April 13, 2011
Channel Member Analysis Project
MKTG 4530 Marketing Channels
Trang Tran
Christa Sumerauer
cls0342
Christa Sumerauer 10591580
Contact Information
Contact Person: Amy Reeder
Title: Merchandise Specialist
Company Name: Old Navy
Company Address:
Grapevine Mills
3000 Grapevine Mills Parkway
Grapevine, TX 76051
Phone Number: (972) -355-3405
Email: amysreeder@gmail.com
2
Christa Sumerauer 10591580
Questions
1.
2.
3.
4.
What types of tasks does your job involve? (3)
Did you have any particular training for your position?
What type of work experience does your job require? (6)
Have you done or experienced anything in your past that prepared you for your
position?
5. Who do you deal with in carrying out your job? (2)
6. What role does your department or organization play?
7. Where is the warehouse that most or all of your merchandise come from?
8. Who are you major competitors? (7)
9. Who has the most say or power in your product area (e.g., manufacturer, retailer,
component suppliers, customers)? (23)
10. How many customer buying cycles do you deal with (e.g., winter, summer, fall)? (19)
11. What type of seasonality do you encounter in your role? (14)
12. What is the life span of a product or service in your industry? (15)
13. How does the presentation of the merchandise help to sell the products and move
inventory faster?
14. What particular things can you do to move inventory faster and more efficiently?
15. What are the top three cost components you deal with? (17)
16. What specific actions can be done to meet budget requirements?
17. What actions are taken to resolve a particular problem arises such as too much
inventory or late shipment?
18. What rules and/or regulations (company or legal wise) do you have to follow while
carrying out your job?
19. Do you use any innovative technology dealing with distribution or inventory doing
your job?
20. Does your position entitle you to work between different channels of Old Navy,
such as oldnavy.com or the Old Navy application for mobile phones?
Interview Interpretation
3
Christa Sumerauer 10591580
1. What types of tasks does your job involve?
The job of a Merchandising Specialist at Old Navy involves getting the merchandise from the
shipping truck to the floor and also being in charge of the visual merchandising for the entire
store. Old Navy usually hires two Merchandising Specialist per store so that the tasks can be
divided. The two Merchandising Specialists work together with the Door2Floor team to get all
the merchandise from the truck, into the inventory room, than onto the floor. Door2Floor is what
Old Navy calls their logistics associates who are in charge of shipment. As a Visual
Merchandiser, the Merchandise Specialist is in charge of dressing the mannequins and placing
certain merchandise within a certain area in the store to insure the most possible sales and to
make the store aesthetically pleasing. For example, if a certain shirt is a popular style or color,
that shirt would be placed towards the front of the store so that it is one of the first things the
customer sees.
2. Did you have any particular training for your position?
Old Navy provides special training for the Merchandising Specialist position including training
for other departments to insure that they can help other employees and customers if needed, even
though they are more behind the scenes compared to sales associates. Most new employees go
through the training period, but if there is not enough time to have proper training, a school
background in fashion merchandising, coloring, and fabrication will help greatly. The General
Manager works closely with a newly hired Merchandise Specialist to learn “The Book,” a book
supplied by corporate containing the store layout, guidelines for inventory, and important
shipment information.
3. What type of work experience does your job require?
Old Navy prefers employees to have at least one year of sales associate experience at an Old
Navy, but not necessarily the specific location where the sales experienced took place. In other
words, an employee who has been working at Old Navy for a year can transfer to a different
location if a Merchandising Specialist position opens up elsewhere. Prior Old Navy experience is
preferred, but experience from another retailer (preferably within the fashion industry) is also
expectable.
4. Have you done or experienced anything in your past that prepared you for your
position?
Getting a degree in Fashion Merchandising would help to prepare for a Merchandising Specialist
position, as well as all of the jobs that stemmed from that particular degree. Working with a local
designer, a local PR agent and working at Fashion Week in New York City is great things to put
on a resume that would attract employers and to show that the person has a lot of relevant work
experience in the field.
5. Who do you deal with in carrying out your job?
The Merchandise Specialist works closely with almost every other employee within different
positions throughout the store. These include all of the store managers (within this specific store
4
Christa Sumerauer 10591580
and all the way up to corporate), district managers and sales associates. They work closely with
truck drivers so that they know when new shipments are coming. They also work with customers
seeking merchandise of a different size or any merchandise that might not be on the floor, but
will be in the back warehouse.
