My brand plan - CYCLOAN

Word count: 7931 Emily Kemp N0684707

FMBR30001: Strategic & Creative Solutions This submission is the result of my own work. All help and advice other than that received from tutors has been acknowledged and primary and secondary sources of information have been properly attributed.

Should this statement prove to be untrue I recognise the right and duty of the board of examiners to recommend what action should be taken in line with the University's regulations on assessment contained in its handbook.

Printed name: ..............................................

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CONTENTS CONTENTS

1 1 2 4 5 8

PRE-BRAND DEVELOPMENT Report aims Stage 1 insights Research aims & objectives Methodology Concept development

12 12 20 22 23 24 32 34 34

THE BRAND Brand overview Brand identity Business objectives Marketing objectives Marketing mix Brand benefits Business structure Logistics management

36 36 38 38 39 40 40 42 44 45

THE MARKET The clothing industry overview Macro trends

Circular economy

Sharing economy Micro trends

Glitter everything Market readiness Market health Market size

46 46 48

COMPETITORS Positioning Competitor sectors overview

50 53

Porter’s 5 forces Key players

56 56 58 59

GROWTH STRATEGIES Short-term Medium-term Long-term

60

SWOT ANALYSIS

62 62 63 64

CONSUMER ANALYSIS Buying behavior Why the buy The Dedicated Ravers /

Dress to impress The Identity Morphers /

Dress to express The Environmental Prioritizers /

Dress to address

68 70 72 72 73 73 74 74 76 80 82 82 84

COMMNICATION PLAN Objectives Key areas for communication Budget B2B Direct Marketing Consumer touchpoints App display & navigation Email marketing Free delivery Lookbooks INSTAGRAM

85 86 88 88 90 92 92 94 95 96

External content Own content PPC MARKETING Instagram Google AdWords Flyers Promotional stands Communications structure Results Customer journey

99 99 100 100 102 103 103 104 106 110 111 112

FINANCE Objectives Income forecasts Sales forecast ROI on marketing

communication tactics All income sources Start-up finance List of needs Profit and loss accounts Sensitivity analysis Return on investment Cash flow

113

KPIs

114

RISK ASSESSMENT

117

SUMMARY

PRE-BRAND DEVELOPEMNT

REPORT AIMS 1

To conduct appropriate research methods to obtain the most validated and reliable results as possible while being mindful of its limitations.

2

To utilize on the opportunities discovered in the Stage 1 report to develop a solution for issues discovered.

3

To evaluate, both primary and secondary, research to understand the external landscape, competitors and consumer needs to draw conclusive insights and design a desirable, functional brand.

4

To create a brand which presents a feasible, alternative to buying fast fashion while addressing consumer wants and needs.

5

To design a visually pleasing report and create cohesive branding, fitting to the brand’s identity, which is aesthetically pleasing.

1

STAGE 1 INSIGHTS (Kemp 2019)

THE ISSUE Fashion is the second dirtiest industry worldwide (Sweeny 2015) with detrimental impacts prevalent at every stage of a product’s life. Advancements have been implemented over the last 20 years, reducing the impacts inflicted per garment, however, the net impact is still increasing as efficiency gains are outweighed by the ever-growing scale of consumption (Fletcher 2019), having nearly doubled in the last 15 years (Laville 2017). Social media has had a huge input to this, particularly with younger consumers, as many will only be pictured in an item 1-3 times before retiring it (Siegle 2018). Consequently, fashion cycles have been pushed to extremes by constant influxes of new items being demanded, leaving old stock needing to be heavily discounted in order sell. The closing months of 2018 showed this unequivocally [Appendix 13, Heavily discounted fashion].

The Stage 1 report explored the existence of the attitude-behaviour gap in fashion among millennials (18-36), in other words, how people may say one thing regarding sustainability but, when purchasing clothing, they behave differently. The research of this report revealed that fashion is reflective of people’s sense of identity, their individual attributes, and what they value most. Their buying behaviour is determined by their personal hierarchy of attributes.

Despite this age group, collectively, wanting to be more sustainable than any generation before them, when purchasing fashion, factors such as price, following the ‘in thing’, and convenience are valued more highly. Thus, the existence of the attitude-behaviour gap.

2

THE OPPORTUNITY In order to encourage sustainable behaviour other factors must not only be considered but prioritised. Consumers must have a bigger perceived self-benefit while sustainability acts as a secondary benefit:

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Pre-accustomed consumption habits must be catered for by allowing individuals to constantly obtain new looks to photograph and share, while reducing the negative environmental impacts currently associated with the fast fashion model.

Pricing strategies must be competitive against fast fashion giants to offer perceived better value for money to the consumer whilst providing fair rates to everyone involved in the production process, and ethical, environmentally-friendly decisions being maintained throughout.

The brand must be highly accessible, convenient, and have a varied product range.

THE PROPOSAL An app on which garments from niche designers and brands are rented out, focusing on catering for events and festivals, as a more sustainable way of consuming fashion. Despite sustainability being the driving point behind the brand, the forefront shall focus on delivering more desirable consumer benefits: affordability, convenience and constant access to new looks.

3

RESEARCH AIMS & OBJECTIVES To recognise how to maximise sustainable consumption of clothing among people aged 18-36.

To understand the unsustainable issues associated with fashion consumption.

To understand consumer’s (18-36) purchase behaviour when buying for nights out, events and festivals and recognise what they look for most.

To investigate the viability of the proposal and resolve logistic related issues.

To gauge potential customers reaction to the concept and rectify any unclear or unfavoured aspects.

To understand designers wants and needs from a rental platform.

To investigate the financials associated with the concept and confirm if the brand could be profitable.

4

METHODOLOGY In order to reach the research aims a varied marketing retail mix was established [Appendix 1].

SECONDARY A broad scope of secondary research was used to develop this report, including: • Blogs • Books • Presentations • Journal articles • Reports, newspapers • Press releases • Government publications • Magazines • PDFs • Websites • Podcasts • Mobile apps •

The Fashioned From Nature exhibition at the V&A museum

The combination of these resources was used to better understand how to build a sustainable business within fashion, gain insight into the market landscape and the success of certain brands within it, and consumer habits.

Despite thorough research being carried out, some aspects, such as the conversion rates used in the marketing communication plan, were based on assumptions or sources deemed not fully reliable. Predictions were made as systematically as possible, given the information available, however may not be completely accurate.

5

PRIMARY CONSUMER TESTING

Online survey

Focus groups

Responses: 121

Participants: 9 females, 4 males, aged 20 - 22

An online survey was conducted to obtain understanding of the overarching opinions, knowledge and behaviours of 18-36-year-olds. Responses were collected via posting on multiple social media accounts to reach to a wide audience. This also eliminated the possibility of skipped or missed questions by requiring answers (Kress 1988), and simplified the analysing process by Google Forms providing responses in a statistical form. Only 1 open-ended question, requiring a short response, was included, the remaining were reserved for focus groups as they “usually result in poor replies in self-completion questionnaires” (Hague and Jackson 1998, p.67).

As the first step in understanding the consumer, initial findings from the survey were noted, and further questions were developed for focus groups to gather greater detail.

While the survey was operational, secondary research continued. Certain questions within the survey became undermined as new sources were discovered providing findings using greater quantities of participants, making them more reliable.

Results collected were heavily female-biased and dominated by a 20-21 age group, due to the friends and followers of the social media accounts used. As the brand generated a female focus this was viewed as a positive, however, findings may not be as representative of older millennials, aged 25-36.

In order to select the most appropriate target consumer, both males and females were used as participants, with a variation of individuals who were considered to be heavy festival and event goers, and who were not. Questions followed a semi-structured form to minimise risk of them being relayed and interpreted differently between groups, which would have resulted in alternative answers being given. However, questions were altered between each group to expand on issues and ideas brought up by the prior group and delve deeper into certain areas as focus was established from the brand development taking place.

More open-ended questions were included to deliver richer, qualitative data from real consumers. These acted as an ‘exploratory tool’ (Hague 2003, p.61) as the initial question could have been led in any direction. The second and third groups were also used to gauge thoughts of the brand logo and colour scheme.

Groups were formed of friendship groups which resulted in greater interaction as they felt free to speak their opinion in front of one another, even if their response triggered an unexpected reaction. This benefit was one justification for using a focus groups as opposed to individual interviews (Malhotra 2012, p.189).

Had this survey not reached 100 responses its findings would have been disregarded as they would be unrepresentative of the market as a whole and unreliable.

6

BRAND GAUGING

Emailing

PRICING

Emailing & telephone

Responses: 12 niche brands / designers Direct mailing, via email and the messaging system on Etsy, were used to contact a selection of designers fitting to those that would appear on the brand app. As these are individuals with little time available, questions were kept as direct as possible to obtain the specific information required and encourage a greater quantity of responses to allow for comparison. As emailing is an unreliable means for acquiring responses, uncountable emails were sent to relevant individuals to ensure a strong number of responses. Quantitative questioning was used but the list concluded with one open-ended, qualitative inquiry. This allowed the respondent to elaborate on any aspect they wished but didn’t pressurize those who may have nothing more to say or didn’t have the time available to provide a long response. Pressurising for these rich responses may have deterred designers from replying what so ever.

Once the brand concept had been established, emailing and telephone calls were used to obtain specific quotes in order to test the financial viability of the business, as to address the ‘feasibility’ aspect of report aim 4, and to solve ‘logistical issues’ to meet research aim 2.

7

CONCEPT DEVELOPMENT Behaviours and opinions were gauged and compared for festivals, events and more common, club nights out. Findings, from the online survey and focus groups, revealed that consumers care more about their look at bigger events [Appendix 4; 5; 6; and 7]. Very different strategic approaches are necessary to cater for club nights than festivals and events and therefore shouldn’t be considered in conjunction. The later was selected as the brand focus as no other rental brand currently offers a festival range, whereas most offer garments for nights out.

Multiple business models were explored in the development process, however, initial ideas proved unprofitable when following decisions to meet the needs of all parties involved (e.g. commission rates of designers and price points consumers were willing to pay). Consequently, a direct business model was adopted meaning movement of garments only takes place between the brand and customers. Former issues found became strengths for the brand, acting as a point of differentiation and creating distance between current, and future potential, competitors (this will be expanded on in pages 46-55).

8

£ CONSUMER

LOCAL BUSINESSES

DESIGNER

£

CONSUMER

DESIGNER

£ CONSUMER

DESIGNER

9

10

11

BRAND OVERVIEW WHAT DO WE DO? Here at Cycloan, we offer a range of high-quality, daring garms for rental, allowing you access to top end pieces at a low-end price. We believe in bringing about a more sustainable industry but believe you shouldn’t suffer to make this happen!

WHY RENT?

OMG! SAVE

SPARKLE

SUSTAIN

Access premium styles at a fraction of the price.

Dazzle and feel incredible exploring new looks.

Help better utilize clothing and reduce to amount sent to landfill.

12

WHY US? No other platform offers groovy garms for rental. Get the looks you want, when you want them, at a price you can afford.

HOW DOES IT WORK?

SCHEDULE

ENJOY

RETURN

Choose your look and tell us when you want it.

Receive on your day of choice and rock it!

Return using labels provided.

IT’S THAT SIMPLE!

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VISION To change the way fashion-forward individuals consume fashion for events for which they desire alternative styles for a short-term need basis in order to bring about a more sustainable industry.

MISSION To provide consumers access to the most daring, edgiest styles, allowing them to express their individuality and become the headline act of the fashion world at any event they attend.

VALUES

OMG! Inclusivity

Individuality & self-expression

Sustainability

We believe that everyone should be able to wear what they want.

We provide access to the top garms so you don’t have to be a rich b*tch to own the show!

We believe in everyone having the confidence to be themselves and express it through their clothing choices. Look no further for the quirky looks you crave!

We believe in transforming the fashion industry into a circular economy through full utilisation of high-quality garments (and they look a lot better too!)

ESSENCE The daring looks you want now at a price you can afford.

TONE OF VOICE Confident, witty

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OUR STYLE

We aim to bring about a CYClical model to the fashion industry

It’s what we do...you get it

Logo variations The Cycloan logo may be presented, as solid fill, in any one of the Cycloan colours. The, black and hot pink, split colour logo may never be present smaller than 4cm. All logos must be visible, un-pixelated and not placed on top of an image closely resembling its colour.

Min 4cm

16

Cycloan text

TITLES (70pt) Subtitles (30pt) Avenir Next Condensed - Heavy Italic Body text (9pt) Kohinoor Bangla (Light)

Cycloan colours R = 234 G = 82 B = 150

R = 242 G = 178 B = 209

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R = 255 G = 237 B=0

PERSONALITY Sincerity Ruggedness Excitement Sophistication Competence 5 types of brand personalities, David Aaker 1997 (West, Ford and Ibrahim 2015)

According to Aaker (1997), there are 5 different types of brand personality. For Cycloan this is excitement.

The concept is to “match brand personality with the consumer segment personality profile to establish a strong connection” (West, Ford an Ibrahim 2015, p.160). Due to this Cycloan’s consumer base will be thrill-seeking purchasers.

18

DIFFERENTIATION “Differentiation is imperative.” (Wheeler 2009) No other platform offers rental of festival wear.

Consumers desire dazzling looks when attending their big events but struggle to justify high prices when knowing they’ll only wear them a handful of times. Renting allows them access to high end, show-stopping pieces at the price level of fast fashion!

19

BRAND IDENTITY Adapted from the Brand Identity Planning Model (Aaker 2010)

As a product

As an experience

High quality clothing

Seamless

Alternative styles

Simple

Association with those who desire outgoing looks for big events. They wish to break from the norm and experiment with styles.

Enhances experience at events products are intended to be worn to

Consistency in standards of products on arrival

Value proposition “The less known your company is, the better value proposition you need.” - (Laja 2017)

Creating, communicating and delivering value is argued to be the very definition of marketing in today’s world (Belch and Belch 2018). As a new brand, Cycloan’s value proposition must be supreme in order to convince consumers that a purchase with them is worth them parting with their hard-earned cash, by developing and sustaining desirable brand perceptions.

FUNCTIONAL

“Value is closely related to quality.” - (Aaker 2010) Cycloan products are highly accessible and of excellent quality. Threat of outfit disasters at the most inconvenient times are eradicated, meaning customers can boogie on worry free.

SELF EXPRESSIVE

Cycloan is a ‘vehicle for their customers to express their personality’ (Aaker 2010).

Whether this be fitting with their everyday levels of self-expression or taking on a completely different persona, Cycloan allows customers access to a variety of daring styles to experiment with their look and express who they are.

EMOTIONAL

Wearing the elite garms, Cycloan customers will become the headline act of fashion, adorned by their friends and other event attendees. All eyes shall be on them, providing a surreal ‘feel-good’ factor enhancing their experience. Furthermore, the guaranteed ‘Instagrammable pics’ will create additional social value to purchases [Appendix 13, Social currency].

Cycloan’s confident personality radiates through to their customers to form a stronger perceived connection and sense of familiarity with the brand.

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As a symbol

As a person

As an organization

Bright

Edgy

Bold

Quirky

Values the aid of change to a more sustainable fashion sector.

Colourful

Outgoing

Eye catching

Confident

“A strong symbol can provide cohesion and structure to an identity and make it much easier to gain recognition and recall.” (Aaker 2010)

Witty

Form an aspect of respect

Bubbly Charismatic

Credibility The use of several brands and designers shall lend credibility for Cycloan. Those already familiar with some of the names featured will be more inclined and more trusting of the app, as their faith is already established with the niche businesses.

Reviews given by previous consumers will additionally credit Cycloan’s claims as they confirm their experience with the brand.

21

BUSINESS OBJECTIVES

To provide consumers with the looks they want, when they want them.

To maintain a low carbon footprint through all business activities.

To become profitable within 3 years.

22

MARKETING OBJECTIVES AWARENESS From Year 2, to obtain at least of 5% of app downloads through organic searches each year.

INTEREST & DESIRE To reach 25,000 app downloads within the first year, to increase by at least 30% year-on-year, for the first 5 years.

ACTION To generate 5,000 sales within the first year, to increase by 120% in the Year 2, 83% in the Year 3, 60% in Year 4 and 50% in the Year 5.

RETENTION From Year 2, to maintain a retention rate of at least 25% year-on-year.

(See Appendix 15 for objective related actions)

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MARKETING MIX “Marketing has never been more important or pervasive than it is today.� - (Belch and Belch 2018, p.7)

PRODUCT Cycloan will provide a selection of premium, trend-driven festival attire from a range of niche designers and brands.

Later in the first year, alternative occasion wear will additionally be introduced (see p.56).

Though offering a variety of products, the service itself shall be the key offering of Cycloan. Where these products may be found elsewhere, for purchase, it is the service which no other brand provides for this segment of fashion.

