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Michaels Stores SWOT & PESTLE Analysis

ID : 52224153 | Jun 2017

OVERVIEW

Name of the Company: Michaels Stores

Business Sector: Retail, Home Decor

Operating Geography: North America

About the Company: Michaels Stores, Inc., was founded in 1973 by Michael Dupey. At present it is headed by Mr Carl S. Rubin. It is an American retail chain of wide range of art and crafts, ranging from kids crafts sets to home décor and floral supplies. The Company HQ is in Irving, Texas, USA. As of January, 2017, this company has 1223 stores and further 144 stores in other subsidiaries, employing more than 48900 employees.

Revenue: 4.4 billion Dollars

SWOT & PESTLE Analysis

The SWOT analysis for Michaels Stores is presented below:
Strengths
Weaknesses
1. Strong asset pool of Blackstone, parent company of Michael stores.
2. In Forbes list of largest private companies, they are in top 100.
3. Their shrewd CEO Mr Rubin.
4. Robust social programs for employees
1. Non presence in online commerce.
2. Vulnerable against cyber threats.
3. Not internet centric, betting big on brick and mortar with no backup plan.
Opportunities
Threats
1. Market expansion in emerging economies.
2. Leveraging inputs from YouTube and Pinterest.
3. Employing analytics to predict consumers’ next interests.
4. Using in store events to attract young moms.
5. Curated recruitment.
1. Unpredictability in market.
2. Amazon.
3. Cost Benefit ratio.
4. Internet.
5. 3D printing
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Strengths

1. Strong asset pool of Blackstone, parent company of Michael stores: The Blackstone group who owns Michael stores, Inc. has seen a robust growth in their earnings in US share market. Furthermore, all of their hedge funds have seen positive growth since 1987, when they launched their first hedge fund. With such a strong backing, Michael Stores, Inc. can weather whatever comes in the way.

2. In Forbes list of largest private companies, they are in top 100: In world’s most fierce market, USA, this company features in 100 biggest private firms, this says a great deal about their sound roots.

3. Their shrewd CEO Mr Rubin: Since he arrived on helm of Michael stores, Chuck Rubin has refined brick and mortar stores experience for the customers. Focusing upon catchy merchandises and customer centric store design, while fending off the challenge from e-commerce behemoth Amazon

4. Robust social programs for employees: embracing the people first approach in the company, Michaels stores, is a generous boss for the employees providing various health care as well as child education benefits in “Michael gives back” initiative.

Weaknesses

1. Non presence in online commerce: Only 5 per cent of its revenue comes from online business. In a world dominated by internet giants, this is a worrisome detail.

2. Vulnerable against cyber threats: In a data breach in 2014, 3 million customer credit as well as debit card details were stolen. With more sophisticated tools, more attacks cannot be ruled out.

3. Non internet centric, betting big on brick and mortar with no back-up plan: With constant challenge from Amazon, emergence of arts only website like Etsy is also a problem Mr Rubin’s plan. This century belongs to disruptive ideas, so hanging on a past theme might go against them in future.

Opportunities

1. Market expansion in emerging economies: Although they are the largest retail suppliers in North America. But the market in developed nations is saturating especially in a niche segment like this. Michael Stores can move into India and China using FDI to create a new market for better revenue streams.

2. Leveraging inputs from YouTube and Pinterest: Various people turn to picture and video websites for creative ideas, Following the trends on websites and incorporating them in products can be a winning bet.

3. Employing analytics to predict consumers’ next interests: Combining above trend watch with new tools of data mining, precise predictions can be used for new merchandising releases.

4.Using in store events to attract young moms: Art and craft, home décor, and most other that these stores offer , more often than not, have a particular clientele , moms and women handle these shopping either for their kids or for themselves. Their brick and mortar have a rose tinted because of nostalgia. They can use this to create personalized services to win over customers.

5. Curated recruitment: Recruiting young people from fine arts background can produce a double benefit for the firm. Firstly it will create a good image in market and second such specialized guys can lend sophistication in stores’ working.

Threats

1. Unpredictability in market: In 21st century, this is a basic threat. No one knows from where next big disruption will come in any sector. .

2. Amazon: The Michael stores are a retail chain. Amazon is the biggest threat in retail business. Strong headwinds against dying physical stores Business has to be taken care of if they want to remain profitable.

3. Cost benefit ratio: As more and more business are turning to e commerce, costs for staying a brick and mortar chain will increase comparatively to other business models

4. Internet: As innocuous as it sounds, internet is a real threat. Michael store sells various craft products for a price. On internet one can find a DIY process for similar stuff and make it for minimal price. So again it will cut into their profits.

5. 3D printing: Enter the algorithm for your desired product and voila! You have it in your hands.

To get the complete detailed SWOT report on Michaels Stores please mail us at: support@swotandpestle.com. or contact us here.

Michaels Stores SWOT analysis has been conducted by Saurabh Sharma and reviewed by senior analysts from Barakaat Consulting.

