The Idle Man- Reccomendations

N0646833 & N0602192 BA (Hons) Fashion Management FTMG30256 23 March 2018 Word Count: 3270

Business Improvement Report The Idle Man

Contents Executive Summary

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1.0 Introduction

1

2.0 Company Profile

2

2.1 About the Company

2

2.1 Product

3

2.2 The Idle Manual

3

2.3 Personal Stylist

4

2.4 The Idle Guide Store

4

2.5 Our Customer

5

3.0 Market Profile

6

3.1 Global Market Opportunity

6

3.2 Market Forecast

7

4.0 Situational Analysis

8

5.0 Review of Current Strategy

11

6.0 Business Improvement

12

6.1 Growth Strategy- Core Competencies:

12

6.2 Change Management Strategy:

13

6.3 Rationale

14 ii

6.4 Considerations and Risk Analysis 7.0 Financial Feasibility

15 17

7.1 Average cost of manufacturing 150 organic T-Shirts 17 7.2 Financial Statements

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7.3 Financial Overview of Current Position

23

8.0 Implementation

24

8.1 Recommendations: Three Horizons

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8.2 Five Year Implementation Plan:

24

8.3 Staff Recommendations:

25

9.0 Marketing Recommendations

26

10.0 Social & Civic Responsibilities

27

10.1 Triple Bottom Line:

27

11.0 Conclusion

28

References

29

Bibliography

32

Appendix

35

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List Of Figures Figure 1: Front Cover (theidleman.com, 2018).

Figure 2: The Idle Man Autumn Lookbook ’17 (theidleman.com, 2018).

Figure 3: The Idle Man Autumn Lookbook ’17 (theidleman.com, 2018).

Figure 4: The Idle Man Lookbook ’16 (theidleman.com, 2018).

Figure 5: The Idle Man Global Reach (Author’s Own, 2018).

Figure 6: The Idle Man Differentiated Product Positioning (Author’s Own, 2018).

Figure 7: The Manual (theidleman.com, 2018).

Figure 8: Personal Stylist (theidleman.com, 2018).

Figure 9: The Guide Store (theidleman.com, 2018).

Figure 10: Customer Infographic (Authors Own, 2018).

Figure 11: Brand Positioning Map (Authors Own, 2018).

Figure 12: Menswear Growth YOY (Mintel, 2017) Figure 13: Brand Imagery (Authors Own, 2018).

Figure 14: Core Competencies (Authors Own, 2018).

Figure 15: UK Map Figure 16: Risk Reward Analysis (Authors Own, 2018).

Figure 17: Average Cost of Manufacturing a T-shirt (Discovery Knitting Leicester, 2018).

Figure 18: The Idle Man own brand products (TheIdleMan.com, 2018).

Figure 19: Three Horizons Model (Authors Own, 2018).

Figure 20: Staff Recommendations (Authors Own, 2018).

Figure 21: The Triple Bottom Line (Zeis, 2016).

Figure 22: The Triple Bottom Line (Van Den Berg, 2017).

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List of Tables Table 1: SWOT Analysis (Authors Own, 2018).

Table 2: PESTLE Analysis (Authors Own, 2018).

Table 3: Cost of Manufacturing (Authors Own, 2018).

Table 4: SAFe CRITERIA (Authors Own, 2018).

Table 5: Cost of Production (Authors Own, 2018).

Table 6: Financial Opportunity (Authors Own, 2018).

Table 7: Current Product Mix (Authors Own, 2018).

Table 8: Product Mix Growth Strategy (Authors Own, 2018).

Table 9: Financial Statements (Authors Own, 2018).

Table 10: Balance Sheet (Authors Own, 2018).

Table 11: Capital & Reserves (Authors Own, 2018).

Table 12: Net Assets (Authors Own, 2018).

Table 13: Ratios (Authors Own, 2018).

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Executive Summary The purpose of this report is to create a five year business improvement plan for The Idle Man whist undertaking a company analysis through reviewing its current strategies and analysing the market considerations. This includes a situational analysis. The situational analysis was undertaken in relation to the global menswear market by looking at key macro and micro market trends. This data was used to identify an area of improvement within the business and propose a strategy of improvement. A feasibility and implementation plan was included to ensure successful integration into the business while maintaining the brands core competencies.

The Idle Man was started by Oliver Tezcan, the former Head of Menswear Buying at ASOS. The Idle Man was launched because Tezcan wanted to highlight to young men that being stylish shouldn’t be difficult.

Since its inception, it has seen rapid growth, with the site now attracting close to over 3.7 million unique visitors a month (Similarweb, 2018).

Although gross profit margins are still low, in the last financial year, the gross profit margin increased by 87.5%, from 16% gross margin in 2016/17 to 30% in 2017/18. When compared to the previous year, it indicates a steady growth, increasing by 128.6%, from 7% gross margin in 2015/16 to 16% in 2016/17.

This provided The Idle Man with a 116.273% increase in net revenue. From this, it is noted that year-onyear, gross profit margins are continuing to increase, indicating that The Idle Man has the gross profit to reinvest into UK production. However, it is clear that The Idle Man does not have the liquidity and flexibility to grow aggressively in a new market, yet.

It is advised that The Idle Man build on the strategic capabilities already established, integrating the current growth strategy to increase own label mix to 50% by 2018, which will ensure gross margin reaches 35% by 2018, with the intension to bring manufacturing of such products to the UK (Manchester, UK) to coincide with already established Radial warehouse in Manchester.

By moving production of The Idle Man’s own label collection to Manchester, it will help the brand merge its production and fulfilment operations, ensuring problems are dealt with quickly and efficiently, helping to deliver a smoother consumer purchase journey. Manchester is on average 51% cheaper than London (Expatistan: Cost of Living Comparisons, 2018), along with providing a smoother customer purchase journey, The Idle Man’s UK based supplies will be local to Manchester, helping to further minimise lead times in a cost-effective manner.

To conclude, through extensive analysis of The Idle Man’s current financial position and their current strategic objectives, it is recommended that The Idle Man move sourcing and production to the UK for their own label collection. Market research highlights that The Idle Man’s UK and international consumers want products to hold the ‘Made in Britain’ label.

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1.0 Introduction This report will examine the male fashion market within the UK and internationally, focusing on the male etailer The Idle Man and its competitors.

This report will concentrate on the growth of The Idle Man’s own label collection, evaluating the feasibility and advantages of moving sourcing and production to the UK, helping to expand their market share over the next 5 years.

Figure 2: The Idle Man A/W 17 Lookbook ’17(theidleman.com,2018)

Figure 3: The Idle Man Autumn Lookbook ’17 (theidleman.com,2018) 1

“We’re an online men’s destination that champions style over fashion.”

