Case Studies in Retail

Topic 1:
A JD Sports case study: Balancing the product portfolio to satisfy customer demand
Introduction
JD is the UKs leading retailer and distributor of fashionable sports and casual wear. JD has a
reputation as the most innovative visual merchandiser of sportswear and branded fashion. It
was founded in 1981 in Bury, in the North West of England, with one shop - John David Sports.
The JD Sports Fashion PLC Group now has over 900 stores across the UK and the Republic of
Ireland. In more recent years it has entered the European market with stores in France, Spain
and Holland.

JD is acknowledged as the leading specialist multiple retailers of fashionable branded and own
brand sports and casual wear. It combines globally recognized brands such as Nike and adidas
with its own brand labels such as Mckenzie, Carbrini, Brookhaven and The Duffer of St. George.
JD also operates an online business with the website servicing one million unique visitors a
week. Having a range of products, priced correctly, is a key component of a business marketing
strategy. This range of products is referred to as the product portfolio and a business needs to
have the right balance of new, growing and mature products as part of its portfolio. The product
life cycle (PLC) is the term used to describe the stages a product goes through from an initial
idea to being removed from the market and no longer sold.

JD is proud of the fact that it provides its customers with the latest sport and athletic inspired
fashion apparel and footwear, as well as fashion and outdoor clothing products and equipment
from the very best brands. This case study shows how JD balances its product portfolio to
continually sell products that customers want to buy at prices they are prepared to pay.

The product life cycle (PLC) is the term used to describe the stages a product goes through from
initial development (start of life) to its removal from the market when sales have declined (end
of life). There are six stages to the PLC:


1. Development
2. Introduction
3. Growth
4. Maturity
5. Saturation
6. Decline


Development is the first stage of the cycle when a business has a new product idea. The idea
may come from market research, customer demand, updating existing products or in response
to a competitors product. This development phase will incur costs but the business will not
receive income from any sales until the product is launched into the market. Introduction is the
stage when the product is launched into the market.
A business will promote the product to build sales. JD buys third party brands such as Nike and
adidas six months before the products are in stores. This gives time for JD to develop targeted
advertising campaigns online and in the stores ready for the launch of a new product.

Growth
As sales grow and new and existing customers buy the product, it moves into the growth stage
of the life cycle. During the maturity stage although growth in sales has slowed down there is
still a steady demand for the product. At the saturation stage sales begin to drop because there
may be a new or alternative product on the market and the final stage is reached, that of
decline, when the sales of the product fall.


The length of each stage will vary depending on the product. JD monitors and manages the life
of its products very closely. Product sales are assessed immediately after the product has been
launched in store. After four to six weeks an assessment is made as to whether the product
needs to be marked down as a reduced price product. For any product not sold after it has been
reduced it is then stored ready for a sale. JD usually runs two sale periods during the year in
June and December.

Purpose of the product life cycle
Understanding the life cycle of a product is important to a business for a number of reasons.
One important reason is that understanding the PLC will help a business to manage its cash flow.
In the development stage money will be spent on developing the product with no sales to cover
the cost of that development. When the product is introduced into the market the business will
probably incur significant costs in marketing campaigns. Sales revenue in the introductory stage
is unlikely to cover costs. As the product moves into its growth phase, the cost of promoting the
product should decrease as cash flow from product sales increase and the business can see a
profit. Profits should continue through maturity until sales fall as the product begins to decline.
In the sport and casual wear sector changing fashions will also affect the life cycle of a product.
JD buys branded products such as Nike and adidas six months before launch so they usually
have a pre-determined price. In this price and fashion sensitive market, prices may have to
change even on the day of the launch because of other retailers pricing strategies.
Monitoring the life cycle will help to identify when products should be replaced or renewed. JD
is subject to seasonal trends in its fashion and outdoor wear whereas products such as Nike Air
Max 95 trainers will have a longer life. Consequently, stores are allocated the product based on
individual demand.

Pricing strategies
A business can extend the PLC by changing its pricing strategies, for example buy one get one
free offers or free postage and packaging to encourage more sales. Other pricing strategies can
be used at appropriate stages of the PLC, for example a business can use price skimming when
the product is first launched by charging high prices. The aim of skimming is to gain high profits
in the early stages of the PLC. Skimming is successful when the product is new and different so
that consumers will pay a high price for being the first to have it. The opposite strategy to
skimming is termed penetration pricing, this means setting a low price when the product first
enters the market. The aim is to get the maximum possible market share quickly and to shorten
the launch stage of the PLC.

Promotion
There are several ways a business can promote its product to maintain growth at the peak of the
PLC. JD is a market-orientated business which means its focus is on satisfying the needs of its
customers. It segments its market demographically and uniquely understands the buying habits
of its predominantly sports and fashion conscious customers.
A product that JD decides to feature in its promotional campaigns usually becomes a hero
product in one of their seasonal campaigns. Each campaign will be accompanied by a
photoshoot, where JD will hero the product. The images and video are then used to create a
campaign both in store and online. Once in store the products are visually merchandised to
enhance their desirability to customers. This relates to how and where it is presented in store.
Front of store, displays on walls and displays in windows are key areas used to promote the
product.


Online advertising
JD advertises online by using images on the website, as well as targeted e-mailing and social
media posts to its existing database. JD also uses search engine optimisation (SEO). SEO is the
process that uses keywords and phrases to improve web traffic through a search field. This
ensures that it is high on search lists, such as Google, when searched for by customers. JD
promotes its products through various channels on both a local level and national level. For
example, FHM magazine receives key products to review and use in the editorial section of the
magazine, both on shelf and online.
Larger JD promotional campaigns include press advertising and outdoor media campaigns.
Carefully selected press promote the JD message. It regularly uses specially selected outdoor
media venues in key cities throughout the UK and Ireland.

