Market Analysis - Brendan Manley

I Have Market Analysis Skills
I WAS ON A TEAM OF 7 INCLUDING ME FOR THIS PROJECT. WE
HAD TO CHOOSE A COMPANY (INSIDE STORY FINE LINGERIE)
AND PUT TOGETHER A COMPREHENSIVE CASE STUDY. THIS
REQUIRED IN-DEPTH RESEARCH ABOUT THE INDUSTRY,
COMPANY, AND COMPETITION. THIS IS OUR CASE STUDY…
NOVEMBER 28, 2011 Inside Story Fine Lingerie Case Report and Recommendations Daria Betlej | Megan Hastings | Eve Hurowitz | Brendan Manley* | Chelsea Stanimir | Luca Trisi | Kelly Wong 0632 2822 | 0628 0940 | 0624 0022 | 0621 3384 | 0627 5574 | 0628 0082 | 0626 9844 All students in Section 002, except Brendan Manley, who is in Section 001 CONTENTS BACKGROUND ....................................................................................................................................................................... 2 LIDA LISNEY, OWNER AND OPERATOR .............................................................................................................................. 2 COMPANY MISSION .............................................................................................................................................................. 3 PRODUCT OFFERING AND PRICING ....................................................................................................................................... 3 THE COMPETITIVE ADVANTAGE ........................................................................................................................................... 5 CUSTOMER BASE ................................................................................................................................................................... 5 SEASONALITY OF OPERATIONS ............................................................................................................................................. 6 LOCATIONS AND FACILITIES .................................................................................................................................................. 6 EMPLOYEE HISTORY AND RESPONSIBILITIES ........................................................................................................................ 7 SUPPLIERS AND PURCHASING ............................................................................................................................................... 8 COMPETITION ....................................................................................................................................................................... 8 Indirect Competitors ......................................................................................................................................................... 9 Expansion of Linea Intima ................................................................................................................................................. 9 MARKETING/PROMOTION .................................................................................................................................................. 10 Print Advertisements ...................................................................................................................................................... 10 Website ........................................................................................................................................................................... 10 Social Media .................................................................................................................................................................... 11 Special Events ................................................................................................................................................................. 12 Sales ................................................................................................................................................................................ 12 Customer Loyalty E-­‐Mail Blasts ....................................................................................................................................... 12 FINANCIAL PLANNING AND BUDGETING ............................................................................................................................ 13 GOING FORWARD ............................................................................................................................................................... 13 APPENDIX A: Inside Story Financial Statements ................................................................................................................. 14 Curve Consulting | Page 1 On a chilly November evening, Lida Lisney began to feel uneasy while taking an otherwise pleasant walk with Daisy, her Yorkshire terrier. The owner and operator of Inside Story Fine Lingerie brims with confidence when asked about her business, having grown it from a small, non-­‐automated boutique, to a giant in the Greater Toronto Area’s independent lingerie store industry. However, with her son off at university for the majority of the year, and the responsibilities of running a business becoming increasingly overwhelming, Lida finds herself in somewhat of a rut. Where is the business going? Is all of this worth the headaches and the stress? With these questions blurring the future of her business, Lida assessed the current situation of her store, the industry, and tried to formulate goals for the short and long-­‐term. BACKGROUND Inside