Marketing Channels & Retailing 04-02-2011

Strategic Re-Positionings Report

By: Benjamin GuichelaarGuusje van der Heijden

Marloes van KlaverenValentine Snoeren

V&D Strategic Re-Positioning Group 4

Executive Summary

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Introduction

V&D a well-known, 120 years old department store in the Netherlands consisting of 62

different shops thoughout the country.

Formerly known as Vroom & Dreesman, the concept has been a succes formula in the

Netherlands for more than an era.

With an assortment varying from fashion, food, non-food and multimedia, V&D attracts

approximately 1.8 million visitors a week in their off-line, physical stores.

V&D’s stores are located across The Netherlands and they have a broad store portfolio,

ranging from small, medium and large stores. Furthermore, V&D has a second strong

brand format: La Place. La Place is a food chain, not only situated within the department

stores but also on top locations throughout the country. As well as V&D’s department

stores, La Place has a broad portfolio, varying from La Place To Go and complete

restaurants.

Unfortunately, V&D had faced decreasing revenues over the last decade. Despite their

attempts to renew the store formula in 2006, changing their name from Vroom &

Dreesman into V&D and targetting a new, younger consumer group, the re-positioning

did not lead to any significant improvement.

Despite their in-store traffic and A-locations and the well-received new V&D brand by

the consumer, their is something else holding V&D from making profits.

Our goal is to investigate exactly what V&D has to alter in order to enhance their

position in the market and to eventually finish the re-positioning succesfully which had

started in 2006.

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Table of Content

Executive summary

Introduction

V&D-store profile

Current Trends

-Online

-Offline

Swot

Platform Development Model

Proposition Statement

- Key issues

- Problem statement

- Re-positioning proposition

Conclusion

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V&D store profile

Vision:

“Being the department store of the Netherlands”

Mision:

“The mission of V&D is to be again the most respected, admired and profitable

retailer in the Netherlands. Well known because of her inspiring products and her

outstanding service. Concerning the mission everything is focused on 100%

customer satisfaction. Marketing, HRM, assortment development and supply chain

management are carefully adapted to each other, as well as making sure employees

are working closely together. In this way an optimal output is created for customers,

employees, suppliers and shareholders “

History:

For more than 120 years, V&D is the most well-known department store of The

Netherlands. Established in 1887 by the catholics Willem Vroom and Anton Dreesmann,

the concern grew into the retailing concern that is nowadays world famous in Holland.

For a long time, V&D was market leader in departmentstores in The Netherlands.

Re-positioning:

However, in the beginning of the 21st century, V&D faced strong competition of other

upcomming warehouses such as HEMA, C&A and de Bijenkorf.

Their sales strategy of low and contstant prices became oldfashioned and the stores

outdated. This strong competition of new entrants resulted in the end of several

department stores throughout the country.

V&D attempted several store format changes from 2003 onwards, however a few were

actually succesfull. In 2007 V&D changed its logo and began renovating all the stores,

moreover, several stores were re-opened again.

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The new logo and new store format were a big hit amongst the customer as well as te

employees. The previous colorfull logo was replaced by a sophisticated black and white

one and the one by one the stores are ought to be renovated consistent to the new image

of the logo.

Another improvement was the more balanced mix of V&D’s private label and new,

exclusive brands that are presented in shop-in-shops.

All of these improvements are still under construction since there is not yet a unity

amongst all the V&D stores since the renovation process is slowed down.

La Place:

A strong and steady growing aspect of the V&D concern is La Place, a restaurant chain

which is a part of V&D. The first La Place restaurant opened its doors in 1987 in Utrecht.

Nowadays, La Place is one of the most profitable restaurant chains in The Netherlands

with 200 selling points in both The Netherlands and Belgium and an annual turnover of

145 million Euros.

