The Conscious Trader

Business Plan Executive Report Merve Edis Course And Level, Year Ba Fashion Marketing & Communication, Level 6, 2019- 2020 6Famn010C Business Modelling And Management Cwk2 Teacher/S: Pablo Quintano

Wordcount : 1620 (Excluding Bibliography, Annex And Tables)

INDEX Executive Summary

1

General Objectives & Success Criteria

2

Methodology

3

Primary Target

3

General Market Outlook

4

Expected Outcomes

5

Brand Differentiation and Uniqueness (WOW! Factor)

6

Required Investments

8

Bibliography

12

Annex

14

Executive Summary In the recent years, with the upcoming trends of sustainability and environmental friendly consumption trends rising in consumers; the fashion industry has undergone some changes. Mintel (2020) argues that over 51% of 25 to 34 year olds have purchased a second-hand product in the last year, with a rise from 43% from the year previously.

Another trend that has shown a dramatic rise amongst Brits remains to be the act of ‘swishing’, also known as swapping clothes (Mintel 2020). 75% of 16 to 24 year olds have reported to have swapped and/or would be interested in the culture, while the figure is 51% amongst average Brits without age restrictions.

Another interesting figure presented by Mintel (2020) is that while 30% of consumers agree they would prefer to pick an environmentally friendly brand, 79% agree that they find it difficult to know whether or not retailers are transparent with this information.

The following report aims to propose a C2C business model that while supporting a sustainable fashion circle business, also aims to fulfill what remains to be unfulfilled by other competitor brands. The following business model allows the consumer to upload their closet onto the website/app with production information such as brand and/or fabric types to production locations, hence allowing the consumer to track the ethical background of their closets, such as water usage throughout, unfair labour laws, their general carbon footprint, and while this encourages and educates the user towards picking fairer brands and/or materials in the future, it also allows one to filter through options such as vegan (no silk, wool) and/or remove brands from searches. Users are then able to trade with each other, add materials and items they are searching, and track them via hashtags.

The concept combines multiple aspects that today’s trends have been circling around – while fulfilling a concept that does not combine the 3 aspects that are key in the future of fashion industry.

The market entry will be from London, and will expand within the United Kingdom and possibly to other expanding European areas. The reason of entry within the London is due to the high interest and acceptance towards second-hand and thrift shopping culture in London, while also remaining to be a fashion capital.

1

Keywords : market gap, niche shopper, ethical, informing, bold

General Objectives

Create a business plan fully logical and realistically doable

Ensure the WOW factor over competitors

Ensure demand from the market

Create realistic timelines and goals

2

&

Success Criteria Market research fully comprehended and ready to interpret for specific brand demands and market demands

Provide services at much better ease and convenience, provide multiple brand benefits, provide excellent customer service and sleek user interface

Interpreting market data and stability of given business plan (C2C)

Measure success with KPI’s and website traffic, provide realistic timelines to investors for assurance

Keywords : investors, success, realistic, WOW factor, demand, logical

Methodology

Throughout the research of this report, primary and secondary data results have been collected from different sources. An online survey has been conducted with 78 replies within different age groups, and a focus group has been conducted on 14th of April 2020. The focus group was conducted between the main target group, ages varying from 21 to 28, residing in London. Secondary sources have also been utilised throughout this report such as data results from research groups such as Mintel, WGSN, Euromonitor and McKinsey. Key findings have been added to the annex.

Primary Target

Consumers between the ages of 18 to 35, environmentally conscious or is trying to become more environmentally conscious, residing in London.

The primary target group has been chosen as the business plan builds the new trading platform, The Conscious Trader, on an ethical ground with transparent information.

The possible expansion of the brand in the future will be made possible, first growing in the United Kingdom. This is mainly due to the uncertain political environment the United Kingdom is currently in due to the Brexit and uncertain future trading and tax laws that may rise for British businesses abroad, and a certainty will not be possible until the next political deadline given; 31st of January 2021.

Another factor to take into consideration is the recent breakout of the Covid virus; making the political and economical scenery uncertain for months to come, making it harder for business to predict accurate market damage.

3

Keywords : research, target, london, brexit, covid.

