ANAnn Taylor was founded by Robert Liebeskind, son of a high-class dressmaker, and dates back to 1954. At the time Ann Taylor was a bestselling dress design that was gifted to Robert by his father for good luck. The design of this dress brought to life the “well-dressed woman” and the Ann Taylor legacy was born. Robert Liebeskind opened his first Ann Taylor store in New Haven, Connecticut where the first wave of new stores opened primarily in eastern college towns. Then in 1977, Liebeskind sold his stores to Garfinckle, Brooks Brothers, Miller Rhodes Corporation (http://nyjobsource. om/anntaylor. html, 2011). The Ann Taylor stores refrained from carrying a large variety of name brands, like most department stores, which gave them an advantage, less competition and more pricing flexibility (http://www. fundingguniverse. com). In the 1980’s, Ann Taylor changed hands three times, once by Allied Stores Corporation then by Canadian financier Robert Campeau who sold it to Joseph Brooks, the founder of Lord and Taylor. Brooks’ focus to become successful with Ann Taylor was rapid expansion and cost cutting tactics.
By 1991, Ann Taylor consisted of 176 retail stores and 53 outlet stores but, the stores were still carrying a heavy debt load. The industry was slowing, so it seemed like a good idea to offer stock options. The offering went well and seven million shares were sold at $26 per share, providing the cash flow necessary to continue planned expansions (Furman, 1995). The offering also increased Ann Taylor’s burden to perform well in sales and earnings growth however, it was in the face of such pressures that some decisions were made that would eventually prove detrimental to the company.
New management decided that the typical Ann Taylor customer of the 90’s was not as wealthy as its earlier clientele had been, so in an effort to broaden its appeal and cut expenses, the company began using fabrics of lesser quality for the first time. Another poor decision was made to stop carrying Ann Taylor’s profitable shoe line, which accounted for fourteen percent of sales and was often one of the items that drew customers into the store. Ann Taylor began offering its own line of shoes instead, at about half the price, but these were not accepted well by its customers (McNally, 1994).
The stock collapsed and some stockholders sued, alleging misrepresentation of the facts by the prospectus that accompanied the public offering. Soon after the poor decisions were made, Brooks announced his retirement. Coincidently, Brook’s son Thomas Brooks, President of Ann Taylor and the company’s vice Chairman, Gerald Blum resigned just a few weeks earlier. The stock holders and investors became anxious as the company was suddenly being run by a committee. Sally Frame Kasacks was persuaded back to Ann Taylor by the committee and worked on rebuilding a strong management team.
Profits increased nearly 15 percent in one year (Steinhauer, 1995). With good financials insight, the company decided to open the Loft stores which were an attempt to compete with discount apparel stores and attract the younger customers. These stores experienced a bad financial year and the committee blamed Kasacks and her style decisions; she resigned and a new president was brought on board. Sales had declined in the 1990’s and by 2000 the company looked to recapture its lost market share.
A campaign began with an emphasis on a return to its signature look and style—a classic style with solid wardrobe pieces for the career minded woman. Ann Taylor was refashioning itself and, despite inconsistent sales, attempting to solidify its market share by the mid 2000. Within the first year of the recession Ann Taylor closed 203 stores and laid off thousands of employees after their sales dropped by 19 percent and then dropped another 43 percent a year later. With its costs finally in line, the key to recovery became growing store sales revenue without letting costs rise again.
The main issue seemed to be improper scheduling. For years managers did store schedules by hand, having to balance associates’ work requests against trends in daily sales from the previous year which lead to stores with too many associates on the floor during slower sales periods and not enough during the busy sale periods. Their solution was ATLAS, Ann Taylor Labor Allocation System which would compare sales associate’s performances in categories such as average sales per hour, units sold, and dollars per transaction.
The idea was to give more hours to its better-selling sales associates and fewer hours to those poorer-performing associates. What happened was ATLAS scheduled the best associates frequently for shorter shifts during its busy periods and its poor-performing associates for short shifts just once or twice a week during the slower periods. This caused resentment between employees and animosity towards ATLAS and because of the scheduling associates began to steal sales and clients from each other. Yet employee turnover did not increase which may have been due to most of its work force being part time.
It has yet to be determined how this scheduling will effect customer satisfaction. Despite the nationwide store closings and the scheduling changes Ann Taylor continues to have a committed work force. As stated above this is probably due to most of its work force being part-time but, this means the stores are hanging on to its strong sales people. Ann Taylor has been around since 1954, and having such a strong company name and image creates a powerful and lasting emotion in its customers which helps to strengthen their brand loyalty.
