Urban Decay Geographical Expansion by shannon.hessen

Table of contents To be able to understand which country would be the most suitable for Urban Decayâ&#x20AC;&#x2122;s geographical expansion, it is important to understand the terminology used by A.T. Kearney (a leading American consultancy firm) to develop the annual global Retail Development Index ranking.

Geographical Expansion

Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio LXFM 745 Global Distribution for Luxury Brands Professor Alessandro Cannata | SCAD Fall 2018

Table of contents Executive Summary..........................................................................................................4

Company Analysis

Summary...........................................................................................................................7 Current Distribution........................................................................................................10 Retail Brand Idendity Analysis........................................................................................16 Competitive Analysis and Current Positioning...............................................................22 Strategic Planning Process............................................................................................26

Geographical Expansion: Alternative Analysis

Countries Consideration and Selection..........................................................................30 PESTEL Analysis............................................................................................................34 Market Analysis..............................................................................................................38 Key Players.....................................................................................................................40

Target Consumers

Demographic Information...............................................................................................44 Psycographics and Lifestyle...........................................................................................47 Behavioral Information....................................................................................................48 Personas.........................................................................................................................49 Indirect Competition (Consumer Level)..........................................................................53

Store Location, Design, Product

Trading Area Analysis......................................................................................................54 Design of the Actual Space............................................................................................68

Communication and Promotional Plan

Omni-channel Marketing Plan........................................................................................83 Timeline...........................................................................................................................90 Promotional Budget........................................................................................................91

Financial Plan

Product Plan (Merchandise Allocation)...........................................................................92 Sales Forecast................................................................................................................93 Annual Budget................................................................................................................94 Income Statement..........................................................................................................96 Sources...........................................................................................................................97 2

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Executive summary As the beauty brand Urban Decay continues to gain global popularity at an exponential rate, it’s important that their presence in retail continues to expand geographically. Currently the brand that is known for their bold colors and iconic purple marketing, has recently (2014) started opening their own flagship stores outside of the department and specialty stores they’re already carried in. Presently, Urban Decay has 5 total stores in the United States all located in California. In order to continue their rapid expansion it’s critical to start infiltrating the eastern portion of the United States. Opening a new store in Miami, Florida will help the brand to reach new customers, create strong relationships with current customers, and grow their retail presence. The new proposed Miami store will be located in the heart of the Design District in North Miami, just a few miles from the heart of downtown, Miami Beach, and the Miami International Airport. The store will be aimed at satisfying the need of many tourists visiting the area and serve as the brand’s first retail store on the east coast of the United States. The retail store will have interactive features and provide a digital and physical experience for all customers. The key success factors to ensure the store’s success will be excellent customer service, a wide assortment, a digital physical interaction, and in-store promotional events. Overall, Urban Decay’s expansion to Miami will allow the brand to reach new consumers, capitalize on the Miami tourism, and increase their revenue generated from retail stores. Next stop: Miami!

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Company Analysis History Urban Decay is a cruelty free and 100% vegan American Cosmetics brand, headquartered in Newport Beach, California. It is a subsidiary of the French cosmetics company L'Oréal. The company acquired Urban Decay in 2012. This acquisition enabled L’Oreal to strengthen its footprint in high end makeup market. The mid 90’s cosmetic industry was dominated by pink, red and beige tone’s. In 1995, Sandy Lerner (Co Founder of Cisco Systems) mixed raspberry and black together and formed a new color called “Urban Decay.” Sandy Lerner and Patricia Holmes decided to create a cosmetics company stemming from the inspiring color. They released Urban Decay in January 1996, consisting of ten lipsticks and 12 nail polishes featured in the line. Inspired by the urban landscape that surrounded the founders, they named their products “Roach, Smog, Rust, Oil Slick, and Acid Rain. In 2000, MoetHennessy Louis Vuitton purchased Urban Decay. In 2002, the Falic Group (owners of the Perry Ellis fragrance lines) purchased Urban Decay. In 2009, Castanea Partners (a private equity firm) acquired Urban Decay.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Current Status On November 26, 2012, L'Oréal announced it would purchase Urban Decay Cosmetics. L'Oréal paid an estimated amount of $350 million for Urban Decay. The growth in L’Oreal’s revenue was primarily attributed to net sales of Consumer Products by 1% ; L’Oréal Luxe by 10.5%; and Active Cosmetics by 11.9%. Urban Decay’s total revenue went down from 161.1 million euros in 2016 to 144.1 million euros in 2017 (Annual Report 2017: One Source)

Growth Plans Urban Decay discontinued the Naked Original palette and launched new products. One of the recent launch includes the Naked Cherry Collection. The company also has plans towards focusing on product launches and special product promotional events. According to L'Oreal's annual report 2017, the parent company has plans to enter new markets as they have witnessed double digit growth in Asia Pacific for L’Oreal Luxe. The company also aims to create enriched experiential and interactive spaces. Due to a growth in travel retail, The parent company also plans to focus on that category of retail.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Current Distribution Current Authorized Places of Distribution: 1. Urbandecay.com 2. Urban Decay Corporate Stores 3. Macyâ&#x20AC;&#x2122;s 4. Ulta 5. Sephora 6. Nordstrom 7. Belk

