Forever New Case Study Essay

Indian Retail Sector India is one of the most desirable retail destinations in the world. India’s twin growth engines of economic growth and demographic profile set it apart from other nations and present a compelling business case for global retailers looking to enter the market. PwC research indicates that India’s retail sector is worth US$ 350 billion and has a low organised retail penetration of 5 to 8%. Modern trade emerged during the 90s, primarily in the food and grocery sector, and is now growing at a Compound Annual Growth Rate (CAGR) of 15 to 20%. A large market potential for a range of categories is indicated by low ORP, increasing urbanisation, growing incomes, increasing consumer confidence, etc. India’s retail sector comprises organised and unorganised participants. Given the size of the country’s retail market, PwC research and other reports suggest that the 12 million mom-and-pop stores comprising India’s unorganised market can co-exist with modern trade players. Recognising the long-term growth potential of India’s retail market, some of the country’s largest conglomerates have allocated billions of dollars to launch large scale retail initiatives that span cash-and carry, food and grocery, books, music and leisure, gems and jewellery, footwear, apparel, accessories, etc. India-based retail incumbents are expanding their presence across a range of categories, experimenting with formats, launching private labels, strengthening supply chain systems and more. Global retailers are also assessing the Indian market with keen interest. They have recognised that the next wave of growth in terms of generating revenues, reaching new customers (including the large number of middle-class consumers) and harnessing research and development (R&D) and innovative skills. An aspiring middle-class of 300 million consumers, a large demand-driven population of 500 million young consumers and a relatively untapped rural population of 700 million people constitute the growth story. Besides, a strong GDP growth, rising consumer confidence, consumption-based behaviour, increasing incomes and a large pool of consumers have made India one of the world’s most attractive retail destinations. Major demographic groups are driving purchases across categories: Sources: PwC analysis Capgemini, Merrill Lynch Wealth Management India’s Retail Fundamentals: Market Size Compound Annual Growth Rate Unorganised Sector Organised Retail Penetration Retail Density Contribution to GDP US$ 350 Billion 15-20% 12 million mom and pop stores 5-8% 6% 14% Indian economy displays resilience in the midst of global crisis. Source: Prime Minister’s Economic Advisory Council, Government of India Demand drivers Demanding consumers: Indian consumers are demanding access to products and services that delight and excite them, are of good quality, and provide value for money. Increasing incomes: Strong GDP performance, capital market growth and the emergence of new industries are creating new millionaires and boosting income levels. This acts as an incentive for consumers to spend more on products. They are also experimenting with brands, trying new products, etc. Evolving consumption patterns: Traditionally, the focus of Indian consumers was on saving. However, positive macro-economic fundamentals, an evolving retail market, lifestyle influencers, etc. are ensuring that consumers spend more across categories. Other aspects, like the emergence of double-income households, easier access to credit and society’s acceptance of self-indulgence, are changing purchasing habits. Supply drivers Expansion: The growth of modern trade and expansion plans are enabling consumers to easily access retail products and services across urban, Tier II and Tier III cities and towns. Growth opportunities: Some high growth categories in the retail sector include children’s wear, accessories, consumer durables, leisure, apparel and footwear. New entrants: Some of the world’s largest and most prestigious brands and retailers have a presence in India. Those who have not yet entered India are assessing the market with interest. The central government recently took a decision to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail and raise the limit for overseas investment in single-brand retail to 100 percent. Benefits of FDI Consumers: plethora of options with better quality. Government Exchequer: Payment of indirect taxes through the supply chain by the modern trade players, primarily service tax. Farmers/Producers: Establishes efficient supply chains that links farmers and small manufacturers directly with retailers which maximises value for stakeholders. Together with back-end infrastructure, this will minimise wastage (especially of fresh foods and vegetables), increase farmers’ realisations, encourage best practices in crop management and improve food safety and hygiene. Unorganised Trade: Mom-and-pop stores can exist alongside modern trade players and can explore partnership models (e.g., sourcing, franchise partners) in a rapidly changing retail environment . India’s retail sector is an evolving market. The sector will grow and develop over the next four to six decades, since consumers will earn more, those below the poverty line will cross over, the gains from economic growth will be felt more inclusively, etc. Pune Retail Scenario The retail sector in Pune was earlier confined to a few markets