Tutorial 4 – (Question 1 – BBB Fashion)

BBB is a fashion retailer with a chain of 20 shops, each with its own manager. BBB believes it
can best compete by offering a wide selection of high quality products sold at a reasonable
price. BBB has trained all its staff in customer care and prefers to employ staff who have
worked for other fashion retailers.

As a large proportion of BBB's products are clothes which only remain fashionable for a short
period, it is important that good inventory control is maintained. BBB has recently invested in a
robotic system to improve materials handling in its warehouse.

As a service to its customers, BBB will deliver to their home, within 24 hours, any items bought
from one of its shops. BBB's competitors do not offer such a service. BBB knows that it has
demanding customers who appreciate the retail experience and after sales service which BBB
offers. If a customer has any dissatisfaction with a purchase, BBB will make a refund without
question. BBB frequently sends its regular customers special offers and invites them to fashion
shows held in its shops.

BBB’s head office is organised into departments which are responsible for the procurement of
products, setting of personnel policies, investigating innovations in fashion retailing and general
corporate administration.
BBB’s management accountant has been investigating the acquisition of high-tech ‘Smart Tills’
which would provide the following information for each shop:

‧ Sales transactions and analysis

‧ Staff statistics (sales per staff member)
‧ Gross profit
‧ Inventory turnover and balances
‧ Audit information (a database recording all transactions)

If BBB replaces its existing tills with Smart Tills, it will be able to better manage cash and
inventory and optimise its sales due to accurate real time information. This will have the benefits
of identifying and controlling wastage and improve the accuracy of its forecasts.
The overall advantages offered by the Smart Tills are that BBB will be able to react more quickly
to customer demand, ensure that it has sufficient stock in its shops, minimise wastage, reduce
its investment in working capital and enable its head office to know, on a real-time basis, how
well each of its shops is trading.

Required

(a) Explain how BBB could use Porter's Value Chain to achieve competitive advantage. Your answer
should give examples from BBB of the NINE activities in the value chain and explain how each one of
them could add value for BBB.
 (13
marks)

(b) Advise BBB how it could improve its profits by use of Smart Tills.
(4
marks)

(c) Recommend FOUR key stages that BBB should include in a plan to introduce Smart Tills into all its
shops.
(8