POP UP SHOP BRAZIL 1
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COMPANY SUMMARY
MARKET ANALYSIS
POP UP SHOP
6 About 8 Global Expansion 10 SWOT Analysis 12 Brand Identity Matrix 14 Price/Accesibility Matrix 16 Current Distribuition 18 Communication and Promotional Activities
24 Brazil profile 26 PESTEL Analysis 30 The size of fashion 32 Competitors 34 Indirect competitors
TARGET CONSUMER 40 Sao Paulo Profile 42 Demographic
Psychographic Behavioral Information
location/design/product
50 Lifestyle and Behavior
Segmentation 51 Location 52 Competition 54 Area Attraction 56 Area Factors 58 Human Resources 59 Legal Issues DESGIN STORE 62 Exterior 64 Interior 67 Fixture Plan
PRODUCT 70 Plan
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II ELISA BURBANO - LOANY HAM - CAROLINA KIM
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COMMUNICATION & PROMOTIONAL PLAN
FINANCIAL PLAN
98 Plan
102 Budget 103 Salles Dollar 104 Sales Units 106 Written Rational
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V FASM 419
PROF. Meeta Roy
WINTER 2014
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Executive Summary In 1947 H&M opened their first store in Sweden; today they are in 53 markets with over 3000 stores. The H&M business concept is to offer fashion and quality at the best price to their customer. The retail brand’s objective is to expand with 10-15 percent new stores per year. As the company opens new store across the globe, we have seen an opportunity in Brazil because is one of the worlds’ fastest emerging-economies. Not only is an influential and economic giant, but also the society is fashion enthusiast. With this in mind, the H&M team has decided to open a pop up shop in Sao, Paulo Brazil to test the market and to build brand awareness. In this report, we carry out thorough market analysis to learn and understand the Brazilian market. Within the analysis, we researched the political, and economical situation in the country, understanding H&M’s new target customer, and examine the brands already present in the market. After conducting the analysis, we have outlined the negatives and positives of the country. Although there are some concerns about the market, the positive factors can outweigh these concerns. Some of these opportunities can be business contacts, understanding the human resources and the culture for a future opening. Overall, we see a promising future with the opening of the pop up shop. Although the process and opening of the pop up shop leads to a loss profit, H&M will achieve the set objectives and more.
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PART I COMPANY SUMMARY
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+Brand Identity Matrix +Price/ Accessibility Matrix +Current Distribution +Current communication & Promotional activities
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About Hennes & Mauritz AB (H&M) is a Swedish multinational retail-clothing company, known for its fast-fashion for women, men and children. Today the H&M Group offers fashion for everyone under the brands of H&M, COS, Monki, Weekday, Cheap Monday and & Other Stories, along with interior textiles for the home at H&M Home. H&M was established by Erling Persson who opened the first store as a women’s wear shop in Västerås, Sweden in 1947. In present day, the brand’s product comprises clothing, including underwear and sportswear, as well as cosmetic products, accessories, footwear and home textiles. H&M’s mission is to offer fashion and quality at the best prices. One of the company’s strong elements is to offer the more sustainable choice for the H&M’s customers, who are increasingly aware with environment. In 2004, as part of their growth, H&M introduced collaborations with high-profile designers and celebrities such as, Karl Lagerfeld, Stella Mccartney, Viktor & Rolf, Madonna, Roberto Cavalli, Matthew Williamson, Lanvin and others Important designers. From a single women’s wear shop in Sweden, there are 3,000 stores in 53 markets worldwide, and online shopping in 9 countries. (Annual Report 2013)
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GLOBAL EXPANSION H&M is owned by H&M Group, with the exception of some markets where they collaborate with franchising partners - (Franchising is not part of the general expansion strategy). According to Forbes, as of May 2013, H&M has a revenue of $18.13 billion dollars. H&M has 3176 stores in 53 countries. Their objective is to expand with 10-15 percent new stores per year and increase sales in comparable units. In their future plan growth, they are planning to open in the first half of 2014 the first store in Melbourne, Australia. Also, in 2015 H&M plans to open in South Africa. Not only growth is important, but also sustainability is key to the company business and they are working actively to make both existing and new stores sustainable in the long term. This includes recycling waste, changing to more energy and water efficient systems and selecting the more environmentally responsible materials, such as certified wood or recycled materials. (Annual Report 2013)
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S.W.O.T. ANALYSIS Strengths + Strong distribution and logistics network + Prime locations + Well founded parent company - Hennes & Mauritz + Actively seeking to participate in sustainability + Brand recognition world wide. +Well-developed marketing skills + Geographic presence expansion
Weakness +Low quality clothing +Large volume of production with no guarantee of any sales +Not original products but copy of luxury and high-end fashion brands +30 days for a refund that you send by mail
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Opportunity + E-Commerce is expanding at a fast pace + Emerging markets worldwide ( BRIC) + Room for development +Sustainability leadership + Values of millenials
Threats + Rising labours costs in China, India, and Bangladesh + Changing consumer behavior + Appearance of new competitors +Emerging sustainabilities threats for fast fashion.
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Brand Identity Matrix
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person
Brand as a : H&M is guided by strong values based on fundamental respect for the individual and belief in each person’s ability to show initiative. +Fast fashion +Values Sustainability +Values employees +Strong commitments +Affordable price +Global
product
Brand as a : From timeless basics to the latest trends. H&M offers wide ranging and varied categories in women, men, teenagers, and children complete with shoes, accessories, cosmetics and a home interiors concept. +LADIES: Tops, Shirts & Blouses, Cardigans & Sweaters, Dresses, Skirts, Pants, Jeans, Shorts, Jackets & Coats, Blazers & Waistcoats, Office wear, Sport wear, Lingerie, Socks & Tights, Sleepwear, Swimwear, Accessories, shoes, Cosmetics, H&M + Plus Sizes, Maternity Wear. +MEN: T-shirts & Vests, Shirts, Hoodies & Sweatshirts, Sweaters & Cardigans, Jackets & Suits, Coats, Pants, Jeans, Shorts, Sportwear, Swimwear, Underwear & Socks, Accessories, shoes +KIDS - from new borns to 14+ +NEW BORN (0-9M): Sets & Overalls, Tops, Bottoms, Sleepwear, Accessories. +BABY GIRL & BOY(4-24m): Tops & T-shirts, Bodies, Shirts & Blouses, Jumpers & Cardigans, Pants & Leggings, Jeans, Dresses & Skirts, Sets & Overalls, Sleepwear, Socks & Tights, Outerwear, Shoes, Accessories + GIRL & BOY SIZE (11/2/ 2-10 y): Outerwear, Tops &-T-shirts, Shirts & Blouses, Jumpers & Cardigans, Pants & Leggings, Jeans, Dresses, Skirts, Blazers, Sportswear, Dancewear, Underwear, Sleepwear, Socks & Tights, Accessories, Shoes, Shorts, Swimwear, Costumes. +Quality is key - from initial product to final product.
symbol:
Brand as a Simplify worldwide perception +Fast fashion +Trendy +Designer Collaboration +Advertisements with known models, artists, or designer +Sustainability +Affordable price
organization
Brand as an : H&M is a conscious brand – economically, socially and environmentally. +Consistent growth +Conscious brand - economically, socially, and environmentally +Foundations - contribute to people and communities where H&M operates +Publicly traded +Experienced + Global +Cost- consciousness 15
Price / Accessibility Matrix
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COMPETITORS
AVERAGE PRICE
ACCESABILITY
H&M
$149.37
1504
ASOS
$ 980.55
118.5
URBAN OUTFITTERS
$ 651.49
173.5
BERSHKA
$ 180.47
474.5
$ 368
380.5
NEW LOOK
$ 352. 03
612
AMERICAN EAGLE
$ 154.85
487.5
ZARA
$ 341.84
947
MANGO
$ 334.97
1305
UNIQLO
$ 111.20
436
PULL A BEAR
$ 75.74
426.5
EXPRESS
$ 439.35
340.5
GAP
$191.37
736
FOREVER21
$ 93.05
243
THE LIMITED
$ 227.90
154.5
TOP SHOP
$ 721.00
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NEXT
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Current Distribution
Brick-and-Mortar
3176
53
stores in markets with a revenue of
18.13 billion
Online shopping
M-commerce: 9 markets
in Europe and USA • E-commerce: 9 markets in Europe and USA
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Get CATALOGUE sent home ( Available in
53 markets) Franchises
101
stores with a
REVENUE of
1,752
M
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COMMUNICATION AND PROMOTIONAL ACTIVITIES
Annual Spend Figures
4% of its revenues
goes to marketing
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approximately million dollars for 2013.
H&M’s advertising campaigns are produced centrally in Sweden by H&M’s marketing department in co-operation with creative professionals located in the major fashion hubs of the world. The campaigns are designed to be clear and simple and aim to inform our customers of what is new at H&M. The company deliberately distances itself from drug and alcohol abuse, and will not use models that do not portray H&M in a way that is in accordance with that policy
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ADVERTISING ACTIVITIES H&M frequently uses celebrity endorsement to sell its products, with recent campaigns featuring Lana Del Rey, Giselle Bundchen, David Beckham, and Vanessa Paradis. The reaction to celebrities however can differ massively in terms of volume of mentions and intent to purchase, so it’s important to analyze social data to ensure you pick the right one. To help gain customer traffic in the store H&M has also used high end designers such as Karl Lagerfeld, Roberto Cavalli, Maison Marting Margiela, and Isabel Marant to help increase sales. One of the major ad topics that H&M may market is the Fashion Against Aids campaign. The specific collection featured t-shirts, tank tops, and hooded sweaters designed by Designers Against AIDS (DAA) and by several music artists including Rihanna, Timbaland, and Ziggy Marley. Nearly 25% of the sales from this collection went to HIV/AIDS prevention projects.
