Masao Sugiyama is the recently elected president of the Chamber of Commerce in P
ID: 2476249 • Letter: M
Question
Masao Sugiyama is the recently elected president of the Chamber of Commerce in Park Falls, Wisconsin. He is the long-term owner of the only full-service hardware store in this small farming town. Being president of the Chamber of Commerce has been considered largely a ceremonial post because business conditions have not changed in Park Falls for as long as anyone can remember. However, Masao has just read an article in The Wall Street Journal that has made him think he needs to take a more active interest in the business conditions of his town.
The article concerned Walmart, the largest retailer in the U.S. Walmart has expanded primarily by locating in small towns and avoiding large suburban areas. The Park Falls merchants have not had to deal with either Lowes or Home Depot because these companies have located primarily in large urban centers. In addition, a supplier has recently told Masao that both Lowes and Home Depot are considering locating stores in smaller towns. Sugiyama knows that Walmart has moved into the outskirts of metropolitan areas and now is considering stores for smaller, untapped markets. He also has heard that Lowes and Home Depot have recently had difficulty.
Masao decided he needs to know more about all three retailers. He asked his son of a friend to locate the following sales data, which are also in a file called Park Falls.
Annual Sales Values in Millions of Dollars
Year
Lowes
Home Depot
Walmart
Fiscal 2009
15,905
38,434
137,634
Fiscal 2010
18,778
45,738
165,013
Fiscal 2011
22,111
53,553
191,329
Fiscal 2012
26,491
58,247
217,799
Fiscal 2013
30,838
64,816
229,617
Fiscal 2014
36,464
73,094
256,329
Fiscal 2015
43,242
91,511
285,22
Masao is interested in what all these data tell him and he needs some help in analyzing these data. How much faster has Walmart grown than the other two firms? Is there any evidence Walmart’s growth has leveled off? Does Lowes seem to be rebounding, based on sales? What would be the most accurate sales prediction for 2016 for each retailer? Prepare a business memo that includes forecasting analysis, graphs, conclusions (you should identify which forecasting method is the most appropriate per the metric of your choice), and specific recommendations for Mr. Sugiyama.
Annual Sales Values in Millions of Dollars
Year
Lowes
Home Depot
Walmart
Fiscal 2009
15,905
38,434
137,634
Fiscal 2010
18,778
45,738
165,013
Fiscal 2011
22,111
53,553
191,329
Fiscal 2012
26,491
58,247
217,799
Fiscal 2013
30,838
64,816
229,617
Fiscal 2014
36,464
73,094
256,329
Fiscal 2015
43,242
91,511
285,22
Explanation / Answer
1. Seeing from above chart and %age sales increase, walmart sales has never grown with comparison to other two firms. Walmart growth is not faster than Lowes and Home Depot
2. Yes in 2015 Walmart sales growth rate is 11% and in 2014 it was 12%, based on this figure we can say walmats growth has leveled
3. Yes Lowes seems to be rebounding based on sales as can be seen through %age increase table that fluctutaion in growth rate in very less, consistency is maintained
4. Total sales for 2015 is 419975 with 15% growth versus last year's 12%, so assume in 2016 same growth rate will continue and %age increase will be 18% (3 5 higher 15%-12%). So Total sales will be 419975+18%=495571. Share of all 3 will be maintained @ 10% (Lowes), 20%(Home Depot) & 70%(Wal Mart), as evident from above table based on %age market share each year
5. Recommendations - In 2013 sales growth rate came down to 8%, which would have made firms to tap outskirts areas from where they have came back into business in terms of growth rate. It is evident that urban sales have declined and firms are moving to smaller town for business. Masao has to consider problems in large suburban areas
Year Lowes(A) %age
Increase Home Depot
(B) %age
Increase Walmart
(C) %age
Increase Total Sales
(A+B+C) %age
Increase %age Share
Lowes %age Share
Home Depot %age Share
Walmart 2009 15905 - 38434 - 137634 - 191973 - 8% 20% 72% 2010 18778 18% 45738 19% 165013 20% 229529 20% 8% 20% 72% 2011 22111 18% 53553 17% 191329 16% 266993 16% 8% 20% 72% 2012 26491 20% 58247 9% 217799 14% 302537 13% 9% 19% 72% 2013 30838 16% 64816 11% 229617 5% 325271 8% 9% 20% 71% 2014 36464 18% 73094 13% 256329 12% 365887 12% 10% 20% 70% 2015 43242 19% 91511 25% 285222 11% 419975 15% 10% 22% 68%