which were unorganised, chaotic and crowded. In the last two years, however, the rise in modern retail outlets can be seen across the city. Koregaon Park Plaza, Inorbit, Phoenix Market City, Pulse, Kumar Pacific Mall and Amanora Town Center are the new ones that have joined the already existing malls like S.G.S Mall, Mariplex and Central to name a few. Source: CBRE India Retail Market View 2011 Source: CBRE India Retail Market View Source: CBRE India Retail Market View Pune has come a long way in recent times. The IT market, automobile boom, student community, thriving service sector, robust real estate market and increase in the number of professionals have led to an expansion of the city. This rapid urbanisation, and the new demands of Pune’s global citizens, has led to a rise in the number of malls, offering high-end brands. Introduction Forever New is a fashion clothing and accessories brand founded in Melbourne, Australia. It was started by Dipendra Goenka and Amanda Goenka, an Indian-South African couple in 2006. The brand celebrates the feminine beauty of women, a signature style flowing through every creative element. Collections are inspired by global trends in art, film, music and theatre as well as haute couture runway shows in Paris, London, Milan and New York. It was started as Dipendra Goenka saw an obvious gap which was not only restricted to the Australian market but all over the world. With Forever New, the Goenka’s targeted daughters who are willing to shop with their mothers, a group that flies well under the cultural radar. Normally it gets very difficult for a woman who is on her far side of 40s to struggle with hot pants and play suits of her daughter’s choice, and hence Forever New is a one of a kind store which makes women of all age groups comfortable and creates an environment for all ages groups who prefer ethereal to edgy range. Forever New has created a fashion empire based around the frilly and feminine It is one of the fastest growing Australian brands, Forever New emerged in late 2006 as a start up retailer and now trades over 250 stores in 11 countries globally. The company was restructured in 2010 to support it’s growth which values it at about $108 million, although the ownership remained unchanged. While Forever New is best known as an Australian retailer, the 250-store chain already includes outlets in China, India, New Zealand, Singapore, South Africa and Turkey. While Forever New’s restructure meant that it was impossible to say how much the chain made in 2011. Accounts filed with the Australian Securities and Investments Commission showed that between June 25 and July 31 in 2011 it cleared $480,000 profit on about $1.9 million worth of sales. It had assets of almost $50 million and employed about 700 people. Forever New in India Forever New was launched in India soon after it was launched in Australia. It has its head office in Noida, Uttar Pradesh. It also has its branches in Delhi, Mumbai, Bengaluru, Pune, Hyderabad and Kolkata. Segmentation, Targeting and Positioning In the Indian scenario the segment for Forever New will be women of almost all age groups starting from 15 years. They can be teenagers or college going students, fashion conscious girls, celebrities, elite class of women or house wives involved many in social activities etc. The target audience for frilly, ultra feminine products of forever new ranges from 15 to 60 years as the designs are on the classics edge. Along with that it does make collections inspired from the runway for the fashion conscious women. For the teenagers it has edgy, cute and girly designs. It has different price ranges for women of the elite class and celebrities and provides them with luxurious fabrics and designs. For the women aged 40-60 it has frilly, elegant clothes with a soft pastel palate so that it suits their age and style and doesn’t look flashy. Overseas it positions itself as a middle range brand which caters exclusively to women of all age groups primarily from 15 to 60, but in India generally after the age of 30-35 women do not prefer it. Hence in India it has positioned itself as a very chic, feminine, high fashion expensive brand which caters to women of age group from 15 to 35. The Marketing Mix Product: The products of Forever New are exclusively for women and have a wide variety under them. Under the clothing section they have dresses, tops, pants, skirts, denims, shorts, knitwear, coats and jackets. They widen their range with a beautiful collection of bags, sunglasses, shoes, jewellery, hats, belts, scarves and gloves. The products are very feminine, frilly, and classy and generally have soft colours. The quality of the products is very good especially the choice of fabrics or materials for each piece. Design-wise the products are according to the latest fashion forecasts or they are just plain simple classics. Price: Different products have different price ranges, starting from Rs 800 to Rs 15,000. Promotions: Forever New in India promotes itself through hoardings in malls. It also gives away its products for shoots in fashion magazines for which it gets due credit, hence displaying its latest collection through print media. Exhibitions are put up in Mumbai to create brand awareness. They also do mobile marketing by sending an SMS to every customer informing them about their new offers and sales. It gives away free catalogues to people who enter their stores