Leons Furniture is one of the retailers in the threshold of Canada. The first store was opened in Welland, Ontario. It is a public company, operating under the industry of home furnishing stores. According to the annual report of 2015, the annual revenue of the company was recorded as CAD 1.97 billion. The presence of 2864 employees helps the personnel in achieving efficiency within the execution of the business activities (Leons.ca, 2018). Leons is the subsidiary of The Brick. Leons deals in mid range furniture, appliances and electronics. The items in the store rooms are high priced. In the era of 2007, Leons introduced Urban Living Collection, which comprised of small sofas, bedrooms and dining sets.
The research and development team is efficient and possesses flexibility in the creating innovative designs for the furniture. Conducting market research assists Leon to gain an insight into the designs, which the contemporary brands have adopted. As a result of this, it can be said that adopting social media would be beneficial for the Leons in terms of expanding the scope and arena of the business operations (Leons.ca, 2018).
Current performance of Leon
As per the performance of 2017, the annual revenue of Leon was recorded as $2,212,216. The net income was $96593 and shareholder’s equity value was $10.60. This represents 3.2%, 15.6% and 15.2% growths respectively. Mention can be made of the sales growth, which was $2.64 billion (Leons.ca, 2018).
|
Sales ($) |
Gross margin |
Average inventory cost |
GMROI |
|
|
Department A |
315,000 |
50% |
104,000 |
3.02% |
|
Department B |
200,000 |
40% |
50,000 |
4% |
|
Department C |
210,400 |
48% |
86,000 |
2.44% |
|
Department D |
180,000 |
44% |
33,000 |
5.45% |
Table 1: GMROI for Leons Furniture Company
(Source: Created by the author)
Input
Leons Furniture Company uses fair value hierarchy for categorizing the performance assets and liabilities. This segmentation is as follows:
This is done in three levels:
Level 1: Prices are quoted for the assets and liabilities, which are active within the markets.
Level 2: Inputs other than the quoted prices, which are included in Level 1 are directly or indirectly observed
Level 3: Inputs for the assets and liabilities, which are not based on observable data (Leons, s2018)
As per the terms and conditions of IFRS 11, Leons Furniture indulged in joint ventures. This is through the means of recognizing the share value of the assets and liabilities. Within this, focus is laid on revenue share from the outputs. As a matter of specification, the output from the joint operations including the shares are collaboratively incurred (Leons.ca, 2018).
Leons profitability is well placed within the core retailing business, which is carried out as per the industry norms. Initiatives like acquisitions, digital commerce and third party distribution enhances the sales revenue and the profit margin. Excess cash flows compels Leon to be selective in terms of choosing the alliances. Investment criterias includes research about the leading furniture brands within the Canadian market. The personnel are aware of the joint share holdings of 20% with The Brick. Adopting omni channels has enhanced the scope and arena of the retail marketing as well as supply chain network. State of art distribution modernizes the distribution channels (Leons.ca, 2018).
Mention can be made of the extended warranties, which Leons produces on certain merchandise. The management exposes judgmental decision making for specifying the time period for recognizing the warranty revenue. Merchandise imported from US and Southeast Asia receive payment in dollars. This value is equal to Canadian dollar, which is translated at the year-end through the exchange rates. The return policy is beneficial in terms of respecting the purchasing power of the clients and the customers. If the customers are not satisfied with the product, they can return within 7 days. When the customer picks the order, the merchandise value is recognized (Leons.ca, 2018). While selling the gift cards, the personnel can track the use of the cards. This would be beneficial in terms of averting the illegal instances of thefts, robberies among others.
One of the category, which Leons Furniture sells can be small sized sofas. Merchandise for these sofas come from the spare parts, which are assembled from the neighboring countries like United States. In case the customers find any defect within the purchased sofa, they can exchange it within 7 days. However, this needs to be done according to the terms and conditions of the exchange policy. In terms of this policy, this category can be placed in the maturation stage of the product life cycle (Leons.ca, 2018). This is because the managers are in contact with the higher authorities in terms of revising the terms and conditions of the policy.
|
Branding strategy: To sustain profitability Business model: Value chain analysis Current market trends: Low costs for the furniture Sales and margin history: $2,212, 216 in 2017 (3.2% growth) Channels or distribution requirements: Social media Financial plans: review of the current trends and statistics for enhancing the understanding about long-term effects |
Review of the current position would be effective in terms of upgrading the standards and quality of the business operations. Social media would be beneficial in enhancing the scope and arena of the distribution channels.