Unauthorized Retailers: 1. Amazon.com 2. Walmart.com 3. Ebay.com 4. Jet.com 5. Perfumeemporium.com 6. Strawberrynet.com 7. Fragrancenet.com

Corporate Stores in the US: 1. Newport Beach, CA 2. Torrance, CA 3. National City, CA 4. Bakersfield, CA 5. Los Angeles, CA

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Global Distribution Global Self-Standing Stores: 1. Canada 2. Colombia 3. Malaysia 4. Singapore 5. Spain 6. Spain 7. UK 8. Turkey 9. Ireland

Main Department Stores Globally: 1. Macy's (US) 2. Selfridges (UK) 3. Debenhams (UK) 4. Nordstrom (US) 5. House of Fraser (UK) 6. SOGO (Asia) 7. Belk (US) 9. Magasin Du Nord (Denmark)

Main Retail Stores Globally: 1. Sephora 2. Ulta 3. Mecca Maxima (Australia) 4. Marionnaud (Europe) 5. Discount Drug Mart (Canada)

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Locations Urban Decay while not a new brand, is just recently starting to expand into their own retail shops. The company opened their first in 2014 in Newport Beach, California and has since opened 4 more throughout California. The brand chose Newport Beach, CA as a nod to their heritage. Urban Decay started 22 years ago in Southern California and thought it was appropriate for their first brick and mortar store to be in the area. Every aspect of the Newport Beach location was thought out to ensure it perfectly represented the brand. Founder Wende Zomnir spoke about the opening of their first store and said “we felt like it was time to be able to express our brand in a pure environment, [so] people would walk in and say, ‘Wow that’s the brand!’ This felt like the right time (Mayer). At over 1,000 square feet, the store features six makeup stations, a custom foyer, bathroom wallpapered with photos of the company’s employee’s dogs, a digital video wall, 100-inch chandelier, a coffee bar, Instagram photo booth, and a “Dude Station.” The store also sells lifestyle products such as coffee mugs, t-shirts, headphones. The now five Urban Decay retail locations in the United States are all used to try out new products, hear consumer feedback, and connect one on one with fans.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

"We felt like it was time to be able to expresss our brand in a pure environment, [so] people would walk in and say, ‘Wow that’s the brand!’ This felt like the right time” - Urban Decay CCO, Wendy Zomnir

