International Retailing - KLING Business Plan by Danielle Mazur

BUSINESS PLAN

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CONTENTS ---------------------------------------

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EXECUTIVE SUMMARY

BRAND PROFILE

SCOPE OF THE MARKET

I N T E R N AT I O N A L I S AT I O N S E L E C T I O N

COUNTRY PROFILE

TRADING ENVIRONMENT

I N T E R N AT I O N A L I S AT I O N M E T H O D S

MARKETING MIX

CONTINGENCY PLAN

FUTURE DEVELOPMENT

CONCLUSION

EXECUTIVE SUMMARY

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Kling is a Womenswear clothing brand, which plans to expand into the German market, by opening a store in mid 2016. The brand which launched in 2004 has revived business prospects due to the last three years of mounting success, as their quirky collections have sparked press attention, particularly within the home market of Spain, creating greater brand awareness, enabling them to expand into new countries. The fun brand has a unique concept, merging fashion, art and music, forming a social hub that young consumer groups are instantly drawn towards. Developing a connection with these youthful consumers will enable the brand to progress, as the digital e-commerce industry evolves, traditional stores remain at risk, therefore becomes paramount to appeal to these younger generations. Berlin provides the ideal location for diversification, with a growing young population, creative charm and multicultural society; Kling has the opportunity to broaden their consumer base. To ensure that the brand is a success, Kling will tailor the brand to the market, adhering to local demands and use alternative promotional methods, to grasp consumersâ&#x20AC;&#x2122; attention. The prospect of significant increases in income for consumers, strong developments in the employment situation, and low inflation rates, make it an appropriate time to enter the market, and pursue further expansion.

“ FOLLOW THOSE THINGS YOU TRULY BELIEVE IN. THOSE THINGS THAT HAVE THIS INCREDIBLE POWER TO DRIVE YOURSELF, BEYOND WHERE YOU ALWAYS THOUGHT. IT’S TIME TO WALK AHEAD, AND REACH THIS THAT YOU ALWAYS HAD IN YOUR HEAD. IT’S TIME TO GO, IT’S TIME TO...TO GO, IT’S TIME TO F

KLING MANIFESTO

OLLOW

FOLLOW YOUR OWN STAR.

BACKGROUND

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Formed by Papo Kling - Kling is a Womenswear fashion brand that originally opened in Downtown Madrid in 2004, with the aim to develop fun wearable collections, for an alternative, style conscious clientele. The unique clothing depicts girly, sixties inspired style in flamboyant prints and colours. Despite starting out designing T-shirts for friends, the attention gained from press and local celebrities soon led to the development of a complete fashion collection. Since the success of the first collection, there has been a growing interest in the brand and its commercial potential. This has led to Kling generating a turnover of 17.5 million euros in 2013, representing an increase of 25 percent compared with the previous year, when the company recorded sales of 14 million euros. (Pareja, 2015) The ever-growing success of this brand has enabled them to expand into new territories within the USA, France, Ireland and Spain. They currently supply over 5,000 multi-brand stores and have 12 stand-alone stores, with headquarters in both Madrid and Los Angeles. Corresponding to its growth in the US market, Kling aims to continue developing its presence in the multi-channel countries including Germany, the UK and Italy. (Winder, 2015)

In 2014, Kling had a workforce consisting of 102 employees; a figure that has increased in the last year by 70 percent. This rise is due to the brand setting up a subsidiary in the United States in 2013, in which the market contributed 1.5 million euros to the overall turnover. (MarinCamp, 2015) A distribution agreement was also signed in 2015, enabling Kling to begin operation within the Canadian market where they have opened a series of outlets. Although the brand continue to focus their attention on this market they aim to:

BUSINESS AIMS 1) To open six new retail spaces in 2015, and launch a further eight in 2016. 2) The brand aims to develop its presence in the multi-channel markets including Germany, Italy, France and the UK. 3) Design collections that have a clear sign of identity and remain affordable, yet still aim to promote â&#x20AC;&#x2DC;quality over quantityâ&#x20AC;&#x2122;.

