Table of Contents Business Model
3
Sector Overview
4
Customer Profile
5
Competitive Market Overview
6
The Product
7
Production
9
Distribution
10
Pricing Strategy
11
Promotion
12
Growth
13
Bibliography
14
Primary Market Research
15
S.W.O.T
15
Appendix 1a 1b
16 17
Business Model Stella McCartney is one of the UK’s most successful and global designer clothing brands demonstrating continuous growth and substantial increases in annual profits. “Stella McCartney in 2012 saw sales rise 25 per cent to £25.7 million, with profits up 38 per cent to £4.6 million.” Since the launch of the fashion house in 2001 the brand has continually grown and extended into multiple new markets. Over time, the brand has demonstrated its ability and capacity to act as a lifestyle brand, having developed from solely ready-to-wear collections to successfully retailing ranges of eveningwear, sportswear, lingerie, accessories, kidswear and beauty. The brand has the financial and creative potential to continue developing into further markets, offering its extensive and loyal client base a new and exciting way to connect with the Stella McCartney brand. Through its brand extensions Stella McCartney has already entered into the lives and homes of its clients. It is therefore a natural development for the brand to create a range of luxury home décor accessories and furnishings, allowing clients to further immerse their daily lives with the signature Stella style. Stella McCartney will translate its uniquely creative, fashionable and modern values into these luxury homeware designs. Using Stella’s long-standing success, established style, heritage and loyal client base, Stella McCartney Home has the perfect platform from which to confidently launch. Stella Home, as an extention of the Stella McCartney brand will receive the buzz, excitement and media attention found in the fashion industry, elevating it above other luxury homeware brands. ‘Stella Home’ will offer beautiful, luxurious, responsible homewares, ranging from fabrics and textiles to small and larger furniture items. Key values for the brand are environmentalism and sustainability, increasingly in-demand production values which the brand would translate into homeware designs. The unique selling point of Stella Home is that it stands for both luxurious and eco-friendly living: the collection will contain quality, timeless, beautiful home accessories, but based on an ethical business strategy.
Sector Overview The UK homeware The homeware market is a vast, profitable and growing industry worth around £13 billion. The UK fashion industry has a revenue of around £38 billion. Over the course of the recession, UK furniture, lighting and homeware retailers suffered decreased revenues, due to poor economic conditions and low consumer confidence, however, since 2012, retailers have recovered much of their lost business. “In 2014-2015, industry revenue should increase at an annual rate of 1% to £13.5 billion.” “Poor economic conditions weighed on consumer confidence at the start of the period, which negatively affected consumers’ willingness to invest in expensive items like furniture.” “The economic recovery provides opportunities for premium homewares retailers to join the market as discretionary spending increases, and gaps at this end of the market remain.” “IBISWorld estimates that the largest product segment in the industry is the upholstered goods segment, which is expected to generate 25% of industry revenue in 2014-15. The segment includes sofas, armchairs and reclining furniture.” “In 2014 the homewares market will enjoy its third consecutive year of growth, as the economic outlook and housing market continue to improve. While the market growth is accelerating, highlighting that consumers are starting to increase their discretionary spending, they will remain cautious, forcing retailers to continually improve and extend their offer to drive sales.” “Expect to see more investment in exclusive brands and designs as retailers strive to differentiate themselves from competitors.”
“Companies with the largest share of the UK homeware market are Dunelm (6.9%) and John Lewis (6.8%).” These are not luxury retailers, but budget and mid-range based companies that reach out to the mass population and lower-income consumers. Stella Home would not be in direct competition with such retailers, as the range is based on high quality and luxury goods aimed at high-income individuals. As the homeware market is flooded with low-priced goods, a premium brand like Stella Home is unique and innovative in comparison. Changing consumer habits are demonstrating that premium homware brands such as Stella Home are in increasing demand, plus the oversaturated budget homeware sector means that there are large gaps in the luxury homeware sector, in which Stella Home will be placed. Stella Home will also recognise the large demand for upholstered goods by retailing sofas, armchairs, ottomans in the collection.
