Some of the changes in the general and industry environments that have affected the retailer company include changes in customer preferences and economic instability. The inconsistence in the preferences of consumers has negatively affected the demand of the company’s products and as a result, it has experienced some decline in sales. This is following the fact that the business rises and falls according to the changes in customer choices (Faqs.org 2010). As a result, the company is at times forced to dispose of or introduce promotional sales on slow moving products, thus affecting the company’s gross margins and its operations as well.
The current global financial conditions unfavorably affect the demand of the company’s products; decrease access to finances thus causing both current and potential consumers to suffer economic hardships (Faqs.org 2010). This is due to the reason that customer’s purchasing power has in general declined particularly in the downturn period where throwaway income is negatively affected. Some of the economic factors include; unemployment, low wages, low rates of currency exchange, high interest rates and taxation among other factors. Following this downturn, customers have not been able to purchase the company’s products thus negatively affecting its operations and growth (Needles, 2003).
Some of the company’s capabilities are that it has seasonal sales cycles where by picks are experienced during Esther, Christmas and when schools are opening. Since most of its stores are located in closed shopping precincts and the company’s designs are displayed in a manner that the products are easily rotated and adjusted, presentation of these products becomes effective in small area thus allowing for elevated sales per square unit.
Concerning the issue of merchandise supply, the company sources its commodities from Asia and distributes them from Illinois, where the main ware house was located. Once sourced in, the merchandise would be distributed to Puerto Rico and North America. Other distribution amenities are located in Switzerland, Zurich and Vienna and they distribute merchandise to stores based in Austria, Spain, Switzerland and Germany. As a result, commodities are characteristically delivered to these stores thrice or five times in a week.
Over the past few years, the company has been in a position to use its steadily growing purchasing power to bargain for lower prices from its vendors thus resulting to equally higher margins and scores particularly on jewelry (LeClaire, 2005). The merchandised strategy of the company is supported by competent, low-priced sourcing abilities spread in over seven hundred supplies located outside the United States (Faqs.org 2010). This therefore enables the company to buy and supply commodities swiftly and cost efficiently.
The Success of Claire’s
Claire’s stores are located in over 172 locations around the world and concentrated in most of the major shopping malls in the United States and more than twenty-nine territories outside the United States; its worldwide presence offers a strong recognition of the brand name among its target consumers (Weber 1998, p. 83). By the end of January 2010, the company operated approximately 2,948 stores, 1,993 of which were situated in over fifty states throughout the United States. 955 other stores were located in ten countries all over Europe, 195 others were located in seventeen countries through the franchise operations, while 211 are located in Japan through the joint scheme.
During the financial year 2009, the company generated about sixty-three percent of its net sales from the stores based in North American and thirty-seven percent of the net sales from the 955 stores based in the ten countries in Europe (Faqs.org 2010). These net sales were not only dependent on one product, style or category but they were spread across more than 8000 units. It is therefore this multiple classification move that allows the company to benefit from the various fashion approaches while at the same time not being entirely dependent on either of them (Weber 1998, p. 83).
Thus to a greater extent, the success of Claire’s is attributed to merchandising; foreseeing the fashion tendency and appropriately responding to the changes by switching out merchandise without incurring any losses. Active merchandising management has been possible through steady testing of the products and evaluation of the efficiency of the store displays.
Major investment in information system, which began since 1997, has allowed the company to make efficient decisions and appropriately utilize merchandise allotment systems. Another capability of Claire’s Stores Inc. is its ability to manage cash. The company keeps significant amount of cash at hand and also has the ability to generate more cash through operations and obtainable resources under the credit line (Owen, 2006).
