University
of
Washington
Geography
350
Corporate and
Geographic Restructuring;
Localization
What are the most obvious geographic trends of the four key
retail actors -- within metro areas, across regions of the US, and
internationally?
Case
study: Macy's
May Department Stores
(founded 1877, Colorado)
Federated Stores
(founded 1929, Ohio)
In class we reviewed each corporation's major acquisitions, and then
Federated's 2005 acquisition of May for $11B, changing the merged
corporate name to Macy's.
We looked at Macy's corporate statements about customer profiling, the
geography of its corporate organization, and attempts at store
differentiation through the "My Macy's locatlization initiative."
Among the principles illustrated by
this case study:
- corporate acquisition to increase exposure to
rapidly growing regions of the country
- corporate acquisition to enter a complementary
type of retailing (a middle-market retailer acquiring a discount
department store chain)
- pros and cons of maintaining regional brands
with history and goodwill (Bon Marche, Frederick & Nelson's) versus
creating a standard brand across the country.
- acquisitions motivated by scale economies -- sources of corporate scale economies in
retailing:
- buying power pricing power
- centralized distribution
- regional or national advertsiing is spread
across many stores
- cost of sponsorships and brand maintenance is
spread across many stores
- technology investments are spread across many
stores
- short-term cross-subsidization across stores
- stability across business cycles or economic
growth/decline in different regions
Localization
Refer to class notes from "location as a
component of strategy."
As you read the Rigby
& Vishwanath article, have these questions in mind:
- What is "localization"?
- What are the pros and cons of attempting it?
- What are some of the ways it can be accomplished?
- How can managers get enough data to attempt it?
THINKING BROADLY
How could retailiers
actually learn and serve the concerns and needs within a market area?
- What are households actually concerned
about? What do households actually need?
- What are local regions concerned about?
(Think -- what kinds of concerns does your local region have?)
- What kinds of concerns and needs could
conceivably be satisfied by a retailer -- by the household's purchase
of goods, services, or information?
- What information would the retailer have to have
about households in a given market area?
- How could a retailer (in the area already, or
planning an outlet) gain this information?
- What structural characteristics would allow a
retailer to be so responsive to the needs of households?
- Ownership characteristics? (Corporate,
private/single owner, not-for-profit, state- or church supported,
cooperative...)
- Scale characteristics? (Small, large,
single-outlet, multiple outlets...)
- Staffing characteristics?
- Location characteristics?
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