KLING USP Kling has a brand ethos that promotes a fun, and spontaneous lifestyle, incorporating creative mediums such as art, music, fashion and media to develop a clear brand identity. The understanding of this youthful consumer, is conveyed through the alternative product styles, which are showcased in quirky online fashion films, and featured within the brandâ&#x20AC;&#x2122;s own Ruby Star magazine. Collaboration between these forms differentiates the business, as Kling wants consumers to become a part of the brand culture, in essence forming a social hub, so the focus does not remain solely on fashion product.

TA K E A PEAK INSIDE

SCOPE OF THE MARKET

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TRENDS IN THE MARKET

E-commerce is growing rapidly (see figure 1.1),

Localisation is also a trend evolving among retail-

due to technological developments that have

ers, in order to encourage consumer spend, and

made the shopping process easier, and more

improve profit margins. Retailers are now starting

convenient, for consumers. Generation Y in par-

to refine their product range, and adapt it to suit

ticular have been brought up within a digital age,

local consumer demand, taking into account the

and in response have interlinked technology into

store attributes and product preferences. This

everyday life. This surge in online shopping has

level of analysis will aid pricing decisions, help to

consequently forced the closure of many stores,

craft the design and development of new prod-

and impacted global brands such as Abercrombie

ucts, whilst also anticipate consumer demands.

& Fitch, who have proposed to close 60 stores in

In terms of product selection, personalisation is becoming increasingly popular in the fashion

2015. In attempt to combat this, accelerating inno-

sector, and there is scope for retailers to allow

vation of mobile technology used within stores is

customers to turn mass produced garments, into

expected to increase over the next twelve months.

more customised items. Almost one fifth of un-

Statistics have shown that young people aged 16-

der-35s would like to be able to personalise their

24, are twice as likely as average to say innovative

own clothes, wearing alternative designs. in op-

technology in-store would improve the shopping

tional colours. (Mintel, 2014)

experience. At the same time, 20% are drawn to

Collaborative collections with celebrities and

the option to pay for clothes in-store using their

established designers have also generated great

smartphone. (Mintel, 2015) Technology has be-

interest amongst consumers. Global retailers such

come a driving factor due to retailers wanting to

as Topshop and Hennes & Mauritz have merged

offer a personalised in-store shopping experi-

with designers Alexander Wang, and most recent-

ence, which enables them to compete with this

ly Balmain, to create limited edition collections.

growth of online retail.

Figure 1.1 - E-commerce Figures In Europe (figures from Mintel, 2014)

THE HOME MARKET

The apparel industry within the home market (Spain) is regaining growth, despite the recent economic downturn, as the country was hit by the Eurozone crisis. Fast fashion retailers, in particular Zara (Inditex), Hennes and Mauritz, Mango, and Desigual are benefiting from the recovery, as consumer spending has risen over the last year. In 2014 Mango made revenues of 2.01billion euros, whilst Inditexâ&#x20AC;&#x2122;s net sales rose eight percent to 18.12 billion euros. (Mintel, 2015) Although these retailers are not all in direct competition with Kling, they hold greater market share within the apparel industry in Spain. Thus making it more challenging for Kling, as they are unable to compete with the lower value pricing, and fast production time-scales. Key Competitors Zara Hennes & Mauritz Custo Barcelona Mango Desigual Bershka Massimo Dutti Pull & Bear

Strengths > Kling has a strong brand identity, which has been carried through both in-store and online. They also offer an eclectic product range that differs from rivaling retailers, appealing to an alternative fashion consumer. > The brand has developed a high reputation within Spain, gaining press attention in magazine publications such as Glamour, Bazaar and Yodona. Weaknesses > Their collections contain limited styles, this could discourage customers, and instead force them to purchase from more established competitors, who have greater selection and a diverse product range. > Technology is impacting consumer behaviour, resulting in greater e-commerce, ultimately disrupting in-store trade. Kling will need to consider using more

S W O T A N A LY S I S

innovative technology in their store in order to engage with younger consumers they aim to appeal to. Opportunities > The apparel and footwear industry is continuing to grow throughout Europe, with greater attention building online, particularly within the UK and Germany. > The possibility of diversifying the product range, with considerations to the trends in the market, such as developing limited edition, or customised items, to meet consumer demands. Threats > Technology is impacting consumer behaviours, resulting in greater e-commerce, ultimately disrupting in-store trade. Kling will need to consider using more innovative technology in their store in order to engage with younger consumers. > The Eurozone crisis has increased the competitiveness amongst retailers, particularly within the home market, creating a challenging environment, as there is greater pressure to gain the attention of consumers.

