Shopko And Pamida Essay
CASE STUDY–ShopKo and Pamida: Systems Triumph or Tragedy?
ShopKo, a general merchandise retail chain headquartered in Green Bay, Wisconsin, has about 140 stores in 15 states and had sales of $3.5 billion in 2001. Traditionally companies that sell apparel have four product cycles a year, one for each of the seasons. However such companies now face serious competition from companies like Gap that now operate on rapidly changing product cycles, often bringing in new product lines every two to four weeks. One of the growing problems ShopKo had to address was what to do with the excess (or overstocked) merchandise when a cycle ends.
At the end of a season (or cycle), companies have faced two problems. One is the need to empty its shelves in time …show more content…
With headquarters in Omaha, Nebraska, Pamida’s slogan is “Bringing smaller communities what they want.” ShopKo’s aim in purchasing Pamida was to increase its presence in the small towns where competition from retailing powerhouses such as Wal-Mart and Target was not as strong. Pamida was the only major retail store in most of these small towns, and its strategy was to compete by maintaining a high in-stock rate rather than by becoming the lowest price competitor. Pamida relies on information systems to execute that strategy, and its SEC filing stated, “Pamida’s information technology strategy is aimed at providing the customer with . . . merchandise which is always available as advertised.” When ShopKo purchased Pamida, the chain had a total of about 180 stores, although that number increased to 229 stores in 16 states when ShopKo purchased the P.M. Place chain of 49 small town Midwestern stores in May 2000 and merged it into …show more content…
To make matters worse, many key products were in warehouses even though they were not on store shelves. In addition, the company’s gross margin was too low and falling. ShopKo wanted to expand the number of Pamida stores in small towns. Pamida’s solution was to consolidate its five warehouses into three and modernize its inventory management systems to increase stores’ ability to keep their shelves stocked. The plan execution began early in 2000 with the Lebanon (Indiana) Distribution Center Project to convert the Lebanon distribution center servicing 107 of Pamida’s 229 stores, to a full-service warehouse. The concept was to transform the warehouse from a flow-through facility (where goods arrive at the warehouse and are immediately shipped to the stores) to a full service distribution center (where inventory is stored so that it can be shipped to the stores immediately when needed). The warehouse was expanded from 200,000 square feet to 418,000 square feet, but the warehousing software was neither updated nor
ShopKo, a general merchandise retail chain headquartered in Green Bay, Wisconsin, has about 140 stores in 15 states and had sales of $3.5 billion in 2001. Traditionally companies that sell apparel have four product cycles a year, one for each of the seasons. However such companies now face serious competition from companies like Gap that now operate on rapidly changing product cycles, often bringing in new product lines every two to four weeks. One of the growing problems ShopKo had to address was what to do with the excess (or overstocked) merchandise when a cycle ends.
At the end of a season (or cycle), companies have faced two problems. One is the need to empty its shelves in time …show more content…
With headquarters in Omaha, Nebraska, Pamida’s slogan is “Bringing smaller communities what they want.” ShopKo’s aim in purchasing Pamida was to increase its presence in the small towns where competition from retailing powerhouses such as Wal-Mart and Target was not as strong. Pamida was the only major retail store in most of these small towns, and its strategy was to compete by maintaining a high in-stock rate rather than by becoming the lowest price competitor. Pamida relies on information systems to execute that strategy, and its SEC filing stated, “Pamida’s information technology strategy is aimed at providing the customer with . . . merchandise which is always available as advertised.” When ShopKo purchased Pamida, the chain had a total of about 180 stores, although that number increased to 229 stores in 16 states when ShopKo purchased the P.M. Place chain of 49 small town Midwestern stores in May 2000 and merged it into …show more content…
To make matters worse, many key products were in warehouses even though they were not on store shelves. In addition, the company’s gross margin was too low and falling. ShopKo wanted to expand the number of Pamida stores in small towns. Pamida’s solution was to consolidate its five warehouses into three and modernize its inventory management systems to increase stores’ ability to keep their shelves stocked. The plan execution began early in 2000 with the Lebanon (Indiana) Distribution Center Project to convert the Lebanon distribution center servicing 107 of Pamida’s 229 stores, to a full-service warehouse. The concept was to transform the warehouse from a flow-through facility (where goods arrive at the warehouse and are immediately shipped to the stores) to a full service distribution center (where inventory is stored so that it can be shipped to the stores immediately when needed). The warehouse was expanded from 200,000 square feet to 418,000 square feet, but the warehousing software was neither updated nor