Dillards Womens Merchandise Department

Business Plan
Chandler Brun
Carmen Cantrell
Catherine Deist
Jamie Johnson

Table of Contents
Executive Summary
Business Plan

Pages 1-12

1. Company and Department Analysis

Pages 1-5

i.

Type of Merchandise

ii.

Company/Department Image

iii.

Strengths, Weaknesses, Opportunities, and Threats (SWOT)

iv.

Primary Competitors

2. Retail Strategy Analysis

i.

Market Segment

ii.

Target Market

iii.

Growth Trends

iv.

Retail Market Strategy

Pages 5-7

3. Financial Goals

Pages 7-8

4. Suggested Buying Plan

Page 8

References

Page 9

Executive Summary
Dillards Inc. began by opening its doors to the public in 1938 and has continued to
flourish for almost eight decades. Today, sound selling methods, keen attention of day-to-day
organizational details, alert selection of personnel and hard work are the key retail strategies
implemented to create one of the most popular department stores in the United States. Dillards
targets middle- and upper-middle income women. Dillards also carries men and childrens
merchandise, however womens apparel and accessories accounts for 40% of overall sales. On
top of name-brand merchandise Dillards also sells many different private labels to attract
customers. Womens apparel is the backbone of the company; therefore, it is important to
maintain a strong presence in this department. Success in womens will also allow Dillards to
remain competitive amongst the many department stores succeeding in the United States retail
market. Womens apparel turnover has fluctuated over the years and has steadily decreased
starting in 2013. This year Dillards plans to accomplish an increase in turnover for the womens
apparel departments. The average gross margin return on investment (GMROI) has also
experienced a drop in 2015; however, past trends dont indicate it will fluctuate very much.
Another goal for the company is to increase GMROI so that Dillards may reach its ultimate goal
of becoming to number one department store in the nation. Specifically, Dillards Inc. Auburn
womens department plans to accomplish $4,533,333.34 in Net Sales, 47.5% in Gross Margin
percent, 4.3 or higher in Turnover, and $3.50 in GMROI this Fall/Winter 2017 season. Some
additional marketing strategies, such as, following top trends, improving visibility through
advertising, and focusing on customer service, can and will be implemented to help Dillards Inc.
reach our goals in 2017.

Business Plan
1. Company and Department Analysis
i. Type of Merchandise:
The Womens Apparel Department features a wide variety and deep assortment of
merchandise. As stated in Table 1, the merchandise mix includes, dresses, tops, pants, rompers,
activewear, coats and jackets, sweaters, skirts, sweaters, jeans, and shorts.
Table 1. Type of Merchandise and Price Points
Dillards- Womens Apparel
Dresses

$49.00, $59.00, $79.00, $99.00, $149.00, $250.00, $388.00, $498.00, $598.00, $650.00,
$895.00

Tops

$9.00, $29.00, $34.00, $49.00, $59.00, $69.00, $88.00, $99.00, $149.00, $250.00, $398.00

Pants
Activewear

$34.00, $59.00, $75.00, $98.00, $150.00, $250.00, $299.00

$9.99, $25.00, $48.00, $68.00, $75.00, $98.00, $110.00

Rompers and
Jumpsuits
Coats

$79.00, $98.00, $110.00, $168.00, $195.00, $225.00, $288.00, $358.00, $398.00

Tunics
Jackets and Vests
Sweaters
Skirts

$39.00, $69.00, $98.00, $119.00, $139.00, $169.00, $229.00, $299.00, $348.00, $398.00,
$799.00, $1199.00
$44.00, $69.00, $98.00, $110.00, $159.00, $225.00, $279.00, $318.00, $398.00
$48.00, $68.00, $78.00, $138.00, $199.00, $229.00, $248.00, $295.00, $358.00, $398.00,
$478.00, $499.00, $525.00, $638.00, $698.00
$38.00, $68.00, $79.00, $88.00, $99.00, $108.00, $128.00, $148.00, $165.00, $188.00,
$218,00, $238.00, $298.00, $318.00, $338.00, $378.00, $398.00,
$40.00, $79.00, $98.00, $110.00, $125.00, $138.00, $168.00, $178.00, $198.00, $290.00,
$398.00, $598.00