GENERAL MARKET OUTLOOK (LOCAL) The second-hand market has grown so significantly in the past 3 years that, ThredUp’s annual Resale report highlights this emerging market growing 21% faster than the retail fashion market (Hughes 2020).

GENERAL MARKET OUTLOOK (GLOBAL) Resale market reached 51 billion dollars in the United States in the past 5 years (Elven 2019).

By 2028, the resale and renting market has been predicted to suppress the retail industry by 1.5 times.

ThredUp believes Millennials and Gen Z are adapting to the secondhand market 2.5 times faster than other generations.

Gen Z currently makes up about 40% of the global spendings (Elven 2019).

GENERAL MARKET OUTLOOK (LOCAL) The second-hand market has grown so significantly in the past 3 years that, ThredUp’s annual Resale report highlights this emerging market growing 21% faster than the retail fashion market (Hughes 2020).

CONSUMER OUTLOOK Gen Z (16-25) is the generation reported to have been the most open towards using rental services, 54% saying they have previously used such service or would be happy to do so.

Younger generations (GEN Z and Millennials) make a significantly higher effort to reduce their fashion waste, 68% claiming to make more ethical fashion choices now than they did 12 months prior, and the figüre reaches 57% in the general shopper.

6 in 10 British shoppers claim they do not think of money as a problem, and are willing to pay more for ethically sourced clothing (Hughes 2020).

MARKET THREATS AND POSSIBLE SOLUTIONS The uncertainty of the Brexit will make the local economy at unease in the upcoming year due to the Britain exiting the European Union without securing trade and tax deals first.

-Being vary of budgeting and assuring investors of realistic and doable goals, not expanding abroad before the deadline of the last Brexit deals, growing locally and organically.

Another global threat is the outbreak of the Corona virus currently (2020) affecting the global economy, and experts have begun predicting a second and worse outbreak during winter months (CNN 2020).

-Ensuring to work with reliable shipping firms and businesses, as the CT is a digital-based business that relies on an outsourced shipping.

Due to the fast growing and adapting business models in the digital age, while The Conscious Trader does not have any direct competitors, the United Kingdom still has second-hand rental websites currently that may pose as a threat.

-Providing unique and constantly changing/innovative business, expanding and diversifying in the mean while gaining expertise, provide unique and personal customer service, build and engage with the community.

4

Keywords : market outlook, competition, uncertainty, pandemic

Expected Outcomes The Conscious Trader profiles fashion brands and ranks them in accordance to their environmental impact, and the transparency of the brand, with a score and detailed information for the users to see. This will allow both smaller and larger fashion houses to gain momentum in the eyes of the consumer, as greenwashing will no longer work for The Conscious Trader user and they will be able to refine amongst brands.

EMOTIONAL FACTOR

While every brand aims to build a community amongst consumers and brands, the niche categorisation of The Conscious Trader and its nature of consumer-toconsumer business plan will allow for users to connect with likeminded users easily and allow for a unity under the brand.

CREATE AN OPPORTUNITY

The Conscious Trader will be open to some brand advertisements; carefully chosen to compliment the brand vision and ethical standpoint, while providing additional revenue.

5

INFORM THE USER

Emotional benefit towards making the sustainable choice clearly within the easily accessible information on the app/ website.

BUILD A COMMUNITY

The digital-age generations (Millennials and Gen Z) are accustomed to use social media platforms and other digital platforms to gain a side income. The Conscious Trader allows this as users not only rent clothes from one-another, but also rent their closets, while The Conscious Trader profits from a percentage. (See Budget for more info).

PROMOTE THE WORTHY

Keywords : community, like-minded, double benefit, transparent

Brand Differentiation and Uniqueness (WOW! Factor) The consumer-to-consumer business models have become rather common on digital platforms, and the competitor analysis on CW1 and further analysis done throughout this report (See Appendix) has confirmed a gap in the market for environmental shoppers. While brands have grown used to labelling items ‘eco-friendly’, the consumer has increasingly became aware of the high rate of greenwashing.

Both primary and secondary research conducted throughout this report (See appendix) has also uncovered that while the consumer tries to stick to the environmental options, they believe of no reliable source to go to for this information (Mintel 2020, WGSN 2019).

