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UNIT 1: BUSINESS MANAGEMENT AREA OF STUDY ONE: SAC

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CASE STUDY: ELLIATT COLLECTIVE Read the case study below and then answer the questions that follow.

Overview of the business Elliatt Collective is a fashion business that focuses on high-quality, innovative and competitively priced ready-to-wear products. The company has two brands: Elliatt and Blessed are the Meek. The Elliatt brand specialises in classic occasion wear for the Melbourne and Sydney markets. Many of the products have fine detailing, such as embroidery and laces, and use specialty and luxurious fabrics. The Blessed are the Meek brand specialises in garments that are dressy, sleek and sophisticated and targeted at fashion-conscious 25–35 year olds. The company’s products are sold online and through more than 1200 stores globally, including 150 stores in Australia and stores in Asia, New Zealand, the United States, Britain and Europe. Until 2017, it did not have its own retail outlets.

How the business started The business started in Sydney in 2011 when Katie Pratt first launched the Elliatt brand. She started with $20 000 in savings and some experience. Her mother had taught her how to sew and she had completed an RMIT night course in fashion illustration and design while working as a product designer for an Australian fashion company. Katie’s initial research into customer needs began by interviewing boutique owners. She also interviewed buyers for department stores. Her findings were that customers were looking for dressy clothing that looked and felt like designer products, but without the same price tag. She identified a gap in the fashion market. Katie started designing small collections and producing them in Bali. Demand started to increase and when it reached a point where Katie had hundreds of thousands of dollars of back orders she knew her Bali manufacturer would not be able to produce the required quantities. She then realised she needed to move production to China. Katie investigated factories in China, in particular in the city of Guangzhou where most clothing manufacturing takes place. She then emailed businesses and people she found on Alibaba before going to China in 2015 to visit factories. Katie had to engage the services of an interpreter as she did not speak Mandarin. However, she felt her visit was not a success.

Katie Pratt started her business with $20 000 in savings, some experience and skills in sewing, and a tertiary qualification in fashion illustration and design.

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UNIT 1: BUSINESS MANAGEMENT AREA OF STUDY ONE: SAC

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A change in direction On the flight home Katie met jewellery entrepreneur Amy Li, and after many discussions and helping each other out in their businesses over a six-month period, they decided to merge their businesses, although they now focus solely on fashion. Li invested $300 000 in Elliatt, which enabled them to launch the label in the United States first, and later in China. A Chinese distributor contacted Katie and Amy by email after seeing the Elliatt range of clothing at a fashion week. Amy, who already had contacts and a network of business people in China, was able to work closely with the Chinese distributor. As the clothing is now manufactured in China, the business saves on shipping costs to stores. Elliatt is stocked in 200 stores in China, which represents 20% of the company’s sales. The business has also attracted additional capital of $1.5 million from a Chinese investor to expand in China, including in shopping malls. The company has staff in Sydney and Melbourne as well as Guangzhou and Shanghai and turns over $7 million a year. China’s emerging middle class The rise of China’s emerging middle class has been the main factor contributing to Katie and Li’s decision to expand its business in China. There has been a shift in the Chinese market from ’mass middle’ to ‘upper middle’ class, with the latter group’s appetite for luxurious goods increasing. This factor has contributed to China being Australia’s number one export market (according to the Australian Trade and Investment Commission). Elliatt is targeting this emerging middle class and in July 2017 launched 15 stand-alone Elliatt boutiques. The boutiques filled a gap in the market because the choices for shopping for clothes in China are either premium malls or street markets selling cheap clothing, not boutiques selling uniquely designed clothes at reasonable prices. Katie has said, ‘There is so much growth opportunity to be had in China. We are only just touching the surface’. Launch of Elliatt Collective In 2017, the Elliatt Collective was launched. The business now offers a mix of products including event fashion, sophisticated fashion and relaxed street fashion. References Elliatt Collective website: https://www.elliattcollective.com.au and https://www.elliattcollective.com.au/pages/our-story ‘Fashion label Elliatt doesn’t have a single store in Australia but it’s about to open 15 in China’, The Sydney Morning Herald, 17 July 2017, http://www.smh.com.au/small-business/growing/fashion-labelelliatt-doesnt-have-a-single-store-in-australia-but-its-about-to-open-15-in-china-20170712gxa75o.html Australian fashion flies high in China, Brand Australia, 19 October 2017, https://www.australiaunlimited.com/business/elliatt BWA chats to: Katie Pratt, Elliatt, Breakfast with Audrey, http://www.breakfastwithaudrey.com.au/katiepratt-elliatt/

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UNIT 1: BUSINESS MANAGEMENT AREA OF STUDY ONE: SAC

CASEST UDYQUEST I ONSCASE

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STUDY

QUESTIONS 1 a. With reference to the case study, describe Katie Pratt’s main personal motivation for starting her business.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------b. Describe two other motivations Katie might have had for starting the business.

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2 a. Identify and describe two sources of business opportunity that Katie Pratt identified when forming her initial business idea.

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UNIT 1: BUSINESS MANAGEMENT AREA OF STUDY ONE: SAC

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b. Identify and describe two other sources of business opportunity that Katie Pratt and Amy Li recognised when they merged their businesses.

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3 When Katie started the Elliatt label, she would have had some goals for her business. a. Explain why it is important for a business to have goals.

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b. Outline at least three goals Katie might have set when she started her business.

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c. Every five years, a business should review its goals. Outline three new goals set by Katie and Amy between 2011 and 2017 or that they might have set at that time. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4 Describe three personal characteristics of Katie Pratt and Amy Li that have contributed to their success as entrepreneurs.

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UNIT 1: BUSINESS MANAGEMENT AREA OF STUDY ONE: SAC

6 a.

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Define the term ‘market research’.

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b. Outline the market research method Katie used when developing her business concept.

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c. Identify and explain two other market research methods Katie could have used.

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