Case Study
Lingerie Department
Bonnie Sullivan
Hayley Slyter
Laurel Dudley
Ashley Lorenz
1
Table of Contents
Executive Summary ………………………………………………………………..................... 3
Part 1: Business Plan
Company and Department Analysis………………………………………………………………. 4
Retail Strategy and Analysis………………………………………………………………………. 6
Financial Goals and Buying Plan…………………………………………………………………. 9
Sources…………………………………………………………………………………………… 11
Part 2: Buying Plan
Team 1: Lingerie
Merchandise Classification……………………………………………………………………… 10
Market Research…………………………………………………………………………………. 14
Market and Industry Trends………………………………………………………………….. ….18
6 Month Buying Plan…………………………………………………………………………….. 19
Assortment Plan………………………………………………………………………………….. 20
Sources…………………………………………………………………………………………... 23
Team 2: Pajamas/Sleepwear
Merchandise Classification……………………………………………………………………..
Market Research……………………………………………………………………………………
Market and Industry Trends………………………………………………………………….
6 Month Buying Plan……………………………………………………………………………..
Assortment Plan……………………………………………………………………………………
Sources………………………………………………………………………………………..
Appendix………………………………………………………………………………………
2
Executive Summary
Dillard’s Inc. is an upscale department store with 330 stores in 28 states. Our company
maintains a presence in the Southeast, Southwest, and Midwestern parts of the U.S., with the
highest concentration of stores located in the South in Texas and Florida. Our stores serve as
anchors in many class-A and class-B regional malls throughout the country. Within the past 5
years Dillard’s Inc. has been in the process of revamping and repositioning our brand image in
the retail market to more clearly differentiate our company- placing ourselves above competitors
Macy’s, Belk, and J.C. Penney, and below high-end stores like Nordstrom and Bloomingdale’s.
We have been able to evolve by expanding our national brand offering, adding more fashion
products to our merchandise mix, and developing our company’s private label lines.
Dillard’s lingerie department offers 9 categories of merchandise that include bras and
underwear, sleepwear, shapewear, lingerie, robes, loungewear, daywear, and hosiery. Our
buying plans, financial goals, and assortment plans focus on the categories of pajamas/sleepwear
and robes.
For Fall/Winter 2016, our financial goal is to increase total department sales for lingerie
by 4.3% compared to last years’ sales at $128,183,600. Our goal as a company is to try our best
to provide a wide range of quality products to our customers at a low price while delivering
exceptional service.
3
Business Plan
Company and Department Analysis
Dillard’s, Inc. ranks among the nation’s largest fashion apparel, cosmetics, and home
furnishings retailers. Dillard’s is a large mid-range department store chain with locations
throughout the Southeast, Southwest, and Midwest regions of the U.S. Our company’s
competitors include J.C. Penney, Belk, and Macy’s. As of January 31, 2015, the company
operates 297 Dillard's stores, including 20 clearance centers, and a website offering a wide
selection of merchandise including apparel for women, men and children, accessories, cosmetics,
home furnishings and other consumer goods ( Dillard’s Inc., 2014). Dillard’s chief marketing
demographic is comprised of middle- to upper-middle income women, with disposable income
to spend on higher quality, expensive products. Our company focuses on competitive pricing,
wide merchandise assortments, and exceptional customer service to distinguish us from our
competitors, resulting in a well-recognized brand and customer loyalty.
One recent issue our company has faced is the unstable economy. Many shopping mall
operators and retailers have been severely impacted by the recent global economic downturn and
have experienced declining sales and revenue. Net sales from retail operations decreased $14.3
million during the six months ended August 1, 2015, compared to the six months ended August
2, 2014 and our inventory grew 3% (Wilkerson, 2015). This indicates we are struggling to
achieve our sales quotas in dollars and in inventory units. Therefore, in the past five years we
have had to close 22 store locations that were unable to meet their financial goals and
consistently under-performing. These factors, along with others, have caused our stock to drop
from an all-time high of $144 to an all-time low of $86.
4
Another challenge we are facing is the advent of mobile and online shopping and
adjusting our sales channels to reflect this lifestyle trend. Along with Macy’s and Nordstrom,
Dillard’s recorded 52-week lows this October while online retailers such as Amazon have been
reporting record highs daily since releasing their earnings report on October 22 (Suttmeier,
2015). Unlike Macy’s, Belk, Nordstrom, and other department store chains, Dillard’s has not
made a move towards the development of omni-channel retailing- we are one the few
retailers in 2015 that doesn’t have a smartphone app for ease of purchase, and our website
remains dated and utilitarian- a brick and mortar company in an increasingly online world. In
addition, we do not maintain a strong online presence on social media sites Twitter, Instagram,
and Facebook which makes it difficult for our company to reach the younger end of our target
market.