Figure 4: The Idle Man Lookbook ’16 (theidleman.com,2018)

2.0 Company Profile 2.1 About the Company The emergence and entrance of new entrants and start-ups that have engaged in e-commerce have changed the way consumers now shop (Hines, 2001). The Idle Man is an online destination for all of men's fashion needs. It’s an E-Commerce store for twenty-something fashion-savvy men with over 20,000 daily active customers. The Idle Man exists to make young men look good with minimum hassle.

With a focus on timeless staples and respected brands, The Idle Man looks to bring a considered edit of no-nonsense clothing to make men’s shopping experience straight forward and stress free (Brown, 2018).

The Idle Man was started by Oliver Tezcan, the former Head of Menswear Buying at ASOS. It was launched as a way to show young men that being stylish shouldn’t be difficult. Since its inception, it has seen rapid growth with the site now attracting close to over 3.7 million unique visitors a month (Similarweb, 2018).

Combining content and commerce has enabled The Idle Man Manual, the sites in house blog, to become one of the biggest mainstream fashion websites in the UK delivering both brand awareness and sales.

The Idle Man Manual boasts a wide range of topics for men to read about fashion, style advice, lifestyle and grooming.

Social media can be an important tool to drive businesses to connect to their customers faster and respond to their needs more efficiently (Granger, 2013).The Idle social handles were established to do just that and has grown to have more than 150,000 unique followers.

Figure 5: The Idle Man Global Reach (Author’s Own, 2018)

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2.1 Product The Idle Man initially started with a variety of ‘streetwear’ style brands, however since sales demonstrated that the higher end products were performing the best (Outlaw, 2016), they have recently adapted their brand portfolio to include more premium brands including Fred Perry, Lacoste, Barbour and Levi in order to provide customers with what they appear to want. It also has its own fast growing own label. The current product mix is 80% brands and 20% own label. The brand is consciously moving towards giving dominance to own label over brands with a 50% - 50% mix by the end of 2018.

Figure 6: TIM Differentiated Product Positioning (Author’s Own, 2018)

2.2 The Idle Manual The Idle Man has a dedicated men's fashion blog that focuses solely on men’s style and fashion, where you’ll find opinions on style, music and life. The blog receives over three million unique visits every month and is one of the biggest driving force in the success of The Idle Man. The blog is one of the main marketing channels that brings in the most traffic to the website.

Figure 7: The Manual (theidleman.com,2018) 3

2.3 Personal Stylist The Idle Man also offers a free personal styling service for men in the market who are in for some advice (Anon, 2017B). The whole process involves three steps, where an interested customer can contact our personal stylist by filling out the appropriate form on the website. He then receives his very own stylist and after a series of questionnaire, a style is picked for our customer and based on this a range of clothes are sent to him for free. The customer is free to try it on and decide whether he likes the look or not and can send back anything he doesn’t like free of charge.

Figure 8: Personal Stylist (theidleman.com,2018)

2.4 The Idle Guide Store The Guide Store is a unique shopping experience that helps men find the clothes they want in the easiest possible way.

Figure 9: The Guide Store (theidleman.com,2018) The first physical store allows men to browse some of the company’s most popular products, whilst receiving personal style advice from a dedicated team of experts. Consumers are able to try pieces on, order them, and have them delivered to a home or office address, or in store to be collected.

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2.5 Our Customer This infographic identifies The Idle Man customer and their buying behaviour and what influences their purchase decision.

Figure 10: Customer Infographic (Author’s Own, 2018) 5

3.0 Market Profile The brand has an estimated net value of 2.2 million as of 2017 and achieved it’s first ‘break even’ month in November 2017 after just four years’ operating (Brown, 2018). This comes as a milestone for menswear e-commerce as there are only a few retailers purely dedicated to menswear, consisting of The Idle Man and Jacamo (a plus-size specialist). Otherwise men would have to purchase accessible fashion from predominantly women’s brands like (ASOS, Topshop/man, River Island and Zara) with brands like Boohoo and Missguided only just tapping into this market.

The brand is currently being funded by a diverse mix of crowd funders, found on Crowdcube.com, and outside angel investors like Foresight and Nottingham Pension Fund (Assetmatch, 2017).

Figure 11: Brand Positioning Map (Author’s Own, 2018)

3.1 Global Market Opportunity According to Drapers, the growth of the global menswear market will outperform womenswear by 2020 (Gheoghegan, 2017). Where menswear continues to grow faster than womenswear at 1.2%, a 0.2 percentage point rise on the year before, while womenswear saw a 0.3 increase to 0.9% in 2017 (Scholl, 2018). Therefore, this provides enough incentive for retailers to focus on developing and expanding their menswear collections (Keynote, 2015).

It is expected that by 2019, 26% of menswear sales in the world will be made online (Passport, 2016) as male smartphone ownership has risen from 76% in September 2015 to 82% in 2017. Younger men are being overtaken by men aged 25-44 to be the most likely to have a smartphone while significantly more likely than their female counterparts of the same age to have used their smartphones for shopping for fashion. This significant rise in smartphone ownership across the globe shows how much online retailers can benefit from this trend (Mintel, 2017). The average return rate for menswear is lower than womenswear, with 18% return rate for menswear vs 40% for womenswear (Euromonitor, 2016). For menswear retailers, this is very positive.

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3.2 Market Forecast While the menswear market only contribute 27% of the total clothing market, it is almost doubling the growth rate of the women’s clothing market with estimated sales reaching £14.5 billion in 2016.

Figure 12: Menswear Growth YOY (Mintel, 2017)

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However, even with this kind of unprecedented rate of growth, the sales growth for menswear is declining year on year.

Sales have shown a significantly weaker 2016 when compared to 2015 as younger men are prioritising how they spend their money as they would rather focus on creating ‘experiences’ and spending their money on leisure and save money rather than purchase clothing (Mintel, 2017)

4.0 Situational Analysis In order to gain a better understanding of the macro and micro environmental factors affecting the brand, a PESTLE and SWOT analysis was undertaken.

A SWOT analysis provides a framework to collate and review investigative information. The purpose of a SWOT is to audit internal and external strengths and weakness of the brand, identify external threats and monitor potential opportunities within the marketplace. (Posner, 2015)

STRENGTHS -

The menswear market is not as saturated as womenswear. Especially online where there are few brands that offer men fashion and style advice at the same time.

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Menswear has a much lower returns rate at 18% compared to womenswear which had a returns rate of 40%.

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High profit margin; where The Idle Man made a 50% profit margin on brands and 65% on own label products.

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Difficult barriers to enter in the menswear e-commerce, as brands like vans timberland like to work with certain brands to show exclusivity.

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No clear cut price competition in the market.

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The Idle Man Manual is the 3rd most visited menswear blog in the UK and receives three million unique visits every month.

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Only 22% of The Idle Man revenue comes from paid marketing. Therefore, the return on ad spend (ROAS) is quite high.

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80% of the traffic to the website comes organically via content marketing. This is via the blog and all the Idle social media handles.

WEAKNESSES

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The menswear industry has a much lower returns rate than the womenswear industry. However, in the past few months The Idle Man’s returns has steadily been increasing and is at its highest at 19%. This could be attributed to various factors like sizing issues, incorrect item, delayed delivery, etc.