The brand aims to provide a unique shopping experience to like-minded consumers and up-and-comers, allowing them to use only one platform to lessen their fashion waste while combining an alternative to the desire of purchasing and updating their closets.

The Conscious Trader also allows users to benefit from earning a side income, making the business plan more attractive to the new generations.

The brand aims to act as a bridge between like-minded users for a two-way beneficial stream for both the brand and the user.

Gap in the market, no direct competitors Consumer hunger for transparency growing before brands have fully adapted Both brand and user benefits 6

KEY POINTS

Pricing Strategy and Key Points to Consider The initial investment requirement from investors will need to be around 280.000 Pounds; the main cost drivers being the website and app creation, followed by marketing efforts (see BUDGET pg 8).

Traders in the community are free to set prices for their own items; therefore making a clear prediction ineffective, however a recommended pricing strategy is given to users as below.

HIGH STREET ITEMS (INDITEX, MANGO ETC) Pricing strategy will be determined based on how weary the items are. Renting starts from 7 days; however renters and rentees can come to a mutual agreement to extend.

High Street Items are recommended to be rented from 5-30 euro price range. Going over the range is possible, and the prices are not determined by TCT. 4% fee is applicable under each transaction.

LUXURY ITEMS (HERMES, CHANEL ETC) Luxury items are recommended to be rented within the price range of 50-200.

4% fee is applicable under each transaction.

Revenue calculations have been done over the median of recommended prices, in comparison with the current population of the target group, and making a low assumption on active users in the upcoming months/years to remain on the realistic and the safe side per benefit of both investors and the business plan.

7

FINANCIAL FIGURES Bigger the fish, bigger the spending* Secondary income, advertisement have been calculated by CPM (cost per 1000) and taking the website traffic into account with in accordance to the expected clients.*

8

EVALUATIONS 1ST YEAR

According to the budget calculations based on realistic figures and numbers, and such events as Covid-19 taken into account, The Conscious Trader is expected to end the Q4 of Year 1 with - 165K Pounds, not making any profit. This is mainly based on the one time costs initially needed, such as website and app developments, and initial promoting and marketing (PREMKT) expenses.

2nd YEAR

On the Q2 of Year 2, the company manages to breakeven with a 219K, and competing the year with just under 800K on the Q4.

3rd YEAR

On Year 3 the brand finishes the year with 2.2 Million Pounds in cumulative free cash. A possible expansion is made available worldwide and throughout the country with the secured cash flow.

9

MINI BRAND BIBLE

COLOUR CODES

APP AND WEBSITE DEVELOPMENT

“For Extra-Loved Fashion Items” has been chosen as the slogan that will be used, the word ‘extra-loved’ has been chosen to initiate a more positive emotion on the brand.

It accentuates the connectivity and boldness of the sustainable business model.

10

BUSINESS MODEL SEARCH Rentables RENT Rentables

COMMISSION 2.5% on every order

T EN EM IS UE RT EN VE EV AD R

CUSTOMER

RENT RENTABLES

UPLOAD RENTABLES

TRADERS (community name) ESTABLISH THEIR OWN PRICES FOR RENTABLES, HOWEVER A SUGGESTED PRICING WILL BE PROVIDED, AND ALL FURTHER CALCULATIONS ARE DONE ON AVERAGE PRICING BASED, MAY VARY.

CLIENTS - LONDON RESIDENTS 18-35 MAIN REVENUE DRIVER - COMMISSIONS MARKET COVERAGE - LONDON SECONDARY REVENUE DRIVER - ADVERTISEMENT BANNERS 11

POSSIBLE MARKET EXPANSION - MANCHESTER, LIVERPOOL

BIBLIOGRAPHY

Bibliography

AdAge. (2013). CONSUMERS DON'T BELIEVE YOUR GREEN AD CLAIMS, SURVEY FINDS. Available: https:// adage.com/article/news/consumers-green-ad-claims-survey-finds/244172. Last accessed 13th April 2020.

Elven. (2019). Resale market to reach 51 billion US dollars in 5 years, says ThredUp. Available: https:// fashionunited.uk/news/retail/resale-market-to-reach-51-billion-us-dollars-in-5-years-says-thredup/ 2019032042264. Last accessed 2nd April 2020.

