COS Pop-Up Shop Malaysia

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COS Pop-Up Shop Joshua McLeod, Taylor Harman, Amanda Pagan Professor Alessandro Cannata Fasm 410 Retail Management

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Table of Contents

Executive Summary

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Company Summary

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Market Analysis

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Target Consumer

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Location

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Communication & Promotion

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Financial Plan

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Executive Summar y

COS believes in providing functional clothing for men and women with a minimalist driven aesthetic. Their careful selection of countries to expand into is based on the design driven demographic and the availability of resources. Through collaboration with local ar tists and architects, COS has designed a pop-up shop installation in Center Cour t of the Pavilion Kuala Lampur. This booklet will outline why Malaysia, specifically the capital city, Kuala Lampur, would be a great growth oppor tunity for COS.

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Company Summary COS is a fashion brand for women and men who want modern, functional, considered design. The brand offers reinvented classics and wardrobe essentials that are made to last beyond the season. Traditional methods and new techniques merge to form timeless, understated collections from the eyes of COS. COS is a brand under the H&M Group that was founded in 2007. COS is specifically based in London but it is deeply influenced by the Swedish aesthetic that H&M is known for. Since launching in 2007, they have opened stores worldwide in carefully considered locations, applying an architectural design concept that preserves buildings’ original features whilst creating a modern, welcoming space (Walker 1). Their mission states “Our vision is that all our operations are run in a way that is economically, socially and environmentally sustainable. Which will mean our business is helping to meet the needs of both present and future generations,” (H&M). As a brand they wish to grow in other markets like Europe, Asia and the Middle East adding more stores to more locations (“H&M Annual Repor t 2014,” 17).

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“COS is a fashion brand for women and men who want modern, functional, considered design.”

1 1 4 S TO R E S

26 COUNTRIES

19 E-MARKETS

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Brand as a Person - Androgynous - Visual - Communicator - Minimalistic - Detail Oriented

Brand as a Symbol

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Brand as a Product - Modern - Timeless - Quality Conscious - Carefully Curated

Brand as an Organization - Bridge between fast fashion and designer - Sustainable

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SWOT Analysis

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Strengths - Reputation for quality at affordable prices - Strong brand aesthetic - Easy to navigate website - Promotes lifestyle through blog - Avoids fashion trends - Established customer base - Products reach both younger and older consumers - E-commerce services with free postal returns and quick refunds which make encouraging online sales

Opportunities - US and global market expansion (specifically Asian market) - Oppor tunities to expand product categories like lingerie, loungewear, home, beauty and stationary - The possibility to incorporate a bridge of a gap between children’s apparel and pre-teen line -Stronger social media presence and adding creative media content can increase the numbers in sales and reach more prospects

Weaknesses - Cos lacks diversity in their shoe collections - Little adver tising and marketing - Limited number of stores and countries that can access the e-commerce website (114 stores, 25 countries, 19 shop online countries) - COS provides products that are basics. This can always raise the question, “How many white shir ts will the consumer come back to buy?”

Threats - Lower priced competitors - Designer outlet stores have entered the market and could be possible threat

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Market Analysis

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The Apparel Market Malaysia’s presence in the Apparel Industry dates back to the 1980’s.

In 2014 statistics show that Malaysia recorded $98.4 billion in retail revenue. Malaysia became manufacturer by contract to highend global brands like Marks & Spencer, Hills & Brooks, Guess, Tommy Hilfiger, Gap, etc. (“Retail In Asia” 1). Malaysia is well-known for its excellence in services like quality, reliability, and immediate delivery in large quantities in the everalternating fashion trends and the textiles industry (“Retail In Asia” 5).

