BEN95 A & Z Stores Case Study Analysis The Case Study is Attached. Steps and structure of analysis: 1.Key issues 2.Identify key issues 3.Impact 4.Sug

BEN95 A & Z Stores Case Study Analysis The Case Study is Attached.

Steps and structure of analysis:

1.Key issues

2.Identify key issues

3.Impact

4.Suggestions

——————————————————

Points to be focused on also

Compelling commercial (why they do?, do you agree or disagree? And why).

A lot of criticism for the company (identify all the criticisms) you need to come up with recommendation (take care of your stakeholders. Take examples from the case study.

——————————————————-

A & Z Stores Case study: (This is some of the key points/issues)

1- Brand clothing and foods

2- 1463 stores around the world.

3- More franchise partners.

4- 20 years financial instability.

5- A lot of change of leadership.

6- Reputation for quality products.

7- Send the productions overseas.

8- Customer loyal to Britch brand and reacted badly.

9- Stores closures and job loss.

10- 100 stores were closed.

11- Cost 200 million to implement.

12- Loss the reputation of good employer.

13- Opening stores outside (green filed)

14- Values importance.

15- Very ambitions for Z plan.

16- Public criticism.

——————————————————-

– 1300 to 1500 words.

– 0% Plagiarism. Responsible Business Class Test Case Study 2019
A & Z stores
Introduction
A & Z is a British based retail chain of department stores – selling own brand clothing, homeware and
food. Although primarily based in the UK, A&Z sell into a total of 57 countries from 1,463 stores and
websites around the world; many through franchise partners. A&Z employ 81,000 people serving
approximately 32 million customers.
Working with international franchise partners helps extend the reach of the A&Z brand to even more
customers around the world. This model enables A&Z to benefit from partners’ local market expertise
and gain better access to prime retail locations.
A&Z is experiencing a decline in profitability, most especially in its UK operations, and a loss of
reputational capital due to continuing store closures and redundancies. Despite a decade of failed
attempts to transform A&Z, the new CEO has vowed to turn around the fortunes of A&Z while
maintaining its core values. He has publicly stated that ‘no stone will be left unturned’ as he seeks to
radically overhaul operations with a focus on changing a corporate culture that is ‘siloed, slow and
hierarchical’ and a supply chain that is cumbersome, costly and blocking innovation.
Values
•
•
•
•
Inspiration: generating new ideas and exciting and inspiring its customers
Innovation: always aiming to improve things, push boundaries and encourage experimentation
Integrity: striving to do the right thing, build trust and reinforce its reputation
In touch: understanding what is important to customers, communities and colleagues
A&Z have a formal ‘code of ethics’ that is distributed to staff internally and a ‘code of conduct for
suppliers’ document.
Social and environmental policy
“Look Behind the Label”
In 2006, the Look Behind the Label marketing campaign was introduced. The aim of this campaign was
to highlight to customers the various ethical and environmentally friendly aspects of the production and
sourcing methods engaged in by A&Z, including: Fairtrade products, sustainable fishing and
environmentally friendly textile dyes. All coffee and tea sold in A&Z stores is now Fairtrade. In addition,
the company offers clothing lines made from Fairtrade cotton in selected departments.
At Christmas, the company introduces a range of food products to support a housing charity
Z Plan
On 15 January 2007, A&Z launched an initiative, known as “Z Plan” to dramatically increase the
environmental sustainability of the business within 5 years at an estimated cost of £200 million.
The plan covers “100 commitments over 5 years to address the key social and environmental
challenges facing A&Z today and in the future”. The commitments span five themes: climate change,
waste, sustainable raw materials, ‘fair partnership’ and health, with the aim that it will:
•
•
•
•
•
Become carbon neutral
Send no waste to landfill
Extend sustainable sourcing
Help improve the lives of people in their supply chain
Help customers and employees live a healthier life-style
Despite an 18% fall in the share price in January 2008, following publication of their latest trading
statement, the company confirmed that they would be continuing with the plan, saying that there were
‘compelling commercial — as well as moral — reasons to do so’.
A&Z introduced a reusable hessian bag in 2007 as part of the plan, aiming to reduce the number of
plastic bags used within five years. This was followed in May 2008 by the introduction of a 5p charge
for standard sized carrier bags used for food purchases (before this charge became compulsory in the
UK). All profits from the sale of food bags goes to charity. In 2012 the company was awarded European
Business Award for the Environment by the European Union
A&Z has now launched its Z Plan 2025 – maintaining commitment to the core Z Plan but with clear
targets:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
By 2019, we’ll incentivise and reward our customers for making healthier choices.
By 2022, 50% of our global Food sales will come from healthier products.
By December 2018, single serve portion sizes of snacks, confectionery and ice cream will
contain no more than 250 calories.
Between 2017 and 2025, we’ll help to make a positive difference to people who are affected by
either cancer, heart disease, mental health, loneliness or dementia by helping to raise £25m
for charities that support these causes.
By 2022, we’ll enable colleagues worldwide to complete a health risk assessment, including
health checks, where appropriate. We’ll use this data to tailor our interventions/advice and
report annually on progress.
By 2020, in ten locations we will have completed programmes that aim to secure meaningful
