Strategies for Initiating a New Boutique Retail Shop - Term Paper Example

Report on Strategies for Initiating a New Boutique Retail Shop Name Institution Date Table of Contents Table of Contents 2 TABLE OF FIGURES 3 1.0 Background to Market 4 2.0 Market Analysis 5 3.0 Market Forecast 7 4.0. Consumer Trends 9 4.1. Economic factors 10 4.2. Environmental factors 10 5.0. Beyond the Brief 11 6.0. Visualizing Insights 12 References 15 TABLE OF FIGURES Figure 1: CORE BUSINESS VALUE 14 Figure 2: CLOTH PRICES 14 Figure 3: DEMOGRAPHICS OF MELBOURNE 15 NEW CHILDREN’S BOUTIQUE RETAIL SHOP 1.0 Background to Market Children boutiques are one of the business ideas that never misses a market. With respect to the current demographic statistics, it is evident that the world population is realigning itself with more than 60% of the world population being people of under 35 years of age, 35% being under 16 years of age and 17% constituting of population of below 9 years of age (Atkinson, 2015). The demographical statistics brings with it hope for boutique and cosmetic industry since every single person irrespective of age, gender, ethnicity or culture must put on clothes and majority also shall respond to the call of fashion. In a single day, approximately 355,000 infants are born and clothing is one of their chief needs. Narrowing down the statistics to the area of interest, despite Melbourne being a young city, its population grows steadily and currently the total population is approximated at 4.5 million people. The city is home to approximately 1.8 million households which according to projections shall rise to 2.4 million by 2036 (Brinkman et al., 2014). The statistics further hold that 18% of Melbourne population comprises of the young population aged between 0-14. Every household has empirically 1.8 children (Johnson, 2015). The fashion boutique retailer therefore, has a capacious market to serve with numerous parents always seeking out boutique services to meet the demand of their infants. However, the span and functionality of the new boutique shop is constrained by the competitors’ willingness to control the better part of the market. With reference to Melbourne, the new retailer shall experience stiff competition from numerous local contenders consisting of A Kidz Wardrobe, BIG W, Blossomwood, Evie, John’s Children Boutique and Heather Brown Baby amongst others (Ferguson and Scott 2011). Each of the competitors consists of distinct cultures, size and market span. However, most of them tend to serve the local markets though a number of them have also gone global (Chen et al 2014). Online boutique marketing sites also shall act as a competitive threat to the new entrants since they tend to sell such products at relatively lower prices in comparison to the expected market price for boutique products. Little-Boo-Teek Baby clothes online and Oobi are some of the online sites. The major drivers for Boutique consumption consist of the increasing population and the people’s incomes where more than 12% of the total population is guaranteed personal income of more than $100 dependent on the economic class (Firat, Turker & Metin, 2014). 2.0 Market Analysis The boutique industry is certainly experiencing massive changes as a result of various macroeconomic factors. According to the current statistical data, Melbourne population is growing progressively and infants as well as children tend to occupy a significant percentage of the area’s population hence children boutique retails have a significant role to play in the market (Shareef, Kumar and Dwivedi, 2015). Nonetheless, with increasing demand for other life necessities, consumers have been cautious in their spending thereby elevating the level of competition in the cloth market. Additionally, the number of entrants into the industry is quite alarming thus reducing supplier to consumer ratio consequently resulting in low returns. Finding a free space for a new boutique shop is constrained by the high occupation of retail structures especially in the town center (Ferguson, & Scott, 2011). Further, the owners of the buildings tend to charge relatively higher rent cost as compared to those in peripheral areas and this affects the overall prices of commodities. Despite the prevailing market challenges, a new entrant in the cloths retailing industry still stands a chance to comprehensively define, manage and control the market. Current boutique shops in the region are realigning their strategies to online based marketing and sales (Johnson, 2015). However, research shows that over 73% of customers would prefer face to face purchases. The new entrant can therefore use the brick and mortar technique to set up physical shops where customers can access clothes, negotiate for them and hold, try and touch items before actual purchase. The physical presence promises instant gratification to customers when purchase is made. However, new entrant must consider online platforms as complements to effective marketing and sales management. With respect to the current market situations in the market, the cost of clothes in the market varies proportionately with the type of clothes. For instance, boy’s cotton school shirts goes for A$ 49.95, children shoes for A$79.95, boys’ blazers at A$ 149.95 and Girls’ school dress at A$89 amongst other costs (Sa, 2015). Parents’ attitude to purchase is directly dependent with their income. The