Political - Constitutional monarchy - Corrupt government - Political instability - World-wide scandals (ie. Malaysian Airlines) Economic - Growing economy - GDP $862, 292.2 million (2015) - GDP growth rate of 5% - $25,100 Per Capita (2014) - Stable business environment - Low unemployment rate of only 3% - Disposable income $182,191.6 million (2015) - Inflation rate 2.8% - Interest rate 3.25% - 1 Ringgit = $ 0.24 USD

Social - Young, urban population - Multi-ethnic and multi-religious - Kuala Lampur is populated by 6.837 million, making it one of the biggest urban areas Technological - Internet is the major platform for freedom of speech - Malaysia’s internet penetration per 100 is 62 - Malaysia’s has a commitment of using IT as a tool for education - Internet users 40.3% - Government censors media Environmental - Rich in natural resources - Tropical climate with annual southwest (April to October) and nor theast (October to February) monsoons - Air pollution from industrial and vehicular emissions, water pollution from raw sewage, deforestation, smoke/haze from Indonesian forest fires - Strategically located along the Strait of Malacca and Southern China Sea Legal - Free trade with Chile, Turkey, Pakistan, China, India, Singapore, Indonesia, Korea, Japan, Australia and New Zealand - Large amount of refugees in the country - Drug trafficking and Human trafficking

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High Price

Low Accessibility

High Accessibility

Low Price 14

Key Players

Direct Competition to COS within the Pavilion Kuala Lampur are Zara, Topshop, and Uniqlo.

Indirect Competition Aesop Aldo Calvin Klein Coach Bottega Veneta Ralph Lauren Press Room Bistro Berjayay Time Square (Theme Park)

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Michelle Age: 24 Income: 20K Occupation: Photographer Location: Currently in Kuantan (travels frequently) Hobbies: Blogging, Traveling, Knitting Shops: Zara, Topshop, Calvin Klein, Glossier

Aisar Age: 26 Income: 35K Occupation: IT Technician Location: Subang Jaya (largest population in Malaysia, 20 mins from capital) Hobbies: Coffee Connoisseur, Freelance graphic designer, and Car enthusiast Shops: Topman, Aldo, Alexander Wang, ASOS.com 18

Harris Age: 42 Income: 60K+ Occupation: Finance Location: Kuala Lampur (major, capital city) Hobbies: Cooking, Reading, and Futsal (a modified form of soccer with only 5 players and typically played indoor) Shops: Armani, Hugo Boss, Aēsop, Joe Chia (Malaysian menswear designer, named Asia’s Most Influential Designer last year)

Michelle Age: 40 Income: 50K+ Occupation: Corporate Strategist Location: Klang (city located adjacent to the capital, only 30 min drive) Hobbies: Art galleries, Eating out, Jazzercise (a popular combination of loud music and dancing, similar to Zumba) Shops: Club Monaco, Celine, Acne, Diptyque 19

Demographics Malaysia is located in the Southeast of Asia. It consists of two par ts; Peninsular Malaysia, located between Thailand in the nor th and Singapore in the south, and the two provinces Sabah and Sarawak, located on Borneo (“Malaysia Facts, Malaysia Flag,” 1). Malaysia boasts one of the most vibrant economies in southeast Asia, offering some great oppor tunities for highly skilled foreign workers in a range of different industries (“Work In Malaysia,” 1).

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Malaysia has a population of 30,073,353 as of July 2014. The capital of Kuala Lampur itself habits 1,352,000. With its small size and a growing population, the population density is increasing and is becoming more urban. The country’s GDP was 338.1 billion as of 2014. It’s average income is upper middle and their currency is called the Ringgit.

In addition, Malaysia is one of Asia’s top education destinations. The Malaysian government provides free education on primary and secondary level, summing up to an amount of 11 years for each student.

Location Malaysia is located in the Southeast of Asia. It consists of two par ts; Peninsular Malaysia, located between Thailand in the nor th and Singapore in the south, and the two provinces Sabah and Sarawak, located on Borneo (“Malaysia Facts, Malaysia Flag,” 1). Malaysia boasts one of the most vibrant economies in southeast Asia, offering some great oppor tunities for highly skilled foreign workers in a range of different industries (“Work In Malaysia,” 1).

Shopping Habits As incomes rise, how consumers allocate their money among goods and services has also shifted.

Traditionally, incomes were spent with a primary focus on food.

However, with a large por tion of the population now living an urban, single, and independent life, younger Malaysians are able to spend their salaries differently

(“Consumer Lifestyles In Malaysia,” 1). More money is now spent on car ownership, telecommunication such as cell phones and satellite televisions, consumer goods, leisure activities such as dining out and going out to nightclubs and movie theaters, as well as proactive health care (1). Although e-commerce penetration is still just 1 percent of total retail, online transactions are expected to grow 20 to 30 percent per year (1). Retailers are developing solutions tailored to the local market.

