Friday, January 02, 2009

Turnaround at Talbots

The Boston Globe has an interesting article on Trudy Sullivan's attempt to execute a successful turnaround at Talbots. The retail chain's troubles actually began with some fundamental strategic problems, not simply with the poor economy. First, the company had a difficult time integrating its acquisition of the J. Jill apparel chain several years ago. Second, the company had wasted resources with diversification attempts including the opening of men's and children's stores. Finally, the company's clothing increasingly appealed to a narrower and narrower demographic - namely older women.

The Talbots story is interesting, because many management professors like me constantly preach that companies should stay focused. However, in some cases, that focus can lead to a dangerously narrowing target market over time. In Talbots case, the target market shrank as the average consumer became older and older. The clothes no longer appealed to younger working women who used to frequent the company's stores. So, one moral of the Target story is that a firm should focus on its core customer, but it must take great care not to do so in a way that causes that target market to shrink over time. A second moral is that a firm should be wary of trying to overcome slowing growth in its target market by diversifying through either brand extensions (men's stores) or acquisitions (J. Jill). Instead of expanding elsewhere, a firm in that situation should make sure that it fixes its core market first.

1 comment:

mimiws said...

I read your comments about Talbots with great interest. Analysis of Talbots current plight and its causes reminds me of the "case studies" we did in grad school.
I'm an aging boomer who has shopped at Talbots for 30+ years. I also have a small investment in the company, so I'd like to see it survive.
Catering to "older" women could pay off for them. Shouldn't that be a lucrative market niche? There are very few stores serving that demographic and "boomer"
women have ample discretionary income and no dependents.
The trouble is that Talbots is out of touch with the preferences of this generation of mature women. We don't want to dress like our mothers dressed at our age; we want youthful, casual, age-appropriate clothes.
Is there some way to convey this message to their management team?
I tried sending an email to them and got a canned response thanking me for my comments.
Thanks for reading this.
Mimi Sellers