My virtual anthro by Bri Young

My Virtual Anthro

Alli Drinkwater | Briana Young | Linda La | Mari Maldonado

Table of Contents

Executive Summary 1 Company Summary 4 Overview 6 Anthropologie’s Mission 6 Anthropologie’s History 7 Current Ownership and Management Structure 10 Future Growth Plans 12 SWOT Analysis 13 Current Positioning in the Market 16 Perceptual Map 16 Current Distribution 19 Distribution Channels 19 Sales Volume Distribution 20 Current Communication & Promotional Activities 22 Annual Spend Figures 22 Current Advertising Activities 24 Current CRM Activities 27 New Strategic Initiative 30

Key Objectives 32 Rationale 36 Best Practices 36 Industry Trends 39 Changes in Customer Behavior 41 Long Term Benefits 44 Technology & Implimentation 46 Technology Driving the Initiative 46 Operational Considerations 49 Execution Plan 51 Visualization 53 Product Assortment 57 Market Analysis 62 Size of Market 63 PESTEL Analysis 65 Key Players 69 Direct & Indirect Competition 71 Porter’s 5 Forces Analysis 73 Target Customer 76 Demographic Segmentation 78 Lifestle/Psycographic/ Behavioral Segmentation 80 Customer Profile 82 Communication & Promotional Plan 84

Promotional Activity Plan 85 Pre-Launch 87 Social Media Advertising 89 Launch – Scavenger Hunt 93 Step One: Register 93 Step Two: Download The App 96 Step Three: Locate the Virtual Pop-Up Shop 97 Launch Advertising 99 Step Four: Arrival at the End Destination 101 Financial Plan 103 Conclusion 110 Appendix 112 Perceptual Map Statistics 113 Product Categories 115 PESTEL Write-up 117 Porter’s 5 Forces Write-Up 123 Lifestyle Statistics 127 Works Cited 129

Executive Summary

We at Anthropologie, a subsidiary of Urban Outfitters Inc. have developed a strategic initiative, known as ‘My Virtual Anthro’. Through a the use of three specific technologies – Junaio, Scentee, and the Fujitsu Haptic Sensory Tablet - we are offering current and potential customers in Providence, Rhode Island the chance to engage all five senses in a revolutionary virtual showroom. This initiative harnesses and integrates the physical environment of an Anthropologie store in a fun and digital way. This initiative addresses our need to raise more awareness for our home goods assortment among our consumers and increase our market share in mobile and online sales. Currently we have not tapped into the full potential for mobile commerce, and this is a missed opportunity considering the shift in buying behaviors of our target consumer over the past few years towards digital. ‘My Virtual Anthro’ focuses on the need to create positive word of mouth in the United States market as well as test a physical location that we have determined has the potential to increase brick-and-mortar sales. Our initiative builds on successful best practices from other industries that have successfully raised positive word of mouth for their company. In the home goods market it has been difficult for retailers to capture a high conversion rate because of the consumer’s reluctance to buy products that they have not seen or tested in person. Our initiative tackles this problem by allowing the consumer to see Anthropologie as a digital company and familiarizing the consumer with shopping for home goods online and through a mobile channel. Our market research supports that this is the right time to engage in this initiative especially considering that several of our key competitors are already engaging in digital and mobile experiences. Along with our proposal, we have included an analysis of the home goods 1

market in the United States, a competitive analysis, our operational and promotional activity plan, an expense budget, and a sales forecast for our weekend event. We are aware that technologies for this initiative are expensive, and while we are expected not to raise a profit from this initiative, if successful we see this as a positive driver of our online and mobile sales in the future. Furthermore, our ability to successfully implement this initiative will positively impact relationships with our consumer by tapping into every sense from sight, touch, olfactory, audio, and taste. With the success of this initiative we have the potential to become the new innovator and leader in the home goods market by offering a complete multisensory experience for a digital consumer.

Company Summary

Overview: Anthropologie’s Mission

Lifestyle merchandising is our business and our passion. The goal for our brands is to build a strong emotional bond with the customer. To do this we must build lifestyle environments that appeal emotionally, and offer fashion correct products on a timely basis. Our customers are the reason and the inspiration for everything we do.

“We try to make it a place where they would like to spend time. We think a lot about how they feel, the clothes, the music, the scent, the comfortable fitting room.” -- Wendy Wurtzburger, Merchandise Manager 6

Anthropologie’s History

Founded by the current URBN INC. chairman and president Richard Hayne, Anthropologie opened its first store in 1992 in Wayne, Pennsylvania. In 1998, the brand launched a mail-order catalog and website, and in April 2009, opened the first international store in the Yorkville area of Toronto, followed by subsequent storefronts in Edmonton, Calgary and Vancouver. On October 2009 the brand’s first European store opened, located on Regent Street in London. It was followed by two additional UK outposts, located on King’s Road in Chelsea and in Edinburgh. Anthropologie targets sophisticated women, ages 28 to 45 who are successful in their careers transitioning from their apartments to a home. The Anthropologie customer seeks new and unique items for every aspect of their life. Anthropologie is more than just a brand, but a lifestyle that imparts a sense of beauty, optimism and discovery to the customer. Anthropologie offers an escape from the everyday, being a source of inspiration and delight, where innovative merchandising, customer centricity and a curated array of products come together to create an unimagined experience. (URBN INC.)

The atmosphere that the stores present to the public is imperative to the multi-sense experience that Anthropologie taps into once an individual enters our doors. Our products are an expression of the customerâ&#x20AC;&#x2122;s appreciation for artfulness and good design. To that end, our buyers and designers travel the world uncovering special products and collaborating with talented artisans all over. The assortment of products offered in each store provides pieces that compliment every aspect of the customer lifestyle including: casual apparel, accessories, shoes, beauty, home furnishings, found objects, gifts and dĂŠcor all of which exhibit influences ranging from vintage to global. The combination of our devotion to the customer and the unique Anthropologie spirit brings together likeminded customers with one common love for the Anthropologie merchandise and lifestyle.

CURRENT Ownership & MANAGEMENT STRUCTURE David W. McCreight Chief Executive Officer, Anthropologie Group Kristin Norris Executive Officer Wendy Wurtzburger Chief Merchandising & Design Officer

CURRENT REVENUE Anthropologie’s North American and European retail segment had net sales that accounted for approximately 39.8% of Urban Outfitters Inc.’s total revenue for Fiscal 2014. This calculates to approximately $1.23 Billion (URBN INC).

Freeman M Zausner Chief Administrative Officer

URBN Inc. trades on the NASDAQ GS

Glen A. Bodzy General Counsel and Secretary

Oona McCullough Director of Investor Relations

Frank J. Conforti Chief Financial Officer Calvin Hollinger Chief Administrative Officer

Price: $32.54 Change (%): Stock is Up 0.01 (0.03%) Volume: 1,654,454 (**Data as of 05/23/14 4:00 p.m. ET)

Future Growth Plans

Anthropologie’s growth initiative includes expanding the retail landscape in order to continue strengthening the company sales growth. It is also important to mention, however, that Anthropologie customers are responding positively to both direct and omni-channel efforts. During the fourth quarter of fiscal 2014, Anthropologie has registered 10% in retail comparable sales driven by its compelling product in-store shopping experience (Reuters). Anthropologie has improved the product mix and merchandise designs, which have resulted in positive growth. In the past few years, Urban Outfitters Inc. has put a considerable amount of funds and time developing the digital experience for Urban Outfitters and Free People. Both of these retail segments for example, have recently launched mobile applications (Overstreet), which has significantly amplified each segment’s mobile and electronic commerce usage. The Urban On customer-centric app offers users exclusive access to rewards and retail events through encouraging social media interaction. Since its launch 370,000 customers have downloaded the app and numbers are growing daily. Likewise, the Free People FP Me app attracted over 165,000 members since its launch in June of this year. The strength of these retail segments’ direct-to-consumer channel and sales using mobile devices accounted for the largest percentage increase in transactions. Naturally the next step is to focus on Anthropologie’s digital experience. As of this year, Anthropologie’s first mobile platform was launched along with a full website redesign, which has resulted in strong direct-to-consumer sales growth. The goal is to continue this trend through several new technology investments, including the increase in mobile commerce and hiring professionals to support the online and in-store initiatives. 12

SWOT Analysis

Anthropologie stands for credibility due to their strong brand name as well as for their loyal customer base. As a brand, Anthropologie strives to engage with the customer seeking to connect with them through the experience they can gain as soon as they enter the store. The welcoming and unique environment of Anthropologie, the wide range of products, and the emphasis on a multi-sensory experience has helped Anthropologie build a strong brand position. With all these strengths, also come some weaknesses. Anthropologie targets a limited audience and locations are mainly domestic, which limits the opportunity for growth and becomes more susceptible to economic fluctuations. Having a digital presence has become very important today, where Anthropologie still needs to engage in growing the experience of their electronic commerce. Also as a brand, Anthropologie has an opportunity to invest more in advertising and marketing so the brand can grow and reach customers that havenâ&#x20AC;&#x2122;t had the opportunity of having the Anthropologie experience. With the growth of omni-channel retailing, Anthropologie has opportunity to grow the digital experience to mirror the strong store atmosphere that has already been created in-store.