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Denver International Airport In early 2016, Urban Decay revealed it’s boutique store in the Denver International Airport, Concourse C. The boutique location opened with Kiehl’s as a connecting store so customers can easily shop between the two L’Oreal brands. The store is an open format so customers can easily wander between the two and shop for beauty products before they head off on vacation or after TSA has taken their own. The store is strategically placed in the terminal around other retail shops such as a small spa and The Body Shop. The boutique location opens at 6am and closes at 10pm making it convenient for travelers at all hours of the day.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Launch with QVC In September of 2018 launched their first partnership with powerhouse QVC. The brand debuted the partnership by making 30 of their best-selling products available on QVCâ&#x20AC;&#x2122;s Beauty iQ, their multiplatform beauty shopping website. The partnership came after QVC reported that Urban Decay has historically been in their top-10 most searched brands. Since June 2018 alone, 2,000 searched for the brand were left blank with nothing to satisfy their customers. Although Urban Decay generally has a more millennial-focused merchandising approach, 4 of the top products sold out almost immediately. With 14 million customers, QVC could provide a new platform for Urban Decay to speak to a slightly older customer.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Brand Identity Analysis Product Urban Decay started as a response to the lack of variety and originality of the color makeup options found in retail in the early 1990â&#x20AC;&#x2122;s. The brand offers an extensive assortment focused primarily in color cosmetics. The wide and deep product portfolio carries from the most basic to the trendiest tones, in order to cater a broad scope of consumers. The stackable eyeshadow palettes, give the shopper an opportunity to mix and match colors in order to get a customized product. Their most famous product are the eyeshadows, particularly the Naked palettes. This iconic creation is often copied of counterfeited in many levels. They also sell complementary beauty products such as false lashes, professional brushes and make up bags; and everyday items like t-shirts, sweatshirts, mugs and tote bags.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Brand Identity Analysis Product presentation A big part of Urban Decay’s branding is reflected in the design of the product’s packaging. The way that each product is packaged, tells a story and communicates the meaning of the brand. The variety of materials and the bold, yet elegant, graphics, manage to deliver a product that speaks to every type of woman. According to the brand’s CCO, Wende Zomnir, the packages are designed in tandem in order to be consistent with that story. The empty customizable palettes give the customer an opportunity to immerse inside the brand and be part of the creation by acquiring semi-bespoke products, and having a hands-on in-store experience. The display of the products mixes traditional beauty piano-displays with high tech initiatives such as digital video walls, Instagram booths, and interactive makeup stations. Even in the department stores and multi-brand shops, where digital is more difficult to implement, the displays are totally designed to showcase the products in a special way and connect the customer to the brand. Testers are provided next to each product, and recommended bundles of products are displayed in order to guide the customer through the visit.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Brand Identity Analysis Property The different kinds of retail outlet for Urban Decay are designed to infuse the user on many levels with the brand mantra “feminine, dangerous, fun”. Their headquarters are located in Newport Beach, CA in the United States, and define the visual foundations for the brand’s personality. With the corporate purple pantone as a base for the visuals, the interiors of the stores are designed using big city landscapes as a reference with a touch of sophistication given by the details inspired in royal fixtures (i.e. chandeliers and furniture). Big prints with the current campaign are displayed throughout the space. The reflective surfaces as steel, chrome and mirror are engraved with the brand’s graphic pattern. This edgy and cold materials are contrasted with details as apothecary drawers and a mix of little boutique elements in order to keep the space warm and inviting without losing that disruptive feel. The retail spaces have seating areas to make it more welcoming for the customer, so they can relax in the different make-up stations while trying of the products with a makeup artist. Select freestanding locations have high-tech features as giant screens displaying visitor’s photos on a live social feed. Every store tries to add a unique touch inside, i.e., the bathroom wallpaper of the corporate flagship in Newport Beach is made out of pictures of the employees’ dogs. As for the exteriors, they use the corporate purple for every façade, either it’s inside a mall or an historical building downtown. For selected locations ads from the current campaign are displayed on the outside, and for special promotions they use product photographs on the windows with adhesive film.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Brand Identity Analysis Retail Promotional activities Every promotional activity happening at the brick and mortar shop is tied to the brand’s strong presence in social media. The events are usually communicated to fans on the different social platforms and through digital newsletters to the subscribers. The VIP customers or “beauty junkies” have early access to information about launches, sales and events. The Urban Decay stores organize different events for promotional purposes. Customization activities, product raffles for the customers on a determined day, makeup workshops and even free gifts for people uploading their pictures in the stores on social media. The last big in-store event, was a national tour of the beauty influencer Kristen Leanne, with a meet and greet and access to limited edition products. All of the promotional activities are hosted in the different kinds of outlet.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Retail Brand Identity Analysis People The uniforms for the staff are also aligned with the visual identity of the brand. They use corporate purple t-shirts with black shoes and pants for the freestanding stores, and dress all in black following the specific guidelines of each of the other retailers. Despite of having the title of beauty advisor and they are properly trained, they are not necessarily certified make-up artists. The other representatives present inside the stores are the brand ambassadors from the jumbo-sized printed and digital ads. Gwen Stefani and Ruby Rose are just the top of the list of diverse celebrities and influencers present in the Urban Decay Universe. Urban Decay not only encourages the breaking of conformist molds in the production of its products but in its work environment as well, which helps drive the innovation that the company prides itself on. Implementing workplace policies such as a “the crazier, the better” dress code, and allowance of dogs in the workplace help instill a sense of freedom in Urban Decay employees which promotes creative thinking and individualistinfluenced styling. That’s really what this comes down to for Urban Decay – doing all that it can to ensure that no one is left feeling that their needs or desires for certain styles of cosmetics are being neglected. Even Urban Decay packaging reflects this, as the company employs some unique packaging styles in the cosmetics industry. As long as there is a color palette or styling stone unturned in the cosmetics world, you can bet that Urban Decay will be there!

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Competitor Analysis

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Price/Accessibility Matrix To calculate the average price of the core products, the top 20 best sellers from each brandâ&#x20AC;&#x2122;s prices were averaged. The distribution channels include all retail doors as channels of distribution. This includes the own brands brick and mortar, Sephora's/Ulta's, and department stores. The average price of core products range from $28.30 to $38.20. The distribution ranges from 511 doors to 5,000 doors.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Perceptual Map

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Mission Statement

Urban Decay is beauty with an edgeâ&#x201E;˘â&#x20AC;&#x201D;high-performance cosmetics in an insane range of shades. Created by makeup junkies, for makeup junkies.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Strategic Planning Process

Strengths

Weaknesses

• • • • •

• Website does not ship worldwide • Shallow product assortment compared to competitors • Lack of free-standing stores in the US

Digital Presence Physical/ Digital Integration Unconventional Colors 100% Vegan/ Cruelty Free Number of Patented Products

Opportunities

Threats

• Geographical expansion • Travel Retail • Digitally influenced generations who are inspired by makeup tutorials on instagram and youtube (Gen Z)

• Growing number of Competitors • Affordable drug store options • Large number of small innovative companies acquired by big groups like Benefit cosmetics • Number of Counterfeit products

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Patented product technology

+ Edgy

brand personality

differential advantage 28

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Competitive Advantages • • • •

Unconventional colors Cult following from the beginning Edgy brand personality Patented temperature control technology for setting spray

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Geographical Expansion : Analysis of the alternatives To be able to understand which country would be the most suitable for Urban Decayâ&#x20AC;&#x2122;s geographical expansion, it is important to understand the terminology used by A.T. Kearney (a leading American consultancy firm) to develop the annual global Retail Development Index ranking. The parameters used to develop the ranking are illustrated through the chart. Higher ranking suggests that a market not only has high attractiveness for retailers