Story Fine Lingerie was founded in 1997 by Erica and Peter Reisenberger. It is an independent lingerie boutique situated in downtown Oakville, Ontario. Lida Lisney began working at Inside Story in late 2002. She was merely a part-­‐time employee, until an innocent passing comment led to serious talks about Lida acquiring the boutique from the aging Austrian proprietors. Finally, in November of 2003, the deal was finalized and Lida was the new owner of Inside Story. When Lida took the reins in 2003, the store was very simple and could even be classified as antiquated. There existed no computer system, meaning all transactions were manually accounted for, and the store’s décor was out-­‐dated. In 2006, Lida expanded Inside Story, doubling its physical size. She did so by acquiring an adjacent portion of the building inside of which the store is situated. This was accompanied by a complete overhaul of the store’s design, transforming it into one of downtown Oakville’s trendiest boutiques, as confirmed by numerous local publications. In 2011, Lida had further plans for expansion. Wanting to open a new location for quite some time, Lida acquired a unit in the upscale Sherwood Forest Village Plaza in Mississauga, which previously housed Callalily, a high-­‐end lingerie store that had recently gone out of business. Despite the downfall of her predecessor, Lida was confident that Inside Story’s unique product offering and services could withstand the barriers that contributed to the failure of Callalily. By April 1, 2011, Inside Story, Chapter II was open for business. In addition to the physical expansion of the business, the business has grown exponentially under Lida’s ownership. With annual revenues barely reaching $300,000 under the previous owners, Lida has managed to consistently increase this figure, until its peak of $1,066,688 in 2008. Unfortunately, sales have been stagnating since. While consistently eclipsing $1 million in revenue, there has been no further significant sales growth, and retained earnings (after the deduction of a healthy managerial salary) have been negative since 2009. LIDA LISNEY, OWNER AND OPERATOR Prior to purchasing Inside Story, Lida worked as a flight attendant for Air Canada for sixteen years. When the opportunity to operate her own business arose, Lida seized it immediately. With the combination of a retirement package from Air Canada and a generous line of credit from TD Canada Trust, Lida was able to pursue the venture, and grow the little boutique into a profitable endeavour. Lida has no prior business experience, nor has she received any formal education to guide her in operating the business. As a result, initial decisions about store operations were primarily based on intuition. However, it is Lida’s strong people skills that have allowed Inside Story to flourish. Working in the hospitality industry for sixteen years has allowed her to Curve Consulting | Page 2 foster superior interpersonal skills that she exudes when dealing with all customers. Shoppers agree that her enthusiasm is contagious: “When I deal with Lida, I feel so comfortable in an otherwise stressful shopping experience. It is obvious that she cares about what she does, and loves doing it!” – Marnie, Inside Story customer Many of Lida’s friends and peers are confident that these impressive people skills, if backed by solid managerial acumen and more methodical decision making processes, could turn Inside Story into an unprecedented force in the Southern Ontario lingerie scene. COMPANY MISSION Inside Story prides itself on instilling confidence in women. The company realizes the importance of celebrating and supporting every woman’s unique and beautiful shape, and provides women with the grounds for feeling comfortable, supported, and confident in their lingerie. At Inside Story, enormous emphasis is placed on customer service and creating the most beneficial and comfortable bra-­‐fitting experience for each client. The reiterated message of “‘Never Compromise’-­‐ Feeling Good Inside and Out at Inside Story” is consistently displayed on the company’s website and on other marketing materials. Store employees also constantly reinforce this message. This mission of customer service and the superior client experience has secured Inside Story the title of Oakville’s premier lingerie store for the past eight years. As found on the company website, Inside Story’s mission statement is as follows: “At Inside Story Fine Lingerie, our goal is to reduce the percentage of women wearing an ill-­‐fitting bra. More importantly, we are very passionate about the tremendous positive feelings of comfort, support, physical and mental uplift our customers experience after being professionally fitted.” PRODUCT OFFERING AND PRICING Inside Story’s product offerings are of a high and reputable quality. Lida is adamant that even if the brand is well known, the product must directly align with the store’s mission of excellent fit in order to be carried. Lida has frequently passed over the widely known fashion line La Perla when placing purchasing orders, as she feels that the brand’s lack of sizes offered contradicts the store’s value proposition of selection and fit. Inside Story’s product offering includes bras, sports bras, maternity bras, nursing bras, body shapers, swimwear, panties, and sleepwear. Products are primarily purchased from European manufacturers. Heavily featured throughout both stores are benchmark brands including Chantelle, Primadonna