Retail Fashion Marketing (Year 2)

Base.

ARTD 2042 Fashion Retail Marketing BA Fashion Marketing 24397741 Nomin-Erdene Surenjav

Contents 1. Introduction 2. International expansion plan 3. Benefit of using a flagship store 4. Site Selection 5. Store Environment and Store Design 5.1 Inspiration 5.2 Color 5.3 Lighting 5.4 Music 5.5 Materials 6. Distribution and Supply Chain 6.1 Franchising 6.2 Licensing 7. Merchandising Plan 7.1 Assortment Plan 8. Retail Formal Design 8.1 Floor Layout 8.2 Merchandising Technique 9. References

3 4 6 7 8 9

11

13 14

16

Base.

Base has been growing organically since its inception in 2008. Base is a lifestyle brand, Based in the heart of the East London. It is renowned for bringing the outdoors to the street.

The brand designs high quality products with focus on functionality and creative attitude, fusing both local and global influences. The products are manufactured sustainably and range from men’s apparel such as basic t-shirts, to jeans, to beanie hats, all designed to take you from the city to the outdoors, and back again.

3

International Expansion Plan Globalization of world brings an opportunity to trade globally. There is less barrier to operate business internationally. The world is becoming a single market. There are variety of reasons to go international.

First, the most important goal is company growth and to increase the annual group sales. Second, the consumer behavior has changed, people are more interested to buy international products. According to the Hines, T and Bruce, M stated that 82% of Georgie Armani sales were from foreign market in 2004. Lastly, the global competition, the competitors go further and open more stores internationally, it’s more difficult to compete. Therefore, the future direction of Base retail proposition is to expand the business internationally. Base is already opened online shop worldwide, as a result, Base believes open new stores internationally. Base’s mission statement is to “bring sustainable urban wear to a global market. We will work with our international and local customers closely to understand them and pilling to store environment, offering a stripped back retail experience, creating a unique shopping destination with a vibrant energy and community feel”. The marketing plan identifies the objectives Based upon which the marketing strategy and the communication channels have been proposed. We divided Base objectives in 3 terms of time managing.

Objectives Long term objectives (10 or more years)

-To obtain a larger market share of the global market.

-Further boosting the profitability ion centers and in emerging markets.

-To develop the relationship with international customers, partnership, stakeholders and stockiest.

Medium term objectives

(5 to 10 years) -To obtain share up to 2 per cent of the Russian market in first year of implementation of the marketing plan.

-Open more flagship store internationally .

To obtain Licensing in the hair products.

Short term objectives

(3 to 5 years) -Open first flagship store in Moscow.

-Achieve more market share among the competitors in Moscow.

-Offer promotions to maintain the enthusiasm of new launching -To develop a relationship with lo.cal customers and partnership in Moscow.

-Developing sustainable clothing.

4

Challenges for international expansion strategy Expanding into international market has its challenges, and it is important to acknowledge these before developing the strategy. According to the lecture in Fashion Retail Marketing, there are 5 critical factors to success of international expansion.

These are experience, localization, brand image, local multi-channel services and customer serves. (Internationalization, week 20). Each of it is explained as follows: -Brand image Brand image is one of important aspects that it is a way to differentiate from competitors. Base implement different pricing strategy than its domestic stores because its most competitors in this market operates at low price strategy.

The product prices will be different than UK, depending on the country or product, it will fluctuate on each different type of products. For instance, winter clothing is more expensive than normal products since its overheads are higher.

Furthermore, customer services will be adapted to the culture values that service staff cannot show any impressions against cultural values.

However, Base will not change our unique selling position, for example, layout of the flagship stores it will be the same as domestic stores.

-Experience As it is a first time for the company to open flagship stores in this region, there is no previous experience for this market. The customers do not have any knowledge of the brand. Furthermore, domestic terms of strategy does not often work with international experience. Base is using external experts for market research in this emergent market and then redesign its strategy to adapt to its cultural environmen

-Customer service Language and time zone, training the staff, multichannel communication are the most important to Base’s customer service. Staff recruitment considers multilingual ability, because it’s efficient that staff communicate with customers as well as managers effectively communicate back to head office.