Fast Company. (2020). By 2023, the secondhand clothes market will double to $51 billion. Here’s why. Available: https://www.fastcompany.com/90493728/we-gave-our-employees-a-stimulus-package-other-employersshould-do-the-same. Last accessed 16th April 2020.

Mintel. (2020). BRITAIN’S THRIFTY YOUNG FASHIONISTAS: MORE THAN HALF OF 25-34-YEAR-OLDS BUY SECOND-HAND CLOTHES. Available: https://www.mintel.com/press-centre/retail-press-centre/britains-thriftyyoung-fashionistas-more-than-half-of-25-34-year-olds-buy-second-hand-clothes. Last accessed 2nd April 2020.

Mintel. (2020). UK Fashion & Sustainability Market Report. Available: https://store.mintel.com/uk-fashionsustainability-market-report. Last accessed 19th April 2020.

Riera S. (2019). Reuse, share and rent: the new threat for fashion giants. Available: https://www.themds.com/ markets/reuse-share-and-rent-the-new-threat-for-fashion-giants.html. Last accessed 1st April 2020.

Statista. (2020). Monthly sales volume of second-hand goods in Great Britain from January 2016 to September 2019, as an index number of sales per week. Available: https://www.statista.com/statistics/522059/second-handgoods-retail-sales-volume-monthly-index-in-great-britain/. Last accessed 2nd April 2020.

Statista. (2020). Value of the personal luxury goods second-hand market worldwide from 2015 to 2019. Available: https://www.statista.com/statistics/960606/value-of-the-personal-luxury-goods-second-hand-marketworldwide/. Last accessed 1st April 2020 .

13

ANNEX

EXH 1.

PYRAMID OF VALUES

INNOVATIVE BOLD FULLY TRANSPARENT PRACTICAL ETHICAL CUSTOMER FOCUSED

COMMUNITY CONNECTED UNIQUE LOCAL FAST TRENDY

COMMUNITY GROWTH FOCUSED UNIQUE BONDING EXPERIENCE BELIEF BASED NON-PRODUCT FOCUSED LUCRATIVE

15

ANNEX

EXH 2.

BUSINESS CANVAS

Key Partners : Financial : Investors Creative : App and Website Designers Marketing and Communication : Internally operated start-up business Marketing Agencies specialising in e-commerce, C2C Online/offline marketing teams.

Logictics : Shipping firms, local and ethical (eco-craft) Key Activities Marketing and Communication :

ANNEX

Key Resources : Physical : Shipping firms Human Resources : The employees Financial Resources : The investors, crowdfunding sources for further if need be, clients Value Proposition For users : Presenting a platform both informative and user friendly, providing a service that also may have financial returns for users, emotional and ethical beliefs fulfilled, less waste produced For Advertising Brands Providing a 100% transparent information towards clients, highlighting non-greenwashing companies that are ethical, introducing brands to consumers with likeminded ideals, niche and ideal marketing environment for likeminded brands Distribution Channels

Bond with customers on social media such as instagram, facebook. Uninterrupted line of communication, online & offline; and collaborating measures in the prospect for increased market share.

Customer Relationships :

Bond with traders with a whole-hearted tone of voice, building a community around ethical ideals

C2C distribution in collaboration with an outside shipping firm, providing boxes with prepaid codes to ship to customers, service fee taken via each order.

Firms collect items from one home to another within the city, hence providing fast service.

EXPANSION POSSIBILITY : Create flea market of renting in the future, similar to pop-ups but instead done with clients bringing their items with attached barcodes to keep track, further community bonding

Customer Relationship

Customer Segments

Provide a friendly and warm tone of voice, encourage bonds made via the platform, create a community, provide excellent and fast customer service, be open to criticism

C2C business plan Outside brands to provide advertising for their niche market clientele

Cost Structure Main cost spending : One-time costs : Website and app design, initial technical software Recurring Costs : Marketing, website and app maintenance, employees Business Revenue Streams Main revenue will be derived from 2.5% commission on rented items Secondary revenue will be from advertisements on the website rented banners CPM (cost per 1000 impressions) For detail please see budget on page 8

16

EXH 3.

17

SURVEY RESULTS

ANNEX

SURVEY RESULTS

EXH 4.

