This project aims to indicate measures that can be taken by the intimissimi brand in order to enter the classic underwear market in the UK. It identifies the market factors, size and trends. Market segmentation will be looked at in detail while, key players in the market will be identified as well. Focusing on 3 major players in the market namely; Bravissimo, Myla, AgentProvocateur.
MISSION STATEMENT
Intimissimi brand is synonymous with good quality products at extremely attractive prices. It ascribes the essence of a woman as being inherent in the company’s product. As the organization is venturing into the classic underwear market in the UK, the quality of the products it is offering will be second to none. intimissimi will operate as a boutique store covering middle level market.
This will be mixed with added value with great emphasises on the supply chain structures. As the company will be liaising with different suppliers on different level of production, it is the belief of the management team that the ethical stance of the organization will be reflected in every element of the supply chain. The organization will source from suppliers that meet the ethical stance of the intimissimi brand.
BUSINESS ENVIRONMENT:
SWOT ANALYSIS
Strengths:
- Lingerie remains a necessary purchase for women, because of the emotional attachment to it.
- Women are showing more interest in design and are demanding quality products and brands, rather than accepting unbranded underwear
- The continued increase in the number of women combining full-time employment with busy leisure lifestyles has created demand for wider ranges of footwear.
Weaknesses:
- The strong pound and efficient production in the Far East, and some European countries, have given imports a very dominant share of the UK market.
- Imports from low-cost countries, combined with a tendency to discount heavily in UK retailing, have eroded profit margins.
- Home shopping via the internet has so far proved disappointing and sales through traditional retailing are declining.
Opportunities:
- Women are becoming interested in owning a wider rage of underwear’s for different occassions
- Interests in branded underwear are higher than ever.
- The relative strength of the pound against many foreign currencies provides opportunities for importers and retailers.
- In-store ambience enables an environment for the actualisation of the experience that goes with shopping
Threats:
- The strength of the pound abroad makes it increasingly difficult to sustain imports.
- Traditional outlets for underwear are threatened by the expanding non-specialist outlets.
- The rise of fake industry which copy most of the branded products.
PEST ANALYSIS
Political:
- There have been huge increase investments in the UK since the labour party came into power.
- The political landscape is stable.
Economic:
- There is rise in employment rate in recent years.
- The interest rate has recently been reduced to encourage spending.
Social:
- Celebrities are used as opinion leaders to encourage women to spend on luxury goods.
- More women are living alone as single moms.
- There is an increase in the agitation for equal pay
Threat:
- There is fear of terrorist attack, particularly after the July 7th attack in the UK.
MARKET SEGMENTATION
The way the market is segmented is through analysing the lifestyles of the women. Many of them are high income earners. They live in posh areas like Chelsea, Kensington, etc. They love and follow fashion, reading all sorts of fashion magazines like vogue and glamour to keep up with their style taste. Most of them are between the age 25 and 40, with consciousness for beauty and style. They shop in expensive stores at Knights bridge and New Bond Street
ENTREPRENEURIAL PRODUCT
The quality of the lingerie will be reflected in the materials that are used and the design that goes with it. The lingerie/underwear will come in different colours, sizes and styles that will be devoid of fashion. The raw materials are processed from pure cotton and so on. The company will be working closely with a vertically integrated manufacturer in Turkey and Mali. This will enable products to arrive on time as the organization places emphasis on supply chain management. This is the lifeblood of the brand in the marketplace and as such, other emphasis on customer service among other things that are prominent in the retail business will be overlooked by the organization. Right product, at the right time will be the philosophy of the organization upon which the Intimissimi brand will be built in other word (JIT) service.
COMPETITORS
Agent Provocateur
Launched in 1994, by Joseph Corre (son of ) and his partner Serena Rees, agent provocateur has been hugely influential in the lingerie market with its up market sexy/risqué collections that have generated massive media coverage and many ‘interpretations’. The ranges are very beautiful, glamorous, erotic and decorative, fabulously photographed for the catalogue and website. Prices are around £50+ for bras. It currently has three stores in London, one in Manchester, one at Heathrow Terminal 4, and concessions in (London and Birmingham) and in Dublin. It also has outlets in Los Angeles, New York, Las Vegas, Dubai, Hong Kong, Moscow and Paris. It launched mail order in 1996 and a transactional website in 1999. For the year to end March 2005, Agent Provocateur sales (excluding VAT) were £5.58 million, up from £5.46 million the previous year. Operating profit fell from£464,000 to £214,000 and pre-tax profit from £410,000 to £123,000, (mintel report).
