Harvey Nichols Store: International Marketing Report - Case Study Example

HARVEY NICHOLS STORE: INTERNATIONAL MARKETING REPORT by submission Executive Summary Harvey Nichols is a designer retail outlet based in the UK. For decades, the company has led the way in obtaining the best and latest most admired designer brands. The company is internationally well known for its well tailored, beauty goods, wine, and assorted foods offered in high-end restaurants. Harvey Nichols has a number of stores overseas. Harvey Nichols additionally owns eight large format stores outside the UK. The company has offices and stores in Hong Kong, Riyadh, Instanbul and Dubai (Harveynichols.com 2015). In an effort to solidify the growing Middle East market, Harvey intends to collaborate with a leading Qatari franchise group Al Hamad Al Mana to open up an eighty thousand square feet store in the capital of Doha. The store intends to capitalize on the Qatari market, sell fashion, home wear, and offer an assorted range of hospitality services. The company is intending to tap the market in Qatar due to high luxury merchandise consumption rates of Harvey Nichols products by Qatar shoppers in the UK. Over the next year or so, Harvey Nichols plans on laying the necessary groundwork to facilitate opening of their newest store in Qatar come the year 2017. 1.0 Introduction Benjamin Harvey collaborated with James Nichols in the year 1848. The company has developed over the years, transforming to become a leading luxury brand store (Heine 2010). Currently, the company has opened stores in the UK in major cities and towns such as Manchester, Edinburgh, Leeds and Birmingham. The company seeks to expand their operations by tapping on to the larger Middle Eastern market of Qatar. Qatar alongside cities such as Dubai and Riyadh has high spending population, with their average disposable income larger than an average American citizen. Harvey Nichols specifically deals with luxury products, which come at a higher cost than most products. The company has conducted research to establish the viability of the Qatari market. The company hopes to roll out its biggest store in the oil-producing nation by the year 2017. The company also intends to maximize on the once in a life time opportunity of opening its doors to guests who will visit the country in large numbers to watch the 2022 soccer world cup, thereby increasing sales. The report gives a critical analysis of Harvey Nichol and the suitability of the newly proposed Doha market environment. The report also gives an assessment of the strategic options available for Harvey Nichols to additionally expand its international presence. 2.0 Situation Analysis Harvey Nichols Company has been in the fashion collection business long enough to understand the dynamics of different fashion international markets as well as specific customer needs. The level of quality determines profitability especially for high-end markets such as the newly proposed Qatar market. The basic market requirement is the provision of high-end luxury products for consumers in Qatar. 3.0 Market Summary Harvey Nichols Company possesses large databases about the different engagements in international markets and understands the needs of the targeted customers. By leveraging this information, Harvey Nichols will understand better the specific requirements of its targeted clientele in Qatar, and their spending habits. 3.1 Market Needs Harvey Nichols is providing its clients with a wide variety of fashion collections for men and women, beauty products as well as other luxury fashion accessories. Additionally, Harvey Nichols also intends to provide Nichols branded luxury foodstuffs. The company intends to bring value to its clients through the following strategies. Selection – Harvey Nichols in Qatar will have the biggest selection of luxury merchandise Accessibility – Harvey Nichols are setting up shop in the largest mall in Qatar, and at a strategic location in Doha, therefore giving shoppers the service of getting their luxury merchandise in one location. Customer Service – Harvey Nichols is renowned for being at the frontline in service delivery, giving the best attention to the clients. Customers in Qatar will enjoy high-level service delivery from Harvey Nichols. Quality – Harvey Nichols will offer top quality fashion collections and accessories. Branded Products – research studies confirm that men are increasingly interested in certain branded merchandise while women are more flexible. Harvey Nichols carries big brand names for both genders 3.2 Market Trends The dominant trend for this industry is propelled by increased globalization