Đang tải... (xem toàn văn)
market that is affluent, accessible and trend setting. This market is America’s inner city, and, in Chicago alone, there is an estimated gap of $631M between demand and supply. To fill a portion of this gap, Image Fashions will provide the latest in high-end urban and hip-hop apparel to ethnic groups and minorities on the Southside of Chicago. Historically, retailers have avoided the inner city because of perceived characteristics, whether founded or unfounded, and poor statistical information. Statistically, retailers have relied exclusively on per capita income to determine the purchasing power of neighborhoods; hence most retailers have focused on the wealthy Northside of Chicago and the suburbs. However, this metric ignores the competitive advantages of the inner city, specifically population density, spending patterns and ethnic diversity. When these factors are accounted for, the retail purchasing power of the Southside inner city is comparable to any location in Chicago. Image Fashions’ primary market is the African Americans and Hispanics between 12-34 years of age who populate these neighborhoods. This population is very fashion conscious and, on average, spends 30% more on apparel then their white counterparts. They view their clothes as an expression of their personality and a statement of their connection to the latest icons and popular trends. However, it is very difficult for this group to purchase fashionable clothes. Typically, they must spend an hour or more on public transportation to go to Michigan Avenue. Once there, they may have difficulty finding ethnic brands, or they are shadowed by security, who automatically assume they will steal something. Image Fashions will offer these fashionable products, but it will offer these products in a professional and respectful manner in the customers’ neighborhoods. Image Fashions, with its professional management team, has identified a 5 mile radius that spends approximately $220M annually on apparel and has very little competition. By capturing a small percentage of this value, Image Fashions will be one of the most profitable apparel retailers in the United States. Image Fashions will capture 1.4%, or $3.0M, of this market’s gross revenue, and will deliver the Net Income highlighted in this Revenue
A Business Plan for Inner City Apparel Retail Providing the Latest in Hip Hop and Urban Fashions December 5, 2002 Executive Summary Image Fashions is a retailing concept that addresses an unmet demand and it will target a profitable emerging market that is affluent, accessible and trend setting. This market is America’s inner city, and, in Chicago alone, there is an estimated gap of $631M between demand and supply. To fill a portion of this gap, Image Fashions will provide the latest in high-end urban and hip-hop apparel to ethnic groups and minorities on the Southside of Chicago. Historically, retailers have avoided the inner city because of perceived characteristics, whether founded or unfounded, and poor statistical information. Statistically, retailers have relied exclusively on per capita income to determine the purchasing power of neighborhoods; hence most retailers have focused on the wealthy Northside of Chicago and the suburbs. However, this metric ignores the competitive advantages of the inner city, specifically population density, spending patterns and ethnic diversity. When these factors are accounted for, the retail purchasing power of the Southside inner city is comparable to any location in Chicago. Image Fashions’ primary market is the African Americans and Hispanics between 12-34 years of age who populate these neighborhoods. This population is very fashion conscious and, on average, spends 30% more on apparel then their white counterparts. They view their clothes as an expression of their personality and a statement of their connection to the latest icons and popular trends. However, it is very difficult for this group to purchase fashionable clothes. Typically, they must spend an hour or more on public transportation to go to Michigan Avenue. Once there, they may have difficulty finding ethnic brands, or they are shadowed by security, who automatically assume they will steal something. Image Fashions will offer these fashionable products, but it will offer these products in a professional and respectful manner in the customers’ neighborhoods. Image Fashions, with its professional management team, has identified a 5 mile radius that spends approximately $220M annually on apparel and has very little competition. By capturing a small percentage of this value, Image Fashions will be one of the most profitable apparel retailers in the United States. Image Fashions will capture 1.4%, or $3.0M, of this market’s gross revenue, and will deliver the Net Income highlighted in this Revenue Summary. Image Fashions, LLC Revenue Summary (in $000's) Year 1 Year 2 Year 3 Year 4 Year 5 Net Revenue Cost of Goods Solds Gross Income $ 793.9 $ $ 381.8 $ $ 412.1 $ 2,415.3 $ 1,161.6 $ 1,253.7 $ 2,855.5 $ 1,373.3 $ 1,482.2 $ 3,001.6 $ 1,443.5 $ 1,558.0 $ 3,155.1 1,517.4 1,637.7 Operating Expenses $ Net Income from Operations $ 508.3 $ (101.0) $ 637.4 $ 611.5 $ 681.0 $ 796.4 $ 703.5 $ 849.8 $ 727.5 905.5 Other (Income) or Expenses Net Income $ 95.7 $ $ (196.7) $ 321.4 $ 290.1 $ 384.8 $ 411.6 $ 394.7 $ 455.1 $ 404.5 500.9 Image Fashions will capture this market share and be fully operational within 18 months of opening by accomplishing 3 goals. First, Image Fashions will be tailored to meet the needs of the local customer. Image Fashions will offer products and labels that are not traditionally carried by department stores. It will carry brands from designers, suc h as Sean John, Phat Farm, FUBU and Coogi. These labels, often developed by hip- hop entertainers, are appealing to the market, and they allow the wearer to be associated with their favorite icons. To ensure the proper mix of products and labels, Image Fashions will hire a buyer with experience in this market and hire sales associates from the target market. By hiring students from the target market as sales associates, they can aid the buyer in determining the latest trends and most fashionable clothing. Second, Image Fashions will focus on operational excellence. Image Fashions will provide a service orientated shopping experience that will allow customers to be treated with respect while purchasing their favorite labels 2 within their neighborhoods. The store will be trendy, clean and well lit. The staff will be professional and courteous, and the store policy will reinforce the value of the customer and the experience. While security and shrink are issues, Image Fashions will focus on containing the few problem elements, rather then assuming all customers and employees are potential problems. The third factor for Image Fashions is commitment and leadership within the community. Image Fashions will create jobs and be an active participant in the community. It will host graduation and community events, and this involvement will allow Image Fashions to demonstrate its sincere commitment to the community while building its own brand and identifying new fashion trends. Image Fashions has also studied other markets and expansion opportunities. It plans on opening other stores in second tier cities, such as Pittsburgh, Detroit, Atlanta and Miami, where the target customers of Image Fashion are underserved. The management team is formed with a variety of complimentary skills. They have functional experience in finance, marketing, operations, sales and strategy, and they also have domain experience in apparel, ethnic marketing, retail, and urban development. Through this experience, Image Fashions will gain credibility in being committed to the community and recognition as the retailer and employer of choice within the target communities. The management team is seeking a commercial loan of $1.05M to begin operation of Image Fashions in the Fall of 2003. The loan will be secured against Image Fashions’ inventory, accounts receivable and managements’ personal guarantees. 3 Table of Contents I. Concept 5 II. Industry Analysis 5 A. General Market Definition 5 B. The Chicago Market 7 III. Target Market / Marketing – Sales Plan . 11 A. Marketing Objective 11 B. Target Segment 11 C. Positioning Strategy 11 1. Price . 12 2. Promotion . 12 3. Product Mix . 13 4. Location . 15 IV. Market Analysis…………………………………… . 15 A. General Competitive Landscape . 15 B. Site Specific Competitive Landscape . 15 V. Company Overview / Products & Services 18 A. Labor . 18 1. Managers 18 2. Sales Associates 18 3. Buyer . 18 4. Training Philosophy . 19 B. Store Design . 19 C. Security 21 1. Personnel . 21 2. Infrastructure/Store Layout 21 D. Inventory . 22 E. Purchasing 22 F. Hours of Operation 22 G. Layaway and Return Policy: . 23 VI. Financial Projections . 23 A. Revenue Model . 23 B. Comparative Financial Performance 26 VI. Financial Statements………………… 26 A. Start Up Costs . 26 B. Financing 27 VII. Management 27 A. Management Team . 27 B. Advisory Board 28 VIII.Exit Strategy . 28 APPENDIX A…Financial Analysis . 29 A-1…Most Likely Scenario 29 A-2 Best Case Scenario 32 A-3…Worst Case Scenario 35 APPENDIX B…Management Resumes . 38 4 I. Concept Globalization has improved access to new customers and increased the competition for those customers. However, in the rush to cross over into new borders, American retailers have overlooked an opportunity. This overlooked customer is easily accessible, affluent, an early adaptor and trendsetter. This market is the American inner city, and the customer is the growing minority population that lives there. According to recent studies, the American inner city has $85B in retail purchasing power, but nearly 25% of that demand is unmet. The result is $21B in retail spending that is not captured, and in Chicago alone this gap is $640M. 1 This business plan will outline why high e nd apparel is a major unmet market in Chicago’s inner city and how a strategic and disciplined approach to high end apparel retail in Chicago’s low income communities can generate revenue and employment. II. The General Market A. General Market Definiti on The definition of a low income, or economically distressed neighborhood is a that which has a “median household income 25% less then the city average, a poverty rate at least 50% higher than the city average and/or unemployment at least 30% higher then the city average.” 