Sustainability Movement As part of their new strategy, H&M has, as the first fashion company, launched a global initiative called Garment Collecting. Customers are encouraged to bring in unwanted garments of any brand and in any condition to H&M stores in all 53 markets to be given a new life. As a incentive to this movement H&M has, as the first fashion company, launched a global initiative called Garment Collecting. Customers are encouraged to bring in unwanted garments of any brand and in any condition to H&M stores in all 53 markets to be given a new life. As their sales promotions, they give discounts to their customers for their next purchase.
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Direct Marketing To promote the company and its product, the company will use video advertisements, print advertisements (such as HM Magazine, Email Subscription, Catalogs) and the concept of e-marketing. These promotion and communication strategy will tend to meet the consumers form different places everywhere, especially those target markets or the consumers in the working place. Another campaign is focused on mobile couponing and the interaction between the targeted audience and the brand H&M with the
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use of mobile phones. More than 120,000 are registered members. Current strategies that H&M are marketing to its consumer are through a mobile marketing campaign to promote the latest collection. In doing this mobile marketing strategy consumers receive SMS coupons, mobile banner ads placed on major portals and media sites. As part of their marketing, H&M uses social media to connect with customers to share ideas and to get opinions. They are part of Facebook, Instagram, Twitter , Pinterest, and also in Chinese platforms Youku and Sina Weibo.
L Pinterest A report in Adweek last month showed that during January Pinterest users interacted with H&M-related pins 145,000 times
Twitter Followers: 1,905,680 H&M responds to between five and 10 @mentions per day which seems to be remarkably low in comparison.
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Instagram Followers: 1.6 millions Using the hashtag #HMBikeStyle for the chance to win clothes from the H&M Brick Lane Bikes collection
Google + FANS: 2.5 million Though the imagery used is always eye-catching the posts generally only attract a few hundred +1s and tens of comments.
Facebook - live stream Followers: 14 million They use facebook to stream live collections to posts inviting fans to enjoy “an exclusive front row seat� and hightlights.
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PART I I MARKET ANALYSIS TARGET CONSUMER
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Market Analysis + Brazil Profile +PESTEL Analysis +The size of Fashion +Key Players - Competitors +Indirect Competitors
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B R A Z I L Profile
Brazil, one of the world’s fastest-emerging economies, is located in the eastern part of South America. The country shares border with 10 Latin American countries: to the south, Uruguay and Argentina; to the west, Paraguay, Bolivia and Peru; and to the north, Colombia, Venezuela, Guyana, Suriname, and French Guyana (Marketline). Brazil is South America’s most influential country, an economic giant and one of the world’s biggest democracies (Brazil Profile). It is one of the rising economic powers - otherwise known as BRICS nations - together with Russia, India, China and South Africa. There has been a wide gap between rich and poor in the past, but in the recent years the government has made an effort in reducing social and economic inequality leading to the grow of the middle social class and raising millions out of poverty. Brazil’s natural resources, particularly iron ore, are highly prized by major manufacturing nations, including China. Thanks to the development of offshore fields, the nation has become self-sufficient in oil, ending decades of dependence on foreign producers.(Brazil Profile) As the country is emerging, Brazil is rapidly growing in the fashion industry as well. The country’s economy has been expanding steadily for years, a result of a stable political and social climate and long-term reforms set in place by the current and previous government administrations (Anaya). According to the journalist Suleman Anaya, Brazil is among the BRIC countries and is the only one with major fashion industry of its own. “One of the things Brazil has working for it is that it’s a country that really supports their own — their own production, their own artists, and even their own trade. That makes it less dependent on other countries.” commented Sara Andrade, the influential fashion editor of Vogue Portugal, on a BOF article.
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Capital
Brasilia Government Type
Federal Republic Largest City
Sao Paulo
GDP Country area
8,514,877 sq. km
2.253 trillion
Population
201 million
Currency
Brazilian Real
Exports
Transport equipment, iron ore, soybeans, footwear, coffe, and automobiles
Imports
Machinery, electrical and transport equipment, oil, electronics 27
P E S T E L Analysis According to the Marketline profile analyzes, these are the political, economic, social, technological,environmental and legal structure in Brazil. Despite Brazil’s economic growth in recent years, the nation continues to lag in important indicators such as patent filings and R&D spending. The government has initiated lot of programs to foster innovation; however, results have not been forthcoming (Brazil Country Profile). It is important to consider that social conditions can be harsh in the big cities of Rio de Janeiro and Sao Paulo, where third of the population lives in favelas, or slums (Brazil Country Profile). Although there is a wide difference between the rich and the poor, there has been a rise in the middle income class in the last few years, which has lead to overall increase in the region.
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olitical
Strengths Strong federal republic Strong popularity of the incumbent government Challenges Freedom of speech under threat Weak rule of law Future Prospects Efforts to clean up the electoral process Efforts toward economic integration Future Risks Pressure from coalition partners Prevelance of violent crime – Sao Paulo, Rio de Janeiro rocked by gang wars, which disturb business activities. Very high murder rates.
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conomic
Strengths +Public finance in good shape Strong macroeconomic framework +fiscal responsibility legisltion, a flexible currency and inflation targeting policies. Challenges +Stubborn inflation +Volatile Brazilian real – currency. Future prospects +Development of infrastructure the government actively encourages foreign investment in order to enhance and stimulate economic growth. +Energy self-sufficiency – Recent discoveries unveiled large offshore oil reserves that are estimated at over 50 billion barrels. The exploration of oil resources could turn Brazil into one of the largest oil producers in the world. Future Risks +Dependence on commodity exports +Increasing household debt
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ocial
Strengths +Improving housing and sanitation +Measures to eradicate hunger and poverty Challenges +Regional disparity and urban poverty +Informal employment +Child labor Future prospects +Measures to reduce the spread of AIDS +High education attainment Future Risks +Declining labor participation rate.
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echnology
Strengths +Government encouragement to improve R&D (research & development) +Large aerospace and defense industry – one of the largest in the Southern Hemisphere. Involved in all stages, from design to manufacturing. Challenges +Low R&D output +Highly taxed mobile market (one of the most highly taxed) Future prospects +Expanding vocational and higher education +Inova Expresa Plan – a program to boost productivity in key sectors. Future Risks +Low availability of scientists and engineers.
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nvironmental
Strengths +Rich biodiversity + Hydropower Challenges +Changes to the forest code +CO2 emissions Future Prospects +Propagation of ecouturism +Reduced deforestation Future Risks +Projects fraught with environmental risks
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egal
Strengths +Comprehensive legal structure +Implementation of value added tax (VAT) Challenges +Complicated TAX SYSTEM +Concerns over intellectual property protection +Judicial delays Future prospects +Termination of trade barriers Future Risks +Inefficient regulatory environment +Ad hoc protectionist measures +High tax burden - Fourth highest in Latin America. Total tax rate was 69.3%
After analyzing the PESTEL, we can come to the conclusion that Brazil is a stable and growing country for H&M to enter the market. Even though there are challenges such as the TAX system being overly complicated, a volatile currency (Real) and a stubborn inflation, H&M sees an opportunity to invest in the Brazilian market because of the future prospects. These opportunities are propagation of sustainability, termination of trade barriers, effort for a better economic integration, and also the developments of infrastructure that can lead to enhance and stimulate economic growth. Because of this opportunities in Brazil, there has been a development in the social classes, specially the middle class; from lower middle class to upper middle class. As a result of this expansion in the social class, the country is flourishing in the retail business and expansions.
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The Size of Fashion MARKET VALUE $50.7 Billion - the Brazilian apparel retail industry grew by 6.7% in 2012.
MARKET VALUE FORECAST $70.9 Billion - In 2017, the apparel indus-
try is forecast to have a value increase of 39.8% since 2012.
CATEGORY SEGMENTATION Womenswear accounts for 47.5% of the industry’s total value - It is the
largest segment of the apparel retail industry.
GEOGRAPHY SEGMENTATION Brazil accounts for 11.5% - from the
Americas apparel retail industry value.
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The Apparel Industry Market Value l Category Segmentation
Market Value
The Brazilian apparel retail industry is predicted to have achieved a strong level of growth for the 2008-2012 period (Apparel Retail in Brazil). In the Marketline report analysis about the apparel industry, they forecast that the industry is expected to mantain similar level of growth from 2013, which will continue through to the end of the forecast period in 2017 and expect a value increase of 39.8%. This forecast shows that there is going to be a moderate grow within 2012 to 2017, which can be an opportunity like brands as H&M to penetrate in the market. Since Brazil’s middle class has grown in the last 5 years, half of the brazilian population are looking for reasonable priced brands.
