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VIDEO CASE 6–1 Lands’ End: Where Buyers Rule

Organizational buying is a part of the marketing effort that influences every aspect of business at Lands’ End. As Senior Vice President of Operations Phil Schaecher explains, “When we talk about purchasing at Lands’ End, most people think of the purchase of merchandise for resale, but we buy many other things aside from merchandise, everything from the simplest office supply to the most sophisticated piece of material-handling equipment.” As a result, Lands’ End has developed a sophisticated approach to organizational buying, which is one of the keys to its incredible success.

The Company

The company started by selling sailboat equipment, duffle bags, rain suits, and sweaters from a basement location in Chicago’s old tannery district. In its first catalogue, the company name was printed with a typing error—with the apostrophe in the wrong place—but the fledgling company couldn’t afford to correct and reprint it. So, ever since the company name has been Lands’ End—with a misplaced apostrophe!

When the company outgrew its Chicago location, founder Gary Comer relocated it to Dodgeville, Wisconsin, where he had fallen in love with the rolling hills and changing seasons. The original business ideas were simple: “Sell only things we believe in, ship every order the day it arrives, and unconditionally guarantee everything.” Over time the company developed eight principles of doing business:

1. Never reduce the quality of a product to make it cheaper.
2. Price products fairly and honestly.
3. Accept any return for any reason.
4. Ship items in stock the day after the order is received.
5. What is best for the customer is best for Lands’ End.
6. Place contracts with manufacturers who are cost-conscious and efficient.
7. Operate efficiently.
8. Keep overhead low.

These principles became the guidelines for the company’s dedicated local employees and helped create extraordinary expectations from Lands’ End customers.

Today, Lands’ End is one of the world’s largest direct merchants, with annual sales of traditionally styled clothing, luggage, and home products exceeding $1.4 billion. The products are offered through catalogues, the Internet, and retail stores. Last year, Lands’ End distributed more than 260 million catalogues designed for specific segments, including The Lands’ End Catalog, Lands’ End Men, Lands’ End Women, Lands’ End Kids, Lands’ End for School, Lands’ End Home, and Lands’ End Corporate. In a typical day, catalogue shoppers place more than 40 000 telephone calls to the company. The Lands’ End Website (www.landsend.com) also offers every Lands’ End product and a wide variety of Internet shopping innovations such as a 3-D model customized to each customer (called My Virtual Model™); a “personal shopper,” to suggest products that match the consumer’s preferences; and a feature that allows customers to “chat” online directly with a customer service representative. Lands’ End also operates 19 stores in the United States, the United Kingdom, and Japan.

The company’s goal is to please customers with the highest levels of quality and service in the industry. Lands’ End maintains the high quality of its products through several important activities. For example, the company works directly with mills and manufacturers to retain control of quality and design. “The biggest difference between Lands’ End and some other retailers or catalogue businesses is that we actually design all the product here and we do all the specifications. Therefore, the manufacturer is building that product directly to our specs, we are not buying off of somebody else’s line,” explains Joan Mudget, Vice President of Quality Assurance. In addition, Lands’ End tests its products for comfort and fit by paying real people (local residents and children) to “wear-test” and “fit-test” all types of garments.

Service has also become an important part of the Lands’ End reputation. Customers expect prompt, professional service at every step—initiating the order, making selections, shipping, and follow-up (if necesary). Some of the ways Lands’ End meets these expectations include offering the simplest guarantee in the industry—“Guaranteed. Period.”—toll-free telephone lines open 24 hours a day, 364 days a year, continuous product training for telephone representatives, and 1 day shipping. Lands’ End operators even send personal responses to all e-mail messages—approximately 230 000 per year!

Organizational Buying at Lands’ End

The sixth Lands’ End business principle (described above) is accomplished through the company’s organizational buying process. First, its buyers specify fabric quality, construction, and sizing standards, which typically exceed industry standards, for current and potential Lands’ End products. Then the buyers literally search around the world for the best possible source of fabrics and products. Once a potential supplier is identified, one of the company’s 150 quality assurance personnel makes an information-gathering visit. The purpose of the visit is to understand the supplier’s values, to assess four criteria (economic, quality, service, and vendor), and to determine if the Lands’ End standards can be achieved.

Lands’ End evaluations of potential suppliers lead to the selection of what the company hopes will become long-term partners. As Mudget explains, “When we’re looking for new manufacturers we are looking for the long term. I think one of the most interesting things is we’re not out there looking for new vendors every year to fill the same products.” In fact, Lands’ End believes that the term “supplier” does not adequately describe the importance the company places on the relationships. Lands’ End suppliers are viewed as allies, supporters, associates, colleagues, and stakeholders in the future of the company. Once an alliance is formed the product specifications and the performance on those specifications are regularly evaluated.

Lands’ End buyers face a variety of buying situations. Straight rebuys involve reordering an existing product—such as shipping boxes—without evaluating or changing specifications. Modified rebuys involve changing some aspect of a previously ordered product—such as the collar of a knit shirt—based on input from consumers, retailers, or other people involved in the purchase decision. Finally, new buys involve first-time purchases—such as Lands’ End’s addition of men’s suits to its product line. The complexity of the process can vary with the type of purchase. Schaecher explains, “As you get more complicated in the purchase there are more things you look at to decide on a vendor.”

Future Challenges for Lands’ End

Lands’ End faces several challenges as it pursues improvements in its organizational buying process. First, new technologies offer opportunities for fast, efficient, and accurate communication with suppliers. Ed Smidebush, General Inventory Manager, describes a new system at Lands’ End: “Our quick response system is a computerized system where we transmit electronically to our vendors each Sunday night, forecast information as well as stock positions and purchase order information so that on Monday morning this information will be incorporated directly into their manufacturing reports so that they can prioritize their production.” Occasionally Lands’ End must work with its suppliers to improve their technology and information system capabilities.

Another challenge for Lands’ End is to anticipate changes in consumer interests. While it has many years of experience with retail consumers, preferences for colours, fabrics, and styles change frequently, requiring buyers to constantly monitor the marketplace. In addition, Lands’ End’s more recent offerings to corporate customers require constant attention “because business customers’ wants and incentives, and the environment in which they’re shopping, are very different from consumers at home,” explains marketing manager Hilary Kleese.

Finally, Lands’ End must anticipate the quantities of each of its products consumers are likely to order. To do this, historical information is used to develop forecasts. One of the best tests of their forecast accuracy is the holiday season, when Lands’ End receives more than 100,000 calls each day. Having the right products available is important because, as every employee knows from Principle 4, every order must be shipped the day after it is received!

1		Who is likely to comprise the buying centre in the decision to select a new supplier for Lands’ End? Which of the buying centre members are likely to play the roles of users, influencers, buyers, deciders, and gatekeepers?
2		Which stages of the organizational buying decision process does Lands’ End follow when it selects a new supplier? What selection criteria do the company utilize in the process?
3		Describe purchases Lands’ End buyers typically face in each of the three buying situations: straight rebuy, modified rebuy, new buy.