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Hendersons

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Submitted By dgibbons
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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 continue to drive strong brand associations with such a decline in sales, and it would be prudent to take advantage of that in formation of a growth strategy.

Goal
The goal is to gain significant traction in online sales with the 22 to 30 year old segment while decreasing costs. Henderson can grow its online revenue from $893M currently to $2.2B by making efforts to improve its website traffic, conversion rate, and basket size. D&A expense should be brought down by to be in line with industry standards of 3-4% of Net Sales, which would save between $300M and $600M. A shift to online retailing fits the bill here because it has the potential to create revenue without significant capital expenditures.

Solution
Part I: Growth
Target Customer
For this growth initiative, our target segment is shoppers age 22-30.

Why this segment?
These are people who are old enough to have discretionary income, possess the technical know-how to transact online, care about product quality and are brand conscious. Based on spending profiles in the data provided, shoppers under the age of 30 have higher spend rates across all retail

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