COS Touch - Illustrated Market Report

dENIT ROZNER 1202800 EFMM6003 Final Major project illustrated market report

1

CONTENTS 6 executive summary

10

14 introduction

proposal 16 Overview 21 new product 22 usp 23 Ansoff Matrix

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26

38 People

product

28 demographics 30 spending power 31 marketing typologies

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40 41 46 47

overview CAD range plan sourcing strategy sustainability

52 price 50 50

place 54 55

pricing policy price band chart

58

distribution strategy omni-channel retailing

62 position 60 61

price/style matrix competitor evaluation

promotion 65 brandong 70 integrated marketing strategy

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CONTENTS 86 persuasion

90

94 marketing plan 92 93 93

4

estimated retail sales launch marketing costs capital investment required

s.w.o.t

98

102 conclusion

appendix 102 104 108

114 image refferences

appendix 1 appendix 2 appendix 3

120 bibliography

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executive summa 6

ary 7

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executive summary This report was commissioned to analyse the multiple factors involved in successfully launching and marketing a capsule collection under the COS brand. This report aims to clearly outline the product, the price, the distribution strategy, the positioning and the marketing strategy, amongst others, to create a clear and concise view of how this collection will be launched and how it is expected to perform in the current fashion climate.

The research draws attention to the increased spending confidence of the womenswear market that has been instigated by an increasingly stable economy as well as a shift in the dominant fashion consumer demographic(Mintel).. The 24-35’s age group, that, according to Mintel, is forecasted to grow 7% over the next five years, has overcome the younger, 16-24, demographic as the main clothes shoppers. The change in consumers who are driving growth in the current fashion environment has created a shift in the fashion market (Mintel) and a trend for premiumisation can be observed.

The aim of the Touch collection is to further expand the COS brand as well as target a new, more affluent consumer in order to fully utilize the growth and sales potential this currently unsaturated market offers.

It is recommended: that COS launch a premium capsule collection with higher price points creating in collaboration with a team of young creatives. the brand maintain its inconspicuous marketing strategy and avoid traditional marketing methods such as advertising. that COS launch an interactive and customisable mobile app that also incorporates visual fashion finder and iBeacon technology. organising an open and public fashion show and a interactive runway experience . generating excitement for the collection launch by opening twelve pop-up stores worldwide pre-launch.

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introduction 10

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introduction This report aims to analyse the current womenswear market enviroment and create a potent market development strategy for the COS Touch collection.

The secondary research resources used to create this report were: • Mintel market reports • WGSN reports • LSN Global reports • Online articles from websites such as Business of Fashion , Drapers, RetailWeek and others.

Primary researh has included both quantitative research, in the form of anonymous online questionaires, as well as qualitative research through focus groups.

There were certain limitiations to this report such as a lack of clear financial and statisitcal market data for the COS brand alone as well as a lack of relevant information, market share wise, for its competitiors. There were also limitations in regards to the quantitative research respondents such as lack of variety pertaiting to age, ocupation and background.

This report highlights key drivers of the premium market such as retailing and marketing trends as well as consumer demographics and with the purpose creating apropriate marketing proposal for the product line expansion tailored specifically to the COS brand and its image.

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14

pROPOSAL

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1. 1 Company Overview “Modern, timeless, tactile and functional. Exploring the concept of style over fashion, COS offers fashion pieces for the contemporary wardrobe. Here, high-end design and quality that lives beyond the seasons is available for women, men and children.”

Since its launch in 2007, COS, which stands for ‘Collection of Style’ ,has opened 116 stores worldwide and retails online in 19 markets. Following COS’s parent company, H&M, 12% increase in net income in 2014, plans for further expansion and development at an even faster rate than this previous year are planned. With a 500m gbp net profit in 2014, H&M group has showed great financial outcomes, allowing for further investments to be made in the upcoming year.

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17

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1. 1 performance

•

•

•

•

Strong expansion during the year with a total net addition of 379 new stores. The largest expansion markets were China and the US. At the end of the financial year the number of stores amounted to 3,511 stores in 55 markets.

Gross profit increased by 17 percent to SEK 89,052 m (76,025), which corresponds to a gross margin of 58.8 percent (59.1).

Profit after financial items increased by more than SEK 3.4 billion to SEK 25,895 m (22,448), an increase of 15 percent.

The Group’s profit after tax increased to SEK 19,976 m (17,093), corresponding to SEK 12.07 (10.33) per share, an increase of 17 percent.

- See Appendice 1 for full Financial Report. -

( http://about.hm.com/content/dam/hm/about/documents/en/cision/2015/01/1460341e_ n.pdf )

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1. 1 current product

Womenswear: Apparel Leisurewear Accessories Jewelry Linjerie Shoes Menswear: Apparel Leisurewear Accessories Underwear Shoes Childrenswear Boys & Girls apparel Accessories

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1. 2 New product A capsule collection created in collaboration with a team of young creatives incorporating elements and influences from fine art, architecture and graphic design. The collection will be limited and sold at higher price points.

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1. 3 usp By collaborating with a team of young creatives on the design of the collection we are able to provide the customer with a unique product encapsulating elements of art. architecture and graphic design. Aside from offering the customer a unique garment design, the collection also aims to fill a gap between luxury and premium by offering luxury quality and great design at a more affordable, premium pricing.

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1. 4 ansoff matrix

Market Penetration

product development

Market development

Diversification

• Using the new pricing policy and design ethos the collection aims to target a more affluent demographic.