6. What role does your department or organization play?
The Merchandise Specialist position is within the logistics department and is in charge of making
sure there is enough merchandise on the floor or in stock. They are also in charge ordering more
of specific items when needed. They make sure all of the boxes full of merchandise are unloaded
from the shipping truck, organize that merchandise in the back warehouse, and stock it on the
floor within a timely manner.
7. Where is the warehouse that most or all of your merchandise come from?
Old Navy has six main distribution centers within North America. These main centers are in
Fresno, California; Fishkill, New York; Hebron, Kentucky; Gallatin, Tennessee; Groveport,
Ohio and Toronto, Ontario. All of the Old Navy location within Grapevine Mills Mall does not
come directly from those distribution centers, but rather from a private contractor. All of the
merchandise is shipped from a distribution center, to a contracted firm where it is then shipped
by a privately contracted truck to each store.
8. Who are your major competitors?
Old Navy is a fashion retailer who sells clothes at an extreme discounted price, so they have
many competitors and also many different kinds of competitors. The competitors that are focused
on discount or off-price merchandise are Kohl’s, Marshalls, Ross, TjMaxx, and Target (although,
Target is moving more towards stylish and moderate priced clothing). American Eagle,
Aeropostal and Abercrombie and Fitch are Old Navy’s competitors if style is the focus.
9. Who has the most say or power in your product area (e.g., manufacturer, retailer,
component suppliers, customers)?
Not one specific channel holds most or all of the power within the Old Navy channel member
chain. The corporate office decides the design of the apparel, footwear, and accessories that will
be put into stores for each season. Old Navy outsources manufacturing of their merchandise to
India, where it is then shipped to distribution centers throughout the country. Regional Managers
within different parts of the country are in charge of deciding how long the specific product stays
full price within a store, which is based on customer acceptance and demand. Once an item is not
popular anymore, the Regional Manager decides how much to discount it for and lets the Old
Navy’s that they are in charge of know to not order any more of that item.
10. How many customer buying cycles do you deal with (e.g., winter, summer, fall)?
The major buying cycles for Old Navy, like most fashion retailers, correspond with the seasons
of a year, i.e. winter, summer, fall and spring. Some stores have specialized products depending
on if they are located within an especially hot or cold environment. The two major buying events
5
Christa Sumerauer 10591580
within the year that are not season related are “back to school” and the holiday season. Intense
markdowns cause an increase in sales during the months of August, November (Black Friday),
and December (Christmas).
11. What type of seasonality do you encounter in your role?
Since Old Navy is an Apparel store, the product is revolved around the season (someone would
not buy a heavy jacket in the summer or shorts during the winter). For example, while flip-flops
are a basic item, and one of Old Navy’s most popular (because they have special $1 flip-flop
promotions), only in the spring and summer does the store display an entire wall of flip-flops.
Not only do the type of product change season by season, but the size of shipments change as
well. Some shipments will rise by 5,000 units at a heavy season time.
12. What is the life span of a product or service in your industry?
The life span of our product at Old Navy varies depending on the perishability and customer
acceptance or demand. For example, white and black flip flops are basic items and will always
be in stock, while St. Patrick's Day tees go on clearance the Sunday after the holiday. If the
Merchandise Specialist notices that a product is not selling well, it can go on clearance as little as
two weeks after it is put on the floor. On the other hand, if the sales of a product are high, it
could stay on the floor at full price for months, until it is almost completely sold out.
13. How does the presentation of the merchandise help to sell the products and move
inventory faster?
The presentation of a product is not only crucial to selling important items, but it is also an aid to
customers. Old Navy has what they call an “Event Zone,” which is the area at the front of the
store (the first thing customers see) where all of the items that are based around those months’
highest sales are housed. The Event Zone helps the company gain higher sales by attracting
customers into the store. Old Navy is divided into departments and then shops within that
department, all within one Old Navy location. The shops are based on the style of the item and in
what environment the customer would wear them. For example, men’s, women’s and kids would
all be different departments, and within those departments, a “shop” would be sleepwear,
sundresses or office attire.
Then, within those shops, the Merchandise Specialist presents the merchandise as outfit options.
There are endless “mix-and match” outfit options, but by displaying that certain tops go with
certain pants, the customer is more likely to purchase both garments instead of just one. Old
Navy achieves this by mannequin display or garment display on tables and on hangers, putting
things that would go together next to each other and avoiding putting products that do not go
together on the same rack. The goal is to not just increase sales, but also to have the customer
see the “style story;” perceiving Old Navy as a store where they can buy entire outfits for a
certain occasion.
