A POP UP SHOP IN LONDON’S HISTORIC COVENT GARDEN FASM 410: RETAIL MANAGEMENT ALESSANDRO CANNATA ERICKA MCGRIFF ISA ESPINAL MIA REXACH VICTORIA STRONG
1
We see POSSIBILITY in the impossible, we nurture AUTHENTICITY, we integrate INDIVIDUALITY and teamwork by fusing creativity and logic.
2
3
4
TABLE OF CONTENTS Executive Summary
6
Company Overview
8
UK Market Analysis
18
Target Consumer
27
Coach Pop-Up Shop: London
37
Communication/Promotion
46
Financial Plan
49
Conclusion
53
5
EXECUTIVE SUMMARY The Coach brand is something built off of authenticity, innovation, and relevance. Founded, in the 1940’s, on the streets of New York City in a family-run workshop on Manhattan’s 34th street, Coach became the pioneers in the leather goods and accessories space. Fearlessly establishing the company as the original American house of leather, for the generation, the brand is built on the idea of becoming the company that defines global and modern luxury. This Coach pop-up shop is a way to introduce the new Coach Man to the world. To celebrate and honor the individuality of the man and who he is becoming, in the heart of The Square Mile, London, England, we plan to blend the brands historic legacy with the ever changing environments of design and fashion. The pop-up shop will focus on men’s ready-to-wear and accessories, since the demand for these items has escalated through the past years. This event aims to raise brand awareness in a mostly untapped market, exclusively focusing on testing out the appeal and attraction of the menswear market abroad. This pop-up shop will continue to inspire the man whom is stimulated by the brands rich heritage and for the endless possibilities that lay ahead when shopping with Coach.
6
7
COMPANY OVERVIEW Coach, Inc. is a U.S. heritage lifestyle brand based in New York that started as a family-run business in 1941. The company set out to become the “accessible luxury” brand for the new generations (About Coach), but today Coach is taking a new turn with the new creative director Stuart Vevers. The main goal is to become a lifestyle brand that offers a broad product category of high-quality goods at a luxury price point. The brand sells women and men’s bags, leather and fabric accessories, footwear, apparel, travel goods and other lifestyle products. These products are distributed in approximately 35 countries through department stores, retail locations (including flagship stores), e-commerce and international wholesale . Coach has created shop-in-shops in department stores and other key locations to improve brand image, stimulate growth and appeal to the consumer through these retail environments as a key success factor of their current re-branding strategy. Also, by expanding stores and closing down locations that are not as productive and cost efficient, Coach continues to improve their brand image and their productivity through their distribution channels. Coach is a publicly traded company, listed under COH on the New York Stock Exchange and 6388 on The Stock Exchange of Hong Kong Limited (About Coach).
8
CORPORATE STRUCTURE
CREATIVE DIRECTOR Stuart Vevers
CEO Victor Luis
CFO Jane Hamilton Nielsen
PRESIDENT Gerbhard Rainer
9
FUTURE GROWTH
Coach is evolving into a global lifestyle brand. Recently they moved into the readyto-wear sector, launching women’s for fall 2014 and men’s for fall 2015. They are also looking to expand on their men’s product categories to offer more. The new direction for Coach will be evident in the retail spaces; new store layouts and environments will be created. The “re-platforming” will cost around $570 million and will take place from the 2015 through 2017 fiscal years. Vevers collaborated with William Sofield to create the concept. Victor Luis, the CEO, said they wanted to focus on Coach’s DNA and history, incorporating leather and New York architectural details (McCarthy). All of this will tie the new direction together and make it more evident to the customer.
10
SWOT ANALYSIS STRENGTHS
WEAKNESSES
Well-known brand
Confusion in Desired Market
Strong Customer
Easily Counterfeited Goods
Loyal Customer Base
Low market penetration in Europe
High Quality Goods
Expansion of Factory and Outlet
Accessible Luxury
Stores have caused financial and
Multi-Channel Global Distribution
brand image issues
OPPORTUNITIES
THREATS
Growth in emerging markets (China)
Highly saturated handbag market
International availability
Strong competitors (i.e. Michael
through websites
Kors) in affordable luxury market
Technology integration in retail stores App advancements
11
BRAND IDENTITY MATRIX
PRODUCT
SYMBOL New Logo (Coach rebranding)
PERSON
ORGANIZATION
Smart Shopper Growing Brand Fashion Conscious American heritage Timeless New York aesthetic Accessible Modern Luxury
12
BRAND IDENTITY PRISM RS
ON
Well-known logo
Cool
Timeless design
Classic
Leather goods
Urban
AL
ITY
Customer-centric
Traditional yet innovative
Co-Creation
Fused Creativity and Logic
CULTURE
RELATIONSHIP
Y PH
SIC
PE
AL
Authentic
RE
FLE
Timeless
Stylish
Valuable
Smart
CT
IO
N
SE
13
LF
O -PR
JE
IO T C
N
CURRENT POSITIONING The company looks back to the American heritage roots while moving forward to new possibilities. Coach is looking to become the “company that defines global modern luxury” (About Coach). The customers’ needs come first to establish strong, lasting relationships and to help them keep their product assortment appealing and refreshed (About Coach). Accessible luxury is something Coach stays true to with prices, averaging around $400-$500 for bags, within the same price range as kate spade new york. The prices are comparable to those of Marc by Marc Jacobs for the RTW. Coach is sold in over 1,000 stores worldwide, offers an online website where customers can shop and is sold through various department stores.