Technology Usage As of June 2013 there were 17,723,000 internet users in Malaysia Internet Usage and Telecommunications Reports,” 1).

This can be broken down into 51% smartphone usage, 39% computer usage, and 13% tablet usage. In that same year there was also 13.5 million TV viewers (“Connected Device Usage In Malaysia 2014,” 1).

Psychographics * Since Malaysia is a melting pot of cultures, with mainly Malay, Chinese and Indian influences in its cuisine, has earned a place among food aficionados. * Malaysia is one of the few places where even strangers are addressed with a warm ‘auntie’ or ‘uncle’ or ‘kak’ and ‘makcik’. * Malaysians have traditionally valued courtesy, non-confrontation and a mild manor. * Malaysia in many ways is deeply conservative country.

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PRIZM

The behavior in consumers has not changed much, even after the economic slowdown and the weakening of the Ringgit. Consumers still desire to go on holidays but have changed their destinations picking closer locations to Malaysia, rather than overseas.

The Malaysian young adults situated in the urban areas come from a middle-class family and are educated up to secondary school.

However for ty percent of this population still lives in rural areas. The urban young adults are graduating their secondary school to star t a third education, star t a career, as well as getting married and star ting a family.

Women in their thir ties are established in their career and family. Some in their thir ties are still having children. Contrarily there are plenty of women that are single. In 2010 there were 2. 5 million Malaysians above 25 years old who were unmarried, divorced and widowed.

According to studies 60% of these singles were men.

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The Pavilion KL offers a “Tourist Rewards Card� for 250 store locations within the shopping center. The Pavilion is a touristic destination in which they offer informative tours to discover Bukit Bintang with an all around sensory experience for shopping and dining. They also offer walk tours every Friday to Sunday by appointment only. These services attract tourists into the shopping center, while increasing the exposure and hopefully the number of sales that can be generated.

At the end of the fasting season (Ramadan) there is a large extravaganza at the Pavilion KL celebrating Hari Raya. The end of the Ramadan fasting celebrates togetherness and invites tourist and locals alike to celebrate in a community with decorations, live performances and enter tainment. There is a Ramadan Bazaar in which souvenirs, decorative items and small delights are sold. This celebration will attract Malaysians to celebrate end of fasting by celebration with family and friends in the Pavilion KL, encouraging sales in such happy times. This time of celebration calls for promotions and exclusive offers in stores for this special time of year.

Location Justification

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The Area Area Attractions - Aquaria KLCC - Bintang Walk - Petronas Towers Area Factors The Pavilion KL can be accessed by train, bus, taxi and vehicle. If arriving by train, consumers would need to locate the KL Monorail, an urban monorail located in Kuala Lampur, with 11 stations and is 5 miles long. In addition, MyBAS is a public bus transpor tation system. In February 18, 2015 the government signed a contract to expand the bus public transpor tation system. It will expand from 82 miles and 12 routes to 158 miles and 16 routes.

They are expecting the number of passengers to grow from 5.9 million to 8.8 million passengers a year. Malaysia is infamous for their traffic jams. Government keeps implementing highways but does not reduce the traffic jams or facilitates the transpor tation.

But there is still a big competition between public transpor tation and “personal� transpor tation. The public transpor tation in not very dependable and people opt for their own method of transpor tation. This adds to the problematic traffic jams in Malaysia.

Legal Payment Thanks to the strong regulatory environment, investors are assured of good protection during Ramadan.

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Malaysia ranks within the top five in the world in this category. There are 13 tax payments to be made each year taking an average of 133 hours of company time to process.

Taxes on interest, real estate and vehicles should be considered on top of corporate income rates and employee contributions. A deposit must be made for the retail space, which amounts to two months of rent plus one month’s utility fees.

When creating a business bank account in Malaysia a initial deposit is required, with a minimum of RM1,000-RM5,000.

Building Before building, it should be noted that all businesses must register online with the Companies Commission of Malaysia (SSM).