Within our lingerie department we offer a wide selection of bras, underwear, sleepwear,
hosiery, and loungewear and including plus size, petites, bridal, and contemporary lingerie. Our
5
department’s primary customers range from young women in their twenties to older women in
their sixties or seventies We have a variety of competitively priced brands and styles to fit every
woman’s needs. For the younger customers, we have bright colored thongs, slips, and fun printed
pajamas. For our older customers, we offer more classic styles that provide comfort and
coverage, but still incorporate trendy patterns. People choose to shop with us not only for our
wide and varied merchandise selection, but also because of the convenience of being able to
purchase their lingerie at the same retailer from which they buy their clothes, shoes, and makeup.
Table 1: Lingerie Department Categories and Price Points
Categories
Price Points
Bras
$30, $40, $60
Panties
$5, $10, $20, $30
Pajamas/Sleepwear $25, $40, $50, $60, $80
Lingerie
$40, $50, $70, $80
Robes
$40, $50, $60, $70, $80
Shapewear
$10, $15, $20, $40, $60
Loungewear
$25, $40, $50, $60
Daywear
$20, $30, $50, $60, $70,
Hosiery
$7, $10, $15, $25, $35
Patio Dresses
$40, $50
6
Table 2: SWOT Analysis
●
●
Strengths
Weaknesses
Opportunities
Members of the
Dillard family are
still involved in the
company, making us
more family
oriented and
personable
We offer a wide
array of products at
competitive prices
so customers can
make Dillard’s their
one stop shopping
destination
●
●
●
Slow of store
comp sales
Store visual
merchandisin
g -Some
locations are
nicer than
others, and
many stores
have a dated
appearance
and are in
need of
renovation
●
We are working
toward being
considered in the
same realm as
the more upscale
department
stores such as
Nordstrom
We are always
looking to bring
in new and
exciting,
exclusive brands
Threats
●
●
●
In-store sales are
dropping due to the
increase of ecommerce and online
shopping
It can be difficult to
please such a wide
range of customers
The economy is
always changing and
it can be difficult to
predict when to bring
in more affordable
merchandise
Retail Strategy Analysis
Ladies apparel, accessories, and lingerie are the biggest drivers for the company and
accounted for 38% of fiscal 2014 sales (Dillard’s, 2015). Our merchandise selections include, but
are not limited to, our lines of exclusive brand merchandise such as Antonio Melani, Gianni Bini,
GB, Roundtree & Yorke and Daniel Cremieux. Our exclusive brands/private label merchandise
program provides benefits for Dillard's and our customers. Our customers receive fashionable,
higher quality product often at a savings compared to national brands. Our private label
merchandise program allows us to ensure the Company's high standards are achieved, while
minimizing costs and differentiating our merchandise offerings from other retailers. Dillard’s
offers company credit cards with purchase incentives, which is an attractive perk to middle- to
upper-class women. We are looking to increase the number and use of the Dillard’s credit cards
by providing incentives to sales associates to open new credit accounts. Currently, Private label
card holders are offered private shopping nights, direct mail catalogs, special discounts and
advance notice of sale events.
7
Apparel and textile industry resource Just Style observes that historically, lingerie stores
have been able to weather hard economic times. However, the North American market has been
static since the bottoming of the market in 2008 (Xi, 2012). Market share and competition within
the lingerie industry is fierce and largely dominated by big-name retailers like Victoria’s Secret,
possessing 44% of the market in 2012 (Xi, 2012). However, recent fashion trends have offered
retailers a chance to increase their sales within the sleepwear category. The pajamas-as-daywear
trend made its debut in the fashion industry in 2012, in the form of silky matching sets paired
with heels, and is here to stay. These sleek sets have been photographed on the red carpet worn
by celebrities such as Rihanna, Salma Hayek, Sofia Coppola and fashion week street style icons
around the world.
8
Dillard’s differentiates its merchandise mix from its competitors Macy’s and Belk by offering
the widest assortment of merchandise within its lingerie department, in color, variety,
and brands. Macy’s offers a large variety of brands within bras and underwear, which
accounts for almost half of their department floor space, but their sleepwear assortment is very
small at 15% of the lingerie department space, with limited brands, colors and styles. Dillard’s
sleepwear and robes accounts for 30% of department floor space.