and MarieJo. Exhibit 1 displays the complete list of brands carried by Inside Story, categorized by department. Eighty percent of Inside Story’s sales come from bras, however there is enough demand to support the carrying of other products. Exhibit 2 shows a detailed breakdown of sales by department. Having introduced swimwear only two years ago, Lida has noticed very promising results in the department and plans to increase Inside Story’s swimwear selection in the near future. The store’s swimwear is solely bra-­‐sized, which is a major point of differentiation for Inside Story. These bathing suit tops fit like a bra, with separate band and cup measures, as opposed to the traditional small, medium, large sizing offered by most swim-­‐wear retailers. Curve Consulting | Page 3 Exhibit 1 -­‐ List of Inside Story’s product lines, by department Bras Swimwear Aubade Antinea Atlantis Chanelle Elle MacPherson Elomi Elixir by Lejaby Empreinte Fantasie FitfullyYours Freya/Freya Active Masquerade L’Aventure Lejaby Lise Charmel Mariejo Marlies Dekkers Panache Passionata Piege Primadonna Simone Perele The Litte Bra Company Triumph Twist Ulla Aubade Antigel Fantasie Freya Huit Lidea by Maryan Melhorne Marlies Dekkers Shan Nursing Anita Bravado L’Aventure Mariejo Elle MacPherson Elomi Panache Freya Most of Inside Story’s products are destination items, meaning that customers visit the store with the intention of making a specific purchase. The average ticket price of a sale is $150, consisting of an average of 2.5 items per transaction. However, Lida recognizes the importance of carrying impulse items as well, and has begun to stock the area around the cash desk with small, easily justifiable items that provide excellent margins and effective add-­‐on sales. Examples of such products are Hanky Panky one-­‐size-­‐fits-­‐all thongs as well as Forever New wash powder. Both of these are well-­‐known products, widely publicized outside the lingerie industry. As Lida’s products are of the industry’s highest quality, they follow a premium pricing strategy. Prices often surprise first time shoppers – especially male gift-­‐buyers. The standard industry mark-­‐up is 100 percent. The majority of relevant competitors follow this mark-­‐up scheme, resulting in price parity across the industry. As a result, pricing is not used as a point of differentiation among competitors, forcing owners like Lida to set their stores apart in other, more memorable ways. This is done effectively at Inside Story by providing an augmented product offering of unparalleled customer service. Inside Story has experimented in selling men’s products, carrying silk, holiday-­‐themed boxers during the Christmas season. However, Lida has noted that there may be untapped revenue in carrying small-­‐ticket men’s items year-­‐round, that woman can pick up for their partners impulsively. Curve Consulting | Page 4 Exhibit 2 – Sales by Department Product Bras Underwear Sleepwear Swimwear Sales % ($) 65.9% 12.8% 4.4% 7.4% Sales % (units) 56.7% 32.9% 3.7% 6.7% Total Margin (%) 55.2% 44.3% 41.4% 38.5% Average Ticket Price $ 113.66 $ 37.41 $ 108.60 $ 102.63 THE COMPETITIVE ADVANTAGE Customized European bra fittings serve as a unique aspect of Inside Story’s customer service experience. A unique approach is taken to ensure that each woman is properly and accurately fitted, providing her with comfort, satisfaction, and confidence. This custom experience has become known as “The Accurate Art of Breastimation.” Contrary to competitors, Inside Story does not use measuring tapes in the estimation of chest size. Instead, the crucial back size is first established, ensuring the back band provides ultimate support. Next, the cup size is “breastimated” based on the band size previously calculated. This ensures the perfect fit for a bra, and leads to maximum customer satisfaction and ideal confidence levels. Lida extensively trains every store employee in implementing this process, with in-­‐depth training and extensive product knowledge instilled within the sales force. Although Lida and her senior employees are very experienced in this process, it is often difficult for new employees to consistently meet such high standards. The bra-­‐fitting experience is further differentiated at Inside Story through the “anti-­‐appointment” mentality that Lida has created. Customers are guaranteed service, at their convenience. No appointment is ever necessary. The reasoning behind this is for clients to be able to stop by the store at any time that suits their personal schedules, and be given an equal opportunity to customer service. This process has been successful thus far, with insufficient numbers of sales personnel to meet customer demand rarely occurring. Another key point of differentiation at Inside Story is its wide product selection. The store carries a plethora of styles and ranges including demi cups, full cups, strapless, nursing, plunge, push-­‐up, and sports bras. This vast array guarantees that clients can find a bra suitable to meet their needs and desires, ensuring the ideal customer experience. CUSTOMER BASE As both Inside Story locations are situated in extremely high-­‐income areas, Lida primarily targets affluent, middle-­‐aged females between the ages of 35 and 65. Although she makes a conscious effort to target younger demographics, Lida recognizes the contradiction between her products’ premium pricing and the budget of this younger segment. Engaging these younger demographics has been a