STRENGTHS

Weaknesses

• Strategic brand positioning • Loyal customer base • Wide range and assortment of product • Unique store atmosphere • Presence in mutliple retail channels • Steady sales growth from year to year with no debt

• Niche target audience • Very little attention has been paid to mobile sales channels • Product assortment not always consistent between all locations and retail channels • Limited advertising and marketing

Opportunities

Threats

• M-commerce and E-commerce • High demand for omnichannel retailing • New technologies create more value in mobile POS • Expansion into new markets

• Economic downturn • Intense direct competition • Increased manufacturing costs • External changes (government, politics, taxes) • Lower cost competitors or imports • Product substitution

CURRENT POSITIONING IN THE MARKET: Perceptual Map

The perceptual map on the previous page shows the connection between Anthropologie and it’s ten closest home goods competitors. Price and accessibility are the factors taken into account when analyzing the correlation between these different brands. Determining the accessibility of a brand includes scoping out the number of operating retail stores, the number of companies the brand wholesales to, and the number of countries their e-commerce site caters to in terms of delivering product. When looking at the company’s average price, the mean price of four common categories was taken. These categories comprised of furniture, bedding, dining, and décor. This allowed for a wide evaluation of the company’s prices, looking into more than one area products. This also gives us a better overall average because more averages are taken in the process. The highest and lowest prices in each category have been found and averaged. These findings are then averaged; giving the company it’s average price point. When one looks at this map, Pier 1 Imports and Jonathan Adler have very high accessibility ratings. When these two are taken away, Anthropologie has moderate accessibility, having 174 stores and selling to 135 countries through their e-commerce site, giving them a total accessibility score of 309. They are similar in accessibility to Pottery Barn, Kirkland’s, World Market, and Crate & Barrel, which scored 282, 321, 260, and 261, respectively. Anthropologie’s accessibility score is split somewhat even16

ly between retail stores and e-commerce sales. The same goes for Pottery Barn and Crate & Barrel. World Market and Kirkland’s, however, have twice as many stores, yet only sell domestically. In order to increase Anthropologie’s accessibility, Anthropologie needs to look into expanding its distribution. With this in mind, the implementation of a virtual pop-up shop has the potential to be extremely beneficial in testing new markets for future retail stores, while simultaneously enhancing online and mobile sales. When looking at Anthropologie’s price point, the average is around $716, showing similar prices to West Elm ($811) and Z Galleries ($855). This puts Anthropologie right in the middle of all their competition, with Pottery Barn, Crate & Barrel, and Jonathan Adler surpassing them in the thousands and Zara Home and Kirkland’s below them with averages well under $200.

High Price

Low Accessibility

High Accessibility

Low Price

Current Distribution

DISTRIBUTION CHANNELS As a multichannel retailer, Anthropologie sells through physical brick-and-mortar stores, print catalogs, e-commerce and m-commerce. Currently, Anthropologie can make physical transactions in 174 stores in the United States, nine stores in Canada and four stores throughout Europe. In total there are 187 global locations currently, with plans to expand and open 13 more stores in fiscal 2015. The average Anthropologie store is 7,100 square feet and carries an average of approximately 45,000 â&#x20AC;&#x201C; 50,000 SKUS per store. There are two Anthropologie e-commerce websites currently operating, one in North America and the other in Europe. As of fiscal 2014, Anthropologie has begun launching mobile commerce platforms; currently the only platform for mobile commerce is through an iPad application (URBN INC).

SALES VOLUME DISTRIBUTION Reported in 2012, the Anthropologie stores have revenue per square foot of around $684. The ratio of Internet and catalog order revenues to store revenues has increased from around 17% in 2007 to 31% in 2012. The rapid growth in online apparel retail, the parent company’s investments into e-commerce technology and a few successful online marketing strategies have driven this growth. With the company planning to expand e-commerce operations, Internet and catalog orders are expected to generate more value to the revenue stream in future years (Trefis). As previously mentioned, Anthropologie’s total sales account for 39.8% of URBN Inc.’s total sales. Given that the approximate total e-commerce and catalog sales for Urban Outfitters Inc amounts to $600 Million (Trefis), we can estimate sales for e-commerce and catalog sales for Anthropologie to be around $260 Million if Anthropologie catalog and Internet sales account for 21% of Anthropologie’s sales. Given this estimation we can infer that Anthropologie accounts for 10% of Anthropologie’s mobile sales, resulting in an estimation of around $120 Million in mobile sales.

CURRENT COMMUNICATION AND PROMOTIONAL ACTIVITIES

ANNUAL SPEND FIGURES As a parent company, Urban Outfitters Inc. spends approximately $19.6 Million on advertising as of fiscal 2014 (Urbn Inc.) This accounts fro 3% of the company’s total revenue. Given this figure, we can estimate that Anthropologie’s advertising expenses equate to $36.5 Million.

CURRENT ADVERTISING ACTIVITIES Anthropologie currently does not engage in any radio or television advertisements. Anthropologie’s main advertising initiatives are based around traditional print advertisement and online social media platforms. By utilizing the Internet as a marketing platform, Anthropologie can ensure that potential customers are exposed to the brand even without a way to physically enter a store or experience the product in person. What is interesting about this business is that is that Anthropologie “spend[s] the money that other companies spend on marketing to create a store experience that exceeds people’s expectations”(Labarre). The whimsical and artistic ambiance of the Anthropologie brand is mirrored in various social media profiles with the end goal being that of facilitating communication with and among Anthropologie customers and staff members.

Catalogs Anthropologie produces print advertisements separate from and within the Anthropologie catalog. The catalog is an important resource for customers to become familiar with the product offering and visualize how to incorporate Anthropologie into their lifestyle.

Tumblr- Anthro Blog

The Anthro blog serves as a platform for customers to find inspiration in the images and the products that are written about.

Instagram As a part of Anthropologie’s community building strategy, Anthropologie staff members use this image-centric platform to regularly post pictures from events, behind-the-scenes, and of themselves wearing the brand’s products. This allows the customer to keep up-to-date about the brand and fosters customer engagement. Currently, Anthropologie has over 761,000 followers on Instagram. 24

Facebook

Currently, Anthropologie has over 850,000 likes and over 4,700 people have mentioned Anthropologie in a post or comment. Facebook serves as a product promoter; Anthropologie posts multiple times each day to inform followers about special deals or available merchandise.

The official Anthropologie Pinterest site has 57 boards with over 450,000 followers. The boards are used as inspiration boards demonstrating how to incorporate the Anthropologie aesthetic and spirit into their lifestyle.

Twitter

With over 457,000 followers the content is much like what can be found on Anthropologieâ&#x20AC;&#x2122;s Facebook page and is used as a promotional tool for merchandise and store events.

Other social media channels: Youtube, Vimeo, and Google +

In-store Events Dependent on location, Anthropologie stores are hosts to a plethora of events including fashion shows, in-store concerts, pet adoption days, and DIY tutorials. Customers are encouraged to sign up in their local store to be notified about upcoming events in their area. Going forward, Anthropologie plans to reduce its catalog circulation and promote web-based and digital communication. Also, Anthropologie is increasing investment into image-makers, marketers and stylists to provide an engaging brand experience for consumers (Trefis). 26

CURRENT CRM ACTIVITIES

Direct Marketing

Anthropologie engages in email marketing through personalized reminders to customers to combat shopping cart abandonment. Anthropologieâ&#x20AC;&#x2122;s voice is mirrored in these messages making the email more inviting and less demanding. Anthropologie does not believe in pressuring the customer to make a quick purchase, instead they use these emails to gently coax customers to remember why they selected the product in the first place and then also gives the customer a link to view new arrivals that could be of interest to that particular customer.

Anthro Card The Anthro card is not a credit card – it is simply a way to keep track of purchases if that have previously been made in case customers lose their receipt.

Birthday Coupons

Anthropologie sends their customers very personalized, multi-purpose and well thought out birthday surprises, consisting of a coupon to spend in-store or online. Each card is very detailed, and shows they have place ample thought and funds into sending them to Anthro card customers.

Quick View Anthropologie allows customers who are shopping online to conduct a detailed zoom-in on merchandise in order to show the detail and construction of each product. Anthropologie also offers a “You may also like” tab, that shows merchandise similar to the product currently selected and shows suggestions for pieces that would complete the look.

Sizing Guide Because Anthropologie has no two items that are alike, sizing charts have been created for each one of their garments. This allows customers to feel comfortable about any purchase with the knowledge that they have chosen the perfect fit.

Reviews

Anthropologie provides customers with an online review tab for each product. The customer also has the option to share the review on any of their social media platforms.