Dillard’s has recently experienced the issue of declining store sales due to the volatile
state of the economy, and, therefore, is in the process of rearranging its positioning in the
marketplace by rebranding. We are attempting to move up in the market segment, positioning
ourselves above companies like Macy’s and Belk but below luxury department chains like
Nordstrom and Bloomingdale’s (Dillard’s, 2015). We hope that this repositioning will increase
sales and attract new customers, as well as strengthen our brand loyalty and improve our gross
margin.
Financial Goals and Buying Plan
During the Fall/Winter 2014 season, Dillard’s Inc. lingerie department generated
$128,183,600 in sales. Although company revenue for 2015 is expected to remain flat to last year
(Wilkerson, 2015), we are expecting a more positive outlook for Q3 and Q4 of Fall/Winter 2016.
Using our department’s Fall/Winter 2014 sales figure, we have projected the lingerie department
to gross $133, 695,495 in sales for Fall/Winter 2016 based on the median net sales percent
increase for loungewear and robes (4.3%) for department stores as stated in the 1997 FOR/MOR
report (Moran, 1998).
9
Table 1: Dillard’s Women’s Lingerie Financial Goals for Fall/Winter 2016
Last Year’s Sales for Fall/Winter Season (2015)
Planned Sales for Fall/Winter Season (2016)
Cost of Goods Sold
Gross Margin %
Gross Margin $
Inventory Turnover
Gross Margin Return on Investments (GMROI)%
Average Inventory at Cost
$128,183,600*
$133, 695, 495
$80,755,668
37%**
$47,427,932
1.5 ***
1.12%
$42,502,983.16
*LY dollar sales ($) for department based on provided figure by Whitney Ginder. Fall/Winter season encompasses months of
August through January
**Gross Margin percentage based on department store chain reported figures in the 1997 FOR/MOR report
**Fall/Winter Inventory turnover figure based on Dillard’s, Inc. annual inventory TO of 3.0
Merchandise Classification
Working in buying teams of two, within our department (lingerie) we have chosen to focus on
two categories, Robes and Pajamas/Sleepwear, in our six month buying plan. Teams and
planning responsibilities are outlined below (see Table 2).
Table 2: Buying Teams and Merchandise Categories
Team:
Ashley Lorenz
Leslie Dudley
Hayley Slyter
Bonnie Sullivan
Merchandise:
% of Fall/Winter Sales
Sleepwear/Pajamas
22%
Robes
8%
Other Merchandise
68%
10
References
Dillards.com. (2015). Dillard’s 2014 Annual Report. Retrieved from
http://investor.shareholder.com/dillards/annuals.cfm
Moran, A. (1998). The Combined Financial, Merchandising, and Operating Results of Retail
Stores in 1997 (73rd ed.). Washington, D.C.: National Retail Federation
Morningstar. (2015). Dillard’s Inc. Key Ratios. Retrieved from
http://financials.morningstar.com/ratios/r.html?t=DDS&region=usa&culture=en-US
Suttmeier, R. (2015, October 30). Dillard's, Nordstrom, Macy's Decline as More Shoppers Skip
the Mall. Retrieved from http://www.thestreet.com/story/13345099/1/dillard-snordstrom-macy-s-decline-as-more-shoppers-skip-themall.html?puc=TSMKTWATCH&cm_ven=TSMKTWATCH
Wilkerson, B. (2015, October 22). Dillard's Poor Decisions. Retrieved from
http://seekingalpha.com/article/3595856-dillards-poor-decisions
Xi, T. (2012.). What Is the Economic Growth of Lingerie Stores? Retrieved from
http://yourbusiness.azcentral.com/economic-growth-lingerie-stores-26829.html
11
Team 1:
Robes
12
Merchandise Classification
Table 1: Sales Plans
Women’s Lingerie Department
Classification
Robes
-Heavyweight robes
-Lightweight robes
Other Merchandise
Sales Plan
% of Department Sales ($)
Fall 2016 Sales Plan
8%
$10,254,688
40%
$4,101,875.20
60%
$6,152,812.80
92%
$117,928,912
Table 2: Merchandise Mix (Robes)
Sub-Classification
-Heavyweight Robes
Price Points
$46, $58, $68, $78, $98, $118, $160
-Lightweight Robes
$46, $58, $68, $78, $89, $108, $124
Brands
Lauren Ralph Lauren,
Oscar de la Renta Pink
Label, Miss Elaine, UGG
Betsey Johnson, In Bloom
by Johnquil, Josie, Miss
Elaine
In Table 1, we have further broken down our merchandise category, robes, into subcategories of heavyweight and lightweight robes with percentages and the fall sales plan for
2016. Robes account for 8% of the women’s lingerie department sales; heavyweight robes make
up 40% of total robe sales while lightweight robes make up the other 60%. We also included a
section of Other Merchandise to depict what part of women’s lingerie sales the rest of the
merchandise categories (such as bras, panties, etc.) make up. Table 2 describes our expected
price points for the two sub-categories and a sample of brands that are offered. Our price points
for both categories include a large range of prices so that we can meet the needs of a wide variety
13
of women. We chose to keep our pricing at market pricing because we are competing with Belk
and Macy’s and want to ensure that we stay competitive while still being able to make a profit.
