bus800 individual report_vera bradley_winter 2016

Running Head: Vera Bradley in 2014: Will the Company’s Strategy Reverse Its Downward Trend?

Vera Bradley in 2014: Will the Company’s Strategy Reverse Its Downward Trend?

Industry: Women’s luxury handbag and accessories

Professor: Alison Kemper

Bus 800

Nujhat Nabeela 500505369

Date: March 15, 2016

VERA BRADLEY IN 2014: WILL THE COMPANY’s STRATEGY REVERSE ITS DOWNWARD TREND

Table of Content

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Introduction Vera Bradley was founded by two friends, Barbara Bradley Baekgaard and Patricia R. Miller, in 1982. It operates in the women’s luxury handbag and accessories industry (2.1). It’s colorful and distinctive designed products are offered primarily for women . Two segments through which this company generates revenue, are direct and indirect. Direct channels include Internet, fullprice retail stores and factory outlet stores. Indirect channels include department store and speciality retail channels. The issue Vera Bradley was having is that its’ traditional patterns and products were unable to attract new customers and overall traffic was decreasing. The main issue that requires attention, is its declining demand for its traditional product offering. Analysis

One of the main issues of Vera Bradley is that it`s traditional product offering is not attracting enough new customers to the brand (7.2.6). Several factors that are contributing to this issue involve the nature of the industry it is involved in. Competition is intense. Big players involve Louis Vuitton, Gucci, Prada, Michael Kors, Coach, Kate Spade and many more (3.5). These brands already have a very strong brand image and loyal customer base. Vera Bradley`s current strategy is to follow the strategies of other players in the market to maintain its business (6). Since the competition is intense, simply copying others will not be enough to attain mindshare of consumers. Vera Bradley is failing to innovate and differentiate their product line. It is simply not catering to its customers` needs. As a result, asset turnover ratio of Vera Bradley declined by .56% from 20132014 (9). Net revenue of Vera Bradley also declined year to year since 2010 (9). On the other hand, net income was increasing till 2013, however the following year, it declined by 15% (9). Gross profit margin of Vera Bradley remained unstable from 2010 through 2014. It increased by 5.45% over the course of 5 years, but it has the lowest gross profit margin among all its competitors (9). Overall, the brand is having difficulty standing out from the crowd and unable to generate consumer attraction. Another factor that is contributing to this issue is that during economic downturn, many consumers have less disposable income (1.2.2). During this time, they opt in for substitutes such as non luxury, counterfeit or affordable luxury products (3.4), taking sales away from Vera Bradley. Moreover, Vera Bradley has a diluted image of its brand. It has a very wide array of product lines that do not sufficiently meet the customer's’ needs (7.2.4). Some of its product lines include luggage, purses, wallets, cell phone and computer covers, jewelery, lunch sacks, bags, scarves, beach accessories, and baby clothing (6). Out of all these products, baby clothing seems quite irrelevant for the industry Vera Bradley is competing in. This takes away the focus of the brand, making the brand image diluted.

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Other issues involve not providing product offering catering to men. Men’s products are growing in North America and Asia and it can provide a unique growth opportunity for Vera Bradley (7.3.4). In terms of distribution channels, it has a wide selection. However, it does not distribute products through luxury departmental stores like Michael Kors (7.2.8). Additionally, Vera Bradley lacks presence on a global scale when compared to its competitors (as seen in group map5.1). It only focuses in United States and Japan(7.2.1), whereas, competitors operate in a number of countries (5). It is predicted that sales in China and other emerging markets would grow from 2015 through 2018 (2.7 ). Therefore, Vera Bradley is missing a huge opportunity to market globally in these countries. Alternatives

Following are suggested alternatives for Vera Bradley:

#1. Expand domestically: Vera Bradley should solely focus on expanding its business in North America . Advantage is that Vera Bradley would be able to further capitalize on its already existing resources to increase its business and work with the consumers they are already familiar with. Disadvantage of this alternative is that Vera Bradley will be unable to grow as an international brand. #2. Penetrate in Asia Pacific Region: Euromonitor forecasts that by 2018, biggest players in the largest luxury goods market in the world would be Asia Pacific region. Growing markets like China and India is anticipated to be the key players and enhance sales of luxury goods in the next few years (2.7). With the standard of living rising in these emerging markets, demand for luxury goods is also growing (1.3.4). Not only the rich have a desire to own luxury goods, middle income class too want luxury goods (1.3.5). Advantage with this alternative is that it focuses greatly on one of the major driving forces, i.e. globalization (4.1). Using this alternative, Vera Bradley will have the capability to reach new segments, broaden its customer base and increase sales. Disadvantage would be that if this expansion fails, the company could virtually go bankrupt. Expanding globally would require major capital investment and if unsuccessful, it can turn out to be a major disaster. #3. Rebrand using marketing efforts: Focus on marketing Vera Bradley products to career driven women. Marketing efforts would involve, TV advertisements, commercials with celebrity endorsements, marketing through billboards, interacting with customers through social media. Other methods would involve rebranding Vera Bradley ecommerce website to make it user friendly. According to research, online sales are now growing faster than ever at a rate of 28% annual growth (7.3.5). Benefit of this alternative is that it allows for maximum engagement and personification of the brand. Downside of this brand is that many of the efforts are not measureable and there limited ways to find out its effectiveness in bringing in revenue for the company.

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Recommendation

Using the following evaluation matrix, alternative (s) that suit the brand functional and business strategies best, will be chosen. Criteria: Evaluated out of 5 Alternative #1 Alternative #2 Alternative #3

Reach wide consumers 2 5 4

Enhance customer relationship 3 4 4

Create excitement around product launch 3 4 5

Cost 4 3 5

Total 14 19 22

Since Alternative 2 and 3 meet the functional and business strategies best, it is recommended that Vera Bradley move forward and expand internationally in Asia Pacific and use customized marketing efforts to cater to interest of the target market in that region. In terms of financing, Vera Bradley is in a healthy position, with no debt whatsoever .Vera Bradley’s current ratio is 4.09, this means it has the ability to pay off current liabilities with its current assets 4 times (9). With this extra asset, the company can expand and buy capitals needed. For further financial support, Vera Bradley can also take loan to expand. As the debt to equity ratio in 2014 was 0, it has a better chance of being considered for loan than those with a higher rate (9). For expansion, Vera Bradley should first reach its target market through luxury department stores, specialty retail stores, wholesale stores, acquiring smaller companies, joint venture and it’s ecommerce website. Once success of its brand is determined, then move forward with creating its own full price retail stores. Working with others will give Vera Bradley a taste of the market, without having to heavily spend on capitals. Instead it can use that money towards gaining insight of consumers. These two alternatives together fit in perfectly with the internal and external variables. It looks into the social trend of the future i.e. emerging target markets in the Asia Pacific and rising standard of living in these countries. This step will improve the deficiencies of the brand, i.e. increase global presence, implement creative designs based on market research, and larger set of distribution channels. Marketing efforts will be executed after significant market research on consumer preference, attitude and behavior is completed. Efforts include creating a VIP list consisting of local celebrities, i.e. actors and models of the country and sending them Vera Bradley handbags and accessories as gifts. In return, these individuals will be asked to share their opinion of the brand on their social media outlets using specific hashtag. This will create word of mouth marketing, increase brand awareness and strengthen brand image. Using these recommendations, Vera Bradley can further modify its’ product line to cater to the consumers. Overall this targeted approach will give Vera Bradley competitive advantage against the other competitors and produce high growth and above average earnings.

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Appendix: External Analysis

1. PESTEL 1.1 Political Factors 1.1.1 Inadequate information available in the case

1.2 Economic Factors 1.2.1 1.2.2

Global economic crisis Reduced disposable income of customers (189) Impact: Consumers reducing their spending on luxury goods during recessions and economic slowdown

1.3 SocioCultural Factors

1.3.1 1.3.2 1.3.3 1.3.4 1.3.5 1.3.6 1.3.7 1.3.8 1.3.9

Price sensitivity for luxury goods is driven by brand exclusivity, customercentric marketing, emotional sense of status and value (191) Increasing wealth level gains in emerging markets, especially China (sales expected to grow 7.8% to $350 billion (190) Growing submarket “Accessible luxury” (191) Consumers earning much lesser than the rich individuals also has a desire to own luxury brand products with higher levels of quality and styling (192) Growing two income households to reward themselves with luxuries (192) Trade up, trade down consumers are balancing out their spending by switching to lower cost necessity items to increase discretionary spending (192) Growing online shopping trend (192) There is a unique growth opportunity for men’s products (196) Market is focused mainly towards women, but there is a unique recent growth for male products Impact:

Increased globalization of brands to cater to emerging markets, i.e. China/India

Offer affordable luxury product line to cater to lower income consumers

Lower price tags on the accessible luxury products allow for increased volume of sales

Better consumer data gathering

1.4 Technological Factors

1.4.1 1.4.2

Investment in IT and infrastructure (188) Development of ecommerce sites Online sales growing faster than the rest of the market at 28% to $14 billion (192) Impact: Increased cost savings and more flexibility and scalability with operation structure

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1.5 Environmental Factors

1.5.1 Inadequate information available in the case

1.6 Legal Factors 1.6.1 Patent on product designs and logos (194) Impact:

Stopping competitors from copying/imitating designs/strategy of another brand

Increased innovation, as it is hard to copy someone else

In summary, economic situation can act as a threat to the luxury handbag and accessory market because, during recession time, sales are much lower due to decreased level of discretionary income. The industry however, is greatly influenced by social factors. The desire to own luxury goods, not only by the rich, but also the middle income demographic, is one of the most important opportunities in this industry. In fact, countries in the Asia Pacific have a growing demand for luxury goods due to increasing standard of living. Therefore, globalization is crucial to increase market share. Another opportunity is patenting product design to maintain brand uniqueness. Companies in this industry need to anticipate these changes and exploit them to be ahead of others. 2. Economic Traits

Market size 2.1 2.2 2.3

The luxury handbag and accessories industry is very large with numerous brands competing with each other through regular and diffusion lines (191192) The industry was worth approximately $96 billion in 2013 (189) “Largest markets included United States (occupied 36% of sales), Europe ( occupied 21% of industry sales), Japan (16% of industry sales), China (11% of industry sales)” (189)

Market growth rate

2.4 2.5 2.6 2.7

Market is not yet saturated, expansion is still possible (194) During economic slowdown between 20062010, industry sales declined by 0.6% annually (190) “Growing demand in China and other emerging Asian markets such as Indonesia, Malaysia and India, due to rapidly increasing wealth levels and standard of living gains” (190) “Sales in these markets was expected to increase by 7.8% annually through 2015 and reach $350 billion” (190). By 2018 Asia Pacific would be the largest market in the luxury goods world, predicted by Euromonitor (190)

Life cycle position

2.8 Late growth, early maturity stage

Industry profitability

2.9 Profit margin of marquee brands approximated at 40%50%, while diffusion lines captured about 20% (192) Diffusion brands’ lower profit margins are offset due to increased sales volume,

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growing size of the accessible luxury market and production sourcing to low wage developing countries (192)

Ease of entry/exit

2.10 Very high barriers to entry Established brands already have access to high quality suppliers, materials and designers, expertise in marketing and communications, brand awareness and loyalty (191)

Technology Innovation

2.11 “Online sales are growing faster than ever, at an annual rate of 28%, reaching almost $14 billion” (192)

Product Characteristic

2.12 2.13 2.14

Market for luxury goods is segmented into 3 categories: haute couture (for the extremely wealthy), traditional luxury, accessible luxury (191) Product offering includes fine accessories, bags, leather goods, travel accessories, jewelry, scarves, etc. (191, 195) Luxury brands rely on high quality products to attract customers (191)

The industry is large with numerous competitors competing with each other, in the competitive industry. It is currently in the late growth to early maturity stage of life cycle. Market growth is highly dependent on economic situation. However, expanding into the Asia Pacific region can be successful due to the growing demand in that region. Many brands are offering diffusion line of their brands to cater towards the middle income class and derive profit from increased sale. 3. Porter’s 5 Forces

The luxury handbags and accessories industry designers and suppliers of inputs hold great amount of

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power, however, the labor that create these bags in the low wage country are passive. Due to being able to offer premium price, this industry initially will attract new entrants. However, only those with strong financial resource and brand reputation will find success. Additionally buyers in this industry hold limited power as they are highly loyal to their preferred brands and are willing to pay extra for quality goods. This further increases the attractiveness of the industry for premium profit. Competitive products posses moderate force as some consumers are content with a counterfeit product and pay less. On the other hand some want the real deal and nothing would substitute the product but their favorite brand. Lastly, most rivalries have employed red ocean strategy in this industry and are ultimately targeting the same consumers to make sales. 4. Driving Forces 4.1 Globalization Rising standard of living and emerging markets in Asia Pacific region (190) Increasing market share through maintaining international presence

4.2 Change in social trends Understanding customer’s needs and their preferences through social market research (194) Online shopping trend

