Shop Thursdays: Post COVID-19 Strategy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Shop Thursdays: Post COVID-19 Strategy Case Solution

Introduction

Gillian Pits is the founder of Shop Thursdays a women-wear boutique, founded in 2013.Gillian founded the company with two partners, one was her mother Rita and the other was her uncle James Benzacar. She started with a small rental shop for 3 months, and after the success of that small scale business, she decided to open a permanent store at Yonge Street in 2015, in the neighborhood of Summer-hill, where she opened the leased store. After the success of the first store; she decided to open an online store in 2018 and engaged with her customers on Instagram to promote her online store. In 2019, she opened another brick and mortar store in exchange tower.The COVID-19 forced the company to shut down its physical stores, obligating it to operate online completely.During this pandemic,Pits witnessed huge growth in her online business.

So when the COVID-19’s global pandemic was addressed;Pits and her partners of online and brick-and-mortar clothing Shop Thursdays, were thinking about how to best position the firm for further development. The company had two physical boutiques in addition to an online shop as well, which were aimed at offering their customers with the most up-to-date fashionable products.

Problem statement

As the global pandemic of Covid-19 forced a lot of businesses to go completely online and sell their products online, Pits already had an online presence. Gillian Pits faced an increasing demand for her online store but she was also coming across with some issues of erroneous order placements. Although here is an issue of Limited funds, there is alsoa huge growth opportunity in online business, but Gillian is unable to manage both online and brick and mortar stores together with efficiency.She needs time and resources to devote to her online business with influences marketing strategy, for which she is confused as whether to close the second store located at the exchange tower or to continue it. As she has already closed the first store at Yonge Street; closing the second store means she will not have any physical presence left.

Industry analysis

Canadian retail women-wear industry:

The Canadian women clothing sector was very attractive before covid-19, as there was an increasing number of high-income households who spent more on clothing and premium brands.This sector of Canada was having a significant growth sector from 2014 and 2018, as the Canadian clothing retail sector had generated the total revenues of $23.4 billion, reflecting a compound annual growth of 3.1 percent. In 2018, the women-wear section was the most profitable in the sector, with total revenues of $12.9 billion, or 55.1 percent of the total value. There is a growth opportunity for the businesses to create a successful online presence in the Canadian retail women-wear industry. There is also an increase in the unemployment rate due to Covid-19, as the unemployment in Canada has reached to 13%, which has decreased the purchasing power of the customers. During such pandemic, it was an extremely tough task for the company to retain its loyal customers, let alone increasing its customer base further.

Situation analysis

Quantitative analysis:

As per the quantitative analysis; if Pits continues with the second store; the average net profit will be $539,384, and minimum and maximum profit will be $289,384 and $789,384, respectively.( see appendix:1).The calculation is based on the assumption that the minimum number of customers per day will be 5 and the maximum will be 10 customers per day, and on average; there will be 7.5 customers per day in 250 working days in a year.

If Pits chooses to continue the online business without influence; the marketing average net profit will be $642,916, and the minimum and maximum net profit will be $642,916 and $742,698, respectively. (See appendix: 2) These values are based on the assumptions that there are two categories of customers, i.e. the first-time purchaser and the returning purchaser. The average new customer per year will be 1,812 and the average return purchases per year will be 758, and the average total online customers will be 2,569.

So, if Pits maintains the status quo, such as: reopening the second store at the exchange tower and continuing the online business without influencer marketing; the combined average net profit will be $1,182,300, as shown in the table below:

Net Profit for the fiscal year ending May 31, 2021, for Status Quo
	Minimum	Maximum	Average
Net Profit Second Store	$289,384	$789,384	$539,384
Net Profit Online Store without Marketing	$550,502	$742,698	$642,916
Status Quo Total Profit	$839,886	$1,532,082	$1,182,300