Week 7 BOC: Largest retailers

The monster retailer Walmart is reported to be the largest retailer globally with worldwide retail sales topping at $453,976,000 (http://www.stores.org/2012/Top-100-Retailers). No other retailer even comes close. In 2011, the US sales alone were $316,083,000 which makes up a bulk of the earnings to date (http://www.stores.org/2012/Top-100-Retailers). Their strength lies in their profitability by providing low cost goods to consumers at high volume. They create relationships with their vendors that drive the prices down in that particular market to force everyone to compete for a chunk of the business.

According to Forbes Magazine, “The biggest International firm (based outside the U.S.) on the list is Spain’s fashion retailer, Inditex" (http://www.forbes.com/sites/andreamurphy/2012/04/18/global-2000-the-worlds-biggest-retailers-2/). They are the parent company responsible for the fast fashion retailer Zara which happens to be their oldest and most well-known brand. Inditex has eight brands altogether and consist of Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius, Pull and Bear, and Uterque (http://www.forbes.com/sites/andreamurphy/2012/04/18/global-2000-the-worlds-biggest-retailers-2/). These are all fast fashion retailers which has seen overwhelming growth over the past 10 years because of a failing economy and tighter budgets. People want “bang for their buck” when it comes to fashion clothing. Fast fashion retailers like Zara and H&M provide the latest trends from the runway at incredibly low prices because they source from their factories overseas at high volumes which they can provide at a deeper discount.

The third largest retailer in the US, Target, was recently in the news because of slumping profits due to an underwhelming introduction into the Canadian market. "The competitors have really done a good job in defending their space," said Stewart Samuel, program director at IGD Canada, pointing in particular to Wal-Mart, Loblaw Cos Ltd and Shoppers Drug Mart Corp” (http://www.reuters.com/article/2013/08/21/us-target-results-idUSBRE97K0HR20130821).  The US sales for Target in 2012 topped at $68,466,000 with a growth of 4.1% so the loss in profit recently is seen as very discouraging news (http://www.stores.org/2012/Top-100-Retailers). It is suggested that Target continue to feature steep discounts on their merchandise to help lure away customers from giants like Walmart.

Week 6 BOC : Tylenol Scare 1982

Johnson and Johnson, the manufacturers of Tylenol, took crisis management into overdrive after the 1982 scare that left seven people dead in Chicago. The extra strength acetaminophen pills were laced with cyanide and proven to be tampered with. Everyone thought Tylenol would disappear from the shelves forever, but with some extensive crisis management, the brand bounced back and became profitable once more. “What set apart Johnson & Johnson's handling of the crisis from others? It placed consumers first by recalling 31 million bottles of Tylenol capsules from store shelves and offering replacement product in the safer tablet form free of charge” (http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html). Recalling products before this event was not heard of. Johnson and Johnson alerted the public to not take any Tylenol product whatsoever until the tampering was solved. Rather than continue to keep the bottom line, the company put public safety as their first priority. The effective management of the crisis by the CEO and the prompt response to frightened consumers gave the public some answers and subsequent relief.

 
After alerting the public and recalling the tampered with products, Johnson and Johnson quickly went into action to assure the public this would never happen again. “Under Burke’s leadership, the company spent $100 million to recall 31 million bottles of Tylenol and re-launched the product two months later in tamper-proof packaging” (http://business.time.com/2012/10/05/tylenol-and-the-legacy-of-jjs-james-burke/#ixzz2bygRo7hg). It was a relatively small monetary price to pay to ensure Tylenol would not disappear from the shelves and gain the public confidence back. It was this move that gave the public a sense that the parent company cared about them and cared about the safety of the products they were delivering. J&J didn't resume sales for three months, until it could package the pain reliever in new, tamper-resistant bottles. “Within a year, Tylenol had recaptured its 35% market share, J&J said. Use of such tamper-resistant packaging, such as the foil or plastic wrappers that must be peeled off medicine bottle lids in order to retrieve the pills inside, became widespread” (http://online.wsj.com/article/SB10000872396390444592404578030681224799460.html). It was the quick response and added security measures that put the brand back on top within a few months of the crisis. Thus would prove to be a much heralded way to approach a crisis within a company and would be studied for many years to come.