NEW BUSINESS MARKETING STRATEGY PLAN by Alex Gallop

STAGE 2

12345 INTRODUCTION

THE OPPORTUNITY

IDEA VALIDATION

BRAND SITUATION

AIMS AND

PESTLE

OBJECTIVES

CURRENT BRAND LANDSCAPE

THE YOOX-NET-APORTER GROUP

BRAND DNA

THE CIRCULAR ECONOMY

CONCEPT TESTING

CURRENT POSITIONING

ESSENCE & POSITIONING

MARKET SITUATION

ANSOFF MATRIX

COMPETITORS

METHODOLOGY 8 FURTHER RESEARCH ON THE ISSUE 11

15 THE SHARING ECONOMY 16 MILLENNIALS

CHOOSING THE RETAILER

PAY AS YOU GO RETAIL

BRAND EXTENSION

POINT OF DIFFERENCE - USP 49 TARGET CONSUMERS

WHY LUXURY? 22 THE BIG IDEA 24

WORD COUNT 7,987 2

6789 MARKETING PLAN

COMMUNICATION PLAN

BRAND MANAGEMENT

MARKETING OBJECTIVES

OBJECTIVES

FINANCIAL OUTLOOK

MARKETING MIX CONSUMER NEEDS 55 COST 58 CONVENIENCE

DIGITAL & SOCIAL MEDIA STRATEGY 70 KEY MEDIA MESSAGES 72

PR & INFLUENCER MARKETING

3 YEAR OUTLINE

LFW CAMPAIGN

SWOT ANALYSIS

IMPLEMENTATION TIMELINES

CONCLUSION

APPENDIX

THE FUTURE

SURVEY RESPONSES

87 REFERENCES 88

MARKETING BUDGET

BIBLIOGRAPHY

PROFIT AND LOSS ACCOUNT

IMAGE REFERENCES

100

MEASUREMENT OF SUCCESS 82 RISK ANALYSIS 84

104 INDUSTRY CONTACTS 114 FOCUS GROUP 118 PESTLE 120 INNOVATION ADOPTION THEORY 122 FINANCIAL BREAKDOWN 123 CASE STUDY 128 ETHICAL CHECKLIST

130

INTRODUCTION

Fig 1

The purpose of this report is to undertake the final realisation phase of a three part project, exploring the trend of sustainability and its growing importance within the business landscape. Stage one investigated the trend of sustainability in the context of consumer behaviour and attitudes towards sustainable consumption, specifically regarding the fashion industry. A prominent theme within the research showed that there is a clear discretion between attitudes and behaviour towards sustainability. Numerous trends highlight the growing interest and concern for conscious consumption, however, the previous research uncovered that this concern doesnâ&#x20AC;&#x2122;t necessarily translate into actual behaviour. Underlying factors such as awareness, price and availability hinder the decision making process to consume in a sustainable manner. The nature of fast fashion, trends and style building acts as a barrier to sustainable consumption as consumers have become accustomed to constantly update their wardrobe. However, the research also highlighted existing sustainable behaviours that consumers are familiar with, which can provide opportunities to effectively drive change. By understanding the consumer and their existing behaviours, effective strategies can be created to direct them to behave in a responsible manner without them necessarily being aware that theyâ&#x20AC;&#x2122;re acting sustainable. It is critical to understand consumer behaviour to know how potential customers will respond to a new product or service. In this case, a new business opportunity that solves the issue of low uptake in sustainable fashion consumption. By combining underlying behaviours with key trend drivers, this report identifies a business solution which aims to drive sustainable development within the fashion industry. Research stage one uncovered three possible directions for stage two. However, after consideration all recommendations and conduction of further research, the direction of the report was to critically analyse the circular and sharing economy, and the impact they are having on the business landscape. The reasoning behind this is due to the increasing prevalence of these trends within society combined with the fact that they have an underlying goal to reduce over consumption and waste.

AIMS & OBJECITVES To create a new brand concept which aims to encapsulate the key drivers of sustainable consumption in an attempt to shift consumer attitudes. To create a marketing strategy and communication plan to execute a new business idea in order to build brand awareness amongst the recognised target consumer demographic.

METHODOLOGY

Further research was needed in order to gain further insights on consumer behaviour, key market drivers and idea validation. Fig 2

PRIMARY METHOD SURVEY

DESIGN

SAMPLE COLLECTION

A survey was undertaken to gain feedback on three different aims of research

The survey was released to the UK public, targeted towards females within the millennial demographic age range.

To understand clothing consumption A total of 70 responses were collected, giving a habits in more detail in regard to ‘what’s strong indication of consumer behaviours and in your wardrobe’ needs within the target market, which therefore To gain feedback on the business condirected subsequent business decisions. (see appendix 1-10 for full list of questions and ancept swers) To understand shopping and social habits in regard to experiences and aspects of the sharing economy

FOCUS GROUP

A focus group was undertaken to Gain consumer perceptions on the idea Gain perceptions on the current competitive landscape

The focus group consisted of five female participants aged between 20 and 22 in order to gain an in depth analysis of consumer perceptions. (See appendix 15)

Gain further in depth feedback on the concept

INDUSTRY

Email communication was used to contact rele- Connections were established with vant industry insiders. This was to essentially Emma Allerton – Product library assistant utilise the researchers networking skills, in orat the YOOX Net-A-Porter group der to gain insights which fed the direction of Christopher Halkyard, former Chief logisthe idea. The overall aim of gaining industry tics officer at Rent the Runway insights was to get feedback on the concept, and to also adhere to a realistic approach on Eleanor Snare, Freelance marketing conhow to execute a viable business. sultant Numerous industry experts were approached throughout the duration of the research in order to enhance debates surrounding the concept.

Table 1. Primary research methods (2016)

SECONDARY Secondary research was conducted in order to realise and develop the concept into a viable business idea. Trend reports ultimately guided the direction of the report, where research by Euromonitor, Westfield and WGSN proved to be the most insightful as to validating a new and innovative business. Market analysis by Mintel also provided invaluable insights on the size and growth of the desired market entrant. Due to the innovative nature of the report, the majority of the secondary sources were current, to ensure that the idea remained valid. Slightly older resources were used in the form of books such as, the essential guide to market planning (Wood, 2017) in order to give the report a theoretical framework.

LIMITATIONS OF RESEARCH LIMITATION

ISSUE CAUSED

WAYS TO OVERCOME

TIME CONSTRAINTS

Running out of time to complete all Create a time plan in which each research and execute business plan section of the report must be completed by in order to not fall behind time schedules

VALIDITY OF RESEARCH

Persuasive methods of questioning, biased responses

When designing the survey, focus group and industry emails, to ensure that questions are reviewed in order to eliminate leading questions. Use a range of primary methods in order to gain both anonymous responses and identified responses to balance opinions.

SENSITIVITY OF THE SUBJECT

Socially sensitive subject questioning

To ensure that all responses regarding socially sensitive subjects (sustainable behaviour) are kept anonymous through the online survey in order to gain a true reflection of opinion.

Table 2. Limitations of research table (2016)

FURTHER RESEARCH ON THE ISSUE

What’s the problem?

Further research was undertaken to gain a deeper understanding of clothing consumption habits in order to choose the direction of the business idea. The key insights that were found within the ‘what’s in your wardrobe’ section of the primary research survey further demonstrated the issue of overconsumption that was explored in

The infographic of responses demonstrates the fact that consumers don’t optimise the usage of their wardrobe. The fast nature of trends has led to a depreciation in the way consumers value clothing. Boredom and frequent use are ultimately the main reasons why consumers stop wearing clothing, as opposed to wear and tear or sizing, as only 45% of consumers declared that wear and tear was the reason for disposal, meaning that garments that are being disposed of, clearly haven’t reached their maximum usage potential. This research is further supported by WRAP whom state that around 30% of clothing in the average wardrobe has not been worn for at least a year (WRAP, 2012).

This further research therefore supports the direction of the report to explore the circular and sharing economy in order to resolve the problem that garments aren’t achieving their maximum usage potential, thus wasting valuable resources.

THE OPPORTUNITY

Fig 3

KEY MARKET DRIVERS

PESTLE ANALYSIS A PESTLE analysis was undertaken to gain an overview of the external business environment. Numerous factors were taken into consideration in order to widen the perspective of the project in terms of key market drivers and influences. An in depth version of the PESTLE is within the appendix of the report, however, it will be referred to throughout the project where relevant, and ultimately guides the direction of numerous aspects of the report.

THE CIRCULAR ECONOMY In order to curate an idea to resolve the issues investigated within stage one and at the start of the report, key market drivers must be analysed in order to explore opportunities that will drive the business idea. As identified previously, the circular and sharing economy will be explored in depth in order to gain further insights about the trends. The circular economy has arisen as an alternative system to tackle the issue of resource constraints that threaten the future of production of goods. The concept of the circular economy ensures that companies squeeze out as much value as possible from their resources (products), with the end goal

being a closed-loop supply chain where waste disappears altogether (Bell, 2016). External factors that are driving the trend for a circular economy are highlighted in the figure below. As mentioned previously, supply risks mean that resource intensive industries need to invest in innovation to reduce the amount of primary resources that are used within production. The circular economy not only benefits the environment by minimising production and waste, it comes with great economic incentives also by maximising the use of resources.

Euromonitor, 2015

SHARING IS THE NEW BUYING The definition of the sharing economy was outlined by Matofska as, â&#x20AC;&#x2DC;A socio-economic ecosystem built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations.â&#x20AC;&#x2122; (Matofska, 2016) The sharing economy is founded on the principle of maximizing the utility of assets via renting, lending, swapping, bartering and giving, to ultimately reduce the consumption of new goods and services (Levis Strauss & Co, N/A). Stage one identified that consumers have a positive attitude towards sustainability, however they are accustomed to making regular purchases and presumed that being sustainable meant reducing the amount they consumed. The sharing economy facilitates consumption of products at a rate that consumers are accustomed to, however, as the resources are shared, the environmental and social damage of usage is reduced and unnecessary waste is eliminat-

ed. Societal shifts such as urbanization and digital connectivity are subsequently driving the trend for the sharing economy. According to the UN, by 2050, 66 per cent of the worldâ&#x20AC;&#x2122;s population is projected to be urban. (UN, 2014) Urban populations are likely to benefit from sharing, due to storage constrictions that come as a result of living in overcrowded cities. Such population density will drive the necessity of convenience and the choice of accessed over owned products. With 50 billion connected devices and 66% of the global population connected to the internet (Rubin, 2016). The macro trend of digital connectivity has undoubtedly played a significant role in the growth of the sharing economy, by facilitating more efficient business models.

Fig. 4

MILLENNIAL CONSUMER

The shift to a sharing economy is also as a response to a change in consumer mind set and values. Euromonitor highlight in their New Consumerism trend report that ‘today’s consumers are reassessing their priorities and increasingly ask themselves what they truly value’ (Boumphrey, 2016). With this shift in values, a prevalent theme is the redefinition of ownership, in that the new consumer prioritises experiences over owning physical ‘things’. A demographic pioneering this new mind set are the millennials. ‘Millennials are currently aged 20-35, or born between 1980 and the end of 1994 (with some more generous definitions taking in those born up to 2000).’ (Lyons, 2016) They are predicted to have the greatest spending power of any generation by 2018 (James, 2015). Understanding this fascinating, complex generation isn’t easy but the rewards for brands that take time to invest in doing so will be able to build strong relationships whom define the future of our entire society (Bauer Knowledge, 2015). The so called experience economy is closely linked to the sharing economy in that access is being valued far higher than actual ownership. According to Eventbrite’s study ‘78 percent of millennials would rather pay for an experience than material goods.’ (Eventbrite, 2014) Brands need to know that millennial consumers are increasingly placing experiences, rather than things, at the top of their shopping lists. The driver of this is a result of hyper consumption, and the fact that owning ‘stuff’ is becoming far too easy for consumers, and the novelty of owning something new is quickly wearing off (Eventbrite, 2014).

