CHAPTER I: INTRODUCTION

The Company

Rustan’s name has been synonymous with luxury retailing in the Philippines.

It is considered as the country’s most prestigious retailer. Rustan’s remains as the

exclusive address of note of many of the world’s most famous names and signature

from Cartier to MIkimoto, Tiffany to Estee Lauder, Nina Ricci to Alfred Dunhill, to

name a few of the stores within a store concepts that it has pioneered. Rustan’s

Commercial Corporation owns Rustan’s Department Store and its sister companies.

Rustan’s flagship and main mall is located at Makati City. Today, in the competition

environment of the marketing world, brands and companies who wish to make

inwards into the Asia Pacific market should know that Rustan’s is a major force and

player to contend with.

Rustan’s Logo

Rustan’s Corporate Direction

For the past 60 years, Rustan’s has been committed into providing quality

product and services which meet the expectations of the high end market and cope

with the dynamic needs of customer in a responsible and responsive manner.

It’s our corporate objective to:

-Continue our service in the market.

-Maintain our recognition as a major player in our field.

-Maintain our edge over the competitor through more ideal and competitive

strategies and innovative brands.

-Sustain our reputation as a well renowned retailer of high end brands.

History and Location

The history of Rustan’s Commercial Corporation, as it refers to the premiere

chain of upscale department stores, is the stuff that legends are made of.

Established in 1951 by the Husband-and-Wife Team of Bienvenido (Sr.) and Gliceria

Tantoco, Rustan’s Department Store actually began as a set of goods hurriedly

displayed for sale in the living room of the couple. From these unlikely beginnings, a

picturesque gift shop was formed until it slowly but always elegantly became the

country’s prominent department store chain. It has a reputation. It continues to

earn with constant achievements and innovations in merchandising, sales, displays,

and promotions. Also, Rustan’s was the first to introduce the first customer loyalty

program in retail industry – the Frequent Shopper Plus.

Today, with almost 20 branches all over metro and 2 in Cebu, Rustan’s is

considered as a pioneer in high-end retailing. Rustan’s Flagship Mall and probably

the largest one is located at Makati City.

Rustan’s Department Store Makati Map

The first Rustan’s Department Store built in _________.

Store Layout

Rustan’s is using a combination retail store layout. It basically revolves

around race track layout and free flow layout. A pathway revolves around the store

from the entrance going around then back to the entrance. The products are

arranged in a boutique style.

CHAPTER II: SITUATIONAL ANALYSIS

The following sections are the most relevant issues to Rustan’s successful

operation.

STRENGTHS

*Reputation

Rustan’s reputation in the country as the high-end retail department store is

an impending that a new player or competitor should face. With 60 years of

existence catering into the upper class of the society, Rustan’s relationship with its

loyal customers is well established and hard to beat.

*High-End Brands Distributing License

Distributing international brands in the local market means agreement

between the local distributors and the international manufacturer. Rustan’s and

foreign high-end brands have mutual agreement in distributing products into the

country, thus, players should need to build understanding with foreign brands

before they can officially distribute foreign brands.

*Financial Hindrances to New Players

Since Rustan’s is well known for retailing foreign high-end brands, new

players should realize the fact that investment is crucial for them to be at par with

it. An exclusive high-end brand means a heavy cost, that’s why new players might

be hindered by this fact.

*Concierge

Rustan’s has many concierge booths where customers can ask and seek help

or information for products unlike other competitors.

*Location

Rustan’s department store location is vastly within metropolitan area

particularly nearby its market, business districts where high rise buildings and

condominiums are built. This geographic strategy is an advantage for them

encouraging nearby residential areas to come.

WEAKNESS

*Diversification

Since Rustan’s main market are the upper class, its exclusive high-end

brands might be difficult if not impossible, to diversify into new potential market

segments like the lower and middle class. Thus, Rustan’s improvement for catering

new segment is a problem.

*Employee Competency

Rustan’s should have more competitive and well trained employees since its

market is the upper class, employees must be well trained and capable of handling

such customers.

TARGET MARKET

Rustans Department Store’s market covers much specific area of diverse

group. Majority comes from upper class until the upper middle class (A&B) with

some from class C (lower middle).

Class A,B and C

Male and Female

Professionals from ages 30 and above.

Young adults and adults (18-29).

Social Class

Since most of the brands are expensive, Rustan’s customers are well

established people, probably professionals who want quality products. Rustan’s

locations are well distributed on residential areas, and since brands are exclusively

distributed, people need to go there to buy them. Rustan’s is a kind of Destination

Retail Store since most of their products are exclusively distributed.

A (Upper Class)

B (Upper Middle)

C (Middle-Middle)

D (Lower Middle)

E (Lower Class)

Rustan’s Segmented Market

Class A, 65%

Class B, 25%

Class C, 10%Market

Class AClass BClass C

Rustan’s market primarily comes from three markets, the Upper Class, Upper

Middle Class and some on Middle-middle class.

Rustan’s Financial Structure on 2010

Current A

ssets

Non-Current A

ssets

Current L

iabiliti

es

Non-Current L

iabiliti

esEq

uity

Net Inco

me0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

3,510,317,706

3,426,616,389

3,534,674,223

1,228,688,540

2,173,571,332

118,265,511

Rustan's F.S.Net Income

Rustan’s Department Store 2010 Financial Statement is stated above. The

information came from Securities and Exchange Commission.

PRODUCTS

Long Champ Bags: Php 6,000-10,000

Le’ Sportsac Bags:

Php 10,000 and above

Coco Chanel Lipstick: Php 3,000 & above

Nina Ricci Parfume’: Php 7,000 & above

A woman in Rustan’s looking for a make up

A part of Rustan’s Dept. Store mistaken for a hotel lobby due to its

elegance.

PROMOTION

Rustan’s promotional strategies are not that unique and thorough since they

need not to focus much on that aspect for they are already a major and well

established player in the industry. Rustan’s often uses promos to their loyal

customers to encourage them on buying more (FABCASH). Other promotional

activities are having billboards on the front area of their malls to attract customers.

They sometimes have ads on newspapers if they have announcements and new

promos. Seldom have they used commercial on TV and radio since they are already

a well established firm on their industry. They also have an official website at

rustans.com.ph where customers can see basic products and info that Rustan’s are

rendering.

Chapter III. Recommendations

Retail Marketing Strategy

The following recommendations are the results of the plans made by the

markters based from the observations and analysis conducted for the improvement

of Rustan’s Department Store.

The company should conduct intensive seminars, training and orientation for

the current and upcoming employees. This would help them become more

knowledgeable and competitive in addressing and entertaining customers’

need. Since the marketers had personally experienced how the salespeople

conduct interaction with the customers, they saw lacking of expertise in

handling such situation.

Putting up few branches in other residential areas on major cities outside the

metro. Rustan’s market in Manila is already established, it is time for them to

expand and venture into other major cities outside the metro. There are 2

branches in Cebu, while in Mindanao there is none. They could put up a

branch in Davao City or Cagayan de Oro City where target market are

continuously growing. Through this effort, Rustan’s popularity will not be

enclosed on Luzon.

Organizing more events for more exposure for the company, though it is

already well established, conducting more events will help them attract

potential investors for the growth of the company. Sponsoring major fashion

events will also help them to ensure a well built relationship with other

business related company in the industry.