Borders bookstore case study

Case A3: Abercrombie & Fitch: Hiring for Looks

Clothing retailer Abercrombie & Fitch often recruited on college campuses and in the mall to find attractive young people and then urged them to apply for jobs. This company, known for building an attractive workforce, did so by aggressively hiring pretty young women and handsome young men to match their all-American brand image. Abercrombie & Fitch refers to these great-looking sales associates as brand ambassadors. They project the retailer’s brand and make the store a better experience for customers.

Is seeking good-looking employees a necessary trend in the retail industry? Is hiring an attractive sales force a smart and necessary practice to differentiate the store in the competitive retail environment? Do salespeople need to mirror the images seen in the retailer’s catalog and home page? Does all-American mean thin, tall, and white with blonde hair and blue eyes? If the store has great-looking college students working in the store, will others want to shop there? How important are retail experience and ability versus a pretty face?

In seeking good-looking employees, companies are risking lawsuits for discriminatory hiring practices. Hiring attractive people is not illegal, but discrimination on the basis of age, gender, race, national origin, disability, or ethnicity is. Employers may establish and enforce grooming and appearance standards. Exceptions to Title VII are possible if the employer can prove that one of the protected characteristics is a bona fide occupational qualification.

In 2003, Abercrombie & Fitch was named in two class-action lawsuits alleging discriminatory hiring practices. Black, Asian, and Latino plaintiffs alleged that they were denied sales associated positions. These workers were directed to low-visibility jobs in the stock room or maintenances department.

Abercrombie & Fitch did not admit guilt and denies that it engaged in any discriminatory practices but settled these cases for $40 million distributed to several thousand minority and female plaintiffs. The company agreed to appoint a vice president for diversity, use benchmarks, train all hiring managers, and hire 25 diversity recruits in an attempt to alter its white, all-American image and more accurately reflect the applicant pool in its stores. The settlement also calls for Abercrombie & Fitch to increase diversity in its promotional materials.

DISCUSSION QUESTIONS

1. Why would Abercrombie & Fitch want to hire employees with a certain look?

2. From a business perspective, do you think this is a good idea? What about from an ethical perspective or a legal perspective?

Case A4: Salon-Only Hair Care Products Found Outside the Salon

High-end, salon-only hair care products have been showing up on the shelves at grocery stores, discounters, and drugstores. Premium brands such as Nexxus, Paul Mitchell, Redken, Rusk, and Sebastian are clearly marked with “For Sale in Professional Salons Only.” However, these brands are being sold through mass-market chains in addition to the exclusive salon-only channel. This practice is known as diverting products from the intended channel of distribution.

Is this practice illegal? Currently there is no legislation prohibiting mass retailers from selling premium brands. Because a strong gray market exists for professional hair care products, drug chains, discounters, and food retailers offer salon-only brands in the same health and beauty aisles as the mass-market hair care brands. These high-demand hair care lines are also available through online retail sites.

When beauty supply distributors or wholesalers break contractual agreements with manufacturers, the makers of salon-only brands lose millions of dollars and risk their exclusive brand image and reputation when their products are sold in stores. Improperly diverted hair care products are estimated to be valued at up to $800 million of the industry’s $29 billion in annual sales.

On the Paul Mitchell Web site (www.paulmitchell.com), the company is reminding customers to fight against the manufacturing, distribution, and retailing of counterfeit products through its Product Control Campaign. This education program is designed to warn customers of the possible danger of purchasing the Paul Mitchell brand from intermediaries other than professional salons. The risks associated with purchasing diverted products include possible tampering, expiration, contamination, or substitution.

DISCUSSION QUESTIONS

1. How do customers, manufacturers, salons, and retailers react to the practice of diverting “salon-only” products to discounters, drug chains, and grocery stores?

2. Will the education campaign launched by Paul Mitchell change where consumers shop for professional hair care products? Explain your rationale.

Case A5: SaksFirst Builds Customer Relationships

It’s Wednesday afternoon, and as usual, Gwendolyn has a fitting room ready for Mrs. Johnson. She has picked out some of the new items in Mrs. Johnson’s size that came in the previous week. She has everything from scarves to jewelry to shoes ready to go along with the outfits.

“Good evening, Mrs. Johnson. So how was your birthday?” Gwen asked.

“It was wonderful. My husband took me to Italy. Thank you for the card.”

“I pulled some new items for you to try on.” Gwendolyn said.

“Thank you, Gwen. You are the best!” replied Mrs. Johnson.

The reason Mrs. Johnson has such a friendly relationship with Gwen is because Mrs. Johnson is a regular customer and a SaksFirst member.

Saks Fifth Avenue started in the early twentieth century. Saks is considered the epitome of class, style, and luxury. When customers go to Saks, they receive excellent customer service, when they join SaksFirst – started in 1994 – they also receive a lot of additional benefits. SaksFirst is a preferred customer program that helps facilitate more personal customer sales associate relationships.

To become a member, a customer has to have a Saks Fifth Avenue credit card, and once she or he spends at least $1,000 a year, the customer is automatically enrolled. For every dollar spent, the customer will receive a reward point. At the end of the year, preferred customers receive 2, 4, or 6 percent in bonus points based on how much they charged that year above $5,000 at Saks.