Fig 5

IMPACT Just about every major industry is likely to experience disruption because of the sharing economy, and established businesses are, and will increasingly, embrace the sharing economy. ‘There are many opportunities to be had for established players - from reaching new consumers, building brand loyalty and improving reputation’ (Boumphrey, 2016). Whilst numerous brands such as Uber and Airbnb are able to monetise on this trend by redefining the way that consumers interact with products through temporary access over ownership, traditional retailers are set to suffer. ‘The mind-set has made for a tough environment for many retailers, who now must not only duel with one another for business but must try to persuade legions of consumers to essentially make a lifestyle change.’ (Halzack, 2016) British retail has been severely hit as a response to the increasing demand of

leisure activities and experiences over clothing sales. Retail Week announced that ‘High street like-for-like sales fell 1.1% in July as consumers chose to spend in restaurants and bars.’ (Harrison, 2015) Kalish further expressed the emerging threat at the 2016 World Retail Conference stating that ‘How to react to the shift in spend away from product and into experiences is one of the biggest challenges faced by retailers.’ (Saunter and Hall, 2016) Both of these examples highlight the risk that retailers face as the new millennial mind-set comes of age, however, the sharing/ experience economy presents an opportunity for brands to invest in in order to turn these challenges into new and innovative ways of retailing.

Fig 6

CAN THE SHARING ECONOMY WORK FOR FASHION? As identified previously, fast fashion has led to a depreciation in the way consumers value their clothing. Consumers have become accustomed to buying clothing with the intention of only wearing it a few times. Clothing often has high value but low usage, which reflects the characteristics of other items that have proved popular in sharing consumption models such as cars. It’s quite common to own clothing that is expensive, but has only worn a few times (Pike, 2016). As a result, new business models are emerging to facilitate products as services and provide temporary access to clothing rather than purchasing. This is ultimately to reduce the amount of clothing that is wasted by sitting in a wardrobe and not fulfilling its lifespan potential. Brands can also benefit from leasing through the ability to keep control of their stock by allowing numerous consumers to access the product, thus reducing their environmental and ethical impact, and monetising on this at the same time. The new model is being driven by the previously discussed new millennial mind-set of access over ownership. ‘Temporary or leased ownership of products is not necessarily a new method but one that is gaining momentum.’ (Bell, 2016) Consumers are gaining increasing interest in retailers adopting this trend and Westfield’s How We Shop Now: What’s Next 2016 trend report highlighted the vast consumer appeal for rental retail. The report was derived from qualitative and quantitative questioning of shoppers, and suggests that Pay as You Go rental is going to have a massive impact upon the future of the retail landscape. ‘There

are early indications of a new retail model emerging. A model based on renting rather than owning the key pieces that we want, when we want them.’ (Westfield, 2016) Showing how the trend of the sharing economy is going to integrate into mainstream retailing from 2016 onwards. According to Westfield, there is a real appetite for rental retail models for clothing, ‘Around a fifth of British shoppers say they are interested in renting from their favourite store and the appeal is even greater in cities, with nearly a third of Londoner’s expressing interest.’ (Westfield, 2016) Millennials are the most popular demographic to take an interest in rental, with nearly half of 25-34-year-old Brits keen to rent from their favourite stores. (Westfield, 2016) The interest for clothing is also highlighted, where a quarter of Londoners would like to rent clothing (Westfield, 2016). The high frequency of interest shows the level of consumer demand for rental retail models, however there are only a few businesses operating within the UK that offer this service, showing a prominent gap in the market.

WHY LUXURY?

In order to effectively apply the sharing economy to the clothing industry, viability of sectors must be considered to determine which would be the most effective. Due to the nature of clothing rental and the aspect of sharing resources, quality and durability must be therefore be considered. Snare, an industry expert suggested that offering a premium brand would prove to be more effective than a brand that sells at a lower price point. This is due to the fact that some brands sell at too high a volume and too low a price point to make a rental service viable, as the garments may only last a few wears (Snare, 2016, appendix 11). An insight from stage one highlighted the desirability of quality, being one of the most influential factors when purchasing clothing, which suggests that quality would determine the demand for renting clothing. Luxury products would therefore be the most effective area of the industry to target due to the perception that luxury reflects quality. The primary research for this report confirmed this perception with the most frequent response to ‘what does luxury mean to you?’ was ‘high quality’ (responses in appendix 10).

Fig 7

THE NEW LUXURY MILLENNIAL According to Mintel, ‘consumers aged 16-35 are the main designer fashion buyers, with 55% having purchased any item of designer clothing, underwear or footwear in the last three years.’ (Sender, 2015). Millennials are also the largest demographic whom aspire to own designer brands, with a quarter of young millennials most likely to invest in luxury, and a quarter whom buy luxury items that they can’t afford (Sender, 2015). Due to the fact that millennials are becoming an increasingly important demographic to the luxury industry, brands must be able to adapt and evolve to allure this attractive consumer segment. As identified previously, the sharing economy is disrupting the entire business landscape, and the luxury market isn’t immune to this. The luxury society incorporated the sharing economy within its luxury trend predictions for 2016, citing that ‘It’s already begun to happen, but in 2016 this trend is going luxe.’ (Blackden, 2016) The next generation of affluent consumers desire a sense of variety, uniqueness and individuality. The traditional ideal of luxury was by owning products to reflect the consumers’ identity, however experiential luxury and uncovering unique experiences is now seen as true reflection of one’s self (Blackden, 2016). Casare confirmed the experiential trend at the World Retail

Conference 2016 comparing ‘a meal for six people at Zuma to the price of a Gucci bag. Zuma is what people will talk about, share and remember’ (Saunter and Hall, 2016). Conspicuous consumption is falling out of favour with the new luxury millennial, whom are far more interested in experiences that can give them access to intangible luxury values, over ownership. (Openshaw, 2015) The trend further highlights the millennial generation’s desire to buy into multiple experiences, and to be spontaneous without the pressure of permanent ownership. Due to the commitment that is involved when investing in high cost designer items, the new millennial mind set may accumulate to a threat to luxury brands. The Luxury industry must therefore rethink their positioning, offering and marketing to ensure future appeal. By shifting to a business model that encapsulates the sharing economy in a way where brands can offer an experience rather than just a product, would therefore be highly beneficial.

THE

BIG IDEA The business concept is to implement clothing rental as a business opportunity for a luxury brand in order to pursue a sustainable form of consumption. The opportunity was identified through the combination of stage one insights, the macro environment, the micro environment and industry trends as demonstrated in table 3. “If you just say ‘Save the world’, it doesn’t help. You have to pick the right specific behaviours.” (Smith-Gillespie, 2014) The quote above sums up the true reasoning behind the choice of the big idea. The key industry drivers of the circular and sharing economy ultimately highlight consumer behaviours compelled by numerous different factors. However, these behaviours don’t all necessarily stem from the aspiration to be sustainable, which demonstrates that tapping into pre-existing needs, can be the key to motivating sustainable consumption on a wider level. Stage one identified that consumers can be reluctant to change their lifestyles due to the assumption that sustainable consumption means losing out on material benefits such as regular

patterns of purchasing. However, renting allows the consumer to continue consuming, without the negative impact of throw away fashion, which ultimately solves the issue of unsustainable consumption. Snare highlights a different perspective, in that, ‘Fast fashion, which relies on short garment life span, gives consumers the buzz of always having something new. What’s exciting about rental services is that buzz is still there – you can swap your garment for a new one whenever you want – but without the detrimental social and environmental effects that have been traditionally associated with the feeling.’ (Snare, 2015) Another insight that was revealed in stage 1 was that consumers made frequent clothing purchases due to the ‘good feeling’ associated with buying new clothes. By allowing consumers to facilitate that feeling through rental, consumers whom aren’t willing to minimise consumption habits, would therefore be more inclined to act in a sustainable manner.

SUSTAINABILITY MACRO DIGITAL CONNECTIVITY

ENVIRONMENT

URBANISATION

CIRCULAR ECONOMY SHARING ECONOMY

MICRO ENVIRONMENT

THE FUTURE OF LUXURY

INDUSTRY TRENDS

PAY AS YOU GO RETAIL

THE BIG IDEA

Table 3. Trend filter (2016)

IDEA VALIDATION

Fig 8

CURRENT BRAND LANDSCAPE After researching into available rental brands on a global basis, it was made apparent that the US market have ultimately pioneered the concept of fashion rental. Numerous brands have entered the market by offering either, or both, one off rentals or subscription plans. Rent the runway were one of the first to enter the market and have shown significant success over the past few years (See appendix 21 for detailed case study). However, when identifying rental service brands within the UK, the landscape was significantly different. There are very few brands operating in the UK whom offer a rental service as highlighted in the perceptual map. The majority are within the offline rental market, with most brands catering for suit and fancy dress hire. However, there isn’t a significant amount of brands offering womenswear to rent. The primary research further revealed the lack of awareness for clothing rental brands. The question ‘are you aware of any rental fashion brands, if yes please give an example?’ was asked to the target demographic, and the only response that was received other than ‘no’ was the suit hire brand Slaters. This clearly shows how the

brands that do exist within the market aren’t recognised by the target consumer, meaning that there is a gap in the market for a new brand which aims to fulfil the changing needs of the consumer. The focus group allowed the researcher to gain feedback on the current brand offering within the UK (see appendix 15 for focus group responses). A prominent theme within the outcomes of the research was the need for trust, especially regarding branding as this conveys the true value of the brand. The message of sustainability was significantly favoured over the message to ‘wear what celebrities wear’. Therefore, in order to successfully penetrate the market, it would be more beneficial to offer a rental service as a brand extension for an existing brand, due to the necessity of trust, and source of authority.

US MARKET

UK MARKET

CONCEPT

TESTING INTERVIEW/SURVEY INSIGHT RESPONDENT 1 FOCUS GROUP

You can change up your look more often and could rent things that you know you’re probably only going to wear once. Renting out clothes would give me an opportunity to try new trends and see whether I like them and what I could pair them with in my wardrobe before actually making the decision to purchase it.

RESPONDENT 2 FOCUS GROUP

I would rent clothes as in the long run as it would be cheaper, I could probably have more outfits for less money and wouldn’t clog up my wardrobe space. It would be good to know the clothes I no longer wear would be going to someone else to be used rather than the guilt of throwing them away.

RESPONDENT 3 FOCUS GROUP

I would rent clothes if I was wanting an outfit for a one off event such as a wedding or a formal event as I find that I always want something new to wear yet I only ever wear the dress or clothing once Renting would definitely be both more cost effective and better in terms of the amount of clothing I seem to accumulate that I never ever wear again and just take up wardrobe space that I don’t have.

SURVEY RESPONSES

Very good idea, would stop me spending money on clothes that I would only wear a couple of times think it's a really good idea because you get the benefit of having something new but not feeling guilty after you stop wearing it Would be a really good idea. Can change looks without wasting money or resources I think once I have leased an item, I would want to keep it. Although it's a good idea if you are unsure about an item, or if it's for an event. Would be good for occasion or party wear when you tend to only wear an outfit once Table 4. Idea validation qualitative research (2016)

Primary research response (2016)

The insights gained from testing the concept proved that there is certainly an appeal for a clothing rental service, demonstrated through the infographic above. The surveyed consumers furthermore werenâ&#x20AC;&#x2122;t aware of any current brands that allow the opportunity to rent clothing (as shown in responses in appendix 8). This therefore confirms the opportunity to turn the big idea into a business strategy to meet the needs of the consumer. The research responses reinstate the problem (as identified in stage one) that consumers want to constantly update their look, yet feel guilty about only

wearing something once or twice and either keep it dormant in their wardrobe or throw it away, which is extremely unsustainable. Rental also allows the consumer to be more experimental with what they wear, which is a clear desired need, in which consumers are now prioritising experiences over ownership of products. The core demand for rental is ultimately for outfits appropriate for events and occasions where the consumer will usually only usually wear the item once, and therefore doesnâ&#x20AC;&#x2122;t optimise the full usage potential of the item.