The national brand, under which Leon sells the furniture is Leon. Some of the furniture are sold under the subsidiary brand, The Brick. The private label brands are Crystoceans, Transglobal, The Brick Outlet, TGW and TGI. Expansion through contracts with the private label brands would be effective for Leon in terms of enhancing the scope and arena of the business (Leons.ca, 2018). Along with this, the contracts would widen the distribution channels, indicating the enhancement of productivity.
The private label brand strategy undertaken by Leon is sustainability in the upcoming financial years. Strategic planning for indulging in alliance would be crucial in terms of securing the market position. Consistency in the strategic planning would reflect conscious approach towards preserving traditionalism. On the other hand, focusing on one particular strategy for long time would compel the employees to feel bored in the process of executing the business activities. For this, revisions need to be done at frequent intervals for luring the clients and the customers towards the brand image (Leons.ca, 2018).
Cost
When dealing with the costs of the furniture, Leon personnel consider the expenses regarding the labour charges, salary, and commission among others. Along with this, assistance of the Commerce department is needed in terms of assessing the effectiveness, appropriateness and feasibility of the adopted pricing methods.
Mention can be made of the current condition of the supply of raw materials, which are reviewed for calculating the demands for the furnitures. Within this, graphs are prepared for gaining an insight into the relationship between the demand and supply. This is assistance in terms of measuring the position within the competitive ambience of the market (Leons.ca, 2018). Alliance with the statutory bodies of law is beneficial in terms of averting the illegal marketing activities.
Currently, the company is following competitive pricing strategy for measuring the position in the competitive ambience of the market. On the contrary, Leon can adopt penetration pricing method, which would be beneficial in terms of penetrating into the foreign markets. Within this, adjustments needs to be done according to the needs, demands and requirements of the clients and the customers. For this, the means of survey and feedback can be considered. Modification of the business operations, according to the opinions of the clients and the customers would help Leon to stimulate the sales revenue and productivity as a whole (Leons.ca, 2018).
Leon believes in catering to the special needs, demands and requirements of the customers. For achieving loyalty, trust and dependence from the customers, various loyalty programs are conducted. These programs are consistently monitored for tracking the response of the customers towards the business methods. Within the marketing strategies, focus is placed on the ways through which the purchasing power and affordability of the customers is protected. Social media marketing can be adopted for increasing the trafficking of the audience towards the brand image. Installation of privacy cookies and policies would be effective in terms of gaining trust, loyalty and dependence from the clients and the customers (Leons.ca, 2018). Special discounts, schemes and offers can be introduced within the urchased furniture. This would act as a caring approach towards the passion of the middle class customers to buy branded furniture.
Leons Furniture has attained a greater share in the competitive market of Canada. Alliance with the subsidiary brand, The Brick has been assistance in terms of enhancing the sales revenue and profit margin. Adopting penetrating pricing method would seem fruitful in terms of assessing the possible sources from where the company can enhance the sales revenue and profit margin.
References
Leons.ca (2018). About us. Retrieved 30th Nov 2018 from https://www.leons.ca/
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Selvaraju, M., Beleya, P., & Sundram, V. P. K. (2017). Supply chain cost reduction using mitigation & resilient strategies in the hypermarket retail business. International Journal of Supply Chain Management, 6(2), 116-121.
Sparks, L. (Ed.). (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan Page.
Varley, R. (2014). Retail product management: buying and merchandising. Routledge.
Ayers, J. B., & Odegaard, M. A. (2017). Retail supply chain management. CRC Press.
Mekraz, A., & Gundala, R. R. (2016). Leadership style and retail store performance-A case study of discount retail chain. Journal of Business and Retail Management Research, 10(2).
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Piotrowicz, W., & Cuthbertson, R. (2014). Introduction to the special issue information technology in retail: Toward omnichannel retailing. International Journal of Electronic Commerce, 18(4), 5-16.
Zentes, J., Morschett, D., & Schramm-Klein, H. (2017). Logistics–Supply Chain Management and Information Management. In Strategic Retail Management (pp. 419-439). Springer Gabler, Wiesbaden.
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