14
DISTRIBUTION Coach is a vertically integrated retailer that owns and operates over 1,000 store locations across five continents, with 500 of those in North America (About Coach). This does not include global wholesale and distributor partners, such as Macy’s, Nordstrom, Belk and Bloomindales, who all sell Coach in-store and online. Coach has online retail websites for the USA, UK, Canada, Japan and China, with informational websites in over 20 other countries (About Coach). This global multi-channel retailer is highly accessible for the modern shopper.
15
COMMUNICATION // PROMOTION In the 2014 fiscal year, Coach spent $130.1M on marketing, equating to 3% of net sales. This was for national, regional and local marketing and included employee compensation, media space and production, advertising agency fees, public relations and market research expenses (Coach Inc.). The winter/holiday 2014 campaign, “Coach Dreamers,” used four artists in the music and film industries instead of the traditional models. This was the company’s way of remarketing itself, using Christopher Abbott, Zoë Kravitz, BANKS and Odeya Rush to recapture the Coach spirit and innovation. They heavily use social media platforms such as Pinterest, Instagram, Facebook and Twitter to share pictures, videos and updates. Their new interactive website offers information on events, videos, a magazine and general updates on what the company is doing to enhance the digital Coach experience. Regarding sales, Coach has a semi-annual sale that offers a selection of products at a discounted price.
16
17
UK MARKET ANALYSIS The UK market has become a force to be reckoned with. It has transformed the economy and jobs within the United Kingdom to something extraordinary. As British men become more interested in what and whom they are wearing, clothing has increaesd in importance. High quality clothing is being offered at affordable prices volume sales are expected to increase throughout the UK,. Since men are less frequent buyers, there are less throwaway fashion trends occurring in the market, as the average cost of menswear purchases remain higher than womenswear. Menswear is an essential part not only to the fashion industry in the UK, but also to the UK economy overall. In 2010, the BFC Value of Fashion reported that the direct value of the UK fashion industry to the UK economy stood at 21 billion euros. These reports show great opportunities for the future of the UK’s fashion industry in menswear not only for designers, but also for retailers. The menswear expenditure growth is expected to surpass the womenswear market for the first time since 1998, proving that the market for menswear has grown “18% in the past five years and is now worth £12.9 billion, and that figure is said to reach £16.4 billion by 2018” (Marriott).
18
19
PESTEL POLITICAL • England is part of the UK constitutional monarchy • In 2014, the government invested £160 million into the economy STRENGTHS • London is a top tourist destination (100M+ visits in 2012) • UK Single Market Centre (helps UK companies trade with EU markets) • Transatlantic Trade and Investment Partnership
ECONOMICAL STRENGTHS • One of the biggest economies • Private and government involvement • UK fashion industry value: $31 billion • GDP: $2.4 trillion (1.8% increase) • Disposable income (per person): $26K • Interest rate: 0.5% • $1= £0.66 CHALLENGES • Inflation: 2.6%
20
SOCIAL • Mainly Caucasian and Christian • Population: 63.7 million (2014) STRENGTHS • 25-54 years: 41% highest age group percentage • Unemployment rate: 5.8% • Education: 16 yrs. of schooling CHALLENGES • Highly influenced by social class • Median age: 40 years old
* Refer to Appendix A
TECHNOLOGICAL
ENVIRONMENTAL
STRENGTHS
CHALLENGES
• £4.6B per year funding for science and research programs • Growth Accelerator: government programs that help English businesses grow
• Heightened attention of consumer’s awareness on sustainable production • 62% of British adults agree that they had become more environmentally aware during previous 12 months • More options in the sustainable industry (eco friendly products)
CHALLENGES • Equipment and protective systems must comply with ATEX regulations • Products must meet EU safety, health or environmental requirements (allows free movement of products within European market)
21
LEGAL • Minimum wage: £6.50 per hour for workers 21+; £5.13 per hour for 18-20 years old CHALLENGES • Shops over 280 sq meters have strict restrictions for operating on Sundays and holidays • Retailers must warn consumers about potential risks • Safety violations result in fines, being sued or imprisonment
* Refer to Appendix A
KEY PLAYERS Direct Competition: Marc by Marc Jacobs, Burberry, Louis Vuitton and Dover Street Market are Coach’s four major competitors in the London area. This selection was based on prices, product categories, aesthetics and accessibility in London.
22
The French fashion house, Louis Vuitton, was established in 1854 by Louis Vuitton. The conglomerate LVMH was created in 1987 by Vuitton. They offer womenswear, menswear, bags, leather goods, shoes, accessories and more in over 400 stores in 10 countries (Senft). In honor of the monogram and the modern traveler, Louis Vuitton set up L’Aventure in Paris at the end of 2013 (L’Aventure).
Dover Street Market was started in 2004 by Rei Kawakubo of Comme des Garçons on Dover Street, London. This is a retail and concept multilevel location for high-end brands such as Dior, Comme des Garçons and Céline. There are currently four locations: London, Tokyo (Ginza), New York and I.T Beijing (franchise location). All Dover Street Markets offer each brand a small area where they create a pop up shop within the space (Dover Street Market).
Marc by Marc Jacobs was started in 2001 as a sub division of Marc Jacobs Intl. The company is vertically integrated, sold through their locations, online and in select department stores (i.e. Nordstrom). The Today they offer product categories such as menswear, womenswear, bags and shoes in 200+ stores in over 30 countries (Marc Jacobs). They had a pop up in Covent Garden called the Daisy Chain pop up, which gave customers products such as perfume and handbags in exchange for a tweet tagged with #MJDaisyChain (Niven).