4.3 Technology and Innovation Strong infrastructure, supply chain and IT systems are essential to keep costs low, ensure scalable and flexible operating structure

Globalization is one of the biggest driving forces in this industry due to rising demand in the Asia Pacific region. Having international presence does not only increase market share, but also provide access to high quality input at a much lower price. Another key force is staying updated with social trends through various research, such as test market, subscribing to trend monitoring services, or setting the trend by the company itself. Changing social trend has the capability to make or break an industry. Furthermore, product innovation through technology can be revolutionary in changing an industry. These driving forces make the industry not so attractive for new entrants, because, it involves a tonne of capital expenditure. Results may not be seen immediately. Overall, these driving forces definitely increase demand for the industry’s product, making competition even more intense, increasing industry profit. 5. Key Success Factors

KSF Impact

Creative design (191) Allows for differentiation

Innovation (191) Sets competitive advantage against the others. Assists in gathering consumer data

High quality for best price (191) Consumers paying premium prices expect their product to be

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free of all flaws. If customers do not find the product to be worth the price, they will not come back.

Brand reputation (191) Increases brand awareness and brand loyalty, which ultimately allows this industry to ask for premium price.

Globalization Crucial to increase market share and cost control by sourcing production to low wage countries

For companies to be successful in this industry, they need to offer products with creative design that match consumer trend. Innovation is also highly important to create competitive advantage. Additionally, brand reputation is key to making sales. Lastly, internationalizing brands to increase sales in the emerging countries and lower cost through globalization. 5.1. Group Map

It is evident that the most valuable luxury brands based on exclusivity and affordance are Hermes, Louis Vuitton and Gucci. Some of the affordable and more accessible brands include Michael Kors, Coach, Calvin Klein, and Vera Bradley. For instance, Coach operates in 191 stores in Japan and 2018 stores in other Asian countries. Coach products were also available in 183 international locations. Their ecommerce website operates in United States, Canada, Japan

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and China. Coach also distributes through specialty retail stores in Asia, Latin America, Middle East, Australia and Europe (195). Additionally, Michael Kors operates in 73 international stores in Europe and Japan, besides North America (196). On the other hand, besides United States, Vera Bradley occupies only 7 retail stores in Japan (195). Cleary Michael Kors and Coach has an advantage on an international scale. The sweet spot is currently acquired by Michael Kors. They have the perfect blend of exclusivity and affordability. 5.2. Company Outlook

Summary: The luxury handbag and accessories industry faces intense competition. Emerging

markets are found in the Asia Pacific region. There is a growing demand for luxury good among the middle income class

There is a very high barrier to entry in this industry. Only those with innovative ideas and already existing brands with strong loyal consumers can survive in the long term

Driving forces that influence the nature of the industry include globalization, change in social trends, and technology and innovation

Key Success factors needed to survive the industry are creative design, innovation, high quality for best price, brand reputation and globalization

According to group map, sweet spot is currently acquired by Michael Kors. Coach is another big player industry with a strong global presence

Following are Vera Bradley’s success and competitive advantages: To ensure no counterfeit products are produced, Vera Bradley’s patterns, print and fabric

backing are copyrighted. This acts as a competitive advantage to them as other brands do not have their designs copyrighted. It also protects the brand image of Vera Bradley, as consumers will never see products with the same design for cheaper price in the market

To keep cost down and control high capital expenditure, Vera Bradley uses global sourcing for production, also has invested into strong infrastructure, IT and supply chain. This allows Vera Bradley to capitalize on one of the key success factors, i.e. provide high quality product for best price

Vera Bradley understands that creative design is one of key success factors in this industry. Therefore, is working with individual designers and forecasting color and fashion trend to stay relevant

Being physically closer to the target consumers help to keep presence in consumer minds .Vera Bradley uses Site location process to increase its visibility through occupying retail stores that match its target demographic (194)

Vera Bradley utilizes technology (another key success factor) to take advantage of the online shopping trend and distributes products through its ecommerce sites

Internal Analysis

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6. Present Strategy: Vera Bradley’s present strategy involves offering distinctive line of colorful, patterned women’s luggage, handbags, and accessories through department stores, company owned full priced retail stores, factory outlet stores and over internet (188). Product line includes luggage, purses, wallets, cell phone and computer covers, jewelery, lunch sacks, bags, scarves, beach accessories, and baby clothing (188). Main revenue generator (40%) was its handbag line and accessories (30.1%) (193). Vision: Not stated in case Mission: Not stated in case Business Objectives:

Open 300 full price retail stores and 100 factory outlet stores (193) Add 13 new fullline stores (193) Open approximately 2025 new outlet stores per year (193) Madeforoutlet strategy: Sell approximately 40% of the products sold in factory outlet

stores designed specifically for outlet (193) Match company strategies with the external environment (188)

Functional Strategies:

To establish Vera Bradley as an aspirational brand for consumers and generate excitement around new product launches (193)

To provide product assortments based on consumer needs through continuous product innovation (194)

To provide great design to product development (194) To place greater focus on department store (largest seller of handbags for career

professionals) relationships and continue to explore other expansion opportunities (193) Ecommerce should mirror instore shopping experience by separating fullline and

outlet products to different sites (193)

Business Strategies:

To expand its customer base while strengthening its connections with loyal customers through advertising and fresh, new products (193)

To differentiate in quality and design to become an industry leader To keep costs down through strong infrastructure, IT and supply chain (188)

Key performance Indicators:

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Vera bradley is debt free It is very liquid in terms of liquidity ratio (increasing working capital, current and quick

ratio) Coverage ratio has increased by 88% from 20102014, meaning it has been getting

better at meeting its financial obligations Asset turnover has increased by 3.2% over the last year

Vera Bradley’s present strategies are not working as it is unable to attract new customers to the retail stores. 7. SWOT Analysis

Strengths Weakness

7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.1.6 7.1.7 7.1.8

Colorful stylish product line (188) Infrastructure, supply chain and IT (188) No debt, ability to expand Product development process (194) Routinely updated styles (194) Site location process (194) Patented design (194) Strong current and quick ratio Strong coverage ratio

7.2.1 7.2.2 7.2.3 7.2.4 7.2.5 7.2.6 7.2.7 7.2.8 7.2.9

Lack of global distribution (only focus in U.S. and Japan) (189) Slow growth of Revenue and Net Income (188) Weak brand image (188) Too broad product line (188) Too many distribution channel streams (189) “Traditional patterns and products simply are not attracting enough new customers to our brand, and overall traffic is down substantially” (199) Product is not distributed through luxury department stores (196) Decreasing ROA and ROE

Opportunities Threats

7.3.1 7.3.2 7.3.3 7.3.4 7.3.5

Expand distribution channel locally and internationally (188, 194) Customize product offering to meet local demands Rising demand in middle income families (190) Product line for career driven women and growing sector of men “Online sales are continuing to grow faster than the rest of the market, with 28% annual growth, reaching almost $14 billion” (192)

7.4.1 7.4.2 7.4.3

Less disposable income during recession (190) Exposure to limited markets Intense competition (188)

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It is very important for Vera Bradley to focus on its’ opportunities and weaknesses. Opportunities will allow it to forecast into the future and make strategic changes according to it. Turning weaknesses into strengths will provide extra defence from threats. 8. Value Chain:

Primary activities of Vera Bradley assist in producing and distributing its products. Supporting activities work together to strengthen the brand from core. Primary activities include global sourcing, strengthening infrastructure, IT and supply chain for cost advantage. Patent on its designs give Vera Bradly a strong competitive advantage over others. Supporting activities include management expertise and collaboration with designers. Vera Bradley should utilize the market research and collaborate with designers to improve product design and innovate. 9. Competitive Strength Analysis:

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KSF = Strength Measure

Weight Vera Bradley

Coach Michael Kors

Kate Spade

Creative Design

.15 5=.75 7=1.05 9=1.35 8=1.2

Innovation .10 7=.7 8=.8 9=.9 8=.8

Quality Product

.15 8=1.2 9=1.35 9=1.35 9=1.35

Best Pricing .05 9=.45 8=.4 7=.35 6=.3

Brand Reputation

.25 7=1.7 9=2.25 10=2.5 8=2

Brand Awareness

.25 6=1.5 9=2.25 10=2.5 8=2

Globalization .05 7=.35 8=4 9=.45 7=.35

Overall strength rating

1 6.65 8.5 9.4 8

Rating Scale: 1= Very weak; 5= Average; 10= Very strong The most important factors to be successful in this industry are brand reputation/ awareness because, unless consumers know of the brand, no matter how good quality the products are, consumers will likely never buy them. Once they buy them, second most important factors are creative design and quality and the rest follow. Overall, Vera Bradley is at a competitive disadvantage as it is behind for almost all the factors except price with the rest of the competitors. Michael Kors has the highest sales among all, therefore, it has a much stronger brand reputation, brand awareness and quality of product. Vera Bradley is only doing business in North America and Japan, with a much smaller number of store (195). Therefore, it has less brand reputation/awareness. 9. Financial Analysis

