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William-Sonoma Inc and W/S Division Overview
Company- 5 Divisions Williams-Sonoma Williams-Sonoma Home Pottery Barn Pottery Barn Kids West Elm
Over 250 stores in USA(All 5 Brands)
16 in Canada, 2Puerto Rico,(Pottery
Barn/West Elm) 6Middle East(Pottery
Barn/Kids)
Kitchen Retail Division
Specialty retailer of products for the kitchen established in 1956
Total sales of $787 million (2009)
Williams-Sonoma makes 42% of the sales in retail
All stores in US
Political/Legal
Trends Explanation
Minimum wage legislation Higher employee turnover, lower profits
Healthcare Bill Increase costs, lower profits
Political instability in Middle East Hurt future opens of new store
Economic
Trends ExplanationEconomic recession in USA since 2008
Lower Disposable Income
Change in food Distribution in USA
Higher percent spent on groceries could create rise for better utensils/ pots & pans
Higher Oil Prices Higher Distribution CostsHigher Product Costs
Commodity prices increase Higher price for materials
Rise in food costs Could increase make it yourself (bread machines, pasta machines)
Social/Cultural
Trends Explanation
On the move society Easier to buy food than make it
Rise in Cooking shows on tv (Food Network, Cooking Channel)
Encourages home cookingUse of better cooking equiptment
Technological
Trends Explanation
E-commerce Online sales
Mobile Shopping Compare prices on your phone
PEST Summary
Factor Trend Evaluation Impact(1=low,5=high)
Rank of importance
Political Healthcare billMinimum WageMiddle East Politics
TTT
234
4
Economic RecessionHigh Oil PricesFood CostsCommodity PricesDistribution of Food
T/OTOT
T/O
33434
1
Social On the move societyTV Networks
TO
24
3
Technology
E-commerceMobile Shopping
O/TT/O
44
2
Defining the Relevant Industry
Any company that does business dealing with the specialty products that are used in kitchens at home or at restaurants.
Competition grows depending on the geographic region based on prestige of location. (ex. New York)
Threat of New Entrants
Nature of Barrier
1. Supply-side economies of scale Medium
2. Demand-side benefits of scale High
3. Capital requirements High
4. Incumbency advantages independent of size
Medium
5. Customer-switching costs Low
6. Unequal access to distribution channels
Low
7. Restrictive Government Policy Low
Power of Suppliers
Weak supplier power because of many vendors
Vendors offer very differentiated products
Forward integration possibly but not likely due to accessibility and exposure
Power of Buyers
Weak buyers power
Many vendors with strong differentiation
Low volume of purchase due to high price of stocking fee
Buyers can be price sensitive
Threat of Substitutes
Down payment on a car Video game console
Rent HDTV/3D tv
Date night Clothes
Vacation Gas
Industry Analysis Summary
Factor Evaluation
Threat of New Entrants Medium Force
Suppliers Power Benign
Buyers Power Medium Force
Threat of Substitutes Strong Force
Intensity of Rivalry Medium Force
Conclusions
Becoming more focused on technology trends
Try an focus on getting a partner to help promote healthy lifestyle
Predict cost of government regulations
Conclusions
Limit the number of suppliers
Try and create niche market
Keep an eye on what is going on in the Middle East
Key Competitors
Sales(in millions)
Net Income (in millions)
GenericStrategy
Brands
Williams-Sonoma
$3,102.7 $77.4 Differentiation
Kitchen Aid, Cuisinart, All Clad, Calphalon, Demeyere, Le Creuset, Mauviel, Nordic Ware, Ruffoni, Staub, Fiberware, Bialetti, Anolon, Martha Stewart
Bed Bath & Beyond
$7,828.8 $600 Differentiation/Low Cost
Pier 1 $1,290.9 $86.8 Differentiation
Macy’s $23,489 $350 Differentiation
Brands
PremierAll Clad(ws,bbb,m), Demeyere(ws), Le
Creuset(ws,bbb,m), Mauviel(ws)Average
Cuisinart(bbb,m), Calphalon(ws,bbb,m),
Ruffoni(ws), Staub(ws),
Anolon(bbb), Farberware(bbb)
CheapKitchen Aid(m),
Nordic Ware(ws,bbb), Bialetti(bbb),
Circulon(bbb,m) Martha Stewart(m)
Strategy
W-S: Continue to grow both in the US market and internationally
BBB: Customer service, variety of products, infrastructure, new products
Pier 1: have a unique buying experience as if you were in the country of the product
Macy’s: Assortment, Value, Shopping Environment, Marketing
Assumptions
People will always want to have nice things in their kitchens
People will spend moneyRetail market will continue to be a huge part
of this economy
Objectives
W-S: figure out which way they want to enter the international market, continue to grow e-commerce business
BBB: continue to be the market leader and how to stay ahead of the competition
Pier 1: product extension, being able to stop the bleeding
Macy’s: continue to grow the Macy’s name and also the Bloomingdale’s brand name
Resources
BBB: product variety, entrepreneurial ways Pier 1: Red floors, only authentic global
importer of home furnishingsMacy’s: Well known department store
nationally and internationally , been around for over a hundred years, big events like the Thanksgiving day parade.
