Global Success of Lands' End, an American Company Term Paper

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Lands' End: An American Company Gone Global

Identify an American-Based company that has expanded Internationally

Lands' End, Inc. is a direct merchant of traditionally styled casual clothing for men, women, children, accessories, shoes, soft luggage, and home products [www.landsend, com, Investor Relations Home Profile, 2002]. The company offers its products through multiple selling channels. It sells through a series of general and specialty catalogs, mailed directly to its customers. It sells through the Internet, its international businesses and outlet stores. The company has three operating segments, consisting of core, specialty, and international. [Yahoo.com, 2002]

Lands' End was one of the first major retailers on the Internet. Its website www. Landsend.com was launched in 1995, and now accounts for approximately 10% of its yearly sales. [Yahoo.com, 2002]

From its humble beginnings, Lands' End has followed an aggressive expansion plan, keeping place with current marketing trends and technology. In 40 years Lands' End has grown from a few sailors on a back street in Chicago to a top international competitor in the direct marketing segment.

Lands' End currently operates 16 outlet and Inlet stores in 4 states: Wisconsin, Illinois, Minnesota and New York; plus 2 outlet stores in the United Kingdom and 1 in Japan. Its "Travelers' Inlet" store, at the Minneapolis/St. Paul International Airport, offers a selection of full-price catalog merchandise. Outlet stores feature Not Quite Perfect® and overstocked items. [Yahoo.com, 2002]

Lands' End was an "early adopter" of the Internet, launching its Web site (http://www.landsend.com) in 1995. Initially, the site featured 100 products as well as stories, essays and travelogues. Today, the U.S. site offers every Lands' End product, including an extensive Overstocks section, where excess merchandise can be purchased at discounts of up to 75%. In addition, Web sites have been launched in the United Kingdom, Japan, Germany, France, Ireland and Italy. A separate Business Outfitters Web site offers company incentives, rewards, gifts and group apparel. [Yahoo, 2002].

Discuss the history of the company

Lands' End started in 1963 in a basement, along the river in Chicago's old tannery district. The founders were sailors and sold and made racing sailboat equipment. They also sold duffel bags, rainsuits, and some sweaters. The business later moved to Dodgeville, Wisconsin, a farming community. [www.landsend.com, Out Our Way, 2002]

Since the early 1990s, Lands' End has opened telephone and return centers in Yokahoma, Japan, and Mettlach, Germany. [Yahoo.com, 2002]

Beyond Buttondowns, their first specialty catalog, was introduced in fiscal 1991, and renamed Lands' End for Men in fiscal 2001 [Yahoo.com, 2002]

Lands' End began marketing to mail-order customers in the United Kingdom in 1991, and rented a distribution center in Oakham, two hours north of London, in 1992. [Yahoo.com, 2002].

In 1994, Corporate Sales, the Company's business-to-business catalog, was introduced.

Lands' End was an "early adopter" of the Internet, launching its Web site (http://www.landsend.com) in 1995. Initially, the site featured 100 products as well as stories, essays and travelogues. Today, the U.S. site offers every Lands' End product, In addition, Web sites have been launched in the United Kingdom, Japan, Germany, France, Ireland and Italy. A separate Business Outfitters Web site (http://www.landsend.com/businessoutfitters) offers company incentives, rewards, gifts and group apparel. [Yahoo.com, 2002]

In August 1996, the Company launched its first German catalog. During fiscal 2001, the Company mailed eight issues of the German catalog. . [Yahoo.com, 2002]

During fiscal year 1998, the Company's phone center and administrative office moved to a larger facility in Yokohama. The distribution center moved to Fujieda from Maebashi in fiscal 1997 to accommodate future growth. [Yahoo.com, 2002]

Discuss the product distribution methods in foreign markets

One of the most important issues facing a company seeking to expand globally is establishing distribution channels. Import restrictions and other government regulations, infrastructure issues such as transportation, language, cultural differences can make this a complex undertaking. It typically requires the aid of agents and other intermediaries [Emerson, 2002]

The method that a company chooses for developing these distribution channels will depend on its goals, modes of operation, and products. Some of the same factors are faced when breaking into a foreign market as are also faced in domestic distribution channels. One of the additional obstacles is dealing with foreign currencies and exchanges. Transportation and export is another issue in setting up a foreign branch of your business. [Emerson, 2002]

In the case of Lands' End, this transition was a bit easier than for many companies. Their distribution system in the United States shipped nation wide. In the beginning, they handled their distribution network by shipping internationally through their same hub an its Wisconsin facility.