MARKET SITUATION

After conducting research on the global market situation in terms of the clothing and luxury industries, it became apparent that online commerce is becoming a significant driver of the luxury goods market. In response to the growing trend for online shopping, â&#x20AC;&#x2DC;more consumers will be tempted to purchase high value items from online pure plays due to the variety of brands and convenience of shopping across different labels and markets.â&#x20AC;&#x2122; (Retail Gazette, 2014) The key drivers within the market will therefore be analysed in the following chart.

Fig 9

Luxury goods market Insight

UK According to international consultancy Frontier Economics, ‘the value of sales from British luxury industries reached £32.2 billion in 2013. The British luxury sector will continue to grow rapidly in the medium term and forecasts the value of sales for 2019 to reach around £51.1 billion.’ (Walpole, 2015)

Analysis

According to Walpole and Consultancy UK, growth within the luxury market is projected to increase significantly over the next four years. However, the luxury sector has shown signs of turmoil this year (2016) going against Walpole’s predictions. Prada have reported a 38 percent plunge in its third quarter profit in 2015 and Burberry have also declared a profit set back in early 2016, showing that brand finances are reflecting a decline in demand for luxury goods (Mallevays, 2016). The decline has been driven by numerous external factors, such as, the Chinese market crash and the threat of terrorism within the EU which both effected overall tourist spending on luxury items. External factors are further explained in the PESTLE analysis within appendix 16. As a result of this, luxury brands must invest in new marketing opportunities in order to remain profitable through tough times. Online luxury retailing

Insight

Global ‘By 2018, global digital sales for women’s luxury fashion are expected to grow from a current 3 percent of the total market to 17 percent, for a total market size of $12 billion.’ (Schmidt et al, 2015) UK ‘Annual sales of online women’s fashion between now and 2018 are expected to grow by 18% in the UK’ (Consultancy UK, 2015)

Analysis

After a slow start, due to reluctance on part of luxury brands investing in digital commerce, the online luxury retail market is showing signs of significant growth. This is due to the fact that ‘most brands now interact with consumers both through their own branded online store and on multi-brand etailers.’ (Schmidt et al, 2015) However, there is still scepticism surrounding the future of online luxury commerce due to the vital sensory aspect of luxury goods, with Chanel claiming that ‘“Fashion is about clothing, and clothing you need to see, to feel, to understand.”’ (Mau, 2014) Nether the less, the majority of luxury brands are now realising the growth potential from selling online, driven by developments in Western markets as well as expansion into developing markets (Schmidt et al, 2015). Sharing and Circular economy

Insight

Global & UK ‘On a global basis, the sharing economy is currently worth £9bn – with this set to rise to a massive £230bn by 2025. The same piece of research details how five sub- sectors of the sharing economy in the UK are worth around £500m now, and could be worth up to £9bn a year by 2025.’ (PWC, 2015 ) PWC also predict in its 2015 report, that ‘companies that adhere to the sharing economy's business model of access over ownership have the potential to increase global revenues from roughly $15 billion today to about $335 billion by 2025.’ (PWC, 2015)

Analysis

The sharing economy is predicted to show dramatic growth over the next coming years, as highlighted in the figures above. With Uber and Air Bnb turning over revenue’s in the billions, the sharing economy is gaining increasing relevance as its own established market, ultimately as a response to new companies monetising on the trend. However, governments are increasingly finding it difficult to measure the actual worth of the sharing economy due to its rapid growth. According to Allen ‘Statisticians are exploring how to measure the UK’s rapidly growing ‘sharing economy.’’ (Allen, 2016) Amid criticism that current statistics don’t capture revenue from new business models, the office for national statistics is exploring ways to adapt to new measurements of how people consume and trade goods (Allen, 2016). The magnitude of conversation surrounding the future of the sharing economy and its worth highlights its growing importance in society, where governments are looking to adapt its economic measurements to an evolving form of consumption. Table 5. Market analysis diagram (2016)

CHOOSING THE

RETAILER

After critically analysing the external environment in regard to drivers of the sustainable and luxury market, two existing brands were considered for the implementation of the business idea. The justification as to why these brands were chosen was due to the fact that they operate online, which as identified before, is a key market driver for the luxury industry. They also have a high reputation within the UK market, and are renowned for their innovative marketing approaches. Consideration of different brands ensures that the most suitable brand is chosen for the application of the idea. (Pros and cons are in order of importance.)

The YOOX Net-A-Porter Group STRENGTHS

WEAKNESSES

The company has a diverse portfolio of brands which each have their own identity, for example, Net-A-Porter provides new release designer items, and The OUTNET offers discounted designer items. This highlights how the brand has diversified into different markets and consumer bases through creating new channels.

The primary research survey suggested that only 49% of respondents were aware of the Net-APorter brand. This percentage was significantly lower than other multi brand retailers identified, showing that the brand has less of a presence in the UK market.

The group earned net revenues of $1.7bn in 2015 (YNAP, 2016) showing that they have a healthy financial situation, which is worthy of investing in a new strategy proposition.

The YOOX-NET-A-PORTER group only recently merged in 2015, meaning that financial security may be limited due to recent high investment, potentially making a new brand extension a risk.

The group prides itself on being an innovator in the online luxury ecommerce market, meaning that their brand essence of being innovative, would suit a business model that is disruptive and new to the market.

The brand portfolio only operate online, and do not own any bricks-and-mortar footfall meaning that their competition operating both online and offline have a slight advantage, due to the fact that a large proportion of consumers still shop for luxury in store.

The YOOX group have previously published reports outlining their sustainable initiatives showing that they are aiming to tackle sustainability.

Strong customer service system in place â&#x20AC;&#x201C; 24/7 service operating from 11 customer care centres across the globe (Net-A-Porter, 2016). This is something that Rent-A-Porter can optimise due to the necessity of customer service within a rental business. (as identified in case study in appendix 21.)

Selfridges STRENGTHS

WEAKNESSES

Dominated only 5% of the UK department store market in 2015 (Sender, 2014) which is a relatively low position, perhaps due to the lack of stores across the UK. The brand also has no store presence on a global scale, only through e-commerce.

Being a retailer of numerous brands with a store presence could mean that implementation of a rental based concept may confuse the consumer as to what products are for rent and for sale as they don’t operate any brand extensions.

Selfridges focusses on being a lifestyle orientated brand rather than purely fashion focused, which may mean that rental is too big of a strategy as the concept is only focused on clothing rather than lifestyle.

The brand prides itself on its Sustainable attributes by leading the way in transforming sustainability into a luxury commodity. The brand pledges ‘We want to use our position to inspire our people, partners and customers to respect our environment, buy responsibly and champion sustainable products that contribute to healthy and happy communities.’ (Selfridges, 2016) A rental concept which aims to reduce the impact on the environment would therefore prove as an attractive marketing strategy proposition.

Strong brand heritage with a popular TV show ‘Mr. Selfridge’ which allowed the brand to tell its story to a wide audience.

The brand has four offline locations in Manchester, Birmingham and London, meaning that the concept could be executed more efficiently through a store, and gain prominence on the high street.

Click and collect facility in place within its locations in London, Birmingham and Manchester. (Selfridges, 2016) Table 6. Strengths and weaknesses of retailers (2016)

BRAND CHOICE JUSTIFICATION After careful consideration of all viable business options, it is evident that the YOOX-NET-APORTER group would be the most suitable brand for the implementation of the new business idea. The groups’ extensive portfolio of brands demonstrates how the company is open to diversification into different markets, by creating new products and services for new and existing customers. ‘NetA-Porter has innovation at its heart. They are fully aware of the implications that avoiding change can have, and the effects this has when interacting with their customers.’ (Barton, 2014) The group has been recognised for their aspiration towards the development of new opportunities through disruptive techniques, and their initiatives are often ignited with emerging ideas and flourishing technologies (Barton, 2014). This has ultimately ensured them to uphold their position as one of the leading online luxury retailers, by staying ahead of the game. The recent merger of the two companies does present a risk due to uncertainty surrounding finances, however Massenet believes that the merger presents extraordinary future potential of the company. (Conlon, 2015) A new brand extension which reflects the needs of the new millennial luxury consumer, would therefore prove to be extremely beneficial to the group whom are renowned for their disruptive nature. After proposing the idea to an employee at Net-A-Porter, the response gave direction as to how to implement the concept effectively. Allerton validated the idea by stating ‘Sounds good! Maybe you could focus on a capsule collection rather than everything at net-a-porter as I know they would like to keep their product prestigious.’ (Dialogue can be found in appendix 12.) After careful consideration, the decision was made to create a brand extension under the YOOX-NET-A-PORTER group in order to differentiate the service from NET-A-PORTERS existing offering.

THE BRAND SITUATION Where are we now and where do we want to be?

Fig 10 37

‘The YOOX NET-A-PORTER GROUP is the world’s leading online luxury fashion retailer. The Group is the result of a game-changing merger which in October 2015 brought together YOOX GROUP and THE NET-A-PORTER GROUP, two companies that revolutionized the luxury fashion industry since their birth in 2000.’ (YNAP, 2016)

VALUES ‘At the heart of our business, our core values stand for everything we do. Be the best Lead not follow Exceed expectations Smart and stylish Service starts with yourself’ (YNAP, 2016)

MARKET SHARE The YOOX-NET-A-PORTER group occupy a significant share in the luxury goods market. Verdict estimates that the group held a 0.4% share of the €314.8bn global luxury goods market in 2014, a 7.0% share of the global online luxury goods market, and 33.3% of the online luxury pure plays market (Westnedge, 2015).

BRAND

PORTFOLIO The analysis will only focus on three brands out of the current six that are on offer this is due to the fact that the ‘Yoox Net-a-Porter Group has plans to close its multi-brand websites, Shoescribe and The Corner.’ (Bobila, 2015) Mr. Porter also won’t be considered due to the fact that the concept is only going to be applied to womenswear. BRAND OUTLINE

TARGET CONSUMER

Net-A-Porter – ‘NET-A-PORTER.COM, launched in June 2000, has established itself as the world’s premier online luxury fashion destination for content and commerce. A true innovator, NET-A-PORTER.COM is renowned for its unparalleled editorial content and is a leading destination for the world’s most coveted designer brands and specialist beauty brands.’ (YNAP, 2016)

The Outnet – ‘THE OUTNET.COM, launched in 2009, is the most fashionable fashion outlet for the styleconscious shopper looking for the best designer products at great prices.’ (YNAP, 2016)

Fig 11 ‘Our customer is a savvy woman – she buys current but she also buys previous season.’(Micallef, 2015) Two consumer bases ultimately represent roughly half of its customers; named 'The Affluent Curator’ and 'The Budget Fashionista’ (Micallef, 2015).

YOOX – ‘YOOX.COM, launched in 2000, is the world’s leading online lifestyle store for fashion, design and art, offering a never-ending selection including: hard-to-find clothing and accessories from the world’s most prestigious designers, exclusive capsule collections, eco-friendly fashion, a unique assortment of home design objects, rare vintage finds, books and a curated selection of compelling and collectable artworks.’ (YNAP, 2016) Table 7. Brand portfolio (2016)

POSITIONING

The brand portfolio currently subside within a highly saturated market. The rise of online luxury fashion has led to an influx of new and existing brands operating online, thus increasing the competitiveness of the market. According to Schmidt, â&#x20AC;&#x2DC;Multi-brand sites, are expected to capture a greater portion of the growth in online luxury fashion, as single-brand sites have more limited growth potential.â&#x20AC;&#x2122; (Schmidt, 2015) The growth of multi brand retailing ultimately means that the YOOX Net-A-Porter brand portfolio is going to face increasing competition as brands strive to gain a higher proportion of sales. Therefore focus must be put on ensuring that the group differentiates itself from the competitors in order to stand out from the crowd.

