Monday, August 31, 2009

Discussion Question 5

For this bulletin board assignment, I chose to cover Dillard’s. This retailer is positioned in a very unique place: it uses a differentiation strategy to offer high end products to customers who can afford it. They are in the upper end of clothing retailers and have appeared relatively flexible with their strategies over the past years.
The competition for Dillard’s is mainly the other upper end retailers consisting of Nordstrom’s, Saks 5th Avenue, JC Penny’s, Macy’s, Neiman Marcus, and other specialty, fine retailers. This retailer offers many upper end brand names that cannot be found in other stores and has built partnerships with high end companies like Coach, , Ugg, Dooney and Bourke, and various others that have distinguished their brand. One other thing that comes to mind in our geographic area is the existence of Dillard’s in a place with relatively no competition, which leaves you with no choice if you want affordable luxury goods. In the recent years, however, I believe they have differentiated themselves by creating more store-owned, high quality brands that they offer at lower prices to give an alternative to those not looking to pay quite so much. Although my first instinct would have been that this would dilute the high end name they had initially established, that seems to not be the case. They also use a pricing structure that allows for major discounts on lots of items, specifically through drastic clearance reductions. Specifically, they offer 30% off clearance prices somewhat frequently throughout the year. I believe, however, that their primary source for differentiation is the high level of service they provide for their customers. This covers everything from first impression of store layout, clothing adjacencies and display, customer interaction and knowledge, on up to return policies and other methods to enhance the experience. For example, I have been personally greeted on various occasions in different stores by the store manager, which is a rarity in the retail world of that scale. Although competitors may offer similar service levels, they also come with higher price tags or may not have as much variety in goods, such as kitchenware, appliances, and others that Dillard’s offers.
The target market for this company is generally covered by a successful, more sophisticated customer base that is looking for reasonably priced luxury goods. Traditionally, they targeted older customers with more refined tastes and were the place to go for top end women’s and men’s dress clothing. In recent years, I have seen that Dillard’s has placed its focus on catering to a younger, trendy base as well by offering a variety of brands like Ed Hardy, Sean John, RocaWear, EckoRed, Sinful, and various others, but has not compromised the sophisticated appearance of its stores to do so. They have targeted this larger market well, and I would probably recommend they simply continue to do so because pursuing a larger market may prove trying to their success since they are already after such a large base. If they were to offer any lower priced goods, it would run the risk of hurting their high end image. For the younger, trendy segment of their market, Dillard’s does a great job of getting the best brands and make them a very exclusive item. They do this through many in-store displays, as well as extensive online and TV advertising. These show exclusivity and show the biggest names modeling products. Furthermore, they tend to have a knowledgeable sales staff that matches the area in which they work. There is definitely specialization for the different departments, unlike many big box retailers that have the same person running maternity and junior section.
To improve their strategies, I would recommend they do more advertising online and also offer a bit more publicity with their brands: in larger cities I have often seen stores that will model their clothing out in the malls to build the image of the store and display all that they have. They may also reconsider their slogan, “the style of your life,” since it seems a bit out of date for this younger market. Their website, however, is easy to navigate and does display the high fashion theme well. Overall, Dillard’s is placed well in the luxurious fashion industry and has proven flexible with their strategies over the past years and are not afraid of change. They have maintained their positive brand image as well and should have no problem remaining their position in this business if they continue to harvest their relationships and industry knowledge.

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