Leggings

$28.00, $32.00, $58.00, $78.00, $89.00, $98.00, $114.00, $118.00, $135.00, $148.00,
$180.00, $198.00, $228.00

Shorts

$34.00, $39.00, $40.00, $54.00, $58.00, $59.00, $69.00, $78.00, $88.00, $89.00, $98.00,
$120.00, $130.00, $135.00, $140.00, $160.00, $175.00, $188.00, $198.00, $228.00

Capris/ Crops

$34.00, $44.00, $45.00, $55.00, $68.00, $78.00, $88.00, $89.00, $98.00, $108.00, $114.00,
$118.00, $128.00, $134.00, $138.00, $148.00, $158.00, $168.00, $178.00, $198.00, $208.00

Ponchos

$30.00, $40.00, $50.00, $64.00, $69.00, $73.00, $83.00, $88.00, $98.00, $118.00, $128.00,
$138.00, $150.00, $175.00, $185.00, $218.00, $230.00, $398.00

Capris/Crops

$34.00, $45.00, $49.00, $55.00, $68.00, $78.00, $88.00, $99.00, $108.00, $114.00, $118.00,
$128.00, $134.00, $138.00, $148.00, $158.00, $160.00, $168.00, $178.00, $198.00, $208.00

Shrugs and
Cardigans

$48.00, $49.00, $58.00, $59.00, $98.00

Jeans

$40.00, $59.00, $69.00, $79.00 ,$89.00, $99.00, $110.00, $124.00, $134.00, $159.00,
$169.00, $179.00, $185.00$245.00

ii. Company/Department Image:

We are considered a tier two department store chain that aims to deliver style, service,
and value to [our] shoppers by offering compelling apparel, cosmetics, and home selections
complemented by exceptional customer care (Dillard's, 2016). Department stores are
characterized by having a broad variety and deep assortment, which we most definitely have. We
provide our own private label brands, such as Antonio Melani, Gianni Bini, GB, Roundtree &
York, and Daniel Cremieux, as well at well-known national brands, such as Michael Kors,
Calvin Klein, Kate Spade New York, and Lauren Ralph Lauren to name a few.

iii. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis:

Table 2. SWOT Analysis of Dillards

Strengths

Weaknesses

Employees are 38,900 which is a

strong asset. The more employees that
the more the customer relationship can
be improved through excellent
customer service
Provides a wide variety of apparel
goods in all stores
Revenue performance is good with a
good financial position
Present in 330+ number of locations
Dillards Inc. has strong customer
loyalty; they only need to target new
customers in order to grow their
business
Dillards Inc. had a strong brand name
allowing them to charge higher prices
for their products because consumers
place value on the brand.

Opportunities

Dillard's closed their travel agency,

Dillard's Travel. By closing this
branch they have ended the possibility
of expanding the business into the
travel world.
Global presence with respect to
leading global players is less
Dillards does not take advantage of
all advertising opportunities.
Dillards caters to a limited target
market. When the economy is bad
consumers are less willing to shop at
higher priced retailers.

Threats

Expanding domestically. Currently

Dillard's Inc. is located in 28/50 U.S.
States.
Acquisition of smaller retail chains
More visibility through advertising
Aland customer focused services

Capital investment in land is very

high, Bottom line contribution is low,
Equity base is high (Dillards, 2016)
Dillards has several direct and
indirect competitors in the industry
Brick and mortar stores are suffering
in the current economy due to the
growth in online retailers

iv. SWOT Analysis Overview:

Based on the SWOT analysis, we have a strong brand image however it is not being used
to its full potential. One strength that we possess is our strong brand names. Consumers are
willing to spend more money for the higher quality goods that we provide, however not all
possible customers are being reached. Not reaching customers through advertising is one of our

weaknesses. We need to improve both our global and advertising presence in order to keep up
with competitors. We have a lot of untapped potential in the domestic market and it is an
opportunity that should be explored considering we have stores located in 28 out of 50 of the
United States. We employ a significant amount of people making it possible for growth and
improvement in the company.
v. Primary Competitors:
Three of our top competitors are Kohls, J.C. Pennys, and Macys. All three competitors
target a similar market to us, that being women, ages 30-60. All of these competitors carry
similar merchandise and brands at price points that are similar to ours. Kohls, J.C. Pennys, and
Macys are also some of the most well-known department stores in the nation. Kohls has 1,162
retail stores located in 49 states throughout the United States. Kohls stores are especially
concentrated in the northeast region. Kohls carries less variety in brands and assortment than us.
Also, Kohl's stores are much smaller in square footage at 88,000 square feet per store compared
to the anchor stores of Dillards, J.C Pennys, and Macys median 150,000 square feet per store
(MacCrate, 2010). JCPennys has a much larger presence than us with over 1,100 stores
nationwide compared to our approximate 330 stores (Wyatt). Macys has 769 locations scattered
nationwide with the highest concentrations in the northeast and south (Macys, 2016). We do not
have a strong rewards program that promotes customer loyalty like our competitors Kohls and
Macys, however we are very relatively successful in sales promotions (Wyatt).
In 2015, we fell behind all three of these competitors in net sales but had the highest net
profit margin of the four. We have a higher return on assets than our competitors. This means
that we receive more profit per investment than our competitors. We have developed a
sustainable competitive advantage through our exclusive private label brands. We also have

pride in our outstanding customer service (Hudspeth, 2016). We will continue to provide high
quality private label brands and improved customer service in order to maintain a sustainable
competitive advantage against our top competitors.
2. Retail Strategy Analysis
i. Market Segment:
Dillards Department Stores are located predominantly in the southern United
States. Our store is located at the Auburn Mall in Auburn, Alabama. In this region, the climate is
a strong driver for retail consumption. According to the Encyclopedia of Alabama, the climate
of this region is characterized by long hot summers, mild winters, and year-round precipitation.
We meet consumer needs by changing merchandise seasonally as the weather changes. While we
keep a high stock of cooler clothes to accommodate the hot and humid climate, we keep lower
stock of heavy winter outerwear because of the mild winters in this area. Our store provides an
assortment of merchandise for all ages of both men, women, and children. Our largest sales are
from middle class women ages 16-60. Consumers in the South generally have more conservative
views making it important that our store is filled with more modest styled clothing. Consumers in
this area are also more concerned with practical and affordable clothing than with high-fashion
so we provide a large assortment of staple merchandise to fit their needs.
ii. Target Market:
Our main target market is middle and upper-middle income women (Hudspeth 2016).
Our assortment includes much more than womens merchandise, however, womens
merchandise sales accounts for 40% of sales.

iii. Growth Trends:

Our sales trends have mostly been positive over the years. In 2013 we had a 5.50%
increase in sales from the previous year. However, from 2013 to 2014 our net sales decreased by
0.89%. We made up for it the next year by increasing sales by 1.32%. Overall, our sales have
increased, but we definitely need to focus on maintaining our sales and hopefully increasing
them at least 1% every year. We believe that our sales will continue to grow over the years if we
continue paying attention to the market and adjusting for major changes instead of just sticking
to what weve always done. If we begin appealing more to the millennial market we will grow
quickly.
Table 3. Sales Trends for Years 2012-2015

iv. Retail Market Strategy

With our store being located in Auburn, Alabama, the home of Auburn University, we
appeal to a market of college students. Since most of the population in Auburn, Alabama is of
college age, our merchandise is aimed to please that demographic. Our involvement with the
Apparel Merchandising and Design program allows us to stay in close contact with both
students needs and the faculty of Auburn so that we have an influence in the fashion programs
here in Auburn. We aim to keep this demographic involved any way we can so that we can

