Essay on Hendersons

609 Words Jun 6th, 2012 3 Pages
Executive Summary
Henderson’s best growth opportunity exists in establishing itself as the premier online retailer for shoppers age 22 to 30 years old who value product quality. This growth strategy also aligns with operational and financial improvements involving decreased retail space and more efficient advertising spend that will help both top line and bottom line growth.

Problem
Henderson’s growth has been declining with a -2% CAGR over the 4-year period between 2006 and 2010. Although Henderson’s is in the middle of the pack for the traditional department store category, it is also suffering from eroding sales revenues, with a 23% percent decline in sales from 2006 to 2010. It is impressive that Henderson’s has been able to
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Growth Opportunity
Target shoppers age 22-30 through an increase in online marketing spend to increase the number of visitors to our website. Also, launch initiatives to increase conversion rate and increase “basket size.” Henderson has already done consumer research finding that online sales were expected to grow both in dollar amount and as a percent to total sales in all major categories. Online shoppers spend more money than any other category, average of $1,500 per year.

Key Levers to increase the online market-share
Increasing the traffic to the website through online advertising
All increases in budget for online advertising will be equal to 3% of our overall advertising budget, or $39MM, essentially doubling the online advertising spend. This money will be brought in from our current expenditures in newspaper advertising. Although this risks reducing some store traffic with our traditional customers, we feel that it fits with the long-term online growth strategy that should not be ignored. The increase in internet advertising spends will be split three ways:
1. Search engine contracts to increase the rank-order of our website when users search for items like “wallet” or “sweater.” This money will also be spent on banner ads to fit the customer profile: 22-30 year old internet shoppers.
2. Seasonal online

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