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Nasteski Fashion

PRICE Average rental prices:

3-days 7-days 14-days

30% RRP 35% RRP 40% RRP

Full purchase will not be offered on the Cycloan app as this could disturb following rentals. However, should they fall in love with a piece, customers may request a discount code to use via designer’s individual websites, the value of which will be decided by the designer.

Should the garment require repairs on return (more than that needed due to general wear and tear) an additional charge will be incurred.

These will be made clear to the customer on, and prior to, order confirmation.

Light damage Heavy damage Unsalvageable

+ up to 5% + up to 20% + up to 60%

Consumers will never be charged 100% RRP as to lend incentive to still return the piece, even if unsalvageable. This is to ensure it will be sent for recycling and re-usage as opposed to the consumers tossing it to end up in landfill. Furthermore, this will not become an issue, in terms of Cycloan covering its costs of purchasing the garment, as they will buy from designers at a 20% discount rate.

Consumers “expect ordering and paying to be quick and easy.” - (PwC 2019) Payments shall be taken using Klarna, a pay later service, giving customers up to 30-days to pay what they owe from the date their order is dispatched. The Klarna bill will initiate at the full RRP of garments to be reduced to the rental price, or rental price plus damage fee, on return. This ensures customers will return garments and offers a means for Cycloan to guarantee they’ll receive damage or late fees should they be incurred. Customers also benefit as they’re granted access to pieces they desire when they may be strapped of cash for the month. This aspect may be particularly favoured for those wishing the save their money for upcoming festivals or holidays.

Many fashion brands, such as Asos, Topshop and Missguided, as well as other sectors are already using this service as they see it beneficial for their customers and, consequently, their brand. Now a trusted, familiar system amongst Cycloan’s target demographic, the use of Klarna will increase trust at checkout for new customers as it is considered an additional security label (klarnacom 2018).

Klarna additionally maintain all risk with the service by paying merchants in-full, upfront (Klarna : Slice it in 3. 2019), meaning subsequent cash flow issues won’t arise.

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PLACE In the first year, stock will be held in the owner’s home which will be relocated to a local Easistore unit in Year 2. All sales will take place on the Cycloan app, where consumers nationwide will have full access to all pieces available.

£135

from £40

£206

from £60

£127

from £38

£208

from £60

!

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A corresponding website will additionally be in place, which will never be seen by customers, for logistical aspects of transactions. This will operate elements such as the printing of delivery labels and sales analysis, making it a crucial element to the functionality of the business.

PROMOTION Cycloan will use a varied promotional mix [Appendix 16], only discounting traditional media such as television or newspapers etc.

Online and offline, internal and external content will be driven to reach as many targeted consumers as possible, generating awareness for the brand and encouraging sales (See communication plan, p. 72-97 for more).

PROCESS PRE-RENTAL Cycloan’s stylist will be constantly observing and predicting trends in order to understand the target customer’s current and future desires, to ensure the right pieces are available for rental at the right time. This will take place through traditional trend forecasting measures, such as keeping alert of runway looks, celebrities and influencers etc, as well as analysis of own sales to review what is selling well and what is not. The Cycloan website will allow syncing with Google Analytics for this to operate. The stylist will also maintain close contact with designers to see what they are planning as well as being able to request certain pieces or styles to be produced.

Pieces will be selected and purchased at 80% RRP, in keeping with commission rates charged by, festival wear specialists, We Koko and Wild Thing [Appendix 9-B].

On arrival, garments shall be photographed by the stylist, both on and off models to give customers full view of the piece. Models used in the first years of operation will be friends of either the stylist or owner, or models seeking experience, who are willing to partake for free.

Garments will be uploaded to the app with a selection of photos, along with its price range (3-14 days) and potential damage fees. These shall then appear in the ‘New’ section as well as any relevant trend sections, e.g. ‘glitter’, ‘flares’, ‘rainbow’. A quarterly look book will also be produced, showcasing new pieces and how to wear older pieces for different occasions.

Garments will be placed in a biodegradable, perforated bag, for protection, and a cardboard, branded box, for storage, along with a return note readily placed.

A barcode shall be generated for garments, which will be printed onto a sticker and placed on the side of boxes to clarify its contents.

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1 day

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THE RENTAL MODEL

3 days

“Short-term rental models offer a compelling value proposition, particularly for segments where clothing users have shorter-term needs, changing practical requirements, or fast-evolving fashion preferences.”

- (Ellen MacArthur Foundation 2017)

On order placement, the garment will become unavailable for the duration of the requested rental period as well as 3 days prior to and 2 days after this, to allow for product turnaround time at both ends. Should another customer request the piece after this rental, they shall be asked to select a ‘back-up option’ should their first choice fail to be returned.

Delivery labels will be printed via the website and applied to the box. The box shall be scanned out of the warehouse via the mobile app and the Klarna payment link established. Delivery shall be conducted via the Royal Mail 24 service, to arrive at customer’s home addresses, or local post office, within 1-day. The customer shall retain the garment for 3-14 days before returning it, using the returns slip provided by Cycloan. On retrieval, Cycloan shall assess the garment for damage and confirm the price owed by the customer, via the mobile app, altering the Klarna invoice. Garments will be taken to the trusted dry-cleaners where repairs, if necessary, and laundering shall take place before being brought back to the storage unit. Items shall be rescanned into the system and placed into a new bag and box along with a new returns slip, ready for their next shipment.

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TRY-ONS

PEOPLE

61% of UK consumers prefer to try clothes on before they buy them.

- (Dover 2018)

A try-on feature shall be offered allowing customers to order items prior to their event and only be charged for the additional postage costs incurred.

Scenario 1 Customers may order items a long time prior to their event to see if they like it in person or to test its fit. In this case, they’d pay £6 for the postage only.

Cycloan shall operate with 2 key members running the business, the owner and stylist. Part-time staff will additionally be employed from Year 2 to cover high sales periods and from Year 3 at least 1 will be available every day of the week.

The brand shall also rely on local dry-cleaners who will take responsibility for laundering and repairs of garments.

A close relationship here is vital in order to ensure equal commitment to efficient turnaround times of garments, allowing them to be ready to send to the next customer.

Scenario 2 Alternatively, they may order multiple pieces to pick their favourite from. In this case, customers may return the pieces together if they are renting for 3-days only, as to avoid any unnecessary transportation and eliminate additional postage costs incurred. Although this puts some level of trust on the customers, garments shall still be assessed for sign of wear to identify consumer deception.

On occasions where the customer is renting for 7 or 14 days, 2 returns slips will be requested and sent. Customers must return the items they don’t wish to wear after the day of arrival and will be charged £3.27 for the additional postage.

POST-RENTAL Garments will last, on average 15 wears. After this they will be put up for sale at 20% of its RRP. The final customers to rent the piece shall be alerted that the garment has come to the end of its rental life and offered the chance to buy it before anyone else. Should they decide against this, the customer shall return it as usual and the garment shall be placed on a ‘Buy It’ section where anyone can access it. At this point, Cycloan shall additionally replace this piece with a new one. This may be an identical piece or a completely new one had it not sold particularly well or is going out of fashion.

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PHYSICAL EVIDENCE All products shall arrive to customers in branded boxes, enhancing the ‘unboxing experience’ (Ellen MacArthur Foundation 2017). A greater sense of luxury on arrival will endorse a heightened level of pleasure than that of fast fashion deliveries, which use a plastic for packaging. No plastic will be used by Cycloan as to commit to the brand’s sustainability values.

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BRAND BRAND CUSTOMERS DESIGNERS “Although the operations and logistics may be slightly more complex than a traditional one-way sales transaction, potential profit margins on each item are bigger.”

- (Pinnock 2019)

Cycloan will generate profits, on average, after 4.29 rents of a garment.

Rental models have the potential to make much greater profits per garment than buying. For Cycloan, £240 profit will be generated, on average, from pieces which RRP at £120 [Appendix 28].

“If I had the money I would go to fancy, cool brands but I just think they’re very over-priced.”

[Appendix 2, Participant 2]

Customers benefit from the product offerings of bold, quirky styles, different to that available on the high street, guaranteeing their ‘Instaworthy pic’ every time. In a renting model, consumers only pay for their usage as opposed to its full value.

Due to this, they may gain access to high-end pieces, for a given time period, which may otherwise be out of their price range. Furthermore, the model allows them to regularly update their look, so they never have to outfit repeat again, as well as freeing up their wardrobe space as ownership becomes a thing of the past.

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“As a designer, my main problem is time, money and marketing.”

- Jessica May Bennett, Kokomo.Design [Appendix 9-G]

Designers and brands used will be niche, allowing them an additional platform to create awareness for their individual websites and generate sales. As the brand will never stock a designer’s full range, consumers will be driven to view individual websites should they desire to see more from them or make a purchase.

BENEFITS DRY CLEANERS The dry cleaners used by Cycloan will receive a huge influx of sales. When sales dramatically increase, a year after launch, Cycloan will additionally offer £5,000 for a joint venture to increase capacity of the dry cleaners in order to fulfil their needs.

PLANET “Increasing the number of times clothes are worn could be the most powerful way to capture value, reduce pressure on resources, and decrease negative impacts. For example, if the number of times a garment is worn were doubled on average, GHG emissions would be 44% lower.”

- (Ellen MacArthur Foundation 2017)

42.1% 18-30-year-olds say that they only wear clothing for festivals and events 1-3 times and 34.7% say 4-6 times [Appendix 4, Q8]. Cycloan’s garments, on average, will have 15 rentals, meaning at least 15 wears and additional wears after resale.

Garments will be fully utilised meaning less new will be demanded and a lower quantity will be sent to landfill. This is currently a monstrous issue for the industry with 235 million items heading to landfill each year, from the UK alone (Harrabin 2018).

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BUSINESS STRUCTURE Cycloan will operate as a limited company (LTD). As an LTD the level of risk acquired by the business owner will be minimised as they will have limited liability. The business shall exist as its own entity, with its own bank account, meaning the owner’s assets would never come under threat should the business experience financial difficulties.

The Cycloan name will also have greater protection and no other brand shall be able to exist under the same name once registered.

Lastly, existing as an LTD as opposed to a sole trader shall give the brand greater status and sense of reliability to both investors and customers. This could induce greater willingness to supply finance and greater trust to purchase from the company.

LOGISTICS MANAGEMENT “Ultimately, the mission of logistics management is to serve customers in the most cost-effective way.”

- (Christopher 2016, p.2)

Logistics management within rental models is particularly important due to the constant movement of products. Effective management will additionally lead to: • Reduced costs: Through accurate planning meaning garments may be sent via a slower, cheaper delivery service.

• Improved garment utilisation: Garments lives are tracked to see how many rentals they may have while remaining high-quality.

• Reduced turnaround time: Through implementation of an efficient process from recollection to laundering and repacking.

• Increased customer satisfaction: As products arrive when expected and of a high standard.

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“In rental models, distribution logistics are particularly important, as products are moved about repeatedly.”

(Ellen MacArthur Foundation 2017)

The Ellen MacArthur Foundation (2017) highlighted 6 key areas to consider within the logistics of a clothes renting model: Area to consider

Point raised

Cycloan’s consideration

Cost

In renting models, every trip is made multiple times. Therefore, costs must be kept down where possible.

Cycloan’s orders will be managed via the website, alerting whoever it concerns (generally the owner) on a daily basis of orders which must be sent out. The automated system will also allow cost minimisation by informing the owner if items are available to be sent via the Royal Mail 48 service as opposed to the 24 service.

Quality preservation

While customers will be aware that garments won’t be brand new when arriving to them, there is still an expectation that they’ll arrive of a certain standard.

The standard and cleanliness of garments will be managed through a centralised system. Garments will be repaired and laundered by the trusted dry cleaners meaning standards are kept consistent. All garments will also be assessed by the owner or trained member of staff to ensure they’re up to standard for every delivery.

Information

Knowing where garments are, and where they are going, are key to the business operating smoothly. Misplacement may lead to dissatisfied customers.

The Cycloan website will act as the central system, tracking where garments should be and how to get them there for when they’re needed. The app will additionally be used for logistics to scan garments in and out of the storage unit.

The cohesion between the app and the website is essential for smooth operation as to not displease customers.

Speed

The turnaround time of products will affect the number of possible rentals in a given time frame and therefore overall profitability of the business.

Cycloan will operate on a 3-day turnaround time.

1 - Return delivery using the 24 service.

2 - Collection, assessment, laundering and basic repairs.

3 - Repacking and delivery to the next customer if already booked.

Should the garment need greater repairs this time may be extended.

Convenience As with almost any brand, customers will be put off of buying if it’s not simple for them to do so.

Customers will have the option for delivery to their local post office or to their home, for a fee, should they lack the time to collect it.

Customers will then be able to drop off their garment at their local post office, as they would with any return, making the process highly convenient.

Appeal

Cycloan will use coloured, branded boxes for every delivery which are highly distinguishable. This will bring an element of excitement on package arrival as consumers immediately recognise the brand and anticipate its contents.

Online retailers are increasingly paying attention to the ‘unboxing experience’ as customers feel an element of joy as they open their awaited packages. For rental models, this phenomenon can also be harnessed through the repackaging process. Packaging can be used which encourages the customer to take care and fold garments as opposed to throwing or scrunching them up on return, contributing to damages. This also spurs a greater appreciation for the value of the piece.

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THE MARKET THE CLOTHING INDUSTRY OVERVIEW “Unchecked consumerism, quite simply, is incompatible with a world of finite resources and an exploding global population.”

- (Anderson 2013)

Early Majority

Late Majority

34%

34%

Time

Laggards

Early Adopters 13.5%

Sales

Time

16%

Innovators 2.5%

Sales

Rogers’ diffusion-of-innovation theory (Holland and Jones 2017)

The fashion industry has been accelerating for many years.

Though prosperous in economic terms, overconsumption of clothing is “deepening the main environmental challenges we face at national and global level,” says TRAID, an environmental charity working to reduce clothing waste (Environmental Audit 2019).

Social pressures have been a leading cause for the rise with platforms, such as Instagram, catapulting a throw-away culture. Consumers thrive off constant change (Barnes and Lea-Greenwood 2006), so demand the looks they see on the runway to be instantly available to them. This causes trends to appear out of sync and often crossing one another (Holland and Jones 2017) meaning multiple trends now exist at any one time. Consequently, fashion cycles are being pushed to their limit with incredibly low turnaround times and the traditional 2 seasons a year system being eradicated by the mass market.

Consumers are gradually accepting responsibility for the impacts behind their purchases (The Future Laboratory 2016) and increasingly demanding transparency, from fashion brands, in order to take control of their own actions. However, they refuse to let factors such as price, convenience and trend-following suffer in order to alter their consumption behaviour to be more sustainable (Kemp 2019).

Sales

Innovative models must be implicated in order to fulfil consumer needs and remain profitable while operating in a more sustainable manor... as will Cycloan!

Time

36

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Clothing consumption is expected to grow to 102 million tons worldwide in 2030

+63%

2030

2017 Nearly a quarter of people discard items after being pictured in them up to 3 times...

17% only wearing them once

x3 x 58.1% of 16-24-yearolds buy clothing at least once a month

3/5 items in UK landfill arrive having been owned for less than a year (Dover 2018; Global Fashion Agenda and The Boston Consulting Group 2017; Siegle 2018; Environmental Audit 2019; (Dover 2018; Global Fashion Agenda and The Boston Consulting Group 2017; Siegle 2018; Reportlinker 2017;Environmental Harrabin Audit 2018)2019; Reportlinker 2017; Harrabin 2018)

MACRO TRENDS CIRCULAR ECONOMY

“Designing and producing clothes of higher quality and providing access to them via new business models would help shift the perception of clothing from being a disposable item to being a durable product.”

- (Ellen MacArthur Foundation 2017)

Circular economy is a current trend, stemming from sustainability, which aims to close energy and material loops by creating a circular model for the resource in question. Though not being a new concept, around 80% of the UK’s economy still follows a linear model (Symons 2016) meaning vast quantities of reusable materials are being needlessly wasted as a result of the ‘take, make, waste’ model (Ellenmacarthurfoundation.org 2019).

Cycloan follows a circular economy by keeping garments in use, in a circular flow between itself and its customers.

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EXPERIENCE ECONOMY People are valuing experiences over possessions. In the US, 74% of millennials would agree with this prioritisation (YPulse 2017). As a market which is ‘regularly viewed as very similar’ to the US (Betts 2014), UK-based statistics are likely to be on par with these findings.

“People want to spend money on experiences rather than material items, but they still want to look good while they post about these experiences on social media.”

- Jenn Hyman, founder of Rent the Runway (Hyman 2018)

Hyman suggests the presence of both emotional and social criteria within the buying behaviour of women seeking occasion wear. She understood consumer preferences and consequently has built a $1 billion business by providing women short-term access to beautiful gowns so they may feel and look great for 1-night.

