What challenges and opportunities do you see for Bigelow in offering all products

What challenges and opportunities do you see for Bigelow in offering all products

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May 15, 2022
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Bigelow Stores

Bigelow stores is a general merchandise retailer located in Atlanta, GA. With 250 stores and three distribution centers (DCs) located in the southeast United States, Bigelow has captured a significant market share in the off-price market. Bigelow carries everyday items as well as “one-time” buy specials that it advertises to consumers at special discounted prices. Bigelow also carries food products with expiration dates but none need refrigeration. Because of the density of the market and the size of its stores, Bigelow can ship full truckloads (TL) of its products from its DCs to its stores on a daily basis. Bigelow currently does not have an internet presence.

With a high market penetration in the southeast intact, Bigelow has decided to expand into the northeast and midwest through acquisitions. It has acquired a medium-sized retailer in Pennsylvania, Lions, that specializes in both general merchandise and perishable and non-perishable food items. Lions currently has 100 stores and two distribution centers in the northeast. It utilizes both direct TL shipments to larger stores that are closer to the DCs and pool distribution to the smaller, more distant stores. Lions has an internet presence where consumers can order groceries online and then pick their order up the same day at the store. Bigelow also acquired Spartan Stores, located in Michigan. Spartan is an outdoor recreational sports retailer that has 50 stores and one DC. It is an omni-channel retailer that picks and ships both store and internet orders from its single DC. Spartan utilizes LTL carriers for store deliveries and small package carriers for internet orders.

Bigelow’s strategy is to grow these acquired firms, first regionally, then nationally and to incorporate them under the Bigelow name. It also has decided to invest heavily in an internet presence to become an omni-channel retailer.

CASE QUESTIONS

What challenges and opportunities do you see for Bigelow in offering all products to all consumers on a single Web site? Would the current DC network support this strategy? Explain your answer.

Answer and ExplanationSolution by a verified expert

Explanation
Retailer B has been trying to extend its product line and presence by acquiring retailers of different regions and product categories. It is also participating in the online arena to expand its customer base.

The online channel may pose certain challenges to Retailer B. Since it aims to operate on a national level, it may be difficult to handle both offline and online distribution channels on a large scale. Moreover, it may face inventory problems in case the online orders exceed its estimation. The clash between online and offline deliveries can be problematic for Retailer B. Also, the investment in the online channel may not succeed due to competition from established online retailers.

However, despite the challenges, there are few opportunities for Retailer B in online retailing. It may expand the customer base of the retailer. The competitor's customers can be attracted by Retailer B using aggressive online offers. Moreover, it can help the retailer to achieve economies of scale by converting Less than Truck Load (LTL) into Truck Load (TL) deliveries for its offline stores. These LTL deliveries may add the online order quantity and help the company to save transportation costs. Also, the company can cover wider geographical regions using the online model.

The current Distribution Centers(DCs) network of the company may not be able to handle both online and offline channels. For example, the DC network of Retailer L acquired by Retailer B is focused on offline distribution through its two DCs. This system may fail in case there is a surge of online orders. Retailer B's 3 DCs may fail to supply both online and offline orders to its 250 stores. Hence, the current strategy may be ineffective for the new omnichannel design.

However, if Retailer B optimizes the current model to suit the needs and demands of both offline and online channels, it may succeed in creating an efficient supply chain network. For example, it may use the optimization model and apply mathematical tools to find the best alternative in the current supply chain network.

Sample Response
Retailer B may face many challenges while selling its products on one website. It might not be able to maintain both online and offline distribution channels. Furthermore, It might not have enough inventory storage space to meet both online and offline demands.

There might also be some opportunities for Retailer B. It can help Retailer B in expanding its customer base. It can also help in achieving economies of scale. This can be done by increasing the order size and converting less than truckload into truckload deliveries.

Retailer B's current distribution channel may not be able to handle both online and offline operations. This is because an increase in orders of one channel may hinder the operations of the other channel.

However, Retailer B may be able to cater to both online and offline channels. This can be achieved by optimizing the current model to create an effective supply chain network.

Bigelow Stores: Challenges and Opportunities in Omni-Channel Retailing

Bigelow Stores, a prominent general merchandise retailer, is expanding its market presence by acquiring Lions in Pennsylvania and Spartan Stores in Michigan. The strategic move involves transitioning into an omni-channel retailer with a strong internet presence. Here are the challenges and opportunities for Bigelow in offering all products to consumers through a single website and an assessment of the current distribution center (DC) network to support this strategy.

Challenges:

  1. Operational Complexity: Managing both offline and online distribution channels on a national scale can be operationally complex. Coordinating inventory, order fulfillment, and deliveries for both channels simultaneously poses challenges.
  2. Inventory Management: Balancing inventory for online and offline orders is crucial. The potential clash between the demands of online and in-store shoppers may lead to inventory shortages or surplus, affecting overall efficiency.
  3. Competition from Established Online Retailers: Bigelow may face stiff competition from established online retailers. Competing with industry giants in the online space requires significant investment and strategic differentiation to attract and retain customers.
  4. Logistical Challenges: Coordinating delivery schedules for online and offline orders can be challenging. Optimizing logistics to ensure timely deliveries for both channels is essential for customer satisfaction.

Opportunities:

  1. Expanded Customer Base: Venturing into online retailing allows Bigelow to reach a broader customer base. Aggressive online offers can attract competitors' customers and contribute to overall business growth.
  2. Economies of Scale: Integrating online orders with offline deliveries can help achieve economies of scale. Converting Less than Truck Load (LTL) deliveries into Truck Load (TL) deliveries for offline stores can result in cost savings.
  3. Geographical Expansion: The online model enables Bigelow to cover wider geographical regions beyond its physical store locations. This expansion can enhance market reach and brand visibility.

Assessment of DC Network:

The current DC network, particularly that of Lions, which utilizes two DCs for offline distribution, may face challenges in handling the surge of online orders. Bigelow's three DCs designed for offline distribution to its 250 stores might struggle to efficiently supply both online and offline orders.

Recommendation:

To address these challenges, Bigelow needs to optimize its current distribution model. This involves leveraging mathematical tools and optimization techniques to create a flexible and efficient supply chain network. By aligning the DC network with the demands of both online and offline channels, Bigelow can successfully transition into an effective omni-channel retailer, ensuring seamless operations and customer satisfaction.

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