This paper analyzes the case of Mountainarious Sporting, a shop selling sports supplies in the town of Barron. After discussing the information required for a more thorough analysis, this paper will examine the owner’s plans to stop leasing retail space for an additional location, discuss several ways to improve the store’s current situation, and propose potential safeguards in order to avoid adverse situations in the future.
As for the additional information required, it is unclear on what basis Donnie makes his predictions about the potential profits for the new store, Deviltech Outfitters. Donnie predicted sales growth of 15% for both stores in 2008, and 30% of the projected 2008 levels in 2009. As can be calculated from the appendix, the sales growth was 12.3% in 2007, 9.9% in 2006, and -10.1% in 2005. Clearly, Donnie’s introduction of soft goods lines of sportswear in 2005 coincided with a drop in sales the same year.
It is unclear what caused the growth of sales in 2006 and 2007 – the footwear segment or Donnie’s traditional wares. Therefore, it is paramount for Donnie to provide more detailed information on sales, namely, which items generated the growth. If this data reveals that the growth was due to footwear, it will serve as an argument for opening the Deviltech Outfitters store; however, if the footwear did not generate considerable growth, it will serve as an argument against opening the new shop.
Also, it is unclear whether opening a new shop selling footwear would generate higher profits than renting space to Doug’s Guns and Ammunition. Furthermore, it is difficult to precisely measure how the clientele and merchandise from that shop impact footwear consumers. To improve the present situation, it might be possible to more completely separate Mountainarious Sporting from Doug’s Guns and Ammunition (by erecting walls or creating separate entrances, for example) so that the customers of the two shops would interact less.
This might also permit an approximate estimation of the impact of Doug’s Guns and Ammunition on the client base of Donnie’s shop. However, the decision whether to evict the weapons shop and open a footwear store or to leave the weapons shop in place should be made only after considering the data about the role of footwear in the revenue growth of 2006 and 2007.
As for improving the immediate situation, the current website might be modified to let clients order the goods that are available from Mountainarious Sporting online. Donnie might also be able to provide delivery in Barron due to the proximity of the store (Balakrishnan et al., 133-135; Melis et al. 273-276).
In addition, if the creation of Deviltech Outfitters is postponed, it might be possible for Donnie’s wife to obtain more experience selling footwear by working for a different store; meanwhile, Donnie will also gain experience by selling footwear in his existing shop.
Also, Deviltech Outfitters could open an additional location to gain extra territory coverage (Bell 26), in addition to the footwear already sold in Mountainarious Sporting. To do so, renting space by using the money gained from Doug’s Guns and Ammunition may be possible. If that idea fails, at least the Mountainarious Sporting will remain intact, and Donnie will continue collecting rent money from the weapons shop.
To prevent future situations similar to the previous setbacks, it is possible to install fire alarms (to avoid fires like in 2002) and to purchase goods in smaller quantities, so that the assortment would still be rich but Donnie would not have to discount prices at the end of the season to sell excess inventory (Bernstein et al. 538; Zhao et al. 172-174).
On the whole, it is recommended that Donnie should better analyze the revenues generated by footwear prior to evicting Doug’s Guns and Ammunition and opening Deviltech Outfitters. It also might be advisable to open the footwear shop in a different location. Also, several modifications to the current business may be made to improve its revenues and safeguard it from future problems.
Works Cited
Balakrishnan, Anantara, et al. “Browse‐And‐Switch: Retail‐Online Competition Under Value Uncertainty.” Production and Operations Management, vol. 23, no. 7, 2014, pp. 1129-1145.
Bell, David R. Location Is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One. Houghton Mifflin Harcourt, 2014.
Bernstein, Fernando, et al. “Dynamic Assortment Customization With Limited Inventories.” Manufacturing & Service Operations Management, vol. 17, no. 4, 2015, pp. 538-553.
Melis, K., et al. “The Impact of the Multi-Channel Retail Mix on Online Store Choice: Does Online Experience Matter?” Journal of Retailing, vol. 91, no. 2, 2015, pp. 272-288.
Zhao, Yingxue, et al. “A Value-Based Approach to Option Pricing: The Case of Supply Chain Options.” International Journal of Production Economics, vol. 143, no. 1, 2013, pp. 171-177.