YMA Case Study 2017

FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION

Introducing Fibre Pods by Fox Hill Llamas YMA Business Case Study 2017

Turning the task of routine shopping into the magic of artisanal discovery.

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Re-Discovering the Wow Factor of Retail Shopping: Imagine the excitement experienced by the very first customers to step into the legendary Macy’s New York flagship store on its opening day. The early 20th century brought radical change to American lives and to the marketplace through the onset of the Industrial Revolution. Retailing pioneers, like R.H. Macy, had the vision to recognize the opportunities presented by social change and to create for customers a powerful presentation of products that not only served their needs but engaged their imaginations (“The History of Macy’s”).

Today, we are living in another period of dramatic social change, the Information Age. Etsy has tapped into the formula that turned department stores like Macy’s into the dominant business model of the 20th century in order to create their own compelling customer experience online. The success of Etsy stems directly from their ability to connect a community of creative artisans with customers who care. This partnership sits on a foundation of common ground and shared interests. They have a common goal: to delight customers with products that turn routine shopping into a moment of discovery.

Introducing Etsy artisan, Nichelle Scholz, whose personal mission focuses on creating unique opportunities to nurture and protect older animals that others may deem to be useless.

Consider the llama, a unique creature with its own place in the biological sphere created by natural selection to live on its own terms. Nichelle Scholz has found a way to respect and to protect the llama by re-purposing their fibres into beautiful,

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artisanal creations including hanging planters of all shapes and sizes and stationary unlike anything currently available in the marketplace. There is a place in the Macy’s of the 21st century for Fox Hill Llamas, a place that will delight modern consumers with the same sense of discovery that ignited the magic of Macy’s more than a hundred years ago.

Fox Hill Llamas/Macy’s: The Customers Who Will Care The introduction of a shop for Fox Hill Llamas in Macy’s presents a major opportunity for reaching a broad range of customers across demographics. While target customers for the shop will range in age from 20-45 years old and will have middle to upper level household incomes, it is the values and the lifestyles these customers share that will attract them to the brand. Fox Hill Llamas is about more than artisanal craftsmanship. It is about celebrating biodiversity, protecting our environment and tapping into the power of products to create a unique, personal space for modern consumers.

Amanda Grey: - Attends NYU; 21 yrs. old - Budget conscious - Trend-Aware - Limited living space - Social Media Savvy - Routine café customer - Avid listener of Indie Rock music

Melissa Watson: - 40 yrs. old - Time poor - Brand selective - Lifestyle conscious - Practices Bikram Yoga - Subscriber to Sakara Life - Household income $100,000 to $250,000

FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION

Strengths:

Weaknesses:

- Macy’s brand identity captures

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customer loyalty across generations Etsy maintains a community of loyal customers who are committed to supporting artisanal products Macy’s/Etsy focus on serving customer demand with unique & exclusive products (Limited, W.) Macy’s/Etsy’s partnership combines a successful ecommerce platform with a brick & mortar showcase for interaction with products Presents customers with an ongoing flow of new products Combines operational expertise of Macy’s with the craftsmanship of Etsy artisans

Opportunities: - Attract new customers for both Macy’s,

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Etsy and their artisans through an elevated level of exposure to a diverse customer base Expand the presence of exclusive products in the current Macy’s assortment Empower Etsy to support and retain successful artisans by providing access to new customers & resources for expanding production Creates unique marketing opportunities for both Macy’s & Etsy to reach new customers with a fresh message & fresh products

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Department store layout & presentation needs updating Existing Macy’s customer base may not respond to the craftsmanship of Etsy artisans Etsy’s online customers may not embrace brick and mortar shops Lack of comprehensive marketing strategy for reaching target customers

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Threats: - Products made by artisans fail to -

meet quality expectations of the customers Top Etsy artisans may be reluctant to enter the department store platform The practice of price discounting in place at department stores may limit the ability to sell artisanal crafts at full price