CORPORATE OBJECTIVES To enhance the YOOX Net-A-Porter groups corporate social responsibility by launching initiatives which aim to reduce carbon emissions and drive social change. To expand the YOOX Net-A-Porter brand portfolio in order to reach new consumers, gain increasing market share, and ensure future growth.

ANSOFF MATRIX The concept is to create a new brand called RENT-A-PORTER which will operate as an extension of the YOOX-NET-A-PORTER brand portfolio. The brand name derives from a play on the parent company name, to ensure that the brand integrates effectively within the current portfolio. The current target market of the group is approximately aged 38 (as identified within the previous section). Rent-A-Porter aims to strengthen the group by attracting new consumers within the slightly younger millennial demographic, by offering a rental service that will meet their needs and changing mind-sets. Rent-A-Porter will operate as a service which allows consumers to temporarily rent designer clothing at a fraction of the retail cost. The brand extension will benefit from the groups strengths identified previously such as awareness and monetary funds, making it an attractive proposition. By integrating the concept within a well-recognised brand, it will ultimately give the service a source of authority, putting it in a stronger position than the current brands within the market.

Existing Products/Services

New Products/Services

Existing markets

New Markets RENT-A-PORTER

Ansoff matrix (1957) diagram

BUSINESS OBJECTIVES To be an innovator and market leader in the rental fashion market within the next 5 years To change perceptions of clothing rental as a new and innovative way of clothing consumption, through effective branding and the use of popular designers by year 3 To drive increasing sales to the rest of the brand portfolio through experiences with rent-a-porter within the next 5 years

THE NEW BRAND EXTENSION

How do we get there?

Fig 12

BRAND DNA VISION ‘RENT-A-PORTER strives to rewrite the rule book of online commerce through revolutionizing the meaning of ownership. Stemming from NET-A-PORTERS innovative approach to doing business, RENT-A-PORTER envisions a future where remarkable luxury experiences can be accessed rather than owned to enhance our customers’ signature style.’

MISSION ‘Through a multi-channel platform system, RENT-A-PORTER aims to provide a service that ensures our customer can shop with us wherever and whenever. With exclusive designer collections available to access, RENT-A-PORTER is the go to destination for the style conscious shopper who desires to experiment with key pieces.’

BRAND VALUES INNOVATORS IN SUSTAINABLE CONSUMPTION ‘Sustainability is at the heart of our business model, we believe that a collaborative form of consumption should be embraced to ensure that designer products are given the appreciation that they deserve.’ GUARENTEED CUSTOMER CARE 24/7 ‘Our customer care team is available 24 hours a day, seven days a week. We pride ourselves as being champions of unparalleled customer service to ensure our customer has the very best experience.’ QUALITY ASSURED ‘We strive to ensure that the quality of our products is maintained to an excellent standard. We have partnered with a leading brand in the dry cleaning business to prioritise hygiene whilst ensuring our garments aren’t damaged in the process.’ OUR TEAM ‘We pride ourselves on the YOOX-NET-A-PORTER company values. The group has always been blessed to have a richly talented group of individuals driving its success and growth. ‘At the heart of our business, our core values stand for everything we do. Be the best, lead not follow, exceed expectations, smart and stylish and service starts with yourself.’

BRAND ESSENCE MODEL Attributes

Promise

Accessible

Quality

Aspirational

Unparalleled service

Convenience

Variety

Destination Personality Chic

Value Innovative driver of change

Feminine

Source of Authority Brand portfolio Commitment to sustainability

Classic

Leader

Innovative

Service

POSITIONING

RENT-A-PORTER positions itself as an innovator in the luxury retail landscape, operating as one of the only brands situated in the UK online luxury rental market. A true visionary whom has recognised the change in the way that consumers prefer to shop, by desiring to rent rather than own their key pieces.

COMPETITOR ANALYSIS Strengths Girl Meets Dress

One of the first brands to enter the UK online fashion rental market. Has a wide product portfolio of 4,000 dresses available. They have an online chat support on the website which ensures they give the best customer service. Send a backup size with every dress rented which lessens the risk of sizing issues.

Chic By Choice

DIRECT Weaknesses

Overview and potential impact on the brand Website and branding is exe- As Girl Meets dress operates a similar business the target cuted in a very tacky way as consumer may be more inidentified in the primary reclined to choose the competisearch (see appendix 15 for tion over Rent-A-Porter. consumer opinion). The colour scheme is very displeasing However, the primary reand the fonts are inconsistent. search suggested that consumers lacked trust with the Their social media strategy is brand due to the appearance extremely poor. The channels of the website and the brandaren’t updated frequently, and ing. This therefore means that their content isn’t very engag- Rent-A-Porter must ensure ing. that their website looks visually pleasing and appeals to Extremely celebrity focused, the consumer in order to gain which is outdated. a competitive advantage.

Website is far more visually pleasing than Girl Meets Dress, muted palette.

Don’t benefit from having a wholesale relationship with designers (Mau, 2015)

Over 1,000 in season options

Twitter only has 558 followers

More than 230,000 registered members (Damn, 2015) Delivers to more than 15 European markets, meaning it’s reach extends past the UK

Very difficult to discover through a search engine

Engaging Instagram with nearly 7,000 followers, and popular Facebook with 58,000 followers.

Identical to Girl meets dress, Chic by choice also offers a very similar service. However, the researcher had difficulty identifying this brand due to their lack of presence on the Google search engine, suggesting that it would be hard for consumers to find.

Rentez Vous

Highly recognised by the media and PR. They promote new and upcoming designers

INDIRECT Poor social media following (Facebook – 3,929 likes, Twitter – 1,633 followers, Instagram – 1,457 followers) Website is somewhat difficult to navigate and you can’t browse available products unless you’re signed up.

Vestaire collective

‘4 million members and 100,000 new members joining each month across 40 countries.’ (O’Hear, 2015) Received $37 million of investment in 2015 Strong social media presence and following

Still have significantly high prices, and reflect the growing nature of vintage luxury becoming just as expensive as new luxury clothing. Extremely time consuming to browse due to the sheer amount of products available. Concerns over authenticity and fake items.

Rentez Vous operates a rental service, however it facilitates peer to peer transactions rather than brand to consumer online. This therefore means that they are not necessarily a direct competitor, however the rental service is similar. They benefit from lower costs due to not having to own any inventory, however, this means that their profit margins would be significantly lower than RentA-Porter, meaning that they are limited as to how much promotion they can afford to do. Vestaire collective is an online luxury resale store, whom sell pre owned luxury items at discounted prices. Due to the fact that Rent-A-Porter will sell the inventory after its maximum rental use, Vestaire collective may impact on the success of this aspect of the business. However, Vestaire collective’s products are more vintage focused, meaning that Rent-A-Porter’s offering will differentiate as the stock will only be a few seasons old. The growing success of the brand also reflects increasing consumer acceptance of pre-owned clothing.

Table 8. Competitor analysis diagram (2016)

POINT

OF DIFFERENCE Rent-A-Porter’s point of difference in the market is to be one of the first existing brands to launch a rental service as a brand extension within the UK. According to the Westfield trend, the future of fashion rental is big name retailers offering a pay-as-you go section as an added service (Westfield, 2016). Rent-A-Porter will therefore be the first to enter the market by offering an added service to the YOOX Net-A-Porter group, in which they will benefit from the existing brand success and popularity. By ensuring that the service remains exclusive by only offering a small selection of brands and products, will in turn differentiate Rent-A -Porter from the current brands whom focus on a push strategy rather than a pull. The business will also focus on the sustainability aspect of rental rather than the current brands whom focus on getting the ‘celebrity look’, in order to promote CSR within the group. This is supported by the fact that ‘using a celebrity actually detracts from whatever it is you are trying to accomplish with your campaigns, and 70 percent of 18- to-34-year-olds prefer peer endorsements over celebrity endorsement.’ (Whitman, 2016)

TARGET CONSUMER Fig 13

THE CITY SLICKER Generation: Millennial (Gen Y) Average yearly income: £70,000 P/A Average monthly spend on clothing: £1000

25-year-old female who works full time in central London. She frequently shops both on her mobile on her lunch break and also two to three times a week after work and on weekends. She uses Uber on a daily basis to get around the city, and does not own a car. Her wardrobe mainly consists of stylish work wear, and a selection of party wear. She wants to frequently update her wardrobe, however, she’s very concerned about the environment and attempts to make a positive impact on the planet. She also aspires to wear luxurious items, however, her financial situation due to living in the centre of London doesn’t allow her to do this.

THE INSTAGRAMMER 22-year-old female, renowned for not being pictured in something twice, this girl rotates her wardrobe on the daily in order to express her personal style (and get likes). She’s single and rents a shared house in the suburbs of London with her friends, browses the internet for clothing near enough every day and only visits the high street once a week. She attends music events and parties twice a week which are of course well documented on Instagram and snapchat. Generation: Millennial (Gen Y) Average yearly income: £25,000 P/A Average monthly spend on clothing: £500 Fig 14

THE IHAETGTANTW (I have an event to go to and nothing to wearer)

Generation: Millennial (Gen Y)

Fig 15

Average yearly income: £35,000 P/A Average monthly spend on clothing: £200 30-year-old female, who lives in Norwich with her husband and one child. University educated with a job as a teacher, she has a very hectic life style and near enough no time for shopping, therefore most of her clothes are ordered from online and delivered to her house. However, an event has come up and of course she has nothing to wear even though her wardrobe is full of clothes. She doesn’t want to buy another outfit that will sit in her wardrobe dormant for years to come. 51

THE MARKETING STRATEGY PLAN Implementation

Fig 16

MARKETING OBJECTIVES To launch the Rent-A-Porter brand by the end of November 2016 in order to achieve optimum sales around the Christmas period To ensure that all stock is fully rented and sold on year on year in order to achieve ÂŁ150,000 profit by the end of year 3. To increase Rent-A-Porterâ&#x20AC;&#x2122;s brand awareness through social media following, PR reach and word of mouth.

MARKETING

MIX

RENT-A-PORTER SIMPLIFIED

CONSUMER NEEDS The primary research questioned what type of clothing millennials would prefer to rent, accessible luxury and luxury items were the most favoured option, suggesting that the product offering must abide by this specification. The choice of accessible and high end luxury was further supported by Mintel as discussed previously, whom suggested that millennials are the largest demographic that aspire to own designer brands (Sender, 2015). By making luxury items more accessible via temporary ownership and at a lower price point, the rental concept will therefore satisfy the needs of the target demographic. The primary research gave further insight as to the why the consumer would rent clothing, which demonstrates their need for the service. Examples include… ‘I would definitely rent clothes if I was wanting an outfit for a one off event such as a wedding or a formal event as I find that I

always want something new to wear yet I only ever wear the dress or clothing once’ ‘Can change looks without wasting money or resources’ (Full responses in appendix 15). All responses reflected an essence of wanting to try something new without the consequences of wasting money or feeling guilty. This therefore means that the product portfolio will mainly include occasion wear and experimental pieces in order to ensure that rental appeals to the target consumer. This is further supported by the primary research survey which suggests that the most infrequently worn clothing within a consumers’ wardrobe are dresses, evening wear and more expensive items. Suggesting that these items are only worn occasionally or as a one off, and would therefore be the most appropriate items to make available to rent.

PRODUCT ANALYSIS Customer segment – City Slicker Product range

Customer need:

Capsule collections of popular designers such as Victoria Beckham, Stella McCartney and Self Portrait focused on key looks and occasion wear.

Needs a dress for an occasion, but hasn’t got the wardrobe capacity to facilitate storing another dress. Also aspires to wear luxurious items, but can’t afford to buy them outright.

Customer segment – The Instagrammer Customer need:

Customer segment – The IHNTW-ER Customer need:

Needs to upload a ‘Outfit of the day’ post and wants to try something new.

A short term rental for a special event.

Value to customer: Can try a different style of clothing which reflects a ‘look’ that they want to try without committing to buying.

Value to customer: A brand new outfit that they can show off to their friends and co-workers. Can also document the occasion on social media by emphasising the fact the dress is luxury.