2 In Chicago, 1.77M people live within a neighborhood that fits this definition. The purchasing power of this population is counterintuitive. To the casual observer, below average per capita income would mean less purchasing power for luxury or high end goods. However, a series of characteristics make this market extremely attractive. The first and most important characteristic is population density. In the inner city, most families and individuals rent apartments. While there are several macro issues that drive this pattern, the result is a large number of renters living within a small area. By comparison, 1 lot in the suburbs or an affluent neighborhood will typically have a single or dual unit town home. In the same acreage of an inner city neighborhood, there is a 5-10 story apartment complex housing 35 families. The discretionary income of the 2 families in the affluent neighborhood is less than the combined discretionary income of the 35 families in the inner city! Another pattern that frees discretionary income for inner city residents is that affluent homeowners spend a large percentage of their income on housing repairs and maintenance costs. Since a renter does not have these costs, it frees their discretionary income to be spent on personal items and expenses, such as retail goods and entertainment services. Statistically, 67% of total U.S. shoppers own their home as compared to only 36% in the inner city. 3 The third driver of the inner city purchasing power is the racial and ethnic composition of the neighborhood. Low income neighborhoods are typically populated by African American and Latino families and individuals. According to market research, 4 both groups are more image conscious than their white or suburban counterparts. Since they are not spending their income on housing expenses, they focus their expenditures to meet their image and fashion concerns, specifically in apparel. The following graph displays the difference in apparel purchasing patterns. 1 The Business Case for Pursing Retail Opportunities in the Inner City, The Boston Consulting Group in a partnership with The Initiative for a Competitive Inner City, June 1998. 2 The Inner-City Shopper A S rategic Perspective , Pricewaterhouse Coopers and the Initiative for a Competitive Inner City, 1997. : t r- t r 3 2 nd Annual Inner-City Shopper Survey: Inne City Shoppers Make Cen s (and Dolla s) , The Initiative for a Competitive Inner City and Pricewaterhouse Coopers, November, 1998. 4 The Business Case for Pursing Retail Opportunities in the Inner City, The Boston Consulting Group in a partnership with The Initiative for a Competitive Inner City, June 1998. 5 Illustration 1: Annual Apparel and Service Expenditures by Race r- t r $1,200 $1,000 $800 $600 $400 $200 $0 Total Inner City US Shoppers White African American Hispanic Note: The U.S. Census defines this clothing expenditures in the category, Apparel and Services, and it is defined as retail expenditures includes dollars spent on all apparel, footwear, jewelry and other apparel and services . 5 Currently, several key mainstream designers, such as Tommy Hilfiger and Ralph Lauren, view the inner city as fashion trendsetters. These neighborhoods are early adaptors of new designs and set the trends for their suburban peers. In market surveys, over 50% of African Americans and Latinos ranked trend setting fashions as somewhat or very important in the purchase criteria. This is compared to 30% of the average U.S. shopper. This trend also seems to be increasing amongst the target populations. 6 MTV’s urban, hip-hop music show, called Direct Effect , and MTV’s fashion show, called Fashionably Loud , recently hosted a one hour special fashion show highlighting the premier urban and hip hop fashion brands. The show was a runway display of the new lines from leading urban designers with several performances by leading rap and hip-hop groups. It was a high-energy display of current and future trends that visually demonstrated a clear difference in the trends and expectations of racial and ethnic groups as opposed to their white counterparts. The influence and success of this show and others like it on MTV and BET (Black Entertainment Television) demonstrates that this market and product offering is nearing a stage of rapid growth and development. The outcome of these combined characteristics is an image conscious and fashion sensitive population that has discretionary income to spend on apparel. While there has been a drastic increase in the number of designers, such as Sean John, Baby Phat, Phat Farm and FUBU targeting the urban consumer, there has not been a corresponding increase in the retail stores that carry these lines. The result is an escalating demand for the product and few sp ecialty stores to cater to this market. 5 http://www.oconomowocusa.com/retail%20profile.pdf 6 2 nd Annual Inner-City Shopper Survey: Inne City Shoppers Make Cen s (and Dolla s) , The Initiative for a Competitive Inner C ity and Pricewaterhouse Coopers, November, 1998. 