to increase its brand awareness. It has an online shopping website which displays and sells the latest collections. Place: It sells through 2 different channels. Stores and Online. In India Forever New doesn’t have stand alone stores. They are located in malls. The head office is in Noida but the inventory is shipped from Australia to each store in India separately, even though the products are manufactured in China. Forever New, Pune Forever New is located in 2 different malls in Pune: ï‚ · Town Centre Amanora, Hadapsar Town Centre Amanora in Pune is a lifestyle retail centre, spread across 20 lac sq. ft. It is set according to world class standards, it is destined to be the retail and cultural epicentre of Pune, catering to both Western and Indian sensibilities, it has everything from premium to mass retail, cinemas, quick service restaurants, cafe’s and fine dining options. Town centre is destined to get a steady stream of customers, keeping them engaged throughout the day and create a profitable equation for retail partners. The location is an advantage for Forever New as it has almost all kinds of people coming to the mall out of which a majority are young women from the age group of 15-35 because the mall is situated right at the entrance of Amanora Township spread across 450 acres and is near the Magarpatta area, the hub of IT professionals. ï‚ · Koregaon Park Plaza Koregaon Park Plaza built on European concept, launched on 2nd March 2012 is a world class attraction with a premium retail mix and the epitome of â€Å"shop entertainment† where visitors will find a host of wonderful, engaging activities. The retail positioning of the mall is mirrored by its location in the heart of Pune, at Koregaon Park. This combination of centralised location and the mall’s world class architectural features positions Koregaon Park Plaza as an appealing destination for tourists & shopaholics of Pune. The location should’ve been an advantage for Forever New had the mall been as successful as promised but unfortunately Koregaon Park Plaza is not doing so well, but loyal and regular customers of Forever New do visit often and shop from there. Since the mall is isn’t doing well, it is very difficult to form new customer relationships leading to less brand awareness. Forever New in Town Centre Amanora, Hadapsar It is a small store in a rectangular format. Size: 375 sq ft. Approximately. The customers that come to this store are mostly young girls (teenagers), IT professionals or housewives of the upper middle or high class. Store Layout: The store in Town Centre Amanora is a small, congested store. It has very less space to move around. The focus does not go on the primary wall. The nesting table at the entrance takes up too much space. The trial rooms are big and well accommodating. There is no proper defined space for accessories. There is no defined path for the customer Forever New in Koregaon Park Plaza This store is in rectangular format with a fairly good size. Size: 400Sqft Approximately. The customers that visit this store are mostly loyal customers and are located far away from the Magarpatta area. It also has college going girls coming in to store. Women/girls from upper middle class or high class also come here to shop. Store Layout: The store in Koregaon Park Plaza is comparatively bigger and spacious. The store provides a well defined path for the customer. It has been put up in such a way that the focus goes on the right places. The store is very spacious and welcoming. It attracts attention. Common Features: Almost all the International stores have a Visual Merchandising guideline from their country head office that they have to follow. Some of them are: ï‚ · The collection stories and their display criteria. For instance, the way the story for is be spring it collection has to Tropical Fantasy and the displayed on the primary wall is already decided and ï‚ · ï‚ · The sent window by the display Australian head office. design too comes from the Australian head office. The basic store characteristics, like the humungous beautiful mirror behind the cash counter, the chandeliers, the white walls, the fixtures, nesting tables, trail rooms with maroon curtains, the chic and fun soundtracks, the comment book, the catalogues etc. Whatever things do not get sold off after a particular period of time are sent back to Australia. The collection is updated every month. Everything each store. Sales happen twice a year. This brand wants to ensure that the customer have a first class experience while visiting their store. So that when they walk out they form an image of the brand in their head and position it as a classy, feminine and delicate place. comes from the Australian head office directly to Brand Portfolio Like mentioned before, Forever New is an exclusive women’s wear brand. It has an ultra feminine style and the designs are inspired by classics and latest runway shows of New York, Paris, Milan and London. In India it is considered as an expensive brand. It uses expensive and delicate fabrics like silk and lace for its products. It provides a good visual experience when one enters its store. groups of women. The products are like the brand itself, delicate and beautiful. It has a wide variety of products and sizes for all the age Sizes Women’s Sizing Chart Measurement Point Bust Circumference Waist Circumference Hip Circumference 4 74 57 83 6 79 62 88 8 84 67 93 10 89 