In order to keep its current stores open, and to hopefully open new stores in the future, Ann Taylor is focusing on cutting costs through appropriate scheduling. By scheduling their employees at specific periods of the day each store is using its selling time wisely and increasing its profitability thus creating a more efficient way of scheduling and motivates its employees to increase their customer turnover and close more sales to guarantee more hours. There are naturally draw backs, or weaknesses, with Ann Taylor and its ATLAS program which has caused hostility between its employees.
This type of weakness could lead to a decrease in customer satisfaction because employees are focused on making the sale as opposed to making sure the customer has a great shopping experience. To even have the need for a program like ATLAS says that there is an obvious lack of communication. When management cannot figure out, on their own, how to schedule their staff according to sales trends then that means one of two things ether top, middle, and/or bottom managers are not speaking to each other on daily or at least weekly basis and that they are not hiring individuals with more available or open schedules.
While there is an obvious decline in sales over the last two years, Ann Taylor has opportunities to turn around their situation. Since the negative trend of sales appears to be a fairly recent occurrence, there is a greater chance to correct the problems and make a quick turnaround. The economy has made somewhat of a recovery and spending confidence is beginning to return. This good news should motivate the sales force and the customers will be returning to the stores or websites.
The fact that employee turnover has remained low during the struggles the company has endured means that the company will not have to train new employees. New employee orientation and training normally costs more than retaining existing employees. This will be a savings to the bottom line on the company’s financial statement. While this makes the shareholders happy, the company has an opportunity to make its employees happy by implementing a revamped scheduling system. This change could greatly improve morale in the stores among the employees.
This improvement in morale, should further improve customer satisfaction and increase sales. While opportunities exist for an expedient turnaround, Ann Taylor must be aware of situations that may threaten their recovery. The substitution of similar products or more value oriented shopping techniques could be a long term change. This change could keep sales figures in decline for several more years. While this loss in business may be due more to the economy than to customer service, a defecting customer is more difficult to regain once they leave to shop elsewhere.
The threat of losing customer loyalty is very high. Along with losing customers, Ann Taylor stores are also facing the threat of losing employees. The dislike of the ATLAS program has discouraged employees to the point that they may look elsewhere for a paycheck. This defection could come to a competitor or another industry, but disgruntled employees are a form of negative public relations no company wants to have. Any combination of these issues could directly impact the company’s success to point where more stores, or ultimately all stores, would be closed.
There’s nothing inherently wrong with stimulating competition amongst workers, but it should be on a store-to-store basis. This way teams compete against other teams instead of individuals steeling customers and sales. There’s a better way to increase the quality of a salesperson such as using the data to keep sales associates on task. However, what if a reward-based system were used to regulate the quality of a worker? We would propose that AnnTaylor use the data to, as an example, give workers the chance to win extra flexibility in their schedules.
Perhaps the retailer could allow a worker that is a great salesperson or an associate who has shown great improvement to have extra personal days. The management’s worry is understandable but, penalizing workers based on data might end up being an ineffective paradigm that distracts the company from other important goals. For instance, many retailers often do not concentrate enough on marketing campaigns to increase traffic in their locations. The number-one goal of any retailer should be increased traffic, as that is what brings in sales opportunities. Another oint to bring up is the hiring process itself. Perhaps investments should be made at this point of the human-resource chain to ensure that the best possible salespeople are hired. In conclusion, technology is a wonderful tool for retail, but it must be used wisely. To completely dehumanize your sales team is a bad idea. If incentives are offered for the sales team, people would see that as a positive goal to reach. They would not be as discouraged as they are when they stress about whether or not they have a job. Works Cited http://nyjobsource. com/anntaylor. html. 2011, May 20). Retrieved May 24, 2011 Furman, P. (1995). Fashionable AnnTaylor to Sell Stock. Crain’s New York Business, 3,34. http://www. fundinguniverse. com/company-histories/AnnTaylor-Stores-Corporation-Company-History. html. (n. d. ). McNally, P. (1994). The AnnTaylor Footwear Formula. Footwears News, 56. Steinhauer, J. (1995). Can Ann Taylor Dust Itself Off? New York Times, 35. Case Study from Chapter 13: Ann Taylor Case Study Chapter 13: Ann Taylor BUSA3210 Ms. Audrey Long Molly Carpenter Barbara Harless Tiffany Caruthers Kevin Nidiffer Elizabeth Howe June 7, 2011