• The collaborations with the young creatives is the Unique Selling Point of this collection.

• The USP will be one of the main factors that will drive the new consumer to buy into the capsule collection.

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Marketing mix 24

25

people 26

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28

2. 1. 1

demographics

• • • •

• •

• •

The 25-34’s demographic is forecasted to rise 7% in the next 5 years. (Mintel) This will prove beneficial for the womenswear market as they are the main clothes shoppers. (Mintel) This age group is least interested in sales or special offerings meaning they are likely to full priced items. (Mintel) As this demographic is more financially stable, demand for more premium garments has increased, representing an opportunity for high street retailers Women still prioritise buying new clothing items with their disposable income. (Mintel) With an increasingly stable economy and a fall in female unepmloyment predicted, women are becoming more confident shoppers and also have more disposable income compared to previous years.

High street design collaborations have continued to be popular in 2014 Mintel estimates that the women’s fashion market will grow by 22% between 2013 and 2018 to reach £30.4 billion .

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2. 1. 2

spending power

Spending Power by Age Group 24-35’s • main clothes shoppers • financially stable: mid-high disposable income 16-24’s • previously main clothes shoppers • less likely to be financially independent - low disposable income Over 55’s • tendency to shop less than younger age groups but recent positive change in buying habits can be observed • high amounts of disposable income

The top 10 markets, according to the 2014 H&M finacial report are:

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1. Germany

6. Sweden

2.. United Stated

7. Nethrelands

3. United Kingdom

8. Italy

4. France

9. Spain

5. China

10. Switzerland

2. 1.. 3 Marketing typologies

The Cool Hunters

New Luxury Millennials

Athena Woman

Digital Influencers

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Digital Influencers

Fashionable

Positive influence

High following 32

Hyper-connected and highly influential. Digital Influencers are a recently emerged typology created by the social media boom of the past few years. With high numbers of followers, they represent lifestyle icons for the new generations.

Always online, they are constantly sharing every aspect of their fabulous lives.

Athena Woman

Career Woman

Career-driven and highly ambitious. A stylish woman in her late twenties to mid-thirties, always on the move. Her look is very important in her day-to day life. She is willing to invest in her wardrobe and has the financial possibilities to do so. Always on the look for stylish, practical garments of the highest quality, she will not hesitate to purchase clothes that cater to her needs (LS:N Global)

Affluent

Healty & Fit 33

New Luxury Millennials

Fashionable

Lavish Lifestyle

Oppulent

34

High-spending, high-net worth individuals. Usually in their early to late twenties, they are constantly online through their various gadgets and enjoy every shopping method, whether online or in-store. Always on the look-out for new trends, they will not hesitate to purchase expensive garments that they consider appealing.

The Cool Hunters

Unique Super trendy and creative. This typology does not have high amounts of disposable income.

They shop in high-street stores most times but are willing to save for a more costly garment with a unique aesthetic. or key designer pieces.

Their look is very hip. They do not follow trends or fashion, they create their own look.

Trend-setter

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2. 1. 3.

psychographic profile

2.5%

13.5%

34%

34%

16%

A

B

C

D

E

A - Innovators B - Early Adaptor C - Early Majority D - Late Majority E - Laggards

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The Cool Hunters New Luxury Millennials Athena Woman Digital Influencers

2. 1. 3.

buying attitude

The Cool Hunters Emotional buyers: Despite not having high-amounts of disposable income, they are always on the look-out for unique products and are willing to invest in garments that stand-out and adds to their unique look.

New Luxury Millennials Emotional Buyers: Their buying motives are usually driven by the need of status and self-actualisation. They are driven to purchase items that the masses cannot own and are likely to invest in exclusive pieces.

Athena Woman Rational / Patronage buyers: They usually know the brands they like and the brands that suit them well but are willing to go outside their ‘comfort-zone’ if they believe a garment is suitable from a price/quality and design/comfort perspective.

Digital Influencers Emotional buyers: Their buying motives are driven by several factors such as aesthetic pleasure or fear. The fear is driven by the constant pressure of being a public figure in a highly competitive and superficial enviroment.

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PRODUCT

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2. 2. 1

Product Overview The COS Touch collection aims to fill a gap between luxury and premium, creating a collection offering luxury quality at premium prices.The collection will feature two different product styles: The first style will be updated classics, similar in style to the current product offering but in premium quality fabrics. These are intended for versatility and durability,offering the customer investment pieces that can withstand through trends and will remain wearable for several years.

The second style will offer statement pieces which are more unique in shape and colour. These garments will be design led and inspired by modern architecture and art. A team of young artists will collaborate with the design team to create these unique and spectacular garments..

These pieces will feature the highest price points and will be produced in very limited stock.

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2. 2. 2 cad range plan Maja Crop

Agnes

Short sleeve white boxy crop top

Contrasting color-block maxi-dress

Size availability: 8-18 RRP: £ 65 Fabric: 60% Cotton / 37 % Polyamide / 3% Elastane Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 389 Fabric: 65% Viscose / 35% Polyamide Made in Romania Distribution: Selected stores

Freja Short sleeve jersey dress with shoulder cut-outs

Alma Slim-fit long-sleeve lightweight turtleneck

Size availability: 8-18 RRP: £ 269 Fabric: 98% Cotton / 2% Elastane Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 89 Fabric: 100 % Merino wool; Made in Romania Distribution: All Stores*

stal

saga

Fitted mid-lenght dress with graphic pastel print.