72 98 12 94 77 103 14 99 82 108 16 104 87 Clothing International Size Conversion XS S M L 4-6 8-10 12-14 16 Footwear International Size Conversion Australia US UK Europe 5 5 3 36 6 6 4 37 7 7 5 38 8 8 6 39 9 9 7 40 10 10 8 41 Ring Size Guide (measurement is the diameter of the ring) S/M M/L 17mm 19mm Product examples: Dresses: The stores comprised of almost 25 different types of dresses: Some of them were: 1. Cassie Embellished Strap Dress 2. Yvette Skater Dress 3. Ella Low Back Dress 4. Poppy Strapless Waterfall Dress The dresses had a very wide price range starting from Rs 2000 to Rs 15,000. The sizes varied from the kind of dresses available. In general the fastest selling sizes were 6 and 8. The slowest selling sizes were 12 and 16. Tops: The store comprised of almost 45 different kinds of tops Some of them were: 1. Trixie High Low Top 2. Koko Studded Pocket Tee 3. Chelsea Printed Tank 4. Mackenzie Roll up sleeve The prices of the tops ranged from Rs 1200 to Rs 6000. The sizes varied according to the different kinds of tops. The fastest selling sizes were 8, 10, 12 and 14. The slowest selling size was 4. Pants The store comprised of almost 20 different kinds of bottoms: Some of them were: 1. Isobella Draped Pant 2. Leya Casual Skinny 3. Arla Tuxedo Shorts 4. Oslo Piped Pocket Jegging The prices of the pants ranged from Rs 1200 to Rs 4000. The sizes varied according to the different kinds of pants. The fastest selling sizes were 8, 10 and 12. The slowest selling sizes were 6 and 16. Bags The store comprised of almost 15 different kinds of bags: Some of them were: 1. Lori Satchel 2. Ava Grace Small Bag 3. Ariela Hard Case Clutch 4. Lucy Stud Coin Accessories The store comprised of a lot of accessories: Some of them were: ï‚ · ï‚ · ï‚ · ï‚ · Tilly Pearly Statement Ring Heather Beret Vanessa Lace Scarf Jaylyn Enamel Torque The store comprised of almost 15 different kinds of shoes: Some of them were: 1. Prianne Platform 2. Sonia Embellished Sandal 3. Candice Diamente Pump 4. Lolita The prices of the pants ranged from Rs 2500 to Rs 6000. The sizes varied according to the different kinds of shoes. The fastest selling sizes were 6, 7 and 8. The slowest selling size was 10. After studying the assortment of both the stores, it can be concluded that: The size 4 clientele in the Pune sector is less. The most common sizes are 8, 10 and 12. Oversized people generally do not prefer Forever New for dresses and shoes but they prefer the tops. Competitive Analysis According to the Pune Retail Scenario, the direct competitors of Forever New would be: ï‚ · ï‚ · Mango Zara Even though they have different styles and they all are from different parts of the world still in the Indian market these brands are competing against each other. Mango: Mango clothing is a Spanish multinational based in company Barcelona. It designs, manufactures and markets clothing garments and accessories for women and men. Mango opened its first shop in 1984. What started out as a small team began to grow as a result of an ambitious production system based on the philosophy â€Å"justin-time†, which defined product concepts, store design, quality standards, price and brand image. This solid approach has turned Mango into a Spanish fashion leader. Mango can be differentiated for having a highly-defined concept. The Mango concept is based on an alliance between a quality product, with an original design and a coherent and unified brand image. Dressing the modern, urban women for her daily needs is the formula they have analysed, adapted and applied in all the countries in which Mango is present. Zara: Since the moment the first Zara store’s doors were opened in 1975, the growth of the Zara fashion line has built a been unstoppable. In Zara famous the has brand competitive successfully clothi ng industry, worldwide thanks to their premium locations as well as a unique management system of design, production and supply chains. Unlike other fashion brands, it takes Zara only 10 to 14 days from the time they design new clothing until it arrives in stores. This â€Å"fast fashion† concept and operation allow Zara to always provide the most fashionable clothes to their customers, and the ever-renewed collections definitely help build brand loyalty. Brand Positioning: Factors Quality Variety Sizes Assortment Value for Money Price Design Style Forever New Good Fair Good Poor Fair High Good Good Mango Good Poor Fair Good Fair High Fair Poor Zara Poor Good Poor Good Poor Medium Good Good Mango in Pune has established itself only as a women’s wear brand. Unlike Forever New it has a very good assortment of products. It has a category of products which can be affordable by middle and upper middle class women and another category which can be affordable by elite classes. It has better quality but less variety. Zara in Pune opened up recently in 2011. It has great style and is up to date with fashion, but unlike Forever New it has sizing issues and most of their products are sold out or not available in proper sizes. It has poor quality goods when compared to Mango or Forever New. It is cheaper than both the brands but it doesn’t provide value for money. Forever New SWOT Analysis Strengths ï‚ · ï‚ · ï‚ · ï‚ · Filled in the brand gap of mother daughter shopping together. Unique Products Brand name Customer Loyalty Online Market Weakness lot of Indian consumers are not able to relate with the brand. Very expensive Weak Promotion