ANNEX

KEY FOCUS GROUP FINDINGS

Moderator : Merve Edis Focus Group Par0cipants : F.Z , 23 , Freelance Photographer V.E , 25 , Lawyer S.B , 26 , Architect M.M , 23 , Styling Student E.W , 26 , Personal Shopper

*THE FOLLOWING ARE CERTAIN EXPERTS FROM THE FOCUS GROUP, and NOT THE WHOLE SESSION

Moderator : When you shop online, where do you tend to get your information relating to the brands’ environmental impacts?

P4: Most of the time if you google it it’ll come up.

P3: Yes, but they could lie.

P5: They almost always lie, I would say, so it’s very difficult to find a brand that’ll actually accept what they are doing and how it impacts them.

P2: Social media is a good source of information sometimes, not always but some celebrities and stuff that you know share your ideas and beliefs, you can trust their opinions.

Moderator : Participant 2, do you mind sharing an example?

P2: Sure. For instance, I love Olivia Wilde, and she was wearing these Outdoor Voices brand yoga clothes, and I googled around to see it’s an environmentally friendly brand and now I have a couple pairs of leggings from them. I bought it because I saw it on another vegan celebrity who endorsed the product by wearing it.

P4: Yes, it is very true but it is hard to always trust celebrities because of course most of the time they get paid for it.

P1: Sure, that’s why you follow people who seem to share your ideals, like P2 said.

18

KEY FOCUS GROUP FINDINGS

EXH 4.

ANNEX

Can you tell me a little bit about your style and shopping habits?

P3: Sure. I shop vintage, which is a very popular genre in the UK, but not necessarily vintage luxury. Mostly thrift shops or like Oxfam/Red Cross.

P4: Yes, I shop vintage as well, although not always. But I shop sale almost always.

P1: I mostly shop from online places. Inditex etc.

P5: I try to recycle my items as much as they can handle to be honest, but because I’m so busy mostly I end up ordering things online.

P2: I shop online too.

Moderator : Is there a reason behind your shopping habits?

P2: I would love to shop in thrift shops and I do if I head to the city, but there’s nothing like that around me. Most of the time my only options are very expensive brands because I try to dress environmentally friendly and it boils down to brands like Stella McCartney if you want something that looks nice.

-Participants agree amongst each other – Moderator : Would you say ethical-wear is an important part of your decision making?

P5: Yes, but not as often as I would want it to be. Like P2 mentioned earlier, it is a lot harder to get access to thrift items when you don’t live near a similar shop.

P1: Yes, and sometimes the options are too limited and you don’t find anything you like.

P4: Yes, that’s a big problem. Or sizes. You could find something you like but if it’s 3 sizes too small on you, you need more options.

P5: Yes, and mostly thrift shops are very small anyway so either you find 2 things that fit you or nothing at all.

COMPETITOR ANALYSIS TABLE

EXH 5.

HURR COLLECTIVE

GIRLMEETSDRESS

FRONTROW

THE CONSCIOUS TRADER

C2C

B2C

B2C

C2C

LUXURY

HIGH STREET

BUSINESS MODEL

INFORMATIVE

FILTERING THROUGH OPTIONS (VEGAN, VEGATERIAN)

19

NO

YES

ANNEX

KAPFERER BRAND PRISM

Unique

PHYSICAL

Trendy Environment Focused Community Based

Warm

Trusting

Green

RELATIONSHIP

Adaptable

Bold

PERSONALITY

STYLISH

Valued

Ethical

Equal

CULTURE

EXH 6.

Warm Happy Aware Community Based

Responsible

REFLECTION

Conscious Innovation focused Relatable Green Educated

20

SELF IMAGE

Like-minded

EXH 7-8-9.

FURTHER SUPPORTING SECONDARY DATA FINDINGS

Value of the personal luxury goods second-hand market worldwide from 2015 to 2019 STATISTA 2020

Monthly sales volume of second-hand goods in Great Britain from January 2016 to September 2019, as an index number of sales per week (STATISTA 2020)

SECONDHAND MARKET RESEARCH - FAST COMPANY 2020

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ANNEX

EXH 10

22

PREVIOUSLY EXPLORED CASE STUDY (C1)

ANNEX