new entrant should set up the new boutique shop is the North Western part of Melbourne town specifically at the junction at Footscray opposite Victoria University. This area is a suburb region characterized by favorable physical conditions, cool temperatures and relatively lower commotions as compared with the town center (Atkinson, 2015). Additionally, the region is inhabited by numerous and densely populated households who are certainly predictable potential customers to the new boutique shop. Further, most of the competitors are situated in the town center as the proximity of the new entrant to the town centre remains distant hence the probability of stiff competition from brick and mortar competitors would be limited (Shareef et al., 2015). Once the retailer has developed a robust and outstanding online marketing platform, the competition from other online competitors would have been curbed. With consideration the entrant’s proximity to the university, the span of reach to customers shall expand significantly since the shop will be serving the University’s employees and students who have got children as well as households around (Firat, Turker & Metin, 2014). However, the area might be challenging to some extent because of minimal competition resulting into reluctance at work and probably lower return in the long-run. 3.0 Market Forecast The clothing retail category has indeed undergone drastic changes within the last decade. Initially, boutique shops were mere brick and mortar shops which had no serious long term objectives but worked consistently towards achievement of daily needs. Retail shops had no congruent work strategy which however remained unanimous for quite a long period of time. Competition remained low since the sector had not been ventured in by numerous competitors (Shareef, Kumar and Dwivedi, 2015). However, by early 2000s, numerous cloth retail shops begun to crop up as a response to the increasing population accompanied by overwhelming demand of clothes and footwear. By 2004, boutique retail shops were almost in every street of Australia and people could easily access boutique products (Groeger and Buttle, 2014). However, competition was stiffening and by 2010, some shops were being closed down. Nevertheless, the internet played a significant part in reviving and reinventing the cloth retailing industry. The internet provided a crucial part in rejuvenating marketing strategies through online marketing systems. Retail shops begun developing self-websites and signing into other social sites as a way of reaching out to numerous customers in a virtual manner (Sa, 2015). Currently, some boutique enterprises such as eBay completely rely on online marketing to reach out and serve customers. Concurrently, some enterprises still manage to perfect their boutique businesses through brick and mortar strategies alone. However, strategic boutique organizations consider it vital combing the two strategies as a way to manage online based customers as well as physical or face-to-face customers thereby taking control of any opportunity that might arise. According to IBISWorld estimates, clothing retailing industry indicates low capital concentration and each Australian dollar spent on capital cost calls for A$9 expenditure on labor. According to the report, the industry is explicitly labor intensive since all stock shelves require employees to manage the merchandise, provide customer services and manage organizational inventory (Ferguson, & Scott, 2011). Besides, according to the Australian Bureau of Statistics (ABS), clothing retailing industry is experiencing drastic and systematic changes to promises mush positivism to the economy. The reports according to ABS maintain that the industry had enhanced by 0.1% between January 2017 and February 2017 increasing the turnover by A$726 million (Brinkman et al., 2014). In January the same year, total turnover had increased by 0.2% while in December 2016 the turnover increase stood at 0.2%. With respect to the annual Australia turnover, the sector had resulted in 2.9% increase between February 2016 and February 2017. These statistics depicts a deteriorating income system from the boutique based businesses. The concern therefore is determining the cause of the reducing returns of the industry. Australian clothing market became the hotspot for clothing retailing enterprises since the response of Australians to fashion elevated as demands for clothes resistant to polar temperatures became a necessity (Groeger & Buttle, 2014). Additionally, the Australian cloth market is experiencing stiff competition from global cloth retailing organizations like eBay. The multinational organizations such as Zara, Topshop and GAP are flooding the Australian market with relatively cheaper clothing items. Consequently, the infiltration of such multilateral organizations results into suppression of local retailers forcing them to lower the cost of their commodities so as to be in a position to compete effectively (Craik, 2015). In his concern of Australia as an unstable economy, Tony, one of the clothing retailers in Mecca Melbourne, in his report to ABS notes that the multinational organization are taking up the market as customers are being lured to somewhere else despite rent costs taking a heavy toll. The idea of developing a new multi-billion resource centre known as Emporium in the heart of Melbourne shall considerately dwindle the business of small and medium retail shops affecting the general operations. With perseverance of such trends, the boutique retails shall essentially be affected adversely by prevailing conditions (Lu, Karpova and Fiore, 2011). Most small and middle retailers are most probably to refrain from their businesses in the near future because of incapability to compete. The online retailing system especially for multinational organizations shall take up the market consequently resulting in deteriorated nation revenue from the sector. 