I N T E R N AT I O N A L I S AT I O N

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Objectives of internationalisation: 1) To minimise the level of risk by diversifying from the home market, where ten of the stores are situated. 2) To develop new ideas by working in conjunction with artists, and illustrators, based within the City, helping to develop the brand further, whilst also tailoring it to that specific market. 2) Broaden the consumer base by gaining access to a young, creative clientele, who are present on social media platforms that will enable the brand to evolve online.

Potential Markets

Reasoning

Ranking

Saturated Market Skilled Workforce Rising Consumer Spend

Germany

Low Unemployment Rate (4.8%) Skilled Workforce Necessary Clientele Low Context Culture Tested the Market

1 = Selected Market

France

Italy

Kling already has a store here therefore the focus would need to be on E-commerce, or developing a Flagship store.

Unstable Economy Declining GDP Growth Rate (-0.2%) High Unemployment Rate (12.7%)

Figure 1.2 - Market Screening (Statistics from Eurostat, 2014)

G E R M A N Y: P R O F I L E

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OVERVIEW Germany is one of the most sought after markets within Europe; with a population of 82,652,256 the country has developed a highly competitive clothing industry worth over 40 billion pounds (Drapers, 2013). Rising wages in the country are boosting consumption levels and purchasing power, aiding spend in the clothing market. Germany remains one of the most resilient economies within the EU, thus making it more appealing for expansion among retailers such as Primark, who has been a noted success in the country. As a result of this has driven rent prices on popular shopping streets, and centerâ&#x20AC;&#x2122;s, therefore Kling will need to rent a smaller unit in order to reduce costs.(Ormrod,2014) Despite the competitive market, the prospect of significant increases in income for consumers, strong developments in the employment situation, and low inflation rates, make this an appropriate time to enter the market. (GFK, 2015) The professional marketplace and business structure is also favourable, with a skilled workforce available. However, Kling will need to take into account that there are limited trading times, with generally no trade on a Sunday.

Figure 1.3 - The Fashion Market Germany (Drapers, 2013)

BERLIN: PROFILE

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Emerging as the creative epicenter of Germany,

Over the last ten years Berlin has also received

Berlin has a population of approximately 3.4 mil-

increasing levels of tourism, reaching 11.9 million

lion, making this the most populous city within the

visitors in 2014, with overnight stays peaking at 28

country, 16.7 percent of which are 18 to 24 year

million, a 6.5 percent rise from 2013. (DW, 2015)

olds, (Statistical office Berlin, 2014). Despite Ger-

This is also a contributing factor that can benefit

many having an overall aging population, with a

the brand when expanding, as they are able to

declining growth rate of -0.18 percent, (Central In-

gain access to new customers, broadening their

telligence Agency, 2015) Berlin itself is expected

consumer base.

to foresee a 20 percent increase of 11 to 18 year

Kling has already generated brand awareness

olds, and overall population growth predicted to

within Berlin, prior to expansion, by showcasing

rise to 3.75 million by 2030. (World Population Re-

their collections at trade shows such as Bread &

view, 2015)

Butter, and Panorama. In 2014 Panorama record-

These statistics indicate that Berlin is forecasted

ed 40.081 visitors, an 11 percent increase from

to gain a rise in young people over the upcoming

the previous season. Numerical data highlights

years; this is favourable for Kling as their product

that 56 percent of attendees were German, en-

range is designed for a younger consumer, aged

abling Kling to sample the market, identifying key

between 18 and 26.

products that prove popular amongst consumers. (UKFT, 2014)

Figure 1.4 - (Berlin-Brandenburg Statistics Office, 2013) There are diverse cultures and nationalities within Berlin, this will need to be considered when expanding, and adapting to the market as Klingâ&#x20AC;&#x2122;s collections in particular have referenced Japanese styles, therefore may appeal to certain consumer groups.