Customer Profile The Customer: Age: 40 Gender: female Wealth: high disposable income Lifestyle: active, social, family, fashionable
MS. STELLA BLOGGS: The core Stella Home client is a high-income, fashion and ecoconscious 40 year old with small children and a spacious home. She is affluent and social with ample free time to host events at both her London and countryside homes. She is feminine, sophisticated and is a loyal customer of Stella McCartney, buying clothing for both herself and her children.
VARIETY: Stella Home products will be both timeless and modern, fashionable and practical, therefore appealing to a wider age group and both stylish and conservative consumers. Stella Home products range from small to larger items and will fit comfortably in both a countryside family home or a chic London apartment.
HOMEMAKERS: The core consumers for Stella McCartney are more mature than other less premium or sophisticated brands: the key client base is with the over 30’s female consumer. Having an older client base means that customers are of the home-making age, and therefore could look to brand’s interior collection for the same tasteful, sustainable aesthetic which they have seen in Stella’s fashion collections. Futhermore, an older customer may have a higher disposable income, and could better afford luxurious homwares.
Competitive Market Overview “Zara Home had a rise in sales of 29% in 2013.” Zara Home is a global homeware company also created as an extension to a fashion brand. The products diverse, offering low and mid-range products. Unlike Stella Home, Zara Home products are of a low quality, produced on a huge scale and cannot be considered luxury items. The Zara Home style which is largely neutral, is tasteful and sophisticated, aligning the company alongside the Stella Home aesthetic.
Ralph Lauren’s Home range is a relevant competitor to Stella Home as the brand is also offers premium, stylish and heritage-inspired designs in a carefully considered, small range of items. Stella Home will differentiate in its femininity, brighter colour pallette and wider product range.
Roberto Cavalli Home is a competitor to Stella Home as it stems from a luxury fashion label, offering luxury homewares such as cushions and throws. Stella Home’s product variety and aesthetic differentiates it from RC Home which is largely based on a bold, loud style.
Missoni Home offers a great business model from which Stella Home can learn. The luxury products, all in the signature Missoni prints, range from small to larger home accesories. They offer core items with unchanged designs along with more seasonal products, keeping brand identity high. As an extension from a fashion brand, Missoni Home is similarly placed in the market, however, Stella Home will offer a unique taste of British heritage, sustainable goods and a wider range of home furnishings.
Product Stella Home will be comprised of a collection of soft and hard furnishings. Entry level items will be candles, diffusers, photoframes, mugs and other small accessories which will likely receive a high demand. The range of items will allow the customer to refurbish any room in their home to varying degrees, with the focus on the living room. Whilst there will be core, unchanged signature items, every A/W or S/S season, new colour swatches or styles may be added to the collection to reflect the season and refresh the range’s aesthetic. Core, signature colours will be taken from the purples, pinks, greys and whites found in the Stella McCartney herringbone pattern.
Home Décor, Textiles & Small Furnishings For Stella Home moodboards and style inspirations, see Appendix (1a & 1b) Stella Home products will be labelled with a ‘Stella Home’ white and pink, feminine label using the brands dotted lettering style. Stella Home candles and diffusers will be made from organic, natural ingredients and will likely be the most in-demand, marketable products due to the entry-level price, potential for gift-giving and their obvious ‘Stella Home’ labelling. The Stella Home tea set will signal the brand’s British heritage and feature the signature herringbone design. This will appeal to the more mature, female customer.
Soft furnishings are marketable and always in demand: cushions, pillows, throws, blankets, rugs and table settings will all be included the Stella Home range. SM is known for her high quality, statement knitwear and this will be translated into her home fabrics. These textiles will be in both neutral and bolder or herringbone designs. A selection of Stella Home cushions will have the trademark chain around the edging, as seen on SM’s Falabella bags. This will give the products an easily identifiable look. The materials used will be high quality and should be largely sustainable, organic and ethically produced.