4.0. Consumer Trends In the new retailers endeavor to indulge in boutique retailing, the retailer must understands that consumers are constrained to specific characteristics which define their propensity to buy. The retailer must understand that customers have demand and that demand is controlled by other market factors (Craik, 2015). Customers’ propensity to buy is characterized by factors such as their social factors, economic factor, political and legal factors, technological factors and environmental factors. These factors play a critical role in shaping peoples orientation towards demand. 4.1. Economic factors People’s willingness and capability to buy is shaped by the relationship between prices of commodities and the quantity of those products. For instance, when market prices are high, consumers’ propensity to buy will be low resulting to purchase of lesser quantities. On the same note, when prices are relatively lower, consumers’ propensity to buy shall increase resulting into purchase of higher quantities of commodities. To maintain economic balance, boutique retail shops must operate at optimal prices and optimal quantities (Sa, 2015). The demand however, is affected by other factors such as parents’ income. Higher incomes replicate to higher propensity to purchase as lower incomes shall mean that purchase shall remain low. Finally, economic cycles also play a fundamental part in shaping people’s remand. During recession and depression, prices are high and the economy is under super-inflation constraining consumers to restrict their purchase to their very basic needs (Leong and Somerville, 2010). During boom however, supply of commodities is high saturating the market leading to lower prices hence shifting the demand towards the better part of the economy. The retailer must be in a position to respond to such economic fluctuations. 4.2. Environmental factors Climate with its seasonal trends play a fundamental role in determining customers demand especially when it comes to clothing. For instance during summer, the demand for heavy clothes and umbrellas is at minimum whereas during winter, the weather goes extremely cold thereby compelling people to purchase the heavy clothes and umbrellas (Brinkman et al 2014). During the winters, people tend to care much for the children hence are obliged to acquire clothing that would keep the children warm. 5.0. Beyond the Brief The major part of this report addresses customer orientation to a new boutique enterprise. However, there are other factors that require explicit consideration and analysis. Firstly, capital plays a significant role in determining the size of the investment. The retailer must therefore assess personal financial capabilities towards meeting the capital needs of the organization. It is worthwhile considering the current rent costs within the location under consideration, the cost of procuring the children clothing, the cost of refurbishing the rented building to meet the expected designs, and cost of registering the business amongst other factors (Atkinson, 2015). The retailer should therefore assess these financial factors in a piecemeal so as to determine the exact cost of initiating the idea and getting the business running. For the retailer to consistently and efficiently meet demands, it is essential that the retailer seek for a long-term reliable supplier who would supply the enterprise with children boutique items as and when required (Lu, Karpova, and Fiore, 2011). The retailer must also be in a position to analyze, understand and interpret the prevailing laws governing business institutions within the country. The retailer must endeavor to act in line with the outlined laws and avoid breach in all cases. For instance, for the business to be initiated, it has to be legally registered and granted authority to take part in market activities. In addition to these factors, the success of the organization leans upon the owners’ capability to plan and strategize effectively before initiating operations (Chen et al., 2014). The owner must assess why he/she has the interest to do business in the boutique industry. Additionally, the retailer should devise a set of objectives that the business shall aim to achieve. The set objectives shall act as a driving force towards expanding marketability of the enterprise’s products (Shareef, Kumar and Dwivedi, 2015). Finally, the retailer should determine the expected returns from the venture as a way of determining the worthiness of the strategy. Most importantly, in running the business, the retailer should use robust bookkeeping techniques to account for all the purchases and expenditures within the enterprise so as to avoid mix-up and enhance orderliness (Lu, Karpova, and Fiore, 2011). 