Industry Overview Some 400,000 specialty retail stores operate in the US with combined annual sales of $350 billion CAGR 2002-06: 5% Market is dominated by large players like Best Buy, Toys “R” Us, Gap, Sports Authority, etc The market size of some major product categories: o Shoes and clothing - $125 billion o Electronics and appliances - $85 billion o Jewelry - $25 billion o Sporting goods - $25 billion o Books - $25 billion Other categories include Toys, Music, Luggage, Pet supplies, etc Specialty retailers cater to a narrow or niche audience – either by location, type of customer or product mix. On a national level, specialty retailing is dominated by national chains, such as office supply store Staples or electronics outlet Best Buy. However, on the local level, specialty retailing is defined by independently owned, unique shops that express the personalities of their owners. These small retail outlets -- shoe stores, food stores or book stores -- have become the bedrock of downtown and urban redevelopment across the country. Industry Statistics Dec 2007 Valuation Ratios P/E(ttm) 22.80 P/Sales(ttm) 1.34 P/Book(mrq) 13.07 P/Cash Flow(mrq) 11.17 Profitability(ttm) Gross Margin % 34.59% Operating Margin % 9.54% Net Profit Margin % 9.19% Financial Strength (mrq) Quick Ratio 0.49 Current Ratio 1.46 LT Debt/Equity 110.07 Total Debt/Equity 118.25 Mgt. Effectiveness (ttm) Return on Invstmt % 13.23% Return on Assets % 9.09% Return on Equity % 25.77% Key Issues The growing popularity of online retailing is attracting competition from traditional and online multi-retailers such as Wal-Mart and Amazon which are gaining considerable market shares in many of the product segments included in the specialty retail sector. Currently majority revenue is generated by store sales but online sales from the stores’ websites are increasing. With US dollar getting weaker, international sales from these US based websites are increasing too. This creates significant positive outlook for the large incumbent players but also acts as a significant barrier of entry for new players. Moreover, despite the presence of some large chains, specialty retail markets are highly fragmented. Barnes & Noble, for example, with over 900 stores, is the largest US bookseller but has a market share of only 15 percent. With increasing transportation costs and tighter margins there is a possibility that some large specialty retail players will consolidate assets, knowledge and outsourcing capabilities in order to generate economies of scale and scope. Key Opportunities High-end and niche merchandise: With rising disposable incomes the demand for high-end goods in increasing, which can best be catered by specialty retail stores. Large players can offer competitive prices as they buy in bulk. Smaller players can differentiate themselves by offering niche products and superior customer delight at a premium price.
Some dominant economic features of this industry include the number of rivals, the number of buyers, vertical integration, and supply/demand conditions. The number of rivals in this industry varies on the scope of how large or small the firm is. Larger rivals include Whole Foods and Walmart and smaller rivals include Lucky’s Food Market and Pathmark. For example, Walmart has a highly differentiated product selection. it offers various forms of products that are ‘identical’ to better convenience its consumers. Walmart also has large channels of distribution where its “shippers are always on the lookout for ways to speed product from source through supply chains to the consumer” (Walmart, 2014 Pg.1). The number of buyers in this industry is consumers who are buying large volumes of products, where these buyers do not necessarily have any buying power. The majority of of grocery stores are in the retail industry, where larger involvement occurs from integrating operations, and suits the industry as a competitive
There is a high degree of diversity between retailers, with dedicated shoe retailers competing with apparel retailers and large supermarket chains.
Best Buy is one of the largest hypermarket store company in USA, with competition from similar local general merchandise store: K-mart, Best Buy do a research on demographic analysis and daily sales statistic to identity profitable customers (Blocher, 2013).
The emergence of software gaming has led to a 4.4% decline in the $31 billion global toy industry1. Unable to capitalize on the changing consumer needs, many toy retailers in the United States and Canada have suffered from declining revenues and increased competition from e-commerce platforms, such as Amazon. Additionally, the increasing overhead and fixed costs have reduced margins and led to losses in market share for specialty retailers to e-commerce businesses.
At present, the large cross-category physical retailers occupy a large percentage of market. For example, Walmart and Target who have more awareness of brand and more convenient network of the retailer stores. In the beginning, Bed Bath & Beyond does not provide an online shopping service to customers. Because the online shopping can help someone who is lazy to buy things in the physical stores and does not own a car to the stores shop. Under the pressure of Walmart, Target and etc., Bed Bath & Beyond started to open online shopping website. However, many pure online retailers are also a big threat of Bed Bath & Beyond especially Amazon.com which will have better price and no tax. Because Amazon has the lower cost of their products, they have
These companies are direct competitors of Macy 's and sell similar items as Macy 's. There are many indirect competitors of Macy 's. The company faces fierce competition from emerging apparel companies such as Forever 21, H&M, Zara. The company also faces major competition worries from Amazon.com and other online retailers which provide convenience to customers and avoid the costs of having a brick and mortar presence (Bailey,
Although Toys R Us participates in the Specialty Retail industry, it has identified its major competitors not as other specialty toy retailers, but as department and discount stores, including Wal-Mart, Kmart and Target. Within the specialty retail segment, Toys R Us competes against FAO Schwartz and K-B Toys.
Due to the good establishment of the business, it has huge market national. The company has therefore opened many retail shops and stores all over the country to ensure that their products are accessible to the customers. The entity provides a favorable environment, and many clients view the place as a fun shopping place to be. The retailer has targeted a big pool of customer because of the variety of products it sells. The stores products vary from kitchen goods, jewelry, and electronics clothes to hardware
Retailers focuses on providing variety of fashion items and brands that attracted customers, some of them also offered items that are about to be distributed and introduced into the market.
Tiffany & Co. is a specialty retail store that sells luxury merchandise. The company is a part of the consumer discretionary sector and belongs to the specialty store sub-industry. Various well known companies such as Bed Bath & Beyond, AutoZone and Staples belong to the specialty store sub-industry. Shopping malls are the primary location of the specialty retail stores. Although some stores are individually located in plazas, most specialty retailers choose malls in order to attract more potential customers and explore other benefits such as shared security and parking costs which can be essential to their overall.1
Big-box retailers such as Target & Walmart have already recognized the growing influence of e & m-commerce, and are offering online store formats. Costco, whose advantage lies in bulk-sales, also announced greater focus and online with plans for mobile applications and improvement to Costco.com.
In this highly competitive industry which is extremely sensitive to the level of discretionary consumer income and the subsequent impact of the type of good purchased, competitors include foreign and domestic guild and premier luxury jewelers, specialty stores, national and regional jewelry chains, and department stores. To a lesser extent there exist catalog showrooms, discounters, direct mail suppliers, televised home shopping networks, and jewelry retailers who make sales through internet sites.
Best Buy, though a firm in the general retail industry, is a major player in certain sub-industries that
The sales outlook in the Internet, catalog, and retail outlet markets remains very positive, with estimated rates on return above 25%. Capable and adequate workforce is available in all areas researched. Legal considerations will be minimal.
The Internet is currently the third most shopped channel; brands are pushed to keep up with the trend of building an online shopping option for their consumers and this is evident through the increase in retailers offering online options for their consumers (Valerio). With solely digital stores like Net-A-Porter, Amazon and eBay, competition among digital stores and physical stores are tight. Retailers are pushed to keep up with the rise of digital shopping whether they want to or not. There are several retail implications with the rise of digital shopping, retailers are turning to multi-channel retai...