Structured long sleeve contrast panels shirt.

Size availability: 8-18 RRP: £ 519 Fabric: 100% Silk Made in Romania Distribution: Selected stores

Size availability: 8-18 RRP: £ 279 Fabric: 98% Cotton / 2% Viscose Made in Romania Distribution: All Stores*

signe Boxy sweater top with contrasting panels

Size availability: 8-18 RRP: £ 255 Fabric: 98% Cotton / 2% Elastane Made in Romania Distribution: All Stores* *All stores: all stores selected to stock the collection.

Maya Boxy contrasting panel graphic print top.

Size availability: 8-18 RRP: £ 345 Fabric: 31% Silk / 69% Cotton Made in Romania Distribution: All Stores* **Detailed information can be found in appendix 2

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Punkt

Lykke

Mid-length sleeve turtleneck blouse

Contrasting panels casual blazer

Size availability: 8-18 RRP: £ 275 Fabric: 98% Cotton / 2% Elastane Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 335 Fabric: 100% Cotton Made in Romania Distribution: Selected stores

Alskar

Flamna

Sleveless asymetric jersey dress

Long sleeve sweater blouse

Size availability: 8-18 RRP £ 269 Fabric:7 4% Viscose / 18% Polyester / 8% Elastane Made in Romania Distribution: All Stores*

Matilda

Size availability: 8-18 RRP: £ 289 Fabric: 65% Viscose / 35% Polyamide Made in Romania Distribution: All Stores*

Bliss

Assymetric dress with contrasting panels

Loose shirt

Size availability: 8-18 RRP: £ 305 Fabric: 100% cotton Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 315 Fabric: 100% Polyester Made in Romania Distribution: All Stores*

Rosa Short sleeve white boxy crop top

Size availability: 8-18 RRP: £ 735 Fabric: 100 % Silk Made in Romania Distribution: All Stores*

*All stores: all stores selected to stock the collection.

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Vatten Short sleeve white boxy crop top

Size availability: 8-18 RRP: £ 225 Fabric: 100% Cotton Made in Romania Distribution: All Stores*

**Detailed information can be found in appendix 2

Kristin

Martine

Midi Skirt with contrast pockets.

Hight waisted flare pant with graphic print

Size availability: 8-18 RRP: £ 259 Fabric: 48% Viscose / 48% Polyester / 4% Elastane Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 335 Fabric: 97% Viscose / 3% Elastane Made in Romania Distribution: Selected stores

ror Turtleneck tunic with graphic print

Lappar

Size availability: 8-18 RRP: £ 315 Fabric: 90% Cotton / 10% Polyamide Made in Romania Distribution: All Stores*

Contrast panel blazer-coat.

Size availability: 8-18 RRP: £ 425 Fabric: 88% Modal / 12% Polyester Made in Romania Distribution: Selected stores

Sko Contrast panel mid-lenght sleeve shirt

Mjuk Pastel faux-fur coat

Size availability: 8-18 RRP: £ 235 Fabric: 100% cotton Made in Romania Distribution: All Stores*

Size availability: 8-18 RRP: £ 895 Fabric: 60% Acrylic / 40% Modarcylic Made in Romania Distribution: All Stores*

Sigrid Cuffed mid-waist slouchy pants

Size availability: 8-18 RRP: £ 229 Fabric: 89% Polyester / 11% Elastane Made in Romania Distribution: All Stores*

*All stores: all stores selected to stock the collection.

Sten Biker sherling coat with zip detail

Size availability: 8-18 RRP: £ 1225 Fabric: 100% sherling Made in Romania Distribution: All Stores*

**Detailed information can be found in appendix 2

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Elina Long blaxer coat with contrast panel.

Size availability: 8-18 RRP: £ 535 Fabric: 100% Silk Made in Romania Distribution: Selected stores

luft Flared midi skirt w/ belt

Size availability: 8-18 RRP: £ 235 Fabric: 100% Polyester Made in Romania Distribution: All Stores*

rut Straight shape cropped pant

Balte

Size availability: 8-18 RRP: £ 225 Fabric: 48% Viscose / 48% Polyester / 4% Elastane Made in Romania Distribution: All Stores*

Mid waist flared pant.

Size availability: 8-18 RRP: £ 265 Fabric: 100% Micromodal Made in Romania Distribution: All Stores*

TUVA Copper detail waist belt

Vatten Clear PU shopper bag

Size availability:S/M ; M/L Price: £ 135 Fabric: 100% Lether/ Chrome plated nickel detail Made in China

Price: £ 315 Fabric: 100% PU / 100% Leather handles Made in China Distribution: All Stores*

KLAR Clear plastic clutch bag with copper detail

Price: £ 265 Fabric: 100% Perspex Made in China Distribution: All Stores* *All stores: all stores selected to stock the collection.

