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My merchandise, in production.
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MARKET RESEARCH
Nalliettes’s Background. Nalliettes is a new high-end clothing company, established in February 2015 and is based in England. It was started and owned by Juliet N. Golooba. Golooba is a new designer and a 2015 Fashion Design graduate from Heriot Wyatt University - West London College. This is a market research to prepare Nalliettes before it commences business. Nalliettes’s new Autumn/Winter 2016 collection will be the starting sale for the company. Golooba has limited funds. Samples of the products; 1) Different sizes same cloth; a black and white colour themed collection.
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2) Emancipated collection; an all-white collection.
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Nalliettes is trying to tap into the massive, an estimated 26 billion pound, fashion business. However while it appears as a lucrative business, it is argued that 95% of start-up businesses in the fashion industry, fail in the first five years of trading. (BBC Onlie.2014). Without a thorough market research and limited funds Nalliettes is likely to fail in its first three years of trading as demonstrated below.
This research will therefore determine, location, growth potential, calculate risks, among others.
Budget The majority of this research is internet based research, due to Nalliettes’s shortage of funds. It will be evidenced with statistics from reputable sources such as the National statistics.
Objectives From this research, Golooba wants to know; a) the business in direct competition with Nalliettes, b) and if there is a market outside Nalliettes’s target age range, c) the best location for Nalliettes shop, d) the survival rates of new business in United Kingdom, e) the availability of incentives from the government for new businesses. Customer needs. Nalliettes will be producing high-end fashion. The company will be producing garments designed by a fresh designer with fresh ideas, in up to date eco-friendly high quality fabrics. The garments will be customised to individual customers’ needs; individual sizes of organic designs, of top-notch quality. Having visited some of the high end online retailers, I also realised there is a need for quality designs in larger sizes and my competitors are not providing this. 6
Target Market Nalliettes’ target market is women of 18-50 years of age; these are high-end fashion consumers, usually rich, famous or both. These are actors, musicians, fashion celebrities, wives and girlfriends of sports stars, business millionaires and billionaires and their families, executives, entrepreneurs. Nalliettes’s customers are those with disposable income who can afford to pay for the quality of merchandise (theguardian.com). Golooba should also have a thorough understanding of Nalliettes’ customers because they have arguably individual tastes, behaviour, the amount they would spend, how much merchandise they would buy. (Donut.com) Location of a business The location of a new business is as important as the product, to the success of a business. According to BBC, the location decisions made for a business will have an impact on other aspects of the business such as the cost of hiring a work space, taxes, revenue, government incentives. There are perfect locations in the city of London such as Oxford Street, Piccadilly Circus, Regent Street; for a new high end business to locate. These locations are London’s most sought after retail and shopping hotspots all round the world. These locations boast excellent transport links such as undergrounds, Bus Routes which operate 24/7. (Rightmove.co.uk). These locations already have well established world-wide renown brands, such as Burberry, Harvey Nichols among others. To perform well, Golooba particularly considers Oxford Street as the best location to operate Nalliettes. At Oxford Street, Nalliettes would be in direct competition for customers with large department stores such as Selfridges, John Lewis as seen in figure 1. Therefore to locate Nalliettes close to stores which draw similar customers is arguably good for Nalliettes. Oxford Street generates its own customers who include tourists, therefore there would be no need for Golooba to advertise Nalliettes. Other than the location self-advertisement, the location also attracts Nalliettes’s demographics potential customers such as high earning professionals, successful Artists and arguably rich tourists particularly those from East Asia and Russia. These are locations with rare opportunities of retail space coming up for rent however when the shop is available on these streets, it is too expensive (Rightmove.co.uk). For a new business in a city centre, Golooba would have to carry out a thorough check on space she decides to rent. The necessary points to consider are, if the space is big enough for the merchandise, customers, and the employees, although it may not be a problem if Nalliettes is still a small business with about two employees. It is also essential the shop has excellent exit and entrance points particularly for the customers’ convenience. Nalliettes must ensure that, it efficiently trains its employs where they are capable to serve customers adequately, whilst equipped with information about the merchandise they are selling. (Donut.com) 7