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[Emerson, 2002]

Setting up a distribution center, call center, warehouse, or retail store in any country is an expensive proposition. It is a large financial outlay, with a huge amount of risk. Lands' End minimized this risk by first testing the market in the foreign country and mailing out its orders through the normal distribution network in the U.S.

Catalogs mailed in foreign countries are written in the local languages and denominated in local currencies. This may be on reason why Lands' End first tried a test market in the UK first. In September 1991, the Company launched its first United Kingdom catalog. . In August 1993, the Company opened a leased telephone order and distribution center in Oakham, England that allowed it to fill orders locally and reduces delivery time to United Kingdom customers. Construction of a new phone and distribution center in Oakham was completed in the summer of 1998. During fiscal 2001, the Company mailed nine issues of the regular monthly United Kingdom catalog, plus two abridged issues to prospective customers in the United Kingdom. .[www.landsend, com, Investor Relations Home Profile, 2002].Lands' End followed similar procedures when opening operations in Japan and Germany.

There are advantages and disadvantages to having the central, worldwide distribution centrally located in Wisconsin, as opposed to a distribution center in each country of operation. A central international distribution center would make it convenient to ship, and package. Only one currency would be used and many administrative tasks such as inventory control and transportation would be easier as well. However, there are disadvantages. The main one would be the extra time it takes to ship something internationally. Another disadvantage would be tracking packages that did not arrive, or packages that arrived damaged. Customer dispute resolution could take too much time. It is unlikely that after one bad experience dealing with a foreign country, that a customer would return to make another purchase. This is likely the reason why Lands' End chose to build a distribution center in each country that it operates.

Discuss pricing strategies

In the U.S., Lands' End offers its products at full price through their catalog and overstocks an discontinued items through their retail outlets. They do have a discount section on their website offering not so perfect items at up to 75% off regular price. [www.landsend.com, 2002]

Compared to their competitors, Lands; End is competitive with Eddie Bauer, who also recently opened a direct mail business in Japan. They offer reasonable merchandise at comparable prices to their competitors. [www.landsend.com, 2002]

When pricing a product for sale in a foreign country, one must pay attention to the relationship of the dollar to the foreign currency, concentrating on its purchasing power and the price levels. If you're unique, you may be able to command a higher price.[McDonald, 1998]

"By pricing products in yen, pounds or deutsche marks, you risk losing profits due to currency fluctuations. But, you can reduce or protect your exposure to swings in exchange rates with a money- management technique called "hedging." It's a risk-management tool that helps you protect your overseas profits by locking into an exchange rate. If you get the right rate at the right time, you may even gain on the exchange. But, a mistimed contract can result in losses. However, a practical solution price selection is to "pad" your product price by adding five percent (or more) to your product's price to accommodate fluctuations in currency exchange rates.." [McDonald, 1998] This is the most common method employed by the majority of companies marketing in foreign companies.

Discuss the types of store formats, and store locations.

Lands' End is mainly concerned with its distribution centers. At this time it does have two stores in the United Kingdom and one in Japan. The formats of these stores are similar to those in the United States. The locations are near major population areas. These stores are still in their infancy. Lands' End concentrates more on the catalog/Internet sales area of its business, primarily the catalog end, which still constitutes 90% of its sales. The retail stores are just extras at this point in time.

Lands' End is concerned with setting up distribution centers in each country in which it operates . Lands' End tends to start it foreign expansion projects in the United Kingdom. This would be an obvious choice for them as there are no language or major culture barriers to overcome. The….....

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