Electricity Most procedures when getting electrical connection will be carried out with Tenaga Nasional Berhad (TNB), which will conduct a site visit, provide an estimate, conduct external connection and install meters.

Trade Regulations The cost of trading across borders is extremely inexpensive in Malaysia, underlining its position as a manufacturing center in the hear t of Asia. However, it takes over 10 days to expor t and eight to impor t, with a large amount of documents to be prepared. Trade licenses may be wholesale or retail trade, and local town councils licenses for the premise and adver tisements of a business.

Human Resources The COS pop-up shop will have 7 local sales associates and 3 managers. We will recruit associates that are fluent in both Malaysian and English in order to assist tourists in the location. They will be educated on the check-out process with the mobile POS system as well as product knowledge. The minimum wage is 282 Ringgets ($69.25 USD) per month in Malaysia. Our sales associates will each be paid a total of 300 Ringgets for the 4 weeks of the pop-up shop.

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Design of the Space The Pavilion KL The pop-up shop will be located in the center cour t of the Pavilion Kuala Lampur. This space is located in the center of the seven story shopping mall, and can be viewed from all seven floors. This space is usually where special events take place and is considered a reference location to meet up with friends. This location was strategically chosen because of the high volume in foot traffic.

Fixtures The space will contain limited furniture to make it as clean and open as possible. Minimal hanging racks will protrude from the ground for clothing. A sleek sofa will be placed strategically to display shoes and small accessories.

Ambiance We have taken inspiration from the COS logo incorporating the circle shape throughout the design. We repeated the shape in the flooring adding white pebbles under an acrylic platform, adding texture and depth within the space.

The openings in the structure will let in natural light enhancing the space with more natural elements. The glass ceiling is prominent and invites top viewers to come and visit the specially curated setting. COS playlist will be playing in the background to incorporate more of the senses Visual Merchandise The merchandise will be displayed in a very curated manner similar to a showroom. The COS aesthetic takes hold within the space with minimal and functional displays. Clothing will be hung delicately for visitors to touch and experience.

Art The pop-up shop as a structure will be treated like a work of ar t. We have collaborated with architects to design the space with COS’s aesthetics in mind.

Security The mall will provide security for COS pop-up shop. Additional, surveillance cameras are placed around the entire mall.

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“The design achieves simplicity, using white elements, cold lighting, large space with minimum objects and furniture.”

The Final Design The style of the pop-up shop is expressed by its simplicity and minimalism.

The architecture seeks a harmony with COS by por traying a minimalist aesthetic that aids the fashion apparel. The design achieves simplicity, using white elements, cold lighting, large space with minimum objects and furniture.

Inspiration comes from the “O” in COS and was applied as all throughout the design. Minimalist architecture simplifies living space to reveal the essential quality of buildings and conveys simplicity in attitudes toward life.

The aper tures work as a transition, meshing the open space together, while still providing different spatial quality and moments that depict COS’s style.

The pavilion lives in the shopping mall, while still designating its own character through a juxtaposition to the site’s geometry. A box emerges within a circular setting, which marks its presence within all the competing stores.

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Renderings By Veronica Lloveras Jean-Pierre Villafane

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Product Plan Since our main focus is workwear we wanted our assor tment plan to demonstrate this. We chose pieces that are weather appropriate for the Malaysian summers, as well as easily transitional from day to night. We will be carrying men’s and women’s apparel, footwear, and select handbags and jewelry.

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USD

Average Price Women’s Knit Women’s Blouses and Tops Women’s Tees & Tanks Women’s Dresses & Jumpsuits Women’s Handbags Women’s Skirts Women’s Pants & Leggings Women’s Shoes Men’s Jackets Men’s Knits Men’s Pants Men’s Shoes Men’s Shirts Men’s Tees & Polos

Week 1 AVR.UNIT 2 55 77 20 11 47 11 270 2 7 22 4 15 30

Week 2 AVR.UNIT 4 91 129 33 18 78 18 450 3 12 36 7 25 50

Week 3 AVR.UNIT 4 91 129 33 18 78 18 450 3 12 36 7 25 50

$115.00 $99.00 $35.00 $135.00 $150.00 $115.00 $125.00 $200.00 $165.00 $115.00 $125.00 $135.00 $89.00 $45.00

Week 4 AVR.UNIT 4 91 129 33 18 78 18 450 3 12 36 7 25 50

Est. Total 14 327 463 120 65 282 65 1,620 10 42 130 24 91 180 3,432 33

Womenswear

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Menswear

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Communication

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COS values communication and currently has 254k Likes on Facebook, 369k Followers on Instagram, along with a print publication and a digital studio.