-Localization About one third of all products will be redesigned for this market. Russia has a harsh weather during winter. Thus, all the winter clothing has to be redesigned to have wind proof or using thermal materials. Furthermore, Base has to take account in cultural influence, so therefore 30% of the products will be designed from its cultural inspiration.

-Local multi-channel services The online website has been translated in 5 languages such as Russian, Spanish, French, Italian and Mandarin.

In conclusion, Base will follow these challenges to success international expansion.

5

Benefit of using a flagship store According to Moore, C and Doherty, A (2010) stated that “retailers can enter foreign markets via internal expansion, merger or takeover, franchising, joint venture and through a non-controlling interest yet, the flagship store is became another mode of entry and it is used mostly fashion retailer.”

Base is implementing the strategy to open flagship stores. The key strategy is communicating the retailer values and market positioning to prospective consumers, rather than only concentrating on profit generation. The flagship store is a showcase for the brand and it is not only for the purpose of shopping. It is more about creating unique shopping experience for customers that cannot found anywhere else. The brand strategic purpose is to build more flagships stores in the emergent markets which are dense in population and highly competitive. Base flagship stores will be spacious and architectural features. The flagship store architecture will make extravagant statement and use of material will choose more specifically and good quality.

Base identifies the following three principle strategic functions for its strategy to expand into Russian market: 1. The flagship stores enables to overcome the entry. It helps to develop comprehensive distribution system and it will make it easier to open standing stores different region in Russia.

2. Flagship Base flagship in Moscow will beneficial to finding the partner relationship in the business. For example wholesale stockiest and franchising partners

3. The third one is focus for marketing communications. The Base flagship store’s purpose is generating more traffic through the store and attract people especially our loyal consumers.

Hines, T and Bruce (2007) stated that flagship store is beneficial to maintaining customer loyalty, such initiatives as exclusive fashion shows, private shopping events and public relation events. Moreover, many fashion brand start host live music events. For instance, in 2013 Burberry hosted a music gigs in its London Flagship Store with 800 guests. ( Raisbeck,F, 2013) and the Vans brand present Hotpot Music in Beijing ( Guan,A 2010). Base is planning to host live music events at flagship stores. The selected bands for these events are Russian rock celebrities such as Tesla Boy, Xuman, Tantsi Minus,Poko box and Zveri.

It is perhaps relatively new to Russian market that it can be less effective yet, the events support to build customers’ relationships. Working with celebrity endorsement is beneficial to support brand awareness. Base will also launch new T-shirt collection with Zveri. Zveri is one of the famous pop rock Russian band. Therefore, we will make public events to host Zveri to introduce new T-shirt collection.

In conclusion, opening flagship stores will face significant financial investment such as designing the stores and renting primary locations for the stores. Moreover, the flagship store may cause the confusion that consumers think it’s a pricy brand because all the stores have luxury theme design. However, Base believes that our stores provide magnificent shopping experience to our customers. It is easier to attract customers and events help to connect the brand and consumers.

Furthermore, Base is seeking business partners for opening more flagship stores in the different regions in Russia.

6

Site Selection The flagship store will be located at the intersection between Tverskaya Street and Stoleshnikov Lane. Tverskaya Street has been a center of the commercial avenue for many years. In 1996 international investment accounted about 22 per cent of the Central Prespecture’s share which is foreign retailers have started to open the stores (Bater, J and Amelin, V 2013) and it is now one of Moscow main shopping precincts. The street has a mix of high street brand to expensive jewelry stores. Stoleshnikov Lane is the third most expensive luxury shopping street (Atwal,G and Bryson, D 2014) and many boutiques shops are located here. There are number of reasons to select this location.

Base.