Extension strategies
As sales begin to decline, a business needs to decide whether to withdraw the product or use
extension strategies to boost product sales and extend its life. Extension strategies include
repackaging, adding extra features or changing the product price.
A business needs to have a mix of products at different stages of the PLC to meet the demands
of its customers as well as maintaining a profitable business. To help identify the right product
mix a business can use an analysis tool called the Boston matrix. The Boston matrix compares
the market growth of a product with its share of the market. The matrix analysis refers to
products as question marks, stars, cash cows and dogs.

All new products are seen as question marks, this is because they are new entrants to the
market and so are not yet profitable and the product may succeed or fail. Stars are those
products with high growth and high market share; they are in the profitable growth stage of the
PLC. Cash cows are in the maturity stage of the PLC as they are products with a high market
share, but their growth in the market has stabilised. At this stage the costs of the product in
terms of production and promotion are generally lower, so cash cows generate high revenue for
the business. Finally, dogs are products that have a low market share and low market growth.
They can be a drain on a business resources so are often sold off if they are no longer making a
profit. For a business to survive, it needs a balanced product portfolio so that it can invest the
revenue it generates from its cash cow products to develop new question marks so that they
become stars.

Balancing the product portfolio
JD monitors product sales and its products portfolio closely. For example, if one of its products is
not selling as expected, the company will decide to reduce the price of the product in order to
encourage more sales. If the product is not selling well after four to six weeks, it becomes an
offer product. The product is then displayed using a vibrant orange and grey price ticket and
will be on display in store with other offer products.
By sectioning these products off from full price products, it encourages a high footfall of
customers looking for a bargain. This process also applies to its online sales. JD uses offer pages
on its website to promote these products as well as sending e-mails to previous offer customers
in order to sell the products more quickly and clear stocks.

Conclusion
Understanding customer buying habits and having the right mix and balance of products is
essential for business survival, particularly in the fast moving environment of fashion and sports
retail. JD understands the importance of market research to understand what its customers
want. JD constantly analyses its product portfolio to ensure that it reflects these wants. A
business needs a mix of products in its portfolio so that if one product fails to sell it still has
other products that it can depend on. The stages of the PLC help a business to measure the
return on its investment in new products and to develop appropriate marketing activities to
promote products through their life.

Pricing of the product and the balance of products can be changed in response to the stage of
the life cycle that the product has reached. The PLC helps in planning and forecasting the
revenue likely to be generated, from the product development stage through to maturity and
decline. JD invests heavily in its promotional activity to ensure products are targeted to its
fashion conscious market. Its innovative visual merchandising and promotional strategies help it
to remain the UKs leading retailer and distributor of fashionable sports and casual wear.


References:
http://businesscasestudies.co.uk/jd-sports/balancing-the-product-portfolio-to-satisfy-customer-
demand/introduction.html#axzz2noTvn9uK
































Topic 2:
A IKEA case study: Building a sustainable supply chain

Introduction
It is easy to think about the present without considering the future. Consumers want more
goods and services to improve their standard of living. The problem is they make choices about
goods and services that have long-term consequences for the environment. In our modern
world, organizations need to show responsibility. This means that they use resources efficiently,
do not harm the environment and consider how what they do affects the ability of future
generations to meet their needs.



IKEA aims to be a responsible organization. It sells low-price home furnishing products around
the world. These include furniture and accessories for kitchens, bedrooms, living rooms,
bathrooms and childrens rooms. IKEA now has stores in 36 countries around the world. It has
come a long way in its 60 years of business.
IKEA vision
The direction for the organisation is provided by its vision. This acts as a guide for everybody
within and outside the organisation about what IKEA wants to achieve.
IKEA's vision is 'To create a better everyday life for the many people.'
To meet its vision IKEA provides many well-designed, functional products for the home. It prices
its products low so that as many people as possible can afford to buy them.

However, in creating low prices IKEA is not willing to sacrifice its principles. 'Low price but not at
any price' is what IKEA says. This means it wants its business to be sustainable. IKEA supplies
goods and services to individuals in a way that has an overall beneficial effect on people and the
environment. Customers all over the world have responded positively to IKEA's approach. This is
evident in its increasing sales. In 2006 IKEA had a group turnover of nearly 18 billion euros.

Sectors of industry and sustainable supply chains
When consumers go to a retailer like IKEA, they will be looking at the different ranges of
products and how they are presented. They may also look for quality customer service.
However, consumers may not be aware that before products reach them, they must move from
being raw materials through a variety of stages to become finished products suitable for sale.
This is known as the supply chain.

The supply chain involves a flow of production and processes through each of the three
industrial sectors:

IKEA takes its responsibilities seriously and organises its operations in order to have a positive
effect upon the environment:

It aims that all the products and materials it takes from the primary sector do not harm
the environment.
Its products are manufactured in a responsible way.
The case study looks in detail how IKEA has achieved its aim to be a responsible business in each
of the three sectors of the supply chain.

The primary sector
IKEA is not a primary sector organisation but it needs raw materials to develop its products. It
therefore works closely with primary sector suppliers to ensure a sustainable impact on the
people and the environment in which it operates. The primary sector involves the development
of the raw materials. IKEA designs its own products. At the design stage, IKEA checks that
products meet strict requirements for function, efficient distribution, quality and impact on the
environment. Low price is one of the main factors that IKEA considers in producing well
designed, functional home furnishings available to everyone.
IKEA buys products from more than 1,300 suppliers in 50 countries. It uses a number of trading
service offices across the world. They negotiate prices with suppliers, check the quality of
materials and analyse the environmental impacts that occur through the supply chain. They also
keep an eye on social and working conditions at suppliers.

