Managing Cultural Changes In Grand Stores – A Case Study

Factors leading to the decline in sales

Discuss about the Management of Change for Cultural.

The following case study is subjected on a UAE based distribution company Grand Stores where the author worked as the Brand Manager in the photography department. Grand Stores is one of the most renowned names in the retail and the wholesale business and this particular store, is there in the market since 1981 (Schmiedel, vom Brocke and Recker 2013). In the recent times, the company had gone through a major downsizing process as there was a drop in sales of around 35% in the business of wholesale and retail.

Cultural changes seem to be the only possible change that the organization could have since in the last few decades as the retail and the wholesale business and the format of these kinds of business has gone through many changes. There has been the emergence of the hypermarket as well as the super market, which have brought a change in the format of the wholesale and the retail business (Cameron and Green 2015). Thus, the nature of the change that the organization could have is the cultural change, only then the company could come of the problem it is going through.

The change that has been found in the business of Grand Stores is that there is a downfall of sales in the whole sale and retail business as taste and preferences of the consumers have changed significantly (Quinn et al. 2012). The company basically deals with the world famous brands in the field of electronics, perfumes, cosmetics, gifts and dinnerware which were been preferred by their customers. But in the recent times, it had been found that the customers are keen to buy those items which they don’t deal.

There are been several reasons which have led to such situations. One of the primary reasons behind is the customer tendency towards “All in one place shops” such as the Hyper Markets like Carrefour, Geant or Lulu. They are also looking for the retailers of the electronics power such as Virgin Mega Store, E-Max and Sharaf DG (Abbas and Asghar 2010). These emerging retail houses has offered such competitive prices along with aggressive promotions for their products that Grand Store found it very tough to survive. Therefore, they have planned to make strategic changes for withstanding the competition.

Grand Stores mainly deal with the expensive products and accessories along with luxury brands where the customer base is dependent on the rich locals and tourists. It has been noticed in the current times that these customer segments have been decreased due to tough economical situations (Chand 2012). On the other hand, the electronic power retail houses and the hyper markets have targeted customers of all categories starting from low income to high income through the utilization of the availability of multiple brands, range of wide products, continuous promotions and aggressive pricing.

Strategies adopted by Grand Stores

Moreover, the interior designs of the Grand Store showrooms are dull and outdated. This factor has also made a loss of customer attraction (Gattermeyer and Al-Ani 2013). Apart from that, lack of social media marketing in the business strategy and absence of promotional product catalogues have led the company to come in the section of backwards. Therefore, the change in the strategy is required on urgent basis.

If the organization is going to make changes in the products they deal with then it will have a good level of scope for recovery of business. Products distributed as per the choice of the consumer will definitely make the restoration of the business (Gollenia 2016). Therefore, the brand image that has been created previously with a high impression in the consumer’s mind will definitely get restored. Dealing of new products in the organization will make more flexibility among the management people and the executives.   

Therefore, if the managers and the leaders within the organization could convince the employees about the changes that are going to take place within the organization; then the scope of changing the culture of the organization will be feasible.

The extent of change should be incorporated up to the sub-variants of the products that are been dealt. The company should make the changes in the order to reach the optimum number of its audience (Kondalkar 2013). The changes should be done keeping the culture of the buyers in mind. Such extent of change will actually make the dealers and distributors of Grand Stores to reject the products which are treated to be unmovable.

Like other hyper markets and electronic power retailers, Grand Stores should concentrate on aggressive promotions and impose competitive prices for their products to make them acceptable to their customers (Lowder 2016). They should deal with those products with aggressive pricing and continuous promotions which are for the customers of all income categories.

Grand Stores should renovate the decorations of their showrooms for making it more open spaced to bring life to them. They should adapt the touch and feel stand and the podiums for implementing the experience zone concept in the place of closed display cabinets and the lockers (McGuire 2016). They should also produce promotional product catalogue and create profile in the social media for the purpose of marketing and business networking to restore their business positions.

The company should vacate sensitive managerial posts and make reduction of the sales professionals along with closing of couple of showrooms for the purpose of cutting the overall cost.

Key stakeholders

The major internal stakeholders of Grand Stores are the company’s shareholders and the Head Office employees (Murphy 2016). The employees of Head Office include directors, managers of senior and mid level, sales executives and merchandisers along with the support staffs.

On the other hand, the external stakeholders include the Brand principals, organized retail customers, independent retail customers and the consumers.

