Academic journal article Journal of the International Academy for Case Studies

Kirkland's, Inc

Academic journal article Journal of the International Academy for Case Studies

Kirkland's, Inc

Article excerpt

CASE DESCRIPTION

In this case the authors tell the story of the founding and impressive growth of Kirkland's Incorporated. The story is one of niche marketing perfected through a deep understanding of product acquisition and merchandise display by a management team that has stayed together for decades. The case is suitable for an upper division undergraduate marketing strategy or business strategy course, perhaps even as a capstone project. The case is designed to be taught in one fifty to seventy-five minute class period, with about thirty to forty-five minutes of reading and preparation time on the students' part, prior to class.

CASE SYNOPSIS

This case is about Kirkland's Inc., a specialty retailer that began with one store in the late 1960s, and today has close to 300 stores with annual sales of over $350 million. Also, it is adding about 30-40 new stores per year. Kirkland's began as a gift shop but has evolved into a home décor/accessories retailer. It has adjusted its product mix to meet the changing demands of consumers and because of some moves made by its competitors. The case includes a very detailed analysis of the home décor/accessories industry, a history of Kirkland's, the current status of Kirkland's (including its strategy and corporate culture), and a detailed description of its major competitors. Some detailed financial information is provided in the case, and current websites are referenced for additional financial information.

HOME DÉCOR/ACCESSORIES INDUSTRY

The home décor/accessories industry is a large and growing industry. In 2002, sales in this industry topped $78 billion-an increase of 7.9% over the previous year. The average net profit margin in the industry was 3.8%. Most of the major competitors in the industry are chains of 150 stores or more. Rather than franchising the stores out to owners in the different regions of the country, the stores are operated as part of corporate chains. This means that economies of scale are very important and give the chain owner a lot of leverage with suppliers. Companies in this industry rely upon word-of-mouth, catalogs, and more recently the Internet to deliver their messages. Historically, they have not spent a lot of money in traditional advertising vehicles. The average size store ranges from 3500 square feet for a small specialty retailer to 80,000 square feet for a big box store such as Bed, Bath, and Beyond.

This industry is highly fragmented. Competitors include the large mass merchandisers like Wal-Mart and Target; the specialty retailing chains like Kirkland's and Bombay; the big box (category killers) like Bed, Bath, and Beyond and Linens N' Things; the department stores like Macy's and Saks; the moderate to large size free standing specialty retailer who have chosen to use free standing stores like Pier 1; the catalog retailer; and the small specialty retailer with just one or a few stores. Ironically it seems that each of these segments of the industry have been able to carve out a niche for themselves, although department stores have been losing business to the other segments for the last 10 to 15 years.

Demographic trends have been very favorable for this industry. The number of people in the 40-64 age bracket (a prime age for these type of purchases) is growing fairly rapidly. There has been an increase in the number of people who own their home and those who own a second home. New and existing single-family home sales have increased every year since 1995.

Many of the stores in this industry have either left the mall venue or never were in large regional malls. Pier 1 has its own free standing stores, and other retailers in this industry have chosen to locate in power strips, life-style centers, or community strip centers. The rent is cheaper per square foot in these retail venues, there are more locations available in these venues, and they match the customer's desire to get in and out of the store quickly. …

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