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Case Study
Name of Business: Burningham’s Department Store
Number and Location: 468 Stores across the United States
Type of Business: Discount Department Store Chain
Needs: The store needs point-of-sale credit card terminals that can provide receipts of transactions .The credit card terminals do not have to be uniform among stores as long as they perform these functions.
Burningham’s, a discount department store chain, needs to update their outdated point-of-sale credit card terminals which are, in some cases, beginning to malfunction. In 356 of the high and medium-volume stores, this update can be justified within the chain’s budget. However, the company faces the challenge of needing to install the new and expensive credit card terminals in 112 low-volume stores that cannot absorb the cost. What could be a possible solution to Burningham’sissue within the low-volume stores where the additional expenditure of new credit card terminals cannot be reasonably justified?
Task: Write a 2 page report in which you describe the problem and offer a possible recommendation for Burningham’sproblem based on some outside research. Finish with the projected results or outcome of your recommendations.
Write clear headings that are appropriate for the problem, recommendations, and the solution.
Incorporate at least one visual, such as a graph or chart to illustrate the issue, the solution, or the recommendation. You can “make up” company information as needed to fill out your report.
Find 1 or more outside sources from the Salem University Library databases or a public Internet search to substantiate your solution or projected outcome.
Cite your outside sources in APA style/format and include them at the end of your report.
Expert Answer
Problem
Burningham’s Department Stores in a discount department store chain which wants to install/ upgrade to new point-of-sales (POS) systems in its stores. While the fixed cost related to installation is broken even by the volumes of the 356 high and medium volume stores and the contribution per unit, the other 112 low-volume stores cannot absorb the fixed cost in the same way as there, the volume is low comparatively. The problem at hand is to find a solution for Burningham’s which is both strategically and economically viable. It has to note here that the past customer experiences, store environments, service interfaces, and store brands have to influence on the future experiences (Verhoef et al., 2009). Adding or upgrading the POS systems adds up to this Customer Experience (CX) and hence cannot be ignored and thought of as a primary objective of the retail chain. Solutions to the given problem must be found from the perspective of positive installation and the related adjustment and not from that of rejecting the idea of installation.
Recommendations
While there can be many solutions to the given problem, we will concentrate on two of them. All the three recommendations will entail the feasibility of implementation.
First, note that the reason for upgrading the POS system is two-fold – customer experience improvement and efficiency improvement. Consider the customer experience first. It is expected that with an improved POS and better service related to that, customers will have more value of their time and will thus be attracted to the low-volume stores. Our suggestion here is to implement the upgraded POS system phase-wise i.e. first in few stores of selected location and then few others in the next phase. The reason behind is that the management can note the relationship between the new system installation and increase in demand. With this phase-wise implementation, the management will be able to understand the point up to which the number of POS has will be marginally beneficial for the store in improving demand resulting from improved CX. The following illustration may help this understand.
Second, it is clearly recognizable that with the improved POS system, it is possible for the stores to reduce the queues at the check-out lines. A reduced queue implies a reduced space. When the total space of the store is fixed, the saved space by reduced queue can be used to store additional merchandise according to the choice of the customer segments visiting the store. For example, it a store data shows that most of the purchasers are young adults, the store can utilize this extra space to keep baby care products. This type of strategy will open up a new revenue stream and will attract more customers. The resultant effect is that the increased volume and revenue can cover up the fixed cost of POS installation. The following option illustrates this option.
The additional space created can be used for keeping premium items as well so that high revenue can be earned from the customers visiting the store.
Solution
Considering the above two recommendations for the given problem, we suggest that the company can deploy any or both of them. The idea is to optimize the number of POS stations in a store so that maximum utility (both in terms of CX and additional merchandise) can be provided to the customers in order to increase their willingness to pay. Once that is possible, it is not hard to absorb the initial fixed cost incurred for the POS installation.
