Strategic case study

This case will be used to answer questions 5 and 6 . Please note that grades will be allocated for your application of the concepts to the scenario Zeliers, a nostaigic Canodian discount brand, has not operated for over 20 years. in August 2023, hudsonss Boy Co (HBC, the company that owns the brand) announced plans to revive the Zellers brand, starting with 25 locations across Canoda and selling through a state-ot-the-ort e-commerce channet. Zellers would repiace select, low-performing Hudson's Boy stores in the following locations: BRITISH COLUMBIA - Pocific Centre, Downtown Vancouver - Aberdeen Mall, Kamloops - Guildrord Town Centre, Surrey - 7 Oaks Shopping Centre, Abbotsford ALEERTA - Kingswoy Garden Mall, Edmonton - Medicine Hat Mall, Medicine Hat - Sunridge Malt, Calgary SASKATCHEWAN - Midtown Plara saskotoon MANITOBA - St. Vital, Winnipeg ONTARIO Erin Milis. Mississouga Burlington Mall, Burlington - White Oaks Mall, London - Scarborough Town Centre, Scarborough - Fen Centre Shopping Plaza, St. Catharines - Cambridge Centre, Cambridge - Rideou Center, Ottava - Sti Lourent Center, Ottawa - Catoraqui Town Centre, Kingston QUEBEC - Place Rosemere, Rosemere - Galeries danjou vilie Danjou - Carretour de lEstries, sherbiogke - Cotaraqui Town Centre, Kingston QueBte - Ploce Rosemre, Rosemere - Galeries d'Anjou, Ville Danjou - Carreiour de I'Ethie, Sherbrooke - Les Promenades Gatineau, Gatineou - Les Galeries de ia Capitale, Quebec Clity NOVA SCOTIA - Micmac Mall, Dartmouth - Mayfiower shopping Mall, Sydiney A bit mare history about the Zellers brand The Zeliers chain was founded in London, Ont. by Walter Zeller in late 1931 as 'retailers to thritty Canadians.' Zellers was a store with something for everyone, with a wide range of products from clothing and grocecies to toys, electronics, and furniture. odvertising itself as a ploce where the Lowest Price is the Law, " Tocon thaie offering would be similiar to Waimart, without the restourant. in 1932. it ran with 12 stores. By the mid-1970i. it expanded to 155 stores, launehing locations in suburban? shopping malls and growing its services to include restauranks in some-stores. The first of these teotouronte. known os The Skillet, opened in 1960 , eventuolly rebranding os zollors fomily fhestourant. Many of the restaurants were decorated in a 1950 s style. complate with teol vinyt booths checkerst ligors and o kkobox and fectured cheop food ike tha 30 freokfast club for $79 ? shopping malts and growing its fervices to include restourante in some stores. The first of these restourante, known os The skillet, opened in 1960, eventuolly rebranding as Zellers family Restourant. Many of the restaurants were decorated in a 1950s style, complete with teal vinyl boothi, checkered floort, and a jukebox, and featured cheap food like the 3D Breakiast Club for 57,99 . Becouse of poor performance and increased competition from Walmart entering the Canadian Market, in 2 afl, HBC announced plans to sel most of its remaining Zellers leases to Target Corp, closing most stores by 2013. Jarget entered the Canadian Market in 2013 and failed miserably. They exited the market within a year ard lost. milions of doliars. Factor Deiven by the External Emvironment Conadians feeling their dollars stretched between high inflotion and a rapid rise in borrowing costs have likely been asking the same question for months now: when will it end? Atter a year that saw prices at the gas pump top $2 per liter in some parts of Canada and grocery bills soar as inflation hit highs not seen in 41 years, economists have seemed more optimistic in their forecasts in 2023. Ifs at the grocery store. It's at the gas pumps. It's at your fovorite restaurant. All that to say that todayi Canadians hard earned money is not going as far as it once did and Canadians ore strapped for cash Wairnart is a Us multinational retail corporation that operates 31.484 supermarkets and discount stores ocross 27 countries, lts competitive odvantage strotegy is based on selling low-cost branded proclucts, attrocting the most eignilicant number of customers possible. The campany has been vory effective at establishing a competitive advantage in costs in multipio woys inclucing - Achiowing low operationai costs through automation & technology: - Ainichized spendiryg on human respurces (inctuding very fow wages) - Minimired spending on human resources (including very low woges): - Working closely with suppliers that dominate induntry brands: - Own lleet of 3,000 trucks \& 12,000 trailers, cutting on outsourcing costs; - And even meeting with vendors to help them cut their own costs, building a win-win reiotionship; - Additionolly, Waimart implemented a satelite network system to share information through the companys network of stores, distribution centers, and suppliers. This system also helped them consolidate orders for goods, enabling waimart to buy largor quantites ot lower prices. What now? When answering these questions you act as Zellers's CEO and strotegic leader as they establsh their wrotegy to succeed as they launch the brand in the Canadian market. To be successtul, they will have to compete against Waimart. If Canadian discount department store Zeliers wanted to compete difectly with wamart conticer in your answer the most felevant changes to their original model Zeliers could make to enoble a cost -oovantoge strategy, understanding that they don't have the resources that waimait has but stir need to compece in that spoce. Preamble - Question 5 Imagine that you dcided, as Zellers's new CEO and leoder, to sell significant products at a very low price. sometimes even below cost. This would last for a period of 18 months to 2 years. Your idea is that because you are driving market awareness for lower pricing than walmart, custamers would come to you, essentially buying market share at pricing you know could be more sustainable in the iong run. Once the market share is gained, the plan would be to raise prices over time atter successfully changing consumer habits to shop at your stores, pushing walmart out. Question 5.1 Please explain why this can be risky because companies have difliculty increasing their profitability by aimply buying a market share (e.g, lowering prices to increase market share). ( 5 marks) Question 5.2 What could you do instead while still maintaining bricks and mortor physicat locotionis? (5 marks) (10 marks) Preamble - Question 6 Again acting as the CEO for Zellers, Imagine you decided not to pursue having bricks and mortor physical location stores instead of having ONLY an entirely online store offering for Zeller. Without the fixed cost associated with a bricks-and-mortar modeli its apparent that they have much lower input (overhead costts), resulting in the opportunity to offer lower prices in the market. Question 6.1 Explain the steps to effectively leverage these advantages and compete with Waimart while creating superior customer value. (6 marks) Question 6.2 How will you market this offering? (6 marks) (12 marks)