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The shipping rates have are still high and do not offer year round shipping packages that could entice shoppers to shop with The Idle Man more.

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With 20% of revenue coming from affiliate channels, The Idle Man places too much dependence on affiliate marketplaces like menlook, trouva, lyst, etc. This has proven to be disastrous due to the unstable nature of these marketplaces.

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The company has a fast growing own label. However the brand only products are a mere 20% of the product mix whereas the brands boast 80% of the company’s product mix.

OPPORTUNITIES -

The Idle Man could develop an independent app to allow customers to shop online more easily.

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A second guide store in Manchester could prove to be beneficial as the awareness of the company is quite low in these leading cities in the UK.

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The personal stylist scheme could be optimised to gain more shoppers to shop with The Idle Man.

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The Idle Manual is the third most followed menswear blog in the UK, with the traction increasing month on month. The manual redirects traffic to the store and poses as one of the biggest opportunity to grow for the company.

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The Idle Man email database boasts more than 150,000 unique subscribers.

This could be optimised by personalisation and selective targeting to increase sales and customer retention.

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Working with influential models/ influencers would promote a unique and edgy company image. This could influence millennial to shop with the brand more and also to increase awareness of the brand.

THREATS -

Competition from leading online businesses like eBay and Amazon affects smaller business especially when it comes to determining price.

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Macro factors like Brexit affect the company-supplier relationship, this could adversely affect the company.

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Being a pure e-commerce business, the company doesn’t have any bricks and mortar stores. With the exception of the guide store which mostly works as an extended version of the store.

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Low barriers to enter the e-commerce market, as anybody with an access to a computer could set up an online business. People can sell items via Facebook or eBay without setting up their own websites.

Table 1: SWOT Analysis of TIM (Author’s Own, 2018)

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Political

After Brexit, there was deviation in the pound, with depreciation of the pound hitting the lowest it’s been in 7 years when compared to the dollar.

In 2014, the UK fashion industry contributed £26billion to the UK economy with

Economic

exports reaching £7.5billion. However, after Brexit, import and export costs increased which has led to an increase in taxes and shipping fees. With the end of free trade, foreign investors may be put off by investing into the UK fashion industry which may restrict the growth of small/ medium sized UK fashion businesses. However, by manufacturing in the UK, The Idle Man can avoid import charges and taxes completely. With an increased cost of manufacturing in the Far East and Asia, along with an increase in oil prices, bumping up the prices of flights, the cost of outsourcing to other countries has increased too much for The Idle Man to achieve economies of scale.

Social

Sourcing, manufacturing and expanding in the UK will provide more jobs which has societal benefits by helping to support UK businesses. By moving production to the UK, The Idle Man can have a transparent supply chain, avoiding the risk of labour abuse in foreign countries, along with the ability to react to customer demands quicker with reduced lead times of only 4 weeks.

Technological

Manchester is the epicentre for the UK’s largest manufacturing and engineering cluster. The Universities in Manchester have a track record of working with industry to deliver innovation in major industrial clusters. This provides an opportunity for manufacturers to take advantage of new and emerging technologies, enabling them to innovate and create ‘smart factories’.

Legal

By manufacturing in the UK, The Idle Man will have stricter corporate and social responsibilities to ensure they comply with UK laws. For example, when choosing a factory to use for the production of the own label collection, ensuring the factory is Sedex Members Ethical Trade Audit (SMETA) approved will ensure the factory is fully compliant to ethical trade laws (Gould, 2014).

Environmental

The Idle Man will have a reduced carbon footprint by sourcing and manufacturing in Manchester, UK and the surrounding area.

Table 2; PESTLE Analysis (Author’s Own, 2018)

Please see Appendix A for a full PESTLE analysis on broader factors.

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5.0 Review of Current Strategy In order to formulate a coherent business improvement plan, it is crucial to review the current strategy of The Idle Man. In order to do this an Ansoff Matrix was undertaken to get a better understanding of the current strategy and this has been highlighted below: This includes providing a differentiated product positioning particularly by growing the own label and by establishing a strong customer relationship by “providing a hub of knowledge, as well as a place to find menswear online” (The Idle Man, 2018) This involves penetrating the market by product development. By expanding the brands own product range within their existing market by increasing the brand’s current product ratio from 80:20, with only 20% of the products being The Idle Man own label to 50:50 by the end of 2018.

“‘Our brand portfolio is very strong, but with the best will in the world we don’t sell anything that you couldn’t buy anywhere else.

Own label is the only way we feel you can really build a lasting emotional connection with the customer” (Tezcan, 2018).

The brands mission statement is simple: Style Made Easy. This has been achieved by “curating brands with the help of the authoritative style blog and industry leading service proposition through the best experience of The Idle Man website” (Tezcan, 2016).

Tezcan believes the natural progression for the brand would be to open their first ever guide store in Clerkenwell, London. It is a place where customers can browse and try on clothes with the help of a personal stylist to enhance their shopping experience and make it easier for them. After the success of the first store, the brand are now looking to tap into new markets and open a second guide store in Manchester. This concept helps the brand sell more of the same products and services in a new market, possibly help them achieve increased brand awareness throughout the country and help penetrate the continually growing menswear market.

The brand diversifies from its competitors through the creation of ‘The Manual’ by becoming an authoritative voice for menswear. This is done by helping men in their purchase journey. The Manual runs alongside the site with a “how to” feature and style advice that attracts roughly two million hits a month. The manual traffic started turning into revenue, with the biggest country for traffic on the blog coming from the US. Around 15-20% of revenue comes from the US with no additional marketing.

The brand decided to invest and launch its first international site for the US market in July 2017. The site offered localised pricing, free returns, free delivery over $75, more cost effective expedited delivery and location-specific blog content. As a result the brand has seen conversion rates soar from the US market and has risen by 50% which converts to 25% of overall sales. The brand identifies expanding into similar markets like France, Germany and Australia as natural opportunities.

Figure 13; Brand Imagery (theidleman.com,2018) 11

6.0 Business Improvement By conducting thorough primary and secondary research, along with providing an analysis of The Idle Man’s current strategy, the business improvement will be the movement of production to the UK for The Idle Man’s own label collection.

It is advised that The Idle Man build on the strategic capabilities already established, integrating the current growth strategy to increase own label mix to 50% by 2018, which will ensure gross margin reaches the predicted 35% by 2018, with the intension to bring manufacturing of such products to the UK (Manchester, UK) to coincide with already established Radial warehouse in Manchester.

6.1 Growth Strategy- Core Competencies: “The core competencies model is a strategic tool to determine the unique assets that can be used to create and offer value to consumers” (Berg, Pietersma and Assen, 2009).

After careful evaluation of The Idle Man’s competitors, it is reasonable to conclude that The Idle Man’s core competencies are the cause of differentiation from their competitors. This ensures competitive advantage, justifying their continued growth over the four years since launching.