It is arguably a good idea to use an experienced Estate Agent to try and locate the appropriate retail space or shop. According to Estate Agents Rightmove, when retail shop, ‘137 Oxford Street London’, went on sale, it was a very rare opportunity however it cost £175,000 per year. (Rightmove online, 2015) Golooba spoke with a Rightmove employ, who discussed shop 137 with her and price range of similar premise. However Rightmove advised Golooba on all expenses on properties and the taxes involved; Golooba can call them when she is ready to rent a shop. Oxford Street’s excellent transport links present it as suitable location to attract employable personnel of all backgrounds; therefore Nalliettes would attract many fashion enthusiasts. In cases of unskilled personnel, new employers can apply for training employee incentives from the government. Government training incentives vary with each region and city businesses will get higher loans or grants than those on the edge of town. (BBC online 2015)
fig.1 There are more factors to consider before setting up a retail business in a city and access to parking or loading space for merchandise is consequently the least problem for Nalliettes. It is inevitable not to consider Nalliettes’ limited financial situation given the example of 137 Oxford Street. It can be argued that for a location like Oxford Street, Nalliettes would need a bigger capital, to afford the cost of operating a city premise.
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Start-up grants for new businesses. Starting a business has been made easier in United Kingdom by the availability of Start-up loans, grants and advice provided by the government. The scheme has been boasted after the financial crash to encourage people to start new businesses; to be creative and also for struggling businesses not to fail. The government also gains through taxing exports and new business means employing people hence reduction in the numbers of the unemployed. Therefore Golooba has more hope of getting a loan from the government because she would be employing. Golooba accessed the government website for information about funding and she discovered she would qualify to up to £ 1,404,274 from about 9 government Schemes. Golooba would also be eligible for more funding if she decides to export Nalliettes merchandise, employs more than ten people. Nalliettes would also receive more funding if it either employed a disabled person, a former Marine or even both. Some of the start-up schemes Golooba and her business would qualify for are;
Access to business advice, start up loans and mentoring to new businesses and entrepreneurs. Programme EAE4 Grants of £500 are available to help start-up businesses develop and grow. Programme EB7 Up to £500 to help start-up businesses to test out the commercial feasibility of their ideas through market research or other tests. Programme EC3 Multi purpose loans of up to £25,000 for existing businesses and up to £7,500 for new businesses that are unable to secure funding from conventional financial institutions. Programme E37 Loans of up to £10,000 for start-up businesses or loans of up to £20,000 for existing businesses are available to start-up a business, expand a business, or bridge a funding gap. Programme EC2 (UK Funding Scheme, online 2015)
For more information one can call 08000823447. Golooba tried this scheme by sending them my details and business ideas and Golooba received an email from James Byrnes, United Kingdom Funding Scheme representative, regarding her inquiries on start-up business; he explained further what they do. A day later Golooba was contacted by another United Kingdom Funding Scheme representative, Rajan Narain who advised her on how the scheme would benefit her. He also mentioned that, there were two types of fees Golooba must pay prior to any funding she would receive. There is also funding and development support from the British Fashion Council for new designers, such as these;
To provide designers with access to monetary support for key areas of business development To provide designers with access to a tailored mentoring program that includes a global network of advisors with which the designers can engage to 9
support in building business knowledge, business development and growth worldwide To provide designers with access to a series of networking events, seminars and workshops, focusing on areas such as investment, retail planning, business management and digital innovation. (British Fashion Council Online,2015)