Category Segmentation
Marketline reported the womenswear segment is expected to be the industry’s most lucrative in 2012, with total revenues of $24.1 billion, which is equivalent to 47.5% of the industry’s overall value. The menswear segment will contribute revenues of $17.1 billion in 2012, equivalent to 33.8% of the industry’s value.
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D I R E C T COMPETITORS Top Shop
Just opened last summer 13’ in Sao Paulo’s JK Iguatemi shopping mall. It’s been a great success, after just two days of the opening; Top Shop had sold over 4500 items. Topshop challenges luxury in almost every country it moves to as today, Topshop is the only ‘fast fashion’ brand to be featured regularly at London Fashion Week. Brazilians are so fascinated by the UK retailers and sales are so high that they are already planning to open two more store in Sao Paulo in the next year.
The company adopts a strategy that combines low prices with high-impact marketing. It makes major investments in promoting its brand name. In 2011 Gisselle Bundchen launch her collection in C&A.
Lojas Renner
Renner is Brazil’s second-biggest clothing retailer, Renner enjoys 16 percent market share. Renner holds a differentiated model of employee management, which enables the brand to offer an enjoyable and consistent experience. In social networks Zara the brand is also making strides, earning it a top After 13 years in the country, Zara has 39 stores ten spot on the index Social Engagement Ranking leading Sao Paulo’s shopping malls. The re- in 2013. Over 90% of its stores are in shopping tail group has adapted its business model to the malls, making life easier for customers with quick Brazilian market by manufacturing its collections access and closeness of other services. Street for southern hemisphere markets in Brazil and stores are located in central urban areas, with an Argentina, thus avoiding import duties. In Brazil, expressive influence and circulation of consumers. Zara has become a brand focused on the upper class, which reduces the number of customers Grendene Hering and stores. Zara has lowered its prices by moving Hering stands out as the fastest growing brand in about 35-40% of production onshore, and have our ranking with an impressive 58 percent increase remained popular by combining high-profile locain brand value. Is one of the oldest Brazilian stores tions with relative low prices. and still in activity, the company continues to be the retailer that has supplied Brazilian houseC&A holds “since always.” Hering continually adapts This international Dutch retail-clothing store has to changing trends, but never strays too far from long had a reputation one of the most boring the fashion basics and casual style for which it is brands. However in Brazil, C&A is a brand that known. . The stores are stocked with new items reflects the new dynamism. For C&A, the nation- every 15 days, but Hering’s basics never change. al market retail leader, the fast fashion sector is To establish an even clearer positioning for its segincreasingly competitive, bringing new challenges ments, the company is dividing the management for the companies. They have more than 50 stores of the Hering brand from the Hering Kids brand in Sao Paulo and for C&A, the national market re- this year. tail leader; the fast fashion sector is increasingly competitive, bringing new challenges for the companies.
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Havaianas Arguably the brand Brazilians love most, it’s no surprise that Havaianas has maintained its position in our ranking this year. Havaianas has indeed become a representation of Brazilian culture. Yet, people all over the world identify with the brand’s values and find its products and attitude just as appealing as Brazilians do. Always renewing itself, the brand adapts collections to the year’s major events, such as Carnival. Always connected to what is happening in the market, Havaianas is agile enough to respond to changes quickly and dream up products that reflect changing moods and trends.
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I N D I R E C T COMPETITORS Besides Brazilian spending in the apparel market they spend their money in beauty (12%), beverages, recreation/travel (3.5%) , electronics (2.2%) and in financial services (22%).
BEAUTY In the beauty market brazilians are spending an average of $260 dollars per capita a year. Sales of beauty products in Brazil totaled 15.4 billions in 2012 (“What Brazilians are Buying 2013“). Some companies and brands that are at the top of the list in the beauty/personal care in Sao Paulo are the following: NATURA Natura is a Brazilian version of Avon. The company sells beauty and household products door-to-door. Their retail sales volume reach 3.3 billion dollars, Natura. Agua de Cheiro Agua de Cheiro is the second-largest franchise cosmetic store network in Brazil, into a service-oriented, contemporary retailer. The company had a $375 million dollar revenue at the end of 2012 (“GCI Magazine“). SEPHORA Sephora recently opened its first store on July in Sao Paulo, “While the company cant’t give numbers, it was the most successfull store opening in our history“ said the senior vicepresident of Sephora in Latin America (“Sephora expects...”).
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BEVERAGES FACTS: +Brazil is the third largest beer market in the world +On average, Brazilians consume 140 million hectoliters of beer per year. + The Brazilian beer companies were responsible for a billing of 63 billion USD in 2012 Anheuser-Busch InBev Anheuser-Busch InBev is the leading global brewer and one of the world’s top five consumer products companies. Their presence is especially strong and growing in the three countries that represent over 40% of global beer volume and global beer profit pools: the U.S., Brazil and China (Annual Report). Their revenue reaches 11 billion dollars in Brazil and a consumption of 126 187 thousand hectoliters of all the products in the year. The two most strong brands of AB-InBev in Brazil are SkOL and Brahma. SKOL remains the most valuable beer brand in Brazil, with positive growth of 11 percent in brand value in 2013 (“Annual Report AB-InBev”).
BRAHMA Already prominent as a sponsor at the São Paulo and Rio de Janeiro Carnival festivals, its expected to attract 30,000 people in the Brahma party zones in all of their events. With Brazil experiencing a sports trifecta of sorts, with the 2013 FIFA Confederations Cup, the 2014 FIFA World Cup and the 2016 Olympic Games, the Brahma brand is at the epicenter of creating an atmosphere of euphoria and national pride (“Annual Report AB-InBev”).
FINANCIAL SERVICES According to Brazilian Association of Credit Card Companies and Services, in 2012 the use of credit cards accounted for 26% of Brazilian household consumption, up from 16% in 2007. Overall, in 2012 R$ 479 billion (US$239 billion) were spent in credit card transactions in Brazil, 16% higher than in 2011. In addition, transactions with credit or debit cards represented 58% of sector revenues in Brazil in 2012.
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TECHNOLOGY Mobile Phones In the first quarter of 2013, Brazilians bought more than 14 million mobile phones, 15% more than in the first quarter of 2012. Of this total, 5.4 million were smartphones and 8.7 million were feature phones. It’s projected that smartphone sales will now reach 28 million units in Brazil in 2013 (“Navigation”). Tablets In the first quarter of 2013, tablet sales in Brazil rose by 164% compared to the same period in 2012, with more than 1.3 million units sold. The overall projection for 2013 is 5.9 million tablets will be sold in Brazil, an 81% increase compared to 2012 (“What Brazilians are buying 2013?“). Brands that are popular in Brazil, are mostly Apple and Samsung but because of the high mark-up price of almost 50% to 60%, the competition in this field is almost zero. Cellphone carriers are one of the only distribuitors of smartphones and tablets in Sao Paulo. Vivo Brazilian carrier Vivo is one of the few companies that sell smartphones and tablets in Brazil, they carry smartphones from $1425 dollars with a pricey plan (“9to5Mac“).
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Target Consumer +Sao Paulo Profile +Demographic +Psychographic/ Lifestyle +Behavioral Information
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Sao Paulo P r o f i l e The largest city in Latin America
+ 11,822,000 inhabitants +847 thousand students enrolled in institutes of higher education - mainly colleges and universities -90% are enrolled in private institutions -10% in public ones. +According to SP Turismo, Sao Paulo is home to: -77 shopping malls - including the largest mall in Latin America, The Centro Comerical Aricanduva, with 500 stores - 410 hotels & 42,000 rooms available -152 theaters - 55 cinemas - 90 museums - 54 parks and green areas +90,000 events are organized per year. +The city ranked 6th in “Forbes list of the Top 10 Billionaire cities�. -26 billionaires with primary residences in Sao Paulo. Together, their total net worth is superior to $120 billion. - The average billionaire is worth $4.65 billion. + One of the biggest challenges of living in the city is the commute. -According to the Brazilian Association of Helicopter pilots, there are 420 helicopters registered in Sao Paulo.
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Understanding Sao Paulo SOCIETY Social classes have been a useful tool for strategist and marketers, a way to segment the 190 million people living in Brazil. The huge differences between rich and poor is the direct reason why social classes have such a relevance for segmenting demography in Brazil. There are several different concepts of social classes in Brazil, but the one that is mostly adopted by the market classifies society as letters from A to E. We are focusing on Classes A and B as the target customer for H&M in Sao Paulo, are those with higher education that results on better jobs and higher incomes. This demographic segmentation will translate into different purchasing power depending location of the household.
