Case #4: “Filene’s Basement” Harvard Business School Synopsis Filene’s Basement

Question

Case #4: “Filene’s Basement” Harvard Business School Synopsis Filene’s Basement is an off-price apparel specialty chain with over 50 stores in the northeastern quarter of the United States. Originating literally as the basement of the Filene’s Department Store in Boston, the wildly successful concept was being replicated rapidly after a management buyout from its Federated Stores parent. The case looks primarily at Filene’s Basement’s store siting procedure and, in particular, at an early 1993decision about two candidate sites in Chicago. The Basement already had 4 stores in the Chicago area; should they add two more? The case provides some demographic and financial data to help arrive at a decision. Preparation Questions 1. How do you appraise Filene’s Basement’s expansion strategy? Comment on the concept, the choice of regions for expansion, and the number of stores. What should be their strategy going forward? 2. How should Filene’s Basement select sites for future outlets? Critique the current process. 3. Suggest a methodology for preparing a sales forecast for the two prospective stores at Naperville and Mount Prospect. 4. Should either or both be opened?

Explanation / Answer

Apparel industry depends on the customer demand, customer footrpint capability to the store, age of customer base, presence of competitor , disposable income of natives etc. Chicago being a prime location of many working professionals and students they can add more stores based on the of gravity of the demand and sales of the current showrooms.

Expansion strategy to be based on customer base and competitors presence. If the area is saturated with enough apparel showroom then there is no chance of further expansion. Condcut a survey in the city and collect the survey results based on their requirement of apparel, shopping pattern etc.

Future outels sites depends on the demographic nature and cost of running the showroom. Identify the other market players and how they have positioned their store. To create a unique value proposition of their product placement and service should be different and should be more catchy.

Sales forecast can be analysed through historical data analysis ( atleast 2 years of data) and the current market trend in that area. Naperville and Mount Prospect. Both are good location but since Naperville has better connectivity to many other major cities and it is considered to be a hub for many industries and educational institutions where young crowds are more, the location can be treated as the most priority potential location. No need to open two stores parallely as the distance is less than 50miles. ( by taking time matrix , distance and customer foot print analysis.).

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