General Overview:

V&D is the most well-known food and non-food retailer of The Netherlands, with

1.8 million customers and a increasingly growing webshop (250% expected

growth in 2011)

Food: 9.5% growth in 2010

Non-Food: 7% growth in 2010

Implementation of mass-media communication (smartphone application,

webshop, facebook, twitter)

Balanced assortment of private labels like, Essentials, Soho New York and LIV

combined with shop-in-shops; Sephora, Dixxons, MEXX and Mango.

The combination of food and non-food creates an experience for the customer

Low and constant prices

Lack of unity amongst all the department stores

Formerly owned by Maxeda, acquired by Sun Capital in 2010

Not profitable for 10 years (except 2010)

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Current Trends

Due to new technology and other changes in the shopping behaviour of the consumer,

V&D needs to take into account significant upcoming trends in order to adapt itself to

the changing market and environment. Below we have defined the most important

trends recognized for offline, as well as for online marketing by V&D.

Online:

Mobile e-commerce

Consumers feel the need to increase the use of e-commerce trough their mobile

phones. The most important possibilities under consumers at the current

moment are; purchasing online, searching online information about offers from

the competitors and to cash in coupons online. In order to provide these mobile

e-commerce possibilities V&D needs to make adjustments to their ICT system.

Cloud computing will be mainstream

The management of costs by ICT solutions trough the internet providing services

will be generally applied in 2011. Bear in mind the fast moving changes en

seasonal related demand; cloud-computing can offer V&D exquisite opportunities

Reduced influence of advertisement

Nowadays the consumer decision is made by the consumer themselves but also

by interacting with co-consumers. Think of discussion forums, review and

assessment sites, and social media.

This results in consumers that are less impressionable to advertisement,

shopping adds, advice and store personnel. Form the store, consumers want to

orientate on alternative purchases trough their mobile phones in order to make

their final purchase decision.

High value of security and compliance

The protection and security of personal information like national identification

numbers and credit card information is high valued by the consumers because of

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the increasing use of new technology. This means V&D needs to communicate

and insure their customers the security and compliance of their personal

customer information

Offline:

Decline and elimination of independent shops

Today consumers expect an integrated shop-experience, that includes cross

channelling of web shops and physical shops and vice versa, and the use of smart

phones.

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Platform Development Model

Current Situation:

We described the current situation of V&D below according the the Platform

Development Model (Retail&Branding, Michel van Tongeren). We divided each element

into positive and negative findings.

1: Experience

+

V&D can benefit from the role of La Place in the stores.

Combination of food and non-food attracts the

customer into the store

Shop-in-shops make the store dynamic and therefore

creates an exprience

- At the moment a visit to V&D is no experience

Customers do not have any expectations when entering

the store

The store is to fragmentated to name it an experience

V&D can benefit from the role of La Place in the stores

opportunity to create experience bringing food and

non-food together

Focus more on in-store dynamics: new technology,

interactive elements, “theme-weeks”, smartphone apps

2: Staff

+

Currently, approximately 11.000 employees

Training possibilities available

Helpfull when asked

Dressed properly; easy noticable

- Lacking proper transfer of know-how because of hiring

young temporary workforce

Training possibilities are not obliged, so not often used

Staff is constantly rushing, because most

shops/departments are understaffed

Because of the broad assortment, staff is constantly re-

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stocking and therefore not able to serve customers

3: Instore

Communications

+

Introduction of new logo is perceived well by customers

‘Prijzencircus’ is a well-known concept of V&D

Numerous folders are spread and are available in-store

Signposting is done properly. Install a shop-in-shop

around a well-known brand

- New brand-identity is not communicated well to

customer

New logo caused some confusion amongst customers

Too much themes and campaigns overlapping each

other

Too many folders are handed out too often; customer

and staff get confused

Store-map is often hidden; not visible enough

No/low music in-store

4: Visual

Merchandising

+

Goods are presented everywhere

Point-of-sale material available and identical at every

cashier

- Store windows are messy and do not attract customers

inside

Store windows are not lit well during night: even when

store is closed, potential customers do still

windowshop!!