recurring problem for Lida. Although she does admit that she carries a few “cheap and cheerful” items, younger buyers are usually more attracted to the “big-­‐box flash” of Victoria’s Secret and La Senza. Nonetheless, Lida is intent on capturing customers at as young of an age as possible “so that they realize the difference quality makes, and continue to come back for it”. Women make up 95 percent of Inside Story’s customers. However, men are extremely important to Inside Story’s sales revenue during the Christmas, Mother’s Day and Valentine’s Day seasons. These male holiday shoppers often wander into Inside Story as a result of their wife or significant other’s mention or suggestion. Thus, minimal marketing efforts have been directed at this segment. Curve Consulting | Page 5 Inside Story’s customer database contains over 8000 records. The database is accessible at both locations. Most of these customers live west of Toronto, either in Mississauga, Oakville or Burlington. By opening Inside Story, Chapter II, Lida anticipated that she would be capturing a very lucrative market segment in the immediate area surrounding the store. However, in the first six months of sales, she has noticed that almost half of the Mississauga location’s sales have been from customers that previously shopped at the original store, resulting in the cannibalization of Oakville’s sales. As 80 percent of Inside Story’s customers are repeat customers, this is especially problematic for the boutique. SEASONALITY OF OPERATIONS Although Inside Story sees immense success during busy months, Lida is concerned about sales figures during “slow” months. The busier months typically fall during the summer, from May to August, as well as in December, which benefits from the holiday rush. January, February, and September through November are especially slow months for Inside Story. The direct reasoning behind these slowdowns is ambiguous. However, Lida attributes the lower sales to poor weather, and poor economic conditions. The slow months are often coupled with the looming possibility of not being able to meet financial obligations. Luckily, Lida’s excellent track record and good relationships with suppliers have led suppliers to be rather lenient when it comes to her accounts payable. Nonetheless, Lida prides herself on integrity and punctuality when meeting such obligations. This pressure during financially turbulent periods is a major source of stress for the owner. Below are monthly sales figures from 2008 onward. Exhibit 3 – Monthly Sales 2007-­‐2008 through 2010-­‐2011 2007-­‐2008 2008-­‐2009 2009-­‐2010 2010-­‐2011 August September October November December January February March April May June July TOTAL $82,161.00 $73,656.00 $71,894.00 $71,018.00 $115,012.00 $55,319.00 $71,514.00 $73,215.00 $97,239.00 $119,734.00 $116,501.00 $119,345.00 $1,066,608.00 $102,048.00 $90,385.00 $76,072.00 $72,632.00 $98,525.00 $44,688.00 $71,512.00 $74,528.00 $79,028.00 $92,018.00 $93,515.00 $110,989.00 $1,005,940.00 $80,326.00 $76,324.00 $58,118.00 $76,787.00 $123,703.00 $58,769.00 $70,807.00 $78,433.00 $85,639.00 $96,776.00 $107,973.00 $96,571.00 $1,010,226.00 $82,418.00 $62,682.00 $70,802.00 $69,326.00 $106,851.00 $48,980.00 $65,901.00 $70,037.00 $96,541.00 $117,859.00 $119,893.00 $134,309.00 $1,045,599.00 LOCATIONS AND FACILITIES Inside Story is located at 107 Reynolds Street, in Oakville, Ontario. Inside Story, Chapter II is located ten minutes east of Oakville, at 1900 Dundas Street West in Mississauga. The Oakville store is situated in the core of Downtown Oakville, which features a variety of high-­‐end retail stores and prestigious restaurants, lending itself to Inside Story’s client base. The city in itself also drives traffic: Oakville has a population of 180,400, and 52% of citizens aged 35 -­‐ 65 are women. The Oakville location was renovated in June 2006, doubling in size from 550 to 1100 square feet. Lida is a member of Oakville’s Chamber of Commerce. The organization is extremely tight-­‐knit, allowing Lida to benefit from referrals from other local high-­‐end women’s clothing stores. Curve Consulting | Page 6 Inside Story, Chapter II is situated in a plaza in Mississauga’s Sherwood Forest Village. The store is smaller in size than the Oakville location, at only 580 square feet. The building was previously occupied by Callalily, a high-­‐end lingerie store. Lida is not intimidated by this fact as her predecessor was poorly managed, and did not offer an equivalent level of customer service to Inside Story’s. Surrounding businesses include Starbucks, Rogues Restaurant, and Convallaria Floral Design. Key high-­‐end restaurants that appeal to Inside Story’s target market and ample parking space poise the Mississauga location for future growth. Both Oakville and Sherwood Forest Village contain very affluent residential neighbourhoods, ensuring that her clientele is prepared to pay these premium prices. Lida has always envisioned a store layout to emulate a woman dressing herself: that of an Art Deco Boudoir, representing the epitome of the strong and very feminine woman with a great sense of style. Emphasis is placed on the ‘store, within a store’ concept. Each brand has its own section within the store, often with personalized fixtures custom built for Inside Story by the suppliers themselves. With the limited space in both stores, brands often compete for maximum coverage and optimal placement of their products. EMPLOYEE HISTORY AND RESPONSIBILITIES Lida takes on an