THE DISTRICT

Berlin is the largest retail market in Germany, with 38 shopping centres and two major retail areas (City West, City East) competing for 3.4 million inhabitants. Berlin has also developed fashion districts, the most popular area being around Hackescher Markt, which is Germany’s largest ‘trend location’. The position of the store will be paramount to Kling’s success within the market, taking into account both the clientele, and the brand’s identity. Mulackstraße is the chosen location for the store, as it is a creative district that enables Kling to take advantage of both local consumers, and tourists. There are many young and independent boutiques within the area, stocking a variety of products from street-wear, to French summer-dresses and highly conceptual avant-garde clothing.

Street

Tauentzienstraße

Kurfürstendamm

Schloßstraße

Wilmersdorfer Straße

Key Features

Main Retailers

Consumer Types

Strongest mass market location in Berlin. Almost no local KaDeWe, P&C, Esprit, Mass market consumconcepts remained, H&M, Zara, SchuhCity, ers KaDeWe department Saturn, Neo, E-Plus from the western part store, flagshipstores Base, Fossil, Bershka with some internationand international retail al elements. chains dominate the market. Premier shopping street in the western Rolex, Montblanc, centre of Berlin. Mass Gucci, Louis Vuitton, market profile towards Burberry, Hugo Boss Tauentzienstraße, Apple, Pylones, Urban luxury Outfitters, Benetton, branding in the west- Karstadt, C&A, H&M, ern part. Picard. Largest district shopping street in Berlin, known for its shopping centres: Das Schloss, SchloßStraßen-Center SSC, Forum Steglitz and Boulevard Berlin.

Karstadt, C&A, SportScheck, Leiser, Saturn, Hugendubel, Intersport, P&C, Anson’s, H&M, Primark, Zara, Das Depot

Important city district location in the western part of Berlin. The only significant pedestrianised area in Berlin. High percentage of regional and national retailers.

H&M, P&C, TK Maxx, Media Markt, Leiser, Karstadt, Marc O’Polo, Alnatura, eterna, Thalia, Tamaris

Rent, m²/Month

€285

Luxury brands in the western part the rest is aimed at a broad mix of consumers (locals and tourists). Locals from the westward part of Berlin’s catchment area, many tourists.

€230

Local consumers only from the western part, slightly more affluent than the average. Almost no tourists.

€115

Mass market local consumers

Figure 1.5 - Revised Shopping Locations in Berlin (CBRE - German Retail Destinations)

€100

PUSH

PULL

> Political instability may potentially affect the busi-

> As a result of the positive economic development

ness, particularly within Barcelona where Kling oper-

(growth of 0.7 percent), employment in Germany has con-

ates a chain of stores, as disputes over whether Cat-

tinued to rise for eight consecutive years, and peaked in

alonia should become independent from Spain are

2013 with 41.84 million employed (The Economist 2015).

ongoing. There are continuing demands for an official

In relation to these figures German household disposable

referendum since 2.3 million voted in an independence

income is now the strongest amongst the large Euro-zone

poll, with 80.7 percent agreeing that Catalonia should

economies. Ultimately this had led to German customer

separate. (Kassam, 2014) Due to the possible impact

confidence increasing within 2014.

on trade Kling has to minimise the risk, therefore expansion would enable the brand to be less dependent

> Berlin is also evolving in terms of creative development,

on these stores if problems arise in the future.

with a greater focus on fashion and digital industries, particularly within Berlin. A skilled workforce will be required

> Since the Eurozone crisis in 2008 Spain itself has

when recruiting additional staff members, aiding the busi-

seen little economic growth, however this has started

ness when diversifying and gaining market knowledge.

to steadily increase since the beginning of 2015, with

This is supported by low unemployment rates of 4.8 per-

0.7 percent growth rate (Trading Economics, 2015).

cent throughout Germany. (Office for National Statistics,

The market still remains vulnerable, which is evident

2015)

through the lack of retail sales in comparison to growth rates, currently standing at -1.8 percent in Spain. (Mint-

> As Kling already operate within the EU there are few-

el, 2015)

er trading barriers when acquiring or dispatching goods. Items sold to Germany from a member state of the Euro-

> Compulsive shopping is one the behavioral chang-

pean Community are not subject to custom duties. They

es adopted by Generation Y/ The Millennials, and

are free to circulate within the European Market, in which

has consequently resulted in increased demand for

there is freedom of movement for goods and capital.

fast fashion (Neuner, 2014). Global companies such as

(GCCI 2015)

Zara currently have a three-week turnover period, from where items are designed and delivered into store, a

> German consumers want alternative brands, compared

rate that will prove difficult for Kling to contend with.

to major global retailers, in a Drapers interview Peter Gold

(See appendix for theory of compulsive shopping)

stated â&#x20AC;&#x153;I think the German consumer is keen to see brands that are new to the market to rival H&M, Zara and Esprit,

> E-commerce is the fastest growing retail market in

which really have a lot of retail space across the country.â&#x20AC;?