Market Research
Our team went out into the field to visit our own store and our top two competitors,
Macy’s and Belk, to research and determine our similarities and differences compared to the two
other retailers. Table 3, below, gives background information on the retailer and locations of
store visits, as well as pictures of the store. Table 4 provides a description of each retailer and a
breakdown of each company’s retail mix. Charts 1, 2, and 3 display visuals of the percentage of
each company’s category offerings in-store within their “Lingerie, Intimates and Sleepwear”
department.
Table 3: Market Survey Store Locations
Retailer
Address
Dillard’s
The Mall at Green Hills
2126 Abbott Martin Rd
#500 Nashville, TN
37215
Picture
14
Macy’s
The Mall at Green Hills
3813 Hillsboro Pike
Nashville, TN 37215
Belk
Village Mall
1627 Opelika Road
Auburn, AL 36830
Table 4: Retail Mix Elements
Retailer
Dillard’s
Retail mix Elements
 high-traffic
location just
inside the doors
 equal selection of
national and
private labels
 Biggest variety
 largest lingerie
area compared to
Macy’s and Belk
 wide range of
price points from
affordable to
designer
Product Merchandising
15


Macy’s





Belk


strong focus on
bras, panties, and
shapewear
small department
area, tucked in
back corner of
store far from
entrance
limited assortment
of sleepwear
brands and styles
mid-range price
point
lingerie located in
middle of store
smallest
assortment and
variety of all 3
stores
more even mix of
categories
compared to other
retailers
affordable price
point
focused more on
basics than
novelty and trend
Table 3: Macy’s Merchandise Mix (Robes)
Sub-Classification
-Heavyweight Robes
(45%)
-Lightweight Robes
(55%)
Price Points
$25, $36, $58, $78, $90
$29, $49, $58, $68, $89
Brands
Charter Club, Lauren Ralph
Lauren, Alfani, Jockey
Flora by Flora Nikrooz, Miss
Elaine, Oscar de la Renta Pink
Label, Morgan Taylor
16
Table 4: Belk Merchandise Mix (Robes)
Sub-Classification
-Heavyweight Robes
(29%)
-Lightweight Robes
(71%)
Price Points
$35, $51, $60, $72, $88
$25, $33, $42, $53, $68
Brands
Kim Rogers, Lauren Ralph
Lauren, Tommy Hilfiger, Aria
Jones New York, Miss Elaine,
N Natori, Lucky Brand
When comparing the merchandise mix of Dillard’s robes and those of our competitors,
Macy’s and Belk, the assortment is relatively the same. In all three lingerie departments,
consumers can find a similar selection of brands, including Lauren Ralph Lauren, Miss Elaine
and Oscar de la Renta Pink Label. Our selection of robes offers a greater variation of price
points compared to Macy’s and Belk which allows for our customers to find a robe at a price
point they can afford. Although we do have a larger range of price points, both of our
competitors do offer a selection of robes, both heavy- and lightweight that are between $25-$45,
whereas our lowest price point is $46.