Presentation of goods is fragmentated and unclear; too

broad assortment

5: Store

+

There are functional starting point visible. V&D is often

located at top locations and the store is designed in a

way that people have to walk thought the entire

groundlevel in order to reach another part of

town/street

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Because of the shelfs, that are designed in a way that

people can overlook the enitre store-level, the store

seems synoptic

The renovated V&D stores have a more luxurious and

tidy store design in comparison to the more old-

fashioned one’s

The La Place bakery is tempting customers to buy

because of the nice smell it produces

- The routing throughout the stores is not clearly

markedcustomers are not guided through the store in

a specific way which often causes confusion.

The design of the V&D stores in general is not very

trendy and attractive for the younger group they are

currently targeting

V&D is lacking the implementation of light and sound

affects in their stores. Music and specific colours/lights

stimulates buying behaviour

6: Mass-media

Commuications

+

V&D’s online-webshop recently boosted in terms of

sales

V&D uses a number of mass-media communication:

television, internet, leaflets, application for smartphone,

facebook, twitter

- The amount of leaflets is to high: customers get

confused by this mass-communication

V&D does not communicate the current themes and

campaign on the mass-media communication channels

enough

The online webshop has to be closely linked to the

facebook and twitter pagemake it a more interactive

experience

7: Location

+

V&D departmentstores are always located at A-

locations; city centre, easy accessible

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In the city center, the stores are designed so the

customers have to walk through the entire ground floor

in order to reach another part of town/street. This

creates a high in-store traffic

La Place is located at A-locations as well: trainstations,

busy streets, alongside highways

- Because of the walk-though design, people may not see

V&D as an eactual department store, but as a short-cut

8: Price

+

Affordable prices; everyone can shop at V&D

Promotions are common and promoted via leaflets

The introduction of the V&D VIP-card ensures loyal

customers of extra discount on their purchases

Affordable, yet exclusive brands (Sephora)

- The V&D VIP-card can’t be used at the online webshop,

which is currently boostingV&D can lose those loyal

customers

9: Assortment

+

Broad assortment available

Good combination of private label and shop-in-shops

Overall good quality

- Too broad assortment: causes confusion amongst

customer and staff

Product range is not cohesive; no fit between products

Too many bulked products

10: Service

+

If the customer isn’t satisfied with his/hers purchase,

they get a refund

VIP-card is an exclusive service

The smartphone application is an new technology

service

- No customizing available

No day-care/dog-watching or other complementary

services present in the store

The exclusive service of a VIP-card cannot be used via

the webshop

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Repairs are not done by V&D

Below you kan find the orginal Platform Development Model in figure 1. We graded the

different elements according our findings, stated in figure 2.

Figure 1.

Figure 2.

Obvious is that the element location is graded highest, with 10 out of 10 points. This is

because the stores are all located at A-locations. The elements with the lowest scores are

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store and mass-media communication. This is because, currently most V&D stores are

messy, confusing and non-consistent. In fact, they are not a union. The mass-media

campaigns V&D is currently communicating are outdated and not targetting the desired

customer group.

Other elements that scored low service and assortment.. Our ultimate goal is to revise all

those elements resulting in a proper recommendation in order to eventually increase

V&D’s revenu and make them profitable again.

Proposition Statement

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V&D’s attempts to alter their outdated image over the past decade didn’t succeed in an

optimal way. As stated above, (Platform Development Model and SWOT analysis) V&D’s

overall performance is lacking behind in several areas.

In order to change V&D’s current stagnating performance and to increase profitability,

we will first discuss the key issues that are holding down V&D at the moment.

After that, the formulated problem statement will be presented, followed by our

proposition statement for V&D

Key Issues:

We will first define the Key Issues in terms of the elements that scored relatively low in

the Platform Development Model explained in chapter 4.

