The Merchandise Plan Project
I. Store Facts
The General Facts of Express
Express was founded by Leslie Wexner in 1980 under Limited Brands. Leslie
Wexner holds a bachelors degree from Ohio State University. Back in 1963, this
billionaire borrowed $5,000 from his aunt to start his business, Limited Brands. Currently
the CEO running the company is Ken Stevens and a step down is Paul J. Raffin, the
president. The Limited Brands is an organization of three major business sectors: lingerie,
beauty and care, and apparel. Express and The Limited are the stores that make up the
apparel sector. The corporation is made up of the seven up-scale retail stores: Victoria’s
Secret, Bath & Body Works, Express, Limited, Henri Bendel, White Barn Candle Co.,
and Aura Science. In the past, Limited Brands have also owned: Limited Too,
Abercrombie & Fitch, Structure, Lane Bryant, and New York Lerner. As for Limited
brands, it was named the most admirable specialty retailer in FORTUNE magazine in
2003.
Currently Express is not international and is only currently located in US regions,
there are currently 884 Express stores. The first Express store opened in Columbus, Ohio.
There are currently 225 Express Men’s stores; the first was introduced in 1987. There are
currently 200 dual gender stores. Express stores underwent a major reconstruction in the
mid 1990s to carry a more sophisticated look instead of the mid 1980s image.
Express is an up-scale fashion brand with the latest sexy, luxurious, and
sophisticated trends, designed particularly for every occasion possible for young men and
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women. A huge part of Express is known as a popular private designer label for young,
working, trendy professionals who are into fashion. Express mainly carries sophisticated
casual and wear – to – work clothing; there is an international influence and modern
appeal to the apparel. One main extremely popular item Express is known for is “The
Editor” pants. These pants never go on sale, and are always a popular basic item for
women, also it composes thirty percent of the business for women’s sales; these pants fit
to perfection for almost all ages. For passionate young professionals looking for quality
design and luxurious fabrics, they would love the collection by the Express Design Studio
(collection). The overall merchandise Express carries includes mainly: pants and jeans,
sweaters, separate jackets, and woven shirts.
Who are Express’s consumer base? Like every retail company, there are a wide
range of age varieties, but it serves mainly customers from eighteen to twenty-five years
of age. Express and Express Men are becoming popular everywhere and the stores are
usually merged together. Overall, Express women’s is 70% of the business and Express
Men is 30%. Express stores are mainly located in suburban malls; it targets lower-middle
class women.
The average price point is $39.50; the price range is anywhere from $14.50 to
$398.00. As for pricing strategy, they usually sell full price items for at least a month, and
usually within that month there are promotions on certain items. For example, knit tops
are usually two for $24.50 or buy one pair of jeans and get the 2nd one half off. After a
month, reductions come in, and therefore, markdowns, and after about three to four
months, the Final Blowout Sale takes place; which is the biggest sale at Express during
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the season. According to last year’s figures, total sales were $1,913,000,000. The
breakdown of selling square feet 5,392,000 and the sales for the average selling square
feet is $347; overall average size store is 6,100 square feet.
As for image projections, Express is targeted, for tall, thin young sophisticated
females. Sizes run from a range of zero to twelve. A large part of their customers are thin
and tall, because they clothes fit to perfection. Express has many competitors; but the top
three major competitors are: federated department stores (Macy’s, Strawbridge’s, etc),
The Gap, and Guess. These competitors sell similar items to Express, because it’s a little
less quality, but much cheaper, with the exception of Guess; therefore there is major
competition. The main benefit of Express over other competitors is that they provide
quality fabrics and designer details over price.
Although Express may have many goals, their main goal is to do what is right for
the customer. This means “help young people express their individuality through a
collection of casual and wear-to-work clothing designed by Express” (Express employee
handout)
As for future plans of Express, their plans are to expand growth of their stores,
eventually merge dual gender stores and reach out to more customers. That is why the
Express credit card is very important to get for the company. Once the customer has the
credit card, they are willing to spend more and become a true Express shopper.
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II. Competitive Comparison
Comparison Between Similar Companies
Below are financial comparisons of two companies very similar to Express (Limited
Brands).
These companies are:
1. Gap, Inc. (which also includes Old Navy and Banana Republic)
2. Guess?, Inc.
First of all, I chose The GAP and GUESS because they are the biggest
competitors of EXPRESS. The Gap provides classic, casual high quality style apparel
with similar price points as Express, but has a wider age range of consumers. As for
Guess, it is a very trendy, high fashion combination of apparel targeted at the same age
range as Express. Similar to the Express Design Studio, Guess has a line called Marciano; it
is a young, sophisticated, high fashion line.