Established in 1995 by Sarah Tremellen, provides a wide choice of pretty and glamorous lingerie and swimwear in D-JJ cup, plus a small selection of clothing designed especially for large-breasted women. It has ten standalone shops plus a mail order catalogue and transactional website. The shops are situated in Cambridge, Glasgow, Leeds, Manchester, Newcastle, Nottingham, Oxford, Solihull and two in London. In 2005, the company ran a direct marketing campaign to expand its customer base, using off-the-page press advertising, inserts, door drop and direct mail.
For the year to end August 2005, sales were £24.9 million, up 28% on the previous year (£19.5 million) with operating profit of £1.1 million (2004: £1.0 million), (mintel report).
was set up by Charlotte Semler and Nina Hampson, in 2001 to sell ‘elegant, feminine and deeply seductive’ lingerie plus massage products, sex toys and other accessories. There are four stores in London plus the collection is stocked in City of London store, (London) and Liberty. There are also stockists in Paris, Milan, Tokyo and in the US. The company produces a catalogue and operates a transactional website, (mintel report).
Prices are at the ‘designer’ end with bras £70-120 (a diamante style is £349) and briefs from £20. Some bras go to a G cup. The ‘My by diffusion range has a lighter touch and is less expensive with bras around £30 and briefs £15-25. This collection is stocked in around 40 stores.
In September 2005, ran out of cash and was taken over by a private investment company called The Investor. The founders retain a small stake and are on the board. The new owners are reported to have said they will invest ‘several million pounds’ to expand the business.
COMPETITORS’ BRANDS VS INTIMISSIMI BRAND
With respect to points raised above in relation to the business environment, trends in the industry, competitors and so on. The Intimissimi brand will operate in small stores with cells in strategic places in order to create awareness for the product. While the key players operate stores that are located in big shopping areas such as Knight’s bridge and Oxford Street and concessions in large department stores, the main focus of this organization is to bring the brand closer to the women that understand the essence of quality without compromising on ethics. This is the message that will be passed across through the Intimissimi brand.
AREAS OF INVESTMENT
In order to enter the classic underwear market, the company needs to take into account the following as areas to invest in:
- Store architecture
- Staffing
- Visual merchandising
- Types of products
- Promotion
- Size range
- Technology
MARKET SIZE AND TRENDS
Underwear as a whole has been buoyant over the five years reviewed below, with, unsurprisingly bras and pants showing the strongest success. In fact when separate one can see that retail value sales of bras and pants has grown by an estimated 21% between 2001 and 2005, compared to the 14% growth of all underwear over the same period. The buoyancy from 2002 can be attributed to the growing fashion status of underwear and continuing product innovation.
Figure 4: UK retail sales of all women’s underwear at current and constant prices and bras and pants, by value, at current prices 2001-05
Source: Mintel
FORECAST
Mintel forecasts that the total UK market for underwear is due to grow by 13% at current prices over the 2005-11 period, reaching an estimated value of £4.25 billion by 2011. Removing the effects of deflation over this time, such growth is equivalent to a 28% real-market increase.
At 2005 price’s
Women’s under wear
£m index
Source: Mintel
COMPETITIVE ANALYSIS
The capital budgeting to launch the collectibles brand in the UK is shown below:
Having looked at the capital budgeting for intimissmi brand entering the UK market, from the above this project should be accepted because the cost of capital is the return foregone by not investing in securities or risk free assets. If by investing in the intimissimi brand is risky as investing in the stock market, the return foregone is 5%. Since 15% return on the brand’s project exceeds the 5% opportunity cost, and then we should go ahead and invest in the business.
ADVERTISING AND PROMOTION
Promotion is viewed as important aspect industry in communicating its product launches, as well as wider support for particular brands. Illustrating this, expenditure, advertising has shown an overall increase between 1998 and 2002. Expenditure in 2002 was listed as £6.2 million compared with £28 million in 1998, which represents an increase of 29 per cent. However, Intimissimi brand would be promoted and advertised via several media, billboards.
BIBLIOGRAPHY:
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Kotler, P, 1991. Marketing Management: Analysing, Planning, Implementation and Control. 7th ed. London: Prentice Hall.
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Wilson, A, 2003. Marketing Research: An Integrated Approach.1st ed. UK: Prentice Hall.
Websites:
www. agent provocateur.com
www. .com
Reports:
Mintel report 27 march 2001
Market Research International Sept 2002
Keynote Market Report Aug 2004