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Tilde Leather ankle bootie with block high heel

Size availability: 8-16 Price: £ 545 Fabric: 100% Leather Made in Italy Distribution: Selected stores **Detailed information can be found in appendix 2

Cirkel

dropp

Metalllic upper arm cuffs

Silver-plated geo long necklace

RRP: £ 75 Fabric: 100% Brass Made in China Distribution: All Stores*

RRP: £ 135 Made in China Distribution: Selected stores

Sten Silver-plated cuff bracelet

Enhet Silver plated circular necklace

RRP: £ 105 Fabric: 98% brass / 2% sterling silver Made in China Distribution: All Stores*

Price: £ 115 Made in China Distribution: All Stores*

\Ror

glas

Perspex detail necklace

Perspex cuff bracelet with silver plated outline

RRP: £ 89 Made in China Distribution: All Stores*

RRP: £ 90 Fabric: 100% Perspex Made in China Distribution: All Stores*

MIra Copper effect clutch bag

Price: £ 335 Fabric: Brass Made in China Distribution: Selected stores Mycket Ankle boot with contrast detail

stasia Pastel ankle-boot with contrasting block heel

Size availability: 3-8 Price: £ 415 Fabric: 100% Leather Made in Italy Distribution: All Stores* *All stores: all stores selected to stock the collection.

Size availability: 3-8

Price: £ 339 Fabric: 100% Leather Made in Italy Distribution: All Stores*

**Detailed information can be found in appendix 2

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2. 2. 4

company ethics

The COS Touch collection will abide by the same ethical policies the COS brand has maintained so far.

To ensure the products are manufactured under good working conditions, they follow a code of conduct based on ILO’s core conventions as well as the Convention on the Right of the Child (cosstores.com).

This includes: • compliance with local labour law • statutory pay and working hours • the right to organise and bargain collectively • a ban on child labour • a ban on discrimination • a ban on forced labour • health and safety in the workplace • compliance with local environmental legislation To assure the code of conduct is maintained, all suppliers who enter a contractual agreement with COS, agree to announced or unannounced audits.

COS also abides by its parent’s company ethical policies. Detailed information can be found in appendix 3

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2. 2. 3

sourcing strategy

This collection aims to offer high quality fabric that are ethically produced so there will be no compromising quality and ethically sourced fabric and trims for lower prices.

The country of manufacture for all COS garments will be Romania.

COS already manufactures a part of its garments at a factory in Cluj.

The reasons for choosing Romania include: • Cheap labour costs • Cheap rent and utilities costs • Cheaper distribution costs • Better quality control Manufacturing the garments in a European country facilitates better quality control due to proximity. The factory is a short flight away from the London headquarters. Romania is also part of the European Union and abides by EU labour law.

Lower distribution costs are also a factor. As the majority of stores stocking the Touch collection are in Europe, distributing the collection requires lower transportation costs and customs taxes.

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pOSITIONING price

50

51

2. 3. 1.

price band chart

coats

£ 535 £ 335

Blazers £ 65

tops

£ 1255

£ 425

£ 305

£ 269

dresses

£ 735

£ 125

bottoms

£ 335

£ 135

Accessories

£ 545

£ 75 £ 135

Jewelery 50

100

|

200

|

300

|

400

|

500

|

600

|

700

|

800

|

900

|

1000 +

The COS Touch collection utilises the same psychological pricing strategy as the main collection,using odd number for prices.

In comparison to the regular collection, COS Touch also utilises premium pricing, offering garments at a higher price, increasing their exclusivity and appealing to a more affluent demographic

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2. 3. 1.

pricing architecture

UNIQUE

£239 £1255 £ 425

£ 735

£ 335

MID

£ 219

£ 239

£ 229

£ 269

BASIC £ 145

£ 65

£ 89

£ 125

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place 54

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2. 4 1.

overview

Availability Brick & Mortar: • Flagship stores: YES • All- Stores: selected • Department stores: Selected Online: • Website: YES • Mobile App: YES

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2. 4 1.

distribution strategy

The COS Touch collection will only be available at selected stores around the world.

The full COS Touch collection will only be available in a limited number of stores such as Flagships and stores in key areas. This is to ensure the collection maintains its exclusivity as well as offering products relevant to each market.

Factors such as footfall, spending power and climate have been taken into consideration when deciding the distribution of the garments to stores which will not stock the full range.

A detailed list, which can be found on page 30, will be available to the public on the COS website at www.cosstores.com/touch/findstore as well as on the newly launched mobile app, for full accessibility.

2. 4 2. OMNI-channel retailing The full COS Touch collection will also be available online on the COS website as well as on the COS mobile app. The stock will be limited to preserve exclusivity.

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EUROPE

58

ASIA

AUSTRALIA

UNITED STATES

Full collection Selected Items 59

position 60

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2. 5 1.

Price / style matrix High Price

Classic

Low Price

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2. 5. 2 Competitor evaluation COS Touch situates itself in the higher price/ more fashionable area of the matrix. Its main competitors,as indicated by the pink oval, are high-end premium brands as well as luxury diffusion brands that have higher price points but similar quality.

COS Touch aims to offer a unique product encapsulating elements of art and architecture in it’s design as well as offering luxury-level quality at a premium retailer price point.

Its unique selling point is what sets it apart from its competitors, whether premium or luxury.

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pROmotion

64

65

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2. 6. 1 Brand dna pyrmid

Who is the COS Touch customer?

What do they believe in?

What feelings does owning a Touch product give them?

What do the garments do for the customer?

What are the Key Ingredients?

What is their USP?

Stylish Unique Creative

Personality

Quality Creativity Design Exclusive Fashionable Confident

Values

Emotional Benefits

Style Comfort Status Quality Modern Functional

Timeless Unique

Phisycal Befefits

Attributes

Luxury quality with premium pricing.

