B Y: J A M E S M U R R AY

Williams-SonomaPEST & Industry Analysis

William-Sonoma Inc and W/S Division Overview

Company- 5 Divisions Williams-Sonoma Williams-Sonoma Home Pottery Barn Pottery Barn Kids West Elm

Over 250 stores in USA(All 5 Brands)

16 in Canada, 2Puerto Rico,(Pottery

Barn/West Elm) 6Middle East(Pottery

Barn/Kids)

Kitchen Retail Division

Specialty retailer of products for the kitchen established in 1956

Total sales of $787 million (2009)

Williams-Sonoma makes 42% of the sales in retail

All stores in US

Pest Analysis

Political/Legal

Trends Explanation

Minimum wage legislation Higher employee turnover, lower profits

Healthcare Bill Increase costs, lower profits

Political instability in Middle East Hurt future opens of new store

Economic

Trends ExplanationEconomic recession in USA since 2008

Lower Disposable Income

Change in food Distribution in USA

Higher percent spent on groceries could create rise for better utensils/ pots & pans

Higher Oil Prices Higher Distribution CostsHigher Product Costs

Commodity prices increase Higher price for materials

Rise in food costs Could increase make it yourself (bread machines, pasta machines)

Social/Cultural

Trends Explanation

On the move society Easier to buy food than make it

Rise in Cooking shows on tv (Food Network, Cooking Channel)

Encourages home cookingUse of better cooking equiptment

Technological

Trends Explanation

E-commerce Online sales

Mobile Shopping Compare prices on your phone

PEST Summary

Factor Trend Evaluation Impact(1=low,5=high)

Rank of importance

Political Healthcare billMinimum WageMiddle East Politics

TTT

234

4

Economic RecessionHigh Oil PricesFood CostsCommodity PricesDistribution of Food

T/OTOT

T/O

33434

1

Social On the move societyTV Networks

TO

24

3

Technology

E-commerceMobile Shopping

O/TT/O

44

2

•RELEVANT I NDUSTRY

•PORTER’S F I VE FORCES

Industry Analysis

Defining the Relevant Industry

Any company that does business dealing with the specialty products that are used in kitchens at home or at restaurants.

Competition grows depending on the geographic region based on prestige of location. (ex. New York)

Threat of New Entrants

Nature of Barrier

1. Supply-side economies of scale Medium

2. Demand-side benefits of scale High

3. Capital requirements High

4. Incumbency advantages independent of size

Medium

5. Customer-switching costs Low

6. Unequal access to distribution channels

Low

7. Restrictive Government Policy Low

Power of Suppliers

Weak supplier power because of many vendors

Vendors offer very differentiated products

Forward integration possibly but not likely due to accessibility and exposure

Power of Buyers

Weak buyers power

Many vendors with strong differentiation

Low volume of purchase due to high price of stocking fee

Buyers can be price sensitive

Threat of Substitutes

Down payment on a car Video game console

Rent HDTV/3D tv

Date night Clothes

Vacation Gas

Intensity of Rivalry

Black Friday Sales/Cyber Monday

Warranties are available

Product variation

Industry Analysis Summary

Factor Evaluation

Threat of New Entrants Medium Force

Suppliers Power Benign

Buyers Power Medium Force

Threat of Substitutes Strong Force

Intensity of Rivalry Medium Force

Conclusions

Becoming more focused on technology trends

Try an focus on getting a partner to help promote healthy lifestyle

Predict cost of government regulations

Conclusions

Limit the number of suppliers

Try and create niche market

Keep an eye on what is going on in the Middle East

B Y: J A M E S M U R R AY

Williams-SonomaCompetitor & Market Analysis

Key Competitors

Sales(in millions)

Net Income (in millions)

GenericStrategy

Brands

Williams-Sonoma

$3,102.7 $77.4 Differentiation

Kitchen Aid, Cuisinart, All Clad, Calphalon, Demeyere, Le Creuset, Mauviel, Nordic Ware, Ruffoni, Staub, Fiberware, Bialetti, Anolon, Martha Stewart

