Trend analysis due 11pm 20th EST

Strengths:

Perry’s is an upscale department store, offering products for everyone from fathers to Toddlers, and even products for the home. Perrys operates 35 retail stores in 7 states across the United States in three main segmented clusters. The three clusters are the Mid-atlantic, Central, and Florida. The Mid-atlantic cluster has 14 stores, with 6 in Maryland, 6 in Virginia, and 2 in Washington, D.C. The second cluster, Central, features 12 stores. There are 5 in Georgia, 4 in North Carolina, and 3 in South Carolina. Florida itself makes up a segment because of its heavy retail presence of 13 stores alone. In 55% of retails store locations, Perry’s sales beat out competitors like Nordstroms, Saks 5th Avenue, and Macy’s. Year to date, Perry’s has done about 894 million in total sales. This is impressive considering there are only 35 stores. Top ranked stores are bringing in an average of 30.7 million, middle ranked stores are bringing in 17.9 million, and lowest ranked are bringing in about 16.8 million. With an Initial Markup of 54% and, Perry’s is able to reach a very profitable gross margin of about 40% yearly. If they can keep costs down, they will be able to continue profiting quite well.

Weaknesses:

Although the large amount of strengths, Perry’s also unfortunately has a large amount of weaknesses. Perrys is in the upscale department store category which includes a lot of other stores that offer the same variety of products. One of their weaknesses, is the amount of competitors. In Florida, the 13 retail stores are some of the best performers in the country as far as sales. Florida stores also have different merchandise requirements than other states because winter weather is much different. This could mean that one of Perry’s weaknesses is having successful stores where colder weather clothes are more prominent. Also, because Perry’s is an upscale department store, Perry’s customer is only going to be one that is an Innovator, Thinker, Achiever, and Experiencer. This limits the companies market reach, and doesn’t give access to possible consumers such as a believer, striver, or maker. Considering differentiation from other stores, Perry’s is relatively similar. Perry’s offers the same type of products as department stores like Macy’s, JC Penney’s, and Nordstroms. As stated in the Perry’s research, the inventory ratio averages around 3, and the highest markdown achieved was 37.7%. The average inventory ratio for most clothing stores in a 12 month period was 3.9, making Perry’s slightly low (Scilly, M, 2016). This may be because of the slightly low markdown achieved of 37.7%. It is possible that retailers like Macy’s and JC Penney’s are attracting customers with their higher discounted prices.

Opportunities:

While Perry’s may face stiff competition from other department stores, their failure to adapt to the landscape of today’s fashion industry can contribute to Perry’s success. Top brands such as JCPenney’s and Macy’s have failed keep up with consumer trends and we are now seeing the closure of many locations across the country. In January of this year, analysts predicted the closure of anywhere from 20-100+ JCPenney’s locations. Why is this happening to department stores? Simply put, consumers shop differently today than they did a decade ago. For baby boomers, consumers desired products that were popular, hip, commercial, prestigious and resembled status; now millennial consumers want products that are local, environmentally friendly and authentic. Most department stores have not done well making this adjustment; instead they continue to carry the same brands without rearranging the retail experience whatsoever. Many of these stores look the same as they did 10 years ago! By improving and innovating the way customers shop in-store, Perry’s can gain an advantage on their competitors.

Department stores have also lacked success in areas such as e-commerce and social media. Very rarely do you see posts from Bloomingdales or Neiman Marcus come across your Instagram feed. Now that consumers prefer to shop at their fingertips, it would be ideal to provide Perry’s customers with an interactive online retail experience where shopping is easy and enjoyable. An online marketplace also offers the opportunity to provide customers with transparent information on sustainability and social responsibility. Similar to brands like Everlane, Perry’s can inform customers on who’s making their products, where they are making them and the cost to produce them. Allowing the customer access to this information will establish a stronger relationship.

Threats:

Consumers currently hold the most power in our industry making them the greatest threat to retailers, brands and manufacturers. Consumer trends have changed so rapidly that large department stores are unable to keep up. Managing so many brands while tending to the changing needs of customers can be difficult. Since department stores and brick and mortar locations cannot meet these demands, consumers now prefer to shop online where they can find the exact item they’re looking for. This shift has triggered many brands to discontinue their product at department stores in order to minimize the risks of excess stock and less profit from discounted prices. Ultimately, this leads to the closure of physical stores and even entire shopping malls. To avoid these obstacles, it is crucial for stores and retailers to modernize and adapt to these changes in our industry. The goal is to gain customers and reach a wider audience but with any change, there is the possibility that somebody won’t like it.

Macro-Environmental Trends

Companies in the retail industry have no control over the macro-environment and cannot influence change, so they must adapt accordingly to it. The macro-environment includes six different forces: demographic, economical, political, ecological, socio-cultural, and technological. Perry’s department store concerns pertain to all of the macro-environment trends, but specifically, the demographic and economical factors.

Employment rates - According to the United States department of labor, the unemployment rate in the D.C is 4.8%, which highest among 22 counties that make up the metro area. (Bureau of Labor Statistics, 2018) This is slightly higher than the national average of 3.7% for the same time. Despite a higher average compared to the U.S., the D.C average is down 0.9% since 2016 showing positive trends. The overall amount employed in the metro area is 3,353,400 which increased 1.8% over the year (2018). Specifically, professional and business services had the largest employment gain adding 20,300 jobs over the last year which is a 2.7% increase. The next largest local job increases were leisure and hospitality with nearly 10,000 job increases, and finally trade, transportation and utilities with 9,600 job increases. This is important information for Perry’s because it represents the spending power of Perry’s target customers.

