Gmi in the 1980s General Case Study

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But the products sold by GMI are such staples, this is unlikely, and its food products are fairly diverse and palatable to a large, general audience. It has also shown the ability to innovate and swiftly offer customers products with new, different formulas based upon shifts in demand. Thus, its 'fashion line' seems considerably less secure than its food lines, much like its restaurant and toy components.

The need to focus on necessary products with durable sources of sustained demand vs. non-specialty products with volatile demand is further underlined in GMI's specialty retailing. Certain brand names such as Eddie Bauer and Talbots are doing extremely well. Although these are clothing lines, these retailers do not offer 'trendy' clothes and instead market themselves to broad niche markets that are older and more reliable in terms of their preferences. Eddie Bauer offers clothing targeted to the 'outdoorsy' consumer who is in search of comfortable clothing that can be worn in a wide variety of weather (such as wet, cold, or hot weather when camping). Talbots' consumers tend to be older and trend-resistant and capitalize upon its brand name for quality, versus being 'of the moment.' Although officially the specialty retailing sector is mixed, this is only because non-necessary products like collectibles are not doing particularly well. Even more so than toys, collectibles often have trouble sustaining demand once a trend burns out and consumers tend to eliminate these components of their personal budgets during economically shaky times (563).

Given this data, it is recommended that GMI continue to operate a diversified profile with some modifications.

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The reliable demand sustained by its foods indicates that this should be the primary area of targeted growth. GMI should engage in more intensive market research about customer demand for its food products and offer innovative and targeted products within this core competency. However, to engage in a risk management strategy in case that certain market shifts do negatively impact this sector (such as the price of wheat and corn), GMI should also continue to diversify in its specialty retail sector, with an emphasis on product lines such as Talbots which have built-in demand. Such general specialty retailers with a wide base of reliable demand market themselves upon quality rather than trendiness (particularly if they target upper middle-class rather than lower-middle class consumers). The 'toy' and 'fashion' segments seem too volatile, and GMI should attempt to shift its acquisition strategies away from these areas and ideally to divest from them, given that they do not offer products that are necessary. They do not allow GMI to exhibit its core competencies of product innovation in areas of high, sustained consumer demand like food. Regarding its 'restaurants,' a reconfiguration of the Red Lobster to suit changing consumer tastes seems both necessary and prudent, but also diversifying to include more fast food and non-sit down restaurants, which tend to be more insulated against shifts in the economy. The 'restaurant' sector also exhibits more synergies with GMI's food lines, versus the toy and fashion components......

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