It is essential for Golooba to search beyond the city however with the same business plan, perhaps Virtual retail should be considered as an option. Starting an online business also requires a market research similar to that of a physical shop. Golooba must familiarise with the nature of online businesses. Familiarise with as many businesses as possible such as Net- a- Porter, Stella McCartney, Dolce and Garbanna, Alexander McQueen among others. Nalliettes will be competing for customers with these well established businesses. According to Donut.com, many businesses are starting online and this involves less risks, costs less to start. Nalliettes’ target market will be the same as those identified above for the shop. Golooba has tried Net-a-Porter website and it appears amazingly designed, therefore while it would be cheaper to design her own website, it is probably best Golooba hires a professional web designer for Nalliettes to have a better chance at attracting customers against the most successful existing online businesses. It is necessary a business plan is created for Nalliettes the online business. (Dolceandgabanna.com, net-a-porter.com)(Donut.com) A thorough researched and formulated business plan would be vital in securing funding for Nalliettes. A business plan includes an explanation of Nalliettes’s products, packaging and ideas of how they will be sold including prices. A business plan must be well written, in good grammatical English on a minimum of 10-15 pages. In addition to online working, Golooba needs to decide whether she would operate Nalliettes at home or in a separate premise away from home. Working from home is cheaper to however it would create problems if there are young children; this would create distractions for the business. Golooba would also consider the space in consideration to her type of business especially if she employs more people. Golooba would access funds from United Kingdom Funding Scheme, if she cannot afford to rent a business premise. Outside the city, premises are cheaper to rent. Golooba must also attend numerous seminars and workshops which are more accessible in recent years than ever. These seminars equip new businesses’ owners with skills to improve their businesses such as development and growth. Furthermore, Golooba must research the taxes Nalliettes would incur whether it is a shop or an online business. Golooba must pay taxes on her business’s profits which include Class 2 (flat rate tax regardless of Profits) and Class 4 (percentage of annual 10
profits above basic threshold) of National Insurance Contributions. If Nalliettes online profits exceed (£82000 2015-2016) threshold it must be VAT registered. According to Donut.com, it is not easy to know how many new online businesses fail. In Conclusion, a thorough done market research combined with a carefully designed business plan, definition of the business’s market niche, Golooba’s business may have a chance of flourishing and survive past the dreaded first five years of business start-ups.
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Reference List;
Funding finder (2015) Government loans and Advice. Available at; http://www.ukbusinessgrants.org/grants-loans-calculator/funding-finder.php Accessed on;
Funding finder (2015) Government Relocation incentives. Available at; http://www.ukbusinessgrants.org/government-relocation-incentives.php Accessed on;28/04/2015
Her Margesty Revenue and Customs.(2015) Tax Checker. Available at; http://www.hmrc.gov.uk/calcs/stc.htm Accessed on; 28/04/2015
Langley, W. (2010) Telegraph- Fashion. Haute Couture: Making a loss is the height of Fashion. Available at; http://fashion.telegraph.co.uk/article/TMG7883236/Haute-couture-Making-aloss-is-the-height-of-fashion.html Accessed on; 29/04/2015
Net- A- Porter (2015) luxury Designer Fashion. Available at: http://www.net-aporter.com/ Accessed on;2/05/2015
Office National Statistics (2015)Release Edition Reference Tables. Available at; http://www.ons.gov.uk/ons/publications/re-referencetables.html?edition=tcm%3A77-357041 Accessed on; 29/04/2015
Rightmove (2015) shop to Rent. Available at; http://www.rightmove.co.uk/commercial-property-to-let/property34789465.html Accessed on; 30/04/2015
Starting an online Business. Available at; http://www.startupdonut.co.uk/startup/set-up-a-business/starting-an-onlinebusiness Accessed on;30/04/2015
Start-up Donut (2015) Tax and National Insurance. Available at; http://www.startupdonut.co.uk/startup/tax-and-national-insurance Accessed on; 28/04/2015
Statistic Brain Research Institute (2015) Start up business failures rate by Industry. Available at; http://www.statisticbrain.com/startup-failure-by-industry/ Accessed on; 28/04/2015
Yueh, L. (2014) BBC The Fashion Business. http://www.bbc.co.uk/news/business-26257403 Accessed on;28/04/2015 12
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