Environmental impact
IKEA uses a tool - the 'e-Wheel' - to evaluate the environmental impact of its products. The e-
Wheel helps IKEA to analyse the four stages within the life of a product. This also helps suppliers
improve their understanding of the environmental impact of the products they are supplying.



Approximately 50% of IKEA's 9,500 products are made from wood or wood fibres. This is a good
resource as long as it comes from sustainable sources. It can be recycled and is a renewable
resource.

IKEA creates many design solutions to minimize the use of materials. For example:
some tables are made out of recycled plastic
some rugs are made of material clippings that would otherwise be wasted
products such as water cans are designed to be stacked. This means that more can be
transported in each load, reducing the number of lorry journeys and therefore lowering
fuel costs.
Each of these ideas helps IKEA's products to be more sustainable and reduce the impact on the
environment.

Supplier codes of conduct
A key part of IKEA's success is due to its communications with materials' suppliers and
manufacturers. During manufacturing IKEA specifies to its producers that waste should be
avoided. Where waste does occur IKEA encourages suppliers to try to use it in the manufacture
of other products. IKEA has a code of conduct called the IKEA Way of Purchasing Home
Furnishing Products (IWAY). This contains minimum rules and guidelines that help
manufacturers to reduce the impact of their activities on the environment. The IWAY code
complies with international legislation.
A product in use should not have a harmful effect upon consumers or their environment. For
example, it should not cause allergies. If it uses energy, it should do so efficiently. When a
product comes to the end of its useful life, it should be possible to reclaim or recycle the
materials that make up the product. Such materials can then be re-used for making other
products.

The secondary sector
Manufacturers within the secondary sector create IKEA products from raw materials. As
products move through the supply chain, the process of value-added takes place.

IKEA designs many of its products so that the smallest amount of resources can make the best
products. For example, IKEA saves on resources by using hollow legs in furniture (e.g. the OGLA
dining chair). Another example is by using a honeycomb-paper filling material instead of solid
wood for the inside of table tops (e.g. the LACK series).
As manufacturers or suppliers add value to products, the IWAY code of practice identifies IKEA's
minimum requirements.

The IWAY code of practice expects suppliers to:
follow national and international laws
not use child labour
not use woods and glues from non-sustainable forests
reduce their waste and emissions
contribute to recycling
follow health and safety requirements
care for the environment
take care of their employees

The application of the code raises standards. Each of the requirements within the code of
conduct helps to develop sustainable business activities. They have a positive impact on the
business environment in which the suppliers operate. They also improve the experience of
people working for those businesses. To monitor suppliers, IKEA regularly carries out an IWAY
audit. This involves talking to employees and inspecting documents and records. IKEA visits
suppliers on-site on a number of occasions to ensure that they are following the code of
conduct.
The code of conduct for suppliers and the work with other organisations underlines IKEA's
commitment to 'low price but not at any price'. Although IKEA wants its customers to enjoy low
prices, this should not happen at the expense of its business principles.

Sustainable partnerships
In 2000 IKEA formed a partnership with UNICEF to work on a community programme in
Northern India. The aim of the work was to prevent child labour by raising awareness and
addressing the root causes.
IKEA has also formed a partnership with the World Wildlife Fund (WWF). IKEA and WWF have
committed themselves to promoting the sustainable use of natural resources. This helps to
ensure that forests can be used both now and in the future.
To support sustainable partnerships with suppliers, IKEA works with other organisations.
For example, IKEA and WWF actions have led to:
a series of training courses for people in Russia, Bulgaria, Romania and China on
responsible forest management
the development of forestry plans in China
demonstrations to managers in Latvia on the benefits of responsible forestry
All these projects show IKEA's commitment to supporting sustainable practices.

The tertiary sector
Businesses in the tertiary sector provide a service, such as banking, transportation or retailing.
They do not extract the raw materials or make products themselves. 11% of businesses within
the UK are retailers.

In the tertiary sector, IKEA's retail stores add value to manufactured goods by providing a form
of shopping different to the usual high-street experience. IKEA has more than 260 stores in over
36 countries. These meet the needs of consumers in a number of different ways:

Retailing turnover in the UK was more than 250 billion in 2006.
Each IKEA store is large and holds more than 9,500 products giving lots of choice.
Within each store, there are a number of realistic room settings that enable customers
to see what the products would look like in their own homes.
The IKEA store is built on a concept of 'you do half, we do half; together we save
money'. This refers to, for example, the customer assembling furniture at home.
Customers handpick products themselves using trolleys.
IKEA provides catalogues and home delivery to save customers time.
IKEA stores have restaurants that provide Swedish dishes alongside local food choices.

To make its activities more sustainable, IKEA has set up many local UK initiatives:
In 2006 IKEA UK recycled more than 70% of its waste products. Its goal is to recycle 90%
of materials.
To reduce environmental impact, in 2006 IKEA UK started to charge for carrier bags. This
reduced the use of carrier bags by 95%. In June 2007 IKEA UK removed carrier bags from
its stores completely.
In December 2006 IKEA UK gave a brand-new folding bike to each of its 9,000
employees. It also gave subsidised travel tickets to encourage them to travel to and
from work on public transport.
IKEA UK has provided low-energy light bulbs to its entire UK workforce and switched its
fleet of company cars to low-emission hybrid models.

Conclusion
IKEA's long-term ambition is to become the leading home furnishing company. However, for
IKEA, getting there is not simply about developing profitability and market share.

As a global organisation IKEA has chosen to undertake a leadership role in creating a sustainable
way of working. It has educated suppliers to understand how and why sustainable production is
vital. This has helped IKEA differentiate itself from its competitors.

Consumers are made aware of IKEA's commitment to sustainability through its involvement with
many other organisations such as the WWF and UNICEF. IKEA is now considered by both
suppliers and consumers to be a responsible company that they can trust.