enormous amount of responsibility in managing the operations of Inside Story and Inside Story, Chapter II. The success of the business relies heavily on the expertise and attitude of employees, which directly influences a customer’s purchasing process. Lida’s sixteen year tenure as a flight attendant at Air Canada has provided her with tremendous customer service and communication skills. However, her lack of business knowledge and heavy workload has inhibited her ability to properly manage the store’s sales force. Inside Story’s two locations combined produce an employee base of ten people. At the Oakville location, Lida manages four full-­‐time employees, two part-­‐time employees, and one marketing and social media assistant, Kelly. A breakdown of the organizational structure is displayed on the left. Lida strongly admires one of her full-­‐time employees, Carol because of her extroverted personality and Exhibit 4 – Inside Story’s Organizational Chart passion for the industry. Carol is an excellent salesperson, which is a testament to her ability to connect with customers through humour. These traits are essential in the customer service industry, and through the use of them Carol has managed to generate a high level of sales for the store. That being said, Lida has previously employed certain individuals who are unable to encompass this strong selling ability, and do not reflect the high-­‐quality and professional image that Inside Story prides itself on. This misalignment with firm values has resulted in costly and time consuming turnover rates. Since a service as intimate as a bra fitting may put a client in a vulnerable and uncomfortable position, Lida has very specific qualities that she tries to seek out in potential employees. According to Lida, an individual must be well presented and outgoing, have sales background, and have basic computer skills in order to be deemed acceptable. It is essential that sales associates understand the importance of not forcing sales but rather making customers feel comfortable and simply guiding their purchase decisions. Furthermore, sales associates must be able to perform accurate measurements that meet Inside Story’s standards, as this is the key differentiating factor of Inside Story. The newest addition to Lida’s employee base is Charnelle, who has a degree in marketing and merchandising from George Curve Consulting | Page 7 Brown College. Her business knowledge has thus far proven to be highly beneficial for Inside Story, with Charnelle often providing Lida with marketing, management, and overall business insight in running her two stores. Overall, employees have different strengths, which allow them to learn from one another and work effectively as a team. At the Mississauga location, Lida has granted management responsibilities to Eva Jeney, a 61-­‐year-­‐old woman with 14 years of retail experience, and background in accounting. As a result of her Eastern European descent, Eva has a heavy accent and this strains her communication skills with clients, as it is at times difficult to understand her. Eva does not hold authority over operating decisions, and is mainly praised for her expertise in retail. Lida often finds herself commuting between locations. She has considered hiring a full-­‐time manager for the Oakville location. However, this initiative has yet to be pursued because it has proven to be extremely challenging to find someone suitable for this position. Additionally, Lida’s large amount of current responsibilities has made it difficult for her to find the time to conduct a well-­‐defined and thorough hiring procedure. SUPPLIERS AND PURCHASING The company’s largest supplier is Van de Velde, a Belgian based conglomerate. Lida has developed and maintains an excellent relationship with this supplier. Lida has even created a signature bra in conjunction with them, to be sold exclusively at Inside Story. Inside Story is the only store in North America to have three pieces of “store fixtures” from Van de Velde, with two in Oakville and the third in Mississauga. A store fixture is what composes the store-­‐within-­‐a-­‐store concept of Inside Story; each fixture is a mini-­‐brand boutique within the store. The brand has discretion over the layout of their fixture, and brands often compete for prime store frontal location. Lida has also traveled to visit the Van de Velde production facility in Belgium to follow the production process from inception to design to packaging. These extra steps taken above and beyond typical supplier engagements are what enable Lida to develop the strongest and most sustainable relationships with her suppliers. The majority of inventory purchases are done at seasonal trade shows. At these shows, Lida visits the booths of all her major product lines, along with prospective new brands. Making these purchases is one of Lida’s favourite aspects of her business, often leading to spontaneous purchases and overbuys without any formal budgeting process taking place. Lida also does purchasing for her store through personal visits by suppliers. This typically involves the supplier coming to the store with products and essentially putting on a trunk show for Lida. Order decisions are made on the spot using intuitive decision-­‐making processes based on what Lida believes will appeal to her target customers, and how much stock she believes she has room to carry. Again, these decisions are fairly spontaneous, made without any research or regard to budget. Inside Story’s