The Manual - The manual is a men’s fashion blog which receives over three million unique visits every month. It is one of the biggest driving forces behind the success of The Idle Man.

The Guide Store- A unique shopping experience which helps men shop in the easiest way possible.

‘Made in Britain’ label- Many potential competitors of The Idle Man are starting to use UK manufacturing. For example, over half of Boohoo’s products are from UK manufacturers and only a quarter coming from overseas factories (Sullivan, 2017).

Figure 14: Core Competencies (Author’s Own, 2018)

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6.2 Change Management Strategy: Adaptation Strategy will be used within this business plan as it is applicable to a change in methods of production. However, there will be an element of Reconstruction Strategy built into the change management strategy as pricing strategies will be reviewed and changed, to maximise revenue, due to the increased cost associated with UK production.

Adaptation Strategy is appropriate to this business plan as the advised improvement strategy is building on the current growth strategy of The Idle Man. There will be no fundamental changes to management or organisational culture, with change being gradual and in line with The Idle Man’s current business model.

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6.3 Rationale Why choose UK production?

“Direct manufacturing costs in the UK have improved by up to 10 percentage points compared to other Western European countries thanks to stable wages and improved productivity over the past decade” (Wright, 2014).

With the increased cost of sourcing from the Far East and China, it is unsurprising that more British retailers are bringing manufacturing back to the UK, like Clarks and Boohoo. Boohoo source 50% of their product from UK factories which provides them with the ability to react quickly to customer demand and avoids the unpredictability of foreign currency rates (Hills, 2018).

Figure 15: UK Map (CKLR, 2018) “The growing Chinese middle class don’t want to buy product made in China anymore, and the customer is getting more savvy to ‘British brands’ that don’t actually make in Britain. That, together with an increasing interest in sustainable and transparent supply chains, and a demand for faster turnaround of product, makes UK manufacturing once more a very viable prospect.” (Sholl and Geoghegan, 2017).

Advantages of UK Manufacturing: -

Shorter lead times. No need to factor in extra shipping times. (4 weeks average).

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Can limit stock due to the ability to reach customer demands quicker.

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No import charges. Delivery costs will be reduced due to avoidance of customs.

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Increasing prices in China and Far East.

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UK manufacturing protects against the unpredictability of foreign currency rates.

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Increasing oil prices are increasing the cost of flights.

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Production costs are higher in the UK but won’t fluctuate. UK factories will produce smaller quantities of product.

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Greater transparency of supply chain.

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Eradicate problems such as bad working conditions and child labour.

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‘Made in Britain’ adds value to products.

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Ability to be on hand to check quality and control any problems.

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Communication will be easier due to no language barrier and time zones.

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Why Manchester?

The Idle Man’s commerce services have been outsourced by the brand to Radial. Radial handles all aspects of the fulfilment operation; including inbound, outbound, returns, packaging and value-added services from its UK and German based warehouses, international transportation, and customer care on behalf of The Idle Man from its UK based operations centre in Manchester.

By moving production of The Idle Man’s own label collection to Manchester, it would help the brand merge its production and fulfilment operations, ensuring problems are dealt with quickly and efficiently, helping to deliver a smoother consumer purchase journey. Manchester is on average 51% cheaper than London (Expatistan: Cost of Living Comparisons, 2018), enabling cheaper production prices, along with a smoother customer purchase journey. The Idle Man’s UK based suppliers will be local to Manchester, helping to further minimise lead times in a cost-effective manner.

Advanced Manufacturing Manchester innovates. This region is the epicentre for UK’s largest manufacturing and engineering cluster. Manchester is now ready for the fourth industrial revolution - The Industrial Digitalisation phase which includes taking digital to a whole new level to drive efficiency and productivity through the development and deployment of technologies such as augmented and virtual reality, robotics, 3D printing as well as artificial intelligence which can help increase national productivity (Begum, 2017).

Given the fourth Industrial Revolution is about integrating the digital with the physical traditional sectors.

Manchester offers the complete package for brands and especially start-ups when it comes to manufacturing and advanced engineering in the online sector. From R&D to architectural services, to assembly, distribution and technical consultancy, the companies are well-established across the whole product life cycle.

The Universities in Manchester have a track record of working with industry to deliver innovation in major industrial clusters. This provides opportunity for manufacturers to take advantage of new and emerging technologies enabling them to innovate and create ‘smart factories’.

6.4 Considerations and Risk Analysis •

The UK does not have a surplus supply of trained, skilled workers which needs addressing to ensure garment manufacturing can continue to a high standard within the UK (Gould, 2014).

•

90% of retailers use third party agents to manage their factories and are unaware of the working conditions within the UK factories (CRAVEN, 2017).

•

Many UK factories cannot cope with the demand for high street volumes (Gould, 2014), however, The Idle Man will not be ordering as higher volumes as that of retail giants such as ASOS.

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Risk Reward Analysis Model

The risk reward analysis identifies the rewards of strategic options and the risk associated with the strategy (Berg, Pietersma and Assen, 2009).

Moving the manufacturing of the own label collection is high risk due to the 26.4% increase in manufacturing prices when compared to the Far East and the fewer number of garment factories operating in the UK. However, if successful, the reward for moving manufacturing to the UK will be higher gross profit margins which can be reinvested into the business, ensuring international expansion and business growth.




Figure 16: Risk Reward Analysis (Authors Own, 2018).

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7.0 Financial Feasibility 7.1 Average cost of manufacturing 150 organic T-Shirts

Figure 17: Average cost of manufacturing a T-shirt (Discovery Knitting Leicester, 2018)

Country of Manufacture Far East

Cost of Production £4.24

Shipping and Duty £1.75

Hidden Costs

£8.95

UK

£2.76

Total Cost £7 £8.95

Price Difference

£1.95

Table 3: Cost of Manufacturing (Author’s Own, 2018) Average manufacturing cost per T-shirt includes cost of fabric, cutting, stitching, labelling, pressing, packing, factory overhead and margin.

Hidden Costs of manufacturing overseas include: -

Flights to meet with factory.

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Cost of buying through an agent.

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Courier bills for fit samples.

“I’ve heard of one brand who had to fit a T-shirt 17 times with a Chinese factory in order to get it right. At £54 a time for DHL to courier the sample over from the Far East that amounted to hundreds of pounds in sampling costs for just one T-shirt” (Hills, 2018).

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Once the extra and hidden costs for manufacturing overseas are added onto the initial £4.24 per top, the cost per top can be estimated as £7 per top, resulting in a £1.95 cost difference between manufacturing in the Far East and in the UK.

With a 60% average profit margin for retailers and an average sell through of 60% for full price garments manufactured in the Far East and Asia, along with the average 12-week order time, it is averaged out that 40% of garments produced are non-profitable. This isn’t comparable with the 80% average sell through of garments made in the UK, with only a 4-week average order time. With the UK having higher wholesale prices but only 20% of product reaching the sale, The Idle Man will receive more profit for manufacturing in the UK and reach higher margins. Other hidden costs, such as courier bills for fit samples will be minimised due to the close contact with UK manufacturers, avoiding costly sampling and production mistakes, minimising risks.