Reference:
http://businesscasestudies.co.uk/ikea/building-a-sustainable-supply-
chain/introduction.html#axzz2noNvuxZx







Topic 3:
An Argos case study: Identifying customers and meeting their needs

Introduction
Marketing is about making sure that a business is providing the goods and services that
customers want. It involves identifying and anticipating what consumers want today and will
want in the future. The marketing department then plays an important role in taking these
goods and services to market through all the channels the business sells through. This case study
focuses on the way in which Argos makes sure that it meets the needs of its customers.

Argos was founded in 1973 and is now the UK's leading general merchandise retailer with sales
of over 3.3 billion. Argos is owned by GUS plc and is part of the Argos Retail Group with over
580 stores in the UK and Republic of Ireland, as well as distribution centres, call centres and its
head office in Milton Keynes, employing over 23,000 people in total. Approximately 98% of the
UK population live within 10 miles of an Argos store.

In the modern world of retailing consumers can have their needs met in a variety of ways such
as High Street shopping, out of town shopping centres, and by direct delivery from Internet
orders. Competition among retailers is increasingly getting tough. Differentiation is therefore
the key to developing a compelling competitive advantage and winning loyal customers.
Differentiation is the process of making your business stands out from rivals - making it different
and better.

Marketers at Argos therefore are continually concerned with addressing the questions:
Who are our customers? (Argos needs to find out as much as possible about its customers in
order to meet their needs.)
Are we offering the right combination of choice, value and convenience?
How can we create a compelling competitor advantage? (How is Argos different from
the competition?)
How can we defend what business we already have and how can we grow?
How do we effectively communicate to our customer base?

Since it first started, Argos has established a very strong, trusted brand focused on value, choice
and convenience. It is the UK's number one retailer for toys and small electrical appliances; it
has a major presence in many other markets including DIY and gardening, consumer electronics
and furniture and a significant market share in jewellery (being No.1 in terms of volume) and
sports equipment.


Consumers are offered a multi-channel approach to shopping. Argos publishes two catalogues a
year, the spring/summer edition in January and the autumn/winter catalogue in July.

Mission statement
All organisations need to have a sense of direction or purpose. This is usually set out in one or a
few short sentences known as the mission statement. Argos' mission statement is:
' Argos publishes two catalogues a year, the spring/summer edition in January and the
autumn/winter catalogue in July.'
This statement clearly sets out the main areas which differentiate Argos from its rivals, namely
by offering its customers:
value for money, and
convenience (mainly through use of the catalogue at home).
Meeting customer needs

Argos recognises that its many customers have different needs and prefer to shop in different
ways. About 80% of Argos customers have already decided what they want to buy before
visiting the store.

One of the prime reasons these customers choose to shop with Argos is because they know that
they will get value for money. In general, retail space is very expensive. The more goods there
are on display in a shop, the more space is taken up and the higher the prices as you will only be
too aware when you examine prices in High Street shops.

Argos is able to offer the customer value for money prices, because it has a low cost business
model with limited product displays. In addition it benefits from economies of scale because as a
popular national chain, it is able to buy in bulk and, by organizing national distribution systems,
is able to reduce logistics costs to a minimum.

Convenience
Argos provides a very convenient way for customers to shop. They are able to look through a
catalogue at their leisure and choose from an extremely broad product range. The range of what
is offered is not limited by the display space in-store and can be accessed in a variety of ways.

Customers and segmentation
Within markets, not all groups of customers are the same - they do not have the same taste, and
incomes or want the same things. It is helpful to think of a market as an orange. When you look
at the orange from the outside you see a shiny orange skin that all looks the same. However,
when you peel off the skin you find that it is made up of a number of segments, each of which
exists within the whole. The segments in an orange are more or less identical, but in markets, by
contrast, they are different in terms of size and character.

A segment, therefore, is a group of consumers who share common characteristics, that are
different from other groups. Different segments may require different versions of the product,
they may pay different prices and they may buy the product in different places.

The most common way of segmenting a market is by demographics. Demography is the study of
population. Demographic segmentation recognises that different sections of the population
have different buying patterns and preferences to others. For example, there is a difference in
taste and spending patterns between the old and the young, between men and women,
according to locality etc.

Argos tested out demographic approaches but found that this was not a very accurate basis for
segmentation. A much more helpful basis has proved to be the frequency of visitors (i.e. the
number of times customers visit the website, or visit stores).

A distinction is often made in business between the internal and external customers of an
organisation. The external customers of a retailing business are the shoppers who want to be
served in an efficient and friendly way. Internal customers are fellow employees that we work
alongside in a place of work. If we treat them as customers then we help them to serve external
customers well.

The Argos way of working is built on a belief that the external customer is the most important
customer. Argos people are a team of colleagues who work together to meet customers needs.

Strategy
A strategy is a general plan which an organisation puts into practice to achieve particular end
purposes (also known as objectives). There are all sorts of general strategies that a company
might employ such as expanding into new countries or new markets.

Argos' strategy today is one of growth. Growth can be achieved in a number of ways such as
opening new stores, increasing the product range, expanding the website or increasing the
value and volume of sales. Argos' strategy involves driving frequency and maintaining the loyalty
of existing customers.

There is a significant amount of customers who buy infrequently from Argos. Argos classifies this
group as the 'Don't quite get its'. Advertising on television and through other media is an
important way of attracting this audience. Through advertising the 'Don't quite get its' are able
to appreciate the range that Argos offers, and the value for money of the offer. For example, at
Christmas time Argos adverts illustrate the way that a shopper can buy all of their presents
through the Argos catalogue.