Europe, with online sales equating to ÂŁ132.05 billion

This conveys that there is already a clientele, providing

in 2014 (Mintel). Although presented as an opportunity

greater potential for emerging brands.

there are opposing risks, as consumers are abandoning

Figure 1.6 - Push and Pull Factors/ PESTEL Analysis

BERLIN: LIFESTYLE

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Individualism is widely encouraged within this diverse city, “Berlin is where the “weird” are more normal than the normal” (Coleman, 2012) and provides a youthful lifestyle that is energetic, where forms of music, art and fashion are celebrated. Home to ten fashion schools, and the emerging technology start-up scene has seen a trend of social media entrepreneurs, resulting in the emergence of a young consumer group with a digitally driven mindset.

THE KLING GIRL

She is young (18-26) and smart. Not so into fashion but so into style. She wants design and more than trends. Looking different and feeling special. Aware of the value of money she buys low cost, however she wants a unique limited design. She has many style icons, each are very individual, from Courtney Love, to Audrey Hepburn and is often caught in a daydream where reality and fantasy merge. Fun, girly and spontaneous and is influenced by creative mediums such as art and music.

TRADING ENVIRONMENT

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Competitor

Product Selection

Target Customer

Price Bracket

Kling

Womenswear

A youthful consumer base, primarily targeting those aged between 18 and 25.

Middle Market

H&M

Menswear Womenswear Childrenswear

Majority younger women between 18 and 27, however the diverse product range appeals to several age demographics.

Value Market

Primark

Menswear Womenswear Childrenswear

Working families who seek value products.

Zara

Menswear Womenswear Childrenswear

Trend focused clientele, with a broad age range due to the simplistic styles. 20 to 35 core age.

Middle Market but uses mass production processes.

Quartier 206

Menswear Womenswear Beauty

A department store primarily appealing to those aged 26 to 35, although can may vary due to the selection of brands available.

Categorised within the luxury market, however the price is determined on the brand.

Bik Bok

Womenswear

Young consumer base aged between 16 and 25.

Middle Market

La La Berlin

Womenswear Childrenswear

Primarily women aged between 20 and 35.

Middle/Luxury Market

Figure 1.7 - Key Competitors in Berlin/Germany

Value Market

High Fashion Ability Quartier 206

Zara Kling

H&M

Desigual

Value Forever 21

La La Berlin

Bik Bok

Pull & Bear Primark

Low Fashion Ability

Figure 1.8 - Brand Adjacency Map

Luxury

I N T E R N AT I O N A L I S AT I O N M E T H O D

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Market Entry Method: Organic Growth Organic growth will enable Kling to remain in control of the business, this is necessary as the brand has a clear identity, and it is important that the reputation is upheld. Aspects such as visual merchandising and providing an in-store experience are important to the brand, therefore a physical store will allow them the freedom to do this. However there are several cost implications that will need to be considered, such as rent, which can be extremely high cost in Berlin, (see figure 1.5) and are expected to sign for longer periods of time, this can often be up to ten years. Kling currently has the finances in place, as they are able to reinvest part of their profits as an investment, by deciding to operate a small boutique store, this will help to minimise the potential risk. Kling will enter the market in mid 2016, as this allows them to focus on the US market, which they have recently expanded into, earlier this year. Entering the market mid spring/summer will enable them to grasp consumer demands before busy shopping periods such as Christmas, where consumer spend increases, allowing Kling to maximise their profits. Fixed

Variable

Store Rent

Production and supplier costs

Utility Bills

Transportation and shipment of goods

Staff Wages

Advertising and promotional costs

Interest Expense

Credit/Debit card fees

Government Fees

Store furnishings and furntiure

Figure 1.9 - Fixed and variable costs

Figure 2.0 - Business Hierarchy and sectors required when expanding.

