Strategic planning & development help on: Pumpkin Patch

& its strategies

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Executive Summary

Pumpkin Patch is into the apparels industry and mainly caters to the kids segment and to pre-teen segment. It
also has a maternity clothing segment. The company has high design standards and a keen sense of fashion.
The ultimate goal of the company is to make ultra-fashionable clothes for kids. The company has been quite
successful and has tripled its share value since going public. The company focuses on sales through catalogues,
online stores, retail stores and through distribution channels. The company has presence in New Zealand,
Australia, USA & the UK. Pumpkin Patch has been facing challenges from bigger organisations and brand
names like GAP and Next. The company needs to focus on these and needs to use its core competencies. The
core competency of the organisation is its designs but these are replicated. So the company also needs to work
out on pricing strategies to ensure the increase in sales. The company focuses on discount sales and this has
been quite effective. The company also needs to utilise its logistics infrastructure and generate more distribution
channels for better and effective visibility. Lastly the company needs to focus on the Asian market which has high
potential for this segment.

Introduction

Pumpkin Patch came into existence in July 1991. The company was established to fill up the gap between
fashionable children clothing. Most of the retail companies at that point of time were concentrating more on
producing fashionable clothes to cater to the needs of teenagers and women, but Pumpkin Patch gained
competitive advantage over others by introducing fashionable clothes for children through mail order. Pumpkin
Patch initially started its operation in New Zealand, later on it expanded to different parts of world including U.K.,
US and other Asian markets like China. Due to success in the way the business was operated, the company was
able to change its status from a privately held concern to a publicly held concern, which was an eloquent
testimony to the fact of how efficiently the management of the company handled its business

1. Industry
Retail industry seems to be one of the profitable industries among all the other industries. It is profitable, since
the retail industry generally tends to cater to the need of large number of people to provide daily necessities like
public utilities including electricity. The supply of clothes to people to meet their basic necessity is also
considered under the retail industry, a retailing business not only includes providing daily wear clothes but also

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fashionable clothes to people of different income level. Therefore, it is of utmost importance for any retailing
industry to produce goods in such way that it caters to the need of people from all income level.

Pumpkin Patch was established in July 1991 as a privately held retail company that was established primarily to
bridge the gap between providing fashionable goods to children. Pumpkin Patch gained competitive advantage
over its competitors in retail industry by foraying into the market which would cater to the need of providing
fashionable clothes to children. Later on with the plan to diversify and expand its business, Pumpkin Patch
decided to foray into the market that would cater to the need of the teenager and pregnant woman and came out
with a brand name called Urban Angel. The brand helped the company to enhance its revenues to subsequent
level which was quite satisfactory for the company as a whole. With the introduction of the brand that would
cater to the need of the children, the company gained so much of success that the demand in the market for the
clothes was more than its supply (Dobbson, 2007). Though supply deficiency in the market led to a lot of
dissatisfaction within the customers, but the customers remained loyal to the brand which helped the bank to get
popular into the market within very few days of its operation. Gaining brand loyalty helped the company to enjoy
a substantial amount of market share and create a repetitive base of customers, one of the most important
elements of any business to survive. The efficiency of the management to handle the business effectively and
the decision to cater to the needs of the children was the key to success (Fedor, 2005).

2. General Environment Analysis

Demographic
segment Girls wears between the ages of 8 to 14 with Urban Angel Brand that part of Pumpkin
Patch;
Womens wear but not successful as that of children wears

Economic
Segment Caters to the middle income group

Political and
Legal This industry is not very much affected by the political and legal environments,
Segment however the company keeps focus that child labor is not used by its subsidiaries.