and diversification of the merchandise (Hudders, Pandelaere & Vyncke 2013). Increased availability of this merchandise from other brands and an increased demand for tourism in Qatar will shape the market trend. The web and the ability for individuals to shop from any location drive the market trend. The ability of Luxury brands marketers to reach any client across gadgets is also emerging as a current market trend. Marketers are able to understand the client’s journey and the trends that are most likely to culminate into exploration. Studies indicate that high-end shoppers approach retail luxury shopping distinctively by assessing purchases dependent on merchandise and company information obtained from expert analysis and personal referrals (Mosca 2008). Research also shows that high-end shoppers purchase goods based on relationships created with brands. 3.3 Market Analysis Potential Customers Growth Year 1 Year 2 Year 3 High Income Earners in Qatar 5% 3,100 3,700 4,500 Internet Shoppers in Qatar 32% 102 207 379 Total 8% 3,202 3,707 4,879 3.3.1 SWOT Analysis (See appendix 4). 3.4 Competition Harvey Nichols has strong competition from local wonderful luxury shops around Doha. Direct competition comes from stores that sell similar merchandise that Harvey Nichols intends to carry and are located in Doha. Such stores include outlets such as Ali Bin Ali Luxury, Villagio and Pearl. Indirect competition will come from stores in Doha that focus on the diverse target market and do not specifically deal in merchandise that Harvey Nichols operates in, in addition to the popular stores in other cities within Qatar. Indirect competitors include Fendi Store and Circue Due Soleil. Harvey Nichols own comparative research and analysis of ten stores in Doha shows that only a handful of stores are able to focus on the specific luxury merchandise that is targeted by Harvey Nichols. Additionally, the analysis showed that only few stores are able to offer high customer service that focuses on shoppers and non-shoppers alike. Most Luxury competitors routinely ignore browsers. A majority of the competitors changing rooms is not spacious enough and the blinds do not guarantee full privacy. Most stores that are offering similar type of merchandise tend to have clothing sizes that run small and the items are overpriced and substandard in quality. Most stores are not keen on differentiated products and fail to train staff adequately to offer great service. The few shops that combine the right mix of customer care service and quality merchandise reap many profits. 3.5 Product Offering Harvey Nichols will deal in a variety of luxury merchandise. These merchandise include Men’s designer lifestyle merchandise such as Bang & Olufsen Play’s high-spectrum headphones, large fragrance designer brands such as Hugo Boss’ luxury gift sets C-OF-MAN jeans label, Hugo Boss Orange polo shirts and T-shirts. Women’s designer lifestyle goods such as Victoria Beckham printed silk Shantung dresses, Marson Margiela caramel leather boots, Charlotte Simone Popsicle scurf’s and other brands. Skincare products, Beauty products such as make up, fragrances and selected wines and alcoholic drinks for clientele in their roof top restaurant clients. 3.6 Keys to Success Harvey’s wide variety of selection of merchandise and a strong customer service will be the company’s key to success. In addition, the company intends to generate customer repeat business, expand the customer’s transaction amount per sale and ensure repeated frequency for customers to ensure long-term success. 4.0 Market Analysis Summary There are a number of financial forces influencing luxury merchandise shoppers. Customer confidence is vital because individuals do not purchase luxury products when they run low on moods (Woytinsky 1946). Unemployment is also a major factor, because high unemployment rates translate to lack of income to spend on the luxury goods. Large retailer stores are collaborating with clothes designers to bring affordable products to their shelves. Even though stores like Harvey Nichols and Villagio are high on quality, the continued development of the big chain stores trends could affect retailers who deal in designer merchandise during hard economic times. Harvey Nichols is lucky to venture into the high-end market because the majority of brands that are carried by the company are not affected by recession. Statistics collected from the different international stores reveal that brands such as Nicki, Saks and Victoria Beckham’s clothing lines produced positive results in the year 2013, amidst the minor recession that affected European markets. 