“It is not unheard of for UK-made brands to have a sell-through rate of 100%” (Hills, 2018).

Discovery Knitting, Leicester provided figures for manufacturing a T-shirt in the UK. Breakdown of UK cost for one short sleeve top with an order size of 150: Fabric- £3.15 100% Organic Combed Cotton Single Jersey dyed optic white 170/175gsm using a metre of fabric per t-shirt and buying 90 metres of fabric from stock.

Cutting- 60p Based on cutting 150 T-shirts over 4 sizes- S/M/L/XL. Stitching- £4.00 Price per garment if it is a straight forward style. Includes labour costs and factory overheads.

Press, Trim and Kimble- 65p the cost for the final finishing and inspection of the T-shirt and the application of a swing tag.

Individual bag and barcode- 45p Packing the garment and getting it read to go to stores.

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•

•

•

• • Suitability •

•

•

• •

Moving production to the UK will be a profitable strategy in the long run as it will increase net revenue and gross profit margins.

•

The Idle Man’s Sundry Reserves is a feasible option that the brand has to reinvest into UK production.

The menswear market is a high growth sector, with a growth of 4.5% per annum, compared to 3.7% for womenswear (Asset Match, 2018).

Over the past three years The Idle Man site has had an average growth rate of 84% year-on-year (Santamaria, 2017), with a 102% growth over the last financial year (Crowdcube Explore, 2017).

In the last financial year, The Idle Man’s gross profit margin has increased by 87.5%.

Acceptability

• Feasibility

Statistics compiled from primary research show that 90% of The Idle Man consumer want products ‘Made in Britain’ (typeform, 2018).

42% of male shoppers agree it is worth paying more for clothes made in Britain (Make it British, 2018).

“In recent years, we’ve seen a rising interest in the “British Made” label across the fashion sector” (Hendriksz, 2016).

66% of men believe that clothing ‘Made in Britain’ has better quality (Make it British, 2018).

Over 60% of consumers said that promoting clothing as ‘Made in Britain’ would give them greater trust in an online retailer (Make it British, 2018).

After Brexit, a weaker pound has led to an increased price in outsourcing overseas production, along with an increased cost of import tariffs and trade barriers (Hendriksz, 2016).

Lower rates, caused by a weaker pound, creates a good situation for investing in UK manufacturing (Hendriksz, 2016).

Re-shoring manufacturing ensured a focus on product quality, the ability to bring new lines to market quickly and smaller delivery lead times (Gould, 2014).

Increased popularity in ‘Made in Britain’ brands within the overseas market (Gould, 2014).

•

•

Table 4: SAFe CRITERIA (Authors Own, 2018).

19

Example of improvement implementation Cost of Production of Organic Own Label T-shirt: Country of Manufacture Far East

Cost Price

UK

Mark Up

Revenue

Profit

Margin

£4.24

60%

£6.78

£2.54

37%

£8.95

60%

£14.32

£5.37

37.5%

Table 5: Cost of Production (Authors Own, 2018).

Financial Opportunity for UK Manufacturing of Organic Own Label T-shirt: Country of Manufacture Far East

Volume Sold

UK

Price

Revenue

Profit

100

£6.78

£678

£254

100

£14.32

£1432

£537

Table 6 Financial Opportunity (Authors Own, 2018).

Current Product Mix: 2014-2017

Current Margin

Current SKU’s %

Current SKU’s

Own Label

30%

20%

90

Brands

30%

80%

360

Table 7: Current Product Mix (Authors Own, 2018)

Product Mix Growth Strategy: 2018

Margin

SKU’s %

SKU’s

Own Label

36%

50%

600

Brands

36%

50%

600

Table 8: Product Mix growth Strategy (Authors Own, 2018) % Increase of price of production if moved from the Far East to the UK = 26.4% The current price points for The Idle Man own label T-shirt: Ranges from £6.00- £18.00.

“Retail prices for own brand currently range from £6 for a T-shirt and £350 for a shearling jacket, but are edging up as the business focuses more on the label, with quality also improving” (Brown, 2018).

20

Figure 18: The Idle Man own brand products (theidleman.com, 2018)

7.2 Financial Statements 2014/2015

2015/2016

2016/2017

2017/2018

2018/2019

Net Revenue

£496,051

£998,499

£2,159,483

£4,362,625

£8,293,497

COGS

£537,630

£923,701

£1,814,597

£3,036,663

£5,269,402

Gross Margin %

-8%

7%

16%

30%

36%

Marketing Costs

£553,830

£525,795

£481,282

£448,476

£448,476

Staff Costs

£425,266

£434,671

£546,232

£535,392

£535,392

Other Costs

£599,475

£546,566

£501,126

£550,997

£680,926

Total Overheads

£1,578,572

£1,507,031

£1,528,640

£1,534,865

£1,664,795

Operating Profit

(£1,620,151)

(£1,432,234)

(£1,183,753)

(£208,903)

£1,359,300

Table 9: Financial Statements (Authors Own, 2018) Balance Sheet

2014

2015

2016

Cash

145.25K

406.15k

161.38k

Stock

1.17k

447.81k

537.39k

Tangible Accounts

23.65k

19.74k

11.07k

Total Current Assets

159.64k

905.88k

823.83k

Total Current Liabilities

24.65k

436.39k

429.16k

Total Fixed Assets

23.65k

19.74k

11.07k

325.22k

325.22k

Total Long Term Finance Trade Creditors

24.65k

436.39k

429.16k

Trade Debtors

13.23k

51.93k

125.07k

0

Table 10: Balance Sheet (Authors Own, 2018) 21

2014

Capital & Reserves Profit & Loss Account Reserve Called up share capital

-21.36k

Shareholder Funds Sundry Reserves

2015

2016

-1.8m

-3.28m

1.98k

2.67k

158.64k

164.02k

80.52k

179.2k

1.97m

3.36m

800

Table 11: Capital and reserves (Authors Own, 2018)

2014

2015

2016

Net Assets

158.64k

164.02k

80.52k

Net Worth

158.64k

164.02k

80.52k

Total Assets

183.29k

925.63k

834.9k

Total Liabilities

24.65k

761.61k

754.37k

Working Capital

135k

469.49k

394.68k

Table 12: Net Assets (Authors Own, 2018)

2014

2015

2016

Current Debt Ratio

0.15%

2.66%

5.32%

Current Ratio

6.48%

2.08%

1.92%

Equity In Percentage

86.6%

17.7%

9.6%

0%

198.3%

403.9%

6.42%

1.04%

0.66%

0.15%

4.64%

9.36%

Ratios

Gearing Liquidity Ratio Or Acid Test Total Debt Ratio

Table 13: Ratios (Authors Own, 2018)

22

7.3 Financial Overview of Current Position A strategic analysis of The Idle Man’s current financial position has been performed to assess the ability to implement the recommended business improvements. CEO Oliver Tezcan reported The Idle Man reached its first “break even” month in November 2017, expecting 2018 to be profitable for the first time (Brown, 2018). The menswear market is a high growth sector, with a growth of 4.5% per annum, compared to 3.7% for womenswear (Asset Match, 2018). Over the past three years, The Idle Man site has had an average growth rate of 84% year-on-year (Santamaria, 2017), with a 102% growth over the last financial year (Crowdcube Explore, 2017), achieving a net revenue of £4,362,625 in 2017/18 (Asset Match, 2018).