Tverskaya is a high street market and Stoleshnikov is Luxury Street. This intersection point enables us to demonstrate our brand value as a luxurious but not that much luxurious. Therefore, it is connected with Base consumers which they shop both market and our brand offers timeless designs with a high quality, at a premium yet affordable price. The site is located in the prime location in Moscow and it is the biggest shopping area that brand is easily accessible by customers. Moreover, in Stoleshnikov Lane there are many boutiques and cafes are often visited by our targeted customers. For example, Base is close to the Oldich. Oldich is the area designed similar Brooklyn in London or Williamsburg in USA. According to the Idov, he stated that “Oldich is friends and family bar hidden beneath a vintage clothing store, the kind of place one could scarcely imagine hatching in status-crazed, brand-mad Moscow as recently as three years ago”. There are Oldich cafe, vintage shops and barbershop. Chop Chop barbershop is one of the spiritual homes of Moscow’s hipster elites. However, the retailers pay around €7000 to €8000 per square meter annually in the central areas of Moscow. (Atwal,G and Bryson, D 2014). In conclusion, rental costs are expected to be high but Base believes that the prime location is crucial to meet our strategic targets.

7

Store Environment and Store Design In recent years, the competition in retail industry is increasing rapidly. It has become increasingly difficult to differentiate the stores purely on a basis of merchandising, price, promotion or location. However, the unique store design or atmosphere of the stores has a greater influence on customers’ decision making. Moreover, Hines,T and Bruce, M stated that “The most obvious and arguably most important flagship store influence is in terms of the architecture and design of the satellite stores�.(Hines, T and Bruce, M 2007). Flagship stores and its design are inextricably linked to each other. Flagship store tells story of the brand and the store design is telling the story to the consumers. Base is lifestyle brand that we build strong connection with customers and build the lifestyle environment. The atmosphere of flagship stores will be same as home country. The discussion of outline of the store environment and store design of the Base as follows: The flagship store in Moscow, Inspiration Base store devours a cool and dark vintage theme which is inspired by caves or old church.

In-store elements such as color, lighting, images, or sounds may have more immediate effect of decision making and appeal to consumer senses.

Color Color is used to stimulate sense and can affect the mood of the customers. It is important in advertising, fashion and architecture. (Kent,A and Omar, O 2013) Moreover, menswear store may work better with harder lines and darker colors. Thus, Base is combining black, white but mostly gray in its stores. Nijdam, N stated that white color is used to purity and safety, black color is elegance and power. The gray is neutral color that it portray a sense of durability, quality and a classic sense of nature and quiet. (Lamancusa,K 2003).

8

Lighting Level of lightning have been shown an influence on customers’ mood. Base is inspired by dark vintage, which means the store use softer lights. The softer light creates relaxed pleasant mood that customers are expected to spend more time in store comfortably.

Moreover, lighting is also inspired by cave theme. It explains that the cave is dark but there are some strong lights come from a top site. Base has shown that idea in light attached with the walls and concentrate more lights on the products.

Music Music is one of the Base’s unique selling point. Base’s target consumers enjoys listening to unsigned indie rock bands and alternative music and they often attend live and intimate gigs. Therefore, we works with new coming indie rock bands and organise events with these rock bands in stores. On weekends Base is planning to have live music day.

Materials The materials on the wall is an expansion of the gray brick, through the stone looking tile flooring and marble furniture, connects the building itself with the simple but strong dark vintage elements.

All of these senses explain one idea. The Base flagship store environment is demonstrating the simplicity but strong and comfortable relaxing ambience.

9

Distribution and Supply Chain

There are number of channel options that marketers build the best place of distribution to serve customers. Base is choosing two channels of brand expansion strategy. These are franchising and licensing.

The Base retail chain is comprised of three distinct formats in Russia. As before mentioned, flagship store is the earliest stages of Base’s business development within Russian market.

Base’s corporate plan is to open standing stores and department store concessions, of which there will be more stores open in other regions in Russia. However, it is difficult to achieve through the operation of company owned all stores. Jackson, T and Shaw, D (2009) stated that in international markets, a fashion brand may use a combination of its own store in certain countries, department store concessions in others. Therefore, Base is planning to have contractual agreements of franchising in standing stores and department store concessions.

Franchising Franchising is defined as a contractual agreement made between a fashion brand, retailer and independent retail business, which buys the right to own and operate a shop in a closely specified format. (Jackson, T and Shaw, D, 2009) These standing stores and department store concession have better knowledge and experience in this market.

