Mens Runway High end Men\'s Fashion at a Low Price Mkt301 PDF

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Mens Runway High end Men's Fashion at a Low Price Mkt301...

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Mens Runway High end Men's Fashion at a Low Price

Table of Contents

Executive Summary - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 3

Business Concept/Product Description - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 4

Market Analysis - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Page 7

Financial Plan - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 10

Operations and Supply Chain - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 15

Marketing Plan - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 18

Human Resource Issues - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 21

Appendices - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 23

Executive Summary

Purpose: Currently at select locations, TJ Maxx has a women’s clothing section known as the runway. The clothes offered by the runway are from high end retailers such as Gucci, Fendi, Louis Vuitton, and Versace. Currently there is no Men’s Runway to cater to male customers who also want to enjoy luxurious brands at up to 40% off-retail prices.

Market Size: We have identified our market to be around 45,000 males in the Boston area.

Expected Growth: Retail sales of men's clothing is a growing market; in the last four years there has been $10 billion growth in this sector. Global menswear is expected to be a $571.8 billion business by the end of 2018.

Unmet Customer Need: At this point, there is no way for males to shop for high end apparel at low prices, despite the increased trend of sales for men's clothing. People desire these name brands, but for many they are unaffordable.

Competition: Our biggest competition is online resellers who are on websites such as Ebay and Poshmark. On these platforms, apparel is sold by individuals and is often previously used items of clothing. Other competition includes upscale department stores such as Barneys New York and Neiman Marcus. These stores have luxury clothing but are typically unable to offer the same discounts TJ Maxx can.

Our Advantage: TJ Maxx would be able to combat the online sellers through offering an in store shopping experience. We also already have connections with these high end companies that are offered in the womens runway, so we have an in with these designer brands which will allow us to offer a Men’s Runway. Our surveys showed us that 81% prefer designer brands to conventional ones. Additionally, 78% of our respondents said they’d shop at Men’s Runway. The discounts TJ Maxx

is famous for will be offered along with our treasure hunt experience, further ensuring we will dominate this market.

Funding: The Mens runway will not be something that will require new buildings or added space to stores, instead we plan to replace currently used space with the Mens Runway. $34,000 is the start up capital we are asking for; this will go toward manager salaries, equipment purchases, new store decor, and labor associated with re-arranging the store.

Business Concept - Product Description

What are we selling? The of TJ Maxx would be a fresh new way for men to shop for the luxury high end brands they desire. TJ Maxx launched their Women’s Runway to “Bring glamour into your everyday life with high end designer pieces, priced to help you look like a star.” After several years, there has been no comparable option for men. The purpose of the Men’s Runway is to bring the ideals and goals of the Women's Runway to the male population.

How Does TJ Maxx get these expensive Items at Off-Price? There are two avenues that allow TJ Maxx to gain high price inventory at prices that allow them to be affordable for their consumers. The first way is the designer apparel is often from the prior “season” and is essentially left over. Secondly, TJ Maxx is willing to buy products

that may have small scratches or defects from these luxury brands. The customers of Gucci, Louis Vuitton, and Armani are wealthy individuals who are not as willing to wear an old seasons shirt or put up with small imperfections on their goods, due to them paying large sums of money. TJ Maxx has set up distribution links with these companies, making it increasingly easier to add men's clothing to the shipment of womens goods that readily come in. Our ability to have these designer goods, in-store, at off-price, and sold by the trusted brand of TJX, separate us from our competitions and truly makes us unique.

Differentiation As of 2018, there are a very limited number of ways for the typical stylish man to obtain high end fashion by designer brands. The more popular ways of getting these luxury items is through online websites who are supported by individual resellers. Often these products have previously been warn and lack the backing of a large company. The other way consumers get high end clothing is through some large department stores, but these are often expensive out of the reach of consumers, that TJX could market to. According to DIGIDAY, “the menswear market is estimated to be valued at $33 billion by 2020, an increase of 14 percent from 2015.” As the demand for these goods increase, TJX’s Men’s Runway is sure to stand out for several reasons. TJ Maxx will allow consumers of high end men's fashion to shop in person, in a store, rather than browse online outlets. The treasure hunt experience that outs TJX is a league of it’s own, will be present as well. The price of our goods will be also a huge difference when compared to our competitors. As TJX is notorious for, our low prices will set ourselves apart. By TJ Maxx buying luxury goods with small defects or the items of last seasons wardrobe, we will be able to use the same distribution links and partnerships for women's clothing, for men, with

the same designer brands. Our discount prices on these goods will draw in a cohort of men who were previously unable to shop at large department stores, and we have identified this market to be around 40,000 in just the city of Boston alone.

