Logistics Case Assignment: VertigoVertigo is a menswear chain specializing in formal wear and suits,...

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Logistics Case Assignment:	VertigoVertigo is a menswear chain specializing in formal wear and suits, shirts, leisurewear and footwear targeted at the 35-55 years age group. Since its launch in 1962 the chain had been performing well with rising sales, profits and share price until 2004. Since then sales have stagnated, profit margins dropped by 40% and its share price has decreased by 25%. Vertigo’s market share has declined from around 13% to 8% mainly as a result of two of its major competitors, Bond and DJ, who have embarked on major expansion programs. Bond and DJ have gained competitive advantage over Vertigo in four ways:			Document Preview:				Logistics Case Assignment: Vertigo  Vertigo is a menswear chain specializing in formal wear and suits, shirts, leisurewear and footwear targeted at the 35-55 years age group. Since its launch in 1962 the chain had been performing well with rising sales, profits and share price until 2004. Since then sales have stagnated, profit margins dropped by 40% and its share price has decreased by 25%. Vertigo’s market share has declined from around 13% to 8% mainly as a result of two of its major competitors, Bond and DJ, who have embarked on major expansion programs. Bond and DJ have gained competitive advantage over Vertigo in four ways:  Investment in a new generation of larger, ‘off-center’ stores. With around 250 square meters of sales area, they are roughly twice as large as Vertigo shops, almost all of which are in town centers.  Global sourcing. Bond and DJ now source respectively, 55% and 44% of their clothing from low labor cost countries. Imports from these countries represent only a quarter of Vertigo’s sales, though this proportion has been growing.  Extending the product range. Both of Vertigo’s main competitors have diversified their product ranges into leisure-wear and footwear and broadened their appeal to younger men, i.e. less than 35 years old. This has expanded their customer base, increased average expenditure per visit and made their offering more fashion- sensitive.  Overhauling their supply chain. Bond has enlarged its original distribution center (DC) from 8000 square metres (sq. m) to 12000 sq. m, while DJ has built a new 10000 sq. m. distribution centre. This has enabled the companies to increase the proportion of sales channelled through their DCs to 92% and 84%, respectively.  In mid-2010 Vertigo appointed a new Chief Executive Officer (CEO) to ‘stop the slide’ and ‘turn the business around within a five year period’. His initial strategic review identified logistics as a problem area and indicated that the company’s competitiveness could be...

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Running Header: VERTIGO CASE ANALYSIS – LOGISTICS  1
Vertigo Case Analysis – Logistics
Vertigo Case Analysis – Logistics   2 
Vertigo Case Analysis – Logistics 
Logistics and operations management represent one of the important functions of a business 
organization. The effectiveness as well as efficiencies in these functions plays a critical role in 
the overall business and financial performances. In this context, the case study assessed and 
evaluated in this report represents the critical role logistics / supply chain plays in the reversal of 
business performance and offering an opportunity to regain lost ground.
Current Logistics Operations of Vertigo – Deficiencies 
The case represents three companies which specialize in chain of menswear retailer for footwear, 
leisure wear, shirts, suits and formal wear. Vertigo represents an erstwhile market leader setup in 
the year 1962 which has lost ground to its key competitor Bond and DJ starting from the year 
2004 in terms of sales, profit margins as well as market capitalization. In this context, this 
reversal of fortune as compared to its competitors for Vertigo can be traced back to a large extent 
the nature of its logistics operations and overall supply chain operations.
In tracing the origination of these deficiencies, the broader overview of the various comparative 
parameters of logistics function as well as supply chain related operations amongst Vertigo, DJ 
and Bond in terms if annual sales related data, product group wise per cent distribution of the 
sales, the scale of floor space and count of individual shops, the geographical spread of these 
shops, the data pertaining to distribution centers, frequency in terms of average delivery on daily 
basis to the shops, and the product / supplier data illustrate the marked differences between 
Vertigo on end and DC as well as Bond on the other end.
Vertigo Case Analysis – Logistics   3 
In this context, the primary set of deficiencies that underlie Vertigo as compared to DC and Bond 
include the following, (i) The retail outlets for sales with Vertigo are also to a significant extent 
within the city center with relatedly very less retail  outlets for sale at the off center locations. 
When this compared to the relatively successful DC and Bond, their retail outlets are all well-
diversified with predominant outlets spread across the off-center locations illustrating the 
competitive advantages. This further accentuated by the difference in terms of floor space with 
each store which is higher at Bond and DC than that of Vertigo. This limits Vertigo in terms of 
product varieties that it can house within its stores and meet customer expectations (Rushton et 
al,

Logistics Case Assignment: Vertigo Vertigo is a menswear chain specializing in formal wear and suits, shirts, leisurewear and footwear targeted at the 35-55 years age group. Since its launch in 1962...

Answer To: Logistics Case Assignment: Vertigo Vertigo is a menswear chain specializing in formal wear and...

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