According to these financial figures on the graph below, all three retail companies
seem to be extremely close in figures after analyzing the data. Of course, two of the three
companies are conglomerate. As for the most profits, third ranking was The Gap with
11% profit for 2004 and 6% 2003 Express came in second place with 25% for both 2004
and 2003, and first and most profitable apparel company is Guess with 31% profit in
2004 and 33% in 2003.The most non-profitable company was The Gap, even though they
had a 5% increase in profit.
The buyers for both Guess and The Gap came to a tie according to gross margin
figures; they were both at 38% performance for 2004. Operating expenses are extremely
high for The Gap with 27% compared to Guess’s 7%. Why is this? My guess is that it
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could be a manufacturing issue. Both buyers for The Gap and Guess did better the
previous year by roughly 3%. As for Express, they are in the middle for figures in terms
of the buyer and operating costs. The buyer was at 36% for both 2004 and 2003, and
operating costs (11%) and net profit (25%) remained at the exact figures for both years.
Even though Guess is profiting the most, they had a net profit decrease by 2% from the
previous year, I would say because of a 5% increase in operating expenses.
Here is a demonstration at retail figure comparisons.
Net Profit Before Taxes
40
Percentages
30
20
Guess
10
Express
0
2004
2003
Years
Key Points
 All three companies remained steady from 2003 to 2004
 GAP has slightly increased in net profit before taxes
 Express remained exactly the same in figures
 Guess has slightly decreased in net profit before taxes
Gap
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GUESS
Cost of Goods Sold
60
61
62
63
64
65
66
Operating Expenses
6
Operating
Expenses
4
Cost of
Goods Sold
2
0
2004
2003
Key Points
 Cost of Goods Sold, which is mainly controllable by the buyer has decreased
by 3% from the previous year
 Operating expenses has increased by 5% as shown on the pink line
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The Gap, Inc.
Cost of Goods Sold
60
62
64
66
68
30
Operating Expenses
29
28
27
Operating
Expenses
26
Cost of
Goods Sold
25
2004
2003
Key Points
 In terms of COGS, Gap’s buyer performed better in 2003, because there was
a 4% decrease from 2003 to 2004.
 Operations did perform slightly better because they had a one percent
decrease
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EXPRESS
Cost of Goods Sold
0
20
40
60
80
Operating Expenses
29
Operating
Expenses
27
Cost of
Goods Sold
25
2004
2003
Key Points
 Express performed exactly the same in percentages for Cost of Goods Sold,
Operating Expenses, and Net Profit before Taxes
 After comparing Guess and The Gap to Express financially, I would have to
say that the buyers at Express are performing the best out of the three
companies
 In Operating Expenses, Guess performed the best with a low 7%, Guess also
profited the most
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III. Store and Department Environmental Factors
Major Factors affecting Express Sales Plan
Economy, technology, consumer changes in behavior, and most importantly
competition definitely plays an important role to reaching Express’s sales plan everyday.
In terms of technology, registers are extremely important and the returning
machine, all have to be online in order for it to function.
If the registers do not get a break from running all day, it will eventually shut off
on its own. Express in King of Prussia has sixteen registers available at all times. Only
five center registers are used daily. Of course, all sixteen are running when the store
operates on holidays, occasionally on weekends, and especially blow out sales. If most of
the registers are offline, which they are sometimes from running all day, then the
associates have to call in to credit card companies for all purchases over $75 charged.
This is extremely annoying to both the associate and especially for the customer because
they have to wait for about ten minutes. This technological problem only occurs during
holidays and major sales. When this type of problem does occur, the store does lose some
of their customers, because they hate waiting in the extremely long line. Express registers
not only complete sales transactions, but employees also clock in and out, sales plan by
hour are also displayed, how much and if we made plan by the hour, and what item and
how much of it was sold each hour. This technology is extremely crucial for running
store operations.
Returning clothes is definitely a hassle at Express. They want to eliminate as
much returns as possible, because the company knows that the customer tends to wear the
clothes and return it after attending a major event (party). When returning items, a drivers
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license, state ID, or passport is need for all returns because they company wants to track
down how many times a customer is returning. After returning numerous times, a
customer will be denied for returns, therefore they cannot return. This issue did occur in
Business Week sometime last year. Customers are denied faster when returning without
receipts, especially returning big items such as dresses or suits. Customers do throw a
huge fit when they are denied and some said that they will never come back again.