Although gross profit margins are still low, in the last financial year, the gross profit margin increased by 87.5%, from 16% gross margin in 2016/17 to 30% in 2017/18. When compared to the previous year, it indicates a steady growth, increasing by 128.6%, from 7% gross margin in 2015/16 to 16% in 2016/17.

This provided The Idle Man with a 116.273% increase in net revenue. From this, it is noted that year-onyear, gross profit margins are continuing to increase, indicating that The Idle Man has the gross profit to reinvest into UK production. However, it is clear that The Idle Man does not have the liquidity and flexibility to grow aggressively in a new market, yet.

At the end the last financial year, The Idle Man’s own label collection contributed to 20% of the overall product mix and had generated 19% of the net revenue (see table _ net revenue was £2,159,483) (Crowdcube Explore, 2017), totalling £410,301.77 in net revenue.

However, if production were to move to the UK and retail selling prices increase by the recommended 111.2%, along with achieving the average 80% full price sell through rate, the aforementioned Business Improvement plan will provide an increase in gross profit which could be used within another business strategy. By increasing retail prices, The Idle Man’s own label collection will align more with the retail selling prices of the brands stocked, creating fluidity throughout the company.

Due to not having stock turnover figures, the rate of sale, sales forecast figures and revenue figures cannot be predicted. However, the data provided by Discovery Knitting, Leicester UK in chapter _ highlights the potential margins and gross profit achievable through UK production. The cost price of the production of a basic organic T-shirt in the UK is £8.95 which will have a 60% mark-up, resulting in a retail selling price of £14.32. This will achieve a 37.5% margin, increasing gross profit to £5.37 per T-shirt.

These figures alone provide crucial validation as to why The Idle Man should create ‘Made in Britain’ own label products.

In 2015, The Idle Man received funding through Crowd Cube to invest in content strategy and brand marketing (Crowdcube Explore, 2017). Marketing costs have decreased from £481,282 in 2016/17 to £448,476 in the last financial year. These statistics indicate customers are reacting well to the brand pushing marketing strategies.

23

8.0 Implementation 8.1 Recommendations: Three Horizons

Figure 19: Three Horizons Model (Authors Own, 2018).

8.2 Five Year Implementation Plan: Year 1- The first year will entail retaining profit that can be reinvested into UK production. Primary research will be conducted, extra staff will be hired and trained on the job whilst building the new range.

Suppliers and manufacturers will be found, pre-screening will be undertook and prices negotiated.

Year 2- The range will be built and manufacturing will have the green light to start. Products will be rolled out online and customer reactions will be closely monitored. If necessary, the trading and sourcing process will be updated and any products will be discontinued if they’re not reaching the predicted 80% full price sell through. It is expected that there will be high investment and low growth in the first year of manufacturing.

Year 3- Rapid growth is expected within the third year. There will be an increase in revenue generated and additional touch points will be introduced with steady investment to react to customer demands and as a result of analysis of buying behaviour.

Year 4- Continue generating revenue and reinvesting into the collection.

Year 5- This year will be used to retain profits. Analysis of customer buying behaviour will be carried out and identifying how to expand the collection further. If predictions are met, The Idle Man will use the fifth year to look into purchasing their own factory to continue growing the own label collection.

What to look for in a factory: •

Knowledge and experience.

•

Technical capabilities.

Good Reputation.

•

24

8.3 Staff Recommendations:

The Idle Man currently employ 4 full time buyers and 1 merchandiser; 2 buyers currently oversee the own label collection.

However, in order to manage with the increase in the own label collection, staffing will need to increase by 34.5%, employing an extra 2 buyers, 5 merchandisers and 2 members of staff to work on sourcing. The Idle Man currently employ staff with an average salary of £20,500. With an increase of 34.5% working within the own label collection team, overall staff costs will increase to £719,892 per annum.

Figure 20: Staff Recommendations, (Author’s Own, 2018)

25

9.0 Marketing Recommendations In order to raise awareness of the brands new Made In Britain Range, the 4 P’s were looked into to help create a viable & marketing campaign to spread awareness of the new range.

Product With the adoption of production of half of the own brand product mix to be manufactured in Britain, this would entail that 150 SKUs would be of products made in Britain.

Price The price has been an important factor when it comes to differentiating the brand from its competitors.

Where the product mix sits in between brands like Jacamo and luxury end brands like Mr Porter. The products are reasonably priced from £6 a t-shirt to £350 for a shearling jacket. But the prices would increase as the business focuses more on the label and being manufactured in the UK.

Place The made in Britain products would be sold on the website and the guide store. It would also be sold in all the markets the brand is currently in.

Promotion Marketing budget would be allocated to promote the Made in Britain lines. This would be spent s follows: •

Campaigns and look books would be shot to keep in line with the brand imagery with the central theme of made in Britain. A clear understanding of how we are sourcing the product from the UK would be emphasised as to connect emotionally with our customer.

•

A story would also be covered in The Manual explaining the benefits the new line would offer, outlining where the raw materials were sourced and where the products were manufactured.

•

This would be promoted on all our social media platforms which would include Facebook, Instagram and Twitter.

•

Banners and pop ups would be placed all over the manual and website to entice and make the consumer aware of the new lines.

•

Email campaigns would be used a key promotion tool as it is a key revenue maker for the brand.

With the look book as the central focus of the campaign which would be carried out vigorously for the first three weeks and then intermittently for three months after.

•

The lines would also be promoted in the guide store with the key themes focusing on the Made in Britain campaign where all the staff would promote it as our latest offering and show possible customers the value of Made in Britain products.

26

10.0 Social & Civic Responsibilities “Consumers have the ability to demand that the brands they buy make more responsible sourcing decisions, using their collective wallet as both the carrot and the stick. There is a lot of power at the top of the chain and as brands increasingly realise that consumers care deeply about this issue, real change will begin to happen” (Heale, 2013).

When choosing a factory to use for the production of the own label collection, ensuring the factory is Sedex Members Ethical Trade Audit (SMETA) approved will ensure the factory is fully compliant to ethical trade laws (Gould, 2014).

10.1 Triple Bottom Line: “The triple bottom line approach serves as a framework for brands to measure their economic performance aligned with their social and environmental performance” (Source.ethicalfashionforum.com, 2010).

