Case Analysis

Instructions: Read article below and respond to the instructions which follow.

Aritzia sales top pre-pandemic levels on strong U.S., e-commerce growth 'Expansion in the United States will be a leading driver of our growth'

Stephanie Hughes, Calgary Herald Oct 14, 2021

In mid October, 2021, Vancouver-based fashion retailer Aritzia Inc. reported something truly unpredictable. It had exceeded pre-pandemic sales levels due to in-store shopping, which had rebounded, while e-commerce continued its rapid growth. Aritzia, which was founded in 1984 as a standalone boutique, posted $350.1 million in net revenue for the three months ending Aug. 29, jumping by roughly 75 per cent since the same reporting period in 2020. The surge was led by a bounce-back in boutique store locations, which saw comparable sales grow by 60 per cent year-over-year and 14 per cent over pre-pandemic levels in 2019. Retail revenue came roaring back at $219.6 million, a 95 per cent jump from a year prior. These results came even though roughly 50 per cent of the boutique store locations in Canada were closed. The company also brought in $130.4 million in e-commerce sales, which was about 49 per cent more than 2020.

Aritzia founder and chief executive officer Brian Hill attributed the results to store re-openings and the retailer's business expansion south of the border, where the active client base had grown by more than 50 per cent over the past 12 months, as well as e-commerce sales growth. "Looking ahead, expansion in the United States will be a leading driver of our growth," Hill said in a release. "We are confident that e-commerce will continue to grow even on the back of 89 per cent growth last year. Retail has surpassed our most optimistic expectations and is continuing to trend above pre-pandemic levels, now and for the foreseeable future."

Heading into the crucial holiday season, retailers across the board were facing a number of challenges, from problems with the global supply chain and tight labour markets at home. Aritzia chief operating officer Jennifer Wong said that the company remained confident in keeping up with product demand and inventory management. "Our inventory management measures included early anticipation over the need for more inventory, and continuing to closely monitor our projected inventory requirements on the freight side," Wong told analysts. "We are strategically increasing our use of expedited freight by three to four times in response to ocean shipping timelines that have doubled compared to a year ago."

Moving forward, Hill had said that the retailer would focus on both online shopping and brick-and-mortar strategies, expanding by six to eight boutique locations in the U.S., as well as expanding on product offerings. In its latest report, the company said it "continues to maintain a healthy inventory position despite global supply chain constraints."

By late 2021 Aritzia had recruited more than 1,000 additional full-time staff advisors in boutique store locations and 800 seasonal positions in distribution centers, according to Wong. To tackle the holiday season labour crunch, Aritzia sought to attract around 400 seasonal distribution center workers with a $21 starting wage.

Amid the optimism the company raised its full-year sales forecast to a range of $1.25 billion and $1.3 billion, compared to the previous outlook of $1.15 billion to $1.2 billion.

Question 41 (1 point)

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Which of the following accurately provides a SWOT analysis for Aritzia?

Question 41 options:

A)	Strength: 2021 sales exceeding expectations; Weaknesses: Global supply constraints; Opportunities: Continued increase in online purchasing; Threat: Closure of stores

B)	Strength: Increased use of online purchasing; Weaknesses: Insufficient staffing; Opportunities: $1.25B sales forecast; Threat: Closure of stores

C)	Strength: 2021 sales exceeding expectations; Weaknesses: Closure of stores; Opportunities: Continued increase in online purchasing; Threat: Global supply chain constraints

D)	Strength: Expansion into US; Weaknesses: Covid 19; Opportunities: Advancements in e-commerce technology; Threat: Global supply constraints

Question 42 (1 point)

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Aritzia's $220M in retail (in-store) sales vs its $130M in online sales says what about the fashion store's target customer?

Question 42 options:

A)	Target customer loves fashion

B)	Target customer still preferred shopping in person during the reporting period

C)	Target customer is young female

D)	Target customer is young female with discretionary spending power

Question 43 (1 point)

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Aritzia's "About Us" page reads: "Beautifully made clothes. Exceptional experiences. For every woman." This statement could be considered Aritizia's _________________.

Question 43 options:

A)	Aritzia's "About Us" page reads: "Beautifully made clothes. Exceptional experiences. For every woman." This statement could be considered Aritizia's _________________.

B)	Marketing strategy

C)	Value proposition

D)	Positioning statement

Question 44 (1 point)

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The article talks a lot about Aritzia's preparation for the holiday shopping season. The COO talks about ramping up inventory and hiring hundreds of people because she is aware that ____________ will drive revenue higher during the last quarter.

Question 44 options:

A)

value

B)	Growth strategy

C)	consumer behaviour

D)	segmentation

Question 45 (1 point)

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Aritzia began in Vancouver in 1984 and slowly grew its brand across Canada. More recently it has been expanding into the United States, with great success. This growth strategy could be considered __________________.

Question 45 options:

A)	Product development

B)	Market penetration

C)	Diversification

D)	Market development