Kudler_Fine_Foods

The Vitamin Shoppe C. Hull D. Mazzullo, M. Smith, S. Wall-Carty University of Phoenix MMPBL/501 Edward Hartmann August 22, 2010 * The Vitamin Shoppe The organization chosen for this paper is The Vitamin Shoppe. This company has optimized the resources of human resources and knowledge of market strategy for effectiveness and efficiency. This company has set the standard for excellence within a customer service base that is being used by other companies. The Vitamin Shoppe has become one of the top company’s in training employees in product knowledge. This company excels in the vitamin industry due to excellent use of human resources and knowledge that is comprehensive and ever expanding to include consumer needs and current scientific evidence. These occurrences are a direct reflection of the many different styles of the management and leadership of this company. Company Synopsis The Vitamin Shoppe was “Founded in 1977 as a corner shop in New York City, the company was taken private by Irving Place Capital formerly Bear Stearns Merchant Banking in 2002. “In 2009, The Vitamin Shoppe raised about $155 million in initial public offerings” (Vitamin Shoppe, 2009, p. 1). “Vitamin Shoppe (formerly Vitamin Shoppe Holdings) helps vitamin shoppers meet their recommended daily requirements. The company sells vitamins, supplements, and minerals, as well as herbal, homeopathic, and personal care products, through more than 400 The Vitamin Shoppe stores in about 35 US States and the District of Columbia” (Vitamin Shoppe, 2009, p. 1). For Vitamin Shoppe, reducing the costs of their products is the best way for them to increase their profits. Vitamin Shoppe’s prices are elastic; any cost changes in their products can affect how much their customers will purchase (McConnell & Brue, 2004). In addition, the Vitamin Shoppe not only has competitors in their own industry, Drugs, Health and Beauty Industry but they also have competitors in the Drug Store and Pharmacy Industry; Vitamin Shoppe has to compete with large chain grocery stores and pharmacies which can offer low prices (Marketline Business and Information Center, 2010). Now think about the concept of income elasticity of demand. Marsha The concept of Income Elasticity of Demand is to measures the rate of response of quantity demand due to a raise (or lowering) in a consumer’s income. Vitamin Shoppe has become the leading specialty retailer and direct marketer of nutritional products. They have increased their sales by 8.6%, making them the 19th consecutive quarter of comparable same-store sales growth. Additionally, they have continued to achieve operating leverage across their business. The company’s income from operations has increased by 27.2% from (31.3% excluding expenses associated with the secondary offering) and their net income was up 73.8 %.( Vitamin Shoppe). The increase was the result of the growth in comparable store sales, strong performance from new stores and a 5.1% increase in direct sales driven by further expansion in Vitamin Shoppe's online business. Vitamin Shoppe may increase their cost of goods sold, which includes product, warehouse, distribution and occupancy costs, increased $13.2 million, or 11.4%, to $128.5 million for the three months ended June 26, 2010, compared with $115.4 million for the three months ended June 27, 2009.(Vitamin Shoppe) . Their increase elasticity has expanded their making them on of the top leading Co Customer incomes for goods or service increase by 10%; expect the demand for it to increase by more than, less than, or about 10%' Income elasticity defined is the measurement of the demand of goods or a service based on the rise or lowering of a consumer’s income. In other words, if a buyer’s income increases or decreases this will affect the amount of goods the consumer will purchase. The question posed to this team is how much would the demand for a product increase, decrease, or remain the same if the income of the products consumers increased by 10%. In order to figure these out there are a few numbers that would be needed. The first number we will need is the percentage of income change, which we know to be 10%. The second number we will need to know is the percentage in the demand, this number we do not know. The formula would be as follows, (% Change in demand) / (% change in income) = Income Elasticity of demand. Based on this formula we can assume the rate for demand would increase less than 10%. Conclusion Vitamin Shoppe is a leading specialty retailer and direct marketer of nutritional products their broad product offering enables us to provide their target customers with a selection of products not readily available at other specialty VMS retailers or mass merchants, such as drugstore chains and supermarkets. The elasticity for this company is powerful. In a double digits number, elasticity had increase for the good for this company. The closeness between increase changes in sales and quantity. It is estimated the income elasticity of revenue for Vitamin Shoppe over the last year were they have grown their net sales from $436.5 million in 2005 to $155 million in 2009. By looking at this, the company has reducing their cost, this is what lead them to increase their market shares, it became beneficial and profitable for the company . Editing – CWE - Posting References Market line Business and Information Center. (2010). Vitamin Shoppe Industries Inc. Overview. Retrieved from http://www.marketlineinfo.com.ezproxy.apollolibrary.com/library/DisplayContent.aspx'R=2AC1A188-514E-44D2-8002-2286396A67A2&N=4294510937 McConnell, C. R., & Brue, S. R. (2004). Economics: Principles, Problems and Policies (16th ed.). : McGraw-Hill. Moffatt, M. (n.d.). Income Elasticity of demand. About.com. Retrieved from http://economics.about.com/cs/micfrohelp/a/income_elast.htm The Vitamin Shoppe. (2009).Hoover's, Inc., Retrieved August 23, 2010, from http://www.hoovers.com/company/Vitamin_Shoppe_Inc/jfjshi-1.html The Vitamin Shoppe. (2008). Investor Relations Home: About The Vitamin Shoppe. Retrieved August 23, 2010 from http://www.vitaminshoppe.com/content/en/support/help/investors.jp Vitamin Shoppe. (2009). Retrieved August 23, 2010 from website: http://www.vitaminshoppe.com/content/en/support/help/investors.js