Burberry was founded by Tomas Burberry in 1856 and is known for their tartan print and trench coats. They now have over 500 stores in over 50 countries, offering menswear, womenswear, bags, shoes, accessories, perfume and cosmetics (Our History). Their British heritage makes them widely attractive to the London consumer. They showcased their heritage with Printemps’ London Mania in 2013, a tribute to London’s architecture and unpredictable weather (Bouchet).
23
EXPENSIVE
ACCESSIBLE
EXCLUSIVE
AFFORDABLE
24
JUSTIFICATION FOR PERCEPTUAL MAP Coach’s positioning is justified by their accessibility and price in the market compared to other companies. It is highly accessible because of its vast number of stores and it is considered affordable luxury with a lower price range than high luxury brands. Burberry is positioned slightly higher because of its more expensive assortment and less store exposure to consumers. Louis Vuitton is considered high luxury fashion brand, making their products more expensive and has less availability of stores to customers. Dover Street Market is placed at the extremes of expensive and exclusive because of their high priced merchandise and only has four stores opened to its customers, making them highly limited.
25
INDIRECT COMPETITORS LUXURY TRAVEL
THE WATCH HUT
Global Luggage: “Global Luggage is a British, family-owned luggage and accessories retailer with over ten years in the business. They have broad product selection and their fierce commitment to excellence in customer care has solidified them as one of the premier luggage destinations in London. They provide quick and easy access to high quality branded luggage, handbags and accessories through our same-day London delivery service, free next day UK delivery and click and collect shopping option.” (About Global Luggage).
The Watch Hut: “The Watch Hut launched in November 2005 with the aim of selling branded watches at amazing prices. They are experts in online watches retailing with an unparalleled reputation in the designer segment of the market. Since its foundation the site has grown to become Britain’s largest website in the sector. We are the UK and Europe’s leading authority on designer watches and our huge, yet carefully selected, range helps drive the UK’s most fashionable timepiece trends year after year.” (Our Story).
LUXE ACCESSORIES
SOCIAL SPENDING
Apple Inc.: “Apple Inc. is an American multinational corporation headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, online services, and personal computers.” (Frequently Asked).
LIMA Floral: “LIMA Floral is an evolution on what we have offered diners at LIMA Fitzrovia, with the aim of showcasing Peru as a country full of diversity: ecologically, culturally and historically, sharing an authentic and native culinary offering.” (About).
26
TARGET CUSTOMER The Coach London pop up will target three specific groups of people: the HENRYs, International Tourists and London Enthusiasts, all based on age, income and shopping habits. All groups have the money to spend on affordable luxury goods, are in the age range that would most appeal to Coach’s style and are travelers, which is why they were chosen for the target consumer. Further analysis about these groups can be found in Appendix.
HENRYs, or “High Earners Not Rich Yet,” are 25+ years old with an annual income range of $150K to $250K. They outnumber ultra-affluents (those who make 250K+) three to one, so this group is a significant sector of the luxury market (Jones). Coach falls under the affordable luxury segment in the fashion industry, which is mainly where this customer shops. Quality and one-of-a-kind retail experiences are major factors HENRYs look for when shopping. They are predominately mono-brand shoppers who are tech-savvy (Jones). London is a major tourist destination for both UK and international citizens. In 2012, 15.5 million visits were from overseas, while 87.2 million were domestic visits and locals made 240 million London day trips from the greater London area (SPA). International tourists are between 25 and 34 years old, making up 23% of the segment. Most of these travelers do not have kids, and 57% are females. London Enthusiasts are also mainly between the ages of 25-34, but this group is mostly married or living with their partner with no children. International tourists are planners, where Enthusiasts are planners and change plans on-the-go. Both groups have significant spending power as tourists, often staying in 3+ star hotels and spending on average £205 each day for 5-7 days.
27
* Refer to Appendix B
CUSTOMER PROFILES
LUKE Age: 29 From: Cambridge, England Income: 100K British pounds Education: LLM in French Law Interests/Hobbies: Biking, Tennis, Attends Art Galleries, Travels across Europe
28
ZAYNE Age: 25 From: Spain Income: 50K (Brit Pounds) Education: BA in Advertising Interests/Hobbies: Writes Poetry, Plays Guitar, Frequently visits London, goes to concerts
29
STORE LOCATION DESIGN PRODUCT
30
31
JUSTIFICATION FOR LOCATION COVENT GARDEN TOURISM Covent Garden is a historic area stationed right in the heart of London. Geographically, Covent Garden is located in Central London, bordered by the City of London and Leicester Square and is within walking distance of Soho, the River Thames and Trafalgar Square. Covent Garden was once home to and one of the most popular locations within London; the Royal Opera House, Covent Garden square, Covent Garden market, Theatre Royal are just some of the sites that called Covent Garden home. Now its has transformed into a popular destination for visitors and Londoners (Culture).
TOURISM IN COVENT GARDEN Londoners 53% of total shoppers Average dwell time 93 minutes Average retail spend 2013: ÂŁ100 per visit
* Refer to Appendix B 32
SALES POTENTIAL The sales potential for Covent Garden is forecasted to reach a 1.5% of annual sales increase and a 2.0% vacancy rate. Several events are held in the market’s outdoor square, but the increased traffic for these events actually decreases sales inside the market buildings. A big challenge on the overall economy of Covent Garden is the space constraint. There is no additional space for display or storage, which can affect some retailers differently. There is sales potential in Covent Garden for the Coach brand to grow and prosper within the new market of menswear (Thomson).
ESTIMATING COMPETITION
33
AREA ATTRACTIONS There are so many amazing attractions within and around the Covent Garden area. Within the area there are some of the best shopping (Jo Malone London, Burberry Brit, The Real McCoy’s) and eating attractions (cafÊs and bars to high end restaurants) around and within Covent Garden. Gyms, museums (British Museum, Somerset House, National Gallery), and theaters (Cambridge Theatre, London Coliseum, Lyceum Theatre) are all there for our customers and shoppers to enjoy, perfect for bringing your kids, or if you need some alone time (Culture).