Income levels -Within the last year, the median household income was reported at $77,649, which increased from the previous years $72,935 (Data Access and Dissemination Systems (DADS), 2017). The average household income in 2017 was $116,090, which also grew from the previous year at $110,614 (Data Access and Dissemination Systems (DADS), 2017).. The total number of households in the D.C. area reported in 2017 was 277,985, which grew from 2016 at 276,546 (Data Access and Dissemination Systems (DADS), 2017). This is all a very positive thing for Perry’s because this means more families are moving into the area with higher salaries, which results in more prospective customers and increased sales.

Demographic Trends - Demographic trends like population, gender, and age, hold important clues to consumer behavior. People who share the same demographic profile usually have the same purchasing behavior. These factors all play an important role for Perry’s when analyzing the market and targeting customers at Perry’s. The reported population of 2018 in in Washington D.C according to the United States Census Bureau, was 702,455. Males make up 47.4% and females 52.6%. Perry’s target market is similar to their competitors; Macy’s and Nordstrom, whose customers are the middle class who prefer quality products at reasonable prices. Perry’s targets upcale, affluent customers. The average age in the Metropolitan area is 33.9, which is exactly around the age Perry’s is targeting.

The following chart summarizes the data gathered. It is from the 2017 Washington D.C Census reporter.The high percentages of wealthy household income and large percentage of children under 18 is beneficial for our boy’s department.

(Census Reporter, 2017)

Micro-environmental Trends

Perry’ Department Store is operating in an environment dominated by established players that have explored other product lines; other than apparel, Macy’s offers home furnishings, cosmetics among other products ("Macy's, Inc.", 2019). Which means that is stands to rake in more in revenue; it can also enjoy more economy of scale that may give it the latitude to set competitive prices. JC Penney’s also has presence not only in the US but also in Puerto Rico. Its enhanced market presence impacts revenues and improves its competitive streak; more sales translate into more profits which means that the company can invest sufficiently into marketing and promotional activities without the fear of draining its revenue. Other entities such Walmart also contributes towards shaping the competitive landscape; Walmart, a major discounter, has managed to curve a considerable market share for its products. The market is also awash with consumers who exhibit purchasing preferences; others are limited in terms of their purchasing power.

Competitors - Macy’s Inc is a department store chain which operates 850 stores in 45 states within the US; it offers men’s women, junior and children apparel and accessories along with shoes, cosmetic and jewelry ("Macy's, Inc.", 2019); its target market include working men and women within the 24-54 age range; it focuses on affordable fashion that appeal significantly to the client base. The second competitor is J.C Penney Corporation, Inc; it is an old and established retailing giant; its product target middle class Americans. Operates both in the US and Puerto` Rico. It has over 1,100 department stores in the two countries. Just like the Macy’s the JCPenney Corporation. Third, Nordstrom Inc also exists in the same market niche as Macy’s and Perry Inc. Nordstrom is an American upscale retailer which operates within 33 states in the US. In total, Nordstrom Inc. has 177 fulltime stores and 127 Nordstrom racks.

Like its competitors, Perry’s would improve its accessory department and its private label with the aim of increasing brand assortment. The company can explore brands that guarantee more brand awareness, adopting categories that yield greater brand awareness in its stores situated in Manza Gallerie and M Street, Washington DC would increase Perry’s visibility in the market.

Customers - Perry’s consumer profile is predicated on its psychographic market segmentation which profiles buyers based on their behavior and trait (Kahle, Beatty & Homer, 1986). The market comprises of innovators, thinkers, believers, achievers, strivers, experiencers, makers and survivors. Aspects of consumers that dictate their purchasing behavior include fashion attitude, and income levels among others; families with disposable income are more likely to purchase merchandise from Perry’s stores as compared to their counterparts with less annual income. In addition, work type and dressing codes also impact how clients make purchases. Lifestyle also impact sales; merchandises that appeal people in the rural areas may differ with those that appeal to the upper middle class and the conservative middle class.

The table above underpins the relevance of VALs, a psychographic market segmentation tool that Perry’s can explore to shape its strategies in a way that aligns with consumer behavior and traits. Segmenting the consumer and developing brands that identify to their unique needs would give Perry’s an edge over competitors. For instance, the company could make more products that appeal to innovators because they dominate the marketplace. Contrastingly, thinkers are invariably motivated by order (Kahle, Beatty & Homer, 1986). They value responsibility. They have demonstrable respect for the statuesque but also explore new ideas; even with the financial capability to make a wide range of choices, thinkers tend to be practical when it comes to purchases; they consider durability and functionality above other attributes of a merchandise. Armed with such knowledge, Perry’s would only develop products that correspond with demand created by thinkers and would steer clear of surpassing market needs especially in regard to products that appeal to the thinkers.

Conclusion

In conclusion, when performing a SWOT analysis and understanding micro and macro economic factors Perry’s is prepared for success in opening in Washington D.C. When comparing the strengths and weaknesses, Perry’s is financially stable and has less markdowns compared to competitors, which may turn customers away. In terms of Macro environmental factors. The unemployment rates are low and careers are in line with the Perry’s target customer. The average age and income rates are also perfect for a Perry’s opening. Perry’s has many competitors, but increasing brand visibility as well as specific brand awareness is beneficial. Specifically, many high-earning and young families will hopefully increase sales in our boy’s department.

References

5 Technologies Transforming Retail in 2018. (2018, January 19). Retrieved March 5, 2019, from https://www.businessoffashion.com/articles/fashion-tech/5-technologies-transforming-retail