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DEMOGRAPHIC Age: 18-40 Gender: Women Marital status: Single/Engaged/ Education: Higher Education (Bachelor & Master Degree) Income: Maximum - 45,000 BRL Average - 11,437 BRL Median - 7,500 BRL Religion: Christian With the emergent middle class taking off, there is a consumption boom in the country. However, this boom poses a risk Brazilian middle-class households may be saving too little. Families could become over indebted and vulnerable in the long term if Brazil’s economy slows down, according to The World Bank. It is important to keep in mind about the emergent class; however, Brazil is a booming fashion country and the upper middle class society is looking for more international brands other than luxury brands. There is a price gap that can be filled with affordable brands such as H&M in the market. 44
LIFESTYLE / PSYCOGRAPHIC INFORMATION As stated before, we are focusing on women from classes A and B, that are business women with their own income or wives and daughters with husbands with higher end positions in the industry
GEOGRAPHY Our new target customer of Sao Paulo normally live in four main neighbourhoods mainly for its safety, Jardins, Itaim Bibi, Pinheiros and Campo Belo, this are all areas that are very close to JK Iguatemi, it is just an 8 to 10 minute drive from all of them. Jardins being the top residential area, it houses some of the city’s most expensive houses and fashionable restaurants and shops, followed by Itaim Bibi that offers a mixed commercial and residential districts, Pinheiros is an up-and-coming district that also offers both commercial and residential outfits and finally, Campo Belo is a only residential neighbourhood in the centre/south of Sao Paulo (Born in Brazil). These four areas for living have as a main characteristic the safety and all of them are a mixture of commercial and residential areas. As women increasingly join the workforce, machismo has become less common. Younger, better-educated women have values that correspond closely to those of North American women. Women are well-accepted and are prominent in education, medicine and journalism and as small business owners.
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BEHAVIORAL INFORMATION Where do they work? Ages: 25 to 40
Normally, white, middle-class and elite women living in large urban centers generally have more occupational choices and greater behavioral flexibility than poorer women. Nevertheless, even when women are employed, men are seen as the primary providers of the family, with women’s monetary contributions viewed as supplementary. Overall in Brazil, women hold only 2 percent of executivelevel positions, so its not common for women to work in such higher-level positions. Women mostly work in law, education, dentistry, interior design and some have their own small business. Moreover, whether employed outside the home or not, women remain responsible for the proper functioning of the domestic sphere, with or without the aid of domestic servants (Culture of Brazil). In Sao Paulo people who work with their hands are, by definition, not middle class. This is why upper-middle class Brazilian families are far more likely than their American counterparts to employ domestic servants; it would be unseemly for a middle-class housewife to get down on her knees to scrub the floor.
Ages: 18 to 25
This upper class age range, are children of wealthy families, who attend the best private school in Sao Paulo, are now graduating and attending the University of Brazil. Once they graduate, they work with their families, or get jobs through contacts of the family. Some go to North America or Europe to continue their education
Leisure Activities Ages: 25 to 40
Among the urban upper-middle class women in Sao Paulo they enjoy many leisure activities around family or her group of friends, mostly revolves around beauty, shopping and foot. Normally women in this area get together to go to a spa or to any gym activity during the morning and in the afternoon it is quite common for women to meet for a coffee with her friends in the mall. The upper middle class women normally enjoy luxury centers like the Spa Cidade Jardim, where they can escape the city’s pollution and gray concrete skyscrapers for a traditional Indian massage, delivered by a masseuse just arrived from Mumbai. With extra time, they can use the gym, swim in the indoor pool with a city view or visit the in-house plastic surgeon. The urban retreat is part of Tania Ginjas’s Spa Collection brand, the largest operator in the country, which has tripled its locations to 22 in the past three years. The gym culture is fundamental in São Paulo, Bio Ritmo, one of the dominant upscale fitness center, were women enjoy yoga, pilates and dance lessons. Its standard monthly membership runs about 350 Brazilian reais, or $200. Shopping is definitely integrated into the lifestyle of Sao Paulo upper-middle class, as a usual and necessary activity and as an entertainment program. 46
During the weekends, this social class goes to their second home in the beach, where they enjoy seafood and outdoor activities. If they stay in town they go to private clubs, that have golfing, swimming, sailing and tennis. Also enjoy their leisure time at art galleries, theaters, night clubs, and the finest restaurants (Bevins, Vincent)
Ages: 18 to 25
Class A women from this age share many of the leisure activities as the elder ones, but as they are starting in the working force or studying they don’t have much free time during the week, but when they are not working or studying, they are clubbing. The nightlife is as intense as it gets, which makes going to a club a total must-do. Also they much enjoy during the weekends, going to the mall, movies or to dine with their friends. Sundays are a family day, were the whole family goes to mass, they are a very involved religious community, then it is a costume to go eat and watch a movie or a soccer game if there is any.
Shopping Habits and E-commerce A new survey from Servicio de Proteccion indicates that classes AB buy on impulse being in stores or online (Statistics Brazil). The majority of online consumers still belong to class A (59% of the total) and class B (28% of the total) online customer. The average amount spent by class AB in Sao Paulo buying items online was R$1263 (about $600) per purchase (“Purchasing Behavior in Brazil”). The most successful items online are: perfumes, cosmetics, electronics, clothing, shoes and books. Among the AB classes of Brazil, shows credit card penetration to be 57%, this is the preferred payment method for them (“Brazilian Media”). Specific Technology Usage and Media Consumed According to Forbes Magazine, 100 million of Brazilian are internet users in which 79% are from classes AB (Geromel, Ricardo). According to comScore (2013), consumers in Brazil spend more than 27 hours per month online on their computers, being the global average: 24.7 per month. The Brazilian Internet audience is young on average, with 18% of users age 18-24 and 30% of all users age 25-34. A 2012 study from IBOPE’s Target Group Index showed that 61% of magazine readers in Brazil are women and are from classes AB (Brazilian Media). Other pertinent activities among Brazilian magazine readers from classes AB include: • Going on social media (54%) • Reading news often (45%) • Serving as brand champions by writing product reviews that convince others (27%) By understanding the consumer behavior for women from classes A and B c we came to the conclusion that there is only room for growth. Their purchasing power is high and since they are very price sensate it is a perfect match for HM to enter the market, since it has lower prices than other international brands. In the area of e-commerce and social shopping it seems Brazilians are very engaged and involved, the data above shows they interact, recommend product, write reviews and evidently they shop, reaching online sales of $12 billion dollars. 47
PART I I I - POP UP SHOP STORE LOCATION DESIGN PRODUCT
48
STORE LOCATION + LIFESTYLE & BEHAVIOR SEGMENTATION + SALES POTENTIAL + ESTIMATING COMPETITION + AREA ATTRACTIONS + AREA FACTORS + HUMAN RESOURCES + LEGAL ISSUES
49
LIFESTYLE & BEHAVIOR S E G M E N T A T I O N ITAIM BIBI / JK IGUATEMI Area - ITAIM BIBI Not only is Itaim home to exclusive shopping centers, but its residents are also some of the most affluent Brazilians. On average, the Itaim surrounding area boasts an annual per capita income of $18,320 anually, more than double that of most Brazilians. Itaim and the surrounding shopping centers, then, are located in the center of concentrated Brazilian affluence. JK Iguatemi (Lifestyle/Behavior Segmentation)
50
JK Iguatemi is located strategically in Itaim, area with historically the highest purchasing power and potential of per capita consumptions, focusing predominantly on a target audience Classes A and B (Upper class and Upper Middle Class), characterized by their fidelity and quality requirement. Every detail was planned to satisfy rich Brazilian customers addicted to shopping. This customer is used to going to malls for shopping and entertainments and they appreciate the high-end environment offered by JK Iguatemi, with great restaurants and the presence of strong anchors such as state-ofthe-art movie theatres, high-end international brands, beautiful landscaping and green environment. Services include Lounge One, a space reserved for VIP guests or those with a three-month disposable income of 5,000 Brazilian reals. There are meeting rooms, a nursery, and personal shoppers and shopping bag porters available at the service concierge. Everything has been designed according to the standards of a luxury hotel. Rounding out the JK Iguatemi program are other entertainment attractions such as the Cinepolis, a cinema with 4D theaters, a VIP lounge furnished with large armchairs and serving food, a patio, an auditorium, restaurants and tearooms (“JK Iguatemi�).
J K I G U A T E M I MALL L
O
C
A
T
I
O
N
51
E s t i m a t i n g C o m p e t i t i o n In JK Iguatemi there are 230 retailers, international and national. The mall is home to global retailers such as Lanvin, Miu Miu and Chanel. The luxurious mall also offers others strong global brands such as such as Lacoste, Topshop, Gap, Diesel and other recognized brands. After analyzing the H&M’s competition in the mall, H&M will have a number of competition which are not only international, but also national brands. The international brands are: Zara, Topshop, Gap, Rapsodia, Mac. The national brands are Farm, Fillity, Havaianas, Schutz, Vyvedas, and Spezzato. Zara, one of the strongest and direct competitors, first arrived in Brazil 14 years ago and today operates a total of 41 stores in the country (Grimberg). Another competitors is the UK Retailer,Topshop, which opened last year and has been a great success with the Brazilians customer. Unlike Zara or Gap, the retailer has taken a different approach, selling the same collection in Brazil, as it does in Europe and the U.S. Therefore, this alone pushes Topshop away from local competitors, point outed Daniled Valadao, brand manager for Topshop in Brazil. She also explains that there is also a special collection for the Southern Hemisphere, which includes Brazil, South Africa, Chile and Australia. It is made in London and has the same colors, prints, shapes and styles of the current collection, but adapted to the opposite season.” On the other hand, Gap, which opened last fall (2013), sells and works on reversed seasonality mode, which the collection are six month behind from what it sells in the U.S. Although there are many internationals brands in the mall, the national brands are strong competition for H&M because Brazilians are not only brand loyal, but also they have national pride. “One of the things Brazil has working for it is that it’s a country that really supports their own - their own production, their own artists, and even their own trade. That makes it less dependent on other countries”, said Sara Andrade, fashion editor of Vogue Portugal. 52
Street Floor
Floor 2
Floor 1
Floor 3
“People here appreciate not just the value of something expensive, but the value and pleasure of good design and materials.�
Suleman Anaya - BOF
53
A R E A ATTRACTIONS
The mall is integrated with the city and is located in Itaim Bibi which is home to exclusive shopping centers, but its residents are also the most affluent Brazilians. The mall is situated in a remote area within a prominent district , yet the mall is close enough to clubs and bars, restaurants and commercial centers. +The nearest attraction (right next to the mall) is the Parque do Povo which is one of Sao Paulo’s newest parks. The park, a new landscape in the area, is connected with a walkway to the mall.,
Parque Do Povo
+ Another area attraction is the Rua JoĂŁo Cachoeira (2.4 km distance), which is an open air shopping center with numerous popular and boutique stores. +Another shopping center and attraction is the Iguatemi Sao Paulo, owned by the same parent company. The Iguatemi Sao Paulo is the oldest mall in operation in the country. Inside the mall, there are other number of attractions such as entertainment (cinema), restaurants, hairdresser and barber.