CEO - Papo Kling

Board of Directors

Merchandising & Stock Executive

Merchandising Team

Buying Executive

Marketing Executive

In-store

Marketing Team Buying Team

Suppliers Online

In-store

Store

Visual

Manager

Merchandiser

Supervisor Part-time Sales Staff

A marketing team will need to be sourced when

In-store staff will also be required to run the daily

expanding into Germany, as the marketing opera-

operations, and due to the area selected there

tions will be vital, due to the level of risk proposed.

is likely to be high footfall in response to tourism

Consequently Kling will need to invest both time

levels. As a result staff will be required to speak

and funding into this, as the staff selected will be

more than one language, this will be considered

provided with in-house training, by members who

during the selection process.

work within the home market head quarters, to ensure they have the brand knowledge and under-

Germanyâ&#x20AC;&#x2122;s geographical location will also make it

standing. However, it will remain a collaborative

more efficient during the transportation or ship-

effort amongst both parties, as Kling will require

ment of goods, making the process easier when

the best advise and expertise as to what is most

receiving the manufactured products that are

suitable for the German market.

made in China, and Turkey. Following the trend of localisation, it is important that Kling can tailor the business to the demands of German Market.

MARKETING MIX

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PRODUCT Kling currently produce four collections a year,

Also any phrasing on the clothing will need to

each collection has three lines comprising of:

be considered, ensuring that there is no offen-

Basic: which consists of very simplistic styles

sive terminology once translated into German

and patterns. Daily: experiments with texture and layering.

Once the brand has established itself in Ber-

Style: develops patterns in quality fabrics and

lin there may be opportunities to collaborate

designs, creating virtually one-off garments.

with local artists and illustrators, developing clothing designs and prints, providing Kling

However due to seasonal variations the collec-

with a clear unique selling point. This level of

tions will need to be adapted to contain more

product development may be necessary to

knitwear pieces and coats/jackets during the

sustain growth, and withstand competition in

winter period, as Kling currently develops items

the growing fashion sector of Berlin.

for a wamer climate.

PROMOTION Kling has a creative approach to marketing and promoting the brand; the creation of Ruby Star magazine enables Kling to showcase their collections through editorials whilst also engage with their consumers. The magazine is launched every six months containing interviews with musicians, photographers and artists, enabling the brand to effectively integrate with the creative communities situated in Berlin. This may also be a successful promotional technique as catalogue shopping is historically popular in Germany, and with a efficient domestic postal service, (Parry, 2014) therefore a subscription to a magazine will allow a point of contact to be developed with the consumer, in which they can be updated on brand information regularly. There is a prominent focus on social media platforms; producing fashion films, music playlists, and blogs, that can be accessed online through both social media platforms and their website. This enhances the online presence of the brand, which is essential when adapting to the German market, as 60 million Germans are currently online, which is equivalent to 80 percent of the population. (Knowles, 2014) Therefore this level of online promotion needs to be maintained during expansion to generate, and attain, consumer awareness.

Figure 2.1 - Social Media Used By Kling

Figure 2.2 - Germany Social Media Use (Kemp, 2014)

100

tea and cake: art programme

Tea and Cake is an art programme devised by Kling, where future design and art talents are able to form a miniature exhibition event, held within their store. (Kling, 2015) This idea has only been implemented throughout the stores situated in Spain, however the concept should form part of the promotional campaign when entering Berlin due to the creative scene established within the city. Replicating this programme will showcase how Kling are favouring local talents by supporting their work, aside from this the method should encourage greater footfall, as individuals will be entering the store for an alternative purpose. Provoking individuals to come into the store even if their initial intention is not to make a purchase.

PRICING The pricing strategy will remain the same when entering Germany, as inflation rates are currently low at 0.9 percent, (Central Intelligence Agency, 2015) therefore is encouraging consumers to purchase goods. This is reinforced by the current stability of the economy, as employment rates remain steady at 74.1 percent, (Office for National Statistics, 2014) fuelling a rise in customer spending. As the euro is weakening against the pound, shoppers from China and the US are favouring cities within euro-zone countries. As the Chinese are the now worlds most valuable tourists, spending a total of 102 billion dollars in 2012 (Hounslea, 2015) the pricing strategy must also be aligned to attract these consumers, to remain competitive, and gain greater market share.