Thus, Franchising allows us expand quickly without taking much risk and gain better understanding of the local the market. There are many luxury brands implement franchising strategy such as Hermes, Christian Dior and Gucci (Atwal,G and Bryson, D 2014). However, Gucci switch from franchising to direct control operation in Moscow. (Moore,M and Birtwistle 2005). According to the Jackson, T and Shaw, D (2009) stated that the trend in the luxury market has been for brands to move away from franchising towards directly operated stores, where they have more control. Base understands the importance of expanding quickly to build brand awareness. Furthermore, franchising option is bringing additional profits to the company which will be used for flagship stores. It is absolutely vital for Base to build strong brand image in short term without any high risk of losing significant investment. Once it has built its strong brand image, it can take over back to original plan to grow organically.

Furthermore, Base is relatively new brand having five years’ experience in fashion industry and its cash position is vulnerable at this point of time.

Therefore, our brand has to obtain knowledge about the market and gain experience with it for the future success of the company. However, franchising has a downside that it can effect brand reputation in wrong way. Therefore, it is important to find trustful franchisee. Base is in the hunt for the franchise partners who are experts in the local market and have long term retail experience.

10

License Licensing is when a brand or retailer allows another party to use the brand name to other manufacturers in new product categories to generate additional income stream (Jackson, T and Shaw, D (2009). However, the manufacturers prefer to use a well renounced brand name, that in our case it is not much applicable. Base will not apply license in its short term object yet. Base is interested in licensing men’s hair styling product in 10 years’ time. There number of recognized companies are licensing the hair products such as French connection. Caroll, C and Fitzek,L (undated) stated that French Connection has heavily licensed and as a result its sales plummeted by over 18 percent for quarter in last year.

Therefore, it seems licensing is risky strategy that might have a negative effect on the brand image.

However, the hair products for men is fit to our target customers and Base is limiting its licensing strategy by only with men hair products.

11

Merchandising Plan

Retail fashion merchandise planning is “mainly concerned with the numerical control and management of the range from initial conception to delivery to the shop� (Jackson, T and Shaw, D 2014). It is important task to bring the right products in right time and right amount. Base designs high quality products with a focus on functionality and creative attitude, fusing both local and global influences. Items are manufactured sustainably, and breakdown with mostly casual wear and fewer selection of formalwear, foot wear and accessories. All items are designed to take you from the city to the outdoors, and back again. In this section, it will outline merchandising plan in Spring Summer and Autumn Winter collection. Setting the financial plan is first step and then product research and assortment plan. (Mackie,P 2014).

Financial plan is crucial that this sets the parameters of what to buy from the financial perspective. Base’s spring summer sale plan is to be around 60% casual wear, 20% formal wear, 10% footwear and 10% for accessories. As a result of the sales plan, it makes easier to start research product. Base mostly sell edgy and hipster style apparels. The style will not change much during the research. However, the color is important and we will follow the trend and local area influence. For example, overall climate in Moscow is well known for long winter (November to March) and hot, humid summer (June to August) (World weather online, undated). Therefore, harsh climate affects the choices and it includes repeated purchase of basic items in Russia. Because of the harsh weather and long winter, Base is planning to allocate mostly long armed sweaters and jackets and also T-shirts. T-shirt is one of our core products that it expresses the brand identity. The size range is going to be the same as in UK ranges where Medium and Large sizes will be distributed utmost.

12

Assortment Plan Base’s assortment plan is illustrated in Diagram 1. Planning of textile and clothing products is an assortment decision, concerning the amount of product choice that is available to the customers.

It is difficult to balance. Base provides a narrow and shallow assortment. It is explained “shallow assortment contains limited quantity of product items, while a narrow assortment contains a limited product lines (Neil, D and Cant,M 2005).

Base is acknowledged as a high-end brand which prefers to retail good quality and edgy style instead of difficult to control intense wide variety clothes.

Diagram 1.

