3.3 Microenvironmental Attractions

ATTRACTION OF NEW ZEALAND –MICROECONOMIC, LUXURY FASHION

NZ retail market performing well with an average growth rate of 4.4% – the market not yet saturated (Appendix 6) (JPMorgan, 2020) . Predicted growth of womenswear market by 2.3% by 2024 reaching NZD 8.1bn (Section 3.6) (GlobalData, 2020).

Accelerated digitalization: Online shopping grew by 14.6%in 2020 despite falling income and negative sentiment (Covid) (IBISWorld, 2020)

Greater transparency about sustainability: New Zealand consumers are demanding greater transparency with 41% expecting retailers to be more responsible (Sylvester, 2020). They are using their purchasing power to shop with brands that reflect their values and deliver responsible environmental and social practices (Accenture, 2020).

Sustainably focused country: Aim to be the first country to be truly sustainable (Sustainable Business Council SBC, 2019). NZ ranked 25th in the Global Sustainability Index, which considers a country’s environmental policies and actions (Mulhen, 2020) • Sustainability is a concern for 87% of NZ consumers and is the 3rd most important factor after quality and price (SBC, 2019) • NZ are welcoming sustainable brands & will contribute to Net

Booming economy for luxury international fashion (Babin, MD of Bulgari, 2020) (Van, 2020) Growing middle class sociographic (40% of the country) (Rashbrooke, 2020) Zero carbon emissions mission (2050) (Department of International Trade, 2020)

VALS Lifestyle: (Secjon 3.4)

STELLA’S NZ CONSUMER PROFILE

Stella targets a wide age range of consumers ranging from from 22-45+ globally (Jackson & Shaw, 2010). Their target consumer appreciates high quality, durable clothing that does not contribute negatively to the environment. Average price of clothing sold is £302.92 with prices ranging up to £2,650 therefore typically attracting consumer with a higher budget (Edited, 2021). Stella’s emotional connection and personal relation to the target consumer has help her develop such a loyal following (Chen, 2017)

‘Mindful and responsible women that are modern and chic”

(McCartney, 2020)

The consumer profile of those in NZ will be very similar to those in the UK (Stella’s home market) due to similarities in culture (Appendix 4 Hofstede's Cultural Dimension), drivers of demand and fashion sense. According to the VALS lifestyle system (Jackson and Shaw, 2009), the NZ customer is likely to be Actualizers; consumers of luxury with high wealth and conscience for their impact, or experiencers; young consumers, enthusiastic about new possibilities (Jackson and Shaw, 2010).

CONCERN FOR SOCIAL WELFARE AND GREATER ENVIRONMENTAL PROTECTION (SBC, 2019)

22-45+ YEARS OLD WOMEN (growing luxury market segment in NZ)

ASPIRE FOR QUALITY OVER QUANTITY

DEMAND FOR LOCAL PRODUCE (Sylvester, 2020)

COMPETITOR ANALYSIS AND MARKET POSITION

On reflection from section 3.3 and analysis of the macroenvironment (Section 12, Appendix 4), NZ is an attractive market for Stella. Their global presence and relatable values to NZ consumers significantly reduces threats in the new market (Figure 3). However, this may increase as foreign competitors may be inclined to enter the market due to NZ’s wide range of Free Trade Agreements with major economies and pro-competitive regulations (World Bank, 2020). With significant focus on ethics and a mid-price point, Stella will generate a competitive advantage with its unique position in the NZ market (Figure 4) (Porter, 1985). High Price

PORTERS FIVE FORCES FRAMEWORK à (Figure 3) is used to analyse how atracjve NZ microenvironment is to Stella and to establish their main • Competitive rivalry MEDIUM

• Threat of new entrants of new competitors MEDIUM

• The bargaining power of suppliers LOW

• The bargaining power of buyers LOW

compejtors in this market (Figure 4)(Port, 1979). The model will help Stella to understand the atracjveness of the industry and potenjal threats other than just compejtors (Johnson & Scholes, 2010) • Threat of substitute products MEDIUM

Figure 3: Porters Five Forces Framework (adapted from Porter, 1985) Unsustainable

Low Price

Figure 4: Sustainability vs. price positioning map of Stella McCartney's competitors New Zealand (Sharp, 2018) (Lee, 2017)