Couture

High End

Middle Market

Mass Market

Value Market

Kling is categorised into the middle market, although the basic lines are considerably inexpensive, the fashion and style lines average at a higher retail price than those situated in the value. or mass market sectors.

PLACE As Kling has a long-term commitment to expand globally, several distribution channels are already in operation 1) Website Kling has an international website, that can be accessed in the UK, EU, US and Canada, providing easy online navigation and quick transactions. Incentives such as free delivery are offered to encourage spending within the EU, aiding the brand when understanding the consumer, and identifying product trends, through testing the existing market. 2) Independent Store Opening a store within Berlin will be the strategy proposed to organically grow the business. Distribution from a store will be essential when expanding into Germany, as German consumers often abandon their basket at the point of payment online, due to only a quarter of the population owning a credit card. Therefore as cash remains a common form of payment, the importance of a store is paramount in order to meet the demands of the German consumer. (Knowles, 2014).

How will the success be measured? The success will be measured in terms of sales and profitability, as this will highlight whether or the not Kling have adapted successfully to the German market, and understood consumer demands. Increasing footfall is also another indicator to measure how successful the business is. The marketing and promotional methods designed should help to achieve this, by encouraging people to come into store. Greater social media, and online following, will showcase that there is growing attention surrounding the brand. In particular blogger mentions, and increasing press interest will communicate this.

FUTURE DEVELOPMENT

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Figure 2.3 - Kling Growth Enter Market - 2016

Greater sales due to the

Sales become more stag-

Initial promotional activity

rise in brand awareness and

nant therefore Kling may

will help to increase sales.

increasing online activity

consider accessing a new market.

As Kling become established within the German Market through the success of their promotional methods, and increased online presence, they will see an increase in sales. At this point they may consider greater expansion within the market, and open another store within the country, correlating to the overall business aim. As sales begin to slow, Kling may want to enter a new market such as the UK, as the brand becomes more established they may be able to compete larger, fast-fashion retailers within highly competitive markets. Alongside this they can develop their product range to contain more styles.

CONTINGENCY PLAN

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If the store is not successful withdrawal strategies will need to be put into place, this will involve firstly resorting to an alternative entry method. A concession within a department store such as Quartier 206, would involve Kling having less control over the business, and would mean operating on a smaller scale. However, a department store would already have the consumer base in place, and if there were still issues the contract agreement could be terminated. Ultimately assisting Kling as it would not be necessary for them to completely exit the market. If there was a downturn in the economic climate, Kling will need to take a proactive approach, which may involve removing themselves from the market, and setting up operations elsewhere.

CONCLUSION

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It appears evident that Kling should expand into Germany, with the growth of the clothing market coupled with the greater economic stability, and increased consumer spending. Kling has the potential to broaden their consumer base in Berlin, whilst also recieving creative inspiration within an art fuelled city, providing greater validation. Overall this expansion can be achieved due to the good financial position of the brand, and it will enable Kling to meet the long term business aims, which was the opening of eight new retail spaces in 2016.

REFERENCES

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APPENDIX

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Appendix 1 Theory of Compulsive Buying Refering to a study that examines the development of compulsive buying in a maturing consumer society such as Germany. It is argued that developments characterising mature, i.e., postmodern consumer societies create an atmosphere which supports the rise of compensatory and compulsive buying. Appendix 2 Primark Success Germany: Primark, which opened its first store in Dublin in 1969 under the name Penneys and launched in Germany in 2009, has grown rapidly during the economic downturn in Europe due to its rock-bottom prices and fast-changing fashions. The company posted a 13% sales surge at actual exchange rates in the 16 weeks to June 23, bringing its revenue rise for the first 40 weeks of its financial year to 14%. Appendix 3 Zara International Retail: > The home market was on the verge of saturation which limited growth potential, and a shift in consumer behaviour meant reduced consumer spend. > The retailer entered culturally close markets before taking opportunities in more distant markets, this is an aspect Kling will consider when deciding on which market to enter.

DANIELLE MAZUR I N T E R N AT I O N A L R E TA I L I N G W O R D C O U N T: 3 2 1 7