Iguatemi Sao Paulo
To round the entertainment in JK Iguatemi, Cinepolis opened at the mall in July 2012. The cinema installed the first theater with 4DX technology in South America. It also offers VIP lounge furnished with large armchairs and also offer service.
Cinepolis
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RESTAURANTS
BARS
55
A F
A
R C
T
E O
R
A S
PEDESTRIAN TRAFFIC “The malls are very open and integrated wit the city”, said Carlos Jereissati, CEO of the company. Additionally he said, “The Brazilians likes to meet and be in groups so this sense of belonging is very important because we want to be part of a group, we want to be part of a place that we feel connected to”. The mall wants to be integrated in every sence with the people; not only as a destination for shopping, but also be a place for other important cultural events such as book fair, art shows and fashion shows. The traffic in the mall is 20,000 (estimate) people enter every day at the mall (BOF). Last year in 2013, 7.2 million customers were expected to enter the mall. For the debut of the mall 70,000 people came during the first week. PUBLIC TRANSPORT As far as public transportation, the mall can be access or approached by public buses, taxi, and trains. JK Iguatemi has invested $25.5 millions in developing roads, underground garage for public buses, and signs for pedestrians. And another $20.6 million on a viaduct and bike routes. PARKING SPACE The mall offers three floors of parking with 1681 space.
56
INFRASTRUCTURE JK Iguatemi is 35 thousand square meters large, spread over four floors of retail space and three floors of parking space. The mall has a capacity of over 304 stores. Also the mall is part of a multipurpose project with three new luxury office towers, one of which is to house the global headquarters of Banco Santadner (JK Iguatemi) The Jk Iguatemi stores can have a space 2 store over 7,500 square feet each - great flagships such as Burberry or Prada. The aesthetic of the mall is high ceilings, wide boulevards, white stone floors, light-refracting materials and interior design with clean, minimalist lines. All of these factors contribute to an airy feeling of integration between the mall and its surroundings. SERVICES JK Iguatemi offer special services such as Comfort station, wheelchair, JK Bike (an initiative to promote health and wellness. Located in the first floor), Baby strollers, valet parking, parking, concierge, personal shopper. Other services they offer is exchange agency, repair of clothing shoes bags and belts, lottery, hairdresser/barber, pharmacies, magazines and newspapers, supermarkets and emporiums (JK Iguatemi)
57
H U M A N R E S O U R C E S (AVAILABILITY OF REQUIRED BUILDING AND STAFFING)
The team will be formed by the H&M staff and locals employees in Brazil. + local staff (22) + local store manager (1) + Local construction team (5) + H&M Manager (1) + Interior Department Team (1) + H&M Visual Merchandising Team (2) + H&M Operation Team (3) A month and half prior to the grand opening the H&M staff will be in Brazil to start organizing for the opening - construction, training, organizing. For the training of the local staff, the hiring process will begin from June through a registered company, and the hiring process will end in August. After we have chosen the store manager, and the staff, they will go through a en extensive training to learn about our services and products offered. We will be hiring 23 local employees who will be trained a month prior of the opening. The H&M has strong social responsability towards their staff; therefore, it is important not only to follow the employment law in the country, but also to be loyal to our teams. The JK Iguatemi opens from 10 am to 10 pm everyday except for Sunday, which is opened from 2 pm to 10 pm. Because of the working hours of the mall, and also to keep in mind the employment laws (see pg. 59) in the country, we need 23 employees in order to follow the working hours.
58
L I
E S
S
G
U
A E
L S
(EMPLOYMENT LAWS)
LABOUR RELATIONS Brazil has a highly regulated and costly labour system for the formal sector, and there continues to be a sizeable informal sector that employs many workers. The Economist Intelligence Unit expects the country’s labour force to reach 104.3m by end-2011, up from 102.2m at end2010. With the economy booming labour laws become increasingly important. It is also important that in Brazil, an employee can only be hired by a proper registered company. A foreign company is required to meet certain conditions and undergo a determined procedure in order to be able to hire personnel. Employees are hired on the basis of a certain term and other conditions of an employment agreement. Within 48 hours after an employee started his job in a respective organization the mentioned employment agreement should be registered. MAIN EMPLOYEES’ RIGHT
REMUNERATION According to the Brazilian Labour Laws, an employment contract (written or verbal) must state the remuneration of the employee. The remuneration of an employee includes, besides base salary, fringe benefits and bonuses, amongst others. WORKING CONDITIONS/HOURS WORKED The Brazilian Federal Constitution determines that regular working hours should not exceed 8 hours per day and 44 hours per week. Specifically for financial institutions, working hours should not exceed 6 hours per day. A series of constitutional and legal provisions establish a shorter working week for a variety of professional categories such as bank clerks, telephone operators and so forth, who are subject to different working weeks pursuant to specific regulations. Time worked in excess of the above is treated as overtime. In general, compensation for overtime work is paid at least 50% above the compensation paid for normal working hours.
WORKING CONDITIONS/HOURS WORKED All work of equal value must be remunerated at the same rate, irrespective of the nationality, age, sex, or marital status of the employee. A minimum wage is established by law and is currently set at approximately US $ 311 per month (R$622). FOREIGN PERSONNEL Legal entities with 3 or more employees, are obliged to maintain a proportionality of 2/3 of Brazilian employees to 1/ 3 of foreign employees. The proportionality must also be observed in relation to total employee remuneration. Lower proportionality may be granted by the relevant authorities in specific circumstances (e.g. lack of Brazilian workforce in a specific sector). For proportionality purposes, foreigners residing in Brazil for more than ten years who are spouse or parent to a Brazilian national, and those of Portuguese nationality, are considered as Brazilians. GOVERNMENT SEVERANCE INDEMNITY FUND FOR EMPLOYEES (FGTS) For individuals considered as employees, the company must make a monthly deposit to the Government Severance Indemnity Fund for Employees (FGTS), at an amount equal to 8% of an employee’s remuneration. In case of a dismissal without just cause, incited by the company, an employee may withdraw this fund with an additional penalty (to be paid by the employer) equivalent to 40% of the accumulated FGTS balance. The company must contribute an additional 10% fine to the social fund.
Source: HSBC Global Connection
59
DESIGN +Visual +Floor Plan +Styles - Mannequins
60
61
+Visual
Exterior
Street View
62
Mall Indoor View
63
+Visual
Interior
64
65
66
Fixtures Plans
(10)
(10)
67
Ambiance
68
69
+Styles - Mannequins We are going to have the total of 20 looks that are going to be shown in the fashion show for the opening and sold in the stores. There are going to be 14 mannequins with the styles for the visual window, and six mannequins with the others styles for the inside. The following six looks are some examples that going to be used for the mannequins which are going to be positioned inside of the store.
70
71
72
73
74
PRODUCT
PLAN
+HM will launch in October 2014, during this time Brazil season is summer. We have selected products that will adjust to the season and the Brazilian customer aesthetics. According to Vayama Brazil Etiquette “Fashion is very important in Brazil. They dress fashionably, but never too conservatively�. HM offers trendy and fashionable pieces and the products selected reflect how Brazilian women dress everyday and we believe the products will satisfy our customer styles. he women in Sao Paulo have a taste for vivid colors and loud prints.
They are very proud of their body image, and dress very sexy because of it. We have selected a variety bright colors for our color way, our pieces are very trendy and fresh for the summer climate. For the size assortment we determine to have more tops and dresses for sizes 2, 4, and 6. And for bottoms we focus to have more pieces on sizes 8, 10 and 12, as Brazilians are very voluptuous. Jewelry, handbags, hats, scarves, and shoes categorize the accessories we have chosen. The assortment of the accessories will be extensive because of the reasonable price. Our prices have been set by the standard HM retail price plus a 30% markup.