Artistic design influence and unique prints Style over fashion: timeless design that lives beyond the season. Merging traditional methods with new techniques and innovative fabrics

Positioning

Essence

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2. 6. 1 Packaging The aim of creating a separate bag for the Touch collection is to create a unique and easily recognisable bag that has a premium feel and look.

The bag will only be used to package COS Touch items. Having a limited edition shopping bag increases prestige and encourages customers to show off the coveted shopping bag.

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2. 6. 1 Packaging Shiny satin-finish fabric handles

Embossed Logo

Light-copper metallic color

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2. 6. 1 swing tags & labels The new price tags maintain the same size and format as the original COS price tags. The main difference is in color and texture. The matted grey carton is replaced by a shiny light copper, matching the carrier bags and also features an embossed logo.

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2. 6. 1 swing tags & labels

GBP EUR SEK LEI

S

096648

1

3044

70 8

2712/2

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2. 6. 2 Marketing strategy Outline

Social Media Teaser 1

Social Media Teaser 2

Catwalk Show Announcement

Catwalk Show

1 Month before Pop-up opening and collection unveiling

1 Week before Pop-up opening and colleciton unveiling

3 days before Pop-up opening and collection unveiling

Pop-up launch

Collection Launch

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App Launch

2 weeks after official unveiling

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2. 6. 2 social media teaser campaign Social Media Teaser 1: • Abstract fabric,shape and print images.

• Posted bi-weekly on Facebook and Instagram with #COSTouch caption Social Media Teaser 2: • Pop-up stores exterior.

• One post a day for seven days including a countdown and the COS Touch hashtag.

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2. 6. 2 social media teaser campaign

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2. 6. 2 new cos mobile app

NOTIFY ME NEW ITEMS

SALE

PROMOTIONS

EVENTS

The browsing option in the COS Touch portal Option to toggle on/off push notifications on the MyCOS account

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SIGNE 100% Merino Wool All fabrics coming from animal hair Are better to be hand washed in cold water and mild detergent or shampoo and dried flat.

BROWSE COLLECTION mEET THE TEAM

Wash cold. Iron on low heat. Do not tumble dry. Do not dry clean

FABRIC DETAILS

iTOUCH

Care instructions showed when the care label’s QR code is scanned The COS Touch portal offering several interactive option

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2. 6. 2 SNAP & FIND The new COS app will feature a Snap & Find option. The customer can scan anything from fabric, to color to garments. The app will analyse the image and scan the entire COS collection to offer the items most closely resembling the scanned image.

This is to offer ease of access in finding specific colors or shapes opposed to browsing through the entire online shop

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2. 6. 2 mycos • • • • •

MY COS

Offer customers the option to save items in the gallery.

If a saved item is on promotion or low stock, the customer will be informed.

Push notifications option to inform customers of sales, promotions events or new items.

Fully customisable. Notifications can be toggled on and off.

Allows the brand to receive and analyse data such as customer purchase habits and preferences.

sAVED ITEMS

NOTIFY ME NEW ITEMS

SALE Low stock

PROMOTIONS SALE

EVENTS

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2. 6. 2 Pop-up stores As the collection is created in collaboration with a team of artists, to maintain the art theme the pop-up stores will be designed as a digitlaly interactive art gallery Date: • Will open on the day of the Runway Show.

• Estimated 23 / 02 / 2016 Place: • 11 carefully selected key cities around the world.

• Placed in hip neighborhoods with high footfall Purpose • Showcase COS Touch collection • Create word-of-mouth • Raise excitement for the capsule collection • Create social media engagement through the various interactive features • Allow customers to get a first look at the items.

• Encourage use of new mobile app • Generate free publicity and press

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key cities EUROPE

LONDON PARIS BERLIN MILAN AMSTERDAM

key features

U.S.

L.A. NEW YORK

ASIA

SEOUL HONG KONG SHANGHAI TOKYO

Virtual Fitting Rooms TV Screens

Help Counter

Display Cases

Photo Booth

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2. 6. 2 snap & scan Customers are able to interact with the displayed items due to IBeacon technology. The feature,which can be used via the COS mobile app enables each display case to send a signal with relevant information to any user.

It is an interactive way for customers to pre-order the garments as well as find out information regarding price, artist feature videos talking about the collection and care details.

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2. 6. 2 snap & scan

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2. 6. 2 runway show • The Fashion Show will be announced starting 3 days prior, on Social Media. • The announcement will be slightly vague with the purpose of preserving secrecy of the capsule collection until the official unveiling.

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2. 6. 2 runway show Fashion show will be outdoors and open to everyone.

Location • The Serpentine Galleries is the ideal location.

• An art gallery is appropriate due to the artist design collaboration.

• COS has also been supporting the Serpentine galleries for several years and has previously collaborated with them • On the premise of the past and future collaboration between the Serpetine Galleries and COS,the venue hire will be free of charge

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2. 6. 2 snap & scan - Interactive runway The runway show will be interactive. Through the Touch portal on the new COS app, with the help of IBeacon technology, guests will be receiving real-time information about the products on the runway.

The portal offers basic information such as price and name as well as the option to further browse care instructions, videos about the design process and artist collaboration and the option to pre-order the garment.

The aim of this is to create an immersive experience for guests as well as to promote the new app and encourage guests to download it on their smartphones.