typical payment period with suppliers is net 30-­‐60, sometimes extending to as much as net 90. These allowable extensions are evidence of Lida’s consistent and strong relationships with suppliers. The time allowance provides Lida with some flexibility in terms of working capital and cash availability. “If you pay on time all the time, asking for an extra month sometimes is never a problem when you make a point to maintain great relationships” – Lida Lisney COMPETITION Inside Story has two major types of competitors: direct and indirect. Direct competitors are classified as retail stores that solely sell bras, panties, corsets, shape-­‐wear, sleepwear, intimates, and bra-­‐sized swimwear. Indirect competitors are Curve Consulting | Page 8 classified as mid to large-­‐sized retail establishments that feature extensive intimate, lingerie, swimwear, and sleepwear departments. Exhibit 6 shows a positioning map featuring Inside Story and its competitors. Direct competitors include: v
v
v
v
v
v
v
Good Night, Good Morning (Oakville) La Senza (Oakville and Mississauga) Victoria’s Secret (Oakville and Mississauga) La Vie En Rose (Oakville and Mississauga) Susan’s Fine Lingerie (Mississauga) Linea Intima (Oakville) Mistero Lingerie (Mississauga) Exhibit 5 – Inside Story’s Competitors & Locations Indirect competitors include: v The Bay (Oakville and Mississauga) v The GAP Body (Mississauga) v Sears (Oakville and Mississauga) INDIRECT COMPETITORS The lingerie departments in many of the big-­‐box stores such as The Bay and Sears offer an extensive array of products and product lines. Furthermore, they also offer a wide variety of price points, with bras ranging from $24 to $88. However, these departments do not offer comparable specialty products. They also cannot compete with boutique lingerie stores in terms of level of customer service and product knowledge. EXPANSION OF LINEA INTIMA The recent expansion of Linea Intima into Oakville has threatened Inside Story’s overall profitability and sustainability. Linea Intima, established in 1977 in Toronto, recently opened its seventh store in the summer of 2011 in Oakville. The family-­‐operated company is renowned for its high-­‐quality merchandise and commitment to strong customer service. Linea Intima offers the latest high-­‐quality designer bras, panties, corsets, shape-­‐wear, sleepwear, intimates, and bra-­‐sized swimwear. The store is located just 400 meters away from Inside Story in Oakville. Lida has acknowledged the competitor’s recent move but has remained optimistic. She understands that many of her customers will likely go to Linea Intima and determine how it compares with her overall product offering. However, customers have told Lida that Linea Intima does not provide the same level of service as Inside Story. Furthermore, Lida has taken proactive measures to maintain customer loyalty. She is introducing a customer loyalty program in early 2012. On the situation, Lida remarked that, “the issue makes you wake up and smell the coffee. Don’t take your customers for granted. Work harder to maintain their loyalty.” Curve Consulting | Page 9 Exhibit 6 -­‐ Positioning Map MARKETING/PROMOTION Lida has yet to construct a comprehensive marketing plan that effectively promotes her store in a way that properly aligns with and promotes the store’s vision and mission. She admits that her current marketing initiatives are sporadic. Furthermore, she recognizes that funds for initiatives are not allocated in a strategic manner. Inside Story also currently lacks any measurement or post-­‐implementation techniques to evaluate and review marketing efforts. However, Lida has made a conscious effort to maintain brand consistency by placing the same logo in every store advertisement to facilitate brand recognition. The store’s main points of differentiation, convenience and selection, are also reiterated in various advertisements and on the store’s website. The main advertising strategy that the store actively uses is expert testimonials, where advertisements feature quotes by Lida regarding ill-­‐fitting bra statistics, as well as various ways to obtain “the perfect bra-­‐fit”. Previous attempts to branch out from this traditional marketing strategy include a radio advertisement on the local radio station, Wave FM. Although successful, this initiative was terminated due to the conversion of Wave FM to a country-­‐music radio station, which does not properly align with Inside Story’s target market. Lida is still hoping to find a replacement station on which to advertise, but is yet to embark on a proactive search for a suitable fit. PRINT ADVERTISEMENTS Lida consistently prints advertisements in two local newspapers, the Oakville Beaver and Snap Oakville, read by approximately 49,000 Oakville Residents each month. Additionally, advertisements are placed in a weekly newspaper, The Shopping News, which consists of classifieds and business advertisements servicing the areas of Burlington, Milton, Oakville, and West Mississauga. WEBSITE The primary form of communication between Lida and her clients is through Inside Story’s website, www.insidestory.ca. In the last fiscal year, Lida invested $3650 in the development of this website. The website serves an informational purpose by providing in-­‐depth descriptions and photos of the products carried in-­‐store, as well as by listing all of the brands carried Curve Consulting | Page 10 at Inside Story. The website comprehensively outlines the company’s primary