In comparison large numbers of people regularly shop at Argos - these are the 'Get its'. Argos'
approach with this segment of the market is to increase the amount they spend in every
purchase.
Argos has introduced an ever-expanding product range especially since its Home
Delivery Service was introduced.
Argos has focused on convenience for customers. Research showed that customers
regard speed to be the top criterion when choosing to shop from Argos.

Growth therefore comes from driving frequency of purchase, and increasing the expenditure
per customer on Argos products.


Harnessing technology to meet customer needs
Many consumers today are cash-rich but time-poor. Fortunately most people (particularly the
young) have high levels of competence when it comes to using modern technologies such as
mobile phones and computers. Argos therefore uses a variety of modern channels to
communicate with customers and to provide them with avenues for enquiring about availability
of stock, and for making purchases.

Many customers like to browse the Argos catalogue in the comfort of their own home. A large
proportion of orders are still made in store, but an increasing proportion are being made online
and by telephone.

There are a number of channels for receiving goods including collection from the store and using
the home delivery service. In line with the development of new technologies and market
research, Argos has also introduced new innovations such as text and takes home and Quick Pay
kiosks.

Conclusion
Argos' unique shopping experience is popular and successful because it is focused around
meeting customer needs. Argos has gained competitive advantage over rivals by differentiating
itself on the basis of providing the best value for money for customers through the most
convenient shopping experience. The market has been carefully segmented according to the
way in which customers use the stores to make purchases.

Argos' strategy is to continue to grow through attracting new customers while rewarding
existing customers for their loyalty. By embracing new technologies in a busy world, Argos
continues to provide the channels that are most appropriate to the modern retailing experience.

Argos' turnover continues to grow, so that, for example, turnover was 1,552m in the six
months to the end of September 2004 compared with 1,377 in the same period in 2003. The
larger part of this growth came from new stores, but there was also a significant increase in
sales from existing stores at a time when other retailers were struggling.


Reference:
http://businesscasestudies.co.uk/argos/identifying-customers-and-meeting-their-
needs/introduction.html#axzz2noUZxUnQ



































Topic 4:
An Aldi case study: Business expansion through training and development
Introduction
Aldi is a leading retailer with over 8,000 stores worldwide. It continues to expand in Europe,
North America and Australia. The Aldi brand is associated with value for money. Its stores
provide customers with a wide range of products. There is an emphasis on high quality products
and providing excellent value for customers.

Aldis slogan is spend a little, live a lot. It works hard to keep prices low for its customers. The
company buys large quantities of products from carefully selected suppliers. Its buyers are
experts who choose the best quality products at the most competitive prices. The savings
achieved by sourcing products in this way can be passed on to customers. Aldi keep costs down
in other ways. It ensures its operations are as efficient as possible, for example, store layouts are
kept simple and opening hours focus on the busiest times of the day.

The importance of developing people
Aldi places great importance on how it trains and develops its employees. Training is the process
of providing employees with the necessary knowledge and skills to perform their tasks and roles
competently. Training not only helps to increase business efficiency but it can also make staff
more motivated by increasing their job satisfaction.

While training is narrowly focused on helping a company become efficient and effective in the
short term, development is more about building the long-term capabilities of the workforce. It is
about helping individuals to gain knowledge, learn new skills and develop a wide range of
attributes. Development makes employees more adaptable and more able to take on a wider
range of roles.

This case study will demonstrate how Aldis training and development programmes help ensure
its employees have the skills and competencies that the business requires both now and in the
future.

Identifying training needs
Workforce planning
Workforce planning is the process of finding out how a business will meet its labour
requirements both now and in the future. Aldi, like other businesses, needs to predict its future
staffing needs accurately. It needs to plan for both the number of workers it will require and the
specific skills that the business will need in the future. The company can then recruit new staff if
necessary. It can also ensure that it has training and development programmes in place to meet
these needs.
Aldi identifies future training needs through an on-going analysis of company performance in
key areas at all levels. For example, the company monitors the availability of its products to the
customer within its stores. If the level of availability drops below the targeted level then a
programme of training on order accuracy would be undertaken. It also considers future
developments within the business and also within the grocery retail sector in order to predict
both the total numbers of staff it will need and, more crucially, the skills and competencies that
will be required.

Aldis rapid expansion means that its current workforce cannot meet its future staffing
requirements. The company will need to recruit more than 4,000 new members of staff within
the next 12 months to meet the requirements of current exceptional sales growth and new
store openings. To attract the best candidates, it offers industry-leading salaries at all levels.
To ensure it gets people with the right set of skills, the company produces clear and detailed job
descriptions for each post. These show the tasks and responsibilities for that position and in
turn, the skills and competencies needed by an individual to succeed in that role.

Interview and assessment
Through a process of interview and assessment, managers identify if candidates have the
precise skills and competencies that the job requires. If the selection process shows that they
are suitable, then they will be recruited and Aldi can be confident that they will fulfil the
challenges of their role.

Although Aldi expects new recruits to make an immediate contribution to the business, it also
provides training so that they can develop their careers within the company. Aldi has entry
levels for apprentices, store assistants, deputy managers, assistant store managers, trainee
store managers and graduate trainee area managers. Aldi organises high-level training for
recruits to all levels. For example, in their first year, graduate recruits receive training in all areas
of the business. This ranges from training in-store to understand how the retail operation works,
to regional office tasks such as logistics, trading and financial planning.

All new recruits go through a comprehensive structured training plan. New employees learn
about the philosophy of Aldi and its expectations of them. This is important in making new
employees quickly feel part of the Aldi family. This training will be appropriate to the role, so
could be in a store or at an Aldi regional office.

On-the-job training
Aldi 17 Image 6On-the-job training is training that takes place while employees are actually
working. It means that skills can be gained while trainees are carrying out their jobs. This
benefits both employees and the business. Employees learn in the real work environment and
gain experience dealing with the tasks and challenges that they will meet during a normal
working day. The business benefits by ensuring that the training is specific to the job. It also
does not have to meet the additional costs of providing off-the-job training or losing working
time.