34
AREA FACTORS People can travel to Covent Garden on foot, bike, taxi, car, bus, boat or even underground. If you’re walking its best if you visit WalkIt. com to find the best and quickest route for you to reach your destination. If your traveling underground, the Piccadilly Line, is the best option for you, and it’s just a short walk from the Market Building. For the tourist and locals who are biking Covent Garden provides you with safe and secure bike racks in multiply locations for the shoppers. If you decide to arrive by car, the parking is very restricted, and we advise to avoid driving, as there are limited onstreet parking meter, you must pay the congestion charge. And for the person who wants to come by taxi, the London Black cab is the choice for you, while if the bus is the transportation for you, Covent Garden can be reached by hopping on either RV1, which is the only one that stops at Covent Garden, or 9, 13, 15, 23, 139 and 153 which all stop at Trafalgar Square and Aldwych which are both within walking distance. Finally, if you love the water, arriving by boat is also possible, the closet ferry is at Embankment (Hours & Getting).
35
HUMAN RESOURCES We will have eight people working at our London location store, earning ÂŁ10 an hour. To properly train them we will fly in a well seasoned manager from a previous store. This manager will stay in a flat supplied by us near Covent Garden for the duration of the shop. We will recruit people from the UK through social media. Employees will work up to 30 hours a week.
36
POP-UP SHOP / COVENT GARDEN
DETAILS OF PHYSICAL SPACE
37
DESIGN OF SPACE The retail location will be an 800 square foot store with two floor-to-ceiling glass doors and two floor-to-ceiling windows used for displays. The fixtures of the store will be minimal, industrial track and spot lights, as well as floor lamps and dimmed wall lights for specific displays However, the Coach logo, which will be positioned on the top right corner of the store (medium sized) will light up at night with slow changing LED lights as a way to appeal the younger market Coach is going for. One of the window displays will showcase one full outfit every two weeks, which will be placed on a hanging ceiling rack. Lastly, there will be a shoe-shine station on the outside of the store that will promote Coach’s Shoe-Shine Kit and will invite the customers to know more about product care and use. The store’s exterior will attract customers through its inviting design, transitional lighting and effortless aesthetic. The layout of this store will follow a free flow floor plan as a way to allow the customer to decide how their in-store experience will be by the way they interact with the store features and its products. The allocation of the products throughout the store will focus on a style/item presentation to encourage impulse buying in terms of the relationship between the products and their use. We will establish the aesthetic by incorporating current retail trends in the UK, which will be the use of technology as tools that facilitate the customer experience. There will be two hanging coat racks in the center of the store, 4 wall displays, 3 medium floor displays and 2 small ones and 3 leather chairs next to the window display for personal purchase planning. There will not be any cash registers for the reason of facilitating the purchase of the product all throughout the store by using digital platforms for payments. In a section of the store, there will be a leather care station that will provide the customers demonstrations of proper leather care and will hand-out free product samples specifically made for this pop-up shop. Another way to keep the customers engaged with the brand through the store will be by incorporating the use of digital screens that allow them to customize certain features of their in-store experience. Customers will be able to manipulate the music and its volume of the store through the digital screen; the platform carries a wide assortment of music that streams for a limited amount of time per person, like a modern jukebox, but for free. Our Twitter, Facebook and Instagram platforms will also be linked to this platform as a way to encourage our customers to explore our social media presence. This digital platform will also provide the customers the option to buy Coach merchandise via the e-commerce site. The ambiance of the store will be inspired on the edgy and effortless London aesthetic by using rich and neutral colors, industrial materials, mood-setting lights and an assortment of music that can be manipulated by the customers on the interactive digital display-the mood of the store will be manipulated by the customers according to their choices.
38
* Refer to Appendix C
DESIGN OF SPACE FLOOR PLAN
39
* Refer to Appendix C
40
PRODUCT PLAN
41
42
43
ASSORTMENT PLAN
Category
Style
Color
Size
Retail ÂŁ
Bleecker Stainless Steel Three Hand Strap Bleecker Three Hand Ionized Plating
White Black
N/A N/A
260 300
Belts
Bleecker Story Patch Belt
Mahogany/Silver; Black/Silver
32-42
95
Wallets
Compact ID Card Case
Military Print Military Print
N/A N/A
140 60
Tech
Slim Zip Tablet Case Bifold iPad Case Crosby Leather Executive Portfolio
Military Print Military Print Black
N/A N/A N/A
145 145 220
Bags
Bleecker Stitched Collection Backpack Sullivan Carry All Tote Sullivan Textured Carry All Tote
Black; Hunter Green N/A Military Print; Mahogany; Deep Sea N/A Black; Hunter Green; Mahogany N/A
410 410 450
Watches
44
Category Bags
Shoes
Style
Color
Size
Retail ÂŁ
Sullivan Patchwork Carry All Tote Thompson Messanger Thompson Textured Messanger
Black; Black/Fawn Painted Military; Black Black; Mahogany
N/A N/A N/A
450 375 375
Houston Sneaker
7-13
150
7-13
205
Charlton Turnlock Oxford Fulton Boot
Painted Military; White; White/ Black; Black Hunter Green/Black; Black/Natural; Black Wood; Painted Military Print/Black Oxblood; Black; Wood
7-13 7-13
225 265
Barracuda Leather Jacket Distressed Leather Moto Fuzz Coat Fur-Lined Leather Utility Coat Sleek Leather Business Coat Painted Military Parka
Fawn Black/White Maroon Cream Black/Mahogany Painted Military
S,M,L S,M,L S,M,L S,M,L S,M,L S,M,L
1,050 1,200 975 1,345 1,500 975
Houston Turnlock Sneaker Coats
45
COMMUNICATION // PROMOTION
COACH POP-UP SHOP
2015
46
RATIONALE FOR PROMOTION Social media has constantly gained more value in brand marketing and it’s a cost effective way for consumer companies to reach a greater audience through these platforms. Through creative content marketing, brands establish more interest in the active participation of consumers with the company. Instead of using intrusive marketing, we will focus our marketing strategy on being active listeners and participators since communication is important to today’s consumers. For this reason, we will promote the launch of the brand by creating buzz on several social media outlets such as Facebook, Twitter and Instagram. According to Kissmetrics, photos on Facebook get 53% more likes, 104% more comments and 84% more click-throughs as opposed to text and link posts. Also, posts with 80 characters or less get 66% more engagement, but posts that focus on questions and conversations get 100% more comments. Facebook activity, which is the number of posts and comments published per hour, peaks approximately at 3pm as well as at 11 am and before 8 pm. By focusing our Facebook post strategy around timing we have decided to post 3 times a week and make two posts per day for 3 months before the launch; one before 3 pm and one around 8pm that will be topic related posts as a way to follow-up the afternoon conversation and consumer engagement in the evening. Posting 1-2 times a day gets 40% more engagement and posting 1-4 times a week there is a 71% more engagement. Further analysis can be found in the Appendix.