economic, social and environmental benefits in the communities around our stores and beyond.
We’ll build on our insights and roll out programmes in 100 further locations in the UK and
internationally by 2023, then share our learnings with 1,000 locations by 2025.
By 2025, 50% of our full line operated stores and offices in the UK will have space available for
community groups, charities and local interest groups to use.
Between 2017 and 2025, we’ll support colleagues worldwide to provide one million hours of
work-time community volunteering.
By 2025, we want all edible surplus food from our stores, key franchises and direct Foods
suppliers worldwide to be diverted for human consumption.
We’ll enter into a new collaboration with Oxfam over 3 years focusing on the UK and India to
develop a deeper understanding of the connection between our sourcing practices and our
human rights impacts. Oxfam will report the findings independently, whilst A&Z will develop a
programme of actions and report annually on our progress from 2018.
Between 2017 and 2025, our Global Community Programme will benefit one million people in
our supply chain communities by working in partnership with others to help build livelihoods,
protect the environment and improve well-being focusing on our areas of biggest human rights
and environmental impact.
By 2020, 100% of A&Z products will have at least one Plan A attribute and by 2025 every
product will have attributes which address all priority social, ethical and environmental impacts.
By 2022, all A&Z product packaging in the UK that could end up with our customers will be not
only ‘recyclable’, but ‘widely recycled’. To achieve this, we will actively collaborate with others
to bring about changes in local government recycling policy. By 2022, we will also assess the
feasibility of making all A&Z plastic packaging from one polymer group, which will help
maximise the use of recycled content.
By 2025, the 50 key raw materials used for A&Z products will come from sources verified as
respecting the integrity of ecosystems, the welfare of animals and the wellbeing of people and
communities. This will cover over 80% of A&Z raw material usage by volume.
•
•
•
By 2025, we’ll halve net food waste relative to sales from A&Z operated and franchised
locations worldwide against a newly established baseline.
By 2030, in line with climate science, we aim to reduce greenhouse gas emissions from A&Z
operations worldwide by 80% compared to 2006/07, on route to a 90% reduction by 2035.
By 2030, in line with climate science, we’ll reduce our indirect greenhouse gas emissions from
upstream and downstream sources by at least 13.3 million tonnes.
Despite such clear commitment A&Z face criticism on:
•
•
•
•
•
•
•
•
•
•
The amount of single use plastic they use in their products
The movement to greenfield sites from high street stores
The high prices they charge for simple vegetarian dishes
The lack of attention paid to food and clothing supply chains
Poor Management conduct with employees
Tiered employment conditions
Marketing is sexist and undermines women
A 12.5% gendered pay gap
72% of its workforce is female but 57% of management are male
70% of board is male
History and Background
A&Z made its reputation in the early 20th century with a policy of only selling British-made goods (it
started to back down from this policy in the 1990s.) It entered into long-term relationships with British
manufacturers, and sold clothes and food under the A&Z brand which was introduced in 1928. By 1950,
virtually all goods were sold under the A&Z brand label. A cautious international expansion began with
the introduction of Asian food in 1974. M&S opened stores in continental Europe in 1975 and in Ireland
four years later.
The company put its main emphasis on quality. For most of its history, it also had a reputation for
offering fair value for money. When this reputation began to waver, it encountered serious difficulties.
Arguably, A&Z has historically been an iconic retailer of ‘British Quality Goods’. The uncompromising
attitude towards customer relations was summarised by the 1953 slogan: “The customer is always and
completely right!”
A&Z’s profits peaked in the financial year 1997/1998. At the time it was seen as a continuing success
story, but with hindsight it is considered that profit margins were pushed to untenable levels, and the
loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also a
burden, as rival retailers increasingly imported their goods from low-cost countries. A&Z eventually
switched to overseas suppliers in 2001, which saved production costs but seriously undermined a core
part of its appeal to the public. These factors combined to plunge A&Z into a sudden slump, which took
the company, its shareholders, who included hundreds of thousands of small investors, and nearly all
retail analysts and business journalists, by surprise. The company’s share price fell by more than two
thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145 million in the year
ended 31 March 2001.
In 2001, with a redesign of its underlying business model, profits partially recovered.
In 2004, A&Z was in the throes of an attempted takeover by a large British retail group. They fought off
the takeover by selling off its financial services business to HSBC Bank, closing some stores and
stopping the expansion of its food only stores. In February 2007, A&Z announced the opening of the
world’s largest A&Z shop outside the UK at Dubai Festival City. On 2 October 2008, A&Z opened its
first mainland China shop in Shanghai.
In 2009, twenty-two unprofitable and minor food stores in the UK were closed as part of a cost cutting
measure. In August 2010, it was confirmed that three more major stores would close. The closures
were met with protests from the local communities and petitions were signed in support of retaining the
stores, although they went ahead.
The Retail Knowledge Bank conducted an audit of the company’s brands in August 2010, and revealed
that sales of womenswear were at a 10-year low. On 9 November 2010, the chief executive revealed
