Retail Little Red Roaster Case Study

In: Business and Management

Submitted By guineverej
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Guinevere Jagiello RCSC 214 Case Paper 1 9/30/12

Recovery Strategy for Steve & Barry’s

Problem

Steve & Barry’s original mission was successful; sell quality, low priced collegiate and casual sportswear for lower than other competitor’s costs. Their problem arose when they changed their mission to selling celebrity endorsed fashionable clothing, with the same expectations in prices and profits as that of their original. The costs needed to support the production of high-fashion apparel did not follow the same conditions that they used to produce their collegiate sportswear clothing. In order to achieve this, they had to open a large number of stores in a short amount of time in order to balance the costs of production of the higher fashion sector. However, their expansion was not dependent on retail profits, but rather through securing deals for rent in stores of run-down malls. This kept them afloat for a small while, but quickly the economy dropped in a number of ways, and it proved that the focus in production of high fashion with low prices could not be successful in the same way as that of their collegiate sportswear clothing.

Facts

1) Exhibit 3 in the tariff engineering illustration of the Steve & Barry’s report, shows the differences in tariff manufacturing rates. A product’s price can dramatically decrease if it can be made in Mexico at a 0% tariff rate than in China at a 19.7% rate. For high-fashion designs this strategy would not prove as effective, as it requires a very specific demand of color fabric, print, and materials in which only a certain manufacturer may carry, and possibly one of a much higher tariff rate. This results in larger inconsistent profit rates.

2) By 2007 Steve & Barry’s fashion endorsed line held 1/3 of…...

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