommy is focusing more on sophisticated premium denim market than the promotional jeans wear commodity. Additionally, it is launching new labels for women “Crest”, anticipated to meet the increasing demand for casual dress line for women. The management at Tommy is optimistic about the new product line, and expects that it will offer huge opportunity to meet consumer requirements with a casual clothing line.

The key areas of focus, in 2006, are improving marketing efficiencies and reduce excess capacity. The company has initiatives to introduce Lagerfeld brands in the US this year. Lagerfeld brand was acquired by the Tommy Hilfiger in 2005, in a move to expand worldwide with an identity of having multi-brands.

The management has made up its mind to project Hilfiger as a specialty store for it will run test stores in different retail formats. These stores are anticipated to become fully operational the second half of this year.

Tommy Hilfiger Corporation’s subsidiaries designs, sources, and market for men’s and women’s sports, jeans, and children’s wear. Its brands range consist Tommy Hilfiger and Karl Lagerfeld.

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