Value to business: The social media post will act as organic marketing for the brand, where followers of the Instagrammer may want to rent the same or similar item.

Value to business: A frequent user, promotes the brand to her friends and family through word of mouth. As their income rises, loyalty with the brand will subsequently increase and therefore drive sales to the rest of the group.

Value to customer: A great solution to wasting money on an outfit that will only be worn once, and can be delivered to their home to ensure convenience Value to business: An infrequent user to the brand, however loyalty will be gained over time, and Rent-A-Porter will be the go to destination when they have an occasion coming up.

Table 9. Product/segment analysis grid – adapted from essential guide to market planning book (Wood, 2007)

PRODUCT RANGE A range plan has been drawn up in order to strategically manage the functioning of the business, and to also plan how many products are going to be available across the year. The plan was made on the assumption to use 7 designers per year, which are turned around twice in line with the seasons. (See appendix 19 for full range planning) In order to ensure that the product remains exclusive, capsule collections will be curated to differentiate the offering from the Net-A-Porter current portfolio. This is to ensure that the needs of the parent company are met, as a current employee suggested that a capsule collection would be the most viable option for the service. (See appendix 12 for full dialogue) The product portfolio within the ranges will reflect a variety of styles in order to attract different consumers’ style preferences.

PRODUCT LIFECYCLE

Applying the product lifecycle to the business ensures that the appropriate level of marketing penetration is achieved in order to control the exposure of the brand. A full, in depth analysis of Rent-A-Porterâ&#x20AC;&#x2122;s positioning within the lifecycle is outlined in the appendix section 17.

COST Costing decisions must be considered as a part of the marketing mix in order for the business to attract new customers, to ultimately ensure that revenue and profits are achieved.

THE SERVICE DETAILS Rent-A-Porter will initially only offer one off rentals of garments, rather than a subscription service. The justification of this decision was based on the outcome of the primary research survey which suggested that consumers would prefer to pay for a one off rental rather than a monthly subscription. This is mainly due to the fact that at present, rental is only really needed for events, however as the brand moves along the product lifecycle, a subscription service may be needed in the future as rental moves towards growth.

EXTERNAL INFLUENCES Consumers’ perceptions as to what they believe is the right pricing for the service ultimately determines the subsequent demand. 'Consumers will accept a price if it is within what they consider an acceptable range for that good or service’ (Wood, 2007). The primary research survey revealed that the target demographic would be most willing to pay 20% of the full cost of the item for a one off rental. Pricing based on perceived value for the service is essential for a rental business due to the fact that the consumer doesn’t get to keep the item after usage. Competitors’ prices further determine the justification of cost. Girl meets dress’s prices range from under £50 to £100+ for a one off rental, where the price varies for every style. Looking at competitors’ prices is a strong indication as to what price consumers would be willing pay, however, organizational costs must be

INTERNAL INFLUENCES Objectives of the organisation and the marketing plan must be taken into account to ensure that the cost of the service ensure that the revenue targets are met. As the businessâ&#x20AC;&#x2122; objectives aim for the business to be profitable, the service must generate income that covers the running and variable costs of the business, as well as making a profit. Applying this to Rent-A-Porter, clothing that is available to rent as a one off must circulate (be rented) enough times to cover the whole sale cost of the garment, as well as the running and variable costs that the brand incurs. Costs to consider include: Wholesale cost of garments Dry cleaning Delivery (next day) Website creation Staff Insurance (on clothing and property) Marketing

Primary research results (2016)

DESKTOP MOBILE

Fig 18

CONVIENIENCE By understanding the target demographics shopping behaviour, appropriate channels must be adopted to ensure that the consumer can reach the product available with convenience. Convenience is becoming an extremely important aspect to consumer purchasing due to the fact that ‘we inhabit a digital era of instant gratification, where we can browse and buy at speed, and where – online at least – the shops never close.’ (Mintel, 2014) In order to achieve optimum sales, Rent-A-Porter must ensure that the service is exceptionally convenient to use due to the necessity of both receiving and returning the product at a fast pace. Millennials shop online more than any other age demographic, and remain the key demographic for online commerce (Smith, 2014). Due to the fact that the YOOX-Net-A-Porter brand portfolio operate online, Rent-A-Porter will follow in the same direction by primarily functioning through its own online website. This will therefore attract the core target market of millennials due to the convenience that ecommerce provides. Mobile commerce is also

showing to be a key driver of purchasing within the millennial demographic. ‘According to research by PayPal… the UK’s average mobile spend is projected to grow by 36% between 2013 and 2016 compared to just 10% for overall online spending. Around 33% of surveyed online shoppers had made a purchase on their smartphones in the past 12 months – around 58% of these smartphone shoppers were aged 18-34 years.’ (Euromonitor, 2015) Rent-A-Porter will therefore ensure that the website is mobile optimised, as a way to ensure convenience for mobile shoppers and therefore gain increasing sales due to the growth of mobile commerce.

CUSTOMER SERVICE After assessing competitor and similar brand cases, having a 24/7 customer service system in place is vital when running a successful rental business (See case study in appendix 21). The YOOX Net-A-Porter group currently operate a 24/7 customer service system which Rent-A-Porter can thus use as a portal to support customers, as well as through the dedicated Facebook page.

LOGISTICS Logistics of the business must be considered to ensure that customers are served effectively, limit costs and ultimately determine the efficiency of the business. Halkyard, an industry expert made the suggestion thatâ&#x20AC;Ś â&#x20AC;&#x2DC;The rental business is very challenging especially on the logistics side. It really comes down to where the owners want to spend the capital...on the inventory or the infrastructure. The more infrastructure purchased, the faster you can turn the inventory and the more wear and tear you experience. The upside is you don't have to invest as much in the apparel which is helpful for start -ups.â&#x20AC;&#x2122; (Dialogue in appendix 13) Rent-A-Porter will use the infrastructure that is already in place for the YOOX-Net-A-Porter group. The brand will operate its service from one of the two distribution centres that are based in London, which contains stock from Net-A-Porter and Mr Porter (see dialogue with Net-A-Porter employee in

appendix 12). This therefore solves the challenges identified by Halkyard as part of the infrastructure will already be in place, meaning that Rent-A-Porter can invest in more stock in order to satisfy the consumer. The inventory purchased by Rent-A-Porter will be stored in the DC, and control of stock will be based upon customer demand/algorithm data analysis. This means that a significant amount of technology will have to be invested in order to operate the service effectively as highlighted in the Rent the Runway case study (see appendix 21). The brand will collaborate with Johnsons dry cleaning to ensure that goods remain in impeccable condition. By collaborating, Johnsons will give Rent-A-Porter a discounted charge in exchange for advertisement space on the website and also a flyer within the delivery boxes. Rent-A-Porter will also use the existing connection of Net-A-Porters dedicated delivery service, which caters for same day delivery in the London region and next day delivery to the rest of the UK.

3 YEAR OUTLINE YEAR 1 FIRST HALF SETTING UP INFRASTRUCTURE, SECOND HALF LAUNCHING AND BOOSTING BRAND AWARENESS YEAR 2 ESTABLISHING WITHIN THE MARKET YEAR 3 INCREASE PRODUCT PORTFOLIO BY 20% IN ORDER TO ACHIEVE GROWTH (full details of plan highlighted in market planning and financial section)

Fig 17

SWOT ANALYSIS STRENGTHS 1. The brands purpose is to minimise consumption through keeping its inventory within its possession and maximising the use of existing resources. This is clearly a viable solution to the issues that arose in stage one surrounding fast fashion culture. According to WRAP, ‘Long-term hire and leasing of products drives a longer term approach to product durability, with longer service life, lower maintenance load and lower use of materials and CO2.’ (WRAP, 2012) By renting and maximising the usage of a garment, it ultimately saves on unnecessary production of new clothing and minimises waste, thus proving a solution to the problem of over consumption as identified in stage one. 2. As the brand is a part of the YOOX-NET-APORTER brand portfolio, which as identified previously has a large amount of financial resources. This therefore guarantees a high level of financial security for RENT-A-PORTER during its first few years of operation. 3. RENT-A-PORTER would benefit from the existing infrastructure of the YOOX-NET-APORTER group. The group currently operate 3 automated distribution centres in the UK, which decreases start-up costs due to not having to invest in the full infrastructure to operate the business. 4. A financially viable way of attracting aspirational luxury millennials, whom are the key target market for the luxury industry. By offering products at a discounted rate, it opens up for a wider proportion of the target market to shop with the group.

WEAKNESSES 1 Concerns regarding hygiene of garments which have been previously worn – An insight which arose from the primary research survey was the uncertainty as to whether garments would be clean or look worn as this would detract them from wanting to rent clothing. (Responses can be seen in appendix 9) In order to reassure the consumer, the brand must prioritise the importance of hygiene and quality control, and communicate this to the customer. 2 There is a risk of garments not fitting due to the aspect of the service operating via online commerce, customers aren’t able to try the items on for size so this may deter them from using the brand. However, a way to overcome this is to make more of an emphasis on the actual size of the garment in terms of measurements, which consumers can compare to. 3 Confined as to what markets the brand expands into due to lack of infrastructure in other parts of the globe, infrastructure is vital to ensure the service remains convenient. 4 Potential environmental damage caused by dry cleaning and transportation of goods could weaken the proposition that the brand is ‘sustainable’.

OPPORTUNITIES 1. Through the rental of clothing, consumers can simply try before they buy into a brand, which could ultimately lead to increased brand loyalty in the future. Building and maintaining longterm relationships with customers should encompass a value co-creation process of experiences, this is especially vital for luxury brands (Moon et al., 2012). By creating a channel for consumers to experience a product through rental access, the consumer may gain a lasting connection with the emotion that the experience triggers. ‘“Assuming millennials do well as they age, they will have already experienced the luxury brand’s aspirational offering and have a good idea of what to expect when they can partake of the main courses.”’ (Cardamenis, 2015) Thus driving loyalty for the groups existing brand portfolio in the future. 2. As the brand moves through the product lifecycle as discussed previously, more consumers will be inclined to use the service as it gains increasing acceptance. 3. There is an opportunity for Rent-A-Porter to expand into the booming second hand luxury market. Existing inventory that can’t be used within the rental service system can be sold on as second hand, which has seen increasing demand in recent years. 4. To diversify into the menswear market and offer the service to males, which could incorporate formal suit hire. 5. Expand into different markets across the globe when the brand is more established and starts creating sufficient revenue. 6. The YOOX-NET-A-PORTER brands collectively have a strong following on social media and email marketing which could boost the brand presence of RENT-A-PORTER.

THREATS 7. The brand is based on the underlying principle of trust, which can prove to be a risk. The threat of the items not being returned or damaged would result in a significant financial burden for the business. (See risk analysis section for resolution) 8. The brand faces the threat of counterfeited goods being returned instead of legitimate products. Counterfeiting currently costs ‘European clothing and accessories companies an estimated €26.3 billion ($30 billion) — about 10 percent of their sales — every year’ (INDVIK, 2016) this is therefore a significant threat to the business due to the size of the counterfeiting market. 9. There is a risk of other brands offering a rental service in the future which could potentially result in the market becoming more competitive. 10. Threat of tarnishing brand exclusivity due to a wider appeal.

Table 10. SWOT analysis (2016)

MARKETING COMMUNICATION PLAN How exactly do we get there?

Fig 19

RENT - A - PORTER

COMMUNICATION

OBJECTIVES

To successfully penetrate the UK rental market, by generating brand awareness of Rent-A-Porter among the core target market of millennials Communicate effectively a new perspective of clothing rental as a new and innovative way of shopping Communicate both the societal and consumer benefits of RENT-A-PORTER effectively To ensure the target market understands how RENT-A-PORTER works and what the brand is about The communications plan is to be fully integrated within year one and two of the marketing plan, activity will begin mid-way through year one within the brand building phase. The aim of the communication plan is ultimately to inform and make potential customers aware of the brand (Wood, 2007). As mentioned previously, RENT-A-PORTER positions itself within the Introduction phase of the product life cycle as it is at the start of consumer acceptance. This therefore means that the brand must focus on a heavy use of communication methods in order to effectively gain brand presence in its first years of operating.