47
IT’S A SECRET, BUT PASS IT ON! #Coach2015
SCHEDULE MEDIA Facebook Twitter Instagram Web Banners Giveaways Events
PRE-LAUNCH MAY JUN. JUL.
AUG.
LAUNCH SEP.
OCT.
NOV.
DEC.
POST-LAUNCH JAN. FEB.
MAR.
APR.
#CultOfTheOutrageousAtomicCarriageHouse #Coach2015 #Coach2015 #CoachFromAbove #CoachLondon
48
* Refer to Appendix D
FINANCIAL PLAN
49
* Refer to Appendix E
INCOME STATEMENT
Revenues Total
August £ 937,500.00
September £ 918,750.00
£ 1,856,250.00
Expenses COGS Design of Space Build of Space Interior Fixtures Exterior Fixtures Storing Wages Rent/Utilities Logistics Janitorial Promotional Activities Legal/Permits Housing & Flight Total
£ £ £ £ £ £ £ £ £ £ £ £ £ £
August 375,000.00 10,000.00 5,000.00 3,581.00 330.00 1,000.00 7,920.00 12,772.00 500.00 300.00 1,610.00 1,000.00 3,150.00 422,163.00
September £ 367,500.00 £ £ £ £ £ 1,000.00 £ 7,920.00 £ 12,772.00 £ 500.00 £ 300.00 £ 960.00 £ 1,000.00 £ 3,150.00 £ 395,102.00
£ £ £ £ £ £ £ £ £ £ £ £ £ £
Earnings (Before Tax)
August £ 515,337.00
September £ 523,648.00
£ 1,038,985.00
50
742,500.00 10,000.00 5,000.00 3,581.00 330.00 2,000.00 15,840.00 25,544.00 1,000.00 600.00 2,570.00 2,000.00 6,300.00 817,265.00
Interior Fixtures Touch Screen Display 32" Hanging Lights Wall Lights Wall Mount Shelves Industrial Clothing Rack Wooden Block Table Lg Wooden Block Table Md Wooden Block Table Sm Wooden Hangers (Set of 4) iPad Total Interior Exterior Fixtures Custom Neon Lights Custom Window Decal Total Exterior
Unit Cost £ 400 £ 105 £ 165 £ 332 £ 165 £ 332 £ 200 £ 100 £ 6 £ 199 Unit Cost ($) £ 200 £ 130
51
Units 1 6 4 1 1 2 2 3 5 3 28 Units 1 1 2
£ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Costs 400 630 660 332 165 664 400 300 30 597 4,178 Cost 200 130 330 4,508
Footfall Conversion Rate Average Basket Total Revenues
August 18,750 10.00% £500.00 £937,500.00
September 26,250 10.00% £350.00 £918,750.00
Category Bags Shoes Tech Wallets Coats Watches Belts Total
% 40% 21% 15% 10% 7% 5% 2% 100%
August £375,000.00 £196,875.00 £140,625.00 £93,750.00 £65,625.00 £46,875.00 £18,750.00 £937,500.00
Average Unit Price Product Categories August Belts £ 95 Watches £ 280 Coats £ 1,174 Wallets £ 100 Tech £ 170 Shoes £ 211 Bags £ 412
September £ 95 £ 280 £ 1,174 £ 100 £ 170 £ 211 £ 412
52
September £367,500.00 £192,937.50 £137,812.50 £91,875.00 £64,312.50 £45,937.50 £18,375.00 £918,750.00
£742,500 £389,813 £278,438 £185,625 £129,938 £92,813 £37,125 £1,856,250
Units August September 197 193 167 164 56 55 938 919 827 811 932 913 911 893
CONCLUSION Through the Coach pop up shop in Covent Garden, London, we seek to establish more awareness about Coach’s menswear. Simultaneously, our strategy aims to be profitable in planned sales during the pop up shop. After careful investigation of the setting and our product, we plan on testing the market’s potential for Coach menswear in order to encourage the brands presence around the world. Our information suggests our target market in London can afford these prices and is attracted to the aesthetic. Coach believes its new direction led by Stuart Vevers will appeal to the London crowd. Overall this shop is a way to test a major opportunity for the brand.
