Market position
Harris and Walters (1992) (appendix 2) have developed a positioning strategy outlining the implications for operations management. The strategy is divided into four component parts which are merchandising strategy, customer services strategy, customer communication strategy and the trading environment strategy which are combined to offer to the target customer group i.e. students.
The focus will be on the trading environment strategy, which requires a definition of display, convenience, ambience and design of the store. The Implementing Strategy is concerned with the location, size and visual merchandising of the store. The implications for operations management are quality and quantity of staff, the standards of facilities and systems and the scheduling of physical and human resources.
Trading environment strategy
Store Image
Factors affecting store image include merchandise sold, promotional activities, customer service and salesforce. The store’s name is an information rich cue to its image, therefore the name ‘Kwik Kit’ emphasises that the process of getting a team kit is quick and easy. It is essential to have a distinctive name as the mention of it “evokes a vivid image in consumers’ mind” (Zimmer and Golden, 1988, p335). The sports theme will run through the store with an interior design similar to that of a changing room.
The Implementing strategy
There are three major decisions in retailing “location, location, and location” (Dunn et al, 2002, p226). If the store is easily reached, the number of consumers will increase and therefore “a good location may result in high sales revenue, increased market share, and high profits, a poor location could become a financial liability” (Kimes & Fitzsimmons, 1990, p420). Thus location is vital to the success of Kwik Kits. In order to access students with promotional material or distribution effects the stores need to be based on or nearby to university campuses. These are non-traditional locations. Initially I’d seek to locate on one campus based university, which would be Birmingham as this is renown for sport. Therefore, Kwik Kits should have high demand. Also, there is no competition on this campus as this would be the only store of this kind. However, Loughborough Campus has a new store called Concept Sports, which specialises in imprinted sports clothing so would be a competitor. The number of stores could increase by extending to other campus universities such as Bath and Nottingham University. Bath may be particularly desirable as it is popular with sports students as their sports facilities are currently being developed.
The student market does not tend to have personal transport such as cars as these are expensive, so they will predominantly use bicycles or public transport. Locating Kwik kit on campus combats transport problem, as it would be easily accessible as is a high density of students living close by who could walk to the store. Campus universities tend to be within reach of cities or large towns therefore highly populated areas e.g. Birmingham University campus is close to the city centre. Therefore, members of the public who are not students would also have access to these stores, which would increase customers.
Due to the store providing speciality goods, which are highly tailored to individual needs the trading area will be medium to largely sized. If the store seeks to attract customers from Birmingham city then their mobility will increase which may warrant a larger sized store. In terms of stock holdings, the store will be able to hold broader and deeper varieties of merchandise, which will help to attract customers from greater distances. There are no competitors directly on Birmingham campus so the store should gain enough custom to be medium sized. However, the store size may be restricted due to existing buildings on the campus.
Clothing would be displayed in a limited colour range with no custom colours so stock could be held in store and bought cheaply in bulk from suppliers. The main tracksuit colours would be black and navy and to tailor them to your team colours you’d use colour printing or embroidery.
Computer programmes on the store floor would provide customers with an interactive kit matcher, so you could make a visual image of the kit before work began on the printing. The consumer could also design the printing on the computer, therefore it would be totally individually tailored. Fully trained store staff will print the garments but the consumer can carry out the rest of the process.
The store would be different to mail order companies as consumers can try on the clothing and get fully involved in the development process so therefore is very interactive. Kwik Kit may seek to move into mail order using an interactive kit matcher website.
There are five different types of space needed in a store:
- Back room
- Office and other functional spaces
- Aisles, service areas, and other nonselling areas of the main sales floor
- Wall merchandise space
- Floor merchandise space (Dunn et al, 2002, p499)
In relation to Kwik Kits the following spaces will be allocated (appendix 3):
The store will have a loop layout (Appendix 4). Therefore all merchandise can be viewed on the walls and in the centre of the store there will be a computer suite. One wall will be used for displays of printed kits, television screens and staff certificates. The television would play famous sporting moments for customers to watch as they wait for their kit to be printed. The display cabinet will contain samples of kits with intricate printing on, to illustrate the quality of product and services. Employee qualification certificates in printing and customer services will also be displayed to increase customer trust and to ensure credibility.
Two of the other walls will be used for displaying the two types of playing kits i.e. own brand and Nike. Walls will be ‘triple hung’ with garments of different sizes on each peg. The final wall will be used to display training gear and tracksuits.
Wall fixtures and the bench/shelving (part of the changing room effect underneath the hanging kits) will display sports accessories such as footballs and managers boards.
Certain forms of in-store marketing will be used including posters on the back of toilet doors showing products provided, as people are likely to pay attention to these. In order to reduce shrinkage or theft, goods will be electronically tagged, and the store will be very open plan to increase surveillance.
