Case Synopsis: Ann Taylor

The Ann Taylor Case provides information about both Ann Taylor Stores Corporation (ANN)

and the overall retail environment. The case depicts ANN, a women’s specialty clothing retailer

that had been successful in creating a complete product line that appealed to its target

demographic of socially upscale professional women, but that in 2008 faced increasing

competition and a challenging economic environment. ANN had experienced significant growth.

However, success had been very uneven between the original Ann Taylor Stores (AT) division

that sold updated classics and the company’s newer Ann Taylor LOFT division that carried

lower priced casual merchandise.

ANN was not the only retailer suffering in a poor economic climate.The news reports quoted at

the beginning of the case confirm that the entire retail industry was facing an unpredictable

environment in 2008-09. Retail businesses were encouraged to take a close look at operations to

see what changes might have to be made. ANN’s current CEO, Kay Krill, was already doing so.

She had already begun to implement a variety of initiatives and was considering several more.

To generate growth, Krill had identified several distinct areas of opportunity. She continued her

ongoing efforts to revitalize the flagship Ann Taylor (AT) store brand, while not dampening

LOFT’s recent growth. In addition, ANN had recently launched a beauty business, was testing a

maternity section, had expanded the high end fashion offerings, and was considering a new

concept store specifically targeting the “older” segment of women ages 55-64.

However, these initiatives came under review in 2008 after the downturn in sales. CEO Krill

announced a restructuring plan, a reduction of the firm’s overall cost structure. This included

layoffs of headquarters staff and reconfiguration of executive performance compensation

bonuses. Some analysts questioned the wisdom of Krill’s ongoing involvement in day-to-day

operations and wondered if the turnover in upper management since 2006 might be a problem. It

is clear that Krill was firmly committed to long-term growth. However, the basic question of the

case is whether she was doing what she should do to unleash what she believed was the firm’s

“significant untapped potential”?

Questions

1. What are key forces in the general and industry environments that affect Ann Taylor’s

choice of strategy?

2. What internal resources and assets did ANN have that gave it a competitive advantage?

3. How did ANN compete?

4. What has Kay Krill done to implement strategy, and what challenges remain?

Case Synopsis: Fresh Direct

First launched in July 2001, FreshDirect was a New York City based on-line grocery store with a

state of the art production center, top-notch personnel, leading edge manufacturing software, the

highest standard of cleanliness, health & safety, and an informative and user-friendly website.

System efficiencies included: a cost-effective operational design; no middleman; a central

production and distribution location; well designed order and delivery protocols; and a policy of

no slotting allowances. These system characteristics enabled FreshDirect to maintain a high

product quality while keeping product prices low, therefore their promise to grocery shoppers of

“higher quality at lower prices.”

The ideal FreshDirect customer was described by Jason Ackerman, one of the founders, as

someone who buys their bulk staples from a warehouse like Costco on a monthly basis, and buys

everything else from FreshDirect on a weekly basis. The website offered a broad selection of

products along with information about the food. Products could be compared on taste, price,

usage and nutritional information. Custom cuts and seasonings of meat could be ordered.

Delivery options included direct to the home in New York City, or office and train parking lot

access in the suburbs.

The on-line segment of the grocery industry was a small percentage of the industry total.

Despite a large potential target audience, the on-line segment had been slow to catch on. The

total online sales in 2008 were $6.5 billion, and the numbers were expected to reach over $8.4

billion by 2010, but the five million people who shopped online for groceries still represented

only 2 percent of the online population.

FreshDirect’s competition came from traditional brick-and-mortar grocery chains and a handful

of other on-line grocers in New York City. The challenge was to compete on price while

covering the cost of packaging items in the warehouse and delivering individual grocery orders.

With margins so small, in order to be successful, some analysts estimated that the online grocers

had to do 10 times the volume of a traditional grocer. This increased the pressure on FreshDirect

to differentiate itself from other online and traditional brick-and-mortar competitors and capture

market share. As the online grocery market continued to define itself, FreshDirect’s challenge

was to continue to innovate in product purchase, storage and distribution, and attract loyal

customers while keeping costs down and quality up. Could FreshDirect maintain its market share

among competition from both online and tradition grocers?

Questions

1. What were key forces in the general and industry environments that affected FreshDirect?

2. What internal resources and assets did FreshDirect have that gave it a competitive

advantage?

3. How did FreshDirect compete?

4. What innovations and entrepreneurial strategies did FreshDirect utilize to craft a

competitive advantage?

Case Synopsis: Jamba Juice

Juice Club (which would eventually become Jamba Juice Company) was founded by Kirk Perron

and opened its first store in San Luis Obispo, California in April 1990. The company began with

a franchise strategy and opened its second and third stores in Northern and Southern California

in 1993. In 1994, management decided that an expansion strategy focusing on company stores

would provide a greater degree of quality and operating control. In 1995, the company changed

its name to Jamba Juice Company to provide a point of differentiation as competitors began

offering similar healthy juices and smoothies in the marketplace. On March 13, 2006, Jamba

Juice agreed to be acquired by Services Acquisition Corp. International (headed by Steven

Berrard, former CEO of Blockbuster Inc.) for $265 million. The company went public in

November 2006. In December 2008, Berrard named James White, formerly president of

Consumer Brands at Safeway, as the new CEO and president of Jamba Juice.

Jamba’s core customers were health conscious consumers who led, or aspired to lead, a healthy

lifestyle. Therefore Jamba positioned its products as healthy alternatives to conventional

American fare, such as hamburgers, french fries, and ice cream. Due to vast options in size,

caloric density, and relative sweetness, Jamba smoothies could serve as a light snack, a sweet

treat, or even as a meal replacement for on-the-go customers who wanted to avoid highly

processed or sugar rich convenience foods. The Company’s commitment to fresh fruits and

natural products bolstered its image as a leading provider of natural food and beverages,

allowing it to benefit from the healthy alternatives trend.

Jamba Juice Company followed a fundamental business philosophy focused on branding

(attention to the product attributes, and company vision and values), business (planning for long-

term growth), and culture (creating a team environment, passion for the brand). Jamba’s growth

strategy included the development of new stores, increasing same store sales, increasing

customer frequency, developing alternative brand channels, and increasing either company-

owned or franchised stores, all with an expanded menu. With competition highly fragmented in

the specialty juice and smoothie industry, Jamba Juice had a unique opportunity. Did it have the

resources available to carve out a competitive advantage without losing its “healthy alternatives”

brand identity?

Questions:

1. What are key forces in the general and industry environments that affect Jamba Juice’s

choice of strategy?

2. What internal resources and assets does Jamba Juice have that may give it a competitive

advantage?

3. How should Jamba Juice compete?

4. How should Jamba Juice manage its growth?