Store:

Currently, V&D departments stores do not form a unity. The difference between the

already renovated stores and the other stores is too big which causes confusion.

Moreover, there is no clear unity within the stores. The departments in one store are too

different from one another.

Mainly because of this fact, visiting V&D cannot be seen as an experience for the

customers.

The lack of atmosphere in the store is due to the missing music and suprise effects.

Overall the store is too static, combined with a messy shelf here and there.

These missing factors explain why the stimulation to purchase is low, although the in-

store-traffic is relatively high.

After the implementation of the new V&D logo, that was designed in order to attract a

more younger target group, V&D did not live up to their promises. The interior and

design of the department stores are not trendy at all and mostly attractive to

housewives and older generations rather than youngsters.

Another aspect V&D has to work on is the groundplan, that is not very clear at the

moment. Customers are not stimulated to walk a certain route throught the stores which

again causes confusion.

Mass-media Communication:

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The communication channels that V&D is using at the moment are reasonably outdated.

For instance, V&D comes with a new flyer every week. In this cheap-looking leaflet, V&D

presents their discounted products and other promotions.

This abundance of information results in promotions overlapping each other in the

customers and V&D’s staff perception. Morover, the more discounts and promotions are

presented, the less willingly the customer is to immediately run to the store to buy a

specific discounted product, because “The product will be discounted again soon”.

In chapter 3 we elaborated some more on the trends for the upcomming year

concerning department store shopping behaviour. In the near future, customers are

expected to discuss their purchases on the internet via discussion panels/forums. This

development eliminates the power of on-screen advertisement and posters.

In terms of V&D’s target market, it would be a wise decision to look into the effects of

social media and what it can mean to create a new store identity.

After having a close look to V&D’s website/webshop, we came to the conclusion that

there men are somewhat left out in terms of advertisement. Same thing came across

when we looked at the twice-weekly send digital newsletters.

V&D does have a facebook page and twitter account, however, these are not clearly

linked to the webshop. V&D should make use of the social media channels in a more

optimal way in order to attract a younger target group.

Service:

Because of the fact that V&D is recently acquired by Sun Capital, some internal changes

are inevitable. We spoke to some employees in a V&D department store and they were

had concerns considering possible high employee turnover and the fact that V&D is

currently hiring young, temporary workforce that will reduce the transfer of know-how

within the company.

Many stores are over-stocked and that results in a decline in service. The staff is

extremely busy with re-stocking the empty shelves, and therefore has less time to

actually serve the customer.

Assortment:

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V&D is having troubles not only to create a union in the stores, but also when it comes

down to the product assortment they offer. V&D is a wharehouse where you can find

nearly everything you need, however, there is so much choice that customers eventually

decide not to make a choice at all.

The brand and product portfolia V&D offers is extremely broad, not only in terms of

quantity, but also in terms of quality.

V&D offers a mix of their private label brands (Soho New York, LIV, Yes or No) combined

with shop-in-shops and other famous brands (Benetton, Mexx, Mango, Sephora, Dixons,

Desigual, La Senza). The combination of private label and other brands is in fact a good

thing. The problem is that V&D fails to align these brands all together to create a union

in their assortment.

Moreover, the broad assortment causes confusion amongst employees and customers.

When you ask a staff member about a certain product that is on promotion, they usually

don’t know what you are talkin gabout or where the product is situated on the shelf.

Problem Statement:

V&D currently misses the connection with their target group. They are attempting to

create a fit between the stores and the customers wants, needs and desires, however

V&D is lacking in several areas.

Therefore, the problem statement for V&D is:

“How can V&D connects wit hits target group again in terms of image, communication,

trends and brand/product cohesiveness in order to make a visite to the physical or online

store an experience.”

In order to do so, We have created a re-positionings proposition for the retail concern in

order to solve the current problem.

Re-positionings Proposition:

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V&D must take immediate action in the area’s discussed in the key issues as stated

above. The lack of service, cohesiveness within the store and the assortment and

communication towards customers holds the V&D down and are causing the main

problems in terms of loss making and store perception.