14. What particular things can you do to move inventory faster and more efficiently?
The display of merchandise is critical, not just where the merchandise is placed within the store,
but how neat or clean the store and products are can effect sales and inventory turn over. This
6
Christa Sumerauer 10591580
makes it easier for the customer to shop and not get discouraged. Also, by making sure all sizes
and styles available are on the store floor helps move inventory out of the back warehouse and
into customers home.
15. What are the top three cost components you deal with?
The top cost component for Old Navy is employee work hours since the company employs many
sales associates, managers, logistics associates and merchandise specialists to make sure that
every day-to-day task goes smoothly and ensures the customer is satisfied. The second biggest
cost component is gasoline costs since the store has many different products and new products
that are constantly being reordered and restocked. The third cost component is one that almost all
retailers are currently experiencing; the rising cost of cotton. Since 95% of all clothes at Old
Navy are made of cotton, the price of production, shipping, and storing cotton-based clothes has
greatly increased.
16. What specific actions can be done to meet budget requirements?
The main thing Old Navy does to cut costs is to cut the hours of sales associates, especially if it
is a slow month. When this is done, the employees who are scheduled work harder and more
efficiently to get the same amount of hard done with less people. Also, those sales associates are
trained to help customers find merchandise and politely encourage or suggest additional items to
help increase sales and achieve sales goals. Also, special incentives are given to those who get
the most customers to sign up for Old Navy credit cards.
17. What actions are taken to resolve a particular problem such as too much inventory or
late shipment?
The Merchandise Specialist is in charge of contacting Old Navy’s logistics service department
whenever a problem arises regarding late shipment or missing merchandise. If too many items of
a specific product arrive, the District Manager is contacted in case another Old Navy location
nearby is short on that specific item. In which case, that location will acquire the extra
merchandise.
18. What rules and/or regulations (company or legal wise) do you have to follow while
carrying out your job?
Gap Inc. (which is the parent company of Old Navy, along with Banana Republic) has
implemented a “Gap Code” company wide. This code not only includes the social responsibility
of the company and of the employees, but also rules regarding shipping and handling,
returns/exchange policies and the high standards the headquarters expect of their employees. It
also involves human resources and legal concerns. Every Old Navy employee is required to read
“The Book” to ensure they properly understand Old Navy’s guidelines and to make sure the
customer follows them as well.
19. Do you use any innovative technology dealing with distribution or inventory doing your
job?
7
Christa Sumerauer 10591580
Currently, Old Navy is testing a new technology that will help with stock and moving inventory.
With using this new technology, the Merchandise Specialist prints out a report every morning
containing information of their current stock. The report will list every item within the store,
which sizes of those items are in stock, and all the style numbers of items already sold. It will
also show how many items they have on available to restock. This will allow the Merchandise
Specialist to see what items are selling the most so that they can be sure to have that item in
stock at all times or when ordering more of that item needs to take place so that they will never
be out of stock.
20. Does your position entitle you to work between different channels of Old Navy, such as
oldnavy.com or the Old Navy application for mobile phones?
All of the Old Navy associates have been trained to work with their website, oldnavy.com,
regarding returns and inventory. Employees also use online channels to look up inventory to see
if an item is available or if there is a different size available upon request from the customer.
Although Old Navy has a mobile application, the employees are not trained to use it in the work
environment since it is solely used for customers to browse merchandise.
Interview Evaluation
8
Christa Sumerauer 10591580
Old Navy is a major retailer under Gap, Inc., a worldwide known company who utilizes
globalization like many apparel retailer like them. Old Navy (Gap, Inc.) is vertically integrated;
designing and buying all their merchandise (fabric and materials) at corporate (San Francisco,
CA) and manufacturing all their merchandise in company owned factories overseas. Owning
several distribution centers within the United States allows for quick shipment of merchandise to
every Old Navy in the country. The use of new and innovative technology to assist associates in
inventory control, stocking, and managing the floor is a great way to make sure they have the
right amount of product at the right time for their customers. Such technology might be new to
Old Navy, but it seems like it would not be a new concept. Since almost every aspect within the
business world and our daily lives revolve around technology, managing inventory without this
technology seems like is would be very difficult, timely, and costly.
Splitting the store into different departments and “shops” is an efficient way for
employees to stay organized and for customers to shop more easily. Displaying apparel that
matches and looks good together next to each other is a great way to increase sales.
As far as distribution goes, I do not know how much of a competitive advantage Old
Navy has against other apparel retailers. The new inventory technology helps to get more
merchandise to the store faster, but almost all other retailers within the fashion category works
the exact same way. They all outsource from China or India, then ship the freight to the United
States where it is then distributed to different warehouses within the country. So a competitive
advantage is hard to achieve if everyone else is doing the same thing.
9