Men’s casual wear Sweatshirts

Styles

% Mix

Average Colours per Style

Total SKUs

% Mix

Price Range

Plain

4

7

28

£50

2

1

2

£55-£75

TOTAL SWEATSHIRTS

6

Short Sleeved-Plain TOTAL T-Shirts Jacket Short Sleeved-Plain

Printed

T-Shirts

31.58%

30

1

6

6

Short Sleeved-Printed

1

1

1

2

10.53%

Jeans

4

21.05%

1

5.26%

Shirts

42.86% £30-£35 £35-£45

7

10.00%

3

12

17.14%

£70-£90

5

5

7.14%

£90-£130

2

2

4

Short Sleeved-Printed

1

1

1

£45

Long Sleeved-Plain

2

4

8

£70-£80

TOTAL SHIRTS

5

26.32%

Trousers

1

5.26%

19

100%

TOTAL MENS CASUAL WEAR

3

£30-£40

13

18.57%

3

4.29%

70

100%

£60-£80

13

Retail Format Design The Flagship store performs to communicate the retailer’s values and managing consumption experience which is coherently and consistently supports the status of the retailer. Therefore, store layouts play significant role for the flagship stores. Kent, T and Omar, O (2003) explain “Strategically designed layout combines the effective use of merchandise and aisles to draw customers through the store to maximize their exposure to the store’s offering”. The following sections will outline Base’s retail format design:

Floor Layout Overall store layout applies a straight plan with straight walls, round and straight furniture and rails.

Straight plan encourages customer flow of the store (Omar, O and Kent, A 2003). The products are displayed mostly on the walls thus, it gives more space to consumers to flow around. Moreover, the mid-floor fixture is designed as curved plan that it encourages the circulation. There are free sittings and it helps to steer customers through the store. Base intends to work with music bands and there will be events for live music in the flagship store. Therefore, the sitting area needs to be rearranged to the state when the events take place. Thus, portable furnishings are essential. To conclude, using mixture of curved and straight layout are visually appropriate and suitable for the brand at premier.

Furthermore, Morgan, T (2008) explains that floor layout is usually divided by four areas and define these by platinum, gold, silver and bronze. The bronze area at the rear of the store will draw fewer consumers, because of the distance. Base is planning to display the jeans pool game in the bronze area thus, it will attract more customers into this area. Base is a lifestyle brand and the flagship stores are for attracting customers through informing the brand identity. Base is not fully profit oriented organization at this stage, instead we are seeking to develop strong brand image and customer relationships. Thus, we installed pool table game with soft drink vending machine in the shops.

Furthermore, Base’s fitting area will be located also in the bronze area thus, the shop floor space is used effectively. Moreover, locating the fitting room in the distant area makes customers to browse through most of the range of products and increase repeat sale. The till point will be in gold or silver area. Accessories will be displayed at the till point thus, it gives a chance to quickly view and perhaps a grab accessories while a customer is waiting to pay for the purchase. The hot shop display will be in platinum area which is in front of the mannequins. The mannequins’ designs and display products will change seasonally. Furthermore, the mannequins will stand in three meters inside of the store.

14

Merchandising Technique Base’s products are mostly displayed though horizontal and coordinated merchandising. Base uses horizontal method for the core products such as t-shirts. Design patterns of the t-shirts is framed on the walls, thus, it will attract customers to stop and outlook the popular bestselling products with high turnover.

For the coordinated merchandising it is important that the collection or themes are convened together to create a consistent look. For instance, Base displays jackets, sweaters, trousers and shoes all together in same place thus, the looks are designed to give the consumer inspiration.

Digital Base offers free Wi-Fi connection in store and installed IPads, Mac on the desks to assist customers to search their wanted goods online. Our brand introduces eco-labeling and QR codes are printed on each product label. These labels are made to inform customers about where the product is manufactured, what material is used, and an eco-label rating. Customers are able to scan QR codes that are provided on the eco-label to see the above information.

15

References Books 1. Atwal,G and Bryson,D (2014). Luxury Brand in Emerging Markets (1st edition). Basingstoke: Palgrave Macmillian . pp 49-70. Google Books Online. Available at: http://books.google.co.uk/ books?id=0LA5AwAAQBAJ&pg=PA70&lpg=PA70&dq=Stoleshnikov+Lane+luxury+street&source=bl&ots=g_gsnY_JZG&sig=WnEh4ipLG3TkZrbRjc5K3f7vldA&hl=en&sa=X&ei=IaZeU-WwNsnVObipgLgP&ved=0CDoQ6AEwAg#v=onepage&q=moscow&f=false [Accessed 14 May 2014].