THE NEW STRATEGIC INITIATIVE

KEY OBJECTIVES

1. Create positive word of mouth 2. Increase online and mobile usage experience 3. Increase social media engagement and digital marketing 4. Test viability of a new market 5. Increase sales volume through new advertising avenues â&#x20AC;&#x2DC;My Virtual Anthroâ&#x20AC;&#x2122; will bring many advantages to the Anthropologie brand, allowing us to test as well as broaden many aspects of the company. This virtual pop-up shop is heavily focused on creating a positive word of mouth for the brand. Anthropologie barely does any advertising, yet the customer stays longer in our stores than a majority of other chain stores. The average anthropologie visit lasts one hour and 15 minutes, while some visits may last for hours. Although the brand doesnâ&#x20AC;&#x2122;t advertise, we work extremely hard on connecting with our customer, understanding who she is, and giving her the experience she wants. This loyal, emotional bond created with the customer leaves her with a positive, fulfilled experience that prompts her to keep coming back season after season. With this virtual pop-up shop, we expect to lose money. However, we know that the new loyal customers we welcome into the Anthropologie family will receive an experience like no other, which they will be 32

eager to share with other potential customers soon after. This positive word of mouth will be highly beneficial to the brand image and will continue to attract customer even after the virtual pop-up shop is over. Along with this, the pop-up shop is a great way to enhance the company’s brand experience and test new technologies in order to embody the spirit of Anthropologie and communicate the overall brand to the customers in a new and innovative way. The idea of this initiative has a key focus on multi-sensory engagement, “Anthropologie [stores are] defined by the idea and activity of discovery, [and] we do everything we can to ground the experience in tactile, visual, kinesthetic, sensual elements” (Labarre). Taking advantage of the pop-up shop trend’s benefits, we plan to use this initiative to test new markets and possible brick-and-mortar locations. Providence, RI and Des Moines, IA both lack an Anthropologie store, which makes these locations perfect for the ‘My Virtual Anthro’ allowing testing of different markets for viability. If these markets prove to be effective, they will also help gain more loyal Anthropologie customers in the Midwest and the Northeast, while boosting the brand excitement of the existing customers already in the area. Along with testing new locations, ‘My Virtual Anthro’ also allows the brand to test new technologies. Many new technologies are incorporated into this virtual pop-up experience. Anthropologie will be introducing a new mobile application using augmented reality to bring the unique Anthropologie experience to m-commerce. Anthropologie does not have its own app at the moment, therefore this virtual scavenger hunt is a great way to test the new application with the Anthropologie customer while simultaneously getting them more comfortable with Anthropologie’s e-commerce and m-commerce experience purchasing home goods. Technologies such as Junaio and Scentee are also going to be tested with the customer. If the feedback is positive, Anthropologie will continue to partner with and use these technologies within the brand in the future in-store concepts. For example, after the completion and analysis of this initiative, Anthropologie could begin selling different styles of Scentees as apart of our product assortment, which could release Anthropologie scents through one’s mobile device. 33

In addition to creating a customer interactive app with checkout capabilities, ‘My Virtual Anthro’ will also engage customers more in depth with Anthropologie’s social media platforms. While on the scavenger hunt, the app will link the online shopping experience with aspects of different social media outlets, helping guide the customer to Anthropologie’s social media platforms. For example, while viewing a poster through the augmented reality Junaio technology in the app, the customer can not only shop for products, but they can also click on a link to an article and/or video posted on Anthropologie’s blog or other platforms. While growing social media, another objective of this virtual popup shop is to broaden the Anthropologie experience. Anthropologie has developed a strategic brand positioning that keeps customers returning simply for the one-of-a-kind experience they can receive. We hope to live up to and enhance this unique experience through the use of multi-sensory technologies and selecting striking locations to house the virtual pop-up shops, bringing more character to the experience and products featured. This virtual pop-up shop scavenger hunt is all about bringing the joys of the brick-and-mortar store to the digital side of Anthropologie. While experiencing ‘My Virtual Anthro,’ the customer should feel engaged with the entire brand on every levels including – audio, visual, scent, and touch. This is key to making our objectives possible. All in all, our true goal is to bring the heart of Anthropologie to a new market and essentially create positive long-term word of mouth, thereby increasing sales in all channels.

RATIONALE: Best Practices

Our initiative involves a multi-sensory experience inspired from several key best practices from varying industries detailed below.

JUNAIO USED IN ABSOLUT AND AUDI Absolut Vodka developed a printed magazine advertisement in Spain, where they implemented the Junaio Augmented Reality Technology. The advertisement consisted of a bottle covered with a blanket. To experience the ad, the smart-phone needed to hover over the advertisement in the magazine with the app in use. When Junaio scanned the image in the magazine, the 3D content will pop up in the phone where you can see the bottle being uncovered revealing that is an Absolut Vodka bottle. Audi also implemented this technology to a printed advertisement, utilizing this channel through an integrated, multi-platform application it featured both 3D interactive models of the exterior of the car and a 360 degree view of the interior. The 3D models of the new Audi Q3 were completely interactive where users could choose from different colors and change the types of rims on the tires just by touching the appropriate section of the model. Users would activate the experience using the print ad that appeared in 10 European magazines. 36

Swarovski Scavenger Hunt Back in 2011, Swarovski hosted a large-scale citywide treasure hunt, which featured 500 teams of two players guided around a series of London locations to complete challenges and earn points. To participate in the event, customers needed to preregister through Swarovski to be able to download the app for the hunt. The company teamed up with SCVNGR, an application that allows users to develop scavenger hunts and earn points among friends. Swarovski established a series of locations where the application would help lead the contestants around the hunt. The goal was to earn as many points as possible per team. Swarovski also teamed up with Dazed & Confused to enlist a cultural panel, including Mark Titchner (artist), Joe Dunthorne (writer of Submarine) and Mary Katrantzou (fashion designer) â&#x20AC;&#x201C; who have chosen some of their exclusive and best-hidden gems of the city to become a part of the scavenger hunt. The hunt culminated in an award ceremony at Lawrence Hall, Royal Horticultural Halls, where the contestants celebrated the day in style with DJ sets. The team with the highest score was also presented with a trip to Paris, Barcelona, Florence or Istanbul. In addition, the other teams with other high scores would win prizes from the hosts.

Industry Trends

In March of 2013, according to estimates from the U.S. Census Bureau retail sales at furniture and home furnishings stores ticked up 2.8 percent from the previous year. Investment into home furnishings is positive and the boost in sales growth is fueled by the “housing improvement, along with rising consumer confidence” (Little). Home industry analysts from the NPD Group say that “for consumers who don’t necessarily have the cash to remodel a whole room, purchasing home goods offers a way to spruce things up on a lower budget” (Little) because the tougher economic times slowly gave rise to consumers seeking out items that have a “lower cost of entry to make them feel good, little luxuries” (Little). Many industry trends are occurring including the rising popularity of e-commerce among customers for consumer goods purchases. The lines between e-commerce and offline commerce have become blurred. For example, in 2013, “eBay launched “digital storefronts” in New York and San Francisco that allowed customers to order items for same-day delivery”(Lutz). However, despite its growth, e-commerce actually only accounts for approximately 5 percent of all retail sales. The increase in mobile devices is showing its ability to transform the shopping experience altogether. Today, “about half of all smart-phone owners use their devices to conduct retail research. [McKinsey&Company] expects that more consumers will use their smart-phones and tablets to complete these transactions 39

as well. The combination of mobile retailing and true multichannel integration will transform the buying experience”(Duncan). Social media has been prominent for the past couple of years and now more “businesses are trying to use social media as part of their marketing efforts”(Duncan). Companies are putting more focus on developing and sustaining their brand image. Retailers like Anthropologie are fortunate to have build their business models around creating strong associations with a positive brand culture. Companies are turning to social media to increase brand awareness and form long-lasting relationships because “consumers are the most active voices in creating brand meaning. They do this by sharing experiences and perceptions via . . . the communication tools available to them”(Roy). Industry shifts with digital and offline channels have mainly been taking the online experience and implementing it in-store thorough the introduction of technologies, much like Burberry in the Regent Street Flagship store, where it is essentially a physical representation of the brand’s website. These are great ways to enhance the store experience while simultaneously incorporating customer generated content through social media channels. Additionally, another industry trend seen in the retail sector is the growing number of pop-up shops. Retailers selling consumer goods are “leveraging these limited-time stores to pique consumer interest, drive brand awareness and test their businesses in new markets” (Lee). In a Spire Research report, it was brought up that when [a popup shop] resurfaces, the store can be completely re-furnished with an entirely new format and set of merchandise, providing consumers an alluring element of surprise” (Lee). For this reason the concept of a moving scavenger hunt is so appealing because given our design it will add a level of intrigue when we give the customer a completely different environment in such a short time span. With this pop-up shop trend, “landlords also are warming up to the . . . concept, due to the traffic surge some neighborhoods get when new stores open and the chance that they can turn a short-term lease into a long-term opportunity” (Lee). This is the perfect opportunity for our model because the prospect of finding a retail space to lease has become much more acceptable. A Pop-up shop is an “effective way to tell the story of a brand and make it more tangible to consumers” (Lee), which proves to be a challenge in the e-commerce space. A successful example of e-commerce working with pop-up shops is how BaubleBar was able to stand out from its intense competition. The eTailer now relies on these shops to drive customer awareness and brand perception. BaubleBar has said that the pop-up shop is a “very strong customer acquisition channel [because they] get new customers and explain who [they] are, what [they are] all about and what [they] can offer them” (Lee). 40