4.1 Marketing Strategy A number of initiatives inspire the company’s marketing strategy. Advertisements will play a key role in the Qatari local media and yellow pages. The company will also engage commercial marketers to append the brands logo on the major internet search engines as a secondary way of advertising and marketing the company. For specific designer items such as the Paco Rabane fragrance, individuals refer to the commercial directories to locate retail outlets. 4.1.1 Mission Harvey Nichols mission is to avail to the customer the specific luxury products that are needed and desired. Harvey Nichols exists to magnetize and maintain clients. The company’s good run of business is as a result of adhering to this maxim. The company always surpasses the client’s prospects. 4.1.2 Marketing Objectives Establish a strong client base in Qatar specifically Doha, its capital city Create a trend of repeated shopping through strong customer service Create fashion awareness by introducing trendy luxury merchandise 4.1.3 Financial Objectives Establish a double digit rate of growth every year after commencements of operations Establish an efficient mode of transportation that is cost effective and prompt. Cut down on primary investment costs and fixed costs by 5% by the third year Increase the rate of return by four percentages semi-annually. 4.2 Target Markets Doha is rated amongst the top world markets in financial and entrepreneurial achievements. At an average age of 35, Doha’s professionals are extremely wealthy, with average household annual earnings of approximately $239,016 and a median home value of $832,034 (Consumer Price indices 2011). Approximately 45% of the population in Doha has achieved a bachelor’s degree and approximately 55% of these certified citizens have acquired a master’s degree. The company’s clients will learn about its products through the following avenues. Qatar airways in-flight magazine Stylists and personal shoppers Local advertisements and press Consumer magazines, fashion magazines and various articles Word of mouth 4.2.1 The Primary Client The main Harvey Nichol’s client base is comprised of professionals earning a basic of more than $ 125,000 annual salary. Other customers include luxury shoppers, business owners, celebrities, media personalities, and wealthy Qataris with a sense of style. 4.2.2 Psychographics Seasonal fashion individuals willing to purchase quality merchandise and brands Individuals interested in understanding the right style for them Individuals interested in an overall better look and career individuals seeking to make good impressions at their place of work 4.2.3 Client Expectations, Needs, and Purchasing Patterns The Harvey Nichols client loves to purchase and enjoys going to shopping malls. Harvey clients are knowledgeable about fashions and designer trends. They also love doing seasonal shopping, i.e. for hot weathers and winters. Harvey clients are used to browsing around in search of new trendy wear. Therefore, these clients should be welcomed and should feel comfortable as they browse through different collections (The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands. 2e2014 4 Jean-Noel Kapferer and and Vincent Bastein The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands. 2e London Kogan Page Limited 2012 395 pp. ISBN-13:978-0-7494-6491-2 $49.95, 2014). These clients also like receiving sales notices occasionally and arrivals of new trendy wear. Harvey Nichols shoppers also like personal purchase touches and love to order special items. 5.0 Marketing Mix Harvey Nichols marketing mix contains the following strategies to client’s service, distribution, pricing, advertising and promotion. Pricing – Harvey Nichols pricing model will be based on attaining a particular margin for every product Distribution – Harvey Nichols store will be located in the Doha festival city mall. The location is significant as it will be located in Doha, right at the heart of Qatari’s capital. Promotion and Advertising – Harvey’s most triumphant mode of advertising will be with the print press and media. The company will also engage most visited search engines. Customer Service – Perfecting customer service is the tradition. Harvey’s attitude towards customer service is that whatever process that needs to be undertaken to satisfy the customer demands must be undertaken, even at the cost of forfeiting short-term gains. The idea behind such a move is to consolidate the customers so that at the end of the day, the investment is paid off with a strong customer base, loyal and vocal to the Harvey brand. 