Retail Business Analysis
Burlington Coat Factory
Corporate History and Summary
Originally founded in 1972 by Monroe and Henrietta Milstein with only one coat/outerwear factory and store, Burlington Coat Factory Warehouse Corporation has grown into an extremely successful discount retail outlet chain. Although it began as a family-owned and -operated business, the company went public for a time, with the Milsteins retaining a majority of share holdings (BCF, 2011). Eventually, the company was purchased in 2006 by Bain Capital Partners, LLC, and was made a private holding. Currently, Burlington Coat has more than 460 stores in 44 states nationally, as well as satellite stores in Puerto Rico and joint ventures in Mexico; employs more than 28,000 workers; and generated $3.67 billion in sales as of the closing of the final fiscal quarter ending in January 29, 2010 (BCF, 2011).
Burlington Coat is known in the retail industry as a major player, offering wide selections of well-recognized, quality brands at low prices. The company’s motto is, “We’re more than great coats,” and they aim to deliver that statement. The company does this by constantly staying on top of trends and seeking the best prices, developing innovative money-saving methods and passing those discounts to their customers. In addition to streamlining their inventory and supply-chain procedures to ensure efficiency, Burlington Coat manages to consistently register sales increases yearly.
Retail Structure and Merchandising Strategy
Its chief competitors/market rivals are Bed, Bath and Beyond, TJMaxx, and Ross stores.
Burlington Coat Factory Warehouse Corporation’s main sales platform is its large stable of warehouse-style discount retail outlets. There are also three sub-divisions, called Baby Depot, Luxury Linens, and a subsidiary chain of stand-alone high-end retail stores under the name of COHOES. Additionally, there are two free-standing Baby Depot stores, and one combination Baby Depot/Luxury Linens outlet (Bloombergs, 2011). The main retail discount stores are known as “Burlington Coat Factory” stores (Covell & Stansell, 2004).
In the Burlington Coat Factory stores, a wide array of merchandise can be found. Though originally the company’s focus was on coats and outerwear, corporate ownership quickly realized the need to expand its offerings to include other market segments. The reason was in order to gain revenues outside the restriction of the coat segment. The biggest sales areas for Burlington Coat Factory are (by order of sales shares from greatest to least in terms of percentage of total retail sales): coats and outerwear; menswear; women’s wear and accessories, including shoes; children’s furniture, clothing, accessories, and toys; and home fashions and furnishings, including bedding and other linens (Covell & Stansell, 2004).
Baby Depot is a specialty division of Burlington Coat Factory, normally a separate store located inside the larger Burlington Coat Factory outlet. Baby Depot features high-quality children’s furniture, bedding, toys, clothing, and accessories from respected brand names including Avent, Carter’s, Chicco, Evenflo, Fisher-Price, Gerber, Graco, Kolcraft, Medela, Peg Perego, and Playtex (Covell & Stansell, 2004). There are two Baby Depot stand-alone outlets.
Luxury Linens is, like Baby Depot, usually a separate department within the parent Burlington Coat Factory store, although it does share one stand-alone outlet with Baby Depot. Offering brand-name towels, sheets, bedding, home decorations and some furniture, Luxury Linens completes Burlington Coat Factory’s goal of “one-stop shopping” (Covell & Stansell, 2004).
COHOES is a separate line of retail stores which sell designer-name clothing and accessories for men and women. At this time, 5 COHOES stores are located in New York, Rhode Island, Connecticut, and New Jersey (Covell & Stansell, 2004). The prices are higher than Burlington Coat Factory’s normal discount price point, due to the value of the items which are sold.
Pricing and Location Strategies
A key factor in Burlington Coat Factory’s success is its twin emphasis on value and selection. These two elements are integral to the company’s corporate culture and how it does business. Burlington Coat’s price point is generally lower than that of similar merchandise offered in other locations, such as in department or specialty stores, and it often has a wider selection than those types of retail venues as well (Datamonitor, 2007). The way this is accomplished is through always seeking to minimize cost and maximize results. It accomplishes this in several ways:
Leasing Locations Segment
Burlington Coat does not normally own the commercial spaces it occupies; instead, it leases spaces that are suitable to its needs (facilities are usually between 133,000 and 166,000 square feet in size) in geographical areas which have been proven to be responsive to discount retail sales (Datamonitor, 2007). Also, leasing facilities decreases overhead costs and gives the company greater flexibility to expand operations and reduce costs according to the economy and local circumstances (such as, should a certain urban area decrease in quality, it can more easily re-locate to a more promising area by not renewing its lease). Additionally, it maintains facility decoration and displays to a minimum: Burlington Coat Factory deliberately has a spare, “warehouse” feel, emphasizing the merchandise quality and volume. This enables Burlington Coat to see a 30-40% decrease in overhead, which it passes on to customers in the form of lower prices (Datamonitor, 2010).
Volume and Direct Purchasing Segment
The company purchases its items directly from manufacturers, not from middle-men, usually at discounted rates due to the
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