Our promotional plan spans a total of six months and includes event, social media, print, and ar tist collaboration marketing. The launch event, which Malaysian pop ar tist Yuna will be hosting, will take place on opening day. As far as our social media strategy, COS utilizes Instagram and Facebook the most.

We will be posting five times a week during our month long pop-up shop on Instagram, with photos per taining to the texture and curiosities of the city and will be very heavily curated. We have a $5,000 budget for Facebook promotion both pre, during, and after the pop-up shop. When selecting which magazines to par tner with we were looking for design-driven publications.

We will be promoting our pop-up shop before, during, and after in magazines such as Kinfolk and Cereal.

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PRE-LAUNCH May 2017

Facebook $5,000

Instagram $8,000

Youtube $1,200

Email $1,500

Blog $2,500

Magazines $6,800

Artist Collaboration $15,000

Total: $40,000.00 USD

Jun 2017

DURING Jul Week 1

Jul Week 2

DURING Jul Week 3

July Week 4

POST Aug 2017

Sept 2017

Oct 2017

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Financial Plan Sales Forecast

Foot Traffic to Foot Fall %

Avg Foot Traffic Per Week (all amounts shown in USD) (MKUP 65%) Product women’s knits women’s blouses and tops women’s tees & tanks women’s dresses &jumpsuits women’s handbags women’s skirts women’s pants & leggings women’s shoes men’s jackets men’s knits men’s pants men’s shoes men’s shirts men’s tees & polos Total

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200,000

C% 35 % 0.01 0.2 0.1 0.1 0.06 0.2 0.05 0.02 0.01 0.03 0.1 0.02 0.05 0.05 1

Footfall Conv. % Footfall to Trans.

Average Basket Total Revenue COGS

0.03 Week 1 6000 0.02 $225.00 Total Revenue $27,000.00 $9,450.00

0.05 Week 2 10000 0.02 $225.00 Total Revenue $45,000.00 $15,750.00

0.05 Week 3 10000 0.02 $225.00 Total Revenue $45,000.00 $15,750.00

0.05 Week 4 10000 0.02 $225.00 Total Revenue $45,000.00 $15,750.00

Week 1 $270.00 $5,400.00 $2,700.00 $2,700.00 $1,620.00 $5,400.00 $1,350.00 $540.00 $270.00 $810.00 $2,700.00 $540.00 $1,350.00 $1,350.00

Week 2 $450.00 $9,000.00 $4,500.00 $4,500.00 $2,700.00 $9,000.00 $2,250.00 $900.00 $450.00 $1,350.00 $4,500.00 $900.00 $2,250.00 $2,250.00

Week 3 $450.00 $9,000.00 $4,500.00 $4,500.00 $2,700.00 $9,000.00 $2,250.00 $900.00 $450.00 $1,350.00 $4,500.00 $900.00 $2,250.00 $2,250.00

Week 4 $450.00 $9,000.00 $4,500.00 $4,500.00 $2,700.00 $9,000.00 $2,250.00 $900.00 $450.00 $1,350.00 $4,500.00 $900.00 $2,250.00 $2,250.00

Total Revenue: $162,000.00 Total COGS: $56,700.00

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Financial Plan

Income Statement

Net Sales COGS Gross Margin

$162,000.00 $56,700.00 $105,300.00

Expenses Design of Space

$20,000.00

Build Out

$10,000.00

Interior Fixtures

$15,770.00

Exterior Fixtures

$9,920.00

Packaging

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$800.00

Technology

$2,000.00

Shipping Costs

$8,000.00

Wages

$3,000.00

Rent & Utilities

$10,000.00

Marketing

$45,000.00

Hotel & Flight

$10,000.00

Total Expenses

$134,490.00

Profit / Loss

- $29,190.00

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