The head quarters of Grand Stores was established in the year 1981 with 11 employees along with a single store in Abu Dhabi (Moran, Abramson and Moran 2014). The company has grown over the years and is currently running 33 theme retail outlets all over UAE with multicultural employee strength of nearly 1000. The head office store has provided dedication towards business ethics, and this has turned to be one of the major driving forces to attract most of the consumers of the organization. The head office has taken initiatives to expand its business in other cities of UAE and has established other outlets accordingly (Nastase, Giuclea and Bold 2012). They have concentrated to deal with improved quality of photography, consumer electronics, cosmetics, dinnerware and gifts which belong to established household brands. Therefore they have achieved the milestone for symbolizing trust and reliability for their consumers.

The major and the important issue that the company faces is the problem of economic downsizing in the wholesale and the retail business (Cummings and Worley 2014). The major reasons behind the issue are customer tendency towards the Hyper Markets as well as the Electronic Power Retailers. Other reasons include Grand Store’s focus on the luxury brands and expensive products and accessories which are only for the high income customers and the number of those customers were decreasing due to tough economic situations. The showrooms of the company had an outdated interior design which was not able to generate attraction to their target audience (Quinn et al. 2012). Moreover, lack of social media marketing and production of promotional product catalogues were the major reasons of such downfall in business. As the company has a good strength of 1000 employees currently and has 33 retail outlets, they have faced pressure in maintaining the manpower and store costs.

1. What factors the company will consider before bringing a major change within the organization?

2. New changes within an organization are often not acceptable by the employees of the organization; and grand store is a multi-cultural organization, thus there can be cultural conflict within the organization. What kind of leadership style would help in avoiding such problems?

Questions for discussions

3. What should be the company’s strategic decision if a resistance takes place from the employees who will be unable to deal with the new products for not being of that cultural segment?

4. What should the company do in case of such downfall in sales of their products in the future?

It can be learned from the given case study that there is no such assurance that a business will run consistently with a lead in the market at all times. There may be situations when the demands of the organization’s products will be very high, resulting to appreciation of the products (Hyatt 2012). On the other hand, there may be a reverse situation which can create a negative response from the consumers regarding a product. This situation can lead to decrease of sales in wholesale and retail business just like that happened with Grand Stores. Such issues have risen due to customer tendency towards Hyper Markets and Electronic Power Retailers who offer aggressive promotions and competitive prices to their customers over the season. The other reason was Grand Store’s continuous focus only on the luxury brands whose demand was decreasing due to deteriorated economic conditions. Apart from that the interior designs of the showrooms were dull which was unable to attract the target audience. Grand Stores did not produce promotional product catalogues and did not adopt social media marketing strategy which led to make them backwards compared to their rivals in terms of popularity (Cummings and Worley 2014). To deal with such situation, the company has to make strategic moves such as discontinuing the sale of those products which are non-movable and deal with those products which have consumer likings. They also have to reduce their manpower along with couple of stores for reducing the cost in order to avoid financial crisis.

The definition of the culture is not simple rather it is elusive in nature and thus before bringing a cultural change within the organization the following factors should be taken into consideration:

• Evaluation of the present culture of the organization: The current culture of the organization, most of the time is responsible for determining the present performance. Thus, before bringing a massive cultural change, one has to find out the flaws that are there within the current or the present culture of the company, which is affecting the overall performance (Hyatt 2012). The organizational culture also affects things like the internal behavior.
• Those aspects that should be eliminated: The current culture of an organization goes through a change because it has certain flaws (Murphy 2016). Therefore, before bringing a change or rather a cultural change within the organization, one should consider those flaws and make sure that in the changed culture those flaws are not there.

The cultural change within the organization is only possible if the leaders of the organization take proper initiative (Abbas and Asghar 2010). The leadership quality of the leader during the time of the cultural change is helpful not only attracting new employees in the organization, but also at the same time, it is helpful in retaining the employees in the organization. The leaders of the organization, to avoid the resistance from the employees within the organization, require sharing their views and their vision with the employees of the organization. Thus, among all the four leadership styles, the transformational leadership style is the most suitable leadership style (Chand 2012). The transformational leadership style is constructed around the four important parameters and these four parameters include the “idealized influence”, “inspirational motivation”, “intellectual stimulation”, and “individualized consideration”.

Among the four parameters, the “inspirational motivation” is one of the most important parameters. According to this particular parameter, the leader of the organization has the capability to influence the culture that is there within the organization. The leader with the help of their personal attitude, decision-making power and with the help of their action could influence the culture of the organization (McGuire 2016). .