53
WORKS CITED “About Coach.” Coach. Coach, n.d. Web. 4 March 2015. Bouchet, Sophie. “Burberry pops up at Printemps.” Vogue France. Vogue, 08 Aug. 2013. Web. 31 Jan. 2015. Coach Inc. (2014). Form 10-K 2014. Coach Financial Reports. Coach, Aug. 2014. Web. 17 Jan. 2015. “Dover Street Market: Built Upon Beautiful Chaos.” Business of Fashion. Business of Fashion, n.d. 02 Feb. 2015. Faw, Larissa. “Meet The Millennial 1%: Young, Rich, And Redefining Luxury.” Forbes. Forbes, 02 Oct. 2012. Web. 2 March 2015. “Global ecommerce trends 2015: UK leads the way in Europe and North America.” Digital Strategy Consulting. Net Imperative, 27 Jan. 2015. 08 Mar. 2015. “Investing in research, development and innovation.” UK GOV. 05 Dec. 2014. Web. 08 Mar. 2015. Jones, Sarah. “Young affluents provide the best growth potential: study.” Luxury Daily. Napean, 14 March 2014. Web. 2 March 2015. KISSmetrics. KISSmetrics, n.d. Web. 08 Mar. 2015. “L’Aventure Pop Up Store.” Louis Vuitton. Louis Vuitton, 06 Sept. 2013. Web. 01 Feb. 2015. “Marc Jacobs International.” Marc Jacobs. Marc Jacobs Intl, n.d. Web. 29 Jan. 2015. McCarthy, Lauren. “Coach Rolls Out New Retail Concept.” WWD. Women’s Wear Daily, November 2014. Web. 4 March 2015. Niven, Lisa. “Marc Jacobs: Tweets for Treats.” Vogue UK. Vogue, 08 Aug. 2014. Web. 29 Jan. 2015. “Our History.” Burberry. Burberry, n.d. Web. 31 Jan. 2015. Senft, Ashley. “History of Louis Vuitton.” Fashion in Time. Fashion in Time, 29 May 2011. Web. 31 Jan. 2015. SPA Future Thinking. “London Visitor Segmentation.” London Visitor Segmentation (n.d.): n. pag. Transport for London. SPA Future Thinking, July 2013. Web. 21 Feb. 2015. Thomson, Rebecca. “Analysis: London Covent Garden’s approach to successful retailing.” Retail Week. Retail Week, 26 April 2013. Web. 08 Mar. 2015. “Trading hours for retailers: the law.” UK GOV. 12 Nov. 2014. Web. 08 Mar. 2015.
54
55
APPENDIX
56
57
APPENDIX A POLITICAL England is part of the United Kingdom, a unitary democracy governed within the framework of a constitutional monarchy. A constitutional monarchy happens when the Monarch is the head of state and the Prime Minister of the United Kingdom is the head of the government. In 2014 the government invested £160 million into the UK economy creating 220 new British jobs. Because London is one of the top tourist destinations they profited on more the 100 million visits from tourist in 2012. Of those 100M 15.5m came from oversea visitors, and 87.2 domestic visits (within those domestic visits 75m were day trips, and overnight trips were 12.2m) The UK Single Market Centre, which helps UK companies trade with EU markets, works in part with the Transatlantic Trade and Investment Partnership. This partnership, or better known as the TTIP, is a free trade agreement negotiated between the EU and USA. This partnership has the potential to add up to £10 billion to the UK economy. By reducing tariffs on cross-border trade between the EU and the USA and reducing other barriers to trade, this lowers the trade barriers and trading costs making it should easier for companies on both sides to access each other’s markets. For consumers, this will lead to a wider choice of goods at a lower cost (How government works).
ECONOMICAL The UK economy is one of the biggest economies worldwide. The economy is a mixed economic system meaning that the both capitalism and socialism are seen within the system. By capitalizing on this the UK allows levels of private economic freedom within the capital, but also allows the government to intervene in economic activates in order to achieve social aims. (Investopedia) Because the economy is thriving within the United Kingdom, the fashion industry has also seen the repercussions of this thriving economy. The UK value of the fashion industry is £21 billion with a GDP of $2.4 trillion, although the inflation is 2.6%, there has been an increase of 1.8% from the last year. With a $26 thousand disposable income per person, and an interest rate of 0.5% with $1US dollar being the equivalent to £0.66 euros (Economy).
SOCIAL The social structure of the United Kingdom has historically been highly influenced by the concept of social class, with the concept still affecting British society in the early-21st century. With a population of about 63.7 million people, in 2014, mainly Caucasian and Christian people who occupy the UK. With the age range being from about 25-54 years old, with the median age of men with UK nationality inside the country is 40 years old and holding other passports is 31.3, making the target customer a worldly person. The age also connects many of the UK young population to be involved in studying, 16 years old schooling, representing 30% of investment in the country. The unemployment rate is 5.8%, which is very good for the economy of the UK. Although definitions of social class in the United Kingdom vary and are highly controversial, most are influenced by factors of wealth, occupation and education. Until recently the Parliament of the United Kingdom was organized on a class basis, with the House of Lords representing the hereditary upper class and the House of Commons representing everyone else, and the British monarch is usually viewed as being at the top of the social class structure.
58
TECHNOLOGICAL The United Kingdom has received about £4.6 billion per pear funding for science and research programs, proving to be one of the many strengths within the UK. Another strength is the growth accelerator program; this program is a government program that is issued in order to help England’s businesses grow. While a few challenges seen within technology throughout the UK such as the equipment and protective systems must comply with ATEX regulations, which is the European regulatory framework for manufacture, installation, and use of equipment in explosive atmospheres. The ATEX is used to ensure the safety of workers employed in hazardous atmosphere installations. (Iecex) the UK must ensure that products must meet EU safety, health or environmental requirements which allows free movement of products within European market (Investing in research).