Bed Bath & Beyond

$7,828.8 $600 Differentiation/Low Cost

Pier 1 $1,290.9 $86.8 Differentiation

Macy’s $23,489 $350 Differentiation

Brands

PremierAll Clad(ws,bbb,m), Demeyere(ws), Le

Creuset(ws,bbb,m), Mauviel(ws)Average

Cuisinart(bbb,m), Calphalon(ws,bbb,m),

Ruffoni(ws), Staub(ws),

Anolon(bbb), Farberware(bbb)

CheapKitchen Aid(m),

Nordic Ware(ws,bbb), Bialetti(bbb),

Circulon(bbb,m) Martha Stewart(m)

Strategy

W-S: Continue to grow both in the US market and internationally

BBB: Customer service, variety of products, infrastructure, new products

Pier 1: have a unique buying experience as if you were in the country of the product

Macy’s: Assortment, Value, Shopping Environment, Marketing

Assumptions

People will always want to have nice things in their kitchens

People will spend moneyRetail market will continue to be a huge part

of this economy

Objectives

W-S: figure out which way they want to enter the international market, continue to grow e-commerce business

BBB: continue to be the market leader and how to stay ahead of the competition

Pier 1: product extension, being able to stop the bleeding

Macy’s: continue to grow the Macy’s name and also the Bloomingdale’s brand name

Resources

BBB: product variety, entrepreneurial ways Pier 1: Red floors, only authentic global

importer of home furnishingsMacy’s: Well known department store

nationally and internationally , been around for over a hundred years, big events like the Thanksgiving day parade.

Strategy Business Groups

Large

Small

Size

of

bu

siness

General

Specific Target

WS

MO

SIR

I

UDS

GSMS

I-Internet

WS-Williams-SomonaMO- Mail OrderUDS- Department StoreGSMS- General Supermarket Stores

SIR-Solely Independent Retailers

Competitors Compete

Warranties on products mostly appliances

Knowledge of the sales person with the products

Variety of products

Scope & Core Competences

Product scope: Cookware, Cutlery, Electrics, Bakeware, Accessories (low-high end)

Geography scope: W-S in high end malls, BBB and Pier 1 in strip malls, plazas

Core Competences: Having knowledge people who understand what the products do and how to use them.

Performance

W/S- Growing, they have been able to refine their distribution channels and cut cost from this, also the expansion into Middle East.

Pier 1- Declining, having a hard time adjusting to the bad economy, having to close stores.

BBB- Unchanged, have been able to make it through bad market and have a lean process so they didn’t need to do much changing with company.

Macy’s-Company growing, Kitchen division unchanged because they usually get their money during peak wedding season.

Market Analysis

Market Size

Market size for the retail business in 2009 was $4.13 trillion

Key Trends

Retail market is on a decline

“Green” products and business

Growth and Size

Net revenues Declined in 2009 by 8%Retail market declined by 2.5% in 2009

Target Market

Ages 25-40

Income between $35,000 – $70,000

Men and Women

Market Segmentation

Divided target market into three groups Beginners Everyday Cooks/Party Planners Chefs

Social Media

Facebook page has good interaction between customers and Williams-Sonoma

Offer recipes

Customers are the ones posting things about the products in the stores

Conclusion

Have a better understanding of the E-commerce business and social media compared to its competitors and are in-touch with their online customers

Have more premier cookware and less of the cheap stuff

Are following trends of more online than traditional retail even though traditional makes up most of their sales.

Conclusion

Continue the pursuit of becoming international

Continue to gain market share from Bed Bath and Beyond while continuing to cut costs and raise the bottom line

BY: JAMES MURRAY

Williams-SonomaInternal Analysis

Business Model

Specialty retailer of products for the kitchen.