attract more of that market to our stores. With our moderately priced clothes, we are able to
satisfy this target customer. Our products range from athleisure, to business professional so we
are able to satisfy the needs of each customer. Within Auburn, we are one of the only large
department stores in the area. To maintain customer loyalty we need to continue superb customer
service, alter marketing tactics to fit our target market, including new forms of social media, and
having in store displays and designs that appeal to our target market and make them want to
purchase those items.
3. Financial Goals
According to the Retail Owners Institute, womens apparel benchmarks have fluctuated
over the years. Gross margin has remained pretty constant over the years, ranging from 45.0%48.1%, so we expect our gross margin to be 47.5%. Our sales over all our departments has
remained pretty steady over the years. With this steady increase we expect our sales in 2017 to
be $6,800.00 million for all of our stores. However, just our Auburn store will be one out of 300
stores, and the womens department accounts for 40% of sales. Our annual sales are expected to
be $9,066,666.67, therefore just our Fall/Winter 2017 sales will be $4,533,333.34. Womens
apparel turnover has fluctuated over the years. In 2013, turnover was 4.2 and has steadily
decreased to 3.4 in 2015. After this steady decrease, we would like our turnover to be either 4.3
or higher. The average gross margin return on investment or GMROI was increasing until 2014
and hit $3.49, then dropped to $3.02 in 2015, according to the Retail Owners Institute. We dont
believe it was rise to what it was, and our past trends dont indicate it will fluctuate very much.
Our goal is to get our GMROI up to $3.50. We think this is attainable from our gross margin
return on investments in the past.

Table 4. Financial Summary and Planned Sales for 2017

Year GM%

Planned Sales for 2017

Planned Sales

2016 35.59% $6,754.55 million

2015 36.98% $6,780.13 million

GM%

47.5%

Turnover

4.3

Planned Net Sales $6,800.00

2014 36.88% $6,691.78 million

2013 37.09% $6,751.60 million

Planned GMROI

$3.50

2012 36.85% $6,399.77 million

4. Suggested Buying Plan

The two classifications we are going to focus on in our buying plan are activewear and
dresses. In the Auburn store, activewear is extremely popular due to our location in a college
town. Activewear is worn to class, to the gym, and out running errands. Athleisure is such a
prevalent trend we have to capitalize on. However, dresses are also popular when college
students or young professionals need something for a special occasion. Therefore, we are
estimating that activewear will account for 30% of the department sales and dresses will account
for 20% the department of sales. The other 50% of the department sales will be other items
within the womens apparel department such as hosiery, suits, nightwear, and other casual wear.
Table 5. Planned Sales Allocation

Classification

Planned Sales (%)

Active

30%

Dresses

20%

Other

50%

TOTAL

100%

References
Chaney, P. L. (2013, June 12). Climate. Retrieved September 13, 2016, from
http://www.encyclopediaofalabama.org/article/h-1283
Dillards Inc. (2015). Dillards. Retrieved from
http://investor.shareholder.com/dillards/annuals.cfm
Georges, N. Millennials & The Impact on Retail. (2015). LinkedIn. Retrieved from
https://www.linkedin.com/pulse/millennials-impact-retail-nancygeorges?articleId=6082031790120251392
Hudspeth, C. Dillards Inc. (2016). Hoovers. Retrieved from
http://subscriber.hoovers.com.spot.lib.auburn.edu/H/company360/overview.html?compan
yId=10463000000000&newsCompanyDuns=004867198
MacCrate, J. (2010, July 15). MALLS, ANCHORS & CAPITALIZATION RATES: AN
EXCELLENT QUESTION. Retrieved October 10, 2016, from
https://realestatevaluation.wordpress.com/2010/07/09/malls-anchors-capitalization-ratesan-excellent-question-4/
Overview - Macys, Inc. (n.d.). Retrieved October 10, 2016, from
https://www.macysinc.com/for-investors/store-information/overview/default.aspx
Womens Apparel Stores Benchmarks. (2016). Retail Owner Institute. Retreived from
https://www.retailowner.com/Benchmarks/Apparel-Accessories-Stores/WomensApparel-Stores#287027-turnover
Wyatt, M. (n.d.). JCPenney Vs Kohl's Vs Dillards: Department Stores Compared. Retrieved
October 10, 2016, from https://departmentstores.knoji.com/jcpenney-vs-kohs-vs-dillardsdepartment-stores-compared/