2. Cant,M (2005). Introduction of Retailing (1st edition). Google Books Online. pp71. Available at: http:// books.google.co.uk/books?id=EiCYPjzbyDsC&pg=PA71&lpg=PA71&dq=narrow+and+shallow+assortment+brand&source=bl&ots=tJPBijMYsq&sig=JeGNQnTTX-pS2HoCp9CUNVdqkgE&hl=en&sa=X&ei=kX1mU527JIPY7Aa5iIGoAw&ved=0CDIQ6AEwAQ#v=onepage&q=narrow%20and%20shallow%20assortment%20brand&f=false.

3. Hines,T and Bruce,M (2007). Fashion Marketing Contemporary Issues (2nd edition). Oxford: Elsevier. p278-294 4. Jackson,T and Shaw (2009).Fashion Marketing (1st edition). Basingstoke: Palgrave Macmillian.

5. Jackson,T and Shaw (2001). Fashion buying & merchandising management (1st edition). Basingstoke: Palgrave Macmillian.

6. Kent,T and Omar,O (2003). Retailing. Basingstoke: Palgrave Macmillian.

Journals 1. Moore, M (2007). Flagship stores as a market entry method: the perspective of luxury fashion retailing.

European Journal of Marketing. 44(1.2) p139-161.

Available at: http://www.emeraldinsight.com/journals.htm?articleid=1839005 [Accessed 14 May 2014].

2. Roberts, H (2005).Auchan’s entry into Russia: prospects and research implications. International Journal of Retail & Distribution Management. 33(1) p 49-68.

Available at:http://www.emeraldinsight. com/journals.htm?articleid=1464112.

[Accessed 14 May 2014].

3.Lorenz,H and Hakkinen, L (2006). Analysis of the Russian retail sector Prospects for-border M&A activity. Baltic Journal of Manegement. 1(2) p148-168. Available at: http://www.emeraldinsight.com/journals.htm?articleid=1550748 .

[Accessed 14 May 2014].

4. Moore,M and Birtwistle,G (2004). The Burberry business model: creating an international luxury fashion brand. International Journal of Retail & Distribution Management. 32(8). p412-422. Available at: http://www.emeraldinsight.com/journals.htm?articleid=857487 [Accessed 14 May 2014].

5. Moore,M and Birtwistle,G (2005).The nature of parenting advantage in luxury fashion retailing – the case of Gucci group NV.International Journal of Retail & Distribution Management. 33(4). pp 256-270.

[Accessed 14 May 2014].

6. Moore,M (2010). Flagship stores as a market entry method: the perspective of luxury fashion retailing.

European Journal of Marketing. 44(1.2) pp139-161.

[Accessed 14 May 2014].

Paper,W (2011). Going Global? The benefit and challenges of international location planning. Available at: http://www.ekonomi.gov.tr/upload/bf09ae98-d8d3-8566-4520b0d124e5614d/fatih_akkaya.pdf [Accessed 14 May 2014].

16

Lectures Mackie,P (2014). Internationalization and growth from ARTD2042. Week20. Available at Blackboard.

[Accessed 14 May 2014].

Mackie,P (2014). Retail Location Strategies & Flagship store from ARTD2042. Week24. Available at Blackboard. [Accessed 14 May 2014].

Mackie,P (2014). Merchandise Development & Planning from ARTD2042. Week25. Available at Blackboard. [Accessed 14 May 2014].

Mackie,P (2014). Franchising and Licensing from ARTD2042. Week31. Available at Blackboard. [Accessed 14 May 2014].

Articles Caroll,C and Kennealy,R (undated). FCUK it - there go our customer. Trouble ahead for retailer French Connection. [Accessed 14 May 2014].

Jianguo,W (2013). The International Expansion Strategies for Giordano: A Case Study from Chinese Clothing Industry. Available at: http://www.scienpress.com/Upload/AMAE/Vol%203_4_13.pdf . [Accessed 14 May 2014].

Moscow Monthly Climate Average, Russia (2014). Available at:http://www.worldweatheronline.com/Moscow-weather-averages/Moscow-City/RU.aspx [Accessed 14 May 2014].

17