5.1 Positioning The company’s retail outlets give the definitive style experience. The company offers distinctive market niche and well-established brands and labels in addition to offering wardrobe solutions to their customers’ needs. The company also offers personalized services, their main advantage being the unique collection from renowned brands across the world. 5.2 Brand Personality The overall Harvey Nichols brand personality seeks to be innovative, elegant, modern, stylish, customer oriented, trendy, fresh, and refreshing. The Harvey Nichol’s store is a place where individuals can change themselves with trendy wear and take full advantage of the wide variety of unique style brands. Harvey Nichols is a store that educates. The store assists individuals learn more about the different designers while at the same time remaining at relevant with the current trends. Harvey Nichols assists its clients remain and maintain the pieces. 5.3 Promotion The following promotional strategies for initiating euphoria and knowledge about Harvey Nichols will be applied. Local and international PR Harvey Nichols Website Promotional materials Peculiar visual aids and displays such as bill board advertising Word of mouth and referrals Local and international advertizing 6.0 Business Strategy Harvey Nichols is a luxury store within the luxury merchandise market. The store specializes in both women’s, men are clothing, and style needs. In addition, it also trades in beauty solutions for all gender, cafes, and restaurant services. Luxury merchandise sales accounted for 35% of the consumer shopping index numbers, which translates into $567.25 billion during 2013. The retail sector is the next biggest sector in Qatar, first in size of the establishments and the number of employees that the sector employs directly. The retail sector is also regarded as one of the largest globally. The retail industry directly employs a significant number of Qataris and the industry generates approximately $ 250 million in annual retail sales. The sole objective of Harvey Nichols Company is to position itself as the leading location for luxury shoppers, commanding the biggest luxury market share in Qatar within the next few years. Therefore, Harvey Nichols intends to establish itself as the number one service provider, offering the finest collection and the best selection as soon as they hit the markets. Nichols marketing strategy also seeks to create customer knowledge and awareness. The strategy also intends to create a large customer base that will form strong client loyalty. 7.0 Marketing Research Harvey intends to engage in an additional process of marketing research, which will act as a feedback system, founded on a card suggestion system. The customer feedback system has several questions and statements that clients are requested to give their ratings in terms of a particular scale. Several other open-ended queries are presented to the client to give constructive feedback. Harvey intends on implementing constructive suggestions to satisfy the customer demands. 7.1 Financials This analysis will give an economic overview of Harvey Nichols Company in relation to the marketing activities. Harvey Nichols will address the sales forecasts and the break-even analysis and how these elements are associated to the marketing strategy. 7.1.1 Break Even Analysis The break-even analysis shows the sales level required on a monthly basis to eventually break-even. According to the report, Harvey Nichols will require a sales level of approximately $600,000 every month to break even within the first seven years. (See Appendix 2) 7.1.2 2017 Outlook The sales outlook for the year 2017 appears to be bright, given the current market growth rates. Good results are expected in the year 2017, when Harvey Nichols will have identified possible trends for the Qatar market. Industry analysts predict sales growth in the luxury merchandise stores, which Harvey Nichols is a part. 7.2 Economic and Environmental Conditions Increased Qatar tourism, competition, holiday shopping, seasonal expected events such as the Doha indoor games and the Qatar grand prix and the volatility of oil prices are elements that affect the performance of Harvey Nichols. On a macro-economic level, customer confidence and inflation rates are factors that can affect the operations of Harvey Nichols. Global terrorism and rising political instabilities in the wider Middle East may also affect the company’s operations indirectly. 