CHANGES IN CONSUMER BEHAVIOR

As the web and multi-channel accessibility shifts people’s buying and shopping habits, brands must also divide their distribution amongst those channels, both with advertising, apps, e-commerce and inventory (Lauro). According to a multi-channel shopping survey by PricewaterhouseCoopers (PwC), “Eighty-six percent of . . . global respondents and 65% of US-based respondents currently shop across at least two channels, while 25% of global respondents and 21% of US respondents are using four or five channels to shop”(Lauro). Shopper research continues to show that consumers want control of their shopping experience, and the more that brands provide tools to allow a multi-channel shopping experience, the more they will remain loyal to a brand. Research through this survey showed that “consumers will buy what they want, when they want, on whatever channel is most convenient at the time (Lauro). For example, if a customer needs an item quickly, they will buy in-store, however, if they have some flexibility they might choose to buy from Amazon, but if they don’t need it quickly at all, they will buy it from wherever is most convenient at the time. This also has lead to the changes in online shipping policies, many consumers are coming to expect next-day and in some cases same-day shipping (Lauro), but they want to have their experience online as seamless as possible. With digital activities growing rapidly from year to year, it is no wonder that consumer behavior has 41

shifted. A study from McKinsey&Company revealed, “about 60 percent of US households have smartphones, and more than 30 percent of US Internet-equipped households have a tablet as well” (Duncan). Additionally it is well known that phones are no longer used for talking. The majority of cellphone usage comes from listening to music, visiting Web sites, playing games, and other data-driven activities. This gives way to the development of a mobile application that integrates itself into the real-world. With all the talk about e-commerce, we cannot forget consumer behaviors in-store. These stores are important because consumers have realized that they are the “physical manifestation of a brand. It is the only opportunity that customers have to engage with all five senses. This is important because effectively engaging multiple senses can maximize profits” (Carter). Our initiative that we have created addresses the biggest problem with online and mobile retailing, which is that “the online world only appeals to two senses: sight and sound” (Carter). The way consumers shop is directly related to the multi-sensory experience that they receive. For example, in “1982, Milman found that slow music increased spend in supermarkets by 39.2% – since then, Nike has found introducing scent into their stores increased intention to purchase by 80%” (Carter). 42

LONG TERM BENEFITS

1. 2. 3. 4. 5.

Create positive word of mouth for the brand Bring more awareness to the Anthropologie brand and the home goods assortment Increase online and mobile experience and sales volume Increase expansion of stores into new markets Increase social media engagement and digital marketing

TECHNOLOGY AND IMPLEMENTATION: TECHNOLOGY DRIVING THE INITIATIVE

Junaio powered by Mataio: Augmented reality provides businesses with the tools and ability to interact with their customers at a new level by adding interactive 3D and audio content to printed media and the surrounding environment. It enhances the experience a person engages in with their surroundings by combining the physical and digital realms into a single powerful experience. Junaio is a mobile App within an Augmented Reality platform that allows the user to unlock digital information from geographic locations, products and images around you. By using the AR technology, Junaio visualizes the information in a new way. The application is powered by Metaio, a pioneer and leader in Augmented Reality technology. The app works on different platforms through individual channels. It can be used to scan an active print by recognizing predefined images such as: pages in magazine, posters, billboards among others. Using AR games developed by creators users can also use the app to interact with the environment. Junaio is able to virtually place the AR images in a 3D format right in front of the user on their screen. Junaio also has the ability to discover locations with the technology around you using GPS tracking. (Junaio)

Scentee The Scentee olfactory device works by attaching it to the earphone jack of a smart-phone, which will then spray a pleasant aroma. By downloading the Scentee App, available for iPhones and Androids, you will be updated with notifications for emails and Facebook “Likes”. It can set up a timer to the scent that is available in the Scentee cartridge to work with the alarm clock or any other notification. Scentee cartridges come in a variety of fragrances such as beautiful florals like lavender and jasmine, fruity flavors like strawberry, and coffee scents as well. The goal of the scents is to set a mood in a setting or event, send a message or simply for personal fragrance preference. In the ‘My Virtual Anthro’ experience, the Scentee device will be attached to the phone of the customer, where it will be triggered by the Junaio technology to release the smell of the different atmospheres that the pop up shop has available. The scent will reflect the scents of the various candles, perfumes, air fresheners and soaps that Anthropologie offers. The device taps into the senses of the customer to enhance their experience as they walk through the virtual pop-up shop. (Scentee)

Fujitsu Haptic Tablet Haptic technology is a tactile technology that creates a sense of touch through vibrations. The ultrasonic waves vibrate the air above the screen to trigger the senses in your fingers into feeling the textures of the product displayed on the screen. With the Haptic touchscreen implementation in â&#x20AC;&#x2DC;My Virtual Anthroâ&#x20AC;&#x2122;, users will have the ability to touch the fabrics, hardware, and furniture. This ability coupled with the ability to visualize an actual space taps into the spirit of a true Anthropologie store experience. Users will have the ability to browse products listed in the particular set up of the virtual space, click the item, and move their finger up, down and around the image to feel every texture of the product. The use of this technology offers customers a totally original experience that breaks new ground in usability and sensory expressiveness. (Fujitsu)

OPERATIONAL CONSIDERATIONS

In order for this initiative to be successful, certain considerations need to be taken into account including:

PRE-LAUNCH:

POSTER & APP:

• • • • • • • •

• • • • • •

Possible crowds on street locations viewing poster Troubleshooting issues with technologies prior to and during operating hours Application uses internet or some form of data connection Is there 3G and adequate GPS capabilities in the location Permits to conduct scavenger hunt throughout city and display advertisements Weather could affect the level of traffic to pop-up shop

•

Need to develop a sufficient area for scavenger hunt to occur with the city

The amount of people who will be participating The amount of online shoppers in the two areas First steps to get consumers to download application Clue details Level of traffic in specific pop-up shop location Instructions for mobile application Instructions for Scentee technology Number of goody bags that need to be distributed

PHYSICAL LOCATION: • Location of the pop-up shop • Square Footage • Building capacity- how many people can be in building at one time • Possible crowds in-store • Need to have adequate amount of product offering • How many sales associates will be needed to assist with technology • How many tablets are needed to accommodate expected visitors • Possible lines to use the tablets • How to use the physical environment • Length of time individuals will spend inside

TOUCH TABLET • •

New technology possibly has some bugs Newer technology is costly

Post-Launch • • • •

Break down of the space Updates with the app Finding out where future sales come from Keeping customers engaged in Anthropologie’s e-commerce and m-commerce

EXECUTION PLAN Once the approval of the execution plan had passed it would take around 2 months and a half to look for the location where we want the event to be. This scout will start in June and estimated to finalize in mid August. Once the location is found, it is time to plan and finalize the budget. This should be done by the end of June. After the budget is set, the marketing and promotion strategy should be started to find ways to reach our targeted customer, which should be set by the end of August. During this time the development of “My Virtual Anthro” app and the design of the visual concepts of the virtual rooms will begin, starting mid July through mid September. During mid August the merchandise assortment should be selected and the accommodation of the merchandise in the buying plan should be started. The Pre-Launch promotion strategy will start in mid August all the way through April. During this time the strategy will be developed and implemented. Once the year 2015 begins, all the process for the permits for the use of our location will be started as well as the ordering of the technologies that will be used during the pop-up shop. By mid February, the “My Virtual Anthro” app will be done to launch the beta version. This way will give enough time to make sure everything is running correctly and make any adjustments. During the month of February, Anthropologie’s Human Resources will start the scout for the employees that will be chosen for the shop and their training will begin as well. By the month of March, the tent and refreshments will be ordered. It is in this month also that the customers will have the opportunity to log-in into their Anthropologies account and pre-register for the event. It is not until between the end of this month and the beginning of April that the Scavenger Hunt Kit will be sent to the contestants. In May 15 the Pop Up Shop will open. After the opening, the employees and experts will run and analyze of the customer data and how well the event runs. 51

Visualization

The virtual pop-up, ‘My Virtual Anthro,’ will consist of two highly interactive, digital spaces. Located at Water Place Park, the pop-up tent will comprise of an indoor bedroom and an outdoor patio filled with the Anthropologies latest home products. Inside there will be seating and tables around the perimeter where consumers can shop and experience our one-of-a-kind tactile tablets. In the center there will be a bed with a few surrounding items. The rest of the room will come to life as the customer holds up their tablet or smart-phone and view the virtual augmented reality room through the ‘My Virtual Anthro’ app. They can buy straight from the app as they view and learn about the product. The same kind of set up will be out on the patio. There will be a picnic table and quilt laid out on the ground with a few surrounding chairs. The customer can relax out on the park green as they visualize their new patio accents they will be purchasing. The space takes into account all the senses, giving the customer the multi-sensory experience they would get in the store. Each customer participating in the scavenger hunt will receive a Scentee for their phone that will release Anthropologie’s signature scent, Volcano, as they enter the space. Along with this, music will be playing, they will see a beautiful, virtual room through their phones/tablets, textures will be all around (walls, furniture), and they will be able to touch other virtual items through the Fujitsu Haptic Tablets located around the pop-up shop. 53

Inside Bedroom

Outside Patio

after ‘my virtual anthro app’

Before ‘my virtual anthro app’

Product assourtment These are a few of the items that will be in featured in each room. There is a complete list of products being sold with price points at the virtual pop-up shop in the appendix.

