Among outdoors types, Timberland is a household name for quality clothing and, particularly, hiking boots. The company has been in business for decades and is well-established in various trade markets and the consumer active-wear markets. That said, a history and presence doesn’t automatically equal success. A SWOT (strengths, weaknesses, opportunities, and threats) analysis can point out where Timberland needs to seek improvements and bolster its defenses to continue its growth.
The company has a strong name and brand recognition, which is critical in the retail industry. Most people recognize Timberland as some type of shoe or outerwear clothes maker for outdoor work and activity. SWOT analysis will want to emphasize these points and show how the brand recognition translates into reliable sales annually, even when the economy may be doing badly.
As people have to choosier with their spending during bad times, Timberland does have the ability to argue for the quality of its products. This time-built strength can be pitched as significant value for the dollar spent, convincing consumer to spend a bit more on clothing gear that will last years rather than a cheaper item that only lasts six months.
Timberland has the ability to squeeze its operating costs for more savings. This in turn frees up cash as less gross revenue is eaten up by expenses. Being able to produce cash during hard times allows Timberland to be strategically stronger with resources it can use to expand quickly when needed.
Timberland relies on sales overseas in Europe and Asia. As the strength of the U.S. dollars grows or weakens, this will affect international sales revenue. A strong dollar will decrease sales relative to the Euro or Asian currencies as consumers in those countries effectively buy less. A weaker dollar has the opposite effect on a trade basis.
Part of the company’s annual strategy looks to the annual fourth quarter as a “replenishment period, bringing in stronger revenues than normal due to holiday buying. This is a bit of a gamble; if consumers stay stingy during the holidays, then Timberland may find itself waiting for extra revenues that don’t manifest. This weakness can cause a disruption without a plan B.
As other competitors suffer and fail because of a lack of sales and finicky consumers, Timberland’s sales due to strong reputation at worst have been flat. This opens up the ability to push for gaining market share as competitors fail. An analysis should look for these kinds of opportunities and possibly project out what seized market share could mean in increased sales and revenue streams.
Being in retail, Timberland will suffer as the economy suffers since consumer will retrench and hold back on their discretionary spending. Costco, Wal-Mart and Target look far better for necessity clothing when one has to choose with less money. This economy-driven behavior, which Timberland cannot control, will be cyclical and eventually will go away. However, the trick will be to analyze whether Timberland can see this threat coming and has the resources to ride it out.
A good SWOT analysis of Timberland will focus on its inherent retail situation and how that is managed both internally and responding to external forces. Timberland has been able to use brand recognition and quality to bolster itself during hard times, but this can only last for so long. Eventually, the company needs to find new growth or cut operating costs to stay in the black. Projections based on opportunities to grab market share from floundering competitors can produce very valuable strategic data for Timberland if it finds the opportunities to seize.
- boots image by Trevor Rogers from Fotolia.com