The group’s brand portfolio collectively has a coherent message that they are the leaders and innovators in the online luxury market, and their communications certainly reflect this essence. Barton expresses ‘If you were to log onto Net-A-Porter’s website you could be forgiven for mistaking them for a fashion magazine.’ (Barton, 2016) Each brand in the group echoes simplistic luxury across a multi-channel platform experience. In order for Rent-A-Porter to effectively integrate within the group they must therefore reflect the existing profile of brands, and thus offer a seamless multi-channel platform experience.

DIGITAL AND

SOCIAL

MEDIA STRATEGY

Social media has increasingly become a vital channel of communication with consumers and for consumers to communicate with brands. When it comes to targeting millennials, social media is indefinitely one of the most effective forms of communications due to the extensive usage within this demographic. 71 percent of millennials say that they engage in social media daily, and user-generated content occupies about 5.4 hours of the average millennial's day (Taylor, 2014). Therefore, Rent-A-Porter will have a presence across a magnitude of social media platforms, including Twitter, Facebook, Instagram, Pinterest and Snapchat. This decision was made as the results from the primary research survey suggested that theses platforms were the most popular with the target demographic (see appendix 7 for results). By penetrating each form of social media, Rent-A-Porter will have an increased chance of reaching their target customer.

Platform Website

Twitter

Facebook

Experience for user and benefit for the brand This is the key point of interaction for the consumer therefore it must be extremely efficient and easily navigable. The website will operate under the domain name of www.rentaporter.co.uk as it first enters the market. It will visually align with its own branding, however the theme and layout will be very similar to the existing brands in the portfolio. To ensure the brand is fully integrated in the group, the website will have links to the other brands in the group and vice versa. The website will be launched as soon as the infrastructure is in place to run the business, and will be built and powered by the groups existing tech team. Twitter will be used as a platform to build brand presence and interaction with consumers. It will take the domain name of @rentaporteruk as a stand-alone brand account. By operating a Twitter account Rent-A-Porter can benefit from a two-way communication with consumers, where customers can use the account as a point of contact for feedback and comments, and the brand can respond. The content of the twitter account will encapsulate the essence of the brand by engaging in relevant social content and promoting According to Wirth â&#x20AC;&#x2DC;Facebook will continue to be the dominant social media platform in 2016â&#x20AC;&#x2122; (Wirth, 2016) Rent-A-Porter will therefore have its own dedicated Facebook page. This will ultimately act as another channel to promote products available on the website and new in collections. The Facebook will furthermore act as a facilitator for customer comments which the brand can respond to ensure customer satisfaction.

Instagram

Snapchat

Email marketing

Instagram is quickly excelling to be the most engaging channel of communication for the younger generation. Instagram is a great way to create persuasive user generated content which is extremely popular with the millennial generation. Rent-A-Porter will have its own dedicated Instagram page with the same domain as the Twitter page @rentaporteruk. A variety of posts which showcase the Rent-A-Porter product portfolio will be posted in a visually stimulating way to reflect the brand essence. Curated relevant content will also be regularly posted to encapsulate the day to day activities that the target consumer is likely to engage in. The Instagram will also post photos of customers whom have rented items and how they’ve styled pieces in order to inspire other customers to shop with the brand. ‘The online world is an increasingly visual environment so if your brand is a good fit and currently isn’t using Pinterest, then you’re potentially missing a huge opportunity.’ (Davis, 2015) Pinterest acts as another great platform to showcase visually enticing prompts that tempt the consumer to buy into the brand. Rent-A-Porter will have a dedicated Pinterest page which will be used to maintain inspiration boards and link with website links in order to further connect with the consumer. Despite being the youngest service, Snapchat has experienced some impressive growth, with an estimated 200 million monthly active users and 100 million daily active users, it’s ahead of all the other networks in terms of engagement. (Morrison, 2015) Snapchat allows brands to encourage transparency between company and consumer. Rent-A-Porter will therefore manage its own snapchat account to regularly inform consumers about events and new in items. Email marketing will indefinitely be optimised for the start-up and running of Rent-APorter. The website will allow customers and potential customers to ‘sign up’ which means that the brand can send relevant emails to the visitor. WGSN highlights how ‘Millennials prefer reading emails on mobile devices, so marketers need to invest in mobile-responsive marketing campaigns.’ (WGSN,2016) All of the content within Rent-APorter emails must be mobile optimised which can seamlessly link to the mobile version of the website also. The current brands within the group’s emails reflect their websites branding, and include various different types of content suitable for the brand. Rent-A-Porter will therefore optimise its emails to their own branding and send out regular updates in order to gain increasing sales and boost brand awareness and presence. Table 11. Multi-platform social media diagram (2016)

Fig 20

KEY MEDIA

MESSAGES MESSAGE ‘Ownership redefined’

#myporterexperience

MEANING/APPLICATION Ownership redefined will act as a tag line for the brand, to ultimately sum up what the business is about. ‘Taglines still serve an important purpose. They remain an easy and effective way to communicate a new or revised brand message.’ (Yohn, 2013) The tag line will be used within branding, especially on the website where other brands in the portfolio execute their tag lines. The hashtag #myporterexperience will be advertised in an attempt to get customers to post pictures of their experience with Rent-A-Porter in order to encourage peer to peer influencing, which is extremely important. ‘Most consumers, regardless of age, go to the internet to research purchases. And most of them look for user-generated content to help them buy.’ (Bazaar voice, 2012) By allowing consumers to create user generated content through using the hashtag, potential consumers may be more inclined to use the service. Table 12. Key media messages (2016)

RENT - A - PORTER Ownership redefined

Fig 21 72

PUBLIC

RELATIONS Rent-A-Porter will initially use the existing PR team within the London head office to generate press releases surrounding the launch of the business. The PR strategy will act as way to accelerate the marketing communications outlined. Due to the fact that the Net-A-Porter group currently have an established PR team, contacts will already be established within the media, which Rent-A-Porter can therefore utilise.

INFLUENCER

INSTAGRAM MARKETING

Instagram influencer marketing has become one of the most effective tools for marketers as consumers now look to fellow consumers and their favourite Instagram personalities for making their purchase decisions.’ (Barker, 2016) They are strongly influenced by social media posts and comments, especially on Instagram which presents an opportunity to visually entice customers. This has ultimately opened up a new channel for businesses to promote their brand through influential individuals on social media. (Barker, 2016) The primary research further supports the opportunity of influencer marketing, due to the fact that 72% of participants stated that they had bought a product by recommendation from a blogger. Rent-A-Porter will partake in influencer marketing in order to reach the target consumer as ‘according to AdWeek, nearly a quarter of today’s marketers cite influencer marketing as being their most effective customer acquisition tool.’ And ‘working with influencers can be a highly effective way to raise awareness’ (Coffee, 2014) Influencers will ultimately act as a tool to gain brand awareness and increasing users by promotion of the new service and available products. WHICH INFLUENCERS? Careful consideration must be taken in order to choose influencers that reflect the Rent-A-Porter brand essence to ultimately attract the target customer. Examples of influencers that have been chosen to represent the Rent-A-Porter brand include Emma Hill and Hannah Crosskey whom both portray a luxurious lifestyle through their curated imagery. They feature a magnitude of high street brands, however they occasionally promote luxury goods, which shows that they represent an essence of accessible luxury. Emma Hill is a current influencer for the Net-A-Porter brand, which means that there is an existing established contact within the group. The influencers will be paid their set rate per post and paid per click through the Liketoknow channel. Each post on both platforms has a strong reach due to the amount of followers and posts also receive around 1,000+ interactions (likes).

ACCESS the LOOK With catwalks becoming increasingly more visible to consumers across the globe as a result of hyper connectivity and live streaming, nothing stays secret anymore. High street chains are producing fast fashion copies which come to market before luxury has even hit stores. Luxury consumers are therefore starting to demand a â&#x20AC;&#x2DC;see now, buy nowâ&#x20AC;&#x2122; approach to the luxury retail model, where fashion shows are classed as B2C events synchronized to the retail cycle. (Morand, 2016) As a response to this, and a way to drive buzz, demand and awareness, Rent-A-Porter will capitalise on this trend by launching an access the look campaign for London Fashion Week 2017.

Rent-A-Porter will collaborate with one of the allocated designers, to launch their showcased collection on the Rent-A-Porter website as soon as the catwalk show finishes. This is to ensure that the brand portrays its innovative essence and also drives public interest for alternative and more sustainable ways of consumption by renting rather than purchasing to wear once. There will be a magnitude of digital and social media buzz leading up to the campaign to excite consumers. UK fashion magazines will be targeted using press releases for the campaign, in order to create extensive PR coverage for Rent-A-Porter.

Fig 22

STRATEGY

IMPLEMENTATION

BRAND MANAGEMENT

Fig 23

FINANCIAL OUTLOOK Rent-a-porter will operate as a brand extension of the parent company, the YOOX-Net-A-Porter group. The group stated that their ‘adjusted earnings before interest, tax, depreciation and amortisation totalled 133.1 million euros last year’ (Reuters, 2016). Due to the fact that the brand extension is a relatively small concept with minimal start up costs, existing infrastructure is therefore going to be optimised to manage most aspects of the business. The group will invest £50,000 initially in order to cover the start up costs incurred. (A full breakdown of income streams and costings are further explained in appendix 18-20.) Although the financial prospects seem relatively small in comparison to the worth of the parent group, the aim of the business is ultimately to drive sales to the rest of the portfolio in order to persuade millennials to buy more quality items, rather than cheap, fast fashion. As long as maximum allocation of rentals are achieved each year, then the extension will therefore contribute a profit year on year to the parent brand.

MARKETING BUDGET The marketing budget has been set at approximately 15% of the total sales revenue of the business due to the fact that ‘businesses should be spending at least between 1 percent and 20 percent of sales revenue on marketing, in order to execute an effective marketing plan.’ (Bransom, N/A) Combined with the fact that it’s a new business, a higher investment is going to have to therefore contribute to marketing channels. The budget has been based on the revenue income from maximum rentals per year. However, this is a relatively small spend in comparison to the overall groups profits, so therefore, marketing activities will also be allocated to the rest of the corporate structure in order to achieve maximum brand presence.

PROFIT AND LOSS ACCOUNT

MEASURING THE SUCCESS OBJECTIVES

MEASUREMENT

YOOX NET A PORTER GROUP CORPORATE OBJECTIVES

To produce an annual report on the YOOX Net-APorter groups CSR performance in order to measure achievements year on year.

To enhance the YOOX Net-A-Porter groups corporate social responsibility by launching initiatives which aim to reduce carbon emissions and drive social change

Social change measured by increasing adoption of clothing rental services shown through increasing demand for the rent-a-porter brand.

To expand the YOOX Net-A-Porter brand portfolio in order to reach new consumers, gain increasing market share, and ensure future growth.

Ongoing analysis of brand performance within the online luxury market In depth review of market positioning and adapt to new consumer trends to ensure relevance in the future. To monitor new business entrants into the rental market, and ensure that the brand sufficiently reacts to new entrants to ensure that the brand remains a market leader.

To gain consumer feedback on the business as to whether it portrays a message of sustainable innovation rather than celebrity focused. Monitor sales performance of all brands within the portfolio, ensuring that growth is being achieved.

To drive increasing sales to the rest of the brand portfolio through experiences with the brand within the next 5 years

To achieve a successful launch of marketing activities measured through initial demand for rentals.

MARKETING OBJECTIVES To launch the Rent-A-Porter brand by the end of November 2016 in order to achieve optimum sales around the Christmas period

Monitor weekly sales figures and profit margins to ensure that sales targets are being achieved.

To ensure that all stock is fully rented and sold on year on year in order to achieve £150,000 profit by the end of year 3.