Keys To Success We believe there are five major factors that will allow us to succeed. We want to keep our customers coming back to our store, enhancing our treasure hunt experience, with our quick inventory turnover. Next we hope to have all the desirable brands our consumers want. With these name brands, we also will need to have them at affordable prices, this is what will separate us from our competitors. Our quick inventory and global designer brands will require Mens Runway to have effective and efficient management at multiple levels. Having our inventory shipped from multiple locations and having our goods on the shelves will require large amounts of planning and it will be a team effort. In order for management to be successful, they will need hardworking and loyal employees. Through a team effort, we will reach and achieve these five goals, allowing Mens Runway to be a great success.

Value Proposition We have identified that there is an unmet need for men who desire designer brands at an affordable price. People desire these name brands but too often they are out of their price range, and there is a lack of alternatives to combat this issue. The Men's Runway will give TJX a stake in men’s fashion and allow them to exploit this profitable market. These highly demanded fashions are currently not included at TJ Maxx locations, but will fit right in line with the TJX shopping experience and it’s quickly turning inventory. Through our surveys, we concluded that over 80% of our volunteers stated they prefered designer brands over typical cheap ones. We

next looked at if these same people would be happy to shop at TJ Maxx for these luxury goods, and close to 92% answered in favor of TJX. With the increased revenue Mens Runway will bring in, they will also gain market share in a new market within the fashion industry. As previously stated, mens fashion is growing business worldwide and is a billion dollar industry. The Women's Runway is only in select locations across the country, typically in urban locations where the average income is higher and the emphasis on fashion is greater. Due to this, we are planning in our first year to only open a Men’s Runway here in Boston at the Newbury Street location. This location will allow us to thrive in the busy Newbury area, an area known for its high end stores, and be in reach of many young male professionals who are our ideal consumer. Our projected numbers are below, we will go further into how we calculated these numbers in the later sections of this business plan...

Market Analysis Industry description: The industry of menswear has been growing steadily. From 2013 to 2018, the retail sales of menswear in the United States market grew from 62.1 billion dollars to 74.8 billion dollars.

This is a huge market that TJ Maxx has already tapped into, but needs to put in more resources in order to please more customers, and make more profit. A large percentage of menswear profit is now luxury menswear. Recently there has been a huge trend of wearing high end pieces, and most of this is contributed to social media. Social media has become a platform for many fashion loving individuals to share their outfits and lookbooks. Additionally, you can follow your favourite celebrity on social media, and if you see an outfit you like, you can go purchase it. With the global trend of menswear on the uprise our business proposition of the Runway for Men should bring in a good amount of value for the customers and a good amount of profit for TJX.

Target Market: To describe our customer that would shop at the runway, we believe that they will be obviously male, since that is our target market. But, to be more specific, we took the total Boston population of 673,134 residents and narrowed that down to male, which is 322,456. We then narrowed that down further to men with at least a bachelor's degree and are older than 25. This is because we took into consideration that the products that will be on the runway will be more expensive than the usual products that are in sale in a TJ Maxx. Relative of course since it will still be nicely discounted. So we reached 149,614 people were men with at least a bachelor’s degree and are older than 25. Then the decision was that it was unrealistic to immediately capture all 149,614 men so then we took about 30% of that number and reached a target market of 44,884 men. We believe that 44,884 is a good number because of the global trend of designer menswear is definitely on the rise. Since Boston is a young and fairly international city, there will be a lot of people interested in the product that we are presenting. This was furthermore proven to us after we conducted the survey and looked at the results. We had a total of 30 survey results and they largely indicated to us that they would love this product. First of all 96.7% of the people who responded said that they would love to have off-price fashion available. Then 93.3%

of the people said that they would be more inclined to shop at TJ Maxx if they offered more of this off priced fashion. 83.3% of the survey respondents then said that they would rather own and wear designer brands than the normal fast fashion/smaller brands. 73.3 percent of the respondents said that they rather shop for designer clothing in store than online. This would be going against the trend of online shopping taking over, but is probably because that if you’re going to be spending a lot more money on the clothing, they would rather buy it in store. Finally when asked about how much money they spend on clothing per month, the middle 50% said around $30-$150. After analysing the survey results, it’s definitely obvious that having this

service in store would be a great opportunity to capture more customers and generate more

revenue.

Competitive analysis: The good thing about the idea of a Men’s Runway is that there aren’t that many competitors that really come close. Even though multiple high end department stores offer a sales section, the goods there will only be few and left overs. This is different from the Mens Runway because the Men’s Runway is a full section with goods that will be on sale. The closest thing to it

though would be Neiman Marcus Last Call. Neiman Marcus Last call is a service offered by Neiman Marcus on all of their final sale items. There is a decent selection but the main thing is that on any of the more desired items, there isn’t that high of a discount. Neiman Marcus is definitely our biggest competitor, but since there is not a store in the Boston area, there aren’t many concerns since we want to put our first store in the TJ Maxx on Newbury Street. Then there are websites such as Grailed and Ebay, which both offer similar purposes. They both are reselling websites so there aren’t discounts on the items even though a lot of times they are worn already. Also most of the items that are sold on Ebay and Grailed are more geared towards streetwear rather than designer fashion.