ENVIRONMENTAL Throughout the last few years’ consumer behavior has taken a toll on the fashion industries approach to sustainable materials. The purchase of ethical products with high awareness and broad appeal is on the rise, making the retailers of these products a demand. 62% of British adults agree that they had become more environmentally aware during the previous 12 months. The availability of ethical choices is key, with 69% of UK adults keen to buy ethical clothing if it was more widely stocked.
LEGAL Under the United Kingdom, England falls under the English Law Misleading prices - If a trader misleads you or engages in an aggressive commercial practice and you make a decision to purchase goods or services, which you would not otherwise have done, the trader may be in breach of the regulations. Price marking - The Price Marking Order 2004 requires traders to display the selling price of goods to you as a consumer and includes sales by electronic means Buying or selling foreign currency - You are entitled to expect that, where exchange rates are given, the information available is accurate, clear, unambiguous, easily identifiable and given either legibly or audibly. If an exchange rate is displayed on premises, it should be prominent - either just outside or just within the premises. Holiday pricing - that organizers or retailers should not give you as a consumer misleading information relating to the price of a package. If they do so, they may be liable to compensate you if you incur losses as a consequence of being given misleading information. Payment surcharges - traders are banned from charging fees to consumers that are excessive for using payment methods such as credit and debit cards. The fees charged must reflect the actual cost to the trader of using that particular payment process. Small shops in England and Wales can open any day or hour. There are no trading hours restrictions in Scotland. Shops over 280 square meters: Can open on Sundays but only for 6 consecutive hours between 10am and 6pm; must close on Easter Sunday; must close on Christmas Day; large shops that open when they’re not supposed to can be fined The National Minimum Wage (NMW) was developed to ensure employers pay their employees fairly depending on their age and the type of work they undertake. As from 1st October 2011, workers aged between 16 and 17 are entitled to £3.68 per hour minimum, between 18 and 20 employees are entitled to £4.98 per hour and for those aged 21 and over, they are entitled to £6.08 per hour (Trading Hours).
59
APPENDIX B
HENRYs One of the target customers for the London Coach Pop Up shop is the HENRY, which stands for “High Earners Not Rich Yet.” These consumers are 25+ years in age with an annual income range of $150K to $250K, so they have a significant amount of disposable income. Ultra-affluents, or those who make more than $250K, are outnumbered by HENRYs three to one (Jones). This is an advantage for affordable luxury companies like Coach because they make up a more significant division of the luxury market. According to Forbes, at the end of 2012 there were around 11.8 million millennials between 18-30 who fall into this category of making over 100K annually. It is estimated this group will become the largest generational sector of the luxury market around 2018-2020 (Faw). Money is not a seen as a way to show off by this group as it was in previous generations. These customers focus more on quality, exceptional materials and customer service, so they expect extraordinary shopping experiences in store, online and through mobile services (Jones). HENRYs are predominately mono-brand shoppers, so it is no surprise they look for clean stores that offer a strong selection of products and expert customer service. This group appreciates one-of-a-kind retail experiences such as same-day delivery and customer service apps (Bell). Social media resonates greatly with this customer, due to the fact that many of them grew up during the rise of technology. Millennials look to communicate with companies, whether it’s for an issue or for praise, and social media is a major platform for this.
60
TOURISTS London is a major tourist destination for both UK and international citizens. In 2012, 15.5 million visits were from overseas, while 87.2 million were domestic visits and locals made 240 million London day trips from the greater London area (SPA). Our tourist customers can be segmented into two groups, the international tourists and the London Enthusiasts. Both crowds are known to travel in groups for vacation and want to experience as much as possible (SPA). Most of the international tourists are between 25 and 34 years old, which make up 23% of the segment. These tourists are generally visiting from Germany, France, Italy or the USA. The majority of this group does not have children, and 57% are females. Out of the 10.13 million visitors in 2012, 1.53 million were from this segment, the third largest group, making up about 15% (SPA). These visitors are mainly planners who focus on tourist attractions and travel by plane or coach bus. They have a high spending average of £207 per day, covering ticketed activities such as museums and theaters and nonticketed activities like shopping and dining. Visit durations are around 5 nights in at least three-star hotels, further proving they don’t mind spending a bit more for an enjoyable visit. They are researchers who pre-plan most of their trip, so they most likely book travel and ticketed activities far in advance (SPA). Ticketed and non-ticketed activities are researched beforehand as well, so we will need to make sure our pop up shop is well advertised to reach these consumers. London Enthusiasts are mainly between the ages of 25-34 and 35-44, each age range making up 28% of the total, with over half the group being male. The majority, 66% of this segment, is married or living with their partner and 48% do not have children. There are two subgroups within this segment, the active and the relaxed. London Enthusiasts travel from across the world, with 41% of the active subgroup from the UK and a majority of the relaxed group come from France and the USA, each holding 20%. London Enthusiasts made up 16% of the 22.71 UK visitors in 2012 and 29% of the 10.13 international visitors (SPA). These visitors travel to London for more of a cultural, entertainment trip than international tourists. Unlike the international tourist, the London Enthusiast only pre-plans but also plans on the go with smartphones and tablets. This group travels by own means or public transportation and are willing to try different means of travel, which is a positive aspect because there are many ways to travel to Covent Garden by public transportation. Active London Enthusiasts spend on average more than relaxed Enthusiasts, with £1,379 for actives per trip and £1,062 for relaxed visitors. Their stay averages around 7 nights, usually in 4-5 star hotels for actives and hostels or bed and breakfasts for relaxed members. Both subgroups pay for ticketed events, but actives are more likely to pay for non-ticketed activities, such as shopping. Our shop would appeal to these visitors as a unique shopping experience (SPA).