Liaise with financial team to gain reports on the financial situation of the brand If sales targets are not achieved, the number of products within the inventory will be reviewed and adapted

To increase Rent-A-Porter’s brand awareness through social media following, PR reach and word of mouth.

Push certain products that are underachieving through marketing communications in order to achieve full capacity of rentals. Monitor social media following to ensure significant growth is being achieved, if not, then paid advertisements of the social media channels will be incorporated within the future communication plan. PR team to provide monthly reports on the launch and campaign success and how many consumers the brand has reached.

COMMUNICATION OBJECTIVES To successfully penetrate the UK rental market, by generating brand awareness of Rent-A -Porter among the core target market of millennials

Social media team to track engagement rate in terms of increasing followers and channel activity.

Communicate effectively a new perspective of clothing rental as a new and innovative way of shopping

Consumer surveys will be sent to existing customers through email and a website pop up to gain feedback on all aspects of the business. This will include satisfaction of service, feedback on available products, and the set up and ease of use of the website on both desktop and mobile.

Communicate both the societal and consumer benefits of RENT-A-PORTER effectively To ensure the target market understands how RENT-A-PORTER works and what the brand is about

To measure perceptions of the brand through PR activity, in that the coherent message must portray innovation and the sustainable benefits of the brand. Press releases will be adapted regularly in order to demonstrate new innovation within the business.

To pursue coherent communications with the existing brand portfolio

Consumer survey will also question how easy it is to understand how the business works, and whether the transaction was simple in order to ensure that the target market knows how to use the service. If it’s too complex to understands, adjustments will be made to simplify the ‘how it works’ section of the website. The IT team must monitor the website to ensure that it is updated in line with existing brands, and refreshed in order to pursue coherent communications. Table 13. Measuring the objectives (2016)

RISK ANALYSIS RISK

LEVEL

ACTION

Garments donâ&#x20AC;&#x2122;t get returned or are damaged beyond repair

Medium

Risk is medium due to the sensitivity in that the garments need to be returned in order to achieve optimum rentals. A rental agreement has been legally drawn up in which customers have to agree to in order to receive the items. The agreement will include a customer obligation to return the items indefinitely, if the items arenâ&#x20AC;&#x2122;t returned or are returned beyond repair, then rent-a-porter has the right to charge the customer the full cost of the item which will be debited from the bank account details initially provided. Rent-a-porter will give the consumer the option to take out insurance on the rental, whereby if goods are severely damaged, the insurance will cover the cost of the garment.

Identity fraud and human authentication

Low

Sales forecasts are not achieved

Low

Negative feedback on the service

Medium

Fraudulent identities may try and rent an item in attempt to re sell the item, without subsequent consequences. Rent-A-Porter will therefore ensure that a human authentication system is in place to ensure that every user is a real person. A technical security system will be embedded into the website at transaction phase to lessen the risk. Risk is low due to the exclusivity of the service, and the low percentage of available stock in consideration to estimated demand. The first and second year of operation will give insight as to whether to expand the product portfolio in the third year or not. Due to the fact thereâ&#x20AC;&#x2122;s limited availability of products, and a high level of logistics, there may be a few glitches within the running of the business. However, rent-a-porter prioritise customer service, and it is their number one priority to ensure that the operation runs smoothly. Feedback can also be gained through the social media channels in order to improve the service. Table 14. Risk analysis diagram (2016)

Fig 24

THE

FUTURE

The outlook for the future of Rent-A-Porter is promising, as the brand moves along the lifecycle the adoption of clothing rental will ultimately increase. Focuses for the future of the brand include Expanding into the menswear market, by making selected collections featured on Mr. Porter available to rent. The reasoning behind this is due to the fact that the Westfield report highlighted the fact that males would be more inclined to rent clothing over females. (Westfield, 2016) Menâ&#x20AC;&#x2122;s suit rentals have long been common place, which indicates that offering additional items to rent would also prove to be a successful proposition for the future of Rent-A-Porter. To potentially expand the brand into new markets such as the US, as identified previously, clothing rental has established itself significantly within the US market. This would therefore open up the opportunity for Rent-A-Porter to establish itself within this market, as they would hold a competitive advantage of carrying the brand name.

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Fig. 4 leading lady: miranda kerr by yelena yemchuk for the edit by net-a-porter (2015) [image] Available at: http://visualoptimism.blogspot.co.uk/2016/01/leading-lady-miranda-kerr-by-yelena.html [Accessed 19/05/16] Fig. 5 the modern muse: mariacarla boscono by alique for the edit by net-a-porter (2015) [image] Available at: http://visualoptimism.blogspot.co.uk/2015/07/the-modern-muse-mariacarla-boscono-by.html [Accessed 19/05/16] Fig. 6 bohemian rhapsody: amanda murphy by alique for the edit by net-a-porter (2015) [image] Available at: http://visualoptimism.blogspot.co.uk/2015/10/bohemian-rhapsody-amanda-murphy-by.html [Accessed 19/05/16] Fig. 7 aymeline valade (2016) shirt tales: aymeline valade by alique for the edit by net-a-porter [image] Available at: http:// visualoptimism.blogspot.co.uk/2016/01/shirt-tales-aymeline-valade-by-alique.html [Accessed 19/05/16]

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Fig. 18 Own image (2016) Fig. 19 Sebastian Kim, Jessica Alba (2015) [online] Available at: http://www.dailymail.co.uk/tvshowbiz/article3325517/Jessica-Alba-discusses-sexism-posing-knitwear-photoshoot.html [Accessed 19/05/16] Fig. 20 Own images (2016) Fig. 21 Emma Hill (2016) Net a porter. Screen shot [Accessed 19/05/16] Fig. 22 Andreea Diaconu by Cass Bird for Porter Magazine Summer Escape (2015) [online] Available at: https:// uk.pinterest.com/pin/455708056026861629/ [Accessed 19/05/16]

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APPENDIX

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APPENDIX 1 104

APPENDIX 2 105

APPENDIX 3 106

APPENDIX 4 107

APPENDIX 5 108

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Focus group – 5 participants aged between 20-23 Respondent 1 - Hannah Woods Respondent 2 - Alice Watkins Respondent 3 - Abi Larwood Respondent 4 - Rosie Rockett Respondent 5 - Lauren Hunns Introduction, content of the focus group Why would you personally want to rent clothing? Respondent 1 You can change up your look more often and could rent things that you know you’re probably only going to wear once. Researcher – Could you elaborate on this? Respondent 1 – Well renting out clothes would give me an opportunity to try new trends and see whether I like them and what I could pair them with in my wardrobe before actually making the decision to purchase it. Respondent 2 – I would rent clothes as in the long run it would be cheaper I could probably have more outfits for less money and it wouldn’t clog up my wardrobe space. It would be good to know the clothes I no longer wear would be going to someone else to be used rather than the guilt of throwing them away. Respondent 3 – I would definitely rent clothes if I was wanting an outfit for a one off event such as a wedding or a formal event as I find that I always want something new to wear yet I only ever wear the dress or clothing once and that just feels like such a waste whereas renting would definitely be both more cost effective and better in terms of the amount of clothing I seem to accumulate that I never ever wear again and just take up wardrobe space that I don’t have. Respondent 4 - It would be a convenient and a way of having a never ending wardrobe Researcher Why do you think it would be convenient? Respondent 4 —Well it means that I don’t have to make the decision to actually buy something or not as I could try it out before actually buying it Respondent 3 - Yeah I like the fact you can try something new without the cost of outright purchasing it. Researcher - Respondent 5 can you say why you’d want to rent clothing? That’s if you do of course Respondent 5 - Yeah I’m not really that fussed about it, I only buy cheap clothes so it wouldn’t really appeal to me WEBSITE DEMONSTRATION OF CURRENT BRANDS

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Researcher So I’ll start off with asking what you think about the girl meets dress website, do you have any initial opinions Respondent 3 Personally I think it looks quite tacky, like the website looks quite budget so I wouldn’t really trust the brand, and it also looks difficult to navigate. Respondent 2 Yeah I also think it looks tacky, like I wouldn’t want to use it because of the branding. The pink is very off putting and it looks very outdated. The dresses are also tacky looking, and not displayed very well. Respondent 4 - the name also puts me off Respondent 5 - The images are really bad, it really doesn’t look professional at all so I really wouldn’t trust them with my purchase, just seems very prommy Respondent 3 - Yeah I wouldn’t want to buy from a brand that looks like that, branding is definitely the decider for me, it shows what the brands about and I’m not really sure what the site is trying to achieve Researcher Next up is the Fillipa K website, any opinions? Respondent 1 The message with this one is a lot clearer, that its focused on sustainability rather looking like a celebrity Respondent 2 Yeah I’d rather buy into this one over the other because it looks more trust worthy because of the branding. Respondent 3 I definitely think the brand image has a lot to do with it. If I’m paying to only wear something once, then I want the experience to be something special, not tacky. Respondent 5 It looks more luxurious, which is appealing. 119

PESTLE IN DEPTH POLITICAL

How this will affect the business environment Uncertainty of the future economic climate regarding the UK staying or exiting the EU ‘Consumer morale slipped last month to its lowest level since December 2014 as uncertainty about the outcome of the June 23 referendum on Brexit gnawed at consumers, according to market research company GfK.’ (Reuters, 2016) Consumer confidence and spending has already shown signs of weakening, thus affecting the demand for nonessential goods such as clothing. Similar to the EU referendum, the US election may have an impact on consumer confidence due to uncertainty, which may subsequently have an impact on the global economy.

Brexit/EU Referendum US presidential election

ECONOMICAL Inflation rates

Inflation rates have an effect on both consumers and businesses, from rising cost of production, to fluctuations in exchange rates. A high or low inflation rate has the potential to unsettle an economy. Analysts at the Wall Street bank believe that ‘A slowdown concentrated in emerging markets will drag down demand and see economic activity fall well below its potential across the world.’ (Spence, 2015) A recent example that is threatening the global economy is the Chinese market slowdown. Rising economic confidence encourages consumers to spend disposable income more freely, which may impact on businesses due to increasing sales opportunities. According to Retail economics ‘Employment, business rates and other property costs account for over 50% of retailers’ operational costs – all are expected to rise in 2016.’ (Retail Economics, 2016) Rising costs in all of these areas will negatively impact on running costs thus affecting profits.

Currency fluctuations Emerging market performance Consumer confidence with spending Employment/unemployment Operational costs set to rise Sharing economy

SOCIAL/ETHICAL Growing concern within UK consumers surrounding sustainability, especially regarding fast fashion brands

The treat of terrorist attacks within the European region has impacted upon the amount of tourists that visit ‘Spending by Chinese tourists in March tumbled 24 per cent, dragged down by a 35 per cent year-on-year drop in Europe, where the Paris and Brussels attacks have kept some tourists away.’ (Reuters, 2016) Thus proving a threat to brands whom capitalise on tourist income.

Refugee crisis Terrorism threats Corporate social responsibility is a given with most brands Rising use of social media/social influences Growing population of Millennials

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TECHNOLOGICAL The impact of online, mobile and digital technologies will continue to influence the customer journey and the interaction between consumers, retailers and brands. Online vs offline sales ‘66% of the global population by 2020 will be connected to the internet.’ (Rubin, 2016) Technology is disrupting the retail marketplace More efficient business models

LEGAL Introduction of the National Living wage in the UK on the 1st April 2016 Gender pay gap in workplaces must be reported Modern Slavery Act

ENVIRONMENTAL Environmental impact has to be restricted through business operations due to global pressure. Also through targets set by the Government regarding COP21. Packaging and distribution considerations— must now have a low impact on the environment

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Consumers are beginning to see an Omni channel experience as a given. Social media has lead to the ability to do marketing at a relatively low cost, in a more targeted way. ‘Despite internet retailing gaining importance, many UK consumers still want to visit stores. Consumers are still looking for advice and to physically see and touch products, which is not possible when purchasing online.’ (Euromoniter, 2015)

Due to a change in the law regarding minimum wage, businesses costs will incrementally rise due to implementation of higher wages. This could accredit to a threat to businesses due to smaller profit margins if prices don’t rise with increasing costs. However, consumer confidence in spending may increase due to increased wages for a proportion of the population. Modern slavery act aims to tackle modern day slavery within the business landscape. This means that brands must flourish their corporate social responsibility in order to comply with the act. Companies must ensure that they have an overall goal to reduce their environmental impact on the planet. This is due to the fact that consumers are becoming Increasingly conscious towards the future of the planet.

