Strategic Management

Generation Y

"We are going to own this generation. " These words reflect the not so subtle philosophy of dELiA*S(www.delias.com) and Alloy www.alloy.com ). Together they have become on of the most formidable forces in Generation Y retailing. In September of 2003, dELia's was acquired by rival Alloy Inc. If you have never heard of either of these you are probably not a teenager or around them. These two companies sell a variety of trendy clothing, accessories, and home furnishings to young girls and boys between the ages of 10- 24 through approximately 70 dELia's stores, catalogs and their web sites. Alloy's revenues --$300 million in 2003?comes from selling merchandise through its web site and from sponsorships and advertising on that web site. Alloy also owns and operates more than 8200 display media boards on high school and college campuses. The companies urban fashions appear to boys and girls everywhere. And with a data base of over 25 million names and 8.5 million registered voters on their web sites. Alloy and dELias have incredible points of contact with a large number of kids that have significant purchasing power. The companies attract and keep their customers in different ways. First they design and market cloths that parents raise their eyebrows at. Also their catalogs show these fashions with models that look like regular teenagers, not the glamorous fashion types which heightens the appeal. And the company's youthful image isn't just a public persona. Most of the company's employees are under the age of 30. Their phone representatives, who are mostly high school and college students, do more than take orders. They also offer fashion tips and advice. One retailing analyst describes the companies as speaking the language of their consumers. They don't use mass marketing advertising, which generation Y consumers tend to distrust. Instead they get their message out with hot web sites. The company's goal is to become the leading generation Y media, direct marketing and Services Company. Their philosophy is that the business is defined by customers, not by product categories. They foresee a time when they will help their consumers get their first credit cards, first car loan, and first mortgage. "We'll follow them and broaden our offerings."

Please lend me your opinion on the following 4 questions.

1. What general environment trends, statistics, analysis, and so forth might strategic decision makers at both of these companies be particularly interested in? Where could they find this information?
2. What do you think is meant by the statement that the business is defined by it's customers, not by product categories? What implications does this statement have for assessing external opportunities and threats?
3. What types of competitive information might both companies' strategic decision makers want? Would the strategic group's concept be useful for such a uniquely positioned company? If so what companies might you place in their group? If not what competitors do you think they might have? How did you choose these competitors?
4. Do some research on Generation Y. What are their demographics? How about their sociocultural characteristics? When you look at these companies' web sites and catalogs, how are the companies trying to appeal to generation Y? Would you say they are doing a good job of appealing to this generation? How might they have to change their strategies as this generation ages?