8.0 Conclusion Harvey Nichols intends to start operations in the Qatar market by the year 2017. The market is sufficiently poised to respond well to luxury products that are offered by Harvey Nichols. With estimated projections of the market, growth in Qatar, Harvey Nichols Company will with no doubt make a market statement with its range of products. Bibliography Cahen, A. (1949). Measuring the Merchandise Flow of Mens Clothing. Journal Of Marketing, 14(1), 67. doi:10.2307/1247174 Consumer Price indices. (2011). Financ Stat, 593(1), 1-21. doi:10.1057/fs.2011.116 Dubois, B., & Duquesne, P. (1993). The Market for Luxury Goods: Income versus Culture. European Journal Of Marketing, 27(1), 35-44. doi:10.1108/03090569310024530 Harveynichols.com,. (2015). Harvey Nichols - Designer Fashion, Beauty, Food & Wine. Retrieved 7 March 2015, from http://www.harveynichols.com/ Heine, K. (2010). The Personality of Luxury Fashion Brands. Journal Of Global Fashion Marketing, 1(3), 154-163. doi:10.1080/20932685.2010.10593067 Hudders, L., Pandelaere, M., & Vyncke, P. (2013). Consumer meaning making: the meaning of luxury brands in a democratised luxury world. International Journal Of Market Research, 55(3), 391. doi:10.2501/ijmr-2013-036 Ijaouane, V., & Kapferer, J. (2012). Developing Luxury Brands Within Luxury Groups – Synergies Without Dilution?. Marketing Review St. Gallen, 29(1), 24-29. doi:10.1007/s11621-012-0107-8 Mosca, F. (2008). Market-Driven Management in Fashion and Luxury Industries. Symphonya. Emerging Issues In Management, (1). doi:10.4468/2008.1.06mosca The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands. 2e2014 4 Jean- Noel Kapferer and and Vincent Bastein The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands. 2e London Kogan Page Limited 2012 395 pp. ISBN- 13:978-0-7494-6491-2 $49.95. (2014). Jnl Of Product & Brand Mgt, 23(3), 244-245. doi:10.1108/jpbm-04-2013-0294 Woytinsky, W. (1946). Relationship Between Consumers Expenditures, Savings, and Disposable Income. The Review Of Economics And Statistics, 28(1), 1. doi:10.2307/1926680 Appendices Appendix 1: Service Market Analysis Qatar Retail Sector Main facts Luxury Merchandise Market: Doha facts The 2013 average numbers for shrinkage is 1.7% with 0.9% attributed to staff theft and 0.8% attributed to shop lifting There are 234 retail stores in Doha, a quarter of them dealing in part with luxury merchandise The market is highly fragmented One in every four small business dealing in clothing and beauty merchandise fail Many retailers have seasonal sales which translates to seasonal inventory The average small business sales is $ 298,775 Average retail shops have a maximum of one store making less than $ 1,000,000 annually. Over 40% of luxury retailers generate sales over $1,000,000 annually Many individuals manage stand-alone shops in urban centers through leasing space On average, Luxury stores in malls employ over 100 staff members Wages are relatively high Average annual inventory turnover for luxury stores is ten times Merchandising – purchasing products that will sell is the primary business venture for most retailers Doha clothing stores have a significantly higher than average business growth rate with a sales index of 2.87%, which is 67% higher than the industry norm. Appendix 2: Break Even Analysis Appendix 3: Break Even table Break – Even Analysis Monthly revenue Break-Even $600,000.00 Assumptions Average monthly variable cost 46% Estimated monthly fixed cost $517,000 Appendix 4: SWOT Analysis The following SWOT analysis gives the key advantages and challenges within the brand and explains the threats and the opportunities that Harvey Nichols faces. Strengths Best quality selection with variety of luxury products on display Professional staff highly trained and experienced, always ready to listen and assist the client Unique merchandise, custom made for specific markets as per the company’s specification Strong business ties with merchandise producers and manufactures. Well funded marketing budget to develop Harvey Nichols brand awareness Weaknesses Limited awareness of the Harvey Nichols brand among its target population in Qatar Difficulty in establishing a purchasing trends Stiff competition from well established brands within the location Opportunities Developing Middle East market with a considerable percentage of the targeted clientele unaware of the existence of Harvey Nichols Increased returns with an expanded Middle East market The ability to persistently improve profits through repeat spending and efficiency Threats Market competition from existing large brands and upcoming big brands into the Qatar market e.g. Angry Birds theme Park Oil price volatility and the country’s high rates of inflation that reduce disposable income and constrict merchandise buyers to only a limited number of purchases A looming threat of increase in transportation and shipping costs. Read More