Chart 1: Lingerie Product Category Percentages (Dillard’s)
Dillard's
5%
15%
25%
15%
10%
20%
10%
Bras
Panties
Lingerie
Sleepwear
Robes
Hosiery
Shapewear
17
Chart 2: Lingerie Product Category Percentages (Macy’s)
Macy's
3%
7%
5%
15%
30%
15% 25%
Bras
Panties
Sleepwear
Lingerie
Shapewear
Hosiery
Robes
Chart 3: Lingerie Product Category Percentages (Belk)
Belk
Bras
Panties
Sleepwear
Lingerie
Robes
Hosiery
Shapewear
Industry Trends
During the upcoming 2016 Fall/Winter season, we are going to focus mainly on
providing the classic robe styles that one might picture when thinking of cozying up on the couch
on a chilly winter night. We want to provide these classic styles because at that time the
Christmas season will be approaching and robes provide a great gift giving option. According to
the New York Times article “Inside Fashion Week,” loungewear is transitioning into a daytime
look (The New York Times, 2015), so we plan on increasing the amount of the silk-like kimono
styles that will be offered next season. These kimono robes are catering to the loungewear trend
18
by keeping functionality in mind and incorporating design elements like hidden pockets and
“stay-put belts” (Krista, 2015). While we want to be sure and offer the stylish robes, our main
buying focus will be on the classic styles since consumers typically purchase robes to be used
around the house.
6 Month Buying Plan
Merchandise Plan
In order to determine the figures used in the 6 month budget plans (see appendix page 37
for 6 month buying plan) for our merchandise classifications, robes, our buying team used the
information developed in our business plan. We also used the FOR/MOR Report (1998) to
research data and statistics for department stores and tailored the numbers to fit our 6 month
plan. From the FOR/MOR Report (1998) we determined reduction percentage, turnover rate,
gross margin percentage, GMROI, sales to stock ratio, and monthly sales percentages. Bonnie
and Hayley, our merchandise buyers for robes, determined that November and December would
be the months with larger robe sales because that is when the temperatures start to drop and they
make great gift giving items. October and September sales are also slightly higher because we
believe our customers will likely purchase lightweight silk and cotton robes to use during the
early fall weather. We determined that in January robe sales would decrease because customers
will have already bought their robes for the winter season.
19
Pricing Plan
Our initial markup percent will be 58.62%. We decided on this initial markup percentage by
basing our figures off of the FOR/MOR (1998) report’s average initial markup percentage for
department stores and then adjusting it to make it fit with our department We think that a 58.62%
markup will be the right fit for our merchandise because it allows us to make a profit and still
have room for markdowns later in the season. For our markdown policy, we will determine the
need for a markdown on an item-by-item basis. In order to determine slow selling items, we will
look at weekly sales reports and see which robe styles are not selling as fast. For example, we
expect a variety of styles to be sold during November and December because these months are
colder and robes make great gift items for the Christmas season. If there are a couple of styles
that do not have a large amount of sales, then we will start with a 15% markdown. Each week
will reevaluate the sales and increase the markdowns by 3%, depending on if the style starts
selling. Our company also has markdown events for cardholders, so if the merchandise does not
sell as expected, we can utilize those cardholder sales before taking prices down further.
Assortment Plan
In creating our August 2016 assortment plan for robes (see appendix page 38 for
assortment plan ), we divided our merchandise into two sub-classifications: lightweight robes
made of materials such as cotton, polyester, and chiffon and heavier weight robes made of terry
cloth, velour, and plush fleece. We allocated 60% of August’s BOM ($2,782,578) to lightweight
robes, and 40% to heavyweight robes, because the highest concentration of Dillard’s locations
20
are in states that experience warm weather for a majority of the year. Texas, Florida, Arizona,
and Louisiana, contain the most locations per state, accounting for almost 50% of Dillard’s 330
stores. Therefore, it would be logical to stock more lightweight robes when these states
experience very high spring/summer temperatures and mild fall/winter temperatures for a short
period of the year. For merchandise colors, we allotted half of our distribution to neutral colors:
30% for black and 20% for white, which were the most prevalent robe colors on Dillard’s
website and in their location we visited in Nashville. In addition we allocated 15% for pale pink,
15% for pale blue, and 10% for true red, and 10% for prints and designs. In a 2003 psychological
study on color by Joe Hallock (True Colors, 2015), findings indicated that women prefer soft
colors over bright colors, and that 35% of women stated blue was their favorite color. When
asked to choose from mixed colors, women liked colors that were closer to the red end of the
color spectrum, where shades of pink are found (True Colors, 2015). Using these findings we
determined that pale pink, pale blue, and red would be included in our robe assortment plan.
In creating our size allocations, we decided to utilize a classic bell curve, with 10% for
extra-small, 25% for small, 30% for medium, 25% for large, and 10% for extra -large.