There are several methods of providing on-the-job training. Four frequently used methods are
briefly described here:
Coaching an experienced member of staff will help trainees learn skills and processes
through providing instructions or demonstrations (or both).
Mentoring each trainee is allocated to an established member of staff who acts as a
guide and helper. A mentor usually offers more personal support than a coach, although
the terms mentor and coach are often used interchangeably.
Job rotation this is where members of staff rotate roles or tasks so that they gain
experience of a full range of jobs.
Sitting next to Nellie this describes the process of working alongside a colleague to
observe and learn the skills needed for a particular process. This can be a faster and
more useful way of learning a job role than studying a written manual. The colleague is
always on hand to answer any questions or deal with any unexpected problems.

Store managers act as trainers
For most on-the-job training at Aldi stores, the store manager acts as the trainer. A typical
format is for the manager to explain a process to the trainee, then to demonstrate it. The
trainee then carries out the process, while the manager observes. Once the manager is happy
that trainees are competent, they can then carry out the process unaided. This process is used,
for example, to teach a store assistant how to operate the till and to instruct a trainee manager
how to order stock accurately.

All positions from apprentices through to trainee area managers follow this type of structured
tell, show, do training. Trainee area managers also undergo job rotation. They have the
opportunity to experience all aspects of the business to give them a complete overview of how
Aldi operates. They can then see how each department and business operation relates to and
links with other parts of the company and other processes.

Off-the-job training
As the name suggests, off-the-job training is provided away from the immediate workplace. This
might be at a specialist training centre or at a college or at a companys own premises. This type
of training can be particularly useful for developing transferable skills that can be used in many
different parts of the business. It may be used, for example, to train employees in the use of
new equipment and new methods or to bring them up to date with changes in the law. Typical
off-the-job training courses offered to employees by Aldi include:
recruitment, interviewing and selection
employment law
influencing skills
performance reviews (appraisals)
Aldi Management System (how to develop and performance manage people).

For each aspect of training Aldi decides whether on-the-job or off-the-job training is the better
option. Off-the-job training may involve extra costs, such as payments to training organisations.
It also means that staffs taking training courses are not at work, so their jobs have to be covered
by others. This can lead to an increase in payroll costs. However, balanced against these costs
are the gains that Aldi makes from off-the-job training. These include the benefits of having
more motivated staff, greater staff productivity and employees with better skills and the ability
to provide improved customer service.

Aldi's apprenticeship scheme
Aldi provides training opportunities for young people. The Aldi apprentice scheme combines on-
the-job and off-the-job training. Apprenticeships are open to 16-18 year olds. Apprentices
training as store assistants also study for an NVQ in Retail Apprenticeship. They complete store
assistant training and gain an NVQ Level 2 in their first year. They then take a store management
training programme over two years and work for a Level 3 advanced qualification.

The variety seems to suit apprentices. As Sam, an Aldi apprentice says:
The fast pace of the role is really exciting, with lots of chances to learn new and useful skills. As
well as the on-the-job training, there is also studying towards a recognised qualification that I
can fit around work.

Emily, another apprentice, recognises that the programme is a good opportunity:
'After attending college I was looking for an opportunity that would allow me to use my
customer service skills and the Aldi apprenticeship has given me just that. There is a lot of
competition for places, so you really need to want to succeed. I really feel part of the store team.
It can be challenging but it is well worth it.

At the end of their apprenticeships, Sam and Emily will have the knowledge and skills to take on
deputy manager or assistant store manager positions. From there each can rise to become a
Store Manager in the business. Aldis current growth means that there are many opportunities
for promotion, so Sam and Emily could soon join the many others who have been promoted
within the business.

Development
Development is not the same as training. Development focuses as much on personal growth as
skills that are directly related to the job. A development programme is designed to make
individuals more skilled, more flexible in their approach and better qualified for their chosen
careers.
Through a development programme, employees can obtain transferable qualifications that
benefit the individuals concerned as well as the business. This can have disadvantages for the
business, as it gives workers greater value in the job market. However, Aldi is willing to take this
risk as it believes in providing what is best for its staff. Development options for apprentices
include working for various qualifications. Aldi has a fast-track approach for graduates.
Opportunities for graduate recruits at Aldi include secondments to different international
countries to develop all-round expertise.

Aldi retail placement scheme
The Aldi retail placement scheme takes university students on a one-year placement. This allows
the chosen individuals to show what they can offer the business and to find out what the
business can offer them. Aldi offers an excellent reward package for students on a placement,
but in return expects trainees to have enthusiasm, drive and ambition. Successful students get
the opportunity to apply for a place on Aldis Area Management training programme.

To support their development, managers help employees to set personal goals. These are
identified during an appraisal process. This is when a member of staff sits down with their line
manager to evaluate past and current performance, to consider what skills are needed going
forward and to set targets for the future. This could involve identifying further training or
development opportunities.

Conclusion
Aldi seeks to provide its customers with quality products at prices that provide value for money.
It wants efficient operations, with its stores staffed by people who are keen and competent.
Aldis success is shown by the fact that it is expanding rapidly. It is opening new stores and
experiencing sales growth that requires it to take on more staff. This means that it needs to
combine good recruitment policies with robust selection processes.

Staff are recruited from school or college into Aldis apprenticeship scheme or direct into stores
for positions from store assistant up to trainee Store Manager. Those from university with a 2.1
degree or better are able to apply for the Graduate Area Manager programme. All recruits are
assured of appropriate on-the-job and off-the-job training, as well as career development
opportunities. Promotion is open to all staff, regardless of the route they choose to join Aldi.