Cycloan will adopt a similar strategy and cater to similar needs, however , will focus on a clothing sector yet to be touched by the rental model; festival wear.

SHARING ECONOMY “Rising emphasis on sharing rather than owning and rising awareness about the positive environmental impacts of the sharing economy are propelling the growth of the global online clothing rental market.” - (Reuters Editorial News 2018) A sharing economy is one in which individuals share or exchange goods between themselves, thereby making better use of excess resources as utilization is increased.

This trend addresses both the circular and experience economy trends.

Businesses, such as AirBnb, have capitalised on this by providing a platform on which individuals may post their good and sell peer-to-peer, in their case renting out rooms for a period. The trend has sparked among a number of industries such as travel, fashion and furniture.

39

Asos

Topshop

Nasty Gal

Urban Outfitters The Gypsy Shrine

Pretty Little Thing

Jaded London

Boohoo

Elsie & Fred

Missguided

MICRO TREND Glitter Everything From detailed accessories to full outfits, hair, face and body, festival goers adore being covered in glitter. Brands recognise this crave with all fast fashion brands supplying an abundant of glitzy pieces for the festival season.

However, this year may be a little different.

As part of the wider move to phase out all micro-plastics [Appendix 13, Glitter ban], “61 British music festivals have committed to ban its attendees from wearing glitter” due to it being an ‘ecological hazard’ (Petter 2019). Fashion brands must be increasingly mindful of supplying consumer demand for glitter variations which are still ‘firm festival favourites’ (Hiciano 2018). They should ensure products are biodegradable as festivals, and consumers themselves, become more eco-conscious (Johnstone and Maset 2019).

As Cycloan will work with a range of niche designers, who individually have little power as a supplier (see p.51), they have the power to request that they use only biodegradable glitter. Furthermore, this is in keeping with Cycloan’s value of sustainability.

41

MARKET READINESS SHOP

“Consumers are valuing access over ownership.” - (Robinson and Laughlin 2014) The renting model, a ‘form of access-based consumption’ (Moeller and Wittkowski 2010), has long existed for items such as tuxedos and gowns but is now being adopted for more common occasion wear. Globally, brands are cropping up, such as Rent the Runway in the US, YCloset in China and Girl Meets Dress in the UK. Though there may still be some concern regarding the cleanliness of garments worn by previous customers, the success of these businesses proves the market readiness for the model. Furthermore, the recent success of Depop, an app whose primary function is selling second-hand clothes, within the UK, shows the willingness of young consumers to buy and wear items which aren’t brand new. Most even say that they don’t overly think about where it has come from [Appendix 5; 6; 7].

high-end pieces they otherwise may not be able to afford.

Higher priced pieces are more compliable with the model due to the additional storage, maintenance and delivery costs involved. Garments must also be of high-quality to allow usage by a high number of users before it eventually becomes unusable. Yet, Hirestreet rents out high-street brands such as Zara, Topshop and Asos at approximately 20% of their RRP for a 10-day rental, for as little as £7 (Hirestreet 2019). Only launching in 2018, the brand surpassed expectations in its first few weeks and by the end of the year was already looking to expand (NET 2018; Sintons 2018). Hirestreet have been the first brand within the UK to target the 16-30-year-olds and proves the model's viability for lower priced garments.

“Existing businesses prove that rental models can be profitable in certain clothing segments, and that the financial opportunity could be captured more widely.”

The rental model is highly suitable for festival fashion as consumers only have a short-term need for this type of clothing. In addition, 100% consumers agree that, ‘if they could, they’d have a new outfit for every event and festival they attend’. The only concern raised was the aspect of unsustainability [Appendix 5; 6; 7]. Renting provides a solution to these issues by allowing consumers access to new looks whilst being a more sustainable alternative to buying.

- (Ellen MacArthur Foundation 2017)

In the UK, clothing rental brands currently focus on providing high-end occasion wear, mostly including dresses, jumpsuits and accessories. They offer consumers access to

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Laggards 16%

Early Majority 34%

Late Majority

Early Adopters 13.5%

34%

Innovators

Sales

2.5%

Time

“Sustainable fashion was the buzzword of 2018 and customers now have a new level of openness towards renting.” - (Pinnock 2019)

Awareness Interest Evaluation

The UK clothing renting market is entering the early majority stage of the adoption process as most consumers are aware, and a large proportion are interested when asked, but lack the information and means to go looking to rent [Appendix 4; 5; 6; 7]. Among millennials, there’s a high level of interest but few have moved forward to trial a purchase.

“I just don’t think it’s been that accessible really.”

Trial Adoption

- [Appendix 6, Participant 2]

Due to this, Cycloan will communicate the simplicity of the rental model for the renter, as well as its other benefits, and increase accessibility through the usage of an app which no UK clothing rental brand currently offers.

Stages in adoption process (Kotler and Armstrong 2015)

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MARKET HEALTH Fashion e-commerce

Festival market

The primary reason that consumers purchase online is because they believe it to be cheaper than purchasing instore (Dover 2018). As they are developing more cautious spending habits (Dover) the percentage of sales taking place online is increasing [Appendix 13, E-commerce growth]. Last year, e-commerce made up just over £19 billion worth of UK fashion sales (Dover 2018; Statista 2019) and is expected to account for 34.2% of the clothing market in 2022 (Reportlinker 2017). As the high-street continues to experience unfathomable turmoil, the online realm shows much greater potential for new start-up companies in fashion.

“The Association of Independent Festivals reported that there were 975 festivals listed in 2018 which is more than double the amount that took place a decade ago.” - (Fricker 2018)

Clothing rental market “A study by shopping centre owner Westfield in 2017 found that the UK clothing rental market has a potential value of £923m...” (Pinnock 2019) ...and globally is set to reach $1856 million by 2023 (Lang 2018). Rental currently represents a small percentage of the UK clothing industry but is on a steep incline as clear by the 123% increase of sales in 2017 (Pinnock).

Non-designer rental

As mentioned, Hirestreet is leading the way in the UK nondesigner rental space and has proven the compelling room for growth. The brand founder, Isabella West, placed this market at £100 million (Sintons 2018). As no other brand currently owns a significant share of this market, there’s clear gaps for brands to offer what Hirestreet fails to provide, as to claim a stake in this multi-million market.

“In 2018, Mintel estimated the value of the UK music concerts and festivals market to be £2,459 million,” up by 11.7% in 2017 (Fricker 2018), however, the market is a challenging one. Even with high influxes of attendees, well-established festivals can struggle to survive, due to the immense overheads essential to run a desirable festival. Nevertheless, the market continues to grow with an increasing number of day festivals occurring, bypassing some of the costs incurred as well as generating interest from new consumers who previously would never have been keen on the ‘festival life’ of rough sleeping and dirty surroundings.

It’s likely that in the coming year Brit’s attendances to music events and festivals will marginally decrease.

Previously, 64.7% Brit’s festival spending was unaffected by economic uncertainty (FESTIVAL FASHION SURVEY 2015) however, 66% now say cutting back in this area would be the first on their list if money was tight. To obtain a share of this market, the affordability aspect of the rental model must be emphasised to educate consumers that they may still dress how they wish at festivals without over-spending.

In 2016, with 12.5 million, music tourists made up 40% of live music audiences in the UK (Fricker 2018). This is a huge segment of the market and therefore will be addressed in growth strategies (see p.59).

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MARKET SIZE

According to the festival fashion survey (2015), on average people go to 9.5 gigs and 1.5 festivals a year [Appendix 10-D].

However, younger consumers make up a larger proportion of those attending these events. Millennials (25-42) account for 38% of attendees [Appendix 10-A] and therefore attend more events per year than the average; about 30 (Eventbrite 2017). Though this figure may seem high, it should be reiterated that this is not just festivals being discussed but also events. For example, many young consumers attend a great deal of events while at university. During Fresher’s Week alone they may attend 7 different events, each of which they desire a new look for. Holidays abroad additionally increase the average as consumers may attend more than one event for each day they’re away. The upper end of Gen Zer’s, now over 18, additionally show strong participation, with just a 5-year segment (18-24) accounting for 28% attendees, meaning they likely attend a similar amount per year as millennials.

Cycloan will primarily target 18-30-year-olds who account for almost half (45%) festival and music events attendees [Appendix 10-A]. Based on there being 9,410,812 18-30-year-olds in the UK, each averaging at 30 attendances a year, means a total of 282,324,360 attendance are made by Brits a year.

The online survey showed, 76.8% of consumers wear their festival garments 1-6 times [Appendix 4, Q8]. Averaging this to 3.5 wears, it can be assumed that, the total number of new garments purchased a year in the UK, for music events and festivals, is 80,664,103. This is the primary market Cycloan will be operating within.

Location

Population [Appendix 11]

No 18-30-year-olds (16.9%)

Attendances (x30)

New garments purchased a year

England

55,619,430

9,410,812

282,324,360

80,664,103

All UK music event attendees

-

-

470,540,600

134,440,171

As 40% music attendees are tourists (Fricker 2018), a total 134,440,171 garments are purchased for UK events, under the assumption that tourist clothing buying behaviours are similar to that of Brits.

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COMPETITORS COMPETITORS POSITIONING Festival attire

Festival wear specialists

Selfish Economy

Sharing Economy

Fast fashion

Occasion wear

Gap in the market

Primary competitors

Cycloan’s positioning

Fast fashion

Cycloan will provide festival attire within the sharing economy, a combination currently not offered by any other brand, filling a gap in the market.

Fast fashion brands will be Cycloan’s primary competitors as they provide festival wear at affordable prices. Cycloan will aim to draw consumers away from purchasing from these unsustainable brands as to work towards their vision.

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Festival attire

Festival wear specialists Second-hand sellers

Selfish Economy

Sharing Economy

Fast fashion Renters

Occasion wear

Secondary competitors

Potential competitors

Festival wear specialists

Renters and second-hand sellers

Secondary competitors will include festival wear specialists.

Competition here will be minimised through mutually beneficial relationships with niche brands and designers.

However, competition will still be experienced with larger online retailers, We Koko, Wild Thing and Dolls Kill who offer the same product portfolio Cycloan will offer, only for full purchase.

Cycloan must also be aware of potential competitive advances from renters and second-hand sellers. This will be explored in the following pages.

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COMPETITOR SECTORS OVERVIEW (Most similar)

Sector

Similar by

Examples

Focus

Fast fashion

Price point Accessibility Target consumer

Missguided Pretty Little Thing Topshop Primark H&M Asos River Island

Fast fashion brands provide a complete spectrum of products catering for casual nights out, occasion wear, festival wear, sportswear, night/lounge wear etc. all at excessively low prices.

Festival specialists

Product offering (style and quality)

Dolls Kill We Koko Wild Thing Etsy Unique websites

Unique, daring festival styles.

Secondhand sellers

Price point Sustainable alternative Target consumer

Depop eBay Charity shops Vinted

Second-hand selling platforms focus on selling vintage, along with a few relatively low-cost designers appearing on Depop.

Renting models

Business model Sustainable alternative

Hirestreet Chic By Choice Armarium Girl Meets Dress Front Row Wear The Walk

Currently, almost all clothing renters in the UK provide high-end occasion wear including dresses and accessories, charging rates averaging at 12-20% of items RRP. Few offer other items, such as trousers and tops. The exception to this is ‘Hirestreet’ who offer lower priced pieces from high street retailers (e.g.

Asos, Nasty Gal and Zara) for about 20% of items RRP but even they focus on providing occasion wear.

(Least similar)

One off rentals and rental subscriptions are widely available by most rental brands.

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Consumer benefits

Issues / Unmet needs

Fast fashion offers “access to high-impact visual statements for a low cost,” (Robinson and Laughlin 2014) generally with convenient home delivery too.

The low prices allow consumer to constantly fulfil their ‘desire for new’ (Campbell 1992) and refresh their wardrobes on a regular basis, constantly addressing the next fashion fad.

“Cheap fashion means disposable fashion, and encourages more consumption, creating a vicious cycle.” (Black 2008) Due to its ever-changing nature, fast fashion often cuts corners in order to remain low-cost and push garments to sale as quickly as possible. Speed is essential in this market as brands may easily miss the peak of a trend all together leaving them with mounts of unwanted stock; an issue which has become increasingly difficult to avoid due to the elapsed trend cycles.

As a result, garments are low quality and not made to last.

These brands are aware, and drive, the throw away culture as they fuel the prevalent, unsustainable consumption behaviour of clothing for profit margins.

Those on a low budget are enticed to these brands as they view it as their only option, failing to see that pricier, higher quality pieces can be better value for money due to their durability.

For occasions such as festivals, young consumers want to look ‘cool’ and ‘unique’ and ‘eye catching’ [Appendix 4, Q12]. This is difficult to achieve when buying from fast fashion giants due to the high accessibility and status of these brands; many consumers often find themselves ‘twinning’ with their fellow festival goers.

Pieces are high quality and brands provide a range of vibrant styles, different to that on the high street.

Due to their high quality and small-scale production, pieces are high priced for consumers. As these are pieces customers know they’ll only wear once / a handful of times they often cannot justify their price points despite their added social value created via ‘Insta-worthy aesthetics’ [Appendix 13, Social currency].

Sifting through mounds of second-hand stock can be unpleasant and often difficult to find anything of desire. New, online platforms have eliminated this hassle, allowing customers to effortlessly browse and obtain items for a fraction of the price of buying them new.

In a constant rising state (Pickford 2017), ‘vintage’ doesn’t mean what it used to. Now, even charity shops only accept a certain standard and certain aesthetic of clothing, with 8/10 items given to charity shops not actually being sold there, as of 2014 (Wallop 2014). When considering the clothing and accessories market, the desire for branded, vintage has bumped prices making it questionable if it’s actually worth it for these preowned garments.

Second-hand additionally offers a means for more sustainable buying habits, as it reduces the demand for new, for those becoming increasingly conscious of the unsustainable nature of the fashion industry. For this to work, products must be of high enough quality to last a long time.

Renting models offer consumers a means to obtain high-priced pieces, often out of their usual price range, to wear for a period of time. This means customers can have a new, high end look for every occasion without breaking the bank while also adopting a more sustainable alternative to buying.

As most renting brands are offering high end brands, for consumers with minimal disposable income, they are still out of their price range. Buying an outfit from a fast fashion retailer is still more affordable for the few occasions they may need occasion wear.

For renting models to become more mainstream, especially among younger markets, a wider variety of products must become available. These must still be high priced enough, to make the model financially viable, and high quality enough, to ensure the product can endure the multiple uses required for it to make a profit but catering to different needs or occasions.

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PORTER’S 5 FORCES (Affordable festival fashion market)

Renting models

Supplier Power

Fast fashion Competitive Rivalry Festival brand retailers

Threat of Substitution Depop Adaptation of Porter’s Five Forces Model (Porter 1985)

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Festival fashion buyers Buyer Power

Niche brands / designers

Threat of New Entrant

Competitive rivalry Fast fashion Competitive rivalry is colossal in the form of fast fashion brands due to their vast number of customers. However, they possess little brand loyalty as 67% British clothing consumers prefer to shop with a variety of different brands and retailers (Dover 2018). Due to this, they are constantly searching for the best and are open to try new brands, which will work in Cycloan’s favour.

Supplier power Niche brands / designers Niche designers have a range of platforms they can sell on such as Depop, eBay, Etsy, Asos Marketplace, Dolls Kill, We Koko and Wild Thing. This means if they are unsatisfied by one retailer, they have multiple options to switch to.

This being said, as small-scale businesses they have little supplier power as they have a greater need for these platforms than they do them.

Cycloan will work closely with their designers like no other retailer. Rather than merely selling their items, the app will act as a promotional tool for suppliers’ own, unique websites too.

Threat of substitution

Depop

For consumers comfortable with a rental model, they may desire to rent between themselves as opposed to a brand in belief of it being a cheaper alternative. Given their existing business model, this is something Depop could provide (see p.55 for more).

(Competitive rivalry/fast fashion, threat of substitution/ Depop and threat of new entrant/renting models will be explored further in the following pages)

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Threat of new entrant

Buyer Power

Start-ups - Festival fashion brands

Buyers carry great power due to the wide selection of festival wear providers available to them. Consumers have become increasingly tech savvy and will relentlessly search and compare products, brands and prices online to best cater their needs. Due to this, they are incredibly price sensitive as, if one retailer increases their prices, they can quickly and easily opt for an alternative who offer something very similar. In other words, this market is price elastic as a small change in price can result in a larger change in demand.

For this reason, many small and niche brands sell via bigger online retailers to survive.

Start-ups - Renting models

Trust building is a common issue for new brands but more so for rental models as the market is still apprehensive to rent out clothing due to cleanliness concerns [Appendix 5; 6 and 7].

