Reiss - Company Analysis, Segmentation, Financial Ratios, and SWOT Analysis - Case Study Example

MACRO-ENVIRONMENT AUDIT (External Analysis) PEST Analysis Political Fashion wear industry contribution 7% of GDP of US Economic Personal Disposable Income increased by 11% Further increase up to 13% projected Consumer expenditure grew by 16% between 1997 & 2001 Increased spending on leisure Consumer orientation towards spending than saving Social Changing trends towards the relaxing and casual clothing Fashion promotion through media & lifestyle magazines Celebrities emerging as fashion leaders exercising their influence on consumers Shift from commodity clothes to fashion wear Huge and easy availability of fashion wear Increased number of working women Technological Development of cloth fibers with moisturizing creams coatings of Teflon. Intelligent clothes expected to be launched in future and gain popularity RFT garment expected to store information like washing instructions with Bluetooth technology facilitating complete automation of washing process 12 C Culture/Consumer Behavior Consumption Communication 57% of women and 43% of men buy fashion wear. Total market growth is almost 20% middle market shopper and high end shoppers Celebrities endorsing the product Commitment Contractual obligations Capacity to pay Discounts up to 60-70% of the selling price boost the sale of fashion wear. Different regulations between US. Increased PDI and the shift from savings habit to spending habits Choices Channels Caveats Many suppliers in the market, hence consumers have wide array of options Retailers and distributors New designs ad patters to offer differentiated product Maslow Need of Hierarchy Porter’s Five Forces Model Company Analysis 7M Manpower Reiss is growing consistently in number of employees. Skilled manpower is required at every stage from designing to production of fashion wear. Machine Production of intelligent garments and the garments with Teflon coating Minutes Launch of fashion wear at the right time (weather & latest fashion) decides the sale of that garment. Materials Materials and fabric plays an important role in the sale of fashion wear. Right type of fabric with right cut boosts the sale whereas the reverse or mismatch can lead to failure of entire line. Market Market is competitive because of presence of many suppliers including individual designer stores. Money Customers are willing to pay is the product meet their taste. Established brands earn good money to sustain and grow their business further. Total fashion wear industry is 24,678 million. Methods Products are sold with the help of celebrity endorsement. Movie stars, football players 5C Customers Increased level of personal Disposable Income has led to high expenditure on Fashion wear More number of working women now, inclined to buy smart fashion wear clothes Competition High competition because of many suppliers, UK market already saturated with small retailers Costs Cost of manufacturing the fashion wear is high. New line introduced can become completely redundant because of several factors like weather change Channels to Market Branded retailers, Supermarkets, Company showrooms Communication Celebrities and famous figures endorsing the product 7S Shared values The company believes and vies to promote and manufacture creative, contemporary, essential, comfortable and affordable clothes. Strategy Reiss do not follow traditional style. Change is the key word. Window display, in-store graphics, international expansion and deliberate aspiration designs and fashion branding are the strategy used to serve the customers Structure Structure is Functional division, the responsibility trickling down the hierarchy. System Reiss business plan starts with the detailed merchandising with preparing detailed production charts based on historical sales pattern. Production manger converts the dress design into the fashion wear which is then circulated to all the Reiss's stores Staff Internal communication and staff involvement is encouraged. The management ensures employee satisfaction. Synergy of different departments to ensure best product. Style Management style is to lead the fashion world by regularly introducing new designs and cut Skills Directional, Innovative and creative, Employee management, customer retention through customer satisfaction and value delivery Segmentation Ansoff matrix Existing products New products Existing market Promoting business by aggressive store marketing & encouraging customers to buy new fabric for every season and special emphasis on trims New market Planning to open new stores across Europe & USA & Japan, poised to grow domestically and internationally Plan to open Microcosm Laboratory to facilitate learning of management team BCG Matrix Market Growth Product positioning Financial Ratios Current Ratio – 0.749(2001), 0.740(2002), 0.65(2003). The current ratio has gone down in consecutive years reflecting that company is investing in the assets which are important for the survival of business. Profitability ratio - Net Profit Margin – 0.04(2001), 0.033(2002), 0.058(2003). The net profit margin earned by the company has increased over the years showing that Reiss’s profit base is increasing. Sales Growth Ratio – 15% year on year, considered being good for growing company Gross Profit Margin on Sale is 0.65(2001), 0.63(2002), 0.67(2003). The Gross Profit Margin of the company decreased in 2002 because of management decision in 2001 to stop wholesaling to exercise complete control on the selling locations. The Profit margin is showing increase again in 2003 because Reiss started selling its clothes in its stores only, thereby resulting in increased profit. SWOT S 1. Reiss has wholesale production, in house 25 retail stores and prime location stores thus controlling the cost & quality across the forward end of supply chain. 2. The emphasis is on quality, design and affordability aspects of the clothes. 3. Retail outlet store’s have unique architecture with the interiors changing with the seasons impacting the customers psychologically to buy by creating the positive purchase environment. 4. Reiss management structure is well built; the roles are well defined without ambiguity resulting in enhanced performance and clear objectives. 5. No repetition of the Fashion trend, always offering fresh designs to customers. 6. Trims are specially taken care off as it helps selling the clothes and if not proper, it can hamper the sale. 7. Has positive brand image of good quality, value, fashion forward and price competitive offerings. W 1. People perception is that Reiss brand is too aspirational and suave. 2. Reiss need to do complete market research of the markets they are planning to enter to establish the taste and preferences of the local population instead of adopting Hit and Trial approach. 3. Website is not considered as transactional tool slightly overlooking the importance of the website and the kind of business it can attract. O 1. To bridge the gap between the High street fashion and International designer brands. 2. Reiss has established itself as strong brand and now it should start looking forward to international expansion. 3. It is very important for Reiss to continue to gain positive press coverage. 4. By leveraging its existing market position, Reiss to spread beyond UK. T 1. Deterioration of the exchange rates results in adverse impact cost and the profits thereof. 2. Entrance of other competitors in the market. 3. Demand faced for the clothes at each price level is uncertain and towards season end, demands varies and may not even exist for that product, thus, wasting the clothes and making the value zero. 4. Price and stock levels need to be forecasted and matched accurately SoWOT Matrix S H M L H M L T O H H M L M L W Linking S1 with O1 & O2 can pave the way for Reiss to enter the International market while bridging the gap. Linking S4 with T3 and T4 can result in minimal loss due to value depreciation of the clothes at the end of season. W2 and O2 together will lead to international expansion after due market research to overcome the threat. Taking care of W1 by using S7 and S5. T2 can be overcome by and converted into strength with the help of S5, S3 and S1. . Read More