References

1. Company Overview of Michaels Stores, Inc.-https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=288924

2. #91 Michaels Stores- https://www.forbes.com/companies/michaels-stores/

3. Stephen Schwarzman And Blackstone: Wall Street's Unstoppable Force-https://www.forbes.com/sites/steveschaefer/2016/05/11/stephen-schwarzman-and-blackstone-wall-streets-unstoppable-force/#1b1d8a977bd6

4. America's Largest Private Companies- https://www.forbes.com/largest-private-companies/list/

5. New Frame Of Mind: How Michaels Stores Are Crafting A Modern Brick-And-Mortar Experience-https://www.forbes.com/sites/samanthasharf/2016/07/06/new-frame-of-mind-how-michaels-stores-are-crafting-a-modern-brick-and-mortar-experience/#535d685b7af3

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The PESTLE analysis for Michaels Stores is presented below:
Political
Economical
1. No political affiliation.
2. Favourable political atmosphere
1. Sluggish American economy.
2. Buy American, Hire American.
3. Start-up culture.
4. Competition.
Social
Technological
1. Strong social presence.
2. Brand Recognition.
3. Customised touch.
4. Lack of Diversity in Management.
1. Internet Giants.
2. Additive Manufacturing
3. Harnessing Data
4. Search Engine Marketing and Search Engine Optimization.
Legal
Environmental
1. Continues legal battle with customers over data breach.1. Low visibility in Environmental issues.
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Political

1. No political affiliation: according to Opensecrets.org, a research group into political donations, there have been no significant donations from the Michael Group. Hence Michael stores, Inc, can be termed as politically neutral.

2. Favourable political atmosphere: On account of protectionism policy of Current POTUS Donald Trump, Michaels stores, Inc. can highlight their all American credentials to pull in sales.

Economic

1. Sluggish American economy: USA grew at a rate of 2.1%, slowest since first quarter of 2014. It means every market will bear the brunt especially non-essential domains like arts and crafts.

2. Buy American, Hire American: While “Buy American” part may help the firm, Hiring expensive American labour will negatively affect the bottom line of Michael Stores, Inc.

3. Start-up culture: USA is hub of start-ups, smaller companies with lean working model can take on bigger firms and eat into their profits.

4. Competition: Companies like Hobby Lobby can always spring up new surprises. Further, they operate in North America, fiercest market of the world.

Social

1. Strong social presence: A Facebook page comprising almost 2.5 million like and followers is a huge asset. This can be utilised in creation of engaging social media campaign to attract more customers. In house events can be popularised among their Facebook followers. .

2. Brand Recognition: Having a 40 year old brands sure helps in creating a homely feeling in regular customer. But now as millennial generation is joining workforce, and they are already a customer base of online giants, Michael stores, Inc. would need new ideas to re-invent themselves.

3. Customised touch: Thanks to CEO Rubin, Michael Stores are known customer friendly services and bespoke products in stores. This warm and nice gesture is always a right step.

4. Lack of Diversity in Management: All of the major position in this group is held by White, Old men. Neither any women board members nor anyone from other races. This cast a privileged hue on company. Embracing a more diverse group in bigger roles will help the firm in creating a positive image between every part of society.

Technological

1. Internet Giants: Amazon and eBay always pose a threat to physical stores; Michael Stores is no different to this threat. Coupled with rising online company, Etsy, an online art and craft market.

2. Additive Manufacturing: This new technology can cut cost for companies and so allowing a new hope for standing against leaner e-commerce retailers. Although this will also result in layoffs at lower level of manufacturing cycle.

3. Harnessing Data: Michael stores, Inc, is incorporating tons of available data into predicting customers’ behaviour. They have just signed Acxiom Corp to provide them marketing ideas based upon analytics of publicly available data.

4. Search Engine Marketing and Search Engine Optimization: SEO and SEM are new world tools to increase online traffic towards one’s content. SEO is an unpaid technique through which someone can increase visibility of their content in search results, by incorporating some search engine friendly keywords into their website or page. SEM is increasing the visibility of your content via paid marketing. This can be effectively employed to lure in new customers.

Legal

1. Continued legal battle with customers over data breach: A class section suit was filed against Michael Stores, Inc. although it was dismissed (march, 2017). But market image takes hit due to these battles of giants versus consumers. This case was part of a prolonged battle against the 2014 credit information breach in Company’s online website.

Environmental

1. Low visibility in Environmental issues: In 21st century climate issue are real problems and every corporate house tries to do their bit in creating an eco-friendly image. However Michael Stores, Inc. cuts a forlorn figure on this landscape by putting nothing in public domain, pointing that they take environment friendly measures in workplace. Neither their subsidiaries nor their parent group has any kind of public initiative regarding ecological issues.

To get the complete detailed PESTLE report on Michaels Stores please mail us at: support@swotandpestle.com. or contact us here.

Michaels Stores PESTLE analysis has been conducted by Saurabh Sharma and reviewed by senior analysts from Barakaat Consulting.

References

1. Company Overview of Michaels Stores, Inc.-https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=288924

2. #91 Michaels Stores- https://www.forbes.com/companies/michaels-stores/

3. Stephen Schwarzman And Blackstone: Wall Street's Unstoppable Force-https://www.forbes.com/sites/steveschaefer/2016/05/11/stephen-schwarzman-and-blackstone-wall-streets-unstoppable-force/#1b1d8a977bd6

4. America's Largest Private Companies- https://www.forbes.com/largest-private-companies/list/

5. New Frame Of Mind: How Michaels Stores Are Crafting A Modern Brick-And-Mortar Experience-https://www.forbes.com/sites/samanthasharf/2016/07/06/new-frame-of-mind-how-michaels-stores-are-crafting-a-modern-brick-and-mortar-experience/#535d685b7af3

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* By clicking on "Buy Now" you agree to accept our "Terms and Conditions."

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