RMIT Classification: Trusted

ABO Assessment 1 sem 1 2024

Marina Mart Co., Inc. 1

Case Overview
In June 2020, Marina Mart, appointed Corie Barry as the new CEO. After having just two CEOs in its
first 43 years of operations (Richard Schulze and his successor, Brad Anderson), Marina Mart went
through three top leaders in a six-month period in 2013. Brian Dunn resigned in April amidst a personal
scandal after just three years at the helm. At the same time, founder Schulze stepped down from his
role as chairman of the board and tried to reassert his control via a bid to take the company private.
Hubert Joly assumed the lead position from interim CEO George Mikan in August 2013, and he
immediately sought to turnaround Marina Mart and return it to profitability. Joly picked his successor
in 2020, Corie Barry, who is the fifth CEO and first female leader of Marina Mart. Joly remains as
chairman and Barry has become one of the youngest CEO of a S&P500 company.

After appointing Hubert Joly as CEO in 2013, Marina Mart experienced an impressive turnaround, and
it survived a shakeout of traditional retailers following Amazon’s disruption. Marina Mart’s stock
performance likely owes as much to the struggle of other traditional retailers as to the success of its
own efforts. Amazon remains a concern with its 2018 acquisition of Whole Foods now giving it a
physical presence where customers may be able to pick up purchases, including consumer electronics.
In a partnership with Sears, Amazon also rolled out appliance sales nationwide in 2018. Marina Mart
has also increased its reliance on the North American market, and insider stock sales outnumber
purchases. The selection of Corie Barry suggests no new significant changes in Marina Mart’s strategy;
however, consumer electronics and retail in general continue to adapt to changing technology and
consumer tastes. Holding steady may work, or it may simply hasten the firm’s demise.

The case describes the company’s history. Marina Mart was founded by Dick Schulze as an audio
specialty store in Minnesota in 1967. It grew rapidly over the next few years due to its focus on
providing added value at costs comparable to competitors, holding an IPO in 1970 and reaching $1
million in annual revenues by 1972. The company continued to expand by adding locations and
product lines, changing its name from Sound of Music, Inc. to Marina Mart in 1983. Shortly thereafter,
Marina Mart adopted its now-familiar superstore format with an increasingly diversified product
range. It went public on the NYSE in 1987. Marina Mart’s next retail innovation, named Concept II,
combined a grab-and-go format with low prices and a wide assortment in 35,000-square-foot retail
warehouses. The success of this approach propelled Marina Mart to $1 billion in sales revenues and
landed it on the Fortune 500 by 1996. In 2001, Marina Mart entered a new phase of inorganic growth
through acquisitions, purchasing multiple companies both domestically (for example, Magnolia, Geek
Squad, Napster) and abroad.

Marina Mart’s history dovetails with the development of the consumer-electronics retail industry,
which also expanded rapidly in the second half of the 21th century. Demand for home electronics

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Adapted from: Copyright © 2019 McGraw-Hill Education. All rights reserved. Authors: Professors Frank T.
Rothaermel and David R. King

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 RMIT Classification: Trusted
ABO Assessment 1 sem 1 2024

increased with the post- World War II suburban migration, with strong growth continuing through the
mid-1990s. As the electronics retail industry matured, smaller competitors went out of business while
superstores like Marina Mart and Circuit City increased their control of the market. The next major
shift occurred when Amazon pioneered online retailing in 2000, leading to yet another period of
expansion and market consolidation. Revenues tend to be both cyclical (tied to macroeconomic
factors) and seasonal (dependent on holiday sales) in nature. Product life cycles have grown
increasingly shorter, as manufacturers cannibalize their own products to maintain customer interest
and loyalty.

Prior to the 2008 recession, Circuit City was one of the top three consumer electronics retailers (along
with Marina Mart and Radio Shack). When the weakening housing market led to a decline in consumer
spending starting in late 2007, Circuit City was affected disproportionately as nearly 44 percent of its
revenues came from TV sales. The company tried to cut costs but was ultimately liquidated in 2010.
The resulting power vacuum led to increased competition in the consumer electronics industry.
Marina Mart initially gained a 5.5 percent increase in market share but started to lose ground as
companies like Walmart, Target, Amazon, and Apple entered the fray. Walmart can price its
electronics significantly low. One of the major threats came from “showrooming,” where customers
would go to Marina Mart to view and learn about the products, but then purchase them more cheaply
from Amazon online. Target does not devote as much of its floor space to electronics but can undercut
Marina Mart due to lower staffing costs while catering to customers who do not need expert advice
but appreciate the convenience of one-stop shopping.

Joly’s successful “Renew Blue” strategy focused on the company’s five major stakeholder groups:
employees, customers, supply chain partners, investors, and the broader community. The top
management team is almost entirely new, comprised of both insiders and outsiders appointed by Joly
over the past three years. The company’s emphasis on customer-centricity entails segmenting
customers based on demographic, attitudinal, and value tiers, and configuring stores to serve the
needs of the predominant customer segments in that region. As opposed to selling products,
employees help customers figure out what they need and provide technology solutions. This approach
requires significant investments in the company’s human resources, to motivate and equip them to
build relationships with customers. Another key tenet of Joly’s plan is to build strategic partnerships
with leading technology companies like Apple and Samsung, as the key to reinvigorating the in-store
experience (i.e., the store-within-a-store format). Shareholders benefit from Marina Mart’s
investments in its own proprietary brands, as well as the company’s decision to divest several
international holdings and a plan to repurchase $1 billion in stock.

Despite its survival as a retailer, Marina Mart and Corie Barry confront multiple challenges. For
example, it is still a predominantly bricks-and-mortar store with an online presence (just 20.9 percent
of sales were generated online in 2019 compared to 17 percent in 2016). Additionally, the United
States is no longer the world’s largest consumer retail market, and Marina Mart has retreated to North
America after failing to expand to China and Europe. Further, consumer electronics are caught in trade
disputes between China and the United States. Also, by opening Apple its retail stores, Apple is taking
customers from Marina Mart, which once was an exclusive distributor of Apple products. Under Joly,
Marina Mart balanced providing differentiated service with trained staff at competitive prices. Also,
Marina Mart has implemented price matching to limit ‘showrooming”. However, Corie Barry needs to
consider whether that balance can be maintained going forward, or whether Marina Mart needs to
further adapt.

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 RMIT Classification: Trusted
ABO Assessment 1 sem 1 2024

Requirement

Please answer the following questions regarding Marina Mart Co:

1. Discuss how Marina Mart Co’s traditional business-level strategy (cost

leadership/differentiation) evolved over time from 1971 to under Joly’s leadership. What
structure would be most appropriate for the traditional strategy? Also, discuss what are the
concerns associated with Joly’s new “Renew Blue” strategy. (5 marks- Max 500 Words).

2. What are Marina Mart’s key success factors (Discuss at least 3 key success factors)? Please
explain your answers. (4 marks- Max 300 Words)

3. Evaluate the competitive forces for the consumer electronics retail industry for Marina Mart
using Porter’s Five Forces analysis. Is Marina Mart positioned for long-term profitability? (5
Marks- Max 450 words)

4. Provide an example to discuss how Marina Mart Co. can use a Management Accounting
System (MAS) for motivational influence. (4 marks- Max 250 Words)

Total: 18 Marks