Home Accessories & Lighting Storage items, tidys, table lamps and lanterns will be part of the Stella Home range as they are useful items that may be easily transferred into the home. They will be in simple, clean styles in a mix of neutral and warmer colours with mixed textures.
Small Furniture Side tables and upholstered furniture will form the most expensive sector of Stella Home. These products will be in core, limited styles, maintaining strict brand identity and reducing manufacturing costs. Larger furniture items are key as they enable substantial interior transformations, making Stella Home more than an accessories brand.
Bespoke Interior Design Consultation Service Stella Home will offer more than just a product, but also a service. As a way of promoting the aesthetic and luxury of the brand, Stella Home will offer the consumer a bespoke consultation service in which a certified Stella Home interior designer can visit a clients home and discuss how Stella Home designs might be adopted. The client will also have access to an exclusive range of paints and wallpapers in the core Stella Home colours along withexclusive additional colour options for upholsted furniture. This service will act more as a promotional device and way of communicating with key customers, than as a profitable service.
PRODUCTION ETHOS: Stella McCartney is a ‘responsible, honest and modern’ company: qualities that compose the brand’s ethos and identity. Stella McCartney continually explores new and innovative ways to become more sustainable in production, manufacture and operations. Stella McCartney Home products would be marketed with the same emphasis on eco-conscious manufacture as the Stella McCartney fashion collections. The products would be made in a large or small part by eco materials, using an economic production process. Consumers are conscious of the quality and environmental impact of what they bring into and consume in their homes, and so responsible, but fashionable, homeware will be desirable to stylish, eco-aware customers. Whilst first and foremost Stella Home will be marketed as luxurious, fashionable, contemporary furnishings, the sustainable roots of its production will add value to the products and be a bonus or point of sale for many consumers.
Stella McCartney products are largely made in Italian factories which are dedicated to efficiency in order to reduce energy and water consumption, and also specialise in non-leather production. These factories and mills could be also used for the manufacture of Stella Home products. Eco-conscious materials for the collection could include: Organic Cotton and fabrics, low-impact dyes, organic natural essences, Patagonian luxury sustainable wool, wood from sustainably managed forests (these are all materials used in the Stella McCartney chain of production). The brand does not use leather, skins or fur and so natural fibres or synthetic materials will be used as alternatives.
Distribution Strategy
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In order to reduce costs, Stella Home will be stocked on the Stella McCartney website, rather than finding shop space for the product. It would be unwise to stock the range in Stella McCartney’s stand-alone stores as these would need to be reorganised and valuable floor space would be reduced. This could both dilute the brand as a fashion label, confuse the customer and reduce the luxury of the shopping experience. Due to the unknown quantities of stock that will be initially sold, keeping the retail outlet to online reduces the financial risk or disruption to the stand-alone stores.
Website: STELLA HOME
The physical sale of the products would go exclusively to Harrods, who already stock the SM fashion label and would benefit from the press coverage and footfall to the concession. Harrods is the perfect placement for Stella Home as it stocks luxury brands for high-income consumers. The Harrods furniture department has large capacity to showcase the stock which will also benefit from exposure to the store’s many visitors. Having Harrods exclusively stock Stella Home in-store creates a destination shopping experience and highlights the exclusivity and luxury of the brand. From Harrods, appointments with the bespoke consultation service may also be made. The Harrods online website would stock the range with a capacity to ship worldwide, removing the responsibility and costs of shipping away from Stella McCartney and increasing the global breadth of the brand.
Net-a-Porter, which stocks limited homeware including candles and cushions might also stock Stella Home small accessories. This additional online presence on such a popular, luxury webiste would be great exposure for the brand, whilst maintaining the exclusivity of Stella Home given to Harrods.
“The online market will outperform overall homewares - retailers must focus on creating a seamless shopping experience across channels.”