According to the University of Texas at Austin, the average woman’s clothing size in the U.S.
ranges from size 8-14 (Body Image), which would place the majority of women within size small
to size large. By purchasing more “core” sizes and less “fringe” sizes (XS and XL), if we have to
enact markdowns on merchandise later in the season, we are more likely to sell discounted core
sizes compared to fringe sizes and therefore make a higher profit.
Although our price points range from $46.00 to $180, because we are a mid-range
department store our customers are more likely to buy more affordable lower-priced
merchandise. A recent study by Paragon found that about 75% of shoppers identified themselves
21
as more sensitive to price in 2013 compared to 2012 (Shpanya, 2014). Of these surveyed
shoppers earning $50 – $100,000 a year, our target market, 53% indicated pricing as their largest
determining factor with quality taking second place at 20% (Shpanya, 2014). Therefore we
allocated 68% of our August BOM dollar distribution towards our four lowest price points ($46,
$58, $68, and $78). Carrying fewer SKU’s of the most expensive merchandise price points
($118-$180) ensures that we are able to take markdowns on these items multiple times through
the season if necessary and don’t take large hits on gross margin profits. Consequently, we
divided it up by 20% for $46, 18% for $58, 15% for $68, 15% for $78, 9% for $89, 9% for $98,
5% for 108, 5% for $118, 2% for $124, 1% for $160, and 1% for $180.
22
References
Belk.com. (2015). Women: Sleepwear and Robes. Retrieved from
http://www.belk.com/AST/Main/Belk_Primary/Women/Shop/Sleepwear/Robes.jsp#sO=
&ZZ%3C%3EtP=4294920783&ZZ_PO=0&ZZ_OPT=Y&numRecords=100&templateN
ame=%2FAST%2FMain%2FBelk_Primary%2FWomen%2FShop%2FSleepwear%2FRo
bes.jsp
Body Image. (2015).The University of Texas at Austin Health Services. Retrieved from
http://www.healthyhorns.utexas.edu/n_bodyimage.html
Dillards.com. (2015). Lingerie: Robes. Retrieved from http://www.dillards.com/c/lingerierobes?cm_sp=lingerie-_-dept+page-_101715+tile+7+image+robes&forceFlatResults=forceFlatResults
Krista. (2015). Trends for A/W 2015: NYC Lingerie Market Wrap Up. TheLingerieAddict.com.
Retrieved from http://www.thelingerieaddict.com/2015/03/trends-for-aw-2015-nyclingerie-market-wrap-up.html
Macys.com. (2015). Shop All Pajamas and Robes. Retrieved from
http://www1.macys.com/shop/womens-clothing/pajamas-androbes/Sleepwear_type,Pageindex,Productsperpage/Robes,1,All?id=59737&edge=hybrid
&cm_sp=us_hdr-_-women-_-59737_pajamas-%26-robes_COL1
New York Times, The. (2015). Inside Fashion Week Trend Watch: Robes Rule. NYTimes.com.
Retrieved from http://www.nytimes.com/interactive/projects/cp/inside-fashionweek/spring-2016/trend-watch-robes-rule
Shpanya, A. (2014, January 21). Pricing and Shopping - Price Sensitivity & Consumer Behavior.
Retrieved from http://blog.wiser.com/pricing-shopping-price-sensitivity-consumerbehavior/
True Colors - Breakdown of Color Preferences by Gender (2015). Kissmetrics: Analytics,
Marketing, and Testing from https://blog.kissmetrics.com/gender-and-color/?wide=1
23
Team 2:
Sleepwear/ Pajamas
24
Merchandise Classification
Table 1: Sales Plan
Sales Plan (Fall/Winter)
$
%
Women’s Lingerie
Department
$128,183,600
100%
Pajamas & Sleep Sets
$66,655,472
52%
•
Pajama Sets
$19,996,641.60
30%
•
Sleep Shirts
$14,664,203.84
22%
$61,528,128
48%
Other Merchandise
Table 2: Merchandise Mix
Sub-Classification
Pajama Sets
 Shorts Sets
 Pant Sets
Sleep Shirts


Light Weight
Heavy Weight
Price Points
$38, $58, $78, $98, $112
$38, $68, $98, $128, $160
$38, $58, $78, $98, $110
$42, $55, $65, $75, $85,
$95, $104
Brands
Bedhead, Cabernet,
Cassandra, Miss Elaine
Sleep Sense, Lucky Brand,
Kensie, N by Natori
-
25
In Table 1, we have broken down our sales plan for the women’s lingerie department.