The goal of any retailer is to find a balance between all three pillars of the Triple Bottom Line theory as it is a measure of business success. It creates value for the economy, the environment and in society.

People/ Social- Employment of more staff has impacts on employment rates, helping the economy and society. Ensuring The Idle Man offer good working hours, healthy and safe working conditions and no labour exploitation e.g. Farmers that supply the raw materials. By moving production to the UK, The Idle Man can avoid any potential ethical issues surrounding sweatshop labour in Asia which will help fuel The Idle Man’s strong reputation.

Planet/ Environmental- Minimising all environmental impacts from business operations. Bringing manufacturing and sourcing back to the UK, The Idle Man’s carbon footprint will reduce due to reduced transportation in materials and product delivery.

Profit/ Economic- Bringing manufacturing back to the UK, it will boost the economy of the manufacturing sector whilst contributing to the UK economy. The economy will also benefit from an increase in tax payers due to The Idle Man employing UK garment workers.

Figure 22: The Triple Bottom Line (Van Den Berg, 2017).

Figure 21: The Triple Bottom Line (Zeis, 2016).

27

11.0 Conclusion To conclude, through extensive analysis of The Idle Man’s current financial position and their current strategic objectives, it is recommended that The Idle Man move sourcing and production to the UK for their own label collection. Market research highlights that The Idle Man’s UK and international consumers wants products to hold the ‘Made in Britain’ label. This is due to the perceived quality and value associated with products made and sourced from the UK, linking to the consumer requirement of more sustainable sourcing and manufacturing. By moving sourcing and production to the UK, it should encourage more consumers to shop with The Idle Man and increase consumer loyalty, along with reducing carbon footprints. Prices will increase by 111.2%, however, research highlights consumers willing to pay more for products ‘Made in Britain’. The Idle Man will achieve higher profit margins through UK manufacturing, along with reducing costs of transportation, shipping and eliminating the cost of duties.

28

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32

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Moon, E. and Domina, T. (2018). Willingness to use fashion applications to purchase fashion products. [online] Journal of Textile & Apparel. Available at: http://file:///Users/kritikarachelstephen/Downloads/ 7929-33664-1-PB.pdf [Accessed 14 Mar. 2018].

Moran, G. (2018). Inside The Idle Man’s ‘try before you click’ store. [online] Drapers. Available at: https:// www.drapersonline.com/retail/inside-the-idle-mans-try-before-you-click-store/7020531.article [Accessed 14 Mar. 2018].

Santamaria, B. (2017). The Idle Man turns to crowdfunding again, targets international growth. [online] FashionNetwork.com. Available at: http://uk.fashionnetwork.com/news/The-Idle-Man-turns-tocrowdfunding-again-targets-international-growth,831880.html#.WqJ9C6jFLIV [Accessed 9 Mar. 2018].

Sholl, A. and Geoghegan, J. (2017). 'Big brands wanting to resume UK volume manufacturing should open their own factories'. [online] Drapers. Available at: https://www.drapersonline.com/news/comment/ big-brands-wanting-to-resume-uk-volume-manufacturing-should-open-their-own-factories/ 7022326.article [Accessed 8 Mar. 2018].

SimilarWeb. (2018). theidleman.com Traffic Statistics. [online] Available at: https://www.similarweb.com/ website/theidleman.com [Accessed 14 Mar. 2018].

Source.ethicalfashionforum.com. (2010). CSR and the Triple Bottom Line | The Ethical Fashion Source. [online] Available at: http://source.ethicalfashionforum.com/article/csr-and-the-triple-bottom-line [Accessed 14 Mar. 2018].

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Sullivan, C. (2017). Boohoo business model pushes fast fashion to step up a gear. [online] Ft.com.

Available at: https://www.ft.com/content/f1a24648-3a19-11e7-ac89-b01cc67cfeec [Accessed 12 Mar. 2018].

The AME Group. (2018). 5 Ways Technology can Help Lower Manufacturing Costs - The AME Group. [online] Available at: https://www.theamegroup.com/5-ways-technology-can-help-lower-manufacturingcosts/ [Accessed 8 Mar. 2018].

Tools4Management. (2018). Kay's Distinctive Capabilities Framework – A Study - Tools4Management. [online] Available at: https://www.tools4management.com/article/kays-distinctive-capabilities-frameworka-study/ [Accessed 12 Mar. 2018].

Trotter, C. (2018). Why The Idle Man turned to physical retail to build its brand - Insider Trends. [online] Insider Trends. Available at: https://www.insider-trends.com/why-the-idle-man-turned-to-physical-retailto-build-its-brand/ [Accessed 14 Mar. 2018].

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Appendix PESTLE Political: •

Corporation tax rate is 19% for company profits. This rate of tax levied by the government.

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At present, levels of corporation tax in the UK have been lowered in order to attempt to stimulate economic activity (Telegraph, 2012). However, there is no guarantee that the rate of corporation tax will be maintained.

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UK interest rates rose from 0.25 to 0.5%. Large firms may be able to borrow large amounts of money for the purposes of capital expansion at much lower rates than have been previously seen.

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High interest rates can also reduce consumer spending, because high rates make it more expensive for consumers to take out loans to buy things like cars and homes.

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Elasticity of demand. Depreciation of the pound depends upon the elasticity of demand.

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The UK political system based upon parliamentary democracy may be seen as providing retailers with a relatively low risk political environment in which to operate within. This makes the UK a relatively safe market for retailers to make further long term capital investments.

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“Geopolitical instability, terrorism, Brexit, and stalled trade deals will all increase a pervasive sense of uncertainty in the global economy” (McK-BOF, 2017 report).

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The industry has repeatedly been affected by issues such as workers' rights and child labour laws.

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Brexit will increase prices of products due to the devaluation of the pound sterling.

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End of free trade due to Brexit. Importing and exporting will become difficult and more expensive.

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Loss of foreign talent due to Brexit will affect the availability of skilled workers within industry. This would be due to the restriction of free movement and the ability to travel abroad due to higher costs and it becoming more difficult.

Economic: •

£1 = 1.13 Euro. Foreign exchange rate risks being felt and the introduction of additional transaction costs which would be eliminated if the government decided to join the Euro Zone.

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•

Brexit made the pound plunge to its lowest.

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UK referendum decision to leave the EU has created uncertainty in the business environment and financial markets.

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During economic boom periods, people have more disposable income.

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Inflation rate 3.1%.

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Rise in inflation predicted due to the depreciation of the pound. This will limit customer spending.

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Unemployment rate 4.3%. Unemployment rate fell from 8% in 2013 to 4.3% in 2017.

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Before the financial crisis of 2008-09, productivity grew at around 2 per cent per year. Since the crisis, productivity has failed to pick up, confounding forecasters at the Bank of England and the Office for Budget Responsibility.

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Business investment growth 0.5%.