Apart from registers and returning machines, technological factor is the visual
displays created by computers at the headquarters. These pictures of the models are
extremely sexy and gorgeous, which draws the customers to come in. Also another item
created at corporate headquarters is marketing signs, which is extremely important
because promotions and sales draw the customer in.
In terms of the economy such as tax rates, inflation, and weather behaviors, there
does not seem to be a major change in selling. Well, obviously if there was a huge
snowstorm, the mall would just close for the day, but there would only be a few
customers. As for taxes, that is a minor issue, because people tend to shop a lot down in
King of Prussia since there is no tax on clothing compared to other geographic areas such
as Florida or New York City, regardless of taxes or not, customers will still purchase
items that appeal to them, just not as much quantities as they would like to.
Competition is a major affect in sales plan. This is why Express always offer
promotions and sales. For example, there are coupons at the registers for the customers
after they make the purchase such as $10 off $50 on xx/xx/xx – xx/xx/xx to bring the
same customers back during that time period to buy more items. Also there are always
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some sort of sale whether it is T-shirts 2/$24.50, buy one pair of jeans, get the 2nd one
half off, sweaters 40%, or jewelry buy two get one free. These are on going because
Express knows their competitors also have deals that attract the same customers. Also,
since the items at Express are mainly full price, they run these promotions. For example,
a customer returned a pair of brown dress pants in the same hour it was bought because
they bought it at The Limited because it was cheaper.
As for changes in consumer behavior, Express is always up to date with fashion
trends. Express provides these items in a variety of rich and luxurious fabrics and colors.
There are really no big changes as for legislation and changes involved in the community
that would have an affect on sales plan. Another issue at Express is they do not hire full
time employees, therefore they are not providing employees with benefits.
Since this is a fall sales plan, there are many holidays to make a profit. August
and September would be a huge month as for denim sales and back to school clothes.
Christmas, another huge holiday also falls in this plan will drive business sales up also,
Express usually send out major coupons during Christmas to their loyal customers.
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IV. Department Information
Women’s Pants
The department I am buying will be pants for the Women’s department, basically
every kind except for denium. I chose this because I was really interested in buying
“America’s best fitting pants”. Pants are forty percent of the women’s business.
Express’s pants are very luxurious and form fitting and it is also ranked number one as
the best fitting pants in America. They have over 70 skilled designers designing pants.
Department: Pants
I.
Pants
a.
Dress
1.
Editor Pants
a.
Long Bottoms
i. Long (length)
1.
Solids
ii. Short
1.
Solids
iii. Regular
b.
2.
Patterns
2.
Stripes
3.
Solids
1.
Patterns
2.
Stripes
3.
Solids
Gauchos
Publicists
a.
1.
Patterns
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b.
Stripes
c.
Solids
i. Long
ii. Short
iii. Regular
3.
4.
Correspondents
a.
Patterns
b.
Stripes
c.
Solids
Stylist
a.
Solids
b. Casual
1.
Editor Corduroys
a.
Gauchos
1.
b.
Solid Colors
a.
Black
b.
Brown
c.
Gray
Long
1.
Solid Colors
a.
Black
b.
Brown
c.
Gray
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2.
Knit Pants
a.
Gauchos
1.
b.
a.
Black
b.
Brown
c.
Gray
Long
1.
3.
Solid Colors
Solid Colors
a.
Black
b.
Brown
c.
Gray
Khakis
a.
Knee Level
1.
b.
Solid Colors
a.
Black
b.
Brown
c.
Green
d.
Other
Long
1.
Solid Colors
a.
Black
b.
Brown
c.
Green
V. Department Merchandising Plan. (See attachment)
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Works Cited
1. http://www.answers.com/topic/leslie-wexner
2. www.expressfashion.com
3. http://www.limitedbrands.com/about/history.jsp
4. http://biz.yahoo.com/ic/105/105440.html
5. Express Employee Handout (October 2004)
6. Express store manager. Madonna Delesyses.
7. http://www.answers.com/main/ntquery;jsessionid=m3vpkblpitl9?method=4&dsid
=2222&dekey=Limited+Brands&gwp=8&curtab=2222_1&sbid=lc05b&linktext=
Limited%20Brands
8. Phone Interview with Monica Thieme, Express Assistant Buyer.
9. GUESS 2004 Annual Report.
10. The GAP, INC. 2004 Annual Report.