The problem with Talbot in 1997 seemed to be partially from both flawed strategy and execution. The first reason why I think their strategy is flawed is because they didn't think about the effects the new strategy would have on it's existing customers.
Talbot failed to clearly define their target audience. If they could have just secured their best customers and let go of other customers Talbot could have avoided this incident. By just focusing on its core customers and serving them better Talbot could have made more profits.What Talbot did was they wanted to expand their customer base and target young hipper crowds.
By doing so it apparently defected their core customer to other competitors. Because of this Talbot was unable to sell a lot of its merchandise which led to share prices fall from $1. 91 to $0. 81. The problem with executing this strategy was that they tried to sell these other merchandise in the same stores. If they wanted to expand their customer base Talbot should have opened up new stores with a different name that focused on young hipper crowds.
Instead of marking down prices they could have just transferred the younger assortment of merchandise to their new store with different name. This could have prevented their core customers from deflecting from Talbot since it would have not interfered with the taste of older customers and the stock price wouldn't have dropped drastically. Has Talbots fixed the problem? Talbots started taking immediate actions as soon as they realized problems with their merchandise offerings in 1997.They reviewed their upcoming merchandise to bring it back to classic.
To realize this problem they did a market research and took customer surveys. From the survey Talbot learned that younger customers liked the colors and styles but were concerned about the price whereas older customers were concerned about the colors and length of the skirt. By doing this research they were able to define their target customers. The second thing Talbot did was to involve more people into the organization by revising their merchandising process.
Thirdly Talbot made sure that everyone in the organization understood who their core customers were and committed to serve them better. Finally they reached out to core customers through focus groups and personal attention. CEO Zetcher promised Talbot would bring back the classics. Talbot wrote letters to their top 100,000 customers to check out their stores for newly returned classics for fall of 1998.
They also offered these customers scarf as a compliment when they visited their store. Talbots also did a lot of advertising through television and print media.Not only did Talbot work at a corporate level to fix this issue but also the sales associate worked harder to build long term relationships with their customers. Who was Talbot’s customer? How does Talbot’s store operations and supply chain support that customers? Majority of Talbot’s customers were in the age range of 35-55 and they had an above average household income. Their customers were very loyal to the brand and paid full price for their purchases and were repeat customers. Some of these customers have shopped with Talbot for much of their 50 year history.
Talbot had a very strong customer orientation and did what is right for the customer. They offered their customers with unconditional guarantee and would take back merchandise with no time limits and exceptions. With this unconditional return policy majority of their customers were satisfied with their purchases and returns were slim is to none. To provide their customers with efficient service both store and telemarketing associates went through ongoing training for product and styling knowledge enabling them to answer customer questions.Talbot’s stores had a welcoming residential feel and their sales associates received extensive training in both customer and merchandise content.
The associates were required to greet the customers within a minute of entering and ask specific questions to satisfy the customer needs. Talbot’s catalog operations were fully integrated with its store operations and items could be returned to the store to save customers time and cost of shipping. Their automated inventory search program allowed them to locate an item instantly that was out of stock.Using “Red Line” telephone located in every U. S stores Talbot connected with their customers instantly. Those who used this service were offered reduced shipping and handling charge.
Talbot also made sure their assortments were fresh and aligned with lifestyle and fashion trends. Their merchandise process was driven by a merchandising team that consisted of a New York based product development office, the buying and production planning staff, manufacturing staff, technical and design staff. Talbot’s 13 week planning cycle involved five major decision points.This process was followed four times a year.
The styles for all merchandise were developed on previous year sales history and current fashion trends for each of the company’s two main seasons. Talbot merchandise development office oversaw the preliminary conceptualization of the design and the buying staff provided the estimates of merchandise requirements. Then the initial product determination concerning styling, color, fabrication and deliveries were aligned with departmental needs and plans. Then full assortment was selected, edited and reviewed both for store and catalog.Finally a financial plan was formalized and manufacturing plans approved. How should Talbot’s grow in the future? The best bet for Talbot to grow in the future is by serving their loyal customers at their best.
According to the survey conducted by Talbot 87% of their customers preferred classic clothing compared to trendy ones. Their customers also prefer clothes that are more tailored than latest fashion. In order to capture a larger market Talbot should also consider some discounted price since 74% of prospects said they were more likely to shop at discount and off-price stores.As I previously mentioned Talbots should open up new stores with different names and offer products that are catered to attract other customers such as young hipper crowds. This will prevent interferences with their already older loyal customers. For more growth opportunities they should also open new concepts such as men’s stores, bath and body store, etc through acquisition.
Mergers and acquisitions will be a great option for Talbot for entering new markets since the acquired company will have brand recognition in the market.Their online electronic commerce site also seems to be booming since they kept track of the past purchases of the customers and offered accessories that went along with particular clothes. Talbot data also showed a significant presence of new customers visiting the stores though majority of their customers were from the past. They should conduct more market research to find out how they can satisfy the needs of the past customers and the future customers.
By attracting the right customers to Talbot stores they could financially perform well in the long run.