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persuasion 88

89

90

persuasion Top three qualities respondents have identified as their top priorities when purchasing clothes Quality

Versatility

Design

Design Colaboration

+

High Quality

Collaboration with a team of young creatives

Remains a popular marketing trend ( Mintel )

+

Wearable & Versatile

Affluent consumer Brand fatique

Consumer still cautious

Premium Pricing

Consumer Behaviour Demographics

Better economy

Rise in 24-35 demographic

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Business Planning 92

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GENERAL COSTS OVERVIEW Direct Material Cost Fabric, lining, thread, buttons,zips,trimmings, elastic, lace, velcro, labels, batting, leather.

Direct Labour Cost

Direct Expenses

Labour hours x Hourly wage

Embroidery, copyright, digital print

Prime Cost

Indirect Indirect Labour Material Cost Cost

Indirect expenses

Maintainence staff, Rent, insurance, Small Machinery Janitors, supervisors utilities, capital parts, coolant, management costs for equipment cleaning materials, security staff Production Overhead

Production Cost Administration, selling & distributions, finance costs.

Staff salaries, packaging, freight & haulage, promotion & adertising cost Office rent, staff salaries,utilities.

Nonproduction Overhead

ÂŁ 2,054,880 * Detailed spreadsheet can be found in Appendix 4

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LAUNCH MARKETING COSTS Marketing Costs

Pop-up Stores

+

Mobile App

+

Runway Show*

Interior Design

App Development

Materials

+

+

+

Materials

Patents & Licensing

Set-up

+

+

+

Labour

Labour

Staff

+

+

Space Rental

Models

+ Utilities

*Space rental is free. More details on page 85

+ Staff Wages

* Detailed spreadsheet can be found in Appendix 4

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eSTIMATED PROFIT / LOSS COS Touch Collection

Higher profit margin per item.

Premium Pricing

Total Retail Sales £ 11,887,950

OTHER INCOME Promotion for Capsule Collection

Discounting (sales), unsold items, loss, damage, theft

Total Retail Sales minus 20 %

20 % Projected Loss

Estimated Retail Sales £ 9,510,366 Est. Manufacturing Cost

Increase in brand exposure

£ 2,054,880

+

Est. Marketing Costs £ 283,500 Increase in Footfall

Increase in sales revenue for COS brand

Estimated Profit £ 6,757,911

Est Retail Sales minus Marketing & Manufacturing Costs

In-store sales revenue

+

Online sales revenue

* Detailed spreadsheet can be found in Appendix 4

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Capital Funding As COS is part of the H&M Group, the funding will come from the parent company. H&M group has had over ÂŁ 6898m gross profit over the last year and it should have the liquid funds to invest in the Market Development plans for COS.

Est. Manufacturing Cost

2,054,880

Est. Marketing Costs 283,500

Capital Investment Required

~ ÂŁ 2.350,000

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98

S.W.O.T

99

Strenghts • Strong Unique Selling Point - Incorporating elements of art / architecture / graphic design through a collaboration with a team of young creatives.

• Premium quality • Exclusive collection (aspirational) • Design-led but not trend based (garments are versatile and can withstand trends) • Ethical sourced and produced • Supports emerging artists • High profit margin • Global distribution • Omni-channel availability

• Limited availability • Not trend-based • Higher price points than average • Different to what the current COS consumer is aquainted with..

• Higher production costs.

weaknesses 100

opportunities • • • • •

Appealing to a wider demographic Establishing COS as an international fashion brand.

Offers valuable insight relevant to the future pricing policy and design ethos of the brand.

Can be developed in a permanent annual or bi-annual collection

• Possibility of encountering hardship when sourcing materials.

• Risk of not being received well by the general public.

• Encountering high-production costs.

• Failing to reach the desired quality and design level.

• Issues generated by global distribution such as currency exchange rates

threats 101

conclusion 102

103

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conclusion In the competitive and everchanging fashion enviroment, it is important for brands to constantly develop and innovate in order to remain relevant.

As the womenswear fashion market is close to becoming oversaturated, the only way for a brand to set itself apart is by offering something new and exciting. Despite that, for a product to be succesful from a business perspective, the right balance between unique and practical must be achieved. “The growing 25-34-year-old demographic, which is set to rise by 9% in the next five years, are becoming more influential clothes shoppers. They are shopping more at young fashion retailers and are willing to splash out on premium collections such as Topshop Unique. In the current economic climate where consumers have become more discerning about where they shop, more premium designer-inspired collections help mid-market retailers stand out (...)� (Mintel,2014)

The COS Touch collection aims to penetrate this emerging market by creating a unique collection that not only delivers modern pieces of the highest quality, but also incorporates elements of fine art,architecture and graphic design, creating a collection that is both visually appealing and practical.

COS has previously collaborated successfully with artists on several small projects. This collection is the ideal way to take artist collaborations to a larger scale by encapsulating the artistic elements in a new collection.

The collection will be launched globally and will be available on several distribution channels such as brick & mortar as well as through e-tail and m-commerce.

The main element of the marketing strategy will be the twelve interactive pop-up stores in key cities around the world. A mobile app will be also launched consecutively, featuring innovative technology such as digital fashion finder and iBeacon. This marketing campaign aims to further the COS brand and establish it as a global fashion brand in the era of digital innovation and interaction.

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appendix 1 Full-year (1 December 2013 — 30 November 2014) Financial Report •

• • • •

•

•

Well-received collections for all brands in the H&M Group resulted in good sales and increased market share. The H&M Group’s sales including VAT increased in local currencies by 14 percent during the financial year. Converted into SEK, sales excluding VAT amounted to SEK 151,419 m (128,562), an increase of 18 percent.