6.0. Visualizing Insights From the report, it is evident that there are numerous factors that play a momentous role in initiating a boutique retail shop and serving children’s boutique needs. Having initiated the business, the retailer requires finding ways of advertising the business criteria of attracting more customers into the enterprise. One of the most common known methods of visualizing business insights is the neon sign. The neon sign should contain the name of the business enterprise and maybe the dictum of the business enterprise. The neon signs should on display at least during the business hours (Atkinson, 2015). Additionally, the retailer should make fliers which compose of the name of the business enterprise, the location and address of the business and the key products it offers. The fliers should be distributed to the households around, to the university and to any other potential customer. Further, the retailer should consider designing posters which visualizes in picture form, the products offered by the enterprise and main message to the potential customers (Johnson, 2015). Posters should be pinned and pasted in major points of the region like around the university, near cross-roads and other public sites. Furthermore, the retailer can settle on bill board advertisement which directly communicates with the customer on the products offered and open times and days. It should direct the customer to the exact location of the business (Firat, Turker and Metin, 2014). The business should also use social media advertising such as on Facebook, Twitter and Instagram by posting enterprise and product pictures to captivate the users’ attention and increase knowledge on the business and create brand awareness. Factors affecting customers’ propensity to buy Figure 1: CORE BUSINESS VALUE Cost of Children Clothing Clothe Type Cost in A$ Boys Cotton 49.95 Children Shoes 79.95 Boys Blazers 149.95 Girls dresses 89.95 Figure 2: CLOTH PRICES Demography of Melbourne Figure 3: DEMOGRAPHICS OF MELBOURNE References Atkinson, R. (2015). Losing one’s place: Narratives of neighbourhood change, market injustice and symbolic displacement. Housing, Theory and Society, 32(4), 373-388. http://www.tandfonline.com/doi/full/10.1080/14036096.2015.1053980 Brinkman, S. A., Gregory, T. A., Goldfeld, S., Lynch, J. W., & Hardy, M. (2014). Data Resource Profile: The Australian Early Development Index (AEDI). International journal of epidemiology, 43(4), 1089-1096. https://www.ncbi.nlm.nih.gov/pubmed/24771275 Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L., & Chow, W. S. (2014). IT capability and organizational performance: the roles of business process agility and environmental factors. European Journal of Information Systems, 23(3), 326-342. http://fds.hkbu.edu.hk/tch/info-system-e-bus-management/staff/admin-details.jsp?id=vwschowHKB&cv=00069&cid=168&cvurl= Craik, J. (2015). Challenges for Australian fashion. Journal of Fashion Marketing and Management, 19(1), 56-68. https://books.google.com/books?id=uG8cDAAAQBAJ&pg=PA100&lpg=PA100&dq=Craik,+J.+(2015).+Challenges+for+Australian+fashion.+Journal+of+Fashion+Marketing+and+Management,+19(1),+56-68.&source=bl&ots=9noEYSeN3D&sig=dp2Q9SCEUyX2LBZJ9QRJhANty8Y&hl=en&sa=X&ved=0ahUKEwibgPSNzpvTAhWEIcAKHWyVBO4Q6AEIJjAD Ferguson, A., & Scott, T. (2011). Market reactions to Australian boutique resource investor presentations. Resources Policy, 36(4), 330-338. http://econpapers.repec.org/RePEc:eee:jrpoli:v:36:y:2011:i:4:p:330-338 Firat, A., Ozaltin Turker, G., & Metin, I. (2014). Specification of target market in small and medium scale accommodation businesses: a study on boutique hotels operating in city of Mugla. Tourismos, 9(2). https://www.thesearchengineshop.com/online-marketing-accommodation-hotels/ Groeger, L., & Buttle, F. (2014). Word-of-mouth marketing influence on offline and online communications: Evidence from case study research. Journal of Marketing Communications, 20(1-2), 21-41. https://www.researchgate.net/publication/264388943_Word-of-mouth_marketing_influence_on_offline_and_online_communications_Evidence_from_case_study_research Johnson, B. (2015). Equally dressed-up, unequally casual: different experiences of precarious work in designer fashion retail boutiques. Labour & Industry: a journal of the social and economic relations of work, 25(2), 150-162. http://www.tandfonline.com/doi/full/10.1080/10301763.2015.1063856?src=recsys Leong, R., & Somerville, K. (2010). Beyond the Boundaries: Australian Fashion from the 1960s to the 1980s. Australian Fashion Unstitched: The Last, 60. http://www.emeraldinsight.com/doi/full/10.1108/JFMM-03-2014-0017?mobileUi=0 Lu, Y., Karpova, E. E., & Fiore, A. M. (2011). Factors influencing international fashion retailers' entry mode choice. Journal of Fashion Marketing and Management: An International Journal, 15(1), 58-75. https://www.researchgate.net/publication/242344782_Factors_influencing_international_fashion_retailers'_entry_mode_choice Sa, M. L. L. (2015). A Survey on Success Factors of Business Performance for Small and Medium Enterprises in the Malaysian Accommodation Industry. The International Journal of Business & Management, 3(5), 309. http://hrcak.srce.hr/file/220531 Shareef, M. A., Kumar, V., Kumar, U., & Dwivedi, Y. K. (2015). Consumer online purchase behaviour: perception versus expectation. International Journal of Indian Culture and Business Management, 11(3), 275-288. https://cronfa.swan.ac.uk/Record/cronfa23846/Download/0023846-16122015161005.pdf Read More