Pricing Strategy
Market Competitors
HIGH PRICE Roche Bobois Stella Home
HIGH DESIGN
Fendi Casa Ralph Lauren Home
Roberto Cavalli Home
Missoni Home
LOW DESIGN
Designers Guild Anthropologie Oka India Jane
The White Company Habitat
John Lewis Zara Home
Next Home Ikea
LOW PRICE
Wilko’s
Stella Home products will have premium pricing as Stella McCartney’s luxury brand identity must be maintained. Furthermore, the quality and manufacture of Stella Home products will mean that higher prices are necessary to cover the costs of production. Stella Home as a luxury homeware collection must have premium prices to demonstrate exclusivity and to establish its place as a high-end retailer. There will be a high price perceived value for the products due to their manufacture and association with the Stella McCartney brand. The pricing profit margins for the products will be based on the same ratios used in Stella McCartney’s clothing lines. This should result in a cohesive across-brand price range, maintaining the same level of luxury pricing throughout the brand’s extensions. The variety of products allows for customers with both mid to top-range incomes. For smaller items such as candles, lower, entry level pricing is key in order to attract a larger range of customers. The profitability of the smaller items should be high as more units will be sold than the higher priced items. The large, most expensive products will will have lower demand but higher profit per unit sold. Prices will be of a similar range as the Missoni Home and Ralph Lauren Home products (£60-£7000) as they are high quality and reflect the exclusivity and luxury of the fashion houses from which the products stem.
Promotion The Berkeley ‘Stella’ Tea A collaboration with The Berkeley Hotel to use Stella Home products to refurbish their tea room for a 6 month seasonal period or more. The hotel will have the items on a loan/ rent basis and will receive media attention as the first establishment to showcase the Stella Home collection. The hotel already has a Pret-aPortea catwalk-inspired afternoon tea which has been widely covered in the media. The luxury hotel and premium priced tea is fitting with Stella Home’s identity.
Celebrity Gifts & Endorsements Celebrity endorsements will be a key promotional strategy for Stella Home. SM has extensive celebrity ‘pulling power’ with a great range of close, loyal celebrity clients (e.g. Kate Moss, Kate Hudson, Cameron Diaz). These affluent, mature celebrities will be given a selection of small Stella Home accessories in exclusively embossed hampers. They will be encouraged to share these gifts via social media, e.g. Gwyneth Paltrow’s popular blog Goop would be a great platform for promotion. This gives the brand star quality, exclustivity and shows the mature glamour of the Stella Home core consumer. Interviews with Stella Ms. McCartney’s private lifestyle, innovative views and beautiful homes are of great intrigue to the press - Vogue’s Hamish Bowles recently interviewed Stella at her countryside manor, with Bruce Weber as photographer. Magazines aimed at Stella’s mature and high-income consumers such as Vogue, Vanity Fair, House & Garden could be offered unique, personal interviews with Stella in her homes, discussing her collection and inspirations. Her homes would be decorated using Stella Home products, showcasing the range for the photographers. Other publications (Daily Mail Online) may then pick up these images, giving the collection wider scope and consumer reach.
Social Media ‘Stella Home’ will be launched across social media platforms and promoted through Stella McCartney’s twitter and personal instagram which are followed by many, and will clearly show the identity and origins of the collection.
Harrods Launch Party The launch party will recieve the most media hype and be given the brand’s social media attention in the weeks leading up to it. 10 Stella Home social media followers will be given the chance to attend, having used the ‘#mystellaathome’ with a shared picture of one of their SM fashion items displayed most creatively in their own home interior, encouraging the public to engage with the brand. The fashion brand’s loyal celebrity and top non-celebrity clients will be invited. These will be mature, affluent, or family orientated individuals. These could include British celebrities such as the Beckham family, Kate Moss and her daughter, Poppy Delevigne, Jodie Kidd & Nigella Lawson.
Brunch with Stella The 20 most followed and respected interior design & lifestyle social media personalities will be invited into Stella’s London townhouse to be introduced to the collection and talk to the designer. The decorative, social brunch would showcase the Stella Home range in a beautiful way, showing the products ‘in action’. The guests would be encouraged to share pictures and stories of the brunch, and would receive small gifts from the range in SM Home gift-wrapped boxes, demonstrating the covetability of the products to their followers. Tatler will be invited to photograph the event, plus a fun, promotional video of the event wil be posted on the website and social media platforms.