Socio-Cultural
Segment Caters to fashion sense which has been prevalent in the modern society

Technological
Segment Has software applications which provides integrated support from start till finish of the
products

Global
Segment Has presence in UK, US, Australia and New Zealand

Pumpkin Patch initially established its business by foraying into the market to provide fashionable clothes to
children, a market that was not that well developed at that point of time. The company was established to bridge
the gap in providing fashionable clothes to children, and was so much successful that the demand in the market

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was more than the supply of the clothes. The company had so much of demand that the resources of the
company were unable to provide the demanded clothes to their customers on time. But the ability of the
company to have brand loyalty of the customers enabled the company to enjoy market share and competitive
advantage over others. With the successful inception of the sector providing clothes to children, the company
further decided to expand its business by producing clothes exclusively for women with the brand name called
Studio Works. But this business failed to generate enough income for the company and therefore the
management of the company decided not to operate with this brand name that would cater to the need of
providing clothes exclusively to women. The company also incorporated another brand that would cater to the
need of teenagers and this business became stronger with the acquisition of 14 HBK girls stores (Andrew,
2009).

As the business was very successfully running in New Zealand and Australia, therefore it was decided by
Pumpkin Patch to expand its operation to United Kingdom and other locations like US, and Asian markets like
Japan.

The company at the time of incorporation was a privately held company, but with the successful running of its
business the company came up with an Initial Public Offering which helped the company to become a public
company, thereby opening doors for the company to raise funds for expansion and diversification of business
through public rather than using the funds of the company itself. The share price of the company nearly tripled
from $1.25 per share to $3.40 per share which was obviously of much significance to the company since it
enhanced the goodwill of the company in the market. The transition of the company from privately held to
publicly held company was smoothly handled by the management of the company as all the necessary reporting
systems were set up by the management of the company well in advance. The IPO brought a significant
improvement for the employees of the concern since the employees held 16% of the shares of the company
(Henry, 2008).

The company also invested good amount of money in its research to find out what its customers expected out of
the company. Therefore, the company took initiatives wherein the design team went to different shops in order to
have the best design to present to the customers. The initiative of the company to add new ranges of product
throughout the company enabled the company to generate repetitive base of customers, thereby enhancing the
overall revenue generation of the company.

As the business of Pumpkin Patch was running successfully it decided to develop its own warehouse in US and
it was the single warehouse that used to operate for the whole company in the world. The warehouse in US
helped the company to operate without any overhead expense.

3. Industry Environment

According to Andrew (2009) the strategies used by companies to compete are based on Porters generic
strategies that of Cost leadership, Product Differentiation and Segmentation. One of the most significant
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strategies adopted by Pumpkin Patch was establishing the company to cater to the need of the children to
provide them with fashionable clothes. This sector was not that well developed in New Zealand. Establishment
of the company to bridge the gap in providing fashionable clothes to children helped the company to gain
competitive advantage over its competitors operating in the retail sector. After establishing the children brand the
company decided to expand its business by catering to the need of teenagers and pregnant women. This
section strengthened further with the acquisition of HBK girl stores. Moreover, the company being customer
friendly helped the company to create a brand loyalty in the market thereby enabling the company a greater
share in the market over its competitors. Moreover, Pumpkin Patch transformed itself into a publicly held from
being a privately held one and it helped the organization to enter into IPO, which in turn helped the company to
generate business in the southern hemisphere when compared to the northern hemisphere. The thought
process of the company to stay with the kids helped the company significantly to establish its brand in the retail
sector over its competitors (Harrison, 2009).

4. Competitive Environment
The success of the company lies in its capability to provide unique design to its customers and its effort to
provide a continuous range of products to its customers throughout the year. The initiative of the company to
provide a continuous range of fresh design to its customers helped the company to create a repetitive base of
customers, thereby helping the company to establish goodwill in the market. The company has also taken extra
efforts in maintaining its quality, wherein the company ensures the quality of the products supplied by the
suppliers is of prime quality. The apparels industry is highly competitive with big brands like GAP, Next, Esprit etc
(Rothwell, 2010).

5. External Environmental Analysis (O & T)

Opportunities

Foraying into the market to bridge the gap in providing children fashionable clothes was an opportunity for
the company.
Acquisition of HBK girl clothing chain to expand its business to cater to the needs of teenagers and
women was an opportunity for the company.
The brand loyalty of the customers was also an opportunity for the company.

Threats

The entrance of the departmental stores like Wal-Mart and Marks and Spencer in the kids section was a
serious threat to the company.
The inefficiency of the company to generate profits in UK market was a serious threat to the company as
the sales were mostly from NZ and Australia.