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increase from 2010, however, Vera Bradley did score 57%, once in 2011, and second in 2013. Currently it has the lowest gross profit

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margin of all. Therefore it should try to aim for an upward trend, and not a fluctuating one. For Kat Spade, it started off with the lowest gross profit margin in 2010, but it has overall shown an increasing upward trend and by 2014, Kate Spade managed to have a gross profit margin of 57%, which is 2% above Vera Bradley.

In the year of 2013, the Asset Turnover Ratio was 1.77, which means, every $1 worth of assets Vera Bradley owns, generated $1.77 worth of revenue. Over year, the asset turnover ratio decreased, which means the company has not been efficient at using it’ assets to generate revenue. The reason causing this may be the increase in fixed assets over year, meaning, the assets were sitting idle. Another reason could be slow growth of revenue for Vera Bradley. ROA and ROE:

After ROA declined to 22% in 2011, it increased by 4% in 2012, and it again declined till 2014. Decreasing ROA means the company is not as profitable. Therefore, for the amount of asset it has, Vera bradley could be making more returns. ROE of Vera Bradley used to be very attractive. In the year of 2010, ROE was 55% and in 2011 it increased to 72%. In 2012, the ROE declined to 47% and by the end of 2014, ROE was 23%. An increasing ROE indicates the company is profitable. It states how efficient the company has been at generating profit, with the investments shareholders have made. Overall, this declining trend of ROE can be worrisome.

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Net profit margin measures how much profit is being produced per sales dollar. Vera Bradley’s net profit margin has been declining since 2010. There was a sharp increase in margin between 2011 to 2012. Post 2012, it has been decreasing again. This forecasts financial trouble in the future.One way to imprive this ratio is to cut down its expenses to generate higher profit or strive for higher revenue Liquidity Ratios:

Working capital indicates whether the company has the ability to pay off its’ short term debt using its’ short term asset. It also measures operating efficiency. Since Vera Bradley’s current assets exceed current liability, producing a positive working capital, it means that Vera Bradley has the ability to pay off its current liability using its current assets only, without relying on fixed assets. Therefore, it is very liquid and financially sound for the short term. It has the ability to take this extra liquidity to expand its’ business. Quick ratio measures how much dollar amount of liquid asset is available per dollar of current liabilities. In this case, Vera Bradley had $1.06 of liquid assets in 2013, to pay off each dollar of current liabilities. This ratio increased to $1.66 in 2014. The higher the ratio is, the better off the company’s liquidity position is. Therefore, Vera Bradley is in a financially healthy position as off 2014. Leverage Ratios:

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Total Debt to asset ratio measures total amount of debt in relation to total assets . Vera Bradley’s total debt to asset ratio has decreased since 2011. In 2011, ratio was 33%. This means that the company’s 33% of assets were financed by debt. By 2014 the ratio was 0%, meaning,company at this point had no debt. Additionally, similar is seen with the debt to equity ratio. It had a very high ratio in 2011 at 104%. By 2014, since it paid off all its debt, the ratio was 0%. Moreover, coverage ratio also confirms the same fact with an very high rising ratio. This indicants that Vera Bradley is in a very financially healthy position. Efficiency Ratio:

Vera Bradley has gotten 3.2% more efficient at turning over its inventory from 2013 to 2014. Therefore Vera Bradley is doing a good job in this category. 10. Issue Identification The luxury handbags and accessories industry has numerous competitors that already have a strong presence in the Market. Competing against them is being troublesome for Vera Bradley due to having almost no differentiation strategy. Its product line is not attracting enough new customers. As a result, revenue has increased overall from 2010 to 2014, however, there is a decline in year to year growth. Income was increasing until 2013, but there was a decline of 15% in 2014. In the long term, North American market will likely saturate, therefore, Vera Bradley being more affordable compared to other competitors (refer to group map), it has a higher chance of being successful if it expands globally in the emerging markets based on the forecast.

Reference Turnipseed, D. (2014). Vera Bradley in 2014: Will the Company’s Strategy Reverse Its

Downward Trend? Pg.188199.

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