Strategy Business Groups
Large
Small
Size
of
bu
siness
General
Specific Target
WS
MO
SIR
I
UDS
GSMS
I-Internet
WS-Williams-SomonaMO- Mail OrderUDS- Department StoreGSMS- General Supermarket Stores
SIR-Solely Independent Retailers
Competitors Compete
Warranties on products mostly appliances
Knowledge of the sales person with the products
Variety of products
Scope & Core Competences
Product scope: Cookware, Cutlery, Electrics, Bakeware, Accessories (low-high end)
Geography scope: W-S in high end malls, BBB and Pier 1 in strip malls, plazas
Core Competences: Having knowledge people who understand what the products do and how to use them.
Performance
W/S- Growing, they have been able to refine their distribution channels and cut cost from this, also the expansion into Middle East.
Pier 1- Declining, having a hard time adjusting to the bad economy, having to close stores.
BBB- Unchanged, have been able to make it through bad market and have a lean process so they didn’t need to do much changing with company.
Macy’s-Company growing, Kitchen division unchanged because they usually get their money during peak wedding season.
Market Segmentation
Divided target market into three groups Beginners Everyday Cooks/Party Planners Chefs
Social Media
Facebook page has good interaction between customers and Williams-Sonoma
Offer recipes
Customers are the ones posting things about the products in the stores
Conclusion
Have a better understanding of the E-commerce business and social media compared to its competitors and are in-touch with their online customers
Have more premier cookware and less of the cheap stuff
Are following trends of more online than traditional retail even though traditional makes up most of their sales.
Conclusion
Continue the pursuit of becoming international
Continue to gain market share from Bed Bath and Beyond while continuing to cut costs and raise the bottom line
Business Model
Specialty retailer of products for the kitchen.
Offer both direct-mail and direct-to-consumer segments
Offer restaurant quality products for the home cook
5 Year Performance
2007 2008 2009 2010 2011
Net Revenues 3.72 B 3.94 B 3.36 B 3.10 B 3.5 B
Net Earnings 208,868 195,757 30,024 77,442 200,227
# of Stores 254 256 264 259 260
Distribution
Mainly in the US
Have franchise agreement but no locations were reported for the Williams-Sonoma Division
International Markets
Have a franchise agreement with M. H. Alshaya, a Leading Retail with ties to the Middle East, Turkey, North Africa, Cyprus, Russia, Poland, Slovakia, Czech Republic
This is a recent agreement but they have not opened any Williams-Sonoma stores yet. They are testing these markets with their Pottery Barn and Pottery Barn Kids brands
Key Asset
I believe one of the key assets to this company is the fact they take the selling of the kitchen products to the next level by offering cooking classes for all ranges. This is something that the competitors are not doing.
TrademarksCopyrightsTrade dress rightsDomain namesPatents
Value Chain Analysis
Primary Activities: Marketing and Sale, Service Marketing is done mostly by targeting a niche Sales is where the most value is created because the
sales person can tell you what you most need to know about the products and better fit with what you are looking for
Service is also up here because after you purchase your product, then you have the opportunity to attend W/S cooking classes to get used to using your new product
Supporting Activities: Procurement Giving the purchaser the best possible total cost of
ownership for the best possible value that the consumer is looking for
Ansoff’s Matrix
Main focus should be on market penetration In US retail market,
have franchise agreement to go into the Middle East
Trying to expand current products international
International Future focus will be
more about market development in Middle East
Market Penetration
Product Development
Market Development
Diversification
Current Products
New Products
Cu
rren
t Mark
et
New
M
ark
et
BCG Matrix
High
Market Growth Rate
Low
High
Relative Market Share
Stars
Cash Cows Dogs
Question Marks
Low
Williams-Sonoma is second in market share behind Bed, Bath, Beyond. Growth is this industry is small but with this recent bad economy more market share has become available
Generic Strategy C
om
peti
tive
Sco
pe
Competitive Advantage
Low Cost Higher Cost
Bro
ad
Narr
ow
Overall Cost Leadership
Differentiation
Cost Focus Differentiation Focus
•Higher Cost Competitive Advantage: • Offer high quality
products for the kitchen
•Broad Competitive Scope• Even though they only
sell kitchen products, the company as a whole sells to many different areas. This is just on area of focus for the Williams-Sonoma Inc.
Strategy Clock
No Frills
Low Price
Differentiation
Hybrid
Strategies Destined for Failure
Focused Differentiation
Low
Perceived Service Benefits
Price
High
High
Focus on differentiation and have a higher price value then then its competitors. Not focused on focused differentiation even though that is closer to the higher price point which is where W/S is
SWOT
Strengths Weakness
•Offer Cooking Classes•Knowledgeable Staff•Offer higher Quality Products than Competitors•Divided Brands to give better selection of products•Offer catalogs for customers who are not up to date on technology
•Since stores are divided may require driving to other store to get what you need•Catalogs increase paper costs which in the green era is looked down on
SWOT
Opportunity Threat
•Food Costs-make it yourself instead of buying it
•TV Networks
•E-Commerce-Continue to build up online shopping in hopes of reducing mail catalog
•Healthcare bill-Higher Costs
•Middle East Politics-Franchise Agreement
•High Oil Prices-Higher distribution and product costs
•Commodity Prices-higher product costs
•On Move Society-little time for home cooking
Conclusion
Sales in the last five years have been up and down
Are trying to go international with franchise agreement but with the instability of the Middle East is slowing the process of growth of the Williams-Sonoma brand
Add value to company because they are the only one who offers cooking class to better influence the buyers process