Gross profit increased by 17 percent to SEK 89,052 m (76,025), which corresponds to a gross margin of 58.8 percent (59.1).

Profit after financial items increased by more than SEK 3.4 billion to SEK 25,895 m (22,448), an increase of 15 percent.

The Group’s profit after tax increased to SEK 19,976 m (17,093), corresponding to SEK 12.07 (10.33) per share, an increase of 17 percent.

The strong result for 2014 has led to SEK 303 m being allocated to the H&M Incentive Program (HIP). The allocation to HIP in 2013 amounted to SEK 31 m. HIP is for all employees regardless of role, salary and whether they work part-time or full-time. The allocation to HIP was expensed in the fourth quarter. The significant difference in HIP allocations between 2014 and 2013 make it an item affecting comparability both in the full-year results for 2014 and in the fourth quarter of 2014.

Strong expansion during the year with a total net addition of 379 (356) new stores. The largest expansion markets were China and the US. At the end of the financial year the number of stores amounted to 3,511 stores in 55 markets.

More than 16,000 (12,000) new jobs were created in the H&M Group in 2014.

Sales Well-received collections for all brands and continued strong expansion led to increased sales and continued market share gains for the H&M Group in a fashion retail market that in many markets was still characterised by a challenging macroeconomic situation and also by unusually warm autumn weather.

Sales including VAT converted into SEK increased by 17 percent to SEK 49,656 m (42,610) in the fourth quarter. Sales including VAT increased in the financial year by 18 percent and amounted to SEK 176,620 m (150,090).

Sales excluding VAT increased by 17 percent to SEK 42,644 m (36,495) in the fourth quarter and by 18 percent to SEK 151,419 m (128,562) during the financial year 2014.

Sales including VAT in local currencies increased by 11 percent in the fourth quarter and by 14 percent during the financial year 2014.

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Expansion H&M remains positive as regards future expansion and the Group’s business opportunities. The strong expansion continues.

H&M’s growth target remains intact. The growth target is to increase the number of stores by 10–15 percent per year with continued high profitability.

For full-year 2015 a net addition of around 400 new stores is planned. Most new stores in 2015 are planned to open in China and the US. There are also still great opportunities for expansion in other existing markets as well as in new markets. Taiwan, Peru, Macau, South Africa and India will become new H&M markets in 2015. The Group is continuing to work on the global roll-out of H&M’s online store.

In 2015 H&M plans to open nine new online markets: Belgium, Bulgaria, the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Switzerland.

The expansion continues for the Group’s other brands COS, Monki, Weekday, Cheap Monday and & Other Stories. The main focus for expansion will be on COS and & Other Stories, which will open more stores in 2015 compared with 2014. This expansion will mainly take place in existing markets.

H&M Home is also continuing its rapid expansion in 2015, with around a hundred new H&M Home departments and around 10 new H&M Home markets planned for the year.

H&M Sport, H&M Beauty and the extended shoe range are examples of ongoing longterm investments in the broadening of H&M’s product range.

In autumn 2015 H&M Beauty will be launched – H&M’s new and broad concept for make-up, body care and hair care with high quality value-for-money products in a specially produced design. H&M Beauty, which will replace H&M’s current own-brand cosmetics, will be launched already this year in around 900 H&M stores in around 40 markets as well as online.

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appendix 2

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appendix 3 About H&M Conscious Making more sustainable fashion choices available, affordable and attractive to as many people as possible. This is our starting point. We are excited to take on the challenge of making fashion sustainable and sustainability fashionable.

At H&M, we have set ourselves the challenge of ultimately making fashion sustainable and sustainability fashionable.

Karl-Johan Persson, CEO We want our colleagues to be proud of where they work and our customers to feel good about the fashion they buy. We can clearly see a growing interest in more sustainable fashion.

This opens opportunities to further strengthen our customer offering by adding sustainability value to our products.

Our planet is facing scarcity issues on many fronts and still too many people live in poverty. Clean water, climate change, textile waste and wages and overtime in supplier factories are some of the key challenges in our industry.

We want to use our scale to bring about systemic change to our industry and across our entire value chain. Together with our colleagues, customers, stakeholders, business partners and peers, we have the opportunity to bring about massive change – all the way from improving the livelihood of a cotton farmer to lowering the impacts from washing and drying our clothes.

For us, sustainability is a word of action. A mission that is built on passion, long-term thinking and teamwork. Everything we do needs to be economically, socially and environmentally sustainable. All highly interconnected. All equally important for our future growth.

This is why we have created H&M Conscious. With seven commitments at its heart, Conscious is the name for everything we do for a more sustainable fashion future. Hundreds of Conscious Actions – big and small, short- and long-term – are dedicated to putting these commitments into practice. Our Conscious Collection, for example, is one of them. But there are many more.

Our commitments: • Provide fashion for conscious customers • Choose and reward responsible partners • Be ethical • Be climate smart • Reduce, reuse, recycle • Use natural resources responsibly • Strengthen communities

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Environmental requirements for suppliers We set high standards for ourselves in terms of environmental responsibility and we expect our business partners to adopt equally high standards.