Patio Products Suzani Terai Folding Chair

Dockside Dining Table

Opuntia Garden Pot

Air Balloon Birdhouse

Zocalo Embroidered Quilt

Creature Hideaway Euro Sham

Garden Buzz Dessert Plate

Hanging Candle Lantern

Product assourtment (Cont.) Bedroom Products Harper Ottoman

Handcarved Lotus Bed

Gila Euro Sham

Munio Candela Naturella Candle

Luxe Fur Pillow

Turquoise Rivulets Chandelier

Mirrored Jewelry Trays

Creature Hideaway Quilt

Market Analysis

Size of Market

The furniture industry is constantly evolving, and presently strives to produce furniture pieces that project an image that would appeal to a variety of lifestyles. The income of the consumer, economic factors, adjusting lifestyles, and the increase in people who are moving to more urban areas are all instrumental in furniture demand. The global home goods industry was negatively impacted during the economic recession as consumers cut back on non-essential spending, putting their home improvement projects on hold due to lower disposable income. As for today, home ownership (important factor contributing to home goods demand) is increasing as employment level recuperates. As the housing market recovers, housewares demand continues to rebound. While consumers for high-end home goods increases, companies are focusing on high quality, unique goods to fare better against mass-merchandise products. Market maturity in the US and the EU is encouraging companies to look to alternative markets with growth potential such as Latin America and Asia. Technological advances and business practices are offering the industry members more innovation where the companies are putting more effort in their product development and how to deliver it to their customers (Report Link). According to Gordon Brothers Group Industry Analysis, the industry has revenue of $26 billion where 17% of sales are for domestic products, 15% for decorative accessories and 10% for cookware. Recent sales trends report that as of 2013, U.S. retail sales for furniture and home furnishings stores increased 4.6% compared to 2012. The world housewares/tabletop ware market is expected to hit the $32 billion mark by 2015, reports Global Industry Analysis. Manufacturers are appealing to wider consumer tastes by diversifying their product portfolios to offer an array of designs and colors. Industry players collaborate with fashion designers to give their crystalware, flatware and dinnerware product lines added style (Report Link). 63

PESTEL Analysis

Political: • • • •

The United States is a Federal Constitutional Republic Democratic Party leader, Barack Obama has held the presidency since 2009. A strong democratic setup with the next presidential election to be held in 2016. The United States is rated 4 out of 189 world economies for ease of doing business (World Bank).

Economic: • • • • • • 65

The US has one of the most developed economies in the world with annual GDP estimated to be $15,685 Billion. “Finance, insurance, real estate, rental, leasing, health care, social assistance, professional, business and educational services account[ing] for more than 40 percent of GDP” (Trading Economics). Retail and wholesale trade is only 12 percent of GDP (Trading Economics). The US economy is currently under recovery but while the markets appear to be fairing well, the average American is not, which is apparent through high unemployment rates and strong household debt (Payne). The unemployment rate is 6.30 Percent with the previous year being 6.70 Percent (Trading Economics). In particular the United States is expected to have accelerated retail sales growth because there is “an

•

expected 4% jump in personal income” (David Payne). With more money to spend, there is high potential for consumers to continue there spending and have

more confidence to purchase some of our higher priced home goods items.

Social: • The population of the United States was estimated to be 316.7 million. • Online shoppers around the world want a reason to stick with a particular retailer or a small group of merchants (Reuter). • 15% of survey respondents say that over the last year, they have shopped with only one retailer through any channel…A further 43% report shopping with between two and five retailers over the past year, up from 35% in 2012” (Reuter). • “71% of survey respondents shopping with their favorite merchants because of loyalty points and similar programs. As well, 51% of respondents interact with favorite retailers via social media, another source of building brand trust” (Reuter). • 21% of respondents who visit brands’ social media sites were seeking some type of promotion (Reuter). • “43% cited worries about the security of their personal data, up slightly from 41% in 2012” (Reuter). • There is a rise in consumer adoption of mobile (Bosomworth). • US consumers spent around $37.44 billion in 2013 on retail purchases made via smart-phones and tab lets, up from $23.72 billion in 2012 (eMarketer). • In a survey it was noted that “18- to 29-year-olds are nearly twice as likely to say that mobile technology has led to an increase (29%) rather than a decrease (15%) in their shopping at retail stores” (Jones). • “Upper-income Americans are the only income group that reports a net decrease in their in-person retail shopping as a result of mobile technology, as slightly more say they are shopping less (28%) rather than more (23%) at stores” (Jones).

Technological: •

The United States has a strong awareness of technological advances and is making many successful

• •

endeavors into research and development of various technologies. The United States has made many moves into increasing its mobile and online commerce channels. The President’s 2015 Budget for Federal R&D is proposed at $135.4 Billion (Whitehouse.gov)

Environmental: • The United States is located in North America. • It is well known that weather patterns can be unpredictable and experience many changes from day to day. • “March and April indicators [the pickup] supports the belief that winter weather was responsible for most of the depressed economic numbers for January and February” (David Payne). • Last year in the United States at least “one-third of all Americans experienced 10 days or more of 100-degree heat. The 12 hottest years on record have all come in the last 15 years” (Executive Office of the President). • The United States has put formidable efforts into “cut[ting] the carbon pollution that causes climate change and affects public health” (Executive Office of the President) through the President’s Climate Action Plan.

Legal: • • •

Worker and employee laws have been given by the US Congress over the years giving specific protection and addressing rights of the employees. Other protections can also be added by agencies and individual states and local governments, which can extend beyond what is given by the federal government. Minimum wage and maximum hour rules, nondiscrimination, health and safety requirements, and notice of termination protection are just a few workers rights that must be adhered to. ** See more detailed description in appendix 68

Key Players

Fashion retailers employing this initiative: BaubleBar: Online jewelry retailer BaubleBar opened its second pop-up store of the year in June 2013. Shoppers in the SoHo neighborhood of Manhattan can visit the temporary space at 131 Greene Street through August 13 to try on and purchase jewelry and various accessories. The retailer hosts events in the space several nights a week, allowing shoppers to sip a cocktail and eat from a chocolate bar furnished by Godiva while browsing through merchandise. Screens and iPads in the shop allow patrons to customize and shop for jewelry online, and entire sections of the retailerâ&#x20AC;&#x2122;s website are replicated in the physical space, including the SWAT Team Stylists and its Must List.

Kate Spade New York: In a partnership between eBay and Kate Spade New York, four empty windows in Manhattan have been re-purposed for one month as digital pop-ups to introduce the newly launched Kate Spade Saturday brand. Rather than use QR codes, shoppers interact with touch screens to purchase merchandise via PayPal, and a courier will deliver it to a location (within Manhattan and parts of Brooklyn) in an hour or less. 69

Walmart: With its massive retail stores, Walmart is known for providing a one-stop shop for its budget-conscious customers. In a new campaign with Procter & Gamble, Walmart is stepping up the convenience factor with digital shopping at 50 bus shelters across Toronto. For four weeks, the bus stops will feature â&#x20AC;&#x153;mobile shopsâ&#x20AC;? where commuters can scan a QR code on their smart-phone to purchase items such as diapers, toothpaste and mascara. Delivery for items purchased is free of charge (Pennington).

DIRECT & INDIRECT COMPETITION:

Direct competition: Audi: In Audiâ&#x20AC;&#x2122;s virtual showroom near Piccadilly Circus in central London, the brand is showing its entire model line-up digitally in a very small space. Visitors who comes to this showroom can digitally configure Audi vehicles and see the results in a 1:1 scale on the screens that fill the entire space. Audi uses this initiative to showcase their innovation in areas such as drivetrain, bodyshell, or lighting (Audi virtual).

Ikea: IKEA now allows you to virtually place furniture in your home via the companyâ&#x20AC;&#x2122;s mobile app. In order for the app to work correctly, users must use it in conjunction with the paper catalog (Souppouris).

Indirect competition: Gondolas Boat: Visitors and locals are able to explore the Providence, RI waters during the WaterFire event.

Downtown Providence restaurants & shopping: Visitors and locals have the option to shop and eat downtown.