points of differentiation including their “no appointment necessary” convenience factor, and their wide selection of products available. The Advice page on the website further serves to promote the company’s point of differentiation, by outlining the customized European bra fitting technique and the “Art of Breastimation” experience that is actively used for bra-­‐sizing within the store. Another medium of communication between Lida and her clients is through the Blog and the Testimonial pages featured on the website. Through the blog, Lida informs clients of upcoming events and of new product arrivals. She also keeps clients up-­‐to-­‐date on the various experiences she engages in while away on business-­‐related trips. This constant connection and accessibility to clients provides for a sustainable and engaging relationship. The blog however, is yet to be updated as of September 2011. The Testimonials page also currently features a sparse amount of posts. SOCIAL MEDIA Exhibit 7 -­‐ Screenshot of Inside Story’s website home page, www.insidestory.ca Social media promotions have mainly been the responsibility of Kelly. Initiatives include Twitter and Facebook. Created in September 2011, the Facebook page contains contact information for the Oakville location including address and telephone number. There is no contact information currently listed for the Mississauga location. The main purpose of the Facebook page is to post about promotions, sales, and to give general updates on Inside Story. Currently the page has been “liked” by 30 people. Inside Story’s Twitter page, @LidaInsideStory, provides a brief description of the store’s services and locations. Similar to Facebook, the tweets are used to communicate promotional events and sales. The tweets are used to give personal updates about store personnel, as well as re-­‐tweets from suppliers and charities that Inside Story partners with. This engages customers and creates a more personal environment in which they can feel an emotional attachment to both Lida and the brand. Exhibit 8 -­‐ Screenshot of Inside Story’s Facebook and Twitter pages Curve Consulting | Page 11 SPECIAL EVENTS The special events that Lida has hosted include private in-­‐store parties, fashion shows, and the sponsoring of charitable events. Lida’s current strategy in pursuing these special events is to raise awareness for Inside Story in a creative manner. Private in-­‐store parties are available for groups of 10-­‐20 people, during which attendees can gather in the unique environment of a lingerie store after hours, and make exclusive purchases at a discounted price. Past groups include mother’s groups, choirs, and wardrobe consultants. As a thank-­‐you to the organizer of the party, Lida treats the organizer to a bra and a pair of panties. The average revenue generated at each party ranges between $3,000 and $4,000 for a party of 2-­‐3 hours, generating worthwhile profit for the store. These private in-­‐store parties provide a mutually beneficial platform for Inside Story and the participants of the events. The company always breaks even, and the customers receive 25 percent off the second item purchased. These events are promoted during daily sales processes. Lida provides sales associates with an incentive on insinuating leads for these events, with a gift certificate of $100 being awarded for every private party that an employee is able to bring forth. Lida will typically hold one such event per month to accelerate business in slow seasons. Inside Story recently sponsored “The Balance My Life November Swanky Soiree”. The event is a night where Oakville residents can shop at participating stores in downtown Oakville. Storeowners offer special “one-­‐night only” discounts on merchandise. This year’s soiree brought in 120 guests and raised over $3000 for “The Ride to Conquer Cancer”. Inside story offered 10 percent of discounts on all products. Balance My Life is an online women’s magazine in the Oakville area. Each guest pays $150 to receive promotions on the Balance My Life website for the month leading up to the event. Generating significant traffic, Lida was pleased with the results from this event and plans to participate next year. In May 2010, Inside Story held its first fundraising fashion show at Atelier Hair Salon, to benefit “The Lighthouse Program for Grieving Children”. The show featured full coverage of Inside Story’s flagship products, including bras, sleepwear and swimwear. The event raised $5000 for the charity. The Lighthouse Program for Grieving Children provides support to children, teenagers and families who have lost loved ones. As a direct result of the event’s success, representatives from the local Acura car dealership who attended the event personally approached Lida, offering to partner with Inside Story for a future event. In April 2011, Lida and Acura of Oakville together organized the “Fashion Show of Fine Lingerie”, raising money toward the construction of a new Oakville hospital in 2012. The second show raised over $17,000. Lida believes that the event increased store awareness and generated excellent publicity for the store. However, Lida had heavy organizational responsibilities for these events, leading to burnout and high stress. As a result, Lida has decided not to organize any more fashion shows in the near future. SALES Inside Story rarely holds sales. Lida feels that the idea of a storewide sale subtracts from the store’s high-­‐end positioning. th