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TOPS Draped Top Price: $12.95 R 39.50 Color: Mustard, Pattern, Black Size: XS. S, M, L
Woven Top Price: $17.95 R 54.76 Color: Pink, Blue, Black Size: 2, 4, 6, 8, 10, 12
Draped Blouse Price: $19.95 R 60.86 Color: Mustard, White, Black Size: 2, 4, 6, 8, 10, 12
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Draped Blouse Price: $29.95 R 91.37 Color:Floral, Teal, White Size: 2, 4, 6, 8, 10, 12
V-neck Blouse Price: $17.95 R 54.76 Color: Pink, Green Khaki, White Size: 2, 4, 6, 8, 10, 12
V-Neck Longsleeve Blouse Price: $24.95 R 76.12 Color: Mustard, Red, Black Size: 2, 4, 6, 8, 10, 12
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Sleeveless Blouse Price: $9.95 R 30.35 Color: Patterned, Red, Leopard Size: 2, 4, 6, 8, 10, 12
Chiffon Blouse Price: $24.95 R 76.12 Color: Mustard, Teal, Black Size: 2, 4, 6, 8, 10, 12
Chiffon Blouse Price: $29.95 R 91.37 Color: Pink, Patterned, Black Size: 2, 4, 6, 8, 10, 12
78
Wraparound Blouse Price: $29.95 R 91.37 Color: Stripes, Patterned, Black Size: 2, 4, 6, 8, 10, 12
Chiffon Tank Top Price: $39.95 R 121.88 Color:Beige, Black Size: 2, 4, 6, 8, 10, 12
Sleeveless Deneim Shirt Price: $24.95 R 76.12 Color: Light Denim, White Size: 2, 4, 6, 8, 10, 12
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80
Halter-Neck Bodysuit Price: $34.95 R 106.62 Color:Red Size: 2, 4, 6, 8, 10, 12
Kimono Price: $24.95 R 76.12 Color: Black Size: XS, S, M, L
Top Woven fabric Price: $34.95 R 106.62 Color: Black Size: 2, 4, 6, 8, 10, 12
Blouse w/ Beaded Embroidery Price: $49.95 R 152.39 Color: Black Size: 2, 4, 6, 8, 10, 12
DRESSES Jersey Dress Price: $9.95 R 30.35 Color: Green, Black Size: XS, S, M, L
Lace Dress Price: $34.95 R 106.62 Color: Pink, Red Size: 2, 4, 6, 8, 10, 12
Jersey Flare Dress Price: $14.95 R 46.73 Color: Red, Black Size: XS, S, M, L
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Patterned Dress Price: $59.95 R 182.91 Color: Yellow, Teal Size: 2, 4, 6, 8, 10, 12
Chiffon Dress Price: $39.95 R 121.88 Color: Green Khaki, Black Size: 2, 4, 6, 8, 10, 12
Sleeveless Dress Price: $39.95 R 121.88 Color: White, Teal Size: 2, 4, 6, 8, 10, 12
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MaxiDress Price: $24.95 R 76.12 Color: Green, Black Size: XS, S, M, L
Chiffon Dress Price: $69.95 R 210.52 Color: Pink, Red Size: 2, 4, 6, 8, 10, 12
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SHORTS
Twill Shorts Price: $12.95 R 39.50 Color: White, Green Khaki Size: 2, 4, 6, 8, 10, 12
DenimShorts Price: $19.95 R 60.86 Color: Denim Size: 2, 4, 6, 8, 10, 12
Skort Price: $34.95 R 106.62 Color: Black Size: 2, 4, 6, 8, 10, 12
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Suede Short Price: $99.00 R 302.05 Color: Green Size: 2, 4, 6, 8, 10, 12
Woven Shorts Price: $24.95 R 76.12 Color: Black Size: 2, 4, 6, 8, 10, 12
SKIRTS Circular Skirt Price: $14.95 R 46.73 Color: Black, Gray Size: XS, S, M, L
Leather Skirt Price: $99.00 R 302.05 Color: Black, Beige Pink Size: 2, 4, 6, 8, 10, 12
Short Scuba Skirt Price: $17.95 R 54.76 Color: Black, Dotted Size: 2, 4, 6, 8, 10, 12
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Jersey Skirt Price: $34.95 R 106.62 Color: Black, Gray Size: XS, S, M, L
SCUBA Skirt Price: $39.95 R 121.88 Color: Black, Gray, Pink Size: 2, 4, 6, 8, 10, 12
Jacquard-Weave Skirt Price: $24.95 R 76.12 Color: Black, Dotted Size: 2, 4, 6, 8, 10, 12
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Maxi Skirt Price: $17.95 R 54.76 Color: Pink, Green Khaki, Gray Size: 2, 4, 6, 8, 10, 12
Crepe Skirt Price: $49.95 R 152.39 Color: Red Size: 2, 4, 6, 8, 10, 12
Pencil Skirt Price: $34.95 R 106.62 Color: Black Size: 2, 4, 6, 8, 10, 12
Wrap Skirt Price: $49.95 R 152.39 Color: Gray Size: 2, 4, 6, 8, 10, 12
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PANTS Slim-Fit Twill Pants Price: $19.95 R 60.86 Color: Teal, Red, Patterned Size: 2, 4, 6, 8, 10, 12
Slacks Price: $24.95 R 76.12 Color: Patterned, Beige, blue Size: 2, 4, 6, 8, 10, 12
88
Wide-Leg Pants Price: $17.95 R 54.76 Color: Black Size: XS, S, M, L
Pants Slim Fit Price: $34.95 R 106.62 Color: Black Size: 2, 4, 6, 8, 10, 12
Pants Loose Fit Price: $24.95 R 76.12 Color: Blue Size: XS, S, M, L
Jersey Leggings Price: $14.95 R 46.73 Color: Blue Size: XS, S, M, L
Pants Loose Fit Price: $17.95 R54.76 Color: Black Size: 2, 4, 6, 8, 10, 12
Dressy Sweatpants Price: $34.95 R 106.62 Color: Patterned, Beige, blue Size: 2, 4, 6, 8, 10, 12
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Harem Pants Price: $17.95 R 54.76 Color: Black, Leopard, Red Size: 2, 4, 6, 8, 10, 12
Slim Fit Pants Price: $12.95 R39.50 Color: Black Size: 2, 4, 6, 8, 10, 12
90
Jersey Leggings Price: $24.95 R 76.12 Color: Pink Size: XS, S, M, L
Loose-Fit Pants Price: $29.95 R 91.37 Color: Grey Size: 2, 4, 6, 8, 10, 12
JEWELRY
$5.95 R 18.14
$9.95 R 30.35
$4.95 R 11.58W
$5.95 R 18.14
$5.95 R 18.14
$9.95 R 30.35
$4.95 R 11.58
$5.95 R 18.14
$4.95 R 11.58
$7.95 R 24.25
$4.95 R 11.58
$5.95 R 18.14
$5.95 R 18.14
$17.95
R 54.76
$12.95
$5.95
R 39.50
R 18.14
91
$9.95 R 30.35
$17.95 R 54.76
$9.95 R 30.35
$19.95 R 60.86
$19.95 R 60.86
$14.95 R 46.73
$9.95 R 30.35 92
$24.95
R 76.12
$9.95 R 30.35
HATS & SCARFS
$12.95
$12.95
$19.95
$12.95
R 39.30
R 39.30
R 60.86
$6.95
R 21.14
$19.95
R 39.30
$9.95
R 60.86
$9.95
R 30.35
R 30.35
$12.95
R 39.30
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SHOES
$12.95
$12.95
R 39.50
$12.95
R 39.50
$24.95
R 76.12
$29.95
R 91.37
$24.95
R 76.12
$24.95
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R 39.50
R 76.12
$24.95
R 76.12
$12.95
R 39.50
$12.95
R 39.50
$29.95
R 91.37
$29.95
R 91.37
R 152.39
$34.95
R 106.62
R 76.12
$5.95
R 18.14
$49.95
$24.95
HANDBAGS
$49.95
$24.95
R 152.39
R 76.12
$29.95 R 91.37
$29.95 R 91.37
$24.95
R 76.12
$29.95 R 91.37
$9.95
$24.95
$49.95
R 30.35
R 76.12
R 152.39
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PART I V COMMUNICATION & PROMOTIONAL PLAN
96
OMNI MARKETING PLAN +The promotional activities for H&M will be featured in three main categories: print advertising, online advertising and an event.
97
PRINT ADVERTISING Magazines H&M will purchase ad spaces in the most influential magazines in Brazil. We have chosen Elle, Estilo (In Style) and Claudia, since there is a high percentage of class AB readers in these three magazines (See Chart Below). There will be an ad promoting H&M pop up shop opening, in each of the magazines for three consecutive months. We are going to purchase a one page space that will start in July and it will end in September prior to the lunch.
AD for Store Space The actual space for the Pop Up Shop will include an AD featuring the logo of H&M and the announcement of the upcoming shop. **There will be no big billboards or any print advertisement on the street because the Brazilian laws prohibits this kind of advertisements.
ONLINE ADVERTISING The starting point for the online advertising will be creating the actual ad for the multiple locations, featuring the announcement of the upcoming shop. The website of JK Iguatemi will be hosting an ad revealing the upcoming shop. The creation of a Facebook, Instagram and Twitter account specific for HM Brazil that will provide information, photos and important dates, preparing the costumers of the future opening. This initiative will start three months prior the launch, during the launch and post launch. Specifically for the Instagram users we will create an HM campaign, that will be launched along with the store opening. It will consist in uploading photos of your HM look after the purchase with the hashtag #HMLOVESBRAZIL. It will give the opportunity for the customer to win an ultimate prize at the closing of the pop-up shop.