6. Pumpkin Patches Resources

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The company has a good infrastructure and different retail stores in Australia, New Zealand, US and the UK. It
has a very effective design team and market research team. It is led by a strong visionary. The company has
well established warehouse which is capable of serving its entire distribution and retail needs. These are its
tangible resources.

The intangible resources are its brand value and its superior sense of design. It has been able to grow mainly
because of the design sense.

7. Capabilities Identification
Pumpkin Patch has been a brand to reckon with in the kids segment and in the pre-teen girls segment. The
company also launched the womens apparel segment but soon withdrew from it. The company also caters to
maternity dressing. The company has a keen eye on fashion and is very much dedicated to market research and
design. The sole motto of the company is to make extremely fashionable clothes for kids and pre teen girls. The
company has been quite successful in doing this, the market shares of the company have tripled since it
launched its IPO. This speaks volumes about the growth and the potential of the company (Abbas, 2008). The
company has an excellent design team which has sixty designers working in collaboration with the market
research team which consists of customers, visual merchandisers etc. The company has always kept its stock
fresh. The company operates in different modes, online sales, catalogue sales, in-store sales and whole selling.
It always ensures that the designs are changed frequently. The company also has an excellent logistics team. It
has a central warehouse in Auckland and it can supply to stores in the US and UK within a days time. The
freight charges are high but the margins on apparel being higher makes up for the freight charges. The company
also has a very good distribution channel and a strong supply channel. It buys its products from all around the
globe and has strict quality protocols. It also ensures standardisation and is against child labour. The company
has invested in Information technology which enables them to track the products from the design stages right to
the sales stages.

8. Core Competency Analysis

Items for RARE VALUABLE COSTLY TO NON-SUBSTITUTABLE

competencies IMITATE

*Product Yes Yes Not really because No, because Pumpkin Patch experienced rivals
Design & there is no like New Zealand copying exclusive clothing
Brand Quality preventative and fabric designs
measures taken

*Distribution No Yes Yes because it takes No because there are bigger players in the
Channel brand value and market like GAP and Espirit which can capture
brand perception the distribution channel of the company

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 *Presence in Yes Yes Yes as this requires Not really there are larger international brands
Multiple high capital that exist in multiple locations
Locations investment

*Excellent Yes Yes Yes because it To some extent, this company has had a single
Logistics requires expertise warehouse in Auckland which caters to US and
and knowledge UK markets within a day.

The Product design and the brand quality of Pumpkin Patch has been extremely good. The company has a
keen sense of fashion and has always come up with excellent clothes for kids and for pre-teen girls. The
company invests heavily on design and collects designs from all over the world. It also has a sense of placing the
right products in the right places. But, however as it has always been a problem with the fashion industry,
Pumpkin Patch faces problems of design imitation (Andrew, 2009). In New Zealand it has faced problems where
its suppliers have become independent retailers and have copied their design. As patenting is almost impossible
for clothes design this remains a vulnerable area. Pumpkin Patch has an excellent distribution channel and has
entered the US market through its distributors. The intense market competition and presence of big brands like
GAP can affect the loyalty of the distribution channel. The presence of the organisation in multiple locations is
beneficial for the company but most of the bigger brands are also located in the same places. The logistics of
the company definitely has an edge, having a centralised warehouse it can keep track of the entire logistics from
a single point (Arnoldo, 1997).

9. Value Chain Analysis

Fig: Depicts the Value Chain for Pumpkin Patch. Adapted from Fedor, (2005).

The value chain of Pumpkin Patch is defined by its products. The products are segment oriented and clearly
have an edge over the other products in the segment. Catering to fashion for kids this company has been able to
build its brand. The marketing and the sales are through catalogues, online catalogues, in-store sales, wholesale
model. The company has been quite effective in entering new markets with the wholesale model (Dobbson,
2007). The logistics of the company are simply efficient and enhance the productivity of the organisation. Though
the costs of airlifting are higher, this is absorbed by the high margins in the apparel section. The procurement
ensures that quality is assured in the fabrics. The company does not bargain too much with its suppliers. This
establishes a good relation with the suppliers. Information technology has been effective in ensuring the growth
of the company. The company has an application which tracks goods right from design to sales. The Human
resource Team has been effective in the organisation. The organisation does not have strict job roles and the
employees are motivated to Cross the Line. The infrastructure of the firm is quite effective; it has not changed
much from being a privately held company to a public limited company (Harrison, 2009).