For instance, Inside Story is closed on December 26 -­‐ Boxing Day. Instead, Lida holds a “Customer Appreciation Event” on th
the 27 , offering discounts similar to those offered by other stores on Boxing Day. By focusing the event on the customer, as opposed to heavy discounts, Lida feels that it enforces the store’s prestigious reputation and avoids the negative connotations of a Boxing Day sale. CUSTOMER LOYALTY E-­‐MAIL BLASTS Lida actively engages with clients through sending E-­‐Mails throughout the year. A sample e-­‐mail is shown in Exhibit 9. E-­‐
mail addresses are obtained from customers at the point of purchase, as well as through an E-­‐Mail subscription option offered on the firm’s website. Lida’s assistant and marketing and promotions officer, Kelly, oversees these “E-­‐Blasts”. In order to prevent people from unsubscribing, the E-­‐Mails are sent out on average once every six weeks, with random blasts promoting special events, such as the 8th year store anniversary. This milestone anniversary will be celebrated by offering Curve Consulting | Page 12 customers a “1,2,3” incentive discount. An item purchased at full price can be followed by a second item for 20 percent off the regular price and a third for 30 percent off the regular price. Exhibit 9 -­‐ Example of an e-­‐mail used in e-­‐mail blasts FINANCIAL PLANNING AND BUDGETING Lida plans Inside Story budgets each year, and reviews financial statements once every quarter. Appendix A displays the income statements and balance sheets for the 2009 and 2010 fiscal years. Despite reviewing the Inside Story budget and financials, Lida does not have a background in accounting, and makes no changes to her planned budget after the quarterly review. Lida’s bookkeeper, Dawn, has expressed some concern over the high bank fees and interest payments on the Inside Story loan, in addition to her high expenditures on meals and entertainment during trips to trade shows. The Oakville location accounts for the majority of sales, with a mere 20 percent coming from the new Mississauga location. Finally, it is important to note that while Lida has a bookkeeper, Dawn Kurmey. She still plays the primary role in creating Inside Story’s budget, mainly based on personal experience. When observing the budget that Lida has created, it is important to note that she does not have an accounting or management background. Dawn notices that Lida is not always aware of how much she is spending when she travels. Additionally, Lida frequently blames the recession for a decrease in sales when she does not fully understand how it affects her store, and how much she should cut back her budget. GOING FORWARD Taking off her coat after the long walk, Lida knew that although she had grown the business substantially, it would not experience any further growth if she did not transform the way that Inside Story currently operates. While the mission and vision of Inside Story provide the necessary foundation for a successful business, the structure will crumble if not reinforced by a viable business strategy. Lida has tried in previous years to come up with such a strategy; however the limitations of her formal business education have prevented her from doing so. With all these thoughts surging through the forefront of her mind, she picked up the phone to call her bookkeeper Dawn, hopeful for advice that would give her a reason to be optimistic about the future of Inside Story. Curve Consulting | Page 13 APPENDIX A: INSIDE STORY FINANCIAL STATEMENTS REIGER HOLDINGS INC O/A INSIDE STORY STATEMENT OF INCOME (LOSS) AND (DEFICIT) RETAINED EARNINGS FOR THE YEAR ENDED JULY 31, 2009 (UNAUDITED-­‐ SEE NOTICE TO READER) 2009 SALES $1,008,446 COST OF SALES 548,685 GROSS MARGIN 459,761 INTEREST INCOME 0 459,761 EXPENSES Salaries, wages and benefits 113,800 Occupancy 57,382 Advertising and promotion 41,646 Interest and bank charges 22,636 Depreciation 18,939 Travel 14,127 Meals and entertainment 11,784 Vehicle 10,155 Repairs and maintenance 18,208 Legal and accounting 9,726 General and administrative 14,464 Telephone 5,359 Insurance 1,608 Dues and subscriptions 0 Management Salary 134,834 474,668 NET INCOME (LOSS) BEFORE INCOME TAXES -­‐14,907 PROVISION FOR (RECOVERY OF) INCOME TAXES 0 NET INCOME (LOSS) -­‐14,907 RETAINED EARNINGS, beginning of year -­‐215 DIVIDENDS 0 (DEFICIT) RETAINED EARNINGS, end of year -­‐15,122 2008 $1,068,931 578,561 490,370 55 490,425 107,805 53,542 52,771 27,602 16,358 15,398 9,886 9,089 8,947 7,398 7,219 4,745 1,224 1,000 131,100 454,084 36,341 6,638 29,703 27,082 -­‐57,000 -­‐215 Curve Consulting | Page 14 REIGER HOLDINGS INC O/A INSIDE STORY BALANCE SHEET FOR THE YEAR ENDED JULY 31, 2009 (UNAUDITED-­‐ SEE NOTICE TO READER) ASSETS CURRENT Inventory Prepaid expenses Income taxes recoverable Advances to shareholder and related party CAPITAL ASSETS LIABILITIES CURRENT Bank indebtedness Accounts Payable and accrued liabilities GST and PST payable Income taxes payable Advances from shareholder and related party Unearned revenue Current portion of term loan business background TERM LOAN SHAREHOLDER'S EQUITY CAPITAL STOCK RETAINED EARNINGS TOTAL LIABILITIES & EQUITY 2009 $165,556 6,181 0 0 171,738 55,688 227,426 76,101 124,904 14,763 -­‐813 464 15,004 4,921 235,343 7,203 242,546 2 -­‐15,122 227,426 2008 $140,225 12,893 0 0 153,118 74,628 227,746 73,643 102,370 11,188 6,638 665 16,411 3,757 214,672 13,287 227,959 2 -­‐215 227,746 NOTE Financial Statements for 2010-­‐2011 have not yet been completed Curve Consulting | Page 15