Fashion consumers have come to expect exceedingly low prices due to the existence of fast fashion brands. Due to this, even small costs such as delivery charges can make or break a sale.

New rental models face barriers to entry in the form of high start-up costs and an initial slow profit-making model. They must purchase products at full price to rent at a percentage of their cost meaning garments must be rented out multiple times to even break-even. During this time, high overheads are additionally incurred to cover laundering and delivery costs, stretching the time period before the business will see a profit.

Price

New start-ups will face difficulty in gaining brand awareness due to the market already being highly saturated and choice being abundant for consumers seeking festival fashion.

P2 P1

Existing renting platforms

As they already operate under a renting business model, existing brands would experience few restrictions in expanding their product offerings to cater for festival wear too. This may, however, conflict with their brand identity and perception, cheapening them from their current luxury ranges.

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0

Q2

Q1 Quantity

KEY PLAYERS

(Fast fashion)

Founded : 2009 2017/18 Profit after tax: -£46.7 million (BBC News 2019; Jahshan 2019)

In the summer of 2018, Missguided partnered with ITV’s ‘Love Island’ in aim of raising awareness for the brand.

Averaging at 3 million viewers per episode (5 million including those watching on-demand), with almost 75% aged 16-34 (O’Connor 2018), the partnership leveraged the brand over its competitors by utilizing on an already highly engaged audience, within their target demographic.

Missguided experienced sale increases averaging at 40% around the time of the show (Hammett 2018), with certain pieces, worn by favoured contestants, acquiring instant 500% surges (O’Connor).

“Aside from Instagram, nothing allows it to reach its core 16- to 29-year-old female audience with the same efficiency as Love Island.” - Kenyatte Nelson, Missguided’s chief customer officer (Hammett 2018)

The key to this major success was a highly integrated, multichannel approach, seamlessly navigating consumers to their desired pieces. The Missguided website and Love Island app, which at the time had more active users (76.2%) than that of Uber, BBC News or ASOS (Cole 2018), included ‘shop the style’ pages, allowing customers to shop what they’d seen the previous night. This, along with Missguided’s constant communications, across multiple social media platforms, made for one of the most successful TV partnerships encountered.

Despite this, in 2017/18 Missguided experienced a loss of £46.7 million. This was due to an overestimation of floor space required for their new physical stores, leading to loss making stores, and poor judgment on business management structure changes (BBC News 2019; Geoghegan 2019). Missguided demonstrates how every decision by a brand must be cohesive, across their finance, HR, operations and marketing tactics, and actions justified given the current external factors. Failure to do so will lead to catastrophic implications for the brand even if highly successful in other areas.

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(Festival specialists)

Founded: 2011 2018 Revenue: $300 million

(Ecommercedb.com 2019)

“Clothing from Dolls Kill has become a favourite among music-festival attendees.” - (Lieber 2017) Dolls Kill is a US-based brand which soon gained traction, taking the number 33 spot on Inc. 500 in 2014, an ‘annual list of the fastest-growing private companies in America’ (Helm 2015).

The brand empowers women to unleash their creativity and embrace their individuality with an abundance of quirky styles. On the website, ‘dolls’ are used to distinguish these styles, such as gothic, punk, rave, or most recently provocative streetwear, displaying visual personas to help engage with their customers.

(Renting model)

Founded: 2018 (NET 2018)

Of the existing, UK based, clothing rental brands, Hirestreet is the most likely to introduce festival wear due to their garments being lower end and more millennial targeted than any other. Nonetheless, Cycloan would still triumph by providing festival-goers the unique, bold styles they crave as opposed to, as the brand name suggests, items from the high street.

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(Second-hand seller)

Founded: 2011 2018 Revenue: $46 million (Knowles 2018) (estimate)

In 2018, with 8 million registered users worldwide and 2.6 million sessions a day (TempoCap 2018), Depop sellers were on track for sales of $460 million, with the brand taking 10% commission. Depop can rely on organic growth driven through word of mouth (Varghese 2018) meaning they spend little on promotional activity therefore leaving high operating profits.

“By combining mobile shopping with social features, Depop is creating a stronger relationship between buyers and sellers.” - Simon Beckerman, Depop’s Founder (TempoCap 2018) Commonly referred to as the ‘love-child of Instagram and eBay’ Depop offer a platform for peer-to-peer sales with Instagram-like, addictive browsing and favouriting features which has younger consumers hooked, as shown by their user base, 80% of which are under 25-years-old (Knowles 2018).

Cycloan will utilize on the success of merging these 2 concepts, something UK renting brands have so far failed to do.

Currently, Depop don’t pose too heavy a threat due to their focus being vintage resale. However, should they decide to introduce a renting model they have the potential to become a major threat in future as they already possess an engaged audience, like the target of Cycloan. Presumably, this would operate via sellers renting out their own garments via the app to buyers, with Depop maintaining

their 10% cut of all sales. With sellers responsible for laundering and buyers responsible for postage costs, Depop could acquire a second revenue stream relatively simply.

However, several issues arise with this model, as discovered during the development stages of Cycloan: Firstly, consumers are still apprehensive of rental models regarding the state that garments will arrive in [Appendix 5; 6 and 7]. “Brands convey a uniform quality, credibility and experience,” (Goodson 2012) meaning people are more likely to trust a brand than an individual, especially with something unfamiliar to them, like a rental model.

Cleanliness is a heightened issue when it comes to festival attire as it’s likely to become dirty during use. Heavy cleaning processes will be essential for a lot of returned pieces which customers must be assured is taking place.

Secondly, due to the nature of festivals, many designers fear their pieces would be ruined and therefore don’t see it viable for them to rent out their pieces. Many already lack time and so would be unwilling to pursue a model in which they must also be responsible for the cleaning and repairing processes of garments.

Lastly, Depop doesn’t offer a returns option. 61% of UK consumers prefer to try clothes on before they buy (Dover 2018) which is likely to be similar when renting. This is another aspect the app would have to consider and may be difficult to coordinate back and forth from seller to buyers.

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GROWTH STRATEGIES (See Appendix 14 for strategy consideration)

SHORT-TERM EXPANSION Occasion wear Within the first year, Cycloan will develop its product portfolio to include a selection of occasion wear. This will launch at the end of February to cater for the horseracing season including Cheltenham festival and the Grand National.

This product range will put Cycloan in closer competition with other UK renting brand as they specialise in occasion wear. However, differentiation will be established by careful product selection by the stylist catering to the desires of a more youthful consumer. The range will focus on coordinating sets (skirts/trousers and blazers) as opposed to solely dresses which other brands focus on. These sets are highly popular among millennials and Gen Z as proven by their abundant supply from fast fashion retailers. As with festival apparel Cycloan will provide a means to access higher quality, better fitting garments, sure to be a showstopper, for a similar price point to fast fashion brands.

Increasing capacity To meet increased demand levels of Year 2, Cycloan will take on a joint venture with their dry cleaners in order to increase their capacity, a mutually beneficial movement for both parties. This will involve purchasing new equipment for the dry-cleaners ensuring garments may continue to have efficient turnaround times with increased demand.

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Set RRP £52

Set RRP £65

Set RRP £89.95 Rental from £30

Set RRP £188 Rental from £56

57

MEDIUM-TERM EXPANSION Branded products In the Year 3, branded apparel will be added to the app. For females, the product selection shall be based off an in-app feature asking existing customers ‘What do you want to see next?’, as well as pieces selected by the stylist.

Menswear “If I was to rent stuff it would be branded stuff.”

[Appendix 7, Participant 2]

At this point men’s apparel will additionally be added. This will consist of a high proportion of branded pieces with few niche, quirky designs as males were found to have a greater interest in renting branded apparel [Appendix 7]. However, Cycloan will aim to provide for all male festival goers by providing a range of styles.

+

58

LONG-TERM EXPANSION After 5 years, Cycloan will develop its market by expanding overseas. Cycloan will never ship overseas as this is expensive and highly damaging for the environment. When expanding, a new storage unit will be occupied with a new operator and stylist to help cater to local needs. The exact location will be selected during Year 4 and 5 with further market research taking place to gauge the demand for the brand. As mentioned, music tourists make up 40% of live music audiences in the UK (Fricker 2018), showing their similar interests in event types to Brits and the potential for Cycloan to target these consumers.

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SWOT ANALYSIS The SWOT Matrix Adapted from Heinz Wihrich 1982 (West, Ford and Ibrahim 2015)

EXTERNAL To take advantage of opportunities, provided by the external environment, Cycloan will focus on communicating their offering of unique daring styles, within a renting model, as a more sustainable alternative to buying new. This will address the growing concerns around sustainability while offering consumers the unique looks they desire, still within their budget.

A weakness for Cycloan, as a sustainable brand, is the environmental damage inflicted via the over-laundering and heavy transportation measures necessary in the logistical process of a rental model. To minimise this impact, Cycloan will incentivise consumers to collect their parcels from their local post office, eliminating the last-mile delivery, which produces the “highest carbon emissions of the whole logistics chain” (Ellen MacAuthur Foundation 2017). Furthermore, when expanding capacity, Cycloan will contribute finance on the understanding that new assets purchased are as environmentally friendly as possible.

Lack of trust will be overcome by connecting with target consumers on multiple levels including their values, beliefs and personalities.

Finally, to avoid drastic negative effects, due to the Brexit deal, Cycloan will rely on UK based designers (before expansion) which additionally does not incur high levels of emissions from shipment.

Opportunities (O) • Consumers (18-36) want a unique look when attending a festival [Appendix 4, Q12].

• People feel restricted by their budget when buying for festival and events [Appendix 4, Q10].

• People only wear garments for festivals and events several times [Appendix 4, Q8; Appendix 13, Social Media and fast fashion].

• E-commerce growth is high in the fashion industry.

• Consumers are becoming increasingly concerned with sustainability, especially with the clothing they buy.

• Millennials attend, on average 30 events/festivals per year (Eventbrite 2017) • 18-30-year-olds account for 45% attendees to events and festivals • “Young people are increasingly challenging conventional gender stereotypes,” (Marsh 2016) leading the way to complete gender fluidity.

Threats (T) • Ongoing, unfinalised Brexit plans leaves the fashion industry in turmoil, fearing what will happen to the industry due to “potential changes to immigration policies, costly currency fluctuations and the prospect of a sharp increase in import and export costs.” (BOF TEAM 2019)

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INTERNAL Strengths (S) • Provides customers greater accessibility to quirky, bold, daring styles, different to that available on the high street.

• Cycloan provides a means for garments to be better utilised, reducing the demand for new and lowering the amount of clothing being sent to landfill.

Weaknesses (W) • For the rental model, constant transportation is required which is costly and environmentally damaging, conflicting with the brands sustainability values.

• It will take time for Cycloan to build trust among customers regarding delivery efficiency and cleanliness of garments, especially as they are still unfamiliar with the rental model.

• “Lack of trust in the provider has been identified as one of the barriers to fashion renting.” (Armstrong et al. 2015) • Pieces may be laundered more regularly than needed to meet expectations of customers, contradicting their value of sustainability [Appendix 13, Effects of laundering].

SO strategies • Promote experimentation with quirky new styles, encouraging consumers to have their own, unique look at events.

• Aim to provide greater accessibility and acceptance to all who desire the brand’s styles.

• Promote the sustainability factor of the renting model.

• Though young females will be Cycloan’s target audience, the brand will be undiscriminating of age, gender or race and will look to expand and diversify in the future when taking on higher stock levels.

WO Strategies • Promote and educate the market of the sustainability factor of a rental model, comparing itself to online fast fashion brands, which additionally require high transportation levels. In doing so the brand will promote renting as being a step forward for sustainability even if still conflicting in some areas.

• Encourage dry cleaners to use the most sustainable equipment and methods possible.

• Build trust by connecting with consumers on multiple levels; personality, values and beliefs.

ST Strategies • Rely solely on UK based designers and brands, of which there are an abundance of, to eliminate fear of high import costs for the fashion industry while providing customers with designs different to fast fashion brands. Cycloan will additionally only ship within the UK, as to not add heavy transportation fees, which are environmentally damaging.

WT Strategies • Educate the market about the rental model, emphasising its sustainable traits as to build trust with consumers.

• As the “last-mile of delivery has the highest carbon emissions of the whole logistics chain,” (Ellen MacAuthur Foundation 2017) Cycloan will incentive their customers to do the last mile themselves by collecting from their local post office. This will be implemented by a £3.50 charge being placed on all home deliveries but this cost will be taken care of by the brand if sent to a post office for collection. 75% of people asked said they’d choose this option [Appendix 5; 6 and 7]. This reduces negative impacts as people often pass their local pick-up point in their daily routines anyway, as opposed to a delivery van making an extra stop, therefore minimising the weakness of high transportation levels.

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CONSUMER ANALYSIS BUYING BEHAVIOUR A multitude of factors can contribute to an individual’s purchasing habits, but ultimately their drives can be broken down and considered as 3 basic needs. Consumers buy either for practical reasons, to fulfil basic needs, social motives, to fulfil psychological needs, or emotional impulses, to fulfil self-actualisation needs (Ellen MacArthur Foundation 2017; Maslow 2006).

Functional needs will be provided through the provision of high-quality garments, which will prove to be comfortable through the duration of wear.

Psychological needs will be met by allowing customers to feel superior, in terms of their look, to other festival goers. ‘Instagrammability’ is “now a currency for brands” (YPulse and Youth Sight 2017) and is a key aspect Cycloan will take advantage of.

Self-fulfilment means to, “fulfil a long-held ambition, or act independently of the pressures and opinions of others, or to act for action’s sake” (Sethna and Blythe 2016). This will be provided through encouragement of exploration of style, harnessing creativity and confidence “which ultimately provides an overriding feeling of happiness and gratification” (Kemp 2019).

EMOTIONAL MOTIVES

SOCIAL MOTIVES

PRACTICAL MOTIVES (Ellen MacArthur Foundation 2017)

(Maslow 2006)

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WHY THEY BUY Unique styles Affordability Sustainable alternative

(Weinstein 2004)

“Segmentation is both a science and an art.”

SEGMENTATION

Convenience

CYCLOAN HEADLINERS THE DEDICATED RAVERS

THE IDENTITY MORPHERS

THE ENVIRONMENTAL PRIORITIZERS

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THE DEDICATED RAVERS DRESS TO IMPRESS The Dedicated Raver is a dynamic, bold, daring character, unafraid to stand out from the crowd.

She’s 20 years young, enjoying her new found freedom, and living by her own rules, from living on her own for the first time at university. She wants to stand out but fit in, her Instagram page being a perfect representation of this as she posts what makes her feel good but, maybe more importantly, what makes her look good.

Despite living in a financially difficult time, and knowing she’ll be unable to afford her own house for years after graduating, she feels more positive than her parents do about her financial stability (Fricker 2018). Ergo, she continues to spend at least half of her disposable income on non-essentials like leisure activities and clothing (CBRE 2017). This being said, as a student she has a keen eye for a good deal and, as a digital native (CBRE 2017), takes advantage of all platforms at her disposal. Online shopping, via both her laptop and mobile, are her greatest assets when it comes to getting what she wants at the best price possible.

This contributes to the 24 hours a week she spends on her mobile (IPSOS Mori 2017), double that of any other generation. Even she’d admit she looks at her phone ‘all the time’ (Lee and Roddis 2018), mainly messaging her friends and staying up to date on her wider social group’s activities via social media platforms. This is a huge element of her life which she values highly.

In fact, she’d prioritise her social media freedom over salary when considering a job (StyleSight Trend Board n.d.). Keeping up appearances of her online persona has become an everyday habit for Leigh. She’ll unnervingly stop and pose for a picture in the most public of places, even if she receives displeasing glares.

Portable charger A portable charger is a must to ensure she can get on her phone at all times to snap her ‘Instaworthy’ pics. She considers getting a gallery of good pictures, showing off her outfit and capturing the moment with her main girls, an absolute must at festivals. But this may take a while...

A lot of face and baby wipes As a regular festival goer, she knows the essentials to bring. Baby wipes are a must as the showers are minging! It’s better to go without and save money.

Leigh’s festival essentials

A bright eyeshadow palette Festivals are a place she can experiment with her makeup judgement free. She loves coordinating her face with her outfit of the day. Slay girl.

Chunky boots To boogie away worry free.

Large mirror Some may call her vain, as she must constantly look her best. She’s got to look ‘fleeky’ even when caught off guard.

Bucket hat To look a little edgy and and be able to hide her face when she’s not looking so fresh in the mornings.

...plus her planned daily outfits of course.

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Unique styles Affordability Sustainable alternative Convenience

‘‘I feel bad for having stuff in my wardrobe I only wear once’’ [Appendix 4, Q14].