EVENT As part of the promotional activities we decided to host a fashion show a night before the opening of the shop, revealing the assortment shown in stores. The organization of the show will start 4 month prior to the day of the event, that will involve the hiring of models, building staff, caterers and music. 98
MARKETING PLAN Pre-‐Launch MAY
JUN
JUL
AUG
Launch SEPT
Post-‐Launch
OCT (FIRST DAY)OCT (REST OF THE MONTH)
PROMOTION Print Adver=sing Create Print Ads for the different media Elle Magazine Claudia Magazine Instyle Magazine Poster placed in the store POP inside JK Iguatemi Online Adver=sing Create AD forJK Iguatemi Website Post AD Create Like Page in Facebook (HM Brazil) Post the official Ad for HM Brazil Post Photos of the Launching Post Photos of the Consumer InteracJon Create an HM Brazil TwiMer Post Tweets Create an Instagram Account for HM Brazil Start Instagram Campaign Event Marke=ng Organize Fashion Show Fashion Show
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PART V
100
FINANCIAL PLAN
FINANCIAL PLAN
+Budget +Salles Dollar +Sales Units +Written Rational
101
102
BRL
BRL
Other Revenue
Total Revenue
BRL
Logistics (Shipping)
BRL
BRL
New Staff (Local)
(1,405,552.00)
BRL
EARNINGS
Each
Gross margin
5 people organizing the store and helping
Staff, we are having 4 cash registers, 2 people for the fitting room
1,405,552.00
BRL
34,000.00
55,000.00
29,100.00
161,500.00
76,000.00
67,700.00
7,022.00
25,674.00
Total Expenses
Hotel and Flight
BRL
BRL
Claudia
Event (Fashion Show)
BRL
Estilo
Online Advertising
BRL
Elle
Magazines Print
BRL
BRL
Poster (Art)
200.00
BRL
Mirrors (12)
Lighting (100)
Banner
176.00 552.00
Curtains (8) BRL
126.00
BRL
Counter (1)
Wall mounted accessories (20) BRL
1,356.00 1,232.00
BRL
Pedestals (2) BRL
638.00 890.00
Racks (16) BRL
3,744.00
BRL
Black Hangers (5000)
BRL
3,900.00
BRL
Racks w/shelves (2)
4,020.00
BRL
BRL
BRL 256,060.22
170,706.82
170,706.82
426,767.04
-
426,767.04
BRL
BRL
BRL
BRL
BRL
BRL
85,353.41
56,902.27
56,902.27
142,255.68
-
142,255.68
BRL
BRL
BRL
BRL
BRL
BRL
64,015.06
42,676.70
42,676.70
106,691.76
-
106,691.76
Week 4
BRL
BRL
Hotel and Flight for 7 HM associates
(1,000,123.31)
1,675,837.79
This is the total amount per two months for 22 members in the staff
Monthly expenditures
Hm announcing a 2014 opening of a flagship
Ad announcing the opening of the pop-up shop
to build and design the space (JK Iguatemi)
Based on a rent of two months, since we are needing a month
Based on a reported average group gross margin of 60%
NOTES
E
Wall of Shelves (1)
8,840.00
BRL
Buckets (6)
BRL
BRL
BRL
BRL
Week 3
G
Maniqui (20 units)
12,830.00
966,052.00
-
-
-
-
Week 2
D
Fixtures
BRL
BRL
Cost of goods sold
Rent
Week 1
U
EXPENSES
BRL
Pop Up
REVENUE
B T
BRL
420
170.78 73.06
BRL BRL
Skirts
Dresses
Shorts
58.11
BRL BRL BRL
Hats
Shoes
BRL BRL BRL BRL BRL BRL BRL BRL
Shorts
Pants
Jewelry
Handbags
Scarves
Hats
Shoes
TOTAL PROJECTED REVENUE
57,382.08
426,767.04
40,135.20
4,881.24
20,220.48
76,549.20
26,748.12
49,096.32
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
58.11
142,255.68
13,378.40
1,627.08
6,740.16
25,516.40
8,916.04
16,365.44
19,127.36
50,584.80
58,595.04
76,750.80
95.56
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
BRL
73.06
106,691.76
10,033.80
1,220.31
5,055.12
19,137.30
6,687.03
12,274.08
14,345.52
37,938.60
43,946.28
57,563.10
95.56
58.11
30.09
91.13
45.49
BRL
675,714.48
A
151,754.40
175,785.12
BRL BRL
Skirts
Dresses
230,252.40
BRL
BRL
BRL
91.13 30.09
BRL BRL
170.78
120.44
L
Tops
BRL BRL
73.06 45.49
BRL BRL
L
95.56
91.13
BRL BRL
170.78
120.44
91.37 174.39
O
REVENUE BY CATEGORY
30.09
BRL
Handbags
Scarves
45.49
BRL BRL
Pants
BRL BRL
BRL BRL
D
Jewelry
120.44
91.37 174.39
105
21
168
S
174.39
BRL BRL
Tops
UNIT PRICE
224
Total Units
E
BRL
140
84
210
147
168
84
315
252
630
Week 4
L
Shoes
28
672
196 280
Hats
91.37
112 224
Scarves
672
Pants 588
336
Shorts
336 420
840
1,260
Dresses
Handbags
1,008
Skirts
840
Week 3
A
Jewelry
2,520
Week 2
Tops
UNIT SALES
Week 1
S R
103
104
15% 4% 8% 7%
10% 8% 1% 5%
Dresses
Shorts
Pants
Jewelry
Handbags
Scarves
Hats
Shoes
7,224
2,408
140
28
1,806
105
21
168
as an example, being TOPSHOP and Sephora's, stating that they reach the expected month sales in the first ten days.
with a high conversion rate of 6% given that the demand in Sao Paulo consumer is high. Looking at two major international brands
The total sales unit is calculated by the daily footfall of 20,000 in JK Iguatemi mall in Sao Paulo
0
420
84
224
210
13,300
665
133
1,064
1,330
931
1,064
I
672
280
147
168
532
N
840
196
224
84
1,995
1,596
U
588
672
112
315
252
3,990
-
336
420
336
630
2,100
1.50%
S
1,260
1,008
840
2,800
2.00%
140,000
Total Units
E
100%
12%
Skirts
8,400
Number of purchases (1 per) 2,520
6.00%
Conversion rate
140,000
20,000
Week 4
L
30%
140,000
Weekly footfall
20,000
Week 3
A
Tops
20,000
Week 2
Daily footfall
Week 1
S T
2 BRL 1 BRL
Pedestals (2)
Counter (1)
100 BRL
Lighting (100)
4,542.08 BRL
2.00 BRL
46.00 BRL
25,674.00
200.00
552.00
176.00
A
5188 BRL
12 BRL
Mirrors (12)
22.00 BRL
L
TOTAL
8 BRL
P
Curtains (8)
126.00
1,232.00
1,356.00
890.00
-
6.30 BRL
1,232.00 BRL
678.00 BRL
890.00 BRL
638.00
E
20 BRL
1 BRL
Wall of Shelves (1)
319.00 BRL
3,744.00
R
Wall mounted accessories (20)
2 BRL
234.00 BRL
3,900.00
U
Racks w/shelves (2)
16 BRL
0.78 BRL
4,020.00
8,840.00
T
Racks (16)
5000 BRL
670.00 BRL
442.00 BRL
Total
X
Black Hangers (5000)
6 BRL
20 BRL
Number of Each Item Price per unit
I
Buckets (6)
Maniqui (20 units)
FIXTURES
F N
105
WRITTEN RATIONAL Sales Unit
Profit & Loss
The total sales unit is calculated by the daily footfall of 20,000 estimated in JK Iguatemi Mall in Sao Paulo. Being that the consumer demand and impulsive shopping habits of the target market is elevated, there is an estimation of a high conversion rate of 6% in the first week. With extensive research to other international brands entering Sao Paulo, it was found that Topshop in the first day had 150 brazilians waiting in line for the opening of the store in JK Iguatemi and Sephora reached its target sales on the first 10 days of the opening. This is a strong evidence and support to place a high conversion rate in the first week. For the second and third week the conversion rate will gradually decrease to 2%.
The development of the Pop-Up shop resulted into a loss, but that was already expected., as stated before the purpose of the pop-up retail store is for marketing and branding purposes, specially since they have future plans for opening H&M stores in Brazil .
