Reitmans Case Study – Strategic Recommendations
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To: Reitmans Management Team
From: **************
Date: October 16, 2012
Subject: Strategic Recommendations
Reitmans has been able to perform well financially excluding the most recent fiscal year of 2012. Although Reitmans has established itself as a leading retailer of womens fashion, they must now anticipate inevitable changes in the industry and adjust to the changing business climate. To provide the proper strategic recommendations to Reitmans going forward, it is important to analyze and characterize the womens apparel industry and identify where Reitmans is currently positioned.
This industry is one which is flooded with many competing retailers offering many products and for that reason there exists an intense rivalry amongst competitors. Many mid-sized domestic retail chains in Canada were forced to file for bankruptcy and close in the past year because they were unable to compete with larger better established retailers. In a monopolistic market such as womens apparel, it is crucial for businesses to communicate unique brand messages and market their fashions or they run the risk of being ignored resulting in failure. Furthermore, the threat of substitute products is also one to be concerned with due to the abundance of womens apparel retailers. Since fashion trends are relatively widespread, mid-level apparel retailers must rely heavily on their ability to differentiate themselves. If retailers fail to do this, many consumers may shift to purchasing goods purely on the basis of price if they do not perceive any value in one brand to another. For these reasons, buyers possess all the bargaining power. This is evidenced by the “show rooming” phenomenon where consumers visit physical retail outlets with the purpose of finding styles they like, and then purchasing them online for discounted prices.
There are also several factors which can aid in predicting where the womens apparel industry will be in two to three years. The Canadian marketplace is one that has been proven to be lucrative and several American retailers have realized the potential of establishing Canadian locations. Entries into Canada by well-known retailers such as J Crew, Tanger Outlet Centers, and Target Corporation are bound to change the landscape of the Canadian retail environment. Retail centers such as these which were once only available in America, will undoubtedly be attractive destinations once established in Canada. Therefore the threat of new entrants could pose yet another challenge to existing domestic retailers in the years to come. Another change in apparel is the inevitable rise of costs associated with doing business. The rise of wages for employees in off shore production centers, the rise in prices of materials needed in the manufacturing of apparel and other similar factors are out of the control of