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10. Weakness
The major weakness of the company is the lack of distribution channel in USA. Pumpkin Patch has currently
company has recently stepped into the US market and has opened two stores in the country and plans to set up
more stores in the country. The company went into the US market through the distribution channel of Nordstorms
and continued supplying for eighteen months. After that it has ventured into the market by itself. The presence of
big shots like Wal-Mart and GAP has affected the business. The company needs to focus on partnering with
retailers which will ensure the spread of awareness. Also promotional activities need to be carried out which will
position the brand in a better way (Henry, 2008).

11. SWOT analysis of Pumpkin Patch

Internal resource Strengths Has effective design Has effective logistics

team
analysis Has presence all over the
Has a good brand value globe

Internal resource Weakness Low Bargaining Power Does not have any strict
with Suppliers measures to protect designs
analysis
Low distribution channel Does not cater to womens
in the US clothing

External resource analysis Opportunities The apparel market has Unexplored markets in ASIA
a steady growth world which has a good consumer
wide base

Womens Clothing
grows at about 5%

External resource analysis Threats Strong Competition from Copying of Design by other
the likes of GAP and companies
Next
Unstable Economy

Core Competencies analysed: With the brand value The steady growth in the
which strengths can overcome and the strong design Apparel market will allow
weakness & which opportunity team the company can companies to co-exist
overcomes threat? look into the segment of
Womens Apparel Exploring markets in ASIA
would mean diversification
With effective logistics and will also ensure
can look into more protection against economic
distribution channels. downfall in a particular region

The above table discusses the strengths and weaknesses of the organisation. It has also discussed the
opportunities and threats for Pumpkin patch. The strengths of the company are its brand value and its strong
focus on the design. Having a strong brand value the company can negotiate much better with the suppliers but
it chooses not to do so. This can be seen as a potential strength because this will ensure the loyalty of the
suppliers. Womens Apparel one of the growing segments has been neglected by the organisation due to a
previous failure. With a strong foothold in the market the company needs to focus on this segment. With a
superior logistic system the company needs to find more distribution channels as it has the capacity of fulfilling
bulk orders within a days time. The company has been focussing on the ASIAN market but has not decided
upon it, it needs to enter the market as this is a growing market and has huge potential. This will provide the
company both vertical and horizontal growth (Hussey, 2010).

12. Current Strategies

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The company has been growing steadily over the years. The company prefers to grow at a slow pace. According
to the CEO the company does not like to Place Heavy Bets. The company is also dynamic, it changes its
objectives and strategies frequently, it does not have a fixed business plan and the plans change quite
frequently. The company makes it sales through catalogues, online sales, in-store sales and distribution
channels. At present the company is more focussed into increasing the retail stores. It has the capacity of laying
30 stores every year. The company also focuses on a single warehouse system where the products for any retail
store or distribution channel is route through the ware house in Auckland.

13. Future Strategies

Corporate Strategy: The organisation has experienced good growth since going public. The share prices have
increased three times. But it is essential to understand that this growth will not be linear. Thus the organisation
needs to focus on the shareholders and their expectations from the organisation (Luffman, 2009).

Business Strategy: The organisation has been focussing on retail stores in the recent years. It needs to focus on
distribution channels and ensure that it has effective distribution channels all around the globe. This would give
the company a good visibility and also increase the brand value (Joyce, 2008).

International Strategy: The Company needs to focus on the Asian Continent. The markets of China and India
have proven to be successful for major organisations. These markets have huge potential for Apparels Segment.
The UK based Mother Care has launched its products in India through distribution channels and has been quite
successful (Rothwell, 2010).

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