The product assortment is divided in 10 categories focus only on women apparel and accessories, with emphasis in tops, skirts and dresses. Budget The H&M initiative of creating the pop-up shop in Sao Paulo is for the only purpose of building brand awareness and test the new market for future business opportunities, this incentive will not generate profits. The only revenue that will result at the end will be the pop-up sales and an extensive list of expenses starting with the rent of the space in JK Iguatemi for two months (BRL 966,052.00), the shipping and handling of the products, that were calculated from the HM warehouse in Germany to the main port in Brazil renting a 45� container by sea, and then a land transportation to Sao Paulo, adding the high import tax of duties that being 35% (World Freight Rates). Another expense will be the design of the space and decoration, considering everything inside the store, from fixtures to the art. A major part of the expense is the advertising, that will be focused in print advertising, online and the fashion show that will be hosting in the opening day. 106
107
108
A P P E N D I X BIBLIOGRAPHY 109
A P P E N D I X
110
B
R
A
N
D
-
M
A
T
R
I
X
PRICE
ASOS Lowest Scarves 14.8 Dresses 18.5 Outerware 42.58 75.88
ACCESIBILITY
# Brick-‐and-‐Mortar # Online Countries Highest 255.56 712.98 916.69 1885.23
URBAN OUTFITTERS Lowest Highest Scarves 19 215 Dresses 34 360 Outerware 49.99 625 102.99 1200
BERSHKA Lowest Highest Scarves 14.99 25.99 Dresses 19.99 89.99 Outerware 19.99 189.99 54.97 305.97
NEXT Lowest Scarves 11 Dresses 36 Outerware 46 93
0
237 237 118.5
1961.11 980.555
# Brick-‐and-‐Mortar # Online Countries 215
132 347 173.5
1302.99 651.495
# Brick-‐and-‐Mortar # Online Countries 934
15 949 474.5
360.94 180.47
# Brick-‐and-‐Mortar # Online Countries Highest 33 410 200 643
NEW LOOK Lowest Highest Scarves 14.96 18.99 Dresses 14.96 215.66 Outerware 32.55 406.94 62.47 641.59
AMERICAN EAGLE Lowest Highest Scarves 24.95 29.95 Dresses 34.95 69.95 Outerware 49.95 99.95 109.85 199.85
H&M LOWEST Scarves 6.95 Dressses 12.95 Outerwear 19.95 39.85
HIGHEST 59.95 69.95 129 258.9
ZARA LOWESt Scarves 15.90 Dressses 39.99 Outerwear 89.90 145.79
HIGEST 79.90 159.00 299.00 537.90
700
61 761 380.5
736 368
# Brick-‐and-‐Mortar # Online Countries 1104
120 1224 612
704.06 352.03
# Brick-‐and-‐Mortar # Online Countries 893
82 975 487.5
309.7 154.85
# Brick-‐and-‐Mortar # Online Countries 3000
9 3009 1504.5
298.75 149.375
# Brick-‐and-‐Mortar # Online Countries
MANGO LOWEST HIGHEST Scarves 19.99 49.99 Dressses 39.99 189.99
1808
86 1894 947
683.69 341.845
# Brick-‐and-‐Mortar # Online Countries 2500
110
111
Scarves Dressses Outerwear
15.90 39.99 89.90 145.79
79.90 159.00 299.00 537.90
MANGO LOWEST HIGHEST Scarves 19.99 49.99 Dressses 39.99 189.99 Outerwear 69.99 299.99 129.97 539.97
UNIQLO LOWEST Scarves 12.90 Dressses 19.90 Outerwear 29.90 62.70
EXPRESS Low $ High $ Dresses 39.9 298 Outerwear 98 378 Scarves 29.9 34.9 167.8 710.9
1894 947
683.69 341.845
# Brick-‐and-‐Mortar # Online Countries 2500
110 2610 1305
669.94 334.97
858
14 872 436
222.40 111.2
# Brick-‐and-‐Mortar # Online Countries 834
19 853 426.5
150.94 75.47
# Brick-‐and-‐Mortar # Online Countries 550
56 606 303
878.7 439.35
# Brick-‐and-‐Mortar # Online Countries High $ 69.95 148 34.94 252.89
FOREVER 21 Low $ High $ Dresses 8.8 59.9 Outerwear 15 77.8 Scarves 7.8 16.8 31.6 154.5
THE LIMITED Low $ High $ Dresses 79.95 98 Outerwear 79.95 128 Scarves 32.95 36.95 192.85 262.95
TOP SHOP Low $ High $ Dresses 24 390 Outerwear 90 790 Scarves 28 120 142 1300
112
86
# Brick-‐and-‐Mortar # Online Countries HIGHEST 19.90 49.90 89.90 159.70
PULL & BEAR LOWEST HIGHEST Scarves 9.99 15.99 Dressses 12.99 35.99 Outerwear 15.99 59.99 38.97 111.97
GAP Low $ Dresses 49.95 Outerwear 59.95 Scarves 19.95 129.85
1808
1392
80 1472 736
382.74 191.37
# Brick-‐and-‐Mortar # Online Countries 480
6 486 243
186.1 93.05
# Brick-‐and-‐Mortar # Online Countries 255
54 309 154.5
455.8 227.9
# Brick-‐and-‐Mortar # Online Countries 600
1442 721
100 700 350
AVERAGE PRICER PER CATEGORY
Average Price Per Category LOW HIGH BRL 30.35 BRL BRL 46.73 BRL BRL 30.35 BRL BRL 39.50 BRL BRL 39.50 BRL BRL 15.05 BRL BRL 30.27 BRL BRL 21.14 BRL BRL 58.11 BRL BRL 39.40 BRL
Tops Skirts Dresses Shorts Pants Jewelry Handbags Scarves Hats Shoes
152.39 302.05 210.52 302.05 106.62 75.92 151.99 39.04 58.11 151.72
AVERAGE BRL BRL BRL BRL BRL BRL BRL BRL BRL BRL
91.37 174.39 120.44 170.78 73.06 45.49 91.13 30.09 58.11 95.56
This prices already reflect a 30% markup.
NO. OF UNITS - PER SIZE,PER ITEM Apparel TOPS DRESSES SHORTS SKIRTS PANTS
Styles per category 38 18 7 20 18
2 15 16 5 10 4
Shoes
Styles per category 16
5.5 2
Handbags Scarves Jewelry
Hats
Styles per category Units per style Total 9 148 7 152 Rings Necklaces Earrings
8 9 8 3
39 38 39 44
# OF UNITES PER SIZE PER ITEM 4 6 8 20 20 20 22 20 20 10 16 15 17 17 14 10 12 12
6 4
7 5
8 6
10 15 16 15 12 12
8.5 6
12 Total of units per category TOTAL 15 105 16 110 15 76 10 80 10 60
9 6
9.5 6
3990 1980 532 1600 1080
10 Total of units per category 6 41 656
1330 1064 310 310 310 133
113
BIBLIOGRAPHY
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“Brazilian Etiquette.” Country Etiquette, Manners for Global Travelers, Etiquette Guide, Etiquette Dos and Don’ts, Social Etiquette, and Manners in Brazil. Vayama, 2011. Web. “Logistics and Distribution.” Logistics and Distribution. N.p., n.d. Web. 07 Mar. 2014 “Freight Calculator.” World Freight Rates -. N.p., n.d. Web. 09 Mar. 2014. “Brazil Profile.” BBC News. BBC, 22 Oct. 2013. Web. 7 Feb. 2014. “What Brazilians Are Buying in 2013.” Latin Link. N.p., n.d. Web. 10 Feb. 2014. “Navigation.” Atkearney.com. N.p., n.d. Web. 10 Feb. 2014. http://www.atkearney.com/news-media/news-releases/news-release/-/asset_publisher/00OIL7Jc67KL/content/id/1372527 Anaya, Suleman “Inside Brazil’s Booming Fashion Industry.” BoF The Business of Fashion. N.p., n.d. Web. 7 Feb. 2014. “2013 Best Brazilian Brands – Ranking Analysis.” Interbrand IQ. N.p., n.d. Web. 10 Feb. 2014. http://www.interbrand.com/en/knowledge/IQ/2013/best-brazilian-brands/best-brazilian-brands/analysis.aspx “9to5Mac: Apple IPhone, Mac and IPad News Breaking All Day.” 9to5Mac. N.p., n.d. Web. 10 Feb. 2014. http://9to5mac.com/2011/12/16/why-does-iphone-4s-cost-2000-in-brazil-and-what-does-appplanto-do-about-it/ “Annual Report AB-InBev 2012.” Http://www.ab-inbev.com/pdf/AR12/AB_InBev_AR_EN.pdf. N.p., n.d. Web. 10 Feb. 2014. “GCI Magazine.” Beauty in Brazil: A Retail Perspective. N.p., n.d. Web. 10 Feb. 2014 “Sephora Expects 40 Stores in Brazil.” GS&MD. N.p., n.d. Web. 10 Feb. 2014. “Brazilian Culture and Lifestyle Guide.” CelebrateBrazil.com. N.p., n.d. Web. 10 Feb. 2014. “Made in Brazil.” - Premium Beauty News. N.p., n.d. Web. 10 Feb. 2014. http://www.premiumbeautynews.com/en/the-assumed-pride-of-beauty-made,4346 “The Brazilian Passion for Soccer.” The Brazilian Passion for Soccer. N.p., n.d. Web. 10 Feb. 2014. “Brazil Profile.” BBC News. BBC, 21 Aug. 2012. Web. 10 Feb. 2014. “7 Key Statistics about Brazilian Consumers.” Latin Link. N.p., n.d. Web. 10 Feb. 2014. “Born in Brazil.” : Living in São Paulo. N.p., n.d. Web. 02 Mar. 2014. 115