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Fox Hill Llamas: Turning Personal Values Into Compelling Products In each step of the process whether it be shearing or processing fibre, Nichelle Scholz works “to create tangible worth for each llama.” She believes that “as the store grows, so does the value of each animal and the natural variation in color and fibre type make each product as individual and unique as the animals themselves.” Modern customers are looking for just that; unexpected, individualized products and environments that provide a reason for them to spend their time and money in traditional retail stores. With this in mind, it would significantly benefit Macy’s to work with Fox Hill Llamas in order to develop a space with products that provide a means to create an installation engaging viewers through a clever use of material and space. These products not only meet the desire of millennials to purchase transparently produced products, but they also appeal to the aforementioned environmentally conscientious cause that has captured the attention of so many individuals. An in-store installation would provide necessary involvement and voluntary marketing through means of social media on behalf of the customer.

Interactive Installation The vision is to arrange the various hanging Fibre Pods in an assortment suspended from the ceiling installed in cohesion with wooden, textured floors; a writing station will be established in order to allow experimentation with the handmade fibre paper as well as a centered display of stationary pods on

FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION wooden pedestals. The addition of a rug made by Fox Hill Llamas will unify and complete the space. By creating an environment that cannot be experienced online and drastically changing the visual merchandising of a typical department store, it will allow Etsy and Macy’s to truly take advantage of the physical engagement they can have with customers beyond an online presence furthering the depth of their customer relationships. Much like the Iconic Macy’s Annual Flower Show, the idea is to evoke a reason to visit and shop beyond the products themselves; not only will they be able to experience it in-store but they can re-create that experience in their homes as well (“Visit Macy’s USA”). The potential for these pieces to be more than just a product for sale but also an artistic installation allows for the opportunity to draw in customers who may have never considered setting foot in Macy’s for their product assortment but rather to find such an experience such as this therefore increasing foot traffic.

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FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION

Creative Delivery: Introducing Mother’s Moments

M thers’ Moments.. will yours be next?

Fibre Pods now in OneBelow courtesy of Etsy artisan Nichelle Scholz #mothersmoments #bca

Alternating Slide Shown

The Mother’s Moments campaign will target daughters in the millennial generation with the intention to purchase Fibre Pods for Mother’s Day; partnering with the American Breast Cancer Foundation is meant to offer tangible benefits beyond the product itself, an idea that is very important to the artisan, Nichelle Scholz. In order to maintain reasonable profits for the artisan, only the suspended Fibre Pods will contribute a portion of proceeds to the cause. After purchase, the campaign will encourage the customer to take a photograph alongside their mother with the pod and post it through social media channels; images will then be selected and shown on a publicly displayed, digital screen in store. Alongside this, an iPad will be installed as part of the visual display in order for Nichelle Scholz to share not only her story, but also her passion

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for being a mother of three thus allowing customers to relate and feel more acquainted with the artisan herself. According to the interview I had with her, she impressed upon me the importance of turning life challenges and creative solutions into “learning experiences for her children and extending them to the wider community if at all possible.” Assuming the main customer demographic to be women ranging between the ages of 20-45, the Mother’s Moments campaign will act as the bridge that combines both the current and new customers; this provides a thread of commonality not only through gifting and receiving but also in supporting the fight against breast cancer - something that impacts women regardless of demographic; the release of this product will be a limited time only purchase three weeks before Mother’s Day. According to the rotation plan set by Macy’s, this proposal will assume the six-week span allowing for promotional exclusivity within the first three weeks followed by an extension for customers who may have missed the initial rush. Additionally, the three- week prolongation after the holiday will increase the opportunity and visibility of the digital campaign as well as the mothers’ ability to come back and buy additional items therefore increasing revenue.