Aldi puts great emphasis on developing its people. Over 85% of Aldi directors have been
recruited from within the company. This commitment to training and development makes Aldi a
business of choice for both ambitious teenagers and top graduates. This is shown by its placing
in the Top 5 in The Times Top 100 Graduate Employers and the Graduate Employer of Choice for
2012 for General Management.


Reference:
http://businesscasestudies.co.uk/aldi/business-expansion-through-training-and-
development/introduction.html#axzz2nok8WBUn







































Topic 5:
A Marks and Spencer case study: Using supplier relationships to serve customers better
Introduction
To compete in todays modern retail environment, an organisation depends more than ever on
its ability to develop business opportunities as and when they arise. A key element in developing
a business strategy is for decision-makers to build on the unique elements which help that
organisation to do well.

Understanding and building on this capability is particularly important in ensuring that the core
strengths and competencies of the organisation not only fit the business environment but also
help to develop it further and faster than its competitors. This strategic capability to respond to
changing conditions will help counter threats to the organisations development.

Marks & Spencer aims to become the worlds leading volume retailer with a global brand and
global recognition. Its unique retailing formula has already enabled the company to enter a large
number of markets around the world. Marks & Spencer owns no factories and does not make
the goods which are sold in its stores. The core competence at the heart of this formula, which
provides many advantages over competitors, is that of the supplier relationship.

All organisations have to obtain resources in order to provide goods and services. This is known
as the supply chain. Marks & Spencer has a policy of buying and dealing directly with suppliers.
This partnership spans the whole supply chain, including producers and raw material suppliers.
It is a symbiotic relationship - the organisations work together and depend on each other for
success. The strength of these relationships has provided Marks & Spencer with many
advantages over its competitors. These advantages, in turn, lead to benefits for customers, such
as better product quality, value, availability and constancy of supply.

This case study focuses on how this special relationship with the supply base enables Marks &
Spencer to serve customers better. The lingerie market will be used as an example.

Market position
When looking at an organisations competitive position, it is important to understand the
opportunities that exist within a market, as well as other competitive threats. A market can be
defined as: a collection of individuals and organisations who are actual or potential buyers of a
product or service. The market environment in which organisations compete is usually known
as the micro-environment.

This refers to all the factors that influence an organisations activities in a market, such as
changes in the needs and expectations of customers, as well as patterns of competition.
Lingerie is a market which incorporates both core and fashion products - changing consumer
trends and tastes influence the type and nature of products produced and required. As a result,
organisations must constantly develop new product concepts in response to customer demand.
If an organisation does not meet these demands and expectations, it will fail. For a company like
Marks & Spencer, building on one years product successes presents a challenge for the
following year, while products which have been less successful will leave gaps to fill and areas to
develop.

Decision-makers at Marks & Spencer cannot afford to be complacent when developing goods
for such a market. Sound judgement, experience and entrepreneurial flair are all required to
understand the complex cycle of the fashion market.

The lingerie market in the UK is worth more than 1.75 billion. Marks & Spencer has a 40% share
of this market and is, therefore, a clear market leader. However, the improved performance of
competitors and new entrants to the industry mean Marks & Spencer must strengthen its
position. Consolidating a market position is concerned with strengthening and further
developing that position - it does not mean standing still. Competencies, such as mutually
advantageous supplier relationships, must be continually developed to improve competitive
advantage.

The common objectives for Marks & Spencer and its suppliers are to:
Increase Sales
Minimize Stocks
Minimize Commitment
Maximize Flexibility.
The key to doing this has been to manage, or integrate, the supply chain so that both Marks &
Spencer and its suppliers are working towards the same business objectives. Communication is
therefore important between all parts of the chain to ensure that the differences between
demand from customers and the suppliers ability to meet such demand can be minimised.

Developing supplier relationships
Marks & Spencers ability to respond quickly to changing customer needs lies with mutually
advantageous relationships developed with suppliers throughout the supply chain. Many of the
suppliers have seen their businesses grow alongside that of Marks & Spencer. The strength of
these relationships and the mutual trust and support each provides is a critical element for the
development of each business.

An important element in managing this supply chain is fairness. Working closely with a limited
number of suppliers involves helping each of them to meet their own business aspirations, but
not at the expense of other key suppliers. The starting point for managing the supply chain is to
coordinate Marks & Spencers business strategy with each of the suppliers business plans. This
will provide the structure and direction for each supplier to follow.

Marks & Spencers strategic objectives are to develop all new products so that they:
fully satisfy the customer in terms of comfort and fit
are available at the required time
are clearly specified so that they can be launched into any manufacturing site
Provide the maximum benefits permitted by each design.

The beginning of season strategy meeting provides suppliers with the opportunity to discuss
their expectations with Marks & Spencer, such as the areas of business they would like to grow.
It also enables Marks & Spencers decision-makers to provide suppliers with a realistic
assessment of where they need to develop. Discussions at this stage may broach issues such as
how to encourage others to take their products further forward and how to spread knowledge.

At the heart of this process is integrity. It is important that all parties are dealt with in a fair and
equitable way which sustains relationships to provide long-term business opportunities and
developments.

Supplier strategy
For many lingerie suppliers, Marks & Spencer is often their main customer. These relationships
are interdependent - Marks & Spencer depends on the capabilities of its suppliers to help meet
customer requirements. If Marks & Spencer is successful in meeting the needs of its customers,
then the suppliers will also reap the benefits and rewards.