Offer both direct-mail and direct-to-consumer segments

Offer restaurant quality products for the home cook

5 Year Performance

2007 2008 2009 2010 2011

Net Revenues 3.72 B 3.94 B 3.36 B 3.10 B 3.5 B

Net Earnings 208,868 195,757 30,024 77,442 200,227

# of Stores 254 256 264 259 260

Distribution

Mainly in the US

Have franchise agreement but no locations were reported for the Williams-Sonoma Division

International Markets

Have a franchise agreement with M. H. Alshaya, a Leading Retail with ties to the Middle East, Turkey, North Africa, Cyprus, Russia, Poland, Slovakia, Czech Republic

This is a recent agreement but they have not opened any Williams-Sonoma stores yet. They are testing these markets with their Pottery Barn and Pottery Barn Kids brands

Key Asset

I believe one of the key assets to this company is the fact they take the selling of the kitchen products to the next level by offering cooking classes for all ranges. This is something that the competitors are not doing.

TrademarksCopyrightsTrade dress rightsDomain namesPatents

Value Chain Analysis

Primary Activities: Marketing and Sale, Service Marketing is done mostly by targeting a niche Sales is where the most value is created because the

sales person can tell you what you most need to know about the products and better fit with what you are looking for

Service is also up here because after you purchase your product, then you have the opportunity to attend W/S cooking classes to get used to using your new product

Supporting Activities: Procurement Giving the purchaser the best possible total cost of

ownership for the best possible value that the consumer is looking for

Ansoff’s Matrix

Main focus should be on market penetration In US retail market,

have franchise agreement to go into the Middle East

Trying to expand current products international

International Future focus will be

more about market development in Middle East

Market Penetration

Product Development

Market Development

Diversification

Current Products

New Products

Cu

rren

t Mark

et

New

M

ark

et

BCG Matrix

High

Market Growth Rate

Low

High

Relative Market Share

Stars

Cash Cows Dogs

Question Marks

Low

Williams-Sonoma is second in market share behind Bed, Bath, Beyond. Growth is this industry is small but with this recent bad economy more market share has become available

Generic Strategy C

om

peti

tive

Sco

pe

Competitive Advantage

Low Cost Higher Cost

Bro

ad

Narr

ow

Overall Cost Leadership

Differentiation

Cost Focus Differentiation Focus

•Higher Cost Competitive Advantage: • Offer high quality

products for the kitchen

•Broad Competitive Scope• Even though they only

sell kitchen products, the company as a whole sells to many different areas. This is just on area of focus for the Williams-Sonoma Inc.

Strategy Clock

No Frills

Low Price

Differentiation

Hybrid

Strategies Destined for Failure

Focused Differentiation

Low

Perceived Service Benefits

Price

High

High

Focus on differentiation and have a higher price value then then its competitors. Not focused on focused differentiation even though that is closer to the higher price point which is where W/S is

SWOT

Strengths Weakness

•Offer Cooking Classes•Knowledgeable Staff•Offer higher Quality Products than Competitors•Divided Brands to give better selection of products•Offer catalogs for customers who are not up to date on technology

•Since stores are divided may require driving to other store to get what you need•Catalogs increase paper costs which in the green era is looked down on

SWOT

Opportunity Threat

•Food Costs-make it yourself instead of buying it

•TV Networks

•E-Commerce-Continue to build up online shopping in hopes of reducing mail catalog

•Healthcare bill-Higher Costs

•Middle East Politics-Franchise Agreement

•High Oil Prices-Higher distribution and product costs

•Commodity Prices-higher product costs

•On Move Society-little time for home cooking

Conclusion

Sales in the last five years have been up and down

Are trying to go international with franchise agreement but with the instability of the Middle East is slowing the process of growth of the Williams-Sonoma brand

Add value to company because they are the only one who offers cooking class to better influence the buyers process

Conclusion

Growth opportunities are going to come from alliances, mergers, and acquisitions

Focus on market penetration in both US market and international

Continued focus on differentiation strategy