We will spend $128,183,600 on the lingerie department as a whole. We intend to use 52% of
that on pajamas and sleep sets. From there, we have further broken down our spending based on
different categories throughout the department. 48% of our total will be spent on these other
categories. From our 52%, we will spend 30% on pajama sets and 22% on sleep shirts. In Table
2, we have listed our expected price points for pajama sets and sleep shirts. We have further
broken down the category of pajama sets into shorts sets and pant sets. We have broken down
sleep shirts into heavyweight shirts and lightweight shirts. We have also listed brands that we
intend to carry in our store and that we have carried in the past. Our prices are at market pricing
in order to remain competitive. We are keeping our pricing competitive with Belk and Macy’s by
offering a large range of prices for the many different kinds of shoppers we cater to.
Market Research
Our team went out into the field to visit our own store and our top two competitors,
Macy’s and Belk, to research and determine our similarities and differences compared to the two
other retailers. Table 3, below, gives background information on the retailer and locations of
store visits, as well as pictures of the store. Table 4 provides a description of each retailer and a
breakdown of each company’s retail mix. Charts 1, 2, and 3 displays visuals of the percentage of
each company’s category offerings in-store within their “Lingerie, Intimates and Sleepwear”
department. We found that we at Dillard’s put more emphasis on our lingerie in store based on
the high traffic location of our department and our amount of products within the department.
We believe that we cater to a larger target market. We offer a good mix of pajamas, bras,
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panties, and lingerie. Macy’s mainly only focused on their undergarments and shape wear in
store. Belk had a smaller variety and put their focus on the basics rather than trend. Since our
department encompasses all of these qualities we can cater to a larger range of customers. Our
store seemed to be the best kept in this particular location. We had nicer tile, carpet, and
lighting. Even though we excel in this area, we could probably still use some work to further
differentiate ourselves from the competitors.
Table 3: Market Survey Store Locations
Retailer
Address
Dillard’s
The Mall at Green Hills
2126 Abbott Martin Rd
#500 Nashville, TN
37215
Macy’s
The Mall at Green Hills
3813 Hillsboro Pike
Nashville, TN 37215
Picture
27
Belk
Village Mall
1627 Opelika Road
Auburn, AL 36830
Table 4: Retail Mix Elements
Retailer
Dillard’s
Retail mix Elements
 High-traffic
location just
inside the doors
 Equal selection of
national and
private labels
 Biggest variety
 Largest lingerie
area compared to
Macy’s and Belk
 Wide range of
price points from
affordable to
designer
Product Merchandising
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

Macy’s





Belk


Strong focus on
bras, panties, and
shape wear
Small department
area, tucked in
back corner of
store far from
entrance
Limited
assortment of
sleepwear brands
and styles
Mid-range price
point
Lingerie located in
middle of store
Smallest
assortment and
variety of all 3
stores
More even mix of
categories
compared to other
retailers
Affordable price
point
Focused more on
basics than
novelty and trend
Chart 1: Lingerie Product Category Percentages (Dillard’s)
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Dillard's
5%
15%
25%
15%
10%
20%
10%
Bras
Panties
Lingerie
Sleepwear
Robes
Hosiery
Shapewear
Chart 2: Lingerie Product Category Percentages (Macy’s)
Macy's
3%
7%
5%
15%
30%
15% 25%
Bras
Panties
Sleepwear
Lingerie
Shapewear
Hosiery
Robes
Chart 3: Lingerie Product Category Percentages (Belk)
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Belk
Bras
Panties
Sleepwear
Lingerie
Robes
Hosiery
Shapewear
Industry Trends
We are expecting our pajama sets and sleep shirts to have a positive market during the
Fall 2015/Winter 2016 season. During this time, many people are buying new pajamas for
cooler weather, as well as holiday themed pajama sets. Since many of the silhouettes for
pajamas are timeless, we will see a larger change in the color palettes we are seeing within the
market. Some pajama sets will stick with the traditional holiday colors. Our sales will most
likely begin increasing in November and then level out after Christmas time. Many families will
buy matching pajama sets as stocking stuffers, to wear in their Christmas card, or just as an
ongoing family tradition. These holiday pajamas are mostly made of pant sets, but are also
flannel and cotton sleep shirts. The colors we will be seeing a lot of in non-holiday pajamas are
the Pantone colors for the season. We are expecting to sell a lot of marsala, desert sage, dried
herb, Biscay bay, and reflecting pond this season. These color trends have already begun being
adopted in other areas of clothing. We also always plan to sell mostly neutral colors since our
target market includes many middle-aged women that don’t always like to take risks. Since the
weather is changing, we are expecting to sell less lightweight sleep shirts and shorts sets, but
since we do have many stores in the south, we still expect to sell a competitive amount.
