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Ross Stores, Inc

CBAD 478 Final Presentation

Kevin Griffin

on 16 October 2014

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Transcript of Ross Stores, Inc

Strategic Outlook and Guidance Kevin Griffin
Monika Bednarzak
Thomas Rice
Keegan Fridblom
Alexander Green Ross Today - Off-Price Retail Chain of Department Stores What is Off-Price Retail? - In-season designer apparel and merchandise - Sold at a deep discount (20% to 60%) Ross's Best Foot Forward - Operates under two separate stores Key Issues for the Future External Environment:
Consumer Taste
State of the Economy
Rising Commodity Prices
Threat of Available Substitutes
Internal Environment:
Service and Reliability
Core Technologies
Marketing and Sales
Employee Morale
Value Creation Strategy Ross Locations - Target Customer: Ages 25-54 Middle Income Female SWOT Ross Timeline 1950 TOWS - Morris Ross opened his first store in San Bruno, California Early 1980s - A group of investors expanded the original stores to 107 stores within the western United States. Late 1980s - Company went public on Nasdaq - Ross operated 156 in 15 states Recommendations 1. Provide Ross credit services to customers for easy purchase possibility and loyalty programs.

2. Create store aesthetics and layout that are appealing to customers - Due to economic conditions:
- closed some stores
- refocused strategic expansion 1990s to 2000s - the firm launched dd's DISCOUNTS - By 2010 annual sales were $7.9 billion - Expanded its buying power and merchandise offerings 2011: - Ross opened its 1000th store in San Francisco - With 1037 Ross Stores and 88 dd's DISCOUNT Stores opened, Annual sales totaled $8.6 billion Implementation Outline Execution Plans Stakeholder Impact Justification of the Future Gross income of $38.257 billion
Growth rate of about 5% per year since 2009 Current Industry Profile The industry has a few large players that compete on a national or multinational level that make up a majority of the total sales in the off-price retail market: Slow Growth Stage Profitability margin approximately 7% of gross sales on the sales of goods T.J. Maxx Men's Warehouse Ross Stores Stein Mart B2C The distribution through a series of distribution and warehouses Economies of Scale present The product life span is very seasonal The industry is not overcrowded Supplies are never short of stock Five Forces Analysis Rivalry-The industry has a few large players that make up a majority of the total sales in the off-price retail market, these large firms are: T.J. Maxx, Ross Stores Inc., Ascena Retail Group, Men’s Warehouse, and Stein Mart. New Entrants-Economies of Scale makes it hard for new entrants to enter this industry, required capital is very high, so the threat is minimal Substitutes-The substitutes prices in general are very high Bargaining Power of Suppliers-Ross has a team of 4000 buyers who find deals among around 8000 of vendors Bargaining Power of Buyers-The buyer concentration for this industry is low Strategic Group Map TJ Maxx has a strong vision and mission statement to maintain its geographic scope and allow for future growth Ross has seen a 19.8% increase while TJ Maxx has seen a 15.8% increase in sales revenue TJ Maxx operates 983 stores located in all 50 states At the corporate level TJ Maxx pursues a Corporate Dominant Strategy At the business level TJ Maxx uses a Broad Based Low Cost Strategy At the international level TJ Maxx pursues the Home Replication Strategy Competition
In Off-Priced Retail Industry S W O T Strengths -large amounts of profitable stores Weaknesses-no large marketing campaigns to draw in more consumers Opportunities- international expansion Threats- competition (like Ross) growing faster and taking its market share away - Developed Strategic Plan Ross Strategic Hierarchy Competitor Overview Justification for the Future Continued Arena's Strategy
-Dominant Business
-Focused Low Cost Segments
Women’s/ Men’s Apparel
Children’s Apparel
Clothing Accessories
Home Decor Strategy Diamond 1037 Stores in 29 States Across the U.S. and 1 store in Guam Focuses on Existing Markets while focusing on a low cost strategy Expansion due to Internal Development
Restructured to focus on low cost retail Vehicles - Labeled as a Treasure Trove for Hidden Deals - Offers the Lowest Price Possible Differentiators Has fast economies of scale because the firm does not focus on Research and Development Slow Mover- Focuses on reducing costs rather than adapting to changes in the industry Staging Efficient low cost formula
Strict control of COGS and variable costs
Increase financial performance due to increase stock price
Increase market
Segments and Expands
New Stores Economic Logic “Ross’s mission is to offer competitive values to our target customers by focusing on: maintaining a stock of recognizable brands, labels, and fashions, meet customer needs on a local basis, deliver an in-store experience that reflects the expectations of the off price customer, and manage real estate growth to compete effectively across all our markets.” Shared Values Internal Alignment (7s) Structure “Our merchandising strategy incorporates a combination of off-price buying techniques to purchase advance-of-season, in-season, and past season merchandise for both Ross and dd’s DISCOUNTS”. Strategy Style Majority of employees are part time
Shift Supervisors
Salaried Management
Loss Prevention Officers Balanced Scorecard Resources Capabilities Creating Value Creating Value for Consumers Competitive Strength Assessment
- Good purchasing and merchandising system
- Budgeting
- Merchandise
- Shift scheduling (for hourly workers
- Excellent financial and POS systems Systems/Skils Ross Shared Values Helix Single Business Strategy - Ability to focus its attention and resources on maintaining and improving its business model - Creates competitive advantage compared to firms that have diversified product offerings. Business Level Strategy - Focus on variable costs that affect the bottom line: Cost of Goods Sold
- price of products
- distribution expenses - Minimize overhead and centralize distribution hubs Staff Gross Margin Functional Level - Strong Financial Performance Any Questions? - ~20% growth in Total Sales Revenue - ~2.3% decrease in Cost of Goods Sold - 28% growth in Net Revenue - ~3% decrease in Total Expenses (as a percentage of sales) - ~23% increase in Net Income - Cash mainly used for Investing Activities - Maintains High Liquidity Rating - Inventory turnover reflects changes in season - Profitability Ratios are notably high Employee Performance Assessment - Employee morale is generally low at Ross Stores - Rating 2.4 out of 5 on Glassdoor.com - Leadership and Governance Ross Governance Governance Statements Mission Statement "Ross Stores' mission is to offer competitive values to its target customers by focusing on the following key strategic objectives:
- Achieve an appropriate level of brands and labels at strong discounts throughout the store;
- Meet customer needs on a more regional basis
- Deliver an in-store shopping experience that reflects the expectations of the off-price customer;
- Manage real estate growth to maintain dominance or achieve parity with the competition in key markets Governance Statements Vision Statement: Created by Illuminate Consulting "At Ross, our responsibility is to provide bargain prices for brand name products everyday in your community" Vision for the Future In 5 Years: - Ross will increase the brand's value to include a more expanded demographic within geographical regions Critical Challenges - Economic Challenges and forces - Maintaining Strong Financial Performance - Keeping Up To Date with Consumer Trends - Integrating Strategic Plan and Actual Performance on a Contiguous Level Ross To S&P 500
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