Porterâ&#x20AC;&#x2122;s 5 Forces Analysis: Furniture/Home Goods ** See more detailed description in appendix

Bargaining Power of Buyers: Medium-High •

Threat of New Entrants: Low

Many companies locally and globally with wide vari-

•

ety of product and price points •

ized human resources are needed

Companies offer same basic product - Differ in price

•

and aesthetic •

If customer doesn’t like price, they can find something Due to the unique style and experience of brand, the Anthropologie customer becomes attached to brand,

•

Competitive Rivalry: Low Furniture industry as a whole is very competitive - saturated market,

aesthetic, and products •

Market is highly saturated - wide variety of furniture and home good retailers with a large range of price

that fits needs and price point somewhere else •

Large amounts of capital and highly skilled and special-

competition for market share, many

Niche market/aesthetic - willing to pay more

medium sized companies, different aesthetics & price points •

points and styles •

Dominant retailers in industry are starting to expand business into new markets - Costly & increases their market share

•

Experience is key in differentiating from competitors, gaining market share, and increasing sales

•

Anthropologie’s multi-sensory & virtual initiative lower threat to market share

Anthropologie is an exception due to niche segment of the market (unique experience and product mix)

•

el - mix in store to create “story”,

Bargaining Power of Suppliers: Low •

Many suppliers that supply raw materials (metal, fixtures, wood) as well as home good/furniture wholesal-

multi-sensory, & emotional experience •

Anthropologie buys ready-made products from wholesalers and artisans around the world opposed to dealing with raw material suppliers

•

Large number of suppliers/wholesalers = a very low cost of switching suppliers/wholesalers

•

‘My Virtual Antho’ - no other competitor in industry implementing this

ers that sell to companies in industry •

Large assortment of home & appar-

concept (IKEA not fully there) •

Eliminates majority of competition because no other retailer can compete

Threat of Substitution: Medium-Low •

other home goods •

Excluding bigger furniture, smaller home goods, such as décor, can be replaced by ‘Do it Yourself ’ projects

•

DIY projects have increased in popularity over years due to the tough economic times (décor, home im-

with this digital experience at this time

provements, remodeling) •

Anthropologie buyers meet hundreds of artisans and suppliers throughout the year = easy to switch suppliers

Not a lot of products that can substitute furniture and

The alternative to some home goods is simply the lack of home goods

•

Can really affect Anthropologie considering majority of

whenever we see fit for the brand and product assort-

home department and sales come from smaller home

ment

goods and décor

Target Customer

Demographic Segmentation: Young Achievers

Downtown Providence, Rhode Island (Zip Code 02903) We chose Downtown Providence, RI because itâ&#x20AC;&#x2122;s an untouched market by Anthropologie. Looking at the demographic statistics, this location is compatible with our target, showing a wide range of potential Anthropologie customers. The target customer for anthropologie is between the ages of 25-45, which is a dominate age group in downtown, urban area. This location is not only ethically diverse, but it is also filled with college educated customers with an upper-mid income. These traits allow our customer to have discretionary income to spend on bettering and decorating their home, creating their own unique space. Our target customer is married or in a relationship, but still considers herself as an independent, unique person. A majority of Providenceâ&#x20AC;&#x2122;s residences have kids, adding to the presence of our target consumer within this location. We feel that the diverse mix of people in this location will yield us many new and exciting customers for our growing Anthropologie family.

2013 Statistics (Claritas) US Households: Median HH Income: Urbanicity: Income: Income Producing Assets: Age Ranges: Presence of Kids: Homeownership: Employment Levels: Education Levels: Ethnic Diversity:

2,199,666 (1.85%) $55,229 Urban Upper Mid Moderate <55 Family Mix Renters White Collar, Mix College Graduate White, Black, Asian, Hispanic, Mix 78

Lifestyle/Psycographic/Behavioral Segmentation

Our customer would fall under the Segmentation of Bohemian Mix, according to PRIZM. Our customer is a young professional, educated and eager to learn something new everyday. She is independent and very hands-on with the activities she does, being always up to date with what is going on around her. This segmentation is the appropriate for our Anthropologie customer because even though she is a professional, inside her lives the young personality that is eager to learn from different cultures and look for activities that enhances her lifestyle. Our customer is very passionate with everything she does and considerate herself stimulated to find details in their every day that would strengthen how she can make herself a better person and her way of living.

Segment -Bohemian Mix “A collection of mobile urbanites, Bohemian Mix represents the nation’s most liberal lifestyles. Its residents are an ethnically diverse, progressive mix of young singles, couples, and families ranging from students to professionals. In their funky row houses and apartments, Bohemian Mixers are the early adopters who are quick to check out the latest movie, nightclub, laptop, and microbrew (claritas).”

Lifestyle & Media Traits Shop at The Gap Watch foreign movies Read GQ Watch Boxeo Telemundo Audi S4 *See charts in appendix 80

Customer Profi le

Meet Sophia Miller! Age: 28 Income: $60,000 Education: Le Cordon Bleu in Patisserie & Baking Hometown: Chicago, IL Current Home: Providence, RI Relationship Status: In a relationship Career: Owns a Bakery in Downtown Providence Fun Facts: Pescetarian; Avid tea drinker; Runs and bike rides through the park fill her Saturdays and wine, dinners and date nights fill her evenings; Canâ&#x20AC;&#x2122;t refuse a good recipe or kisses from her puppy dog! 82

Communication & Promotional Plan

Promotional Activity Plan In order to capitalize on the large population of potential participants across the United States for the initiative, we will engage in social media through sponsored advertisements via Facebook and Twitter. Instagram is also another social media channel that we will engage in through daily posts of our home goods assortment and advertisements hinting at our initiative. We have chosen these three platforms, as they are the most frequented by our customers to learn about promotional opportunities. Our social media engagement during pre-launch will mainly get avid Anthropologie customers from both inside and outside of Providence, RI to pre-register for the scavenger hunt. Through our research and the nature of Anthropologie’s business we have discovered how powerful word of mouth can be, especially for new and innovative ideas. The Anthropologie philosophy “is that we spend the money that other companies spend on marketing to create a store experience that exceeds people’s expectations. We don’t spend money on

messages -- we invest in execution” (Labarre). Providence is an urban center where many of the residents, including our target consumer, frequently bike and walk around downtown visiting local shops and eateries. This fosters an environment where word of mouth can flourish, but getting that first message out is key to our success. We have opted to create a promotional plan that encompasses direct marketing during our pre-launch and launch promotional activities. We plan to commission an advertisement to run in the Providence Journal to circulate to 96,000 people. We will also directly market through an email blast to current subscribers on the Anthropologie email and catalog mailing lists. Additionally, using customer research and census information that we will gather in the first stages of our pre-launch promotions from local colleges and other establishments within Providence, RI, we will consolidate a list of potential customers who would be interested in our initiative. During the actual launch of our initiative we will send out a catalog with the first ‘My Virtual Anthro’ clue advertisement to the 1000 pre-registered participants. The ad will run in every catalog and be sent out to subscribers even if they have not pre-registered in order for more awareness to be brought to the event as a whole. Lastly, the ‘My Virtual Anthro’ banners will go up the weekend prior to the event as a launch promotion that will create more positive buzz around the event and get the people around Providence curious about the event and participate during the following weekend. Our performance measurement is a projected ROI of (116%). This is a loss for the company on a short term level, however we put much more emphasis on our potential long-term impacts from the positive word of mouth and increased brand awareness to drive future sales.

Pre-launch Advertising Local Newspaper

Email blast

Social Media Advertising Instagram

Facebook Advertisement HashTags: #myvirtualanthro #Cluesforanthro

Facebook page

Twitter page

Launch-Scavenger Hunt: Step One: Register

The first step in participating in our scavenger hunt is registering! Simply go to Anthropologie.com/MyVirtualAnthro to sign up and view all the details. Create an account and enter your information to join the Anthropologie family and become part of the scavenger hunt action! By RSVPing ahead of time you will receive a special gift bag with a Scentee of our famous Volcano scent with a refill and our latest catalogue with your first clue!

step two: download the app

Welcome to

MY Virtual Anthro

Slide to start your virtual experience

Step three: Locating the virtual pop-up shop

View the print advertising through your smart-phone or tablet for additional information. Youâ&#x20AC;&#x2122;ll find the next clue as well as interactive links. These links will connect you with content from our social media, such as recent posts, videos, or moving pictures. They will also connect you with subject matter from our blog or website.

Launch Advertising Clue one: Local Cafe Map of Providence with clue locations

Clue three: Side of downtown building

Clue two: Bus Stop

100

Step four: arrival at end destination

Congratulations, Youâ&#x20AC;&#x2122;ve arrived! Enjoy! 101

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Financial Plan

Our sales forecast for home goods incorporates seven categories, all of which we have projected a percentage of total purchases. Furniture for both patio and bedroom will account for the least amount of sales at 5% each. This is due to these itemsâ&#x20AC;&#x2122; higher price points and lower necessity level. Patio Linens/Pillows will account for 10%, Patio Misc. Accessories will account for 20%. Patio Accessories and also Bedding/linens will account for 15% each. Lastly our highest number of purchases will come from Bedding Misc. Accessories at 30% because it is one of our lower price points and are generally items that do not need much forethought to purchase (See Appendix for full product assortment list). Through our projected conversion rates we have determined that this single event will bring approximately 900 single purchases from our participants and individuals passing by during the WaterFire event. The total projected revenue for the weekend from this new initiative is $184,050. We have also formulated a budget to determine our projected profit or loss on this particular initiative. At the start, we were prepared to take a loss on this particular event because the technology and added expenses are at a high price point. Based on Anthropologieâ&#x20AC;&#x2122;s 38% gross margin cost of goods sold would amount to 114,111. Additionally, we must take into account expenses from advertising, which because we are following Anthropologieâ&#x20AC;&#x2122;s philosophy on advertising, we allotted for a conservative amount of $15,850. Our R&D is low because the technology we are utilizing to develop our application is very user-friendly, however we would hire freelance developers and coders to streamline the process. The scavenger hunt kit that we are providing to our 1000 participants is one of our most expensive items on our budget due to the single price of a Scentee being $50 each, along with that cost we must consider the cost for shipping the packages directly to the registered partic103

ipant. We chose to offer these items free to the participant because, first the Scentee is a tester item and secondly being that this is such an unknown idea, we predict that consumers will be more receptive to a free event. We also will need to have a 12-person staff at our event that will be working 8-hour shifts for two days plus a full day of training. These individuals are current employees of Anthropologie, preferably managers, from current Anthropologie stores located in the Northeast region. Other costs that we will incur are fees for the location and also materials for the physical space of the pop-up shop at Waterplace Park. At the end we project our revenue to amount to $(35,651) at the end of the event largely in part to the high cost of goods sold and technological costs we will incur. Even though this is a loss for this particular event, we are willing to overlook this because of the high potential for future sales in our mobile and online channels as well as the raised awareness for the brand among the potential 80,000 people in Providence during the WaterFire Event. We expect that positive word of mouth will evolve from this initiative bringing more customers to shop our brand through every channel.