plans to strengthen the company’s overall brand image and targeting sales of between £800m and £1bn
for which the company will increase capital expenditure to £850m to £900m over the next three years
to fund the plans. The company also announced a new marketing strapline, ‘Only at A&Z’, and that it
would revamp its website.
The CEO ordered a new store design in May 2011, and it was announced that the company would
spend around £600 million between 2011 and 2014 on its UK stores, involving the launch of a range of
different store formats based on the age, affluence and demographics of people in those areas. The
design also included the trial of a new in-store “navigation scheme”, which followed research showing
that shoppers found A&Z store layouts confusing and “difficult to shop [in]”. By 2013, A&Z’s clothing
division had an 11% market share in the UK. The CEO vowed to bring “quality and style back” A&Z also
stated it intended to increase its number of UK suppliers from the 20 it had at the time. The public
expressed cynicism about getting back to using UK manufacturers after A&Z introduced a ‘value’ range
with everything made in the Far and South East Asia delivered through complex and opaque supply
chains. There was also widespread criticism of A&Z’s lack of fashion style and adherence to traditional
clothing ranges or misjudging the fashion trends and introducing unpopular clothing lines.
Though holding a long-standing reputation as a good employer – offering career tracks and long-term
employment with above average salaries for the sector – A&Z, as part of their cost-cutting activities,
created a tiered approach to employment with increased temporary employment contracts and new
performance management systems that Trade Unions described as ‘Draconian’. Staff express concern
that long-standing members of staff continue to enjoy good employment conditions while newer
employees are paid less and are treated as expendable. The most common complaint from staff is that
Management do not live the values of A&Z and that management training is customer focussed and
lacks a focus on people management issues. Questions have also been raised regarding employment
conditions in the international stores that are run via Franchise agreements.
In July 2015 A&Z announced several store closures. Some 430 workers were affected by the
closures. The closures cost up to £200m to implement; the closure included loss-making stores in
European markets such as France, Belgium and the Netherlands as well as outposts in China.
Several smaller stores were identified for closure in November 2017 and on 31 January 2018 fourteen
stores were identified for closure; followed by several more in April 2018 when A&Z managers confirmed
that 14 more shops were to be closed and another 86 were under investigation – taking the total to over
100 closing by 2022 (including a major store in France). A&Z faces strong criticism for closing high
street stores but expanding their out of town retail park presence. Critics state that A&Z are damaging
communities and impacting the quality of lives of people who cannot travel so readily to out of town
stores, i.e. the elderly, and closing off opportunities for employment to those who do not have cars. In
addition, the abandoning of existing premises to build new premises on greenfield sites attracts scrutiny
regarding damage to the countryside/ environment/ wildlife and increased traffic/fuel emissions.
In 2018, A&Z also sold its interests in its Far East operations/ stores and entered into a franchise
agreement to continue the A&Z brand. At the same time, A&Z extended its presence in the Middle East
(with a focus on food stores) via a similar franchise agreement and celebrates 20 years in the UAE.
A&Z presence has also expanded in India and Northern Europe, with business in Southern Europe
remaining stable.
Corporate Governance
A&Z are governed by an operating committee (Chief Executive and Executives leading various areas
of the business) and a board of directors (Chairman, Chief Executive, Finance Director, Company
Secretary and 4 x Non-Executive Directors). The Operating Committee report to the Board. The
Operating Committee is male dominated with zero ethnic diversity. The Board is male dominated in
terms of senior executive positions and the Chairman, but female dominated in terms of non-executive
membership. As with the board, there is no ethnic diversity on the Board.
In the 2000s, A&Z experienced continuous changes in Chairmen – with the average tenure being only
12-18months. Between 2011-2017, A&Z enjoyed some continuity in their Chair (a former banker), with
a new Chairman being appointed in 2017 (A Tory MP).
The current Chief Executive has worked for A&Z for 25 years; working his way up the ranks to CEO in
2016. Previously, the CEO (2010-2016) arrived at A&Z from a low cost supermarket chain. In 2009, the
CEO was also the Chair of the Board and led the company for just one year.
Franchise agreements to run international stores are with major reputable companies who have their
own value statements. However, the agreement includes a commitment to A&Z values and quality
standards in order to support the brand. Franchises are carefully policed by A&Z but the living of values
is a difficult process to capture by a parent company and there are concerns that standards are not
being adhered to and, most especially, the Z Plan 2025 will not be attained internationally.
Key Facts as at 31st March 2018
10.7 bn (GBP) group revenue
1.1bn (GBP) international revenue
66.8 ml (GBP) group profit before tax (a drop from 176 ml in 2017 and 488 ml in 2016)
Operating profit rising dramatically for international operations and declining for UK
Dividend per share paid to shareholders remains at 18.7 pence across 2016, 2017, 2018 despite falling
profits
61%/39% split clothing/ food in UK stores
1035 UK stores
428 international stores
81,000 employees
Z Plan 2025
Radical plan for change and pressure for profitability

Purchase answer to see full
attachment