Growth
The future for Stella Home will be in its growth of distribution. Stella McCartney clothing is already stocked by Selfridges, Harvey Nichols, Harrods & Liberty departments stores, demonstrating a relationship, loyalty and affiliation with these luxury retail outlets that would hopefully lead to future concessions of the Stella Home brand, both in their UK and overseas stores. Non-UK department stores and online sites such as Luisaviaroma & Saks Fifth Avenue could also be approached to stock the collection, reaching out to more consumers. Once the Stella Home collection has shown steady and strong profitability over two consecutive years, a standalone Stella Home store could be launched in London to properly showcase the stock. The strong property market and interior design credentials of London mean that this Stella Home store would be well placed. The product range might be improved for optimum profitability, however there will always be a limited range of items in the collection in order to maintain brand quality and identity.
Bibliography http://www.stellamccartney.com/gb http://www.stellamccartney.com/experience/ http://www.ibisworld.co.uk/market-research/furniture-lighting-homeware-retailers.html http://www.ibisworld.co.uk/market-research/clothing-retailing.html http://www.verdictretail.com/uk-homewares-market-growth-in-2014-the-fastest-for-seven-years/ http://www.leicestermercury.co.uk/Dunelm-leapfrogs-John-Lewis-UK-s-biggest/story-17027641-detail/story.html http://www.datamonitor.com/store/Product/uk_annual_forecasts_201419_homewares?productid=CM00272-005 http://store.mintel.com/homewares-uk-january-2014?cookie_test=true http://store.mintel.com/homewares-uk-january-2014 http://www.thisismoney.co.uk/money/markets/article-2446554/Stella-McCartney-earns-1-5million-dividend-windfall-fashion-business.html#ixzz3KeFUhROp http://www.ralphlauren.com/family http://www.harrods.com/home/furniture/styles http://www.digitallook.com/news/international-companies/zara-online-turns-profit-in-just-four-months-dl11767736.html http://www.luxurylivinggroup.com/en/fendi-casa http://www.zarahome.com/gb/en http://www.vogue.co.uk/fashion/spring-summer-2015/ready-to-wear/stella-mccartney http://www.vogue.com/865476/stellas-hideaway/ http://www.fashionreview.co.uk/stella-mccartney-fashion/ http://www.theguardian.com/fashion/2014/mar/06/-sp-stella-mccartney-interview http://www.robertocavalli.com/rc_home/ http://www.missoni.com/gb/missoni-home/bath#macro=cat_2200&gender=U&season=A,E&page=2&productsPerPage=30&macroMarchio=18766
Key Market Research http://www.ibisworld.co.uk/market-research/furniture-lighting-homeware-retailers.html Industry Analysis & Industry Trends UK furniture, lighting and homeware retailers have endured a turbulent time over the past five years. Industry revenue fell when the financial crisis hit, but brighter conditions since 2011-12 have helped retailers recover. Over the five years through 2014-15, industry revenue is expected to increase at a compound annual rate of 1% to £13.5 billion. During the current year, it is projected to grow by 1.1%. Poor economic conditions weighed on consumer confidence at the start of the period, which negatively affected consumers’ willingness to invest in expensive items like furniture. IBISWorld estimates that the largest product segment in the industry is the upholstered goods segment, which is expected to generate 25% of industry revenue in 2014-15. The segment includes sofas, armchairs and reclining furniture. http://www.verdictretail.com/uk-homewares-market-growth-in-2014-the-fastest-for-seven-years/ In 2014 the homewares market will enjoy its third consecutive year of growth, as the economic outlook and housing market continue to improve. While the market growth is accelerating, highlighting that consumers are starting to increase their discretionary spending, they will remain cautious, forcing retailers to continually improve and extend their offer to drive sales. John Lewis was overtaken at the top of the homewares sector in 2013 by specialist Dunelm Mill. We expect Dunelm to retain its market leading position through 2014 as the retailer continues to open stores and develop its online proposition. Its offer chimes well with homewares shoppers in the current climate, and is fundamental to its success. Owing to Dunelm Mill’s success, homewares specialists have grown their share of the sector, and Verdict expects specialist share to reach 19.2% in 2014, overtaking