Code of Conduct sets environmental requirements The environmental requirements in H&M's Code of Conduct demand that our suppliers comply with the relevant legislation in the countries where they operate. H&M also encourages suppliers to assume greater responsibility for the environment than is strictly required by the law. When we audit facilities to verify compliance with local environmental law and our Code of Conduct, we focus on four main areas: environmental law and governmental permits, chemicals, wastewater treatment and waste management.

We begin by reviewing factories’ permits. We also examine how chemicals are handled. The focus is on workers’ safety and on chemical discharges to water and into the ground. To evaluate this, we check whether and how chemical containers are labelled, and whether there are Material Safety Data Sheets (MSDS). We also check whether the MSDSs have been implemented, i.e. if workers have been trained in safe chemical handling, and if they use protective equipment. We require that factories with wet processes such as dyeing or washing use wastewater treatment plants. The sludge that the plants produce must be dealt with in accordance with the relevant legislation. Finally, we check whether the factories handle hazardous waste in a responsible manner and send it to an authorised company.

Restriction of chemicals We are working hard to limit and eliminate the use of hazardous chemicals in order to ensure that our products are safe and to limit discharges to water, soil and air throughout the life cycle of all of our products.

We ban or limit chemicals considered as hazardous in the production of all our products by means of the H&M Chemical Restrictions list which all our suppliers must comply with. We define hazardous chemicals according to an intrinsic property approach and we consider properties such as persistence, bioaccumulation, toxicity, carcinogenicity, mutagenicity and toxicity to reproduction, endocrine disruption and equivalent concerns when assessing the risks associated with certain substances.

Our Chemical Restrictions are as a minimum always based on the highest legal standard in any of our sales countries as well as on information from authorities, NGOs and scientific reports. As stated in our Sustainability Policy, we apply the precautionary principle – meaning that we preventively restrict chemicals even where there is scientific uncertainty. Accordingly, our requirements usually go further than the law demands.

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Our Chemical Restrictions list is updated continiously, most recently in May 2014, and it now contains more than 360 restricted substances. We inform all our suppliers in advance of any update and provide support in order to ensure their ability to comply with enforced restrictions.

To ensure compliance with our Chemical Restrictions we perform regular tests, mainly in third party laboratories. We conduct around 30,000 such tests annually. Test procedures follow a risk assessment that is based on factors such as the type of product and production location.

We also conduct dedicated chemical audits at our supplier factories, work with others to promote better practice throughout our industry and have developed a set of programmes to contribute to improvements upstream in our value chain. Read more under chemicals management.

Environmental requirements for IT suppliers In order to be able to make environmentally sound choices when purchasing IT products, H&M requires that all products offered to us are accompanied by an IT Eco Declaration. The IT Eco Declaration is a system for declaration of environmental aspects of IT and telecom products, developed by the Nordic IT organisations, IT-Fรถretagen in Sweden, ITB in Denmark, IKT-Norge in Norway and TTK ry in Finland. The IT Eco Declaration includes information on the environmental practices of the manufacturer as well as on the environmental performance of their products.

Nemko Group, a Norwegian firm that offers testing, inspection and certification services, randomly selects and examines 25 percent of all companies that submit IT Eco Declarations to verify that the information is accurate.

H&M has developed an evaluation model to assess the information in the IT Eco Declarations.

Our evaluation model takes into account legal standards as well as additional H&M requirements.

Environmental requirements for suppliers of store equipment and furnishings H&M has drawn up environmental guidelines for purchasing store equipment and furnishings.

Materials such as PVC and halogen-based plastic materials, metals such as lead and chrome and chemicals such as brominated flame retardants should be avoided in the manufacture of store equipment and in the finished products. In addition, there are some fields of application where we have banned the use of certain materials, metals and chemicals. There are guidelines on first choice materials, metals and chemicals that should be used instead in order to obtain more environmentally sound products.

We also encourage the use of new technologies that can reduce negative environmental impacts from both the construction and the operation of H&M stores and other premises. In addition, we require mixer taps in washrooms, kitchens and toilets to be fitted with water-saving devices. All stores should also have adequate space for waste management and separation.

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appendix 4

LAUNCH MARKETING BUSINES Month

Marketing Costs

Manufacturing Costs Total Marketing Costs Sales Revenue Profit / Loss Website Social Media Collaborations Campaign Launch Media Campaign Direct Marketing Consumer Events Traditional Mktg Total Mktg Costs Capital Investment Profit / Loss

Jan 684,960 16,000

Feb

-700,960

0 209,800 7,608,292 7,398,492

500 500 15,000 0 0 0 0 0 16,000

300 3,500 15,000 130,000 0 31,000 30,000 0 209,800

########## ##########

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appendix 3

LAUNCH MARKETING BU Month

Marketing Costs

Manufacturing Costs Total Marketing Costs Sales Revenue Profit / Loss Website Social Media Collaborations Campaign Launch Media Campaign Direct Marketing Consumer Events Traditional Mktg Total Mktg Costs Capital Investment Profit / Loss

122

Jan 684,960 16,000

Feb

-700,960

0 209,800 7,608,292 7,398,492

500 500 15,000 0 0 0 0 0 16,000

300 3,500 15,000 130,000 0 31,000 30,000 0 209,800

########## ##########

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Image refferences

All Images: http://facebook.com/cosstores/

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All Images: http://facebook.com/cosstores/

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All Images: http://facebook.com/cosstores/

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All Images: http://facebook.com/cosstores/

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All Images: http://facebook.com/cosstores/

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All Images: http://facebook.com/cosstores/

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