Sweetn's

In January 1989, Sue Sparkes, owner of Sweetn's, a women's clothing store in downtown St John's, Newfoundland, was reviewing the data she had just received from her consultant. The data had been obtained from the 1986 census in order to update Sweetn's customer profile and to identify census tract areas from which the store should be drawing customers but was not. She needed this information before the spring sales period started. Further, she was contemplating opening a second store and was wondering if the data would help in making a decision with respect to location.

Background

Sue had started Sweetn's in 1980 after realizing that many of her friends were flying to Montreal and Toronto to obtain the classic styles they were looking for in women's clothing. Apparently, the selection and quality they desired were not available in St John's. Sue decided to open a store which offered excellent service, a good selection of high quality


This case was prepared by Mr. W Glenn Rowe, formerly of Memorial University of Newfoundland now at Tom A&M University where he is a doctoral student in corporate strategy. The case was Prepared for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management.

Copyright © 1993, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes, but all such reproductions must acknowledge the copyright. This permission does not include publication.


clothes that stayed in style for relatively long periods, and prices that enhanced the quality/service image she wanted to maintain. Her dedication to these principles, and her smart and instinct for survival" had enabled her to stay open during the recession in 1982-1983. She had effectively built the business to where she had approximately 1000 customers on her mailing list in 1984. In 1985, she had used 1981 census data to develop a customer profile which enabled her to build her mailing list to 3000 by 1988. Now that 1986 census data had been published, she wanted to update her customer profile to determine from which census tract areas she was drawing customers and from which areas she was not.

Sweetn's Clientele, Image and Competition

Sue considered that her two primary customer groups were non-working, affluent women, thirty-five years of age and older, and working women, twenty to thirty five years of age. These women spent- approximately $2000 per year on clothing for themselves with some of them spending at least $1200 per year at Sweetn's. Sue thought that both groups were extremely concerned with the quality of the clothes they wore and that working women, in particular, were very image conscious. To attract these women, she had designed her store interior to generate an atmosphere of quality, taste, and a high degree of personal service.

Sweetn's had initially offered a wide selection of women's clothing from leading designers such as St Jacques, Night Works, La Petite, Irving Nadler, Simon Chang, Alfred Sun& and Morton Myles. She was currently offering women's clothing from such designers as Liz Claiborne, Geiger, Toussaint, Jacques Veit, Nipon, Rouie, Della Spiga, Camice, and Pendleton. This selection change had been made in response to customer demand and the changing popularity of the designers.

The store's local competitors were aggressive, but few had remained in business as long as Sweetn's. Local competitors without Sweetn's staying power had created problems in the past. When they went out of business, they held aggressive closing out sales which adversely affected Sweetn's bottomline. Local stores with staying-power competed with Sweetn's on the basis of their convenient location (in the two large malls and the major downtown shopping area), generous credit term, quality and having styles that suited their customers. Previous research had indicated that Sweetn's main strengths were service, variety, quality and unique styles.

Retail Sales - Trends and Projections

St John's in Fact (1988), a publication available from the St John's Board of Trade, indicated that on average, families in St John's spent approximately seven percent of their total expenditures on clothing (in 1978, $1398 and in 1984, $2180). Sue suspected that the higher income families to which she catered probably spent more.

The Financial Post Canadian Markets handbook for 1987/1988 had projected retail sales in the St John's Census Metropolitan Area at $893 million for 1987 and $937 million for 1992. Sales had been $820.4 million in 1986 with $47.9 million spent in clothing and shoe stores. This had increased to an estimated $50.8 million in 1987. However, as shown in Exhibit 1, this increase in retail sales was expected to come from an increase in population. Per capita retail sales were projected to remain at $5400 from 1987 to 1992. Given the stagnant per capita retail sales, it was imperative that Sue identify census tract areas that were growing, in order to increase, or at least maintain, Sweetn's share of the women's clothing retail market.

Need for Updated Customer and Market Information

Sue had known she would not have the time to gather the information herself so she had hired a local market researcher to help her. She was expecting the consultant to give her some advice on how the data could be used. She was particularly interested in:

  1. obtaining a profile of her store's current customer base, and
  2. pinpointing areas which would represent key target opportunities for new customers.

She intended to use her customer mailing list to determine her store's primary (70 percent), secondary (20 percent), and fringe (10 percent) trading areas and to combine this with the profile to develop a direct mail campaign to reach her existing customers and to draw in new ones. Unfortunately, she had little money budgeted for research, and had been forced to combine census data available from Statistics Canada with her mailing list.

Sweetn's Trading Area

The consultant had used Sweetn's mailing list of approximately 30M names and addresses that were in the 28 census tract areas and randomly selected 300. These addresses were located on a map of the St John's area with the census tract areas superimposed on it and the estimated percentage and total number of customers in each census tract area were determined. (This information is given in Exhibit 2.) This enabled the consultant to determine Sweetn's primary, secondary, and fringe trading areas. Further, it demonstrated very effectively those areas from which Sweetn's was not drawing customers. In addition, it pointed out that although Sweetn's was located in area 007, it was drawing most of its customers from other areas. Sue knew that determining her prune trading area could help to identify those areas which were saturated and those from which she could draw more customers to achieve her. goal, of increasing her market share.

Social and Economic Characteristics of Customers and Non-Customers by Census Tract Areas

The consultant had gone to the university library and returned with census data (see Exhibit 3) for the twenty-eight tract areas closest to the store and with the Census Metropolitan Area map (see Exhibit 4) for St John's. The data included the following social and economic characteristics: total population, number of wives and lone female parents, number of employed females fifteen years and older, total number of females fifteen years and older, census family income, average value of dwellings, average income of females fifteen years and older, the incidence of low income, percentage of females fifteen years and older with post high school education, the percentage of those in high status jobs (such as managerial and administrative, teaching, medicine and health, technological, social, religious and artistic versus those in Jobs such as clerical, sales, service, primary processing, manufacturing and repair, and others), and the percentage of occupied private dwellings owned. The consultant had also determined the ratio of customers in each area relative to the number of wives and lone female parents and to the number of employed females fifteen years of age and older. (This is included as Exhibit 5.)

Preliminary Analysis

As Sue reviewed the data, she realized that Sweetn's was drawing its customers from some of the more affluent areas where female residents were well-educated and whose working women were in higher status jobs. She knew that distance from the store and lack of parking were not major problems for her customers. The store attracted six percent of its customers from the west end of area 016. To reach Sweetn's they had to bypass the Avalon Mall (located in area 004 in the area bounded by Thorburn Road, Prince Phillip Drive and Kenmount Road) to come downtown where access and parking were much less convenient. Sue wanted to attract female residents from the west end of the city, but recognized that they had to bypass the Village Mall (located in the north end of area 003.02 at the comer of Canada Drive and the Crosstown Arterial) to reach her store.

As she finished her cursory review of the data, Sue wondered what the consultant would have to say about these points and what other information could be discovered from a detailed examination.


Exhibit 1

Notes: 1. All 1987 figures are estimates.
2. All 1989 and 1992 figures are projections.

Source: The Financial Post Canadian Markets 1987/1988.

 Exhibit 2

Note: Total for all 28 tract areas equals 3021. Any error is due to rounding.

 Exhibit 3

 

Source: Statistics Canada

Exhibit 4

Census Metropolitan Area

Source: Statistics Canada

Exhibit 5

To be interpreted as 12.4 of every 100 wives and lone female parents in census tract 002 were on Sweetn’s mailing list.

Source: Company records