Operations management
The basic stock method (BSM) would be used as it is necessary to have a given level of stock at all times. There will be minimum stock holdings and as soon as this was met further orders from suppliers would be made. We may seek to get initial bulk orders from the Far East, as this would be cheaper than sourcing suppliers in England. The clothing could be stored in an off-site warehouse and only a minimum level kept in store to minimise overheads. When the minimum stock holdings were met drivers would collect goods from the warehouse. Stock levels would have to be closely monitored daily. To top-up stock suppliers in this country must be used as it could take a couple of months to ship in goods from the Far East. Initial orders for the forthcoming football season would always come from the Far East. The quantities would depend upon forecasting.
Printing flex for numbers would be made up in-house, or local suppliers could be sourced e.g. Metro Sports in Stourbridge, which is local to Birmingham. An embroidery machine would have to be bought to do
club badges.
All staff must be fully qualified in printing and designing graphic logos for company sponsors. They’d also be fully trained in customer services. One member of staff must oversee the computer suite, two members of staff must supervise the shop floor and three members of staff must conduct the printing and embroidery of the garments. Due to Kwik Kits being a specialist store there is a need for high service levels. The kits for teams are highly tailored to each clubs requirements and therefore, because of this it is very labour intensive. Staffing levels would be high as the aim of the company is to provide cheap kits with printing if required within an hour. More staff would ensure printing was done as quickly as possible.
In order to have an optimal merchandise mix we need to look at the variety, breath and depth of merchandise (appendix 5). Football kits and related sports training clothing are the merchandising line as they will all be aimed at the same consumer group i.e. sports students. The variety of the merchandise mix is linked to the number of different lines provided. My store will be middle variety as football kits would be provided, tracksuits and accessories e.g. footballs and space markers.
In terms of breath, Kwik Kit would provide two brands of football kit. One would be a budget Kwik Kit range and the other a branded name such as Nike. Providing two brands gives the opportunity for bulk purchases therefore cheaper. The problem being if they did not sell we’d have large left over stock, however accurate sales forecasting can prevent this. There will be four types of football shirt in the Kwik Kit range, bought at cost from the Far East for £3 a shirt, to be sold at £8, which is a good profit margin and highly competitive. The Nike range will be more expensive with ranges from £12 to £25 a shirt. This prevents a battle of the brands as two tiers aimed at different budgets appeal to different consumers.
The same would apply for tracksuits with the Kwik Kit range being cheaper than the Nike range, which would be run alongside each other. Nike would be the ideal supplier because their warehouses have just moved to Sunderland from Belgium so delivery would be relatively quick. In terms of top up orders for the Kwik Kit range, suppliers will be sourced in the U.K., although they are more expensive than the Far East, delivery time is shorter. However, U.K. orders would be kept to a minimum as forecasting sales will enable the correct amount of stock to be ordered at the start of the season from the Far East. The two basic colours in the tracksuit range would allow for bulk purchases.
The merchandise depth will be five full kits (14 shirts, shorts, socks, tracksuits and sweatshirts) in each range, both Nike and Kwik Kit brands. When this minimum stock level is reached more goods would be transported from the off-site warehouse into the back room. Using an off-site warehouse enables Kwik Kits to cut overheads and combats space constraints in the store. Stock levels must however be closely monitored at least once a day. Samples of each garment will be displayed on hangers around the shop floor, the rest of the minimum stock will be out the back.
In terms of long term plans for Kwik Kits, there are a number of possible ways to expand the company. For example, by providing an increased number of sports kits in rugby, hockey, netball and cricket. If the store is profitable in Birmingham, Kwik Kits may seek to locate additional stores on other university campuses. These could include universities such as Bath and Nottingham. The interactive computer programme in the store could be converted to a website to allow on-line ordering and expansion into mail orders.
KWIK KIT STORE FEASIBILITY
The chosen industry of Teamwear is highly competitive, however if Kwik Kits can provide a totally flexible team package i.e. provide playing kits, training clothing and equipment it has a high chance of being a successful company. The advantage of sourcing from overseas to cut prices would work in the companies favour, particularly as the student market would be targeted, which may have a tight budget. The differentiation of speedy service with a ‘kits while you wait’ slogan could make Kwik Kits a major contender in the Teamwear and Imprinted Sportswear industry. The location of the first store on Birmingham University campus, also offers scope to expand from the student market to Midlands sports clubs. Due to Birmingham being a large city it is therefore highly populated and would have more sports clubs than a less urbanised area.
However, although this business proposal appears to be feasible, there are always risks with investments. The major issue may be operationally having enough staff to provide printing for kits within the guaranteed time of an hour (subject to quantities). During busy periods, for example at the weekend staffing must be sufficient to cope with the order demands.
Watch out for Kwik Kit stores opening shortly in your area!
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