Businessmodel of VF Corporation

Customer Segments

VF Corporation has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings on a wholesale basis at mass merchants, national chains, department stores, specialty stores; and on a direct-to-consumer basis at individuals.

Value Proposition

VF Corporation offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by providing a wide variety of options. It offers brands in a broad range of categories, including outerwear, footwear, denim, backpack, luggage, accessory, sportswear, occupational, and performance apparel.

The company places a strong emphasis on innovation. It maintains the VF Innovation Fund, which provides financial support for innovative projects proposed by its employees. It also works with leading neuroscientists to understand how the brain sees, and uses this knowledge to improve its products, marketing, and merchandising.

The company has established a strong brand due to its success. It employs 62,000 workers worldwide and most recently generated $12.4 billion in annual revenues. It distributes its products in over 170 countries and owns over 1,520 stores. It produces over 560 million units of apparel per year. It has a diverse portfolio of over 30 brands, including prominent ones such as The North Face, Vans, Timberland, Wrangler, Lee, and Nautica.

Channels

VF Corporation’s main channel for businesses is its direct sales team, while its main channels for consumers are its retail stores (outlet and full-price), concession retail locations, and website. The company promotes its offering through its social media pages, advertising (TV/radio/online/consumer and trade publications), sponsorship of sports, musical, and special events, and the offering of rebate and coupon offers to customers.

Customer Relationships

VF Corporation’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.

Key Activities

VF Corporation’s business model entails the design, development, manufacturing, and distribution of its products to customers.

Key Partners

VF Corporation’s key partners are the suppliers that provide it with the raw materials it needs to manufacture its products. Major raw materials include products made from leather, cotton, rubber, synethics, wool, and blends of synthetic yarn and cotton. It also works with 1,900 contractor manufacturing facilities (accounting for 77% of its units) to produce some of its products.

Key Resources

VF Corporation’s main resources are its human resources, namely the product design experts that design and develop its offerings. It maintains important physical resources in the form of 28 company-operated manufacturing facilities (accounting for 23% of its units) in the U.S., Canada, and Mexico. It also has 32 distribution centers and over 1,520 retail stores.

Also, it operates three global innovation centers (focused on footwear, jeanswear, and technical apparel) which are filled with engineers, scientists, and technical designers that brainstorm new types of products. Lastly, the company highly values its intellectual property, with its trademarks important to its business.

Cost Structure

VF Corporation has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of goods sold, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

VF Corporation has two revenue streams:

• Product Revenues – Revenues it generates from the sale of its products through its various channels to customers
• Licensing Revenues – Revenues it generates through fees paid by third parties to license its brands