6 B The Chicago Market . Chicago is a unique market on several levels. First, Chicago is one of the top 3, most populated markets in the U.S. and is recognized for its diverse and affluent population. Due to its affluence, most major designers and retailers have stores on Chicago’s “Magnificent Mile” (downtown Michigan Avenue) or in the neighboring affluent communities. While Los Angeles and New York typically set American fashion trends, Chicago earns its title of “Second City,” by eventually providing all of the same amenities and products as other “trend leading” cities. The second unique aspect of Chicago is the segregation of its population. Typically, races or ethnic groups dominate one neighborhood or community and have little interaction with other groups. Typically, affluent Caucasian city dwellers are drawn to the north side of the city, while lower income foreigners and minorities live on the west and south side of the city. The result is high price real estate on the north side with an abundance of retailers competing for revenue, while the west and south side offer low cost housing but few recognized retailers. To spend their discretionary income, west and south- siders travel to the north side of the city or Michigan Avenue. Illustration 2a demonstrates the average per capita income by ZIP Code. Historically, retailers would use this as their primary metric when expanding operations into a new market or neighborhood. The darker green ZIP Codes on the map indicate higher income areas as compared to the lighter green ZIP Codes. Using this metric, the north side of Chicago seems to be the most attractive market, with little opportunity for retail businesses on the south side. However, this metric does not account for population density or spending patterns, two factors that are critical in measuring the potential success of retail operations. Illustration 2b accounts for the population density and for spending patterns, rather then strictly using per capita incomes. In this second illustration, the north-side’s advantage is not as clear, and it demonstrates retail opportunities, based upon total apparel expenditures, on the south and west-side of Chicago. The south side offers five high apparel spending ZIP Codes which are in the >$50MM range, impressive when compared to their annual per capita income. 7 Illustration 2a: Average Per Capita Income by ZIP Code 7 Illustration 2b: Total Apparel Expenditures by ZIP Code 8 7 Source: Analysis of U.S. Census Data 8 Source: Analysis of U.S. Census Data Illustration 3 overlays Chicago’s apparel retailers with the information from Illustration 2b (Total Apparel Expenditures by ZIP Code). It supports the historical pattern that retailers have used only average income to define new market opportunities. The retailers, consistent with average income patterns, are concentrated on the north side of the city. Markedly fewer retailers are present on the south and west sides despite the great market potential. Illus ration 3 Per Capita Income by ZIP Code and Apparel Re ailers by Addr ess 9 t : t In comparing Illustrations 2 and 3, it is apparent that there is an affluent market sector that is not having its demands met. Additionally, to further validate the opportunity of real estate and business in the south side of Chicago, the area was recently selected by CNN.com as one of the top U.S. neighborhoods to live in. 10 Based upon the growth of the high-end apparel industry and the customers’ spending power, there is a unique opportunity to enter the fashion retail business in low income ur ban neighborhoods. Chicago is a strong point of entry because of its national affinity to new trends, diverse demographic distribution, lack of competition and high population density. 9 Source: Analysis of U.S. Census Data and Business Yellow Page Listings 10 CNN.com’s Money section. http://money.cnn.com/2002/11/08/pf/yourhome/bplive_chicago/index.htm III. Image Fashion’s Marketing Model The marketing model will focus not only on attracting customers away from competitors but also on trying to satisfy the innate demand within the local catchment area. The marketing model can be considered as below: Illustra ion 4: Image Fashions’ Marketing Model t t t Positioning Strategy Price Marketing Objective Promotion Target Segment Product Mix Location A. Marketing Objective The Marketing Objective is to generate sales of $3.0M in the third year. B. Target Segment The urban clothing mix will be aimed specifically at young adults aged between 12 – 34. Based on primary market research, this segment of the market is highly influenced by fashion and values the distinctiveness that Image Fashions will provide. The buyer for a compariable urban clothing retailer, The Lark, noted that “our target market is aged 12 upwards, with clothes being often their only major outlay and who place a premium on wearing the right clothes.” 11 C. Positioning S ra egy Because Image Fashions does not intend to manufacture or design its own products, it will differentiate itself on service and product mix (by responding rapidl y to changes in fashions). In fact, very few designer brands are exclusive to a particular retail outlet. Research has uncovered that the key factors when deciding where to shop are: • Being treated with respect • Courteous sales staff • Being in an environment where they don’t feel like they are being taken advantage of 12 • Clear return policies • Branded offerings • Clean and stress-free shopping environment 13 11 Interview, November 9 th 2002. 12 Interview with targeted customer segment, Saturday November 9 th 2002. 13 The Case of inner-city retailing, Boston Consulting Group. 11