We recommand the following changes for the retail concern:

Narrow down the amount of brands in the store and make sure that all brands

are coherently aligned with eachother to create a unity in the stores

Attract more exclusive and unique brands to spice up the dynamics in the store.

Sephora is a good example; affordable, yet exclusive since the V&D is the only

retailer that has permission to distribute the brand in The Netherlands.

Moreover we thought of the implementation of customizing within the stores to

create suprise-effects and to attract the younger generations. (e.g. Hire a grafitti

artist to the annual Schoolcampus to pimp the agenda’s/T-shirts)

Make the store overall more appealing to the customers; create a union with

clear groundplans and implement La Place more into the stores. (e.g. create small

stands next to new spring fashion and promote small dishes in the same seasonal

colours as the fashion)

Moreover, re-design the entrances. Lighten up the display windows and make

them attractive at night as well.

Get rid of the leaflets/flyers and in stead bring out a seasonal luxurious magazine.

A magazine is a better option than cheap-looking flyers for several reasons.

- a magazine increases the brand image

- the weekly flyers are confusing to customers, seasonal magazines are more

synoptic and clear for both the customer as well as the employees

- Magazines have a broad reach; they end up in customers houses

- Via a magazine, V&D can create a lifestyle experience, with background stories of

products, an interview with the head-designer of Mango and recipes. This

lifestyle experience will eventually be brought to life in the physical store.

- Nice fotoshoots can contribute to that life-style experience

Promote different theme-weeks/promotion-weeks and link them to a certain

“hot” topic. We suggest a “green-week”, that focuses completely on social

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responsibility and environmental conscious shopping behaviour. Implement the

V&D signature tree in this week and create a new lifestyle experience for the

customers. For example, give away recycled handbags together with the

customers purchase and make this a fashion item (attract a famous “green”

designer and let him/her sign the bags).

Focus more on the social media to communicate with the younger target group.

Link the website, facebook page and twitter account together to make it a more

interactive experience for the digital customer. Morover, make sure that the VIP-

card can be used via the website.

Another application that can be implemented for smartphones as a “hot-or-not”

app. Via this app, customers (targetgroup: teenage girls) can post pictures of

their purchases/V&D-outfit to the app so that their outfit can be ranked/liked by

other girls. In this way V&D creates an online community.

Increase the current service-level of the employees. Offer olbliged training-

sessions in order to secure the know-how transfer within the company.

Divide the targetgroup into subgroups (men, children, sports, electronic,

teenagers). Send out newsletters that are targetted to the right consumer group

in stead of focussing only on middle-aged women.

Conclusion

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Now that we have put our finger on the sour spots, we know exactly what V&D has to do

in order to alter their current instable position in the market.

The problem that V&D faces is not only a decrease of revenue over the past decade, the

store image of the retail chain has declined as well. In fact, you can call it a viscious circle

V&D is in at the moment.

V&D is the biggest, yet only loss-making department store in The Netherlands. If it

weren’t for the stable and steady growing La Place, V&D would most likely be bankrupt

by now.

Alongside with the internal stagnating performance of V&D, the external financial crisis

was not beneficial for the concern at all.

However, now the crisis is comming to its end, it creates opportunities for V&D.

Customers are willing to spend more on luxury items again and V&D can definately take

advantage of that tendency.

V&D has to focus on the experience they are giving their customers. The magazine,

theme-weeks and social media interaction are all aspects that have to be implemented in

the stores in order to actuallu create that life-style experience the customer desires.

Another important issue that needs attention is the overall cohesiveness and unity that

has to become the rule and not an exception. V&D has to align their new image which fits

to their logo with the assortment they are offering.

In our opinion, V&D has all opportunities to create that lifestyle-experience and

cohesiveness within their stores, as long as they are consistent, focussed and alert.

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