61
APPENDIX C
JUSTIFICATION FOR DESIGN SPACE The retail location will be an 800 sq ft store with two floor-to-ceiling glass doors and two floor-to-ceiling windows used for displays. The fixtures of the store will be minimal, industrial track and spot lights, as well as floor lamps and dimmed wall lights for specific displays. There will be less fixtures on the outside of the store because the floor-to-ceiling displays and doors will allow the inside fixtures to illuminate the outside of the store. However, the Coach logo, which will be positioned on the top right corner of the store (medium sized) will light up at night with slow changing LED lights as a way to appeal the younger market Coach is going for. (for example: neon campaign: Cult of The Outrageous Atomic Carriage House). One of the window displays will showcase one full outfit every two weeks, which will be placed on a hanging ceiling rack. Lastly, there will be a shoe-shine station on the outside of the store that will promote Coach’s Shoe-Shine Kit and will invite the customers to know more about product care and use. The store’s exterior will attract customers through its inviting design, transitional lighting and effortless aesthetic. The layout of this store will follow a free flow floor plan as a way to allow the customer to decide how their in-store experience will be by the way they interact with the store features and its products. This will create a tangible and memorable experience that will go beyond the purchase, ultimately exemplifying the objective of this pop-up shop which is to raise brand awareness and establish Coach as a modern lifestyle luxury brand. The allocation of the products throughout the store will focus on a style/item presentation to encourage impulse buying in terms of the relationship between the products and their use. In order for this buying behavior to occur, the aesthetic of the pop-up shop will inspire the customers to do so by creating an ambiance that is true to the edgy yet effortless “London look”. We will establish the aesthetic by incorporating current retail trends in the UK, which will be the use of technology as tools that facilitate the customer experience.
62
APPENDIX C
There will be two hanging coat racks in the center of the store, 4 wall displays, 3 medium floor displays and 2 small ones and 3 leather chairs next to the window display for personal purchase planning. There will not be any cash registers for the reason of facilitating the purchase of the product all throughout the store by using digital platforms for payments. In a section of the store, there will be a leather care station that will provide the customers demonstrations of proper leather care and will hand-out free product samples specifically made for this pop-up shop. We aim to educate our customers to learn how to extend the life of each product they purchase as a way to reinforce their perception of Coach. Another way to keep the customers engaged with the brand through the store will be by incorporating the use of digital screens that allow them to customize certain features of their in-store experience. Customers will be able to manipulate the music and its volume of the store through the digital screen; the platform carries a wide assortment of music that streams for a limited amount of time per person, like a modern jukebox, but for free. Our Twitter, Facebook and Instagram platforms will also be linked to this platform as a way to encourage our customers to explore our social media presence. This digital platform will also provide the customers the option to buy Coach merchandise via the e-commerce site. However, at the actual point of purchase for security purposes and the privacy of the customer’s information, the store’s wi-fi will connect to the customer’s phone and will pop up a notification on the phone in order to proceed with the final payment. Using this collaborative strategy will produce a mutually valued outcome by joining the consumers and the brand through physical and digital interactions instead of just selling a product or service. Fashion has evolved into a market of customers who look for product quality and brand value, but also expect efficient and engaging instore experiences and services even after the purchase is made. Logos are technically irrelevant to the customers nowadays because they seek quality and demand something more than just an image based on its price and status. This is in part due to the fact that the current Coach customer is an individual who is overly exposed to information through multiple digital platforms and has a lot of buying power. More specifically, there has been a significant increase of technology development in the UK and as a result, the retail sector has been heavily influenced by these trends. Consumers in the UK have shown to webroom- where consumers research the product online or through their digital devices before purchasing it in-store and showroom, which is the opposite of web rooming.
63
APPENDIX D SOCIAL MEDIA
64
APPENDIX E
JUSTIFICATION FOR FINANCES First to figure out the finances, the total revenues needed to be calculated. We looked at the footfall in Covent Garden and took a percentage of the average per month, estimating only a select amount of people will pass by our location. Presuming footfall would increase after people become more aware of the pop up, we calculated 18,750 for August and 26,250 in September for footfall. Then, we figured a conversion rate of 10% is likely, having one sale for every 100 people. We took 10% of the footfall per month and multiplied it by the average basket for each month to figure out total revenues. The revenues calculated were ÂŁ937,500 for August and ÂŁ918,750 for September. From there, we figured out how much money we would allocate for each category, with bags being our largest at 40% and belts being only 2% due to the fact that we would only carry one style for belts. We took the percentage of each category and multiplied it by the revenue of each month to figure out how much would be spent on each category. This allowed us to estimate how many units we should order for each category, taking the budget for each group and dividing it by the average price. To calculate the retail price in British pounds, we had to consider adding in transportation and duties. We considered a 60% mark up, which allowed us to calculate the costs. We took 15% of the cost to allocate for transportation and duties, and then added this and the merchandise cost. From there we converted the prices into British pounds and added the 60% markup. We did this for each style to figure out the retail prices in pounds.
65
COACH: A POP UP SHOP IN LONDON’S HISTORIC COVENT GARDEN FASM 410: RETAIL MANAGEMENT ALESSANDRO CANNATA ERICKA MCGRIFF ISA ESPINAL MIA REXACH VICTORIA STRONG
66