104

105

Budget For ‘my Virtual Anthro’

106

Sales dollars For ‘my Virtual Anthro’

107

Sales Units For ‘my Virtual Anthro’

108

109

Conclusion

After a complete industry and market analysis, we have developed a plan to successfully implement a one-ofa-kind augmented reality experience. Through the integration of Anthropologie’s unique multi-sensory experience coupled with innovative technology, Anthropologie’s unique spirit will be felt on a revolutionary digital level. Given the success of the initiative we can expect to open a new market for the Anthropologie brand in Providence, RI and also successfully tap into the mobile market that we have yet to fully infiltrate. The home goods market is on the rise, and we see this as a positive indicator that we can enhance the home goods segment of our business especially considering our strong brand image and business philosophy. With the success of this pop-up shop we expect to increase our digital presence, where we expect increased traffic in all of our social media platforms as well as positive online and mobile sales growth. Our initiative has the potential to propel Anthropologie forward as a leader in the industry, one that will continuously develop our multi-sensory shopping experience both in store and through digital means. If we successfully execute the ‘My Virtual Anthro’ initiative we have a high likelihood to gain a significant amount of market share while achieving a consistent brand experience at every level.

110

111

Appendix

112

Perceptual Map Statistics

113

114

Product Categories

115

116

Pestel Write-up

Political: The United States is a Federal Constitutional Republic, with Democratic Party leader, Barack Obama holding the presidency since 2009. According to the World Bank, the US has a strong democratic setup that makes the United States a positive market to do business. Elections are considered to be fair and transparent, with active participation from citizens in every state. However, the involvement of business interest groups in the election process, through the provision of soft funds, occasionally makes the system of policy making biased. The United States has a rating of 83.99% of ease of doing business with it being ranked number 4 out of 189 economies. Due to the nature of the United States government, it is important to note for this particular initiative that not only do we need to be aware of federal policies but also state and local policies as well. Providence is a fifteen-member city council headed by Mayor Angel Taveras. Through in-depth research we have pinpointed Providence, RI as an excellent location for a potential physical location as well as the perfect location to conduct this new digital experience. Mayor Angel Taveras unveiled plans for spending $5million annually to grow tourism in RI. The plan also addresses improvements in infrastructure and public transit; support for the arts, entertainment and cultural heritage; development of the â&#x20AC;&#x153;farm to tableâ&#x20AC;? food movement; and a positive growth of hospitality graduates with new postions (Go Providence). 117

Rhode Island Officials Governor: Lincoln D. Chafee LT. Governor: Elizabeth Roberts

Providence, RI Officials Mayor: Angel Taveras Commissioner of Public Safety: Steven Pare

Secretary of State: A. Ralph Mollis General Treasurer: Gina Raimondo Attorney General: Peter Kilmartin

Arts, Culture + Tourism Director: Lynne McCormack City Solicitor: Jeffrey Padwa, Esq. Inspections + Standards Director: Jeffrey Lykins Parks + Recreation Director: Robert McMahon

Economic: The US has one of the most developed economies in the world with “finance, insurance, real estate, rental, leasing, health care, social assistance, professional, business and educational services account[ing] for more than 40 percent of GDP. Retail and wholesale trade creates another 12 percent of the wealth. The government related services fuel 13 percent of GDP. Utilities, transportation and warehousing and information account for 10 percent of the GDP. Manufacturing, mining, and construction constitute 17 percent of the output. Agriculture accounts for only 1.5 percent of the GDP” (Trading Economics). On average the GDP annual growth rate is about 3.21 percent, however this past year the United States only saw a growth of 2.30 percent (Trading Economics). Analysts from Kiplinger expect the GDP growth rate for 2014 to only reach 2.40 percent. The US economy is currently under recovery but while the markets appear to be fairing well, the average American is not, which is apparent through high unemployment rates and strong household debt. With this in mind, the United States has the potential to increase its growth considering that “consumer confidence is bouncing back, climbing above the level it held before the government shutdown and winter weather took a toll” (Payne). In particular the United States is expected to have accelerated retail sales growth because there is “an expected 4% jump in personal income” (Payne). With more money to spend, there is high potential for consumers to continue there spending and have more confidence to purchase some of our higher priced home goods items. As we take a closer look at Providence, we have discovered that Rhode Island actually is one of the slower states to recover from the economic downturn of 2008. Rhode Island reported an unemployment rate of 8.3 in April, which is the highest unemployment rate out of any state in the United States. Over the course of this year, the state has had “consecutive over-the-month decrease[s] and the lowest unemployment level since July 2008” (GoLocalProv) was reported in April 2014. Rhode Island as a state is a attempting to revitalize its industry and Gov. Lincoln Chaffee says that, “Through investment in education, infrastructure and workforce development, [they] are 118

building [the] state’s economy in the right manner and creating a solid foundation for the future” (Providence Journal). Rhode Island sees itself as a progressive government, therefore they see that the “tourism industry is more than an amenity-it is crucial to economic development and to Rhode Island’s economic recovery” (Go Providence). This can be seen by the strong support from various donors, the City of Providence and the State of Rhode Island to fund WaterFire Providence, which has drawn over 10,000 to 90,000 participants a night, however average attendance has been estimated to be 40,000. WaterFire Providence is one of Providence’s premier attractions and the annual operating budget is $1.8 million. Due to its prime location and close proximity to various hotels, shops, and restaurants over 45% of the budget is funded by corporate sponsorships and 16% through public funding (WaterFire.org). Being that we intend to capitalize on the foot traffic for this particular event, we see potential support from the local government and various organizations to promote My Virutal Anthro throughout Rhode Island and through its own tourism efforts. However, because we are relying on the ample foot traffic from this event we must pay close attention to any possible economic factors that could affect WaterFire Providence’s funding and operations. This event mainly relies on a staff of 21 people and hundreds of volunteers to run this non-profit event, but other factors related to economic uncertainty have some bearing including, available labor, transportation, boats, docks, building materials, lumber, performers, equipment, police, and permits (WaterFire.org).

Social: The population of the United States was estimated to be 316.7 million. In a PowerhouseCoopers LLP survey, 15% of survey respondents say that over the last year, they have shopped with only one retailer through any channel. That’s up from 8% in 2012. A further 43% report shopping with between two and five retailers over the past year, up from 35% in 2012. 27% of respondents say they shop with six to 10 retailers, down from 35% the year before. 14% shop with 11 to 20, down from 21% in the previous year, while 1% shop with 21 or more, the same as in 2012 (Reuter). Mobile shopping has increased but the same can also be said for traditional retail channels because “While Internet shopping offers the convenience of not having to travel to a store to buy items a consumer may need or want, in-person shopping is still the preferred channel for many consumers who want to interact with the product itself before purchasing” (Jones). The survey reported that upper-income Americans were more affected by mobile technology because the upper-income American is more likely to own a technological device such as a smart-phone or tablet (Jones). 119

Technological: The United States has a strong awareness of technological advances and is making many successful endeavors into research and development of various technologies. President Barack Obama has stated that “whether its improving our health or harnessing clean energy, protecting our security or succeeding in the global economy, our future depends on reaffirming America’s roles as the world’s engine of scientific discovery and technological innovation (Executive Office of the President). The United States has also made many moves into increasing its mobile and online commerce channels. The 2015 Budget proposes $680 million for National Institute of Standards and Technology’s (NIST) intramural laboratories, a 4 percent increase over the 2014 enacted level, to accelerate advances in a variety of important areas, ranging from cybersecurity and forensic science to advanced communications and disaster resilience.

