Case Study: Ann Taylor

Case Study: Ann Taylor (AT)

Ann Taylor is in the Apparel Retail Industry. They specialize in the production and design of specialty retailing of upscale female clothing. They also offer Ann Taylor LOFT, which offers more relaxed apparel appealing to a more casual LOFT style and good value. They also offer a new division, Ann Taylor Factory, which merchandises AT bargains.

The industry as a whole is under going a slow growth rate due to an unpredictable environment. Outlets and stores are closing down, in fact ìnearly 6,000 retail would close in 2008, a 25 percent increase from the previous year.î The general environment is going through harsh economic times and shifty trends. These trends are causing AT and competitors to cut back, and to be smarter.

Porter's Five Forces model

Threat of new competition: Low. The retail industry would have difficult barriers to enter due to that fact that the industry market is so big.

Threat of Substitute products or services: Low. Ann Taylor offers products with unique characteristics and branding, so there would be no reasonable substitute due to the unique characteristics. There is, however, competition, but no substitute due to the fact it is a specialty goods and service. Discount Mass Merchandise could act as a substitute.

Bargaining power of customers (buyers): Medium. Ann Taylor, and the economy as a whole are facing tough economic times. Customers during harsh economic times tend to be more prices sensitive. This could force price cuts by firm due to the increase in customer bargaining power. Consumers have few alternatives to shop in the upscale specialty women retailers, reducing their bargaining power.

Bargaining power of suppliers: High. Suppliers hold significant power over vendors due to the small number and large size of suppliers compared to the clothing industry.

Intensity of competitive rivalry: There are few other specialty Women Retailers to choose from such as: Chico's FAS, Coldwater Creek, and Talbot's.

The thing is with this competition is unlike normal stores that sell different types of products to different customers, they sell a special product that focuses on specific target groups. Each product they produce has increased risk. So, competitors and Ann Taylor are focusing on trying to acquire market segments while dealing with a trendy environment. Each of these competitors are trying to make some significant moves to acquire market dominance. For instance, Talbot's acquired J. Jill group, a catalog and mail order company to push it's product. Where as the Jill targeted 35-55, while Talbot's tended to focus on the 45 up age demographic. Coldwater Creek brand wanted to come off as a common brand that ìyielded the best shareholder return in the group since 2002, with a 33.*% revenue growth