Planning a business strategy with suppliers helps to provide a clearer brief for all parties
involved in the process of supply. Interim meetings provide a useful opportunity for suppliers to
provide feedback from trade fairs and discuss trend predictions. Much of the information
provided for these meetings is market-driven. Working with suppliers enables Marks & Spencer
to combine its own experience with that of suppliers to identify new product ranges which will
fit in well with other existing product ranges.
Meetings with suppliers help to provide a clear structure for the range of products at an early
stage. They also identify key issues, e.g. which fabrics to use, technical priorities and establishing
the number of products which will be bought for that season. It is important that potential
problems are foreseen and solved. More detailed meetings earlier mean less crisis management
later.

Meetings also involve discussions on the development of the previous seasons products so that
priorities can be established for the forthcoming year. This might include:
sales patterns
trends in the market and fashions
colour palette and theme boards
yarns, fabrics, trims and components
the general shape, fit and direction of the range.

The buying process
Members of the buying team work with either primary suppliers who manufacture garments or
secondary suppliers who provide the fabrics as part of the range building process. By working
with suppliers throughout the buying process, Marks & Spencers contribution to the finished
product is all encompassing. The buying team comprises:

1. Selectors - work closely with Marks & Spencers design group and suppliers, and are
responsible for offering choice to customers and delivering it into stores on time. Doing this
involves considerable research in order to keep up-to-date with the latest trends.
2. Merchandisers - are responsible for profitability. Their role involves negotiating prices,
estimating the quantities needed, sales analysis and scheduling the production with
manufacturers and suppliers.
3. Technologists - develop and monitor specifications and quality control systems. They act as
technical advisors to the selectors and merchandisers, as well as to manufacturers. They
also work on long-term projects with secondary suppliers which provide the business with
advances in manufacturing and fabrics.

Nicola Lewis is a selector for Marks & Spencer. She began working for Marks & Spencer after
leaving university. Beginning her career in Stores, she has now moved into the Buying Group.
Nicola helps to compile a well-balanced range of products which will appeal to Marks &
Spencers core customer base but which also has plenty of newness to move the range forward.
Managing the supply base involves two buying cycles based on two seasons, Autumn and Spring.
It involves working up to 18 months ahead.

Developing and cementing relationships with suppliers is central to Nicolas role as a selector at
Marks & Spencer. Working in a fast-changing business environment with a broad mix of
personalities and characters, she feels that by building relationships that encourage people to
be individuals, they become a source of creativity and innovation. Working with suppliers
provides Nicola with independence and empowerment to manage a project. It also involves
being a member of a team focused on meeting customer needs.

Fabric suppliers come from across the world. Discussions enable designers to share their ideas
and discuss innovations in a way which helps them to become more competitive. After careful
analysis, which involves assessing the design, production viability and cost, white sealing takes
place. This is the pre-selection of prototypes which meet the criteria with the intention to buy.

Marks & Spencer selectors, merchandisers and technologists then work with each supplier to
help prepare products to meet the high standards necessary for the stores. This involves:
First fit which provides information and measurements establishing the base size for the
style
Pre-production meetings to discuss production viability of Marks & Spencer standards
and confirmation of packaging details
Test lots which confirm the viability of patterns as well as make-up methods and
standards
Grades which approve dimensions and fit of sizes identified
Wearer trials which assess the performance of garments in customer use. The fit, fabric,
trims, colours and labels are all important for this final stage of development.

Courtaulds Textiles is a large textile company which, as a major supplier, has had a relationship
with Marks & Spencer that goes back more than fifty years. Staff at Courtaulds Textiles work
closely with those at Marks & Spencer through shared goals and values. If a product range is
successful for Marks & Spencer, then Courtaulds Textiles will also reap the rewards.

Courtaulds Textiles believes that Marks & Spencers demands for excellence have helped it to
become a better manufacturer. Working with staff at Marks & Spencer has led employees at
Courtaulds Textiles to recognise that the customer is constantly looking for newness.

This has stimulated investment and innovation which has fuelled the market towards
technological and scientific development. At the same time, wider policies such as quality and
environmental standards have helped Courtaulds Textiles to become a better business.

Standards and quality
Green sealing the product is the term used when the product is bought and owned by Marks &
Spencer. It is the standard used to authorise bulk production. To meet the stringent
requirements for Marks & Spencer, products must be the very best that design, technology and
manufacturing can achieve. This provides real, practical benefits for the final customer.
Specifications and standards are established which enable everybody involved with the
garments to understand the requirements. Monitoring specifications, standards and quality
involves working closely with suppliers, with co-operation throughout the supply chain.
Specifications are those aspects of a product which can be realistically measured or
assessed, such as the quality of raw materials used, product dimensions and product
performance.
A standard is a physical example agreed between a customer and a supplier. Quality
refers to the individual characteristics of each product that enable it to satisfy
customers. For an organisation like Marks & Spencer, quality is particularly important in
providing a framework which enables Marks & Spencer products to develop a
competitive advantage over rivals.

One important link in the relationship between Marks & Spencer and Courtaulds Textiles is the
exchange of electronic data using Electronic Data Interchange (EDI). Courtaulds Textiles helped
to develop the system with Marks & Spencer. The system transfers information, such as prices,
images and product details, between each organisations computer systems.

Another key development has been the increased use of video-conferencing, which, by linking
garment suppliers and raw material suppliers to Marks & Spencer, has helped to improve
communication and reduce lead times.

Conclusion
Marks And Spencer 4 Image 8As the leading company in lingerie retailing, Marks & Spencer has
set benchmarks for the whole industry to follow. Although the Company has a large market
share, it faces fierce competition from other top retailers.

The key element in furthering its competitive advantage has been the development of strong
supplier relationships. Through management of the supply chain, Marks & Spencer has clearly
differentiated its activities within the industry to create a dynamic and responsive lingerie
business which recognises people as a source of innovation.


Reference:
http://businesscasestudies.co.uk/marks-and-spencer/using-supplier-relationships-to-serve-
customers-better/introduction.html#axzz2nok8WBUn