See Appendix A & B for Additional Marketing Materials

Annual Flower Show Extension Macy’s iconic, annual Flower Show is a prime opportunity to incorporate an existing event with the Etsy collaboration in order to increase promotion. By inviting florists to utilize Fox Hill Llamas Fibre Pods, it provides a way to bring the OneBelow shop into the main floor in an unobtrusive yet

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FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION noticeable manner. Additionally, the email list for the Annual Flower Show can be utilized to further promote the idea as well as the presence of Fox Hill Llamas.

The Initiative Besides its production, these pieces represent a completely alternative viewpoint on what the typical Macy’s product might be; the Fibre Pods will drive success within Macy’s current assortment by providing a home goods product that doesn’t speak to a sense of traditionalism but rather to a feeling of naturalism inevitably merging both the new millennial customers alongside Macy’s existing customers; by appealing to the aesthetic desires of one group and the tangible desires of the others, the planters will be an unexpected interest for anyone ages 20-45. There are a total of 12 variations in fibres for suspended pods and 5 selected styles of the stationary pods. Despite the fact that Fibre Pods will be the primary focus, the assortment of Handmade Recycled Paper will be a supporting product line providing five style sets in a total of fifty department stores including flagships in NY and LA. Product

Retail Price

Hanging Llama Pod Box of Llama Love Luxury Fibre Note Paper Luxury Fibre Paper Lettergrams Llama Fibre Paper A3 Handmade Art Paper

$43.21

Color

White/Taupe/Black/Brown

Store A (15) 60

Store B (20) 40

Store C (15) 36

Total Units on Hand 2,400

$27.44

120 sheets of paper per pack

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X

600

$27.44

White/Grey; 50 sheets per pack

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12

X

600

$7.84

White/Grey; 4 sheets per pack

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12

X

600

$6.66

Blue/Peach; 5 sheets per pack

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12

X

600

$19.60

Grey; 4 sheets per pack

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12

X

600

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FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION Encased Vessel Fibre Vessel Black Vessel Fibre Organizer Felted Bowls Average Inventory At Retail

$40.77

White/Grey; 7x6.5cm

48

36

X

1,440

$43.31

48

36

18

1,710

$37.80

Brown/Grey/Caramel/Taupe/White; 8.5x8.5cm Taupe/Brown/Black; 5.5x8.5cm

48

36

18

1,710

$51.18

Grey; 10.5x11.5x10.5cm

48

36

X

1,440

$43.31

Brown/Taupe; 10x5cm

48

36

18

1,710 $502,198.00

See Appendix C for Product Images/Details The following are my sales objectives for my first six months in operation. My average stock will fund my average investment in A, B and C stores. I plan on turning 1.7 times giving a sales forecast of one million dollars; I am planning my reductions at 15% of sales with my IMU percent at 60.0 and my GM percent at 49.5.

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Due to the nature of the brand, I believe the expansion potential of Fox Hill Llamas lies in its future capability to develop an entire home environment out of products that according to Nichelle Scholz, “aren’t [typically] expected from a llama farm.” These items may include an extension of some categories that she currently develops alongside additions such as: -

Pillows & Throws

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Candle Holders – Sleeves

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Rugs & Window Treatments

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Placemats

These options present larger opportunities for retail installations and a more complete marketing campaign. Not only will Fox Hill Llamas be the brand offering planters to satisfy eco-friendly needs, but now the customer’s lifestyle space can be unified through a sustainable and unique aesthetic.

In order to liquidate products, the buy one, give one model will be implemented to reflect the Mother’s Moments campaign cause. During the last week of sales, each Fibre Pod that is purchased will translate into another that is given to a women undergoing breast cancer treatment. This idea reflects the concept that Nichelle Scholz conveyed to me; she believes the “challenge of changing mind sets and creating value where it was previously non-existent or unseen is empowering.” It’s an investment in something more and according to her, the “products are given worth by simply purchasing them.” Therefore, this model can translate that worth by giving to others; it’s about embracing not only the love with which the product was made but passing it along, allowing it to maintain its value. Ultimately, Nichelle wishes to portray the message that her “products and their value are created with nothing short of extensive ideas, time, work and cherished customer support.

FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION

Appendix A

The Learn More link integrated into these IG posts will lead the customer to the front page of the Macy’s website to further explore the Mother’s Moments Campaign.

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FOX HILL LLAMAS FOR ETSY/MACY’S COLLABORATION

Appendix B

iPad that will be included in the Visual Display to show a video of Nichelle Scholz’s story.

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Appendix C

Little Box of Llama Love - Varied colors - 120 sheets - $27.44

Luxury Llama Fibre Note Paper - White/Grey - 50 sheets - $27.44

Llama Fibre Paper - Blue and Peach - 5 sheets - $6.66

A3 Handmade Art Paper - Grey - 4 sheets - $19.60

Encased Vase - White/Grey - $40.77

Fibre Vessel - Brown, Grey, Caramel, Taupe, White - $43.31 Fibre Organizer - Grey - $51.18

Llama Fibre Paper Lettergrams - White/Grey - 4 sheets - $7.84

Felted Bowls - $43.31 - Brown, Taupe

Hanging Llama Fibre Pod - White, Taupe, Brown, Black - $43.12

Black Vessel - Taupe, Brown, Black - $37.80

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References D. (2016). The Death Of Brick-And-Mortar Stores: Macy's Is Just The Beginning - Black Friday Could Change Drastically. Retrieved September 21, 2016, from http://www.inquisitr.com/3417847/the-death-of-brick-and-mortar-stores-macys-is-justthe-beginning-black-friday-could-change-drastically/

Etsy Launches First Ever Shop At Macy’s In New York City. (n.d.). Retrieved September 22, 2016, from http://www.forbes.com/sites/nicoleleinbachreyhle/2016/01/31/etsy-launchesfirst-ever-shop-at-macys-in-new-york-city/

Etsy Vs. Amazon: Different Ideas of What Is 'Handmade'. (n.d.). Retrieved September 21, 2016, from http://www.forbes.com/sites/nicoleleinbachreyhle/2015/10/10/amazon-raises-theirfists-to-compete-with-etsy-in-the-handmade-market-space/

H. (2016). Etsy Opens its First Physical Store in Macy's in NYC. Retrieved September 23, 2016, from https://smallbiztrends.com/2016/02/etsy-store-new-york-city.html

Limited, W. (n.d.). Trends Snapshot: How big brands are achieving crowd-driven innovation from Warc. Retrieved September 23, 2016, from http://content.warc.com/read-trendssnapshot-how-big-brands-are-achieving-crowd-driven-innovation-from-warc

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Mauriello, D. (n.d.). The Etsy Shop Launches at Macy's Herald Square. Retrieved September 21, 2016, from https://blog.etsy.com/news/2016/the-etsy-shop-launches-at-macts-heraldsquare/ (n.d.). Retrieved October 15, 2016, from https://www.etsy.com/shop/FoxHillLlamas Scholz, N. (Oct. 2016) Email Interview with Nichelle Scholz.

The History of Macy's: From Humble Beginnings to Stunning Success. (n.d.). Retrieved October 25, 2016, from http://www.visitmacysusa.com/blog/history-macys-humble-beginningsstunning-success Visit Macy's USA. (n.d.). Retrieved November 05, 2016, from http://www.visitmacysusa.com/ Whiteside, S. (n.d.) Etsy and the battle for authenticity from Warc. Retrieved September 22, 2016.

Image Citations Etsy Awards. (n.d.). Retrieved October 28, 2016, from https://etsyawards.com/ (n.d.). Retrieved October 15, 2016, from https://www.etsy.com/shop/FoxHillLlamas Macy's Flower Show at Herald Square - Duane Street Hotel. (2015). Retrieved October 15, 2016, from http://www.duanestreethotel.com/event/macys-flower-show-herald-square/ (n.d.). Retrieved October 10, 2016, from https://www.pinterest.com/