When it comes to events and festivals, due to her incessant need to keep up appearances on social media [Appendix 13, Social media and fast fashion], outfit repeating is a no no. She refuses to pay more for sustainable garments but tries to be less wasteful by reselling. She tells herself she’ll sell an outfit after use on Depop however, never seems to follow through and instead acquires mounts of clothes she has no desire to re-wear.

She’s a tech-savvy shopper whose on and offline world integrate to form her decisions (StyleSight Trend Board n.d.).

She’ll use technology to scavenge for the best deal but, when it comes to fashion, she still likes to physically see products before purchase (CBRE 2017; Dover 2018) in order to ensure her outfit will be ‘on point’.

She needs a platform to allow her short-term access to the looks she craves whilst easing her guilt of constantly acquiring new looks. The stereotype of her generation of ‘wanting it all and wanting it now’ (CBRE 2017), isn’t too far off either.

She can’t say no to a night out but also wants a new outfit for every time she does. Consequently, she feels incredibly restricted by her budget when purchasing event and festival wear [Appendix 4, Q10].

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Key offerings for The Dedicated Raver Unique, quirky garments ...for their ‘Instaworthy’ pic Try-on service ...to ensure they’ll be looking ‘fleeky’ at their big events Convenient returns ...to ease guilt of clothes mounting up in their closet Affordable ...so they can access multiple looks without breaking the bank

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THE IDENTITY MORPHERS DRESS TO EXPRESS Gothic boots Forget wellies, this chic is all about her chunky boots. She’ll have eyes on her questioning how she’s getting around, somehow never putting a foot wrong with these bad boys.

Festival essentials

No 2 will be the same!

Day of the Dead skull They love the Day of the Dead style, their look may even be influenced by it.

Quirky accessories She’s an easy target for quirky accessories sold on site.

Merchandisers can spot her a mile away and will undoubtedly target her with any item vaguely resembling her aesthetic.

Wings For more mystic, girls transformers, fairy or butterfly wings are an essential. See them floating through the forests, lost in their own world.

Face paint Face paint is an essential of many morphers in order to transform themselves into their desired being. You’ll barely recognise them!

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Unique styles Affordability Sustainable alternative Convenience

She’s often viewed as an outsider or considered a little strange. A festival allows her to escape from her everyday life and take her true form, being whoever she wants with absolute acceptance and even admiration.

Due to this, her look may take more of a costume feel as she transforms persona, completely escaping her norms.

Key offerings for The Identity Morphers Quirky looks ...for her complete transformation Rental model ...to respond to their short-term need of garments

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THE ENVIRONMENTAL PRIORITIZER DRESS TO ADDRESS The Environmental Prioritizer isn’t bound by age. She may be 18, attending her first festival, or she may be 45, attending her 50th. She’s a free spirited, wilderness loving, adventurer. She believes in protecting mother nature, as it protects her, and commits a large segment of her time in doing so. She defies the general market behaviour in terms of wastage, making use of everything possible, recycling and up-cycling what most would throw away. The extreme individuals within the segment may express their strong believes, regarding sustainability, more strongly. Outfits

may make a bold statement or broadcast a message to anyone who may see them.

Most of her festival attire are items she’s owned for years (or will do), however, she does have a few eccentric pieces which make her stand out from the crowd, even though this isn’t her intention. Though she tries not to buy many new clothes she’d be open to renting for festivals as to address her short-term need and allow garments to reach their full usage potential.

Key offerings for The Environmental Prioritizer Rental model ...for a more sustainable way of consuming clothing Quirky looks ...for her eccentric piece Post office collection ...to minimise environmentally damaging transportation

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Unique styles Affordability Sustainable alternative Convenience

Glitter She may wear minimal makeup or a full face but one things for sure, for at least one day of the festival she’ll become a glitter queen.

Biodegradable glitter of course!

Tribal headdress This may be beaded, feathered, covered in flowers or a number of other miscellaneous decorations.

Festival essentials

Harlem pants Your standard hippie, go to comfort for the daily lounge time. She may decide to dress up more of an evening but they’ll see her through the daily events.

Statement outerwear Though she doesn’t care about her appearance to others, she always has a bold, outerwear statement piece which she’ll wear throughout the majority of the festival. This keeps her warm through the brisk evenings and feeling more herself than her everyday attire.

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The trusted shoulder bag She takes her patchwork shoulder bag every where she goes in everyday life and at festivals. She has no need nor desire for an alternative.

COMMUNICATION PLAN COMMUNICATION OBJECTIVES To make a positive ROI of at least 500% from the communication expenditure in every year.

To obtain at least 5,000 Instagram followers within the first year, to increase by 50% year-on-year for the first 5 years, through PPC marketing, internal and external Instagram posts.

To obtain at least 30% of sales through non-paid for means of communication, every year.

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KEY AREAS FOR COMMUNICATION The renting model and affordability Experimentation and self-expression Sustainability

COMMUNICATION BUDGET (Based on bottom-up budgeting method - see p.102)

Year 1 - £10,000 Year 2 - £25,000 Year 3 - £40,000 Year 4 - £60,000 Year 5 - £75,000

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B2B DIRECT MARKETING In order to obtain new designers and brands, which will appear on the Cycloan app for rental, they shall be contacted directly via email or messaging systems on platforms such as Etsy. As it is niche brands who will primarily be used, the majority are highly receptive and open to the opportunity (as can be seen from responses obtained in Appendix 9). The Cycloan stylist will constantly scout for new brands meaning no promotional cost is incurred by acquiring new brands, other than the time taken to find them which is considered a proportion of the stylist’s salary.

CONSUMER TOUCHPOINTS In order to maximise reach and encourage a high volume of sales, Cycloan shall use a varied but cohesive promotional mix [Appendix 16], including owned, paid and earned aspects.

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Email marketing

P

HIGH LEVEL OF CO

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Word of mouth OL NTR O C F LOW LEVEL O

APP DISPLAY & NAVIGATION As proven by brands such as Depop, a web presence is no longer essential for success, particularly when targeting millennials and Gen Z. In fact, the level in which consumers purchase on smart phones has just surpassed the level in which they buy on PCs (PwC 2019), and growth continues.

However, to achieve high levels of success with a single channel as a source for sales, enhanced user experience (UX) will be an ‘essential component of product strategy’ (Babich 2018). The Cycloan app will offer a seamless, easy to follow display and navigation system, consequently leading consumers to buying more and more frequently, as the purchase journey is made frictionless (PwC 2019).

An account may be created at any point, to begin favouriting pieces, but one will only be required when making a purchase. This may be created through email or social media syncing. Requirement of account generation on first visit can drive a large proportion of consumers away from usage, especially for new and unfamiliar brands (Babich 2018), therefore this will not be necessary with the Cycloan app.

HURRY 25% off the first 100 orders! *when you leave a review

£135

from £40

£206

from £60

£127

from £38

£208

from £60

THE FESTIVAL LOOKBOOK Schedule looks now, pay later with klarna

£98

Green glitter sequin kimono - One size

3 days £30 7 days £35 14 days £40

RENT NOW

!

!

Initial consumer thoughts on app design [Appendix 8]

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REQUEST TRY-ON

!

Browsing page Profile icon Takes consumers to their profile where they can view their upcoming or past rents or pay outstanding bills. Here, they may also change their details, such as their delivery address and email.

Basket icon Takes consumers to their basket, to view, edit and finalise their purchase.

Photos The image selected for icons will be those which best show garments.

These will always be shown on models, with white backgrounds, however, a selection of images will be available when clicking on any item to a better look.

‘slashed’ price The price shown with a line through it indicates the pieces RRP. This allows customers to see the difference in renting prices, something most current renting platforms include. This makes them conscious how Cycloan allows them access to pieces which typically would be out of their reach.

£135

from £40

£206

from £60

‘from’ price The ‘from’ price indicates the lowest price the item above may be rented for (for 3-days).

£127

from £38

£208

from £60

Colour scheme The colour scheme shall stick to Cycloan signate 3 colours, along with black and white where needed.

!

Home icon This will take customers to the home page (see next page).

Heart icon Customers will be able to ‘favourite’ pieces they like to come back to at a later date.

Most clothing apps and websites now include this feature.

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‘!’ icon The exclamation point will be used to draw people’s attention to a section they may not know about.

This icon will take consumers to the buy it page. Items which have reached the end of their rental life will be placed here for anyone to buy, should the final renter not desire to purchase it.

Search icon The search button will allow customers to search for something in particular they’ve seen or desire. The search bar shall appear at the top of the page.

Underneath this, customers may also choose to view lookbooks, shop by item, by designer or by trend.

Homepage

HURRY

Banners Top Cycloan banner and bottom navigation bar will be present on every page. These have been kept as minimal as possible, eliminating clutter which can be distracting and unaesthetically pleasing for users. Furthermore, the icons used have been kept as familiar as possible for simple navigation. The only questionable element may be the sales page, however attention is wanting to be drawn here.

25% off the first 100 orders! *when you leave a review

Content Content on the homepage will vary according to what’s now, trending or upcoming. The display shown shows an example homepage for launch showing the offer presented for the first 100 users, access to the festival lookbook and promoting the apps use of Klarna.

The page will also often promote the free shipping option available.

Searching elements are likely to be needed most often and therefore have been placed at the bottom of the screen allowing easier access to the user due to hand positioning. The basket and profile icon have been placed at the top, suggesting greater status as well as being clearly visible to the user.

THE FESTIVAL LOOKBOOK Schedule looks now, pay later with klarna

!

Arrow icon Takes customers back to the page they were previously viewing.

Product view page

Brand logo / designer’s name This feature will take customers to view items available on the app by this brand only.

Photos To the left will be a selection of images available to view to allow customers full view of pieces. When clicking on an image it will appear as the full size image. By scrolling, more images will become visible to click and view. ‘slashed’ prices Shows the original RRP of the piece.

Prices Prices for 3, 7 and 14 rental days are clearly shown. The option currently selected will be highlighted with a yellow box.

Reviews Customers may also scroll down to view ratings and comments left by previous renters of the piece.

Heart icon Allows customers to favourite the piece and have it saved for a later date.

£98

Green glitter sequin kimono - One size

3 days £30 7 days £35 14 days £40

RENT NOW REQUEST TRY-ON

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!

‘RENT NOW’ This button will take customers to select the days they desire the piece (see next page).

‘REQUEST TRY-ON’ By clicking this button customers will be asked if they are trying on in advance (so will be expected to return the item immediately) or are ordering multiple pieces to chose their favourite between and wear out (meaning other pieces may be returned separately or with this garment unused - see p.30).

Rental specification page

Month Allows customers to go to the previous or next month to schedule rental. Rents may be booked up to 2 months in advance.

Selected dates Dates currently selected appear in pink circles.

Users may click dates on the calender to change the rental scheduling.

MAY 2020

‘slashed’ dates Dates with crosses through them indicate dates the particular item is unavailable due to another customer renting it during this period, or the time allocated either end of their rental to allow for product turnaround.

If a customer selects a rental time after another is scheduled, or more than 2 weeks in the future, they’ll be asked to select a back-up option. This means they won’t be left without something to wear should the previous renter fail to return the piece.

Damage fees The damage fees for the piece selected shall be shown on this page. Customers can also click to learn more about the policy if it’s their first rental encounter with the brand.

These fees will be altered automatically according to the number of rentals a garment has had. The fees shown are for a new item with light damages priced at 5% RRP, heavy 20% and unrepairable 60%. The total fee for unrepairable garments is 90%, giving the customer a reason to still return the piece.

This will allow Cycloan to sent the piece for proper recycling, avoiding it being thrown away by the renter and ending up in landfill.

Select rental days Change

3 days

£36

Please be aware of damage fees. Up to: Light +£5

Rental duration From this page, customers will still be able to change the duration they’d like to rent a piece and gives the price for the number of days currently selected.

RENT NOW This button will take customer to rental confirmation page (see below).

Product overview An icon of the garment, the brand/designer, product description and size will be states. The price to the right will show the rental price without delivery.

Heavy +£24

Unsalvageable +£70

ADD TO BASKET RENT NOW

ADD TO BASKET This will add the item to the customer’s basket for the selected dates then return them to the page they were previously scrolling to continue shopping.

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Rental confirmation page

ORDER REVIEW Schedule for

8th - 10th May Green glitter sequin kimono - One size

£36

Schedule for This shows the dates the customer will be renting the piece for.

Select delivery

Delivery selection Customers can choose to have items sent to their local post office, for free, or to their home address, for £3.50. Here, there will also be an option to change the delivery address, which will be saved to the user’s account for quicker checkout.

Damage policy check Customer will need to check a box to confirm that they understand the damage policy meaning the will be charged should the garment be returned damaged, more than from general wear and tear. If they are unfamiliar or want to check the policy they may click the ‘CLICK HERE’ to read more about it.

Local post office Home delivery

FREE +£3.50

Change delivery address

Total price The total rental price the customer will be charged if returned undamaged.

* TOTAL £36 Please confirm you understand the damage and late policies. Or, to read more ‘CLICK HERE’.

RENT NOW

*Note the Klarna payment will start at the product’s full RRP which will be reduced to your rental fee on return.

!

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RENT NOW WITH KLARNA This will lead customers to the Klarna confirmation page to finalise their order. They are prompted here that the Klarna debt will begin at the garment’s full RRP which will be reduced to their rental price on return.

EMAIL MARKETING Year 1 General marketing

Launch promotion

Potential impressions 48,000 19.38%

2.24% (Chaffey 2019)

Email opens 9302 App revisits 1075 Sales generated 54

(Chaffey 2019)

5%

x £36

Year 1 January promotion (Estimated app downloads at time of promotion)

App revisits 7050 Sales generated 353 Revenue generated £11,421

To generate initial sales, the first 100 customers to rent and leave a review will receive a 25% discount on their order. This will take place during the testing phase in March, for which customers will be acquired via external Instagram content (see p.85), and again at full launch in June. Prior to launch, consumers will be encouraged to join a mail listing to receive news of the offer. Positive reviews will assure following customers of the security of the app and indicate service levels from their experience.

Reviews are essential to establish trust with new customers as own claims are often viewed as unreliable but “84% of consumers trust online reviews as much as a personal recommendation” (Bloem 2017).

General marketing

Revenue generated £1,935

Potential reach 15,000

Fuelled by the rapid growth of internet access via mobiles, direct marketing is now a highly effective form of advertising. Email marketing now accounts for 20% of all app revenue (Tagiev n.d.). Emailing allows reach to a vast number of targeted consumers at almost no cost, the only costs being that to generate content and the time taken to send the emails.

47%

(Tiongson 2015)

5%

x £32.40

Email marketing is also an effective way to retain customers (Duncan 2005) and, therefore, shall be used with consumers who already have a Cycloan account, averaging at 2 emails per month. Content shall follow the same planned schedule as Instagram content (see p.87), including news of look book launches. This will showcase pieces catering for consumer’s likely, upcoming events.

With over 5000 purchases being made in the first year (see p.95), at least this many accounts will have been made by the end of the year. Assuming an average of 2000 accounts are active throughout the year, 48,000 impressions can be made (2000 x 24 emails). 19.38% of emails with retail related content are opened with a click-through rate of 2.24% (Chaffey 2019). Assuming about 5% of these customers will schedule a rental, as interest is already established through them revisiting the app, this tactic will generate revenue of £1,935.

Promotion for difficult months

10% discount codes shall be sent during January and May, months which otherwise would expect low sales rates. These will be sent via email and app notification meaning all those who have downloaded the app will receive the promotion, not just those with an account. The codes will be available to use for the month and month following. As 47% of people revisit an app when they receive a form of discount (Tiongson 2015), this will help generate a strong flow of sales through more difficult months.

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Birthday deal

On making a Cycloan account, customers will be asked to give their birthday (optional) or it will be synced via their social media account if set up this way.

A 20% discount code will be offered to use for their birthday which will be shall be sent 2 weeks, then a 1-week reminder, prior to their big day via email and mobile notification. This ensures the consumer has at least one means of seeing the code, should they decide to turn notifications for the app off. This promotion allows the opportunity for personalised content, including the customer’s name and birthday and suggestions based on their previous purchases and favourited items, increasing the likelihood of a purchase.

Year 1 Birthday deal

x2

(2 notification opportunities)

47%

(Tiongson 2015)

Cycloan accounts 5,000 Total potential impressions 10,000 App revisits 4700

5% Sales generated 253 x £28.80

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Revenue generated £7,286.40

FREE DELIVERY “Maintaining a steady cost from product page to checkout increases a customer's likelihood on following through with the purchase.” (BigCommerce 2019) As previously explored, fashion is an incredibly price elastic industry. Due to this, Cycloan will offer free delivery and returns meaning customers won’t incur any additional costs when reaching the checkout, which could deter them from completing their purchase. This aspect is particularly needed to obtain customers who would otherwise buy from fast fashion online giants such as Missguided and Pretty Little Thing, most who offer free delivery.