According to many scholars and critics, the transformational leaders believe in Kantian Capitalism. Thus, the leader of the organization never considers the employees in an organization as a means to the end or the goal that is being set by the organization (Lowder 2016). The transformational leaders also encourage the followers within the organization and at the same time, they could motivate the leaders as well. Thus, the transformational leadership style seems to be the most appropriate leadership style that the leaders of an organization could adopt, if it is going through any cultural changes.

The company should be versatile in making strategic decisions to maintain their sustainability in the market. If the management faces the issue regarding resistance from changing the products dealt from the people who are unable to deal the consumers for not belonging to their cultural segment, they will shift them to some other division where they can work in their full potentials without any interaction with the customers (Hayes 2014). If the company feels that those people are making too much problems while making the changes of the product to be dealt, then they should replace them with those who are suitable for the changed environment (Cameron and Green 2015). The congruence model gives the explanation of the situation where the management makes the strategy on the basis of studying the environment, history and resources as inputs, processes them for the transformation of people and work and produces the output of a modified system, unit and an individual.

It is a high matter of concern for a company that they can face the same evil situation in their business that they have undergone in the past. Grand Stores has noticed a reduction of 35% in their sales which signifies huge business loss along with reduction in market share (Gollenia 2016). Such issues have taken place due to shift of consumer’s taste and preference as number of customers belonging to the culture of Indian subcontinent has increased. Those consumers have a different choice of products than the natives of United Arab Emirates. There may be chances that in the near future, the demand of the products preferred by the current customers becomes obsolete due to further cultural changes and preferences (Kondalkar 2013). The company should therefore invest much time in doing the market research and survey to have a clear picture of the latest trends and the changing demands. Such strategy will help the company to decide what products are required to deal with.

McKinsey’s 7S model elaborates the company’s approach to ensure flexibility. The organization can make detailed research from the market survey and will do the sharing of values through an efficient utilization of their skills, staffs, systems, style, structure and strategy (Nastase, Giuclea and Bold 2012). It can be said that all these factors are interlinked with shared values to give a better view of the market and plan accordingly to excel in the near future.

References

Abbas, W. and Asghar, I. (2010). The Role of Leadership in Organizational change. 1st ed.

By, R.T., Burnes, B. and Oswick, C., 2012. Change management: Leadership, values and ethics. Journal of Change Management, 12(1), pp.1-5.

Cameron, E. and Green, M., 2015. Making sense of change management: a complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.

Chand, S. (2012). 4 Different Types of Leadership Styles. YourArticleLibrary.com: The Next Generation Library.

Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning.

Gattermeyer, W. and Al-Ani, A. eds., 2013. Change Management und Unternehmenserfolg: Grundlagen—Methoden—Praxisbeispiele. Springer-Verlag.

Gollenia, L.A., 2016. Business Transformation Management Methodology. Routledge.

Hargreaves, A., Lieberman, A., Fullan, M. and Hopkins, D.W. eds., 2014.International Handbook of Educational Change: Part Two (Vol. 5). Springer.

Hayes, J., 2014. The theory and practice of change management. Palgrave Macmillan.

Hyatt, M. (2012). How Do You Change Organizational Culture?. Michael Hyatt.

Kondalkar, V.G., 2013. Organization effectiveness and change management. PHI Learning Pvt. Ltd..

Lowder, T. (2016). The Best Leadership Model for Organizational Change Management: Transformational Verses Servant Leadership. Academia.edu.

McGuire, J. (2016). Leadership Strategies for Culture Change Developing Change Leadership as an Organizational Core Capability. 1st ed.

Moran, R.T., Abramson, N.R. and Moran, S.V., 2014. Managing cultural differences. Routledge.

Murphy, M. (2016). Forbes Welcome. Forbes.com.

Nastase, M., Giuclea, M. and Bold, O., 2012. The impact of change management in organizations-a survey of methods and techniques for a successful change. Revista de Management Comparat International, 13(1), p.5.

Quinn, D., Amer, Y., Lonie, A., Blackmore, K., Thompson, L. and Pettigrove, M., 2012. Leading change: Applying change management approaches to engage students in blended learning. Australasian Journal of Educational Technology, 28(1), pp.16-29.

Schmiedel, T., vom Brocke, J. and Recker, J., 2013. Which cultural values matter to business process management? Results from a global Delphi study. Business Process Management Journal, 19(2), pp.292-317.