Shop Thursdays: Post COVID-19 Strategy Case Solution
If pits divests her second store located at Exchange Tower physical and goes online with influencer marketing; the average net profit will be $757,750.74, and minimum and maximum net profit will be $839,886 and $1,532,082 respectively, as shown below in appendix: 3. These values are based on the assumption that is given in the case such as cost per influencer etc., and we have assumed that the minimum number of influencers is 10 and the maximum is 50.The average shipment cost per order will be 9.14. All other assumptions and calculations are provided on the excel sheet.
As Shop Thursday got successful with its first store at Yonge Street as well as its online sales, it indicates that Pits had great knowledge of the fashion industry. Her mother Rita and Uncle James Benzarcar also proved to be experienced partners for her. We can say that Pits hasa strong human resources team with an inclusion of a good educational background in business and well as nine-months experience of serving in the financial service industry, which enabled her to have the knowledge and connection that can help her in raising funds for her business if needed. Pits also updates her inventory to keep her company up-to-date with the changing fashion trends.
There are two options alternatives for Pits, which are maintaining the Exchange Tower store or opting for the complete online presence and growth with the use of influencer marketing. Both of the options’ pros and cons are described below:
Maintaining the Exchange Tower store(status quo):
- The company would be able to get more market share from the customers who do not prefer to shop online.
- Physical presence can increase the brand loyalty of the customers, increasing their trust over the company’s online products as well, because they would have a previous shopping experience at the company’s physical store.
- Certain products could not be sold through online stores, so for that, physical presence is necessary.
- There is less growth opportunity for the company shop at the Exchange Tower. So, compromising online business for the sake of such a slow growth opportunity can turn out to be a bad decision.
- It is a costly alternative for Pits to continue her store’s operation for a very small number of customers.
Focus on online store with influencer marketing:
- Huge opportunities of having domestic as well as international
- The online store will diversify the business geographically, so any adverse situation in one country will impact only the sales and customers from that country. So the risk of losing the customersis reduced.
- As Pits and her partners have limited resources, in such case, online business is a low-cost option to grow and have success from.
- Ordering errors can be eliminated by focusing only on the online business, which will increase the customer satisfaction and will repeat their purchases.
- Will be able to increase the customer base as well as the market share.
- Influencer marketing will make it able to attract a large customer base, as it is in trends and most of the online businesses use influencer marketing for their promotion.
- Nowadays, most of the people belonging to the age group 18 to 45 are using Instagram and they tend to buy products after reading the reviews and watching the products’ reels on Instagram.
- As some customers want to see the real product and do not believe in pictures, only relying on the online store can lose such type of customers.
- Influence marketing is very expensive, providing products or discounts would also be expensive for new companies. Initially, it can cause loss incurrences to the companies instead of attracting the new customers.
As per the qualitative and quantitative analysis of both the alternatives; we will recommend Shop Thursdays to reopen its Exchange Tower store and to also continue its online sales but without influencer marketing strategy, because this strategy tends to reduce the company’s profitability . As the criteria to choose the option is that the net profit should be at least $300,000, both the options are attractive, but the rational decision will be to choose thatoption which will provide more profitability, so the decision is mutually exclusive.We will choose to maintain the status quo-because combined profit of the exiting strategy is higher than the profit from the online sales only with influencer marketing (see appendix: 4). There are several benefits of having physical and online presence together if they are properly managed. So Pits should focus on removing the order errors, taking advantage of opportunities of growth in the online sales’ demand. Instead of using influencer marketing; Pits can use other means of marketing with trends, such as: social media marketing on Facebook, etc……………………
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