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In 2016, there was a growth in bank’s lending to UK businesses. The volatility of the Chinese stock market has had global economic effects.

Social: •

Millennial generation is now the main target of the fashion marketers.

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Ageing population- ensure that the products supplied by company appeal to this aging demographic of the population.

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60% of 55-64s are buying clothes online.

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By 2050, half the UK population is predicated to be obese.

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Total UK population 65,648,100 in 2016. 33, 270, 400 women. 32, 377, 700 men.

Technological: •

Availability of resources, demand and production.

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The introduction of new clothing styles by a competitor can shift demand away from older fashions.

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Clothing companies may add more advanced equipment in their plants like robots, which may force companies to fire some workers.

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Growth of e-commerce- Pureplays have the benefits of low cost operational base. Ecommerce up to 17% in the UK, but with sustained growth.

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Technology has benefitted the fashion brands is in terms of overseas expansion.

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•

Most important amongst these are developments which have allowed retailers to interact with customers using online social networking sites such as Facebook, YouTube and Twitter. These are now seen as key ingredients in the development of a successful marketing strategy (Zarrella, 2010), largely the product of technological changes in the sector.

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Technologies have simply allowed businesses to develop better relationships with their consumers and communicate in a more effective way. E.g. the development of apps.

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Immersive experiences- VR

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Wearable technology.

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Use of drones.

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Cyber security is increasing in importance due to hackers.

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Technology has helped increase supply chain efficiency.

Legal: •

Minimum wage legislation UK employers to pay their employees a minimum of £6.19 per hour for those aged over 21 (Gov UK).

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Workplace Pension Legislation- 3% contribution to company employee’s workplace pension scheme.

Environmental: •

More than 65% of the consumers are seeking sustainable fashion actively. In the mature markets this figure is 32% or less.

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Rise in ethical and environmentally conscious consumers- wanting recycled materials and sustainable fashion.

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Cotton is responsible for 2.6% of global water use.

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17-20% of industrial water pollution comes from textile dyeing and treatments.

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Recyclable polyester is an alternative material.

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SWOT Analysis of The Idle Man A SWOT analysis provides a framework to collate and review investigative information. The purpose of a SWOT is to audit internal and external strengths and weakness of the brand, identify external threats and monitor potential opportunities within the marketplace. (Posner, 2015)

Strengths •

Menswear is one of the fastest growing E-commerce sector.

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The menswear market is not as saturated as womenswear. Especially online where there are few brands that offer men fashion and style advice at the same time.

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Menswear has a much lower returns rate at 18% compared to womenswear which had a returns rate of 40%.

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High profit margin; where The Idle Man made a 50% profit margin on brands and 65% on own label products.

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Brand loyalty high amongst satisfied customers.

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Difficult barriers to enter in the menswear e-commerce, as brands like vans timberland like to work with certain brands to show exclusivity.

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No clear cut price competition in the market.

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The Idle Man has a strong customer relationship.

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The Idle Man Manual is the 3rd most visited menswear blog in the UK and receives three million unique visits every month.

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The Idle Man set to open second guide store in Manchester.

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Only 22% of The Idle Man revenue comes from paid marketing. Therefore, the return on ad spend (ROAS) is quite high.

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80% of the traffic to the website comes organically via content marketing. This is via the blog and all the Idle social media handles.

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Channel 4 Media’s equity deal with The Idle Man, the company has invested a seven-figure sum of commercial airtime to help the menswear retailer accelerate its 100% year-on-year growth.

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The experienced team is growing with the expansion of the company. With a new head buyer being appointed as a part of the expanding own label range.

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The company has gone public which poses a great financial opportunity to go global.

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The Idle Man has just launched the US website of the company, this shows 38

promise as the company can expand into new territories.

Weakness •

The menswear industry has a much lower returns rate than the womenswear industry. However, in the past few months The Idle Man’s returns has steadily been increasing and is at its highest at 19%. This could be attributed to various factors like sizing issues, incorrect item, delayed delivery, etc.

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The shipping rates have are still high and do not offer year round shipping packages that could entice shoppers to shop with The Idle Man more.

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Due to the nature of shopping online security and fraud concerns have been a constant issue at The Idle Man.

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The Idle Man manual receives over three million unique visitors every moth. Whereas, the shop receives only a fraction of this traffic.

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Brand awareness is still at an all-time low in major cities in the UK like Manchester, Birmingham, etc.

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With 20% of revenue coming from affiliate channels, The Idle Man places too much dependence on affiliate marketplaces like menlook, trouva, lyst, etc. This has proven to be disastrous due to the unstable nature of these marketplaces.

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The company has a fast growing own label. However the brand only products are a mere 20% of the product mix whereas the brands boast 80% of the company’s product mix.

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With mobile being one of the leading platforms to engage in a purchase on the website. The lack of an Idle Man app could be a seen as a downside.

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The team has both experienced staff on the buying and merchandise team. However, the editorial team is in a constant state of flux. With members leaving intermittently, this has proven to be a major setback for the company. As the editorial team has proven highly beneficial to the company via the blog.

Opportunities •

The Idle Man could develop an independent app to allow customers to shop online more easily.

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A second guide store in Manchester could prove to be beneficial as the awareness of the company is quite low in these leading cities in the UK.

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The personal stylist scheme could be optimised to gain more shoppers to shop with The Idle Man.

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•

With the company showing promise and growth increasing year on year. This means the company can invest in employing more experienced individuals to take the company forward.

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Channel 4 investment shows the promise that the company is moving in the right direction and can mean that more such big companies would be interested in investing in the company.

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The Idle Manual is the third most followed menswear blog in the UK, with the traction increasing month on month. The manual redirects traffic to the store and poses as one of the biggest opportunity to grow for the company.

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The Idle Man email database boasts more than 150,000 unique subscribers. This could be optimised by personalisation and selective targeting to increase sales and customer retention.

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Working with influential models/influencers would promote a unique and edgy company image.

This could influence millennials to shop with the brand more and also to increase awareness of the brand.

Threats •

Competition from leading online businesses like eBay and Amazon affects smaller business especially when it comes to determining price.

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Macro factors like Brexit affect the company-supplier relationship, this could adversely affect the company.

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Being a pure e-commerce business, the company doesn’t have any bricks and mortar stores.

With the exception of the guide store which mostly works as an extended version of the store.

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Inconsistent funding. The next round of investment is not always confirmed.

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Low barriers to enter the e-commerce market, as anybody with an access to a computer could set up an online business. People can sell items via Facebook or eBay without setting up their own websites.

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Not many consumers are willing to purchase online due to fear of theft and identity fraud. This could work against an e-commerce brand in many scenarios.

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SURVEY Q1. Please select what you product or service you would like male retailers to implement: • Plus Sized Clothing • More eco-friendly fabrics used in clothes • Made in Britain • A delivery pass that has a membership fee for free annual, unlimited delivery and collection.

Q2: If you chose 'Made in Britain', would you be willing to pay more?

• Yes • No

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