This will however only be available for delivery to local post offices, not home delivery.

LOOKBOOKS Lookbooks “allow brands to tell a story – helping to set a particular mood or enhance a theme – but it also puts products in context and highlights corresponding items to drive additional sales.”

- (Gilliland 2017)

As previously analysed, fashion is a fast-paced industry which means fashion brands must deliver what customers want at the precise time they desire it. Due to this, look books shall be created prior to key points during the year to show customers what is available and how to wear certain pieces through the season. These will fall, roughly, on a quarterly basis to aid a flow of sales throughout the full year and will be available to view on the app as well as physical copies being printed and taken to show at promotional stands (see p.93).

Start of May Festival and holiday season End of August Freshers week and start of the university year Start of November Christmas parties (mini book) End of November NYE looks (mini book) End of February The races - occasion wear

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Clickable pictures Photos will be clickable to take customers directly to rental pages on the app. This follows similar integration techniques which lead to the success of the Missguided x Love Island partnership.

Quirky statements Often edgy and pushing boundaries to mirror the personality of the brand.

FESTI-FRINGING FESTI-FRINGING

Prices ‘From’ prices will appear in small font next to pieces, implying the garment’s 3-day rental price.

SAUCY

GIFs In later years, gifs may be incorporated alongside stand-alone imagery for a more varied approach and visually engaging experience. However, this may require additional help for technical support and therefore won’t be used in the first year to minimise costs.

From £50

Images A mixture of full spread images to multiple appearing next to one another - helping customers compare looks to decide their most desired piece

(left) From £30 (right) From £35

SWITCH UP YOUR LOOK!

Current relevent tags e.g. 'Thank you, next' from a current popular song by Ariana Grande. The tag implies Cycloan's business model. Consumers may wear and love a piece, appreciating it's value, but then happily part with it and move onto the next.

Thank you, next.

Paid feature In later years, lookbook appearances may also be a paid feature for designers, acting as an additional platform to promote their brands.

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In the UK, 73% of people use Instagram daily

80% users follow at least 1 brand on Instagram

60.4% Instagram users are 18-24 and 90% are younger than 35

Instagram has the highest engagement rate of social media platforms

2.26%

0.21% Instagram users are 70% more likely to make a purchase on their phone than non users (Elliott 2015; Reynolds 2018; Smith 2019)

EXTERNAL CONTENT First year budget total = £3,750 Potential reach 1,250,000

kokomo.design

Bristol, United Kingdom

3.07%

(Statista 2018)

Engaged audience 38,375 App downloads 11,513 Sales generated 1151

Liked by duvetdaysclothing and 20 others

kokomo.design Now available on Cycloan!

Want to own this style for a night? Then go check them out now!

30%

10%

x £36

Revenue generated £41,436

External content will be used to drive awareness and interest for Cycloan. This will involve designers and brands, who will feature on the Cycloan app, sharing images and news of the launch as well as reminders throughout the year. Thereby, their followers will be encouraged to follow Cycloan’s Instagram page, download the app and try renting. This will take place before any other form of promotional activity and will be used to help tweak any final changes needed on the app, before the official launch.

Within its first year, Cycloan will use 25 designers / brands.

With Instagram accounts averaging at 50k followers each, this will provide a potential reach of 1,250,000. Smaller brands will allow reach to loyal, highly engaged audience’s, and larger brands will allow reach to a higher quantity of individuals. These are consumers who have an existing,

clear interest in this style of clothing and therefore likely to be receptive to the app. Due to this, from the brands’ engaged audiences, app downloads and sales conversions will be high, at 30% and 10%, and will generate sales valuing at £41,436 in the first year.

Promoting Cycloan will be beneficial for the brands as driving their followers to the app will lead to their pieces becoming popular therefore leading to more items being purchased from them in future for rental purposes.

Furthermore, as Cycloan will only stock a few items from each designer at once, if customers wish to see more, they’ll be driven to the brands’ unique websites, generating brand awareness for them as well as sales. Therefore, the app’s growth and success are in their best interest.

85

OWN CONTENT As Cycloan’s target audience are heavy social media users (see p.64), Instagram will play a huge role in communications. The brand must allow consumers access to see their daring styles on offer, prior to an app download.

Therefore, Instagram is the prime platform due to its image heavy format. Furthermore, Instagram users are 70% more likely to make a purchase on their phone than non-users (Smith 2019), crucial for Cycloan as a brand who sells only via an app. Even if this statistic is not completely accurate, opportunities with Instagram users are much greater due to the high engagement rate of the platform.

Images will be posted at least twice a week meaning the brand must always have content planned which may be added to or altered, given a sudden change in the external environment or news flash. Content will include promotional posts of Cycloan’s current stock, regrams of customer’s and designer’s posts.

By the end of Year 1, Cycloan will aim to obtain 5000 followers. With at least 1 promotional post a week, this gives 260,000 potential impressions. Assuming 1% of these will revisit the app and 5% result in a purchase, this will bring an additional 130 sales.

Year 1 Potential impressions 260,000 3.07%

1%

Engaged audience 7,982 App revisits 2600 Sales generated 130

(Statista 2018)

5%

x £36

Revenue generated £4,680

86

MAY JUN JUL AUG SEP Look book drop Sneak peaks - what’s to come First 100 orders get 25% off - when leaving a review Festival season - own images and reposts Holiday season - own images and reposts Settling into uni make a statement Regram Welcome Week pictures Redressing garments for Halloween looks Bonfire night - sparkly orange / black dresses Christmas party looks Promote NYE’s looks New Year - better you - promote sustainable aspect of renting Valentine’s - red sparkly dresses Launching occasion wear Race day attire - own pics and regrams St Patrick’s Day - green garments Earth Day - promote sustainable aspect reuse green garments

87

OCT NOV DEC JAN FEB MAR APR

PPC MARKETING

- INSTAGRAM

Despite the fact that, consumers referred by Instagram spend more, on average, than from any other social media platform (Karlson 2018) Instagram ads will be a loss making tactic for Cycloan [Appendix 24], mustering a return on investment (ROI) of -48.16% across the first year [Appendix 29-A]. This tactic is not about sales but rather to generate awareness by reaching a large number of consumers, encourage more app downloads and increase liklihood for conversion on customers following touchpoint. With the ads taking consumers directly to the app store, the percentage who will commit to downloading will be high as interest has been established and no cost will be incurred. The estimated number of sales from this is 54 sales, a 1.08% conversion rate from those who originally clicked on the ad (Karlson 2018).

The rate at which Instagram ads are shown depend on 3 factors: (Karlson 2018)

Advertiser bid

+

Ad quality and relevance

At launch, a ‘lifetime budget’ of £1,500 will be allocated with a 3-month duration set (5 separate campaigns of £300 each). As Instagram payments are taken on a pay-perclick (PPC) basis, Cycloan won’t be charged more than this figure but may pay less if the advertisement isn’t as successful as desired and doesn’t reach 2000 clicks within 3 months.

Multiple campaigns shall be launched at once to test and refine Cycloan’s audience.

The selection predicted to bring the most traffic will be women, aged 18-30, based in the UK, using either iOS or Android phones, who have an interest in either [Music], [Festivals] or [Music festivals] and [Clothing], who are additionally [Engaged shoppers], and accessed the link via Wi-Fi. Interests may also be expanded when it ‘may increase app installs at a lower cost per install’ (Facebook 2019). Simultaneous campaigns shall explore older demographics, males, and those with an interest in costume and sustainability. These are potential growth areas for the business.

Having multiple, more targeted audiences, as opposed to one, broader audience, increases the ads quality and relevance score, making them more likely to appear on desirable individuals’ timelines (Facebook 2019; Patel 2017). Furthermore, throughout the campaigns, the least successful may be taken down and money reallocated to the best performing ads.

+ “Video ads will typically outperform both single image ads as well as carousel ads.” says Damon Gochneaur, founder of digital marketing agency Aspiro

Agency (Smith 2019).

Estimated action

Video content shall be used to optimise the estimated action of posts, especially when targeting millennials as they are “marginally more receptive to video advertising” (Lee and Roddis 2018). Furthermore, posts will never stray from Instagram’s classic square 1:1 format, for a more aesthetically pleasing scrolling experience, familiar to those who use the app. Captions will remain under 125 characters, as advised by Instagram (Patel 2017) and the CTA ‘Shop Now’ shall be present. An average of 7 hash-tags will be included as this has been found to be the optimal quantity for the greatest level of post engagement, according to Social Fresh’s Jason Keath (Patel).

“65% of users would feel flattered or honoured if a brand liked one of their post.” Iconosquare (Patel 2017) Future campaigns will include user-generated content as it’s viewed as more trustworthy by consumers and incentivises users to post and tag when renting from Cycloan, in hope of featuring on their next campaign.

88

Liked by duvetdaysclothing and 20 others cycloan It’s time to change!

First year budget total = £3,750

Liked by duvetdaysclothing and 20 others cycloan It’s time to change!

Potential reach 1,700,000 (Facebook. 2019)

Desired clicks 5000 [Appendix 32, Instagram paid ads]

Conversion rate: 1.08%

App downloads 1500

(Karlson 2018)

Sales generated 54 Revenue generated £1,944

89

0.2941...%

30%

3.6%

x £36

GOOGLE ADWORDS “Of those who downloaded an app based on an ad viewed on their smart-phone, 50% said they were prompted to do so by a search ad.” - (Tiongson 2015)

With 77.43% market share, Google AdWords is the ‘world’s leading provider of search ads,’ (Wlosik 2018), so will be used to generate awareness and attract new users. In later years, both forms of PPC marketing will additionally be used to remind previous customers, and app possessors, of the app’s existence. This shall take place during key periods: June-August - for the festival period, September - for university welcome weeks, December - for the Christmas period and NYE, and March - for the races.

Following a similar ranking mechanism as Instagram, Google assesses bids, quality and predicted impacts. However, the second and third aspects are valued more highly than the highest bidder (Wlosik 2018) as Google attempt to minimise the frequency of poor-quality ads appearing. Therefore, by creating high quality ads which are accurately targeted Google ads can be relatively affordable, equating to 17p-per-click [Appendix 25]. Due to this, the AdWords set-up will mirror that of the Instagram paid ads.

The conversion rate of those clicking on links to downloading the app will be in keeping to that of Instagram posts.

However, the volume of sales generated will be greater, as these customers will have actively been searching for apparel like that currently being promoted by Cycloan.

90

First year budget total = £1.800 Estimated impressions 2,783,376 [Appendix 32, Google AdWords]

Estimated clicks 10,629 Conversion rate: 3%

[Appendix 32, Google AdWords]

App downloads 3,189 Sales generated 319 Revenue generated £11,484

91

0.3818...%

30%

10%

x £36

Estimated impressions 12,000 (festival attendants)

Conversion rate: 2%

App downloads 1200

(business.com 2015; Richards n.d.)

Sales generated 240

10%

30.9%

x £36

Revenue generated £8,640

Estimated impressions 40,000 (festival attendants)

Conversion rate: 2%

App downloads 4000

(business.com 2015; Richards n.d.)

Sales generated 800 Revenue generated £28,800

92

10%

30.9%

x £36

Footfall 27,500

Footfall 25,000

(estimated)

(Th1rt3en Media 2019)

Estimated impressions 52,500 Conversion rate: 3%

App downloads 5250 Sales generated 1575

10%

30.9%

x ÂŁ36

Revenue generated ÂŁ56,700

FLYERS

PROMOTIONAL STANDS

Flyers will be used as a direct marketing tool through distribution at festivals, thereby targeting festival-goers.

In the first year, this will include Detonate Festival in Nottingham and Parklife Festival in Manchester with hand-outs taking place by the business owner. The average conversion rate for flyer marketing is between 1-3% (business.com 2015; Richards n.d.), therefore predictions have been placed at 2%. This will be one of the most costeffective communication tools used, yielding the highest return on investment [Appendix 29].

Promotional stands at university freshers/welcome weeks will allow interaction with a number of students, who are likely to attend a number of events and festivals throughout the year. This will help develop brand awareness, establish interest and will be the only tactic which allows consumers to physically view products.

Furthermore, face-to-face contact will allow any queries regarding the rental model to be answered as well as allowing the business owner to expand on its affordability and sustainability attributes in response to individual’s interests.

More festivals will be targeted year-on-year with responsibility for hand-outs being delegated to people located in nearby areas as one-off jobs.

The percentage of those who will download the app and the sales generated matches that of flyer distribution as consumers will have already established desire from what they have seen.

93

COMMUNICATIONS STRUCTURE Official launch MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

Birthday deal

10% discount deal

General email mailing Lookbooks

Instagram (External content) Instagram (Own content) Instagram (Paid content) Google Ad Flyers

Pop ups

(Structure will be continued year-on-year)

100 90 80 70 60 50 40 30 20 10 0

Mar

Apr

May

Jun

Jul

Aug

Sep

94

Oct

Nov

Dec

Jan

Feb

Mar

Apr

APR

MAY

RESULTS Due to the ranges of garments Cycloan will provide, and accompanying communication structure, Cycloan’s sales will fluctuate throughout the year (see p.100 for breakdown).

App downloads

Sales

General email mailing

0

54

10% discount deal

0

530

Birthday deal

0

253

11513

1151 (1 year)

Instagram (Own content)

0

130

Instagram (Paid content)

1500

54

Google Ad

3189

319

Flyers

5200

1040

Pop ups

5250

1575

26,652

5,106

Instagram (External content)

TOTAL

95

CUSTOMER JOURNEY (example)

reness awa

1 Consumer sees paid Instagram ad, putting the brand on their radar as a festival goer

interest

2

Liked by duvetdaysclothing and 20 others cycloan It’s time to change!

desire

Consumer attends Detonate festival where they’re handed a flyer, leading them to download the app

3 £98

Consumer browses the festival look book and favourites some pieces Green glitter sequin kimono - One size

3 days £30 7 days £35 14 days £40

4

RENT NOW REQUEST TRY-ON

!

a ct i o n

5

MAY 2020

Select rental days Change

3 days

Consumer has an upcoming festival and searches for festival apparel in Google, hoping to find some new looks. The paid advert appears, reminding them of the app leading them to revisit

Consumer returns to find their favourited pieces and schedules the piece for their festival

£36

Please be aware of damage fees. Up to: Light +£5

Heavy +£24

Unsalvageable +£70

ADD TO BASKET RENT NOW

!

96

schedule

6

ORDER REVIEW Schedule for

8th - 10th May Green glitter sequin kimono - One size

£36 Select delivery

Local post office Home delivery

FREE +£3.50

Change delivery address

* TOTAL £36

Consumer selects free delivery option and completes the order through the Klarna pay later system and receives their email confirmation

Please confirm you understand the damage and late policies. Or, to read more ‘CLICK HERE’.

7

RENT NOW

*Note the Klarna payment will start at the product’s full RRP which will be reduced to your rental fee on return.

!

Order arrives on designated day in branded box

enjoy

8 Consumer wears and loves garment

return

9 Customer returns item with notes provided in box it arrived in

10 Klarna payment is adjusted once arriving back with Cycloan and the customer pays for their rental.

97

FINANCE OBJECTIVES To maintain a positive cash flow across every month.

To become profitable within the first 3 years of operations.

To show a strong ROI for communication tactics, within the first year, and investors and the total investment for Cycloan to operate, within the first 5 years.

99

TOTAL

531

532

347

346

Flyers

Pop ups

53

100

53

100

Google Ad

100

100

7

100

100

4

21

7

100

100

4

21

Instagram (Paid content)

Instagram (Own content)

Instagram (External content)

General email mailing

10% discount deal

Birthday deal

533

347

54

7

100

4

21

533

350

53

605

475

4

9

9 4

92

4

21

579

450

3

9

92

4

21

484

300

53

4

9

92

5

21

3

16

91

4667

1151

Total sales = 5083

316 312

4

16

92

5

176

177 5

21

21

4

4

195

142

20

20

53

92

5

21

92

5

21

321

3

22

92

5

177

22

5383

1575

1040

319

54

130

1427

54

530

253

MAR APR MAY TOTAL

(Due to external content commencing before any other means of communication, it’s results will be obtained over a different time frame. This alters the Year 1, from launch, total sales.)