Strategies Less brand awareness Emerging Markets Increasing Economy New Products Innovation New Technology Threats Intense Competition Substitute Products Substitute Market Losses due to low acceptance rate of consumers Strengths Forever New is a big brand name and a lot of consumers will be directed towards it cause of that. It has a USP of filling in the gap of mother daughter shopping together. It has exclusive products for women. It has high customer loyalty rate. Forever new has established itself in the online market which is the latest trend in the retail business. It ships to India free of cost which adds on to the rest of the advantages. Weakness A lot of Indian ‘mothers’ who go out shopping with their daughters won’t be able to relate to the brand. Another weakness is that due to the high prices of the products a lot of people do not prefer buying from there. It has poor promotional strategies and hence the consumers don’t notice it much and hence less brand awareness. Opportunities With the new technology coming in it would be easier to design and produce goods leading to faster innovation and new products. The economy is increasing and hence more and more people will be willing to spend on such brands. Threats There is intense competition from a lot of International brands as they are also looking forward to invest in the Indian Retail Sector. Substitute products and substitute markets at better deals will pose a threat to Forever New. Since the Indian consumers are not accepting the brand properly the company might go into a loss. Data Analysis and Interpretation Why do people shop from Forever New? Sizes Quality Pricing Design Style 0 Why do people shop from Forever New? 2 Style 12 4 Design 9 6 Pricing 1 8 10 Quality 5 12 Sizes 1 14 A majority of people shop from Forever New because of its style followed by its designs. Preferred Mall 14 12 10 8 6 4 2 0 Town Centre Amanora Koregaon Park Plaza Preferred Mall According to my sample size the mall preferred to visit Forever New is Koregaon Park Plaza. What do people prefer buying? Tops Bottoms Dresses Shoes Accessories 3% 13% 37% 34% 13% Almost 37% of people buy tops from Forever New which is closely followed by Dresses (34%). How often do people visit Forever New? 10 9 8 7 6 5 4 3 2 1 0 Weekly Fortnight Monthly Once in 6 months Yearly How often do people visit Forever New? According to my sample size a majority number of people visit Forever New monthly while hardly anyone visits it weekly. How much do people spend? 9% 18% 500-1500 1500-2500 32% 2500-5000 5000-10000 41% In this sample size 41% of people spend Rs 1500-2500 and 32% spend Rs 25005000 on Forever New. Which other brand do you prefer? 16 14 12 10 8 6 4 2 0 Mango Zara Promod Other Which other brand do you prefer? Maximum number of people prefer Zara if not Forever New. Problems faced 4% 4% 8% Style Designs Pricing 46% 38% Quality Sizes Other 0% According to this sample size the major problems faced in Forever New are sizes and prices. Preferance: Store or Online 20 18 16 14 12 10 8 6 4 Preferance: Store or Online 0 Online Store Many people prefer visiting stores over online shopping. Membership Card? 16 14 12 10 8 6 4 2 0 Yes No Membership Card? A majority of people prefer a membership card for Forever New. Recommendations and Conclusion Forever New is moving at a very slow rate in Pune. It caters only to a limited clientele and many people are not aware of it as a brand. People who are aware of this brand and shop from it are not very happy with the sizes and the prices it offers to them. Along with that a lot of people complained that it has limited variety and goes out of stock fast. Despite all these issues, Forever New does have a brand loyalty and some people do follow it regularly, generally on a monthly basis because of its designs, style and quality. A lot of people are not aware about the online shopping facility of this brand and hence do not take advantage of it. The major backing of the online shopping market is that people prefer going to stores because they like the overall experience of actually touching the product and then deciding on whether to buy it or not. International Brands like Forever New are currently going through a bad phase in Pune because consumers are still in the middle of accepting such expensive brands. Growth Opportunities Even though the women’s wear apparel is booming right now, it still is a little congested. But if there is a proper gap like mother daughter shopping together in one store (similar to Forever New), it can easily fit in the Indian scenario, one just needs to work on the styles and sizes a bit so that the Indian mothers accept it more openly. Indians as consumers are still not ready to shell out a lot of money on apparels so if one can work on the prices and they come down a bit for a brand like this, it will be successful in the Indian market. References and Bibliography Winning in the Indian Retail Sector Indian Retail Report: Opening more Doors CBRE India Retail Market View 2011 http://www.forevernew.com.au/ http://www.canalwalk.co.za/shop.htm?shopMGID=35523 http://www.waterfront.co.za/shop/shopcontent/Pages/ForeverNew.aspx http://www.google.co.in/search?rlz=1C1LENP_enIN472IN472&sourceid=chrome&i e=UTF-8&q=globalhttp://www.zendesk.com/why-zendesk/customer/forever-new http://pune.mallsmarket.com/malls/koregaon-park-plaza-pune http://pune.mallsmarket.com/malls/town-centre-amanora-hadapsar