department stores as the largest channel. By 2019, we are forecasting that specialists will lead the market with 19.9% of the market; however, grocers remain the fastest growing channel. As the online market will outperform overall homewares it is unsurprising that many new entrants use this channel to establish themselves. Its rapid growth provides opportunities for smaller players, and acts as a testing ground for new products and ideas. Retailers must focus on creating a seamless shopping experience across channels. http://www.datamonitor.com/store/Product/uk_annual_forecasts_201419_homewares?productid=CM00272-005 The economic recovery will provide opportunities for premium homewares retailers to join the market as discretionary spending increases, and gaps at this end of the market remain. However, as a result of the downturn, customers are more cautious and therefore retailers must ensure that the products are worthy of these higher price points. http://store.mintel.com/homewares-uk-january-2014?cookie_test=true “In a market flooded with low-priced goods, retailers face a steep challenge to encourage people to trade up and spend more. We expect to see more investment in exclusive brands and designs as retailers strive to differentiate themselves from competitors including online discounters. And retailers will continue to make more efforts to inspire customers to assemble a coordinated look, using displays, catalogues and online technology to help improve the design literacy of today’s home makers.” http://www.thisismoney.co.uk/money/markets/article-2446554/Stella-McCartney-earns-1-5million-dividend-windfall-fashion-business.html#ixzz3K557Ojs6 Stella McCartney earned a dazzling £1.5 million dividend from her core British-based fashion business last year after sales and profits jumped. Stella McCartney Ltd, which runs the group’s two London stores and the brand globally saw sales rise 25 per cent to £25.7 million, with profits up 38 per cent to £4.6 million, according to figures just filed at Companies House. The firm, which is half-owned by McCartney herself and half-owned by Italian fashion group Gucci, paid out total dividends of £3 million for the year. McCartney, who designed the Team GB kit for the 2012 Olympics, said the link with the London Games had been key to the successful year. ‘The Olympics created awareness in all corners of the globe,’ the firm said in its annual filing. The figures represent only a part of the Stella McCartney design empire, with wholesale trade and its international business managed through other companies. Ten overseas stores were launched last year.
S.W.O.T Analysis Strengths Stella McCartney is a profitable, global brand with strong brand power and successful brand extensions already in place The homeware market is a vast and growing industry with increasing demand for luxury home designs Weaknessness The premium pricing of the products will alienate low-income consumers, who are the majority of the population Using eco-friendly manufacting increases production costs and limits the quantities that can be produced Limited product retail exposure Opportunites There is a gap in the market for fashionable, sustainable, luxury homeware The British property market and interior design heritage is strong Using the SM client base to find core Stell Home client bases Increasing revenue for the Stella McCartney brand Threats Similar luxury fashion brands may enter the homeware market as direct competition The economy way suffer a downturn and consumer luxury spending may be capped
Appendix 1a
Stella Home takes its inspiration from Stella McCartney’s own tasteful English countryside Manor and West London townhouse. Styles which can be found reflected in the aesthetic of her stores. The natural, feminine, British country style will use florals, pastels and woods in the designs.
FEMININE BRITISH BRIGHT
A signature style for Stella Home products will be based on the patterened pink and grey herringbone floors found in Stella McCartney stores.
Appendix 1b
This influence will be of sophisticated, London interiors with modern, clean and linear designs in neutral and MODERN HERITAGE grayscale tones. The desire is for Stella Home products LUXURY to be a combination of the two CLEAN mentioned influences, making LINEAR them transferable, diverse and encompassing the sought-after British heritage styles for both families and individuals and for either traditional or modern tastes.