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Current Management Issues in the Retail Industry. TEAM 1. What is Retail?. Sale of physical goods, merchandise, or services Sold from a fixed location, ex. department store Stores act as middlemen Publicly or privately owned Classification examples: - Food products

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Current Management Issues in the Retail Industry

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Current management issues in the retail industry

Current Management Issues

in the Retail Industry

TEAM 1


What is retail

What is Retail?

  • Sale of physical goods, merchandise, or services

  • Sold from a fixed location, ex. department store

  • Stores act as middlemen

  • Publicly or privately owned

  • Classification examples:

    - Food products

    - Hard goods or durable goods

     (Ex. appliances, electronics, furniture, sporting goods, etc.)

    - Soft goods or consumables

    (Ex. clothing, apparel, and other fabrics) 


Main functions of management

Main Functions of Management

  • Strategic Planning

  • Organizing/Decision Making

  • Leading

  • Controlling

     “Management is the coordination and oversight of the work activities of others so that their activities are completed efficiently and effectively. ” ¹

1. Management by Stephen P. Robbins and Mary Coulter


Issues confronting the u s retail industry

Issues Confronting the U.S. Retail Industry

  • Revenue growth & margin improvement

  • Cost management

  • Reporting, risk, compliance, and control


Revenue growth margin improvement

Revenue Growth & Margin Improvement

How to continue to generate growth in the current, challenging economy?

  • Issues: Importance of successfully managing margins

    - input costs are rising (commodity and energy)

    - creates inability to pass costs along due to inflation

    - consolidation in the industry is cutting out the need for retail stores

  • Management’s ability to formulate/execute strategically aligned cost initiatives

  • Imperative to moderate pricing pressures with:

    - product innovation

    - supply agreements

    - changing product mix

    - distribution channel collaboration

  • Proper planning / implementation of effective cost reduction programs


Cost management

Cost Management

How to develop a cost management strategy that maximizes efficiency without compromising growth potential?

  • Issue:

    - Traditional cost reduction methods are:

    • Failing to achieve the targeted reduction

    • Taking longer

    • Becoming more expensive than expected

  • Management Solutions:

    • Understand what money is spent and why on a functional basis

      - Ensure functional costs are aligned to company financial plans / budgets

    • Change the way money is spent

      - Make cost reductions sustainable

      - Create cost consciousness culture that will promote further cost reductions


  • Reporting risk compliance and control

    Reporting, Risk, Compliance, and Control

    How to safeguard a company from risk in this world of constant change?

    • Strategic risk management:

      - sets strategy / direction to effectively balance growth goals with risks

      - effectively deploy resources in pursuit of this objective

    • Effective risk management:

      - looks beyond vulnerabilities to consider sources of both risk and opportunity

      - provides a process for balancing growth, risk, and return

      - establish policies to promote a risk-management culture

    • Proper risk management protects:

      - company reputation

      - brand image

      - shareholder value


    Additional issues confronting the u s retail industry

    Additional Issues Confronting the U.S. Retail Industry

    • Regulatory barriers:

      - Restrictions on real estate purchases

      - Restrictions on foreign investment in retailers

    • Unfavorable taxation structures

    • Absence of developed supply chain and integrated IT management

    • High competitiveness resulting in low profit margins

    • Lack of properly educated / trained work force, often including management

    http://en.wikipedia.org/wiki/Retail#Challenges


    Examples of how to manage retail industries

    Examples of How to Manage Retail Industries

    • Blockbuster vs. Netflix


    Early history

    Early History

    Business and Company Resource Center Database


    Expansion and phenomenon

    Expansion and Phenomenon

    Business and Company Resource Center Database


    Swot analysis of

    SWOT Analysis of

    Internal

    External


    Current management issues in the retail industry

    SWOT Analysis of

    Internal

    External


    An industry replaced by a more efficient version of itself

    An Industry Replaced by a More Efficient Version of Itself

    http://go-digital.net/blog/2011/02/netflix-vs-blockbuster-perfect-example-of-an-industry-replaced-by-a-more-efficient-version-of-itself/


    Strategic planning

    Strategic Planning


    Strategic planning1

    Strategic Planning

    • What do we do?

      Create a more effective and cost efficient rental business

    • For whom do we do it?

      Video and DVD rental consumer market

    • How do we expand?

      Movie, gaming, TV shows; online and mail-delivery services, rental kiosks


    Leading

    Leading


    Leading blockbuster

    Leading Blockbuster

    • Leadership issues

    • Disgraceful leadership

    • John Antioco disagreement

    • Plans to eliminate late fees

    • This debacle lowered investor confidence

    • Created poor public perception of the brand


    Leading style

    Leading Style

    • Blockbuster had two CEO’s

      - John Antioco (1997-2007)

      - Jim Keyes (2007-2010)

    • No teamwork

    • Jim Keyes, had been constantly insulting his competition and disrespecting them

      • "Between the time Keyes took the reins as CEO of Blockbuster and today, the price of Netflix stock is up 500% and the price of Blockbuster stock is down about 90%”

    • hurting Blockbuster’s image


    Decision making

    Decision Making


    Organizing decision making

    Organizing/ Decision Making

    Upper Management Conflicts

    • Frequent turnover in upper management positions

    • Poor repositioning of Blockbuster brand

    • Headquarters moved from Florida to Dallas, Texas

    • Loss of valuable upper management due to move


    Netflix vs blockbuster shares 2008 2011

    Netflix vs. Blockbuster Shares 2008-2011

    http://retailexaminer.co.nz/2011/03/technology-and-the-dvd-market/


    Enron no late policy

    Enron/ “No Late Policy”

    • Blockbuster’s Decisions to team up with Enron, and the “No Late Policy” scandal

    • Enron signed a deal with blockbuster

      • DSL, Online streaming

    • Enron scandal

    • Terminated deal

    • 2005 Blockbuster introduced “No Late Policy”


    No to netflix

    No TO NETFLIX


    Present price comparison

    Present Price Comparison


    Conclusion

    Conclusion

    Blockbuster is staring to make improvements:

    • Blockbuster acquired with Dish Network

      - No longer an independent stock

    • Improving business model since bankruptcy

    • Implementing ways to keep remain a top competitor, adjusting to modern technology and online demands


    Current management issues in the retail industry

    Thank You!


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