OCT NOV DEC JAN FEB TOTAL

92

4

21

MAR APR MAY JUN JUL AUG SEP

INCOME FORECASTS Sales forecast

£2700

100

TOTAL SALES

TOTAL REVENUE

£2700

100

36

Revenue 4

Number of sales at 75%

Revenue 3

Number of sales at 80%

Revenue 2

Number of sales at 90%

Revenue 1

Number of full price sales

Average price

MAR

£3600

100

£3600

100

36

APR

£3600

100

£3600

100

36

MAY

410

39

JUN

£19,570.2

531

£2925

100

£655.2

21

£15,990

Sales value

£22,209.6

533

£705.6

21

£21,504

512

42

AUG

£18,424.8

533

£604.8

21

£17,82o

495

36

SEP

£21,628.8

605

£604.8

21

£21,024

584

36

OCT

£20,692.8

579

£604.8

21

£20,088

558

36

NOV

£17,272.8

484

£604.8

21

£16,668

463

36

DEC

£10,587.6

316

£604.8

21

£5,734.8

177

£4,248

118

36

JAN

£10,447.2

312

£604.8

21

£5,702.4

176

£4,140

115

36

FEB

Year 1 from full launch = 5083 sales £184,140.6

Year 1 of sales = 4728 sales £170,813.40

£22,167.6

532

£705.6

21

£21,462

511

42

JUL

£6,868.8

195

£604.8

21

£6.264

174

36

MAR

£4,960.8

142

£604.8

21

£4,356

121

36

APR

£11,397.6

321

£633.6

22

£6,372

177

£4,392

122

36

MAY

£196,128.6

5383

£5625

200

£7538.4

253

£17,809.2

530

£165,156

4030

TOTAL

Year (from June 2020)

Sales

Revenue

1

5,083

£184,140.6

2

11,183

£405,109.32

3

20,464

£741,350.06

4

32,743

£1,186,106.09

5

49,114

£1,779,240.13

Growth will be achieved through an increased communications budget year-on-year meaning paid tactics may reach a wider audience every year. From year 2, tactics to retain customers will be introduced as well as customers being gained via word of mouth and more posting and tagging Cycloan on Instagram, both which are earnt means of communication.

ROI ON MARKETING COMMUNICATION TACTICS (From June)

Year 1

Year 2

Year 3

Year 4

Year 5

Instagram ads

£3,750

£7,500

£10,000

£12,500

£12,500

Google ads

£1,800

£3,600

£4,800

£6,000

£6,000

£325

£1,445

£2,890

£7,225

£11,560

Pop ups

£4,000

£10,000

£20,000

£30,000

£40,000

Total predicted costs

£9,875

£22,545

£37,690

£55,725

£70,060

£10,000

£25,000

£40,000

£60,000

£75,000

Predicted revenue

£184,140.6

£405,109.32

£741,350.06

£1,186,106.09

£1,779,240.13

Cost of good sold (£16.05 per sale) [Appendix 30]

£81,582.15

£179,487.15

£328,447.2

£525,525.15

£788,279.7

Gross profit

£92,683.45

£203,077.17

£375,212.86

£604,855.94

£920,900.43

ROI (predicted)

938.57%

900.76%

995.52%

1085.43%

1314.45%

ROI (Using full budget)

925.58%

802.49%

932.26%

1000.97%

1222.48%

Flyers

Max budget set

From the predicted costs of marketing communication tactics against the resulting gross profit figures, Cycloan will make a very healthy ROI. Maximum budgets have been set to allow for margin of error within predictions. Even if these budgets are fully utilised the ROI will be strong.

(Please note, these figure don’t take into account any fixed costs incurred and have been used only to evaluate the gross profit generated from marketing communication efforts)

102

+120% +83% +60% +50%

ALL INCOME SOURCES Rentals (Revenue stream 1 in Profit and loss account)

Sales have been precisely predicted based on the communication plan for the first year.

Changing average prices have additionally been considered, increasing for months consumers are likely to require longer rental periods (during summer for holidays).

According to data collected from over 15,000 companies, the average business increases in sales by 120% in its second year, 83% in its third and 60% in its fourth (Girardi 2016), the fifth year has been predicted as a 50% growth rate.

Home delivery (Revenue stream 2)

Customers may opt for home delivery at the charge of £3.50. Based on focus group feedback only about 25% of people would choose this over a free collection option to their local post office [Appendix 5; 6 and 7].

Resale (Revenue stream 3)

Once garments reach the end of their rental life, averaging at 15 rents, they will be sold on at 20% their RRP. This has been predicted based on the stock flow forecast [Appendix 34], resales being predicted the month after their rental life ends.

Year (from September 2019)

Total revenue

1

£75,243.90

2

£273,838

3

£551,211

4

£952,151

5

£1,469,913

START-UP FINANCE Cost of launch

Start-up finance

Registration fee

£12

App development

Month 1-9 £43,800 (Month 10 will be covered by sales income)

App maintenance

Month 7-9 = £720

Initial stock

250 pieces = £24,000

Bags = £284.59 Boxes = £2,460

Insurance (Year 1)

£303.70

Trademark fees

£200

Total

£74,580.29

£15,000 in month 1

Funds from family and friends

£10,000 in month 4

£25,000 in month 5 Government small business loan

Stylist salary (first months) Month 8-9 = £3,000 Packing bags and boxes

Owners funds

103

Investor

£25,000 in month 9

Total

£75,000

LIST OF NEEDS Cost of goods sold

For cost breakdown see Appendix 30 Stock

The average RRP of garments purchased to rent out will be £120, however Cycloan will purchase at a 20% discount rate (£96) due to the close relationships with, and mutual benefits provided to, designers. This is in keeping with commission levels of the likes of, festival wear specialist websites, We Koko and Wild Thing (at 25% and 20%) [Appendix 9-B].

At any one time Cycloan will own a minimum of double the level of weekly predicted sales. This will ensure: • Garment turnaround times are covered • Peak periods during the month have enough stock to cover demand • Availability is constantly maintained on the app • Months with higher average rental times always have stock available (in July and August when customers rent for vacations) • Alternatives will be available should garments return damaged or are not returned at all In addition, a selection of new items will always be purchased for the festival and races periods to appear in the May and March lookbooks. This has been factored into the stock predictions to be brought in the month prior to look book launches, but only to start to be rented in launch months. Other items will be purchased 1 month prior to they’re needed to allow time for shipping, photoshoots and uploading to the app. General sizes provided will be 8-10, 12-14 and 16-18, unless the garment is produced as a ‘One size’. In later years this may be expanded to cater for customers at either end of this spectrum.

As Cycloan’s portfolio only includes high quality apparel they will last an average of 15 wears each. However, pieces are more likely to get damaged at festivals and events due to their nature. As damage greater than that caused by general wear and tear has already been accounted for through customers fees, this issue has been eliminated and not shown in the financial accounts as new stock. Stock usage has been predicated based on new festival and occasion wear being the most demanded pieces at their launch and usage being spread between the other pieces available at that time [Appendix 34]. Actual sales and timings at which new stock is needed will undoubtedly vary from these predictions as certain pieces will be more popular, meaning they need replacing more frequently, and changes in the external environment may lead to sudden influxes in or shortages of sales. The stock flow forecast has been produced to give indication to the level of new stock needed throughout the year to allow for better financial planning. The start of the festival period has been identified to require high quantities of new stock to cover the increased demand year-on-year. Consequently, an additional cash injection is required in month 21 to cover this, which has been accounted for in the cash flow forevasts (see p.112).

Laundering

Postage

Packing bags

Repayments and tax

Marketing For cost breakdown see Appendix 32

Figures in financial accounts refer to: Marketing 1 Marketing 2 Marketing 3 Marketing 4 Marketing 5

Free delivery Instagram paid ads Google ads Flyers Pop ups

Packing boxes

(Accounted for in P&L account)

Interest on loan Fixed interest rate of 6% per annum, across 24 months Family and friend dividends 5% from Year 2 Investors 1 10% from Year 2 Investors 2 5% from Year 3 Tax 19% off all end of year profits [Appendix 33] (Accounted for in cash flow account)

Loan repayments Across 24 months

104

Overheads

For cost breakdown see Appendix 31 Registration fee

Registration to form a limited company

App and web site development and maintenance

App development costs will cover creating an app which operates on iOS and Android devices, allows uploading of new products and payments taken via Klarna. The app additionally has a corresponding website for logistical matters.

Maintenance and support fees will additionally be incurred in order for updates to take place on the app and contact may be made to the app developer should there be any issues occur.

Rent

Year 1 The first year will be operated from the owner’s home meaning no rent fees are incurred.

Wages

Owner The owner will be responsible for the everyday running of the business: • Transportation of garments between the storage unit, dry cleaners and post office • Inspections of garments and price confirmation • Use of Google Analytics to help track what pieces are selling well • Moving garments from the rental pages to resell at the end of their rental life • Responding to customer queries, feedback or complaints • Joint responsibility of the Instagram feed • Email marketing • Purchasing of new packaging and basic supplies • Hiring new staff • University promotional stands

Year 2 In the second year, business operations will be moved to a storage unit to increase space available but keeps costs low by not opting for an office space. This will increase in size in year 3 and 4.

Stylist The stylist will join Cycloan, pre-launch, as a Junior and grow with the business. They will be responsible for: • Photoshoots of garments and uploading of new pieces • Trend forecasting and selecting new designers and pieces to purchase • Staying in contact with current brands being used to keep track of what they’re doing • Creation of look books • Joint responsibility for the Instagram feed • The stylist will also be trained to conduct the everyday activities of the business for times the owner may be unavailable (e.g. during university tour or should they fall ill) Part-time workers From Year 2, part-time staff will be employed to help handle increased sales. As of Year 3, at least 1 part-time worker will be available every day. These will be individuals ages 21-24 who have a full driving licence and access to a car meaning they can conduct some of the transportation of goods. They will be paid £7.70 per hour (GOV.UK. 2019).

Travel allowance

Travel allowance will cover the cost of fuel needed to transport goods between the storage unit, post office and dry cleaners.

Printing

As the business shall be run from a storage unit, printing will of delivery notes and labels must be completed at home. This may be done by any member of staff by accessing the website. Due to this, no technology will need to be purchased however costs of printing must be factored in.

Insurance

Public liability, employee liability and contents cover shall be required.

Accountant fees

An accountant must be taken on to deal with end of year accounts.

Trademark fees

The Cycloan name, logo and pattern will be trademarked to assure no other brand replicates it.

Expansion

As sales increase, the dry cleaners will hit full capacity and won’t be able to meet the demand driven by Cycloan. Due to this, a joint venture shall take place, involving purchasing new assets to increase capacity. This will be a mutually beneficial venture, increasing potential for both brands, therefore both parties will input finance in order for this to take place.

Expansion will take place 2 months prior to the festival season during the 2nd year and again for the fourth year.

105

PROFIT AND LOSS

Year 1 2019/20

1

2

3

4

5

6

7

8

9

10

Sep

Oct

Nov

Dec

Jan

Feb

11

12

Mar

Apr

May

Jun

Jul

Aug

Number of sales

100

100

100

531

532

533

Revenue stream 1

2700

3600

3600

19570.2

22167.6

22209.6

Revenue stream 2

87.5

87.5

87.5

464.63

465.5

466.38

2787.5

3687.5

3687.5

20034.83

22633.1

22675.98

Revenue stream 3 Total revenue

0

0

0

0

0

Stock

0

4800

Laundering

19200 750

750

750

4800 3982.5

Packing bags

55.89

228.7

Packing boxes

1230

1230

1920

Postage (Home delivery)

3990

3997.5

1920

797.83

799.33

800.83

Cost of goods sold

0

0

0

0

0

6085.89

750

750

21408.7

6700.33

4789.33

11518.33

Gross profit

0

0

0

0

0

(6085.89)

2037.5

2937.5

(17721.2)

13334.5

17843.77

11157.64

6000

6000

6000

6000

6000

6000

6000

6000

240

240

600

600

600

1500

1500

2500

2500

2500

132.75

133

133.25

53.1

53.2

53.3

Registration fees App and website development

12 1800

App and website maintenance

240

Rent Wages Travel Allowance Printing Insurance

303.7

Accountant fees

1000

Trademark fees

200

Expansion

Marketing 1

2393.48

Marketing 2

1500

Marketing 3

300

Marketing 4

220

2397.99

2402.5

300

300

85

Marketing 5

Total overheads

2103.7

6000

6000

6000

6000

6000

6240

1740

8160

13564.33

5984.19

6989.05

Total Costs

2103.7

6000

6000

6000

6000

12085.89

6990

2490

29568.7

20264.66

10773.52

18507.38

(2103.7)

(6000)

(6000)

(6000)

(6000)

(12085.89)

(4202.5)

1197.5

(25881.2)

(229.84)

11859.58

4168.6

62.5

62.5

62.5

62.5

62.5

62.5

62.5

Earnings before interest and tax

Interest

Earnings before tax

(2103.7)

(6000)

(6000)

(6000)

(6000)

(12148.39)

(4265)

1135

(25943.7)

(292.34)

11797.08

4106.1

(2103.7)

(6000)

(6000)

(6000)

(6000)

(12148.39)

(4265)

1135

(25943.7)

(292.34)

11797.08

4106.1

Tax

Total earnings

Dividends

Year 2 2020/21

13

14

15

16

17

18

19

20

21

22

23

24

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Number of sales

533

605

579

484

316

312

195

142

321

1168

1170

1173

Revenue stream 1

18424.8

21628.8

20692.8

17,272.80

10587.6

10447.2

6868.8

4960.8

11397.6

43054.44

48768.72

48861.12

Revenue stream 2

466.38

529.38

506.63

423.5

276.5

273

170.63

124.25

280.88

1022

1023.75

1026.38

Revenue stream 3 Total revenue

1200 18891.18

Stock

4800

Laundering

3997.5

Packing bags

228.7

Packing boxes

22158.18

22399.43

4800 17696.3

10864.1

15520.2

7200 4537.5

4342.5

3630

888 7039.43

5085.05

19200 2370

2340

1462.5

11678.48

44076.44

16800 1065

2407.5

8760

49792.47

50775.5

4800

4800

8775

8797.5

434.8

1920

1920

3300

4025

4025

Postage (Home delivery)

800.83

909.01

869.95

727.21

474.79

468.78

292.99

213.36

482.30

1754.92

1757.93

1762.43

Cost of goods sold

11747.03

5446.51

7132.45

11557.21

2844.79

2808.78

24255.49

1278.36

20124.60

14539.92

15332.93

19384.93

Gross profit

7144.14

16711.66

15266.98

6139.09

8019.31

12711.42

(17216.06)

3806.7

(8446.13)

29536.52

34459.55

31390.56

1000

1000

1000

1000

1000

1000

1000

1000

Registration fees App and website development App and website maintenance Rent Wages

2500

2500

2500

Travel Allowance

2500

2500

1000

1000

1000

1000

547.96

261.29

261.29

261.29

3835.03

3835.03

3835.03

2500

2500

2666.67

2666.67

133.25

151.25

144.75

121

79

78

48.75

35.5

80.25

292

292.5

293.25

Printing

53.3

60.5

57.9

48.4

31.6

31.2

19.5

14.2

32.1

116.8

117

117.3

Insurance

391

Accountant fees

1000

Trademark fees Expansion

5000

Marketing 1

2402.5

Marketing 2

750

2727.04

2609.84

2181.63 750

1424.37

1406.34

878.96 750

Marketing 3

300

300

300

640.07

Total overheads

5264.76

5273.78

5287.3

600

600

11379.6

12394.17

2250 600

Marketing 4 Marketing 5

1446.91

550

895

6323.89

14514.88

4000

11530.05

6438.79

6312.49

6901.03

5034.97

5015.54

5497.21

9356.44

Total Costs

23277.08

11885.3

13444.94

18458.24

7879.76

7824.32

29752.7

10634.79

26448.49

29054.8

26712.52

31779.1

Earnings before interest and tax

(4385.91)

10272.88

8954.49

(761.94)

2984.34

7695.88

(22713.28)

(5549.74)

(14770.02)

15021.64

23079.95

18996.4

62.5

62.5

62.5

62.5

62.5

62.5

62.5

62.5

62.5

62.5

62.5

62.5

(4448.41)

10210.38

8891.99

(824.44)

2921.84

7633.38

(22775.78)

(5612.24)

(14832.52)

(14959.14)

(23017.45)

18933.9

(4448.41)

10210.38

8891.99

-824.44

2921.84

7633.38

(22775.78)

(5612.24)

(14832.52)

14959.14

23017.45

18933.9

Interest

Earnings before tax

Tax

Total earnings

Dividends

5510.973

Year 3 2021/22

25

26

27

28

29

30

31

32

33

34

35

36

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Number of sales

1173

1331

1274

1065

695

686

429

312

706

2137

2141

2147

Revenue stream 1

40534.56

47583.36

45524.16

38000.16

23292.72

22983.84

15111.36

10913.76

25074.72

78789.63

89246.76

89415.85

Revenue stream 2

1026.38

1164.63

1114.75

931.88

608.13

600.25

375.375

273

617.75

1869.88

1873.38

1878.63

Revenue stream 3

312

1200

1800

4512

1488

672

2568

1032

744

384

2400

41872.94

49947.99

48438.91

43444.04

25388.85

24256.09

18054.74

12218.76

26436.47

81043.50

93520.13

91294.47

9555

7987.5

5212.5

5145

16027.5

16057.5

16102.5

Total revenue

Stock

14400

12480

Laundering

8797.5

9982.5

Packing bags

434.8

Packing boxes Postage (Home delivery)