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6 Month Buying Plan
Merchandise Plan
In order to determine the figures used in the 6-month budget plans (see appendix page 39
for 6 month buying plan) for our merchandise classifications, pajama sets and sleep shirts, our
buying team used the information developed in our business plan. We pulled numbers from the
FOR/MOR report in order to make sure we were getting an accurate number. We are planning a
slight increase in our gross margin for 2012. We have determined that sleepwear sales would be
highest in November and December because of the change in weather and because of the holiday
season. Customers will not only be shifting to warmer styles and fabrics, but these are also very
gift friendly items for the holiday season.
Pricing Plan
Our initial markup percent will be 50.35%. We decided on this initial markup percentage
by basing our figures off of the FOR/MOR report’s average initial markup percentage for
department stores and then adjusting it to make it fit with our department. We had to inflate our
mark up to allow for the current trend in increased markdowns. We know that consumers like to
think they are getting a good deal, so by starting our prices higher and marking them down
throughout the season, our consumers will not only be satisfied with our high quality products,
but they will also be satisfied with the deal they believe they are getting. This will make
purchases more exciting for our customers. For trendy items, we will mark them down after
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three to five weeks on the floor at full price depending on the speed of sales. We will start with a
10% markdown and then work our way down from there depending on rates of sales. For classic
styles and basics, we will keep them on the floor at full price for six to eight weeks before we
begin the markdown process. For the most part, our markdowns will be based on an item-byitem basis and the rate of sales. We are planning on having more markdowns around and after
the holidays as well. We will also utilize special markdowns for company cardholders. This also
creates buzz and keeps our customers loyal.
Assortment Plan
Pajama Sets
We are planning on spending a total of $17,647,805 on pajama sets for this cycle (for
assortment plan chart see appendix page 40). This is based on the BOM from August. We are
first breaking down our pajama sets into two styles. We will classify each set we purchase as
either a shorts set or a pant set. Since it is the summer time, we will be buying more shorts sets
than pant sets. Since some pant sets are lightweight we will of course still have those in our
assortment. We also will have a higher percentage of merchandise that are neutral colors such as
black, grey, and ivory/white. We will offer less merchandise in bolder colors because those will
only attract a certain type of customer. For sizing we have ordered more sized in mediums and
larges because we feel that is average. Since we offer a large range of pricing we have to split up
our assortment. We offer some high-end brands, but realize that not everybody is looking for
pajama sets that run for over $100. Therefore we are focusing most of our inventory in the lower
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price range, which begins with $48. We chose the assortment factors we did based on the
inventory we are currently seeing in our store and on our website.
Sleep Shirts
We are planning on spending a total of $17,647,805 on sleep shirts for this cycle. This is
based on the BOM from August. We have further classified our styles as lightweight and
heavyweight. Since it is the summer, we are investing more money in lightweight sleep shirts.
We are keeping a good selection of heavyweight because some people find those styles more
comfortable despite the weather. We are planning on offering more neutral colors since our
typical customer would be drawn to something they felt they could easily wear in any situation.
We are offering colors as well, but not quite as many. For sizing, we are offering larger
assortments for medium and large. We found that these sizes are the most common for our target
market today. We also offer a large price range. We realize that most of our customers aren’t
looking to spend over $100 on a sleep shirt; therefore we are only looking to spend 15% in our
higher price points. 50% of our assortment will at or right around the $38 price point. We have
chosen this assortment based on current inventory not only in store, but also on our website.
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References
Body Image [Blog Post]. Retrieved from
http://www.healthyhorns.utexas.edu/n_bodyimage.html
Pantone. Fashion Fall Color Report 2015. Retrieved from http://www.pantone.com
35
Appendix
Team 1
6 Month Buying Plan (Robes)…………………………………………………………………37
Assortment Plan for August 2016 (Robes)……………………………………………...……..38
Team 2
6 Month Buying Plan (Pajamas/Sleepwear)……………………………………………………...39
Assortment Plan for August 2016 (Pajamas/Sleepwear)……………………………………........40
36
6 Month Buying Plan (Robes)
37
August 2016 Assortment Plan (Robes)
38
39
6 Month Buying Plan (Pajamas/Sleepwear)
40
August 2016 Assortment Plan
41