PRODUCT LIFE CYCLE EXPLAINED By applying the product life cycle to Rent-A-Porter, it reveals the interception of consumer acceptance of the sharing economy. The sharing economy and the concept of access over ownership is a relatively new concept that not all consumers may be accepting to. Brands such as Uber and Airbnb have had phenomenal growth over the past few years, and according to Clawson ‘Around 17% of Britons are using shared economy services. And while that figure falls several country miles short of mass acceptance, it does indicate that a significant number of people have put a toe in the water within a relatively short timeframe.’ (Clawson, 2015) indicating that the sharing economy isn’t at maturity as of yet, however, it’s showing growth and disrupting numerous sectors as identified previously within the market situation section. Stage one indicated the mass acceptance of second hand clothing within the UK, further supported by WRAP whom suggest that two-thirds of UK consumers buy or receive pre-owned (or second-hand) clothes (WRAP, love your clothes). Indicating that the majority of consumers in the UK are accepting of wearing clothing that has had previous owners, which could indicate the level of acceptance for clothing rental. However, Euromoniter argue that access over ownership credentials haven’t immersed to clothing consumption yet. ‘Millennials typically limit their material goods ownership to a few core categories, such as technological gadgets and clothing.’ (Euromoniter, 2015) Suggesting that the nownership trend within the clothing sector is seen as a relatively new and innovative form of consumption. This therefore indicates that users of Rent-A-Porter would initially be classed as innovators and early adopters (See appendix for explanation of Rodgers diffusion of innovation theory). In terms of positioning the brand extension on the product life cycle, Levitt explains how ‘Generally, demand has to be “created” during the product’s initial market development stage. How long this takes depends on the product’s complexity, its degree of newness, its fit into consumer needs, and the presence of competitive substitutes of one form or another.’ (Levitt, 1965) The brand would more than likely be positioned within the Introduction phase in year one and two, due to its unrivalled position within the UK market, brand name association and the consumer demand for the service as identified previously (Drivers section). However, as Rent-A-Porter gains increased prominence in the market, the brand will ultimately grow and show increasing profits from year two onwards.

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FINANCIAL INFORMATION ESTIMATED SALES REVENUE POTENTIAL CONSUMER DEMAND—SIZE OF THE PRIZE 17 MILLION MILLENNIALS IN THE UK 8.5 MILLION FEMALE 5% OF POPULATION TRIAL RATE BASED ON LIKELIHOOD OF ADOPTION = 425,000 10% BRAND AWARENESS = POTENTIAL OF 42,500 CONSUMERS

After careful consideration surrounding the stock allocation, it was decided that the business wouldn’t be able to facilitate the demand due to the mass amount of infrastructure that would be needed. Therefore, a range plan was curated in order to plan the amount of rentals per year that the rent-a-porter brand could facilitate. The range plan considers all aspects of the product side of the business such as the amount of rentals that the business can facilitate each year. This means that revenues can be calculated through the amount charged per rental.

The total retail revenue for each product is based on the assumption that 100% of retail income comes from pay as you go rental (charging 20% of the retail cost of the item, for 5 rentals) and 30% on second hand resale of the item on the website. =130% of recommended retail price. Which allows for a 30% mark up for logistics costs.

The overview of the range plan shows that the business will be generating an average sales revenue of £274,000 per year. Range plans are shown on the following pages.

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RANGE PLANS

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PREDICTED COSTS The predicted costs for the business are highlighted below with a breakdown of running costs which include marketing and start-up costs. Fixed costs include costs associated with the everyday running of the business for example dry cleaning per rental, delivery etc. The majority of costs however are estimated from secondary sources. Due to the fact that the business is a relatively small extension, which subsides within a very large company, some aspects of functions arenâ&#x20AC;&#x2122;t incorporated within the profit and loss. This is due to the fact that most operations will be integrated within the current business activities, such as PR, staff etc. However the business will recruit an executive to overlook the brand activity, to ensure that all departments are executing the business effectively.

YEAR 1

YEAR 2

YEAR 3 40,000 40,000

MARKETING BUDGET WEBSITE TECH INVEST LABOUR

20,000

FIXED COSTS

95,000

65,000

40260 4050

80,520 8100

6210 4050 1890 56460

12420 8100 3780 112,920

STOCK DRY CLEANING DELIVERY INSURANCE PACKAGING RUNNING COSTS

20,000 30000 25,000 25,000

25,000

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65,000

135504

COSTS BREAKDOWN Cost

Justification

Dry cleaning

£5 per rental

On the basis of a collaboration with Johnsons. Approx a third of the cost due to mass usage and advertisement returns. (Johnsons, 2016)

Packaging

£2 per rental

Cover cost of box

Delivery

£8 per rental for next day delivery

Set at the same cost as Net-A-Porter next day delivery (NAP, 2016)

Insurance

£5 per rental

Priced just below girl meets dress’ insurance option due to Yoox net a porters existing insurance plan (Girlmeetsdress, 2016)

Cost

Justification

Website initial creation

£20,000

Average cost of website creation. (FarFetch, N/A)

Initial tech investment

£30,000

Cost of new software to be installed in the warehouse in order to control stock – added feature.

Social media Influencers

£5000 p/year

Social media content

£25,000 p/year

Becca Mills, Voice London, PR& Social media agency – confirmed estimate cost 4 posts per year for two influencers. Photoshoots, models cost

Manager

£25,000 p/y

Based on average salary in London (Hudson, 2015)

PR CONTENT

£10,000

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RENT THE RUNWAY CASE STUDY Overview/business model Founded in 2009, Rent the Runway operates as a membership e-commerce service, which offers customers the opportunity to rent designer clothing and accessories for a percentage of the item cost. The company has proven to be a success over it’s history, growing from an inventory of 160 dresses, to having ‘more than five million members, 850 employees, and 350 design partners, and is on track to rent $1 billion worth of dresses alone (in retail value) by the end of this year (2015)’. (Henry, 2015) The business was initially built as a solution to the issue that women faced when attending an event or special occasion. There is extreme pressure to be seen in something new all the time, primarily due to the rise of social media and image sharing, however the slowing economy made this virtually impossible for most cash stripped millennials. The business has since evolved from positioning itself as an occasion wear go to, and has recently unveiled it’s unlimited service. ‘The program offers subscribers across-the-country access to Rent the Runway's entire inventory for a monthly fee of $139 both online and via its app. Once subscribed, you can have in your possession up to three items at a time, which you can keep as long as you want (as long as your membership is in good standing) or switch out for new pieces.’ (Bobila, 2016) Investment 2009 – Received $16 million finance support from Bain Capital Ventures 2011 – Received a further $15 million investment from Silicon Valley financer Kleiner Perkins Caufield & Byers to expand operations via warehouses Now - raised more than $100 million in venture backing over the history of the start up Tech/Logistics of the business The logistics behind clothing rental ultimately determine whether the business is a success or not due to the complex nature of delivering and receiving items smoothly. Assessing Rent the Runways logistical system allows for realistic suggestion of what is needed to operate a rental business effectively due to the success of the company. Advances in technology has allowed rental based service systems flow far more easily. The business operates a ‘high-speed reverse-logistics system that allows Rent the Runway to turn items around in record time, usually within one day.’ (New Relic, N/A) The system ensures that the service can conveniently operate at a high speed pace, which is a vital aspect that consumers desire especially when ordering online. To make this happen, the business uses a warehouse that's 160,000 square feet, which houses one of the world’s largest dry cleaners also. A hugely complex piece of technology which accommodates software is needed to ensure that packages can be accounted for, and sorted in the most efficient manner (Shontell, 2014).

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Strengths and weaknesses of the brand

Strengths

Weaknesses

Customer service engagement –

Rent the Runway unlimited –

A recent review by Austin revealed that online engagement was a highly important aspect to the great experience that Rent the Runway delivers. From start to finish, there is constant interaction ensuring that the customer is always connected to the brand (Austin, 2015)

A review by a D’Onfro boasted how great the service was, however when the price increased from $99 p/m to $139 p/m the customer questioned whether to continue the subscription

Rent the Runway Unlimited The service gives the consumer freedom of time scales, and reduces the restriction of only receiving a few items. It also makes rental more affordable and justifiable due to scale. Allows the user to wear numerous items of clothing without supporting a cycle of throwaway fashion, which follows the trend of sustainable consumption. The monetary value that has been invested into the Rent the Runway brand highlights the appeal that it has with Venture Capitalists. Pioneering the shift of clothing rental from specifically occasion wear to every day wear.

Meaning that price is an influential aspect of the demand the service receives, especially due to the fact that the item can’t be owned. Questionable profitability – D’Onfro also revealed that when the business was operating at $99 p/m it wasn’t making any profits. This shows how getting the price point correct makes the difference between making a profit or loss ultimately. A low availability of inventory can lead to dissatisfaction of customers, especially if an item is ruined by a previous ‘owner’. A review by Shontell highlighted the complications regarding this, however, having an efficient customer service system in place ensured that the customer was satisfied. (D’Onfro, 2015)

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Nottingham Trent University School of Art and Design

Ethical Clearance Checklist for individual student projects To be completed by the student for an individual project that involves the collection of primary data this includes images, drawings, photographs, questionnaires and interviews. Please complete this document following the guidance in the School of Art and Design Ethical Guidelines and Framework for Research and Practice Undertaken by Students.

Section A: About the research Name: Programme of Study: Module Title and Reference Number: Name of module leader/supervisor responsible for the management of the project Duration of project Project title

Section B: Training and experience Have you had previous experience of or been trained in the methods employed to collect data, and/or discussed with your supervisor? Have you been informed, given guidance, had issues outlined in relation to research ethics and consideration in relation to your project?

yes

Section C: Methodology/Practice/Procedures Does your proposed study involve procedures which are likely to cause physical, psychological, social or emotional distress to participants or yourself? Does your proposed study involve the use of hazardous materials, other than those currently covered by the School Health and Safety procedures?

Section D: Ethical checklist Does your project involve observing/questioning/the use of people in any way? Yes

Please complete the remainder of the form

Go straight to Compliance with ethical principles and Declaration

Does your study involve vulnerable participants as described in the Student Ethical Toolkit?

yes

n/a

Does your study involve observation and/or recording of identifiable participants without their knowledge?

yes

n/a

Will participants give informed consent freely and be fully informed of the study and of the use of any data collected?

yes

n/a

Will participants be informed of their right to withdraw from the study?

yes

n/a

Will all information on participants be treated as confidential and not identifiable unless agreed otherwise in advance and subject to legal requirements? Will any recordings of participants be securely kept and not released for use by third parties?

yes

n/a

yes

n/a

Will storage data comply with the Data Protection Act 1998?

yes

n/a

If you have selected an answer shaded in grey, you must submit a full application to the Subject REC or modify the project. A full submission to the Subject PREC comprises of: this form, a project proposal, an additional statement of up to 500 words outlining the ethical issues raised by the project and the proposed approach to deal with these.

Compliance with Ethical Principles If you have completed the checklist to the best of your knowledge without selecting an answer shaded in grey, the research is deemed to conform with the ethical checkpoints and you do not need to seek formal approval from the Subject PREC. Please sign the declaration below, and lodge the completed checklist with your supervisor.

Declaration I have read the Ethical Guidelines and Framework for Research and Practice Undertaken by Students. I confirm that the above named investigation complies with published codes of conduct, ethical principles and guidelines of professional bodies associated with the research discipline.

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Name of student: ……………………………………………………………………………… Signature of student ……………………………………………………………………………….

Ethical declaration survey

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