9600

3217.5

39360 2340

5295

434.8 3300

1762.43

28800

1999.83

3300 1914.19

1600.16

1044.24

1030.72

644.57

27840

434.8 4025

4025

468.78

1060.77

3210.84

4025

4025

3216.85

3225.87

Cost of goods sold

25394.73

27762.33

11469.19

22487.66

6256.74

6175.72

33096.87

6833.78

49740.77

19673.14

23299.35

51193.37

Gross profit

16478.20

22185.66

36969.73

20956.37

19132.11

18080.38

(15042.14)

5384.98

(23304.3)

61370.36

70220.78

40101.10

Registration fees App and website development App and website maintenance

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

1000

Rent

261.29

261.29

261.29

261.29

261.29

261.29

261.29

261.29

570.28

570.28

570.28

570.28

3835.03

3835.03

3567.69

3166.67

3166.67

3166.67

3166.67

3416.67

3416.67

6087.57

6087.57

6087.57

293.25

332.75

318.5

266.25

173.75

171.5

107.25

78

176.5

534.25

535.25

536.75

Printing

117.3

133.1

127.4

106.5

69.5

68.6

42.9

31.2

70.6

213.7

214.1

214.7

Insurance

410

Wages Travel Allowance

Accountant fees

1000

Trademark fees Expansion

Marketing 1

5287.3

5999.48

5742.56

4800.49

3132.71

3092.15

1933.72

Marketing 2

1100

1100

1100

Marketing 3

600

600

600

1406.34

9632.53

9650.56

9677.60

4000 800

Marketing 4 Marketing 5

3182.3

1100

1790

800

800

10000

Total overheads

12904.17

21561.65

11017.435

11301.2

7803.92

7760.21

8211.83

6193.5

9516.35

20628.33

22857.76

19886.90

Total Costs

38298.9

49323.98

22486.62

33788.86

14060.66

13935.92

41308.7

13027.28

59257.11

40301.47

46157.11

71080.27

Earnings before interest and tax

3574.04

624.01

25952.29

9655.18

11328.19

10320.17

(23253.97)

(808.52)

(32820.64)

40742.03

47363.02

20214.20

62.5

62.5

62.5

62.5

62.5

62.5

3511.54

561.51

25889.79

9592.68

11265.69

10257.67

(23253.97)

(808.52)

(32820.64)

40742.03

47363.02

20214.20

40742.03

47363.02

20214.20

Interest

Earnings before tax

Tax

Total earnings

Dividends

7123.0658

3511.54

561.51

25889.79

9592.68

11265.69

108

10257.67

(23253.97)

(808.52)

(39943.71)

20492.08

Year 4 & 5 2022-24

37-48

49-60

Year 4

Year 5

Number of sales

24318

37881

Revenue stream 1

904227.68

1394504.62

Revenue stream 2

21278.25

33145.88

Revenue stream 3

35256

56040

960761.93

1483690.5

Stock

94560

273600

Laundering

182385

284107.5

Packing bags

2204

3558.4

Packing boxes

40250

69100

Postage (Home delivery)

36537.8

56916.20

Cost of goods sold

355936.8

687282.10

Gross profit

604825.14

796408.4

12000

12000

Total revenue

1

2

3

4

5

Total Revenue

75506

275977

555917

960762

1483690

Total cost of goods sold

52003

136453

283384

355937

687282

Total gross profit

23504

139524

272533

604825

796408

Total overheads and marketing

74781

100699

159643

260899

353493

Total earnings before interest and tax

(51277)

38825

112890

343926

442916

Net profit

(51715)

38075

105138

322477

377570

The profit and loss accounts show the total revenue, costs and profit Cycloan predicts to make in its first 5 years. Generation of these forecasts proves the viability of the model as profits begin to be achieved in the second year and the business breaks even within its third year of operation.

Registration fees App and website development App and website maintenance Rent

7593.28

9093.12

Wages

72969.22

86682.62

Travel Allowance

6079.5

9470.25

Printing

2431.8

3788.1

Insurance

586.64

650

1000

1000

Accountant fees Trademark fees Expansion

5000

Marketing 1

109613.39

170748.61

Marketing 2

11000

12500

Marketing 3

5400

6000

Marketing 4

7225

11560

Marketing 5

20000

30000

Total overheads

260898.83

353492.7

Total Costs

616835.62

1040774.8

Earnings before interest and tax

343926.31

442915.7

343926.31

442915.7

21449.1

65346

Total earnings

322477.21

377569.7

Dividends

64495.44

75513.94

Interest

Earnings before tax

Tax

109

SENSITIVITY ANALYSIS Year 1

Year 2

Year 3

Sales -20%

Predicted

Sales +20%

Sales -20%

Predicted

Sales +20%

Sales -20%

Predicted

Sales +20%

1516.8

1896

2275.2

5598.4

6998

8397.6

11276.8

14096

16915.2

Total revenue

60405.12

75506.4

90607.68

220781.38

275976.73

331172.08

444733.5

555916.87

667100.25

Cost of goods sold

41602.06

52002.58

62403.1

109162.4

136453

163743.59

226706.91

283383.64

340060.37

Gross profit

Sales

18803.06

23503.82

28204.584

111618.99

139523.74

167428.48

218026.59

272533.23

327039.88

Gross profit margin

31.13%

31.13%

31.13%

50.56

50.56

50.556

49.02%

49.02%

49.02%

Overheads and fixed marketing costs

67427.7

67427.7

67427.7

68455.76

68455.76

68455.76

94695.92

94695.92

94695.92

Variable overhead and marketing costs

5882.87

7353.57

8824.28

25794.63

32243.29

38691.94

51957.86

64947.32

77936.78

Total overhead and marketing costs

73310.56

74781.27

76251.98

94250.39

100699.05

107147.70

146653.78

159643.24

172632.70

Total costs

114912.62

126783.85

138655.08

203412.78

237152.04

270891.3

373360.69

443026.88

512693.07

Earnings before interest and tax

(54507.5)

(51277.45)

(48047.4)

17368.6

38824.69

60280.78

71372.81

112889.99

154407.17

437.5

437.5

437.5

750

750

750

375

375

375

(54945)

(51714.95)

(48484.9)

16618.6

38074.69

59530.78

70997.81

112514.99

154032.17

0

0

0

0

0

0

5901.35

7376.69

8852.03

Total earnings

(54945)

(51714.95)

(48484.9)

16618.6

38074.69

59530.78

65096.46

105138.30

145180.15

Net profit margin

(90.96%)

(68.49%)

(53.51%)

7.53

13.8

17.98

14.64

18.91

21.76

0

0

0

2492.79

5711.2

8929.62

16274.11

26284.58

36295.03

Interest

Earnings before tax

Tax

Dividends

The sensitivity analysis shows the adjusted profit levels Cycloan could generate should actual sales be -/+ 20% that was predicted. The variable overhead and marketing costs refer to the printing and free delivery costs, which also adjust in accordance to the number of sales achieved. Travel allowance has been considered at fixed cost as the same number of car journeys may be needed, just carrying less stock per trip.

Should the worst-case scenario occur, Cycloan will still start to generate profit in Year 2, however wou;dn’t break-even until Year 4.

110

RETURN ON INVESTMENT Total ROI Total invested Cumulative earnings ROI

Year 1

Year 2

Year 3

Year 4

Year 5

£75,000

£90,000

£90,000

£90,000

£90,000

(£51,714.95)

(£13,640.26)

£91,498.04

£413,975.25

£791,544.95

(68.95%)

(15.16%)

101.66%

459.97%

879.49%

Family & friends funds Year 1

Year 2

Year 3

Year 4

Year 5

£10,000

£10,000

£10,000

£10,000

£10,000

Dividends for year

-

£1,903.73

£6,571.15

£16,123.86

£18,878.46

Cumulative earnings

-

£1,903.73

£8,474.88

£24,598.74

£43,477.2

ROI

-

19.04%

84.75%

245.99%

434.48%

Total invested

Investor 1 Year 1

Year 2

Year 3

Year 4

Year 5

£25,000

£25,000

£25,000

£25,000

£25,000

Dividends for year

-

£3,807.47

£13,142.3

£32,247.72

£37,756.92

Cumulative earnings

-

£3,807.47

£16,949.77

£49,197.49

£86,954.41

ROI

-

15.23%

67.8%

196.79%

347.82%

Total invested

Investor 2 Year 1

Year 2

Year 3

Year 4

Year 5

Total invested

-

£15,000

£15,000

£15,000

£15,000

Dividends for year

-

-

£6,571.15

£16,123.86

£18,878.46

Cumulative earnings

-

-

£6,571.15

£22,695.01

£41,573.47

ROI

-

-

43.81%

151.30%

277.16%

Cycloan will become profitable within Year 3, generating a ROI of 452.21% in the year following and 871.73% in year 5.

All investors will also make a positive return on their investment within year 4.

CASH FLOW Year 1 2019/20

1

2

3

4

5

6

7

8

9

10

11

12

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

12884.3

6884.3

884.3

4884.3

23884.3

10694.24

5387.57

5480.9

3495.53

2161.53

12916.94

10000

25000

0

0

0

0

0

0

2787.5

3687.5

3687.5

20034.83

22633.1

22675.98

2115.7

6000

6000

6000

6000

12148.39

7052.5

2552.5

29631.2

20327.16

10836.02

18569.88

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

Opening balance

Cash injection

15000

Incoming Outgoing (including interest, tax and dividends) Loan repayments

Closing balance

25000

12884.3

6884.3

884.3

4884.3

23884.3

10694.24

5387.57

5480.9

3495.53

2161.53

12916.94

15981.36

13

14

15

16

17

18

19

20

21

22

23

24

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

15981.36

10491.29

19659.99

27510.31

25644.2

27524.36

34116.08

10298.63

3644.72

2770.54

16688.01

38663.79

Incoming

18891.18

22158.18

22399.43

17696.3

10864.1

15520.2

7039.43

5085.05

11678.48

44076.44

49792.47

50775.5

Outgoing (including interest, tax and dividends)

23339.58

11947.8

13507.44

18520.74

7942.26

7886.82

29815.2

10697.29

26510.99

29117.3

26775.02

37552.80

Loan repayments

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

1041.67

Closing balance

10491.29

19659.99

27510.31

25644.2

27524.37

34116.08

10298.63

3644.72

2770.54

16688.01

38663.79

50844.81

Year 2 2020/21 Opening balance

Cash injection

15000

Year 3-5 2021-24 Opening balance

25-36

37-48

49-60

Year 3

Year 4

Year 5

50844.81

128705.42

386687.2

Cash injection Incoming

555916.87

960761.93

1483690.5

Outgoing (including interest, tax and dividends)

471806.23

702780.16

1181634.74

386687.2

688742.96

Loan repayments

Closing balance

The cash flow forecasts show the movement of Cycloan’s cash over 5 years. The first 2 years have been shown in greater detail as the most difficult period to remain positive and to show the need for all cash injections. As mentioned, an additional cash injection is needed in month 21 in order to obtain new stock for the festival period. E With this second investment, Cycloan’s cash flow will always remain positive meaning all bills will be able to be paid.

6250.02

128705.43

112

KPIs Business aims revisited

KPI

To provide customers the looks they want, when they want them.

For 50% of garments to reach the end of their rental life within a year, increasing by 5% year-on-year for the first 5 years.

To maintain a conversion rate of 5% for app revisits to rental scheduling.

To maintain a low carbon footprint through all business activities.

For 75% of customers to collect their rentals from their local post office.

From year 2, for at least 30% laundering be done via green dry cleaning, increasing by 10% year-on-year.

To become profitable within the first To cover the purchase costs of garments in 5 rents or less.

3 years.

To generate profits worth 2x the RRP of garments.

To meet all marketing objectives to ensure the level of sales needed to become profitable are generated.

113

RISK Risk

Likelihood Severity

Impact

INTERNAL Technical glitch on app

The website may become out of sync meaning booked sales cannot be accessed for items to be sent to customers. Consumers may not be able to browse the app, completely halting all sales, which may also prevent them from revisiting the app.

2

5

3

2

4

3

Piece is returned late

3

2

This may not leave enough time for product turnaround, leaving the following customer dissatisfied.

Customer fails to return item

3

3

Consumers failing to return items could have a negative impact on the following customers and may put them off using the app.

4

1

3

2

3

1

Owner falls ill

The owner shall be the main person to run the necessary daily errands of the business. Should they fall ill parcels may not be sent, leaving customers dissatisfied, likely to leave a negative review, and won’t purchase from Cycloan again.

EXTERNAL Piece is damaged beyond repair

Consumer cancels booking last minute Late delivery

by Royal Mail Customer doesn’t like the garment/ doesn’t fit them properly on arrival

It is quite likely for pieces worn to festivals to become damaged beyond repair [Appendix 9-C]. This would render it worthless and no other customer would be able to rent it again.

A last-minute cancellation could restrict sales as items will be made unavailable to other customers until it’s too late. However, this would only make an impact if this situation occurred frequently as each sale is relatively small; one lost customer won’t make a great difference for the business.

Late delivery could mean the customer is left outfit-less for their event meaning dissatisfaction, a likely negative review and tarnished relationship with the brand.

Consumers will be dissatisfied paying a full rental fee if they feel uncomfortable wearing it out.

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ASSESSMENT Prevention

Cycloan will pay £1,000 a month for app and website maintenance, upholding a strong relationship with the developers to report and fix any issues in a timely manor.

The stylist will be trained to operate daily processes to send out, take in and transport garments. From the second year, part time staff will also be trained in this field meaning the owners time may be covered should they fall ill.

If items are ruined beyond repair the customer is charged up to +60% the RRP of the garment. They’re not charged 100% in order to incentivise the them to still return the item as opposed to throwing it and allowing the piece to go to landfill.

The item will be taken off the app (if only 1 is available) and any customers who have future reservations will be notified.

When booking in advance customers will be asked to select a back-up option meaning they won’t be left disappointed should this scenario occur.

The next customer would have been asked to select a back-up piece as they’re booking after a scheduled rent, so they wouldn’t be left package-less. The first customer would also incur a small fee, to mitigate the likelihood future late returns.

Customers will be charged 100% RRP for unreturned items.

To avoid disappointed customers, when items are currently being rented, they shall appear on the app but state that they’re ‘currently unavailable’. New customers may book the items but will be recommended to select a 2nd choice piece. This means if the first is failed to be returned the next customer won’t be left with nothing to wear on the day of their event.

Customers won’t be able to cancel their order 48 hours hour before the day it’s due. This eliminates the risk of items being cancelled after they have been labelled for delivery and makes customers think about cancelling in advance meaning someone else still has the time to rent for the weekend (likely desired period).

Customers may alert Cycloan of the late delivery to receive discount off their rental. Should the garment arrive too late that they were unable to wear it to their event, they will only be charged the postage fee of the transaction. Though they may still feel dissatisfied, the consequences won’t be as severe.

Cycloan will allow customer to return the garment and pay only for the postage fee. Though other rental brands offer completely free returns for items their customers don’t like, as Cycloan provides of a lower price than the majority, therefore likely making lower profits per garment, this is unviable for the business.

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SUMMARY As consumers are becoming increasingly aware of the impacts behind their purchases (The Future Laboratory 2016) and ‘valuing access over ownership’ (Robinson and Laughlin 2014), the potential for the UK clothing rental market is coming into realisation. However, targeting the right clothing segments is imperative, as not all are suited to the model.

Festival wear offers great opportunity. Consumers want more outrageous looks than their everyday for these events [Appendix 4; 5; 6 and 7] but only require them on a short-term basis. Due to this, they are unable to justify high price points and opt for unsustainable fast fashion brands.

Cycloan will cater to these desires by providing a more sustainable alternative while granting access to pieces consumers may otherwise be unable to buy and so filling a gap in the marketplace. The brand shall differentiate itself, from current and future competitors, through upholding a highly selective product portfolio and maintaining close contact with its designers and brands, creating mutually beneficial relationships.

Once overcoming the high start-up fees and initial slow profit generation, the rental model has the potential to bring much higher returns than traditional ‘buy and sell’ structures. For Cycloan, yielding on average gross profits of £240 per piece, which is double garment’s RRP [Appendix 28]. Furthermore, once established, the brand will grow into occasion wear, menswear and eventually expand overseas; unlocking the full potential of the rental market among fashion-forward, youthful individuals.

As a result of this business plan, Cycloan will cater to an unfulfilled need, generate healthy profits within its first 3 years, with room for growth, and encourage more sustainable consumption of clothing.

Social

Economic

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Environmental

118

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