Financial Plan

We plan on starting the Men’s Runway within existing TJ Maxx stores. The Men’s Runway is also based off of the existing model of the Women’s runway. This allows us to have a minimal start up cost for our section of the store because we already have the physical space and inventory processes within our company. However, we would require capital in order to start, execute, and promote a new idea to a new target market.

Start-up Capital We plan on starting the Men’s Runway in the TJ Maxx on Newbury Street in Boston. As recorded in our financial outlook, we are requesting $34,000. The start up cost is needed to create and organize a space in the store, and for the equipment needed for our office workers. The Men’s Runway will need a hanging sign that will be placed above the section in the store. This

will be the same size and model as the one used for the Women’s Runway, but potentially with different coloring, fonts, or design. The start-up money will also be used to purchase higher end shelving and racks that will compliment the high end men’s wear and the overall image of the Men’s Runway. We will also purchase several smaller ground level signs for within the store, to inform customers and lead them to the physical section. Along with these physical items, the start up capital will also go to labor. In order to create this section, employees or subcontracted workers will need to plan how to execute rearrange the inventory space within the store, so we will be paying them to do things such as strategically rearrange the store, move around clothing racks and shelves, and install the signs and shelves mentioned above. More explanation for our start up capital will be found in our expenses section. Revenue Projections In our financial outlook we are including projections for the Men’s Runway over the next three years. We will give you an idea of the next three years starting with the stores themselves. As mentioned above we will start at the TJ Maxx on Newbury street. In year two we project that we will expand to four more stores (five total) and by year three, expand to fifteen stores total. All of the stores we plan to expand to would have similar opportunities for the amount of revenue we can generate based on the location and proximity and density of our target market. For the three years we anticipate the Men’s Runway will account for $450,000, $5,400,000, and $27,720,000 per year. These projections are made by taking into account the amount of stores, amount of customers, amount of trips made by customers, and amount spent at each store visit. (See following figure).

Table shows revenue by year and the factors contributing to it

The increases in revenues is mainly attributed to the planned expansion of the amount of TJ Maxx Men’s Runways as mentioned above, but also an increase in customer visits per store and amount spent. We anticipate this because as the Men’s Runway functions over time, it will have more recognition as the place to get off retail priced men’s wear. Over the three years we forecast the number of new customers to each store to be 1,500, 2,000, and 2,200 respectively. We also forecast the average amount spent for visit to increase from $150 to $180 then $210. The customer visits per store will increase from 2 to 3 then 4. The amount of new Items purchased per visit should increase from 2 to 3 then 4. These factors combined (multiplied) explains our amount of new revenues generated.

Expenses Inherent expenses will also be a part of our functions. Mainly, our expenses will be the cost of inventory. Our cost of sales will be $320,512, $3,846,154, and $19,743,590. We calculated the relationship between revenue and cost of sales by finding the average ratio (1.404) between the two factors from 2014-2016 on TJX’s income statement. Along with the cost of sales we will also have expenses related to day to day operations. We will be required to make some equipment purchases including a new registers to accommodate an increase in customers to

the store, and iPads for employees to be able to better assist customers in ways such as looking up what size they may be, or checking available inventory. This will cost us $3,000. We will also need office equipment for ourselves, in order to operate the Men’s Runway. This will include chairs, computers, printer/copy machine, and carpeting. The total will be $9,000, making our total equipment expenses to be $12,000. Paying employees is another essential part of our expenses. In the three months prior to opening we will need $10,000 as the salary of our manager. Then over the next three years we will pay a total of $70,000, $84,000, and $88,000 to our employees. The rest of our expenses include things like advertising, security, cleaning, and utilities, which will amount to $34,500, $33,500, and $34,500 respectively for each year. Also, based on our projected loan balance at the end of year two and three we expect to have an interest expense of $11,799 and $855,007.

Additional Financing Needs Our financing needs are comprised of the start up cost and additional loans. Based on equity sources raised and other sources of debt, these loans will amount to $350,000 over three years. These loans will mainly be going towards acquiring inventory. These loans are also the reason for our interest expense.We are expected to repay the loans by the end of the third year. One of goals of the Men’s Runway is to generate revenue effectively, in a way that is in line with TJ Maxx’s existing revenue models and company values. We plan on having a quick inventory turnover, just like the rest of TJ Maxx. We will be able to do this by purchasing the most desirable men’s designer goods directly from manufacturers for low prices because of reasons like minor manufacturing defects, or excess inventory. Our inventory purchasing model should go smoothly, because we are basing it off of the already existing model of the Women’s

Runway and TJX in general. We are confident in our ability to constantly generate revenue because of the success of the aforementioned revenue model and the steadily increasing demand and market for designer men’s wear.

Our Revenue The revenue to Men’s Runway will be a portion of the profit to TJX. We plan on taking 4% of the cash profit from the Men’s Runway as it is estimated that we will amount for 4% of the new revenue to TJX. The amount of revenue to Men’s Runway that we expect to see is shown on the table below. Table shows our revenue and cash flows

During year two we exp...