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Virginia’s Yarn Shop Case Study Analysis

by Suleman

Virginia’s yarn store, which was started as a home business by a fifty-year-old Virginia Reed den and after all a married woman three children were already grown up and had moved out was established on October 22, 1986. She created it in the town of Paragould in Arkansas to provide good quality yarn as well as close in the neighbourhood where they were easily accessible by her students she gave knitting lessons and who either had to go to Jonesboro or Memphis to buy the yarn.

She stocked high-quality yarn to make sure her customers’ end product was good after they knit sweaters or Afghans. In addition to the thread, she was also involved in supplying knitting and crocheting needles, supplies, and even pattern books.

One of the significant challenges experienced by the shop was the project to expand the town where other competitive stores, for example, Wal-Mart were established. This is because they are well established and sell goods at a lower price with less discounted to the customers. For example, the sugar and Cream brand, which contained 100 per cent cotton yarn was sold at $1.68 for 2.5 ounces. Despite this challenge, Virginia’s Yarn shop still had customers buying from all over the town. Besides, hand knitting takes more time.

Virginia’s Yarn Shop Case Study Analysis

The other problem as concerns competition was how the knitting classes were charged differently. For instance, at Hancock’s yarns although the pricing of the thread that was of similar quality to Virginia’s was not discounted and was hence almost identical to what they charged their knitting classes fee at $20 for four sessions which amounted to $5 per session. This was $1 less than that offered at Virginia’s.

Another challenge is the lack of enough capital. In business, money is used to make money; that is profit. The more capital one has, the more likely that their benefit will be more.

Other stores such as those located in Memphis offered very high quality and speciality hence expensive yarns whereas others sold these high-quality yarns at a slightly discounted price. However, due to their proximity, for example, St. Louis in Memphis, they did not pose much of competition to Virginia’s Yarn Shop.

It seemed to be the biggest problem as the Wal-Mart store stocked the same kind of supplies as Virginia’s Yarn Shop although with a wider variety of colours. However, the only difference was the stocking of a few types of yarn which was considered to be of more inferior quality by the customers hence an advantage. The business is worth as it is making more on the profits than it is using on expenditure. The students, besides, are paying a lucrative amount of $3 per hour. This is reflected in the shop’s development from a retail inventory where products were sold to the yarn and knitting wholesale for a value of $2300 supplies worth $ 8500, therefore, making the growth of $6200.

To beat this type of competition, Virginia has to come up with specific ways to maintain her customers as well as increase her sales. These include strategies such as advertising, an increase of stock, attracting more customers and also finding ways to retain the already existing ones.

The manufacturers’ supply of yarn within a week is a benefit, as it means the shop is constantly well supplied with a range of yarn. Besides these, the shop is worth all the effort it puts into since, according to Virginia, it shows some signs of improvement and potential. From the income statement at the end of the year depicted by exhibit 1, it is clear that the shop makes a substantial sale that is $ 10, 075 although with a lot of expenses that result in a net yearly income of $ 3,027. This is although it is currently making very little as she expresses how she hates it if people would know how small the business is making.

She needs to adapt to the change in technology because hand knitting takes more time. Once she buys a couple of knitting machines, her production will increase; thus, more profit. In addition to this, she will need to hire more workers to help her run the business as it expands.

Another possible idea is that Virginia should open more shops at various places to meet those consumers who can not purchase from its existing store. However, this needs some thorough market research to find if there is a need and potential customer to avoid losses.

Virginia can borrow money from different financial institutions which it can use to grow its business. In addition, she will do more consumer research to find out what the needs of the consumers are and deal with the same accordingly. She can also expand her sale by offering to deliver the goods to the customer at an additional cost. Some customers may be unable to come to purchase her product at her shop for specific reasons.

Creativity is another ingredient she needs to practice so she gets more products to choose from for the customers. She can do this by trying out the various colour combination and multiple designs.

To increase her profits that could enable her to make a profit of $10, 000 per month, Virginia needs more advertising to make more people aware of her goods and the variation in prices. This should, however, be more local than the ones she has used before for her to make lots of profits.  Since she has identified her target market the right advertising strategy such as advertising on the TV, online advertisement, putting giant new paper adverts; word-of-mouth advertising among others would be useful. Besides, she should reduce some of her expenses, such as the booth in Virginia and the free lessons which increase her expenditure.

Virginia can also employ viral marketing technique. This is encouraging individuals; for example, her customers, to spread the good news about hew products. So, a chain that I created and, ultimately, has an expanded market base.

Also, she should try other ways to invite clients like to start implementing her mailing list. This would enable her to make additional sales and get more knitters to produce more products for her to attain her yearly goals by making sure that her customers come back to the shop repeatedly.

Advertising alone would not help her to achieve her goals of getting more customers and gaining additional revenue. Therefore, due to her knowledge of knitting, she could increase this by teaching more people how to knit. Virginia would ensure that due to an increased customer base, more knitters purchased the products, more income equal to that achieved in full-time employment instead of seeking employment in one of the factories where they are employed on fulltime basis. This is as a result of her love for the shop. This also creates a problem as she is using a lot of funds to advertise, whereas the effects are not visible. She even does not know how to promote to her target market, which consists of professionals as well as retired school teachers.

She also needs to concentrate more on the expansion of the shop by not only stocking more craft items and not only focus on knitting. This would additionally help her achieve her dreams of owning a full line crafts store with the possession of cross stitch, painting of sweatshirts, as well as much more supplies of craft and lessons.

Today’s world economy is globalised, meaning contemporarily, there are speedy means of the transport system. Thus similar products that one produces can be sold almost anywhere on Earth.  Virginia needs to be keen on the emerging issues regarding her products and try to adapt to the changing world. Certain environmental factors affect the operations of the business. For example, the political climate may impact the profitability of any business. It is, therefore, vital that one keep up to date with the dynamic business environment.

There are possibilities of operating more hours to accommodate more customers who might be busy during the day but wish to shop at Virginia’s shop. Besides, she can open a restaurant next to her current shop to bank on those who might want a relaxed environment while shopping. She needs to come up with a small parking space and a children’s playground, to attract more potential customers. Besides, planting beautiful flowers around the shop may also beautify the business environment; and thus, attract more customers.


In conclusion, it is worth every effort for Virginia’s business venture to rip and enjoy the profits. With the perfect financial base, customer base and creative ideas, this business is destined to growing bigger; and actually, her profit expectations of $10,000 will be surpassed.

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