Environmental: The United States is located in North America and it is well known that weather patterns can be unpredictable and experience many changes from day to day. We need to be aware of these changes for our initiative especially because weather can have a direct impact on retail sales. The United States saw this phenomenon this winter as the retail sector experienced very low sales figures. According to Kiplinger’s “March and April indicators [the pickup] supports the belief that winter weather was responsible for most of the depressed economic numbers for January and February” (Payne). The United States has put formidable efforts into “cut[ting] the carbon pollution that causes climate change and affects public health” (Executive Office of the President) through the President’s Climate Action Plan. Rhode Island itself is located in the northeast region of the United States. As we are holding this initiative in the summer we need to be aware of weather patterns and the changing climate that could deter individuals from participating in our initiative as well as the foot traffic at Waterplace Park during the event. Last year in the United States at least “one-third of all Americans experienced 10 days or more of 100-degree heat. The 12 hottest years on record have all come in the last 15 years” (Executive Office of the President). Being that the event is held in a public park, we should also be prepared for high temperatures and possible heat waves. In 2013, WaterFire Providence and the federal Environmental Protection Agency announced that the organization would receive a $600,000 grant that will help to fund a building that would hold all of WaterFire’s materials and equipment in one stationary area. This was done as apart of the EPA’s Brownfields Program, which “empowers states, communities, and other stakeholders to work together to 120

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prevent, assess, safely clean up, and sustainability reuse brownfields. A brownfield site is real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant” (US EPA). Understanding that this market is strongly committed to finding solutions to cleaning the environment we need to ensure that all of our own operations are in line with this mentality when dealing with areas such as transportation, energy usage, and raw materials. Legal: The key to doing business in the United States is to understand the business climate and the laws of the business environment. Worker and employee laws have been given by the US Congress over the years giving specific protection and addressing rights of the employees. Other protections can also be added by agencies and individual states and local governments, which can extend beyond what is given by the federal government. Protections that we should be aware of include: minimum wage and maximum hour rules, nondiscrimination, health and safety requirements, and notice of termination protection. As a US resident corporation we are taxed by the United States on our worldwide income, including capital gains. Net taxable income is subject to a graduated rate structure ranging from 15 percent to 35 percent. US corporations are required to file income tax returns for each tax year. There are many things to understand with US taxation especially considering that there are numerous taxing jurisdictions in the United States and the various political subdivisions, including states, counties, cities, towns and villages. For tax purposes, we should also be aware that no matter if “a company is on a cash or accrual basis for tax purposes, payments for business operations are expensed in the year they are paid. Some classes of expenses can be “capitalized,” meaning their impact will be spread over several periods” (Accounting Web). These expenses typically are for the development of company assets such as new buildings, computer software, furniture and equipment. What we must understand regarding conducting business in the United States is that most companies establish their business within a state, and as a result, must first comply with the state regulations for establishing a business, along with the reporting rules and requirements for maintaining proper accounting records. Since we are setting up our location in Rhode Island we must be aware of any business practices within that state as well as on a federal level.

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Porterâ&#x20AC;&#x2122;s 5 Forces Write-up

Bargaining Power of Buyers: Medium-High There are many companies locally and globally to purchase a wide variety of home goods and at many different price points. There are stores such as IKEA that offer discounted furniture and stores such as Crate & Barrel that offer high-end furniture (Dudovskly). They both offer the same basic assortment of home goods; the only major differences are the price points and personal aesthetic of each retailer. Typically, if the customer is unsatisfied with the price, they will buy elsewhere. Sometimes consumers will pay higher price for something unique and one-of-a-kind in aesthetic, but purchases based only on aesthetic occur less often in the industry. Price is more often than not a leading force in purchasing patterns within this industry, and with so many different choices of retailers and styles, the customer is going to find something within his or her price point that meets their needs. The idea of purchasing based on aesthetic over price is more common with an Anthropologie customer, however, due to the unique style and overall experience of the brand. The Anthropologie customer becomes so attached to the brand, its aesthetic, and its products, that occasionally when a customer falls in love with an item, they end up paying more for it than they intended. Although price is important to our target market at Anthropologie, they know what they can afford and are not always looking for the best deal, but rather something eclectic and unique to their style (Dâ&#x20AC;&#x2122;Urso). Anthropologie knows their customer so well and has created such a strong niche brand/market, they do have some control over their prices. The experience and style of the brand is so rich, they draw the customer in, offering her exactly what she wants. With our initiative, we are now adding to the experience with a digital component 123

that is not being done by any of our competitors to the level we have taken it. This increases the customers motive to purchase with Anthropologie over another competitor (LaBarre).

Threat of New Entrants: Low When looking at the furniture and home goods industry as a whole, the threat of new entrants is low. This is because large amounts of capital and highly skilled and specialized human resources are needed to break into this industry (Dudovskly). The market is also highly saturated right now with a wide variety of furniture and home good retailers with a large range of price points and styles. Many of the dominant retailers in the industry are also started expand their business into new markets, gaining more of a customer following and brand recognition, which can increase these businesses’ market share (BumiFurniture). A great example is Ikea; with almost 350 stores Ikea, is located in over 46 different countries worldwide. When it comes to discount furniture, Ikea has a dominant share of the market (Ikea). This kind of expansion is also very costly and requires specialized skills. One cannot enter another foreign market without becoming an expert on that market, or hiring employees that are highly knowledgeable on that market. The owner of a furniture/ home goods company will put a lot of investments into the company in order to start-up as well as expand. Due to the fact that this whole process is very costly, it makes exiting this industry very costly as well. However, it is much easier to sell off left over merchandise and supplies in the home goods industry than it is in others, such as the automotive industry. Experience is another major factor in the level of difficulty for someone to enter the furniture/home goods industry. This industry is very saturated, so in order to stand out, experience and brand identity is key. A company must ask itself, “What will set me apart from my competitors? Why should the customer buy from my brand over another brand?” Anthropologie has mastered this technique giving our customers a successful multi-sensory experience in stores and with our new digital initiative. We are implementing an experience and concept that no other players in this industry are doing yet with our ‘My Virtual Anthro’ pop up shop. Anthropologie really gives their customer an overall experience, combining all the senses. Anthropologie uses music, lighting, tactile elements, and signature scents throughout every store to draw the customer, and essential create an emotional bond between the customer and the brand/ products, which will build brand loyalty (D’Urso). This gives Anthropologie a huge advantage over it’s competitors and lowers our risk of loosing market share. 124

Threat of Substitution: Medium-Low There are not a lot of products that can substitute furniture and other home goods. However, excluding bigger furniture, smaller home goods, such as décor, can be replaced by DIY projects instead of being bought in-stores. DIY, or ‘Do it Yourself,’ projects have increased tremendously in popularity over the years due to the tough economic times. This movement isn’t just for décor; it encompasses many categories from remodeling to home repairs. Customers want to stretch every dollar, and DIY home décor allows consumers to find that little bit of happiness within their home for a fraction of the price (Bosari). Although DIY projects are still décor, it’s an alternative route to buying décor from furniture/home goods companies. Along with switching to DIY, not all home goods are necessarily essential. While beds, tables, and chairs are needed in the home, many products such as decorative dishes, pillows, and throws are not are not required. The alternative to some home goods is simply the lack of home goods (bumifurniture). This can really affect Anthropologie considering a majority of their home department consists of home goods and décor as opposed to furniture items. This is also where a majority of there sales in this department come from. Overall, there is not a direct substitution to furniture and most home goods, there are just ways around having to purchase some of these items.

Bargaining Power of Suppliers: Low There are many suppliers that supply raw materials (metal, fixtures, wood) as well as wholesalers who sell to furniture/home goods companies. Anthropologie buys ready-made products from wholesalers and artisans around the world opposed to dealing with raw material suppliers (Company Profile). Due to the fact that Anthropologie carries such a large number of different brands/wholesalers, we have a very low cost of switching suppliers. Some of our suppliers/brands include Bonnie and Neil, Lulie Wallace, Rifle Paper Co., and Michelle Morin, but our buyers come across and meet hundreds of artisans and suppliers throughout the year. This makes it easy for Anthropologie to switch suppliers/wholesalers whenever we see fit for the brand and product assortment.

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Competitive Rivalry: Low Within the furniture industry as a whole, the competition is very high. This is because, as mentioned earlier, the market is very saturated and there are many brands with different aesthetics and price points. There are many medium sized retailers and most companies are constantly competing for increased market share and product growth (Hooker Furniture). Anthropologie is an exception to this high competition because of our niche segment of the market. At Anthropologie, we have really set ourselves apart from our competition in terms of experience and unique product mix. Anthropologie is one of the few, if not only, major retailers to combine such a large assortment of home items with fashion and apparel items. Anthropologie uses this assortment mix to our advantage, combining the product categories throughout the store to create a one-of-a-kind store experience. “We try to create little environments that tell a story. The idea is to capture a customer’s attention so that she’ll explore every corner and let her imagination go. We mix up the stock in a way that gives the customer ideas -- ideas about how to mix colors and textiles that she’d never think of combining or ideas about how materials like turquoise and leather can cross categories from clothing to accessories,” says Anthropologie’s visual director, Kristen Norris. Along with this, we also incorporate the multi-sensory experience, inviting the customer in and allowing them to really connect to with the brand on an emotional level. We understand our target customer at Anthropologie and build strong relationships with them, increasing the company’s brand awareness and brand loyalty. The brand awareness and positive consumer experiences/relations are so strong, Anthropologie doesn’t even really have to out a lot into advertising for the company (LaBarre). All of these factors create a powerful competitive advantage for Anthropologie, lowering their struggle to maintain market share. What really sets us apart from the heard, however, is our new strategic initiative. Anthropologie is introducing a first in its class concept, taking the engaging experience from the retail stores and incorporating it into the digital aspect of the company. This will continue to set Anthropologie apart from its competitors. The only other retailer in home goods right now with a similar concept is Ikea with their virtual catalogue. Anthropologie is taking this best practice to the next level and creating virtual spaces using augmented reality technologies. These allow the customer to still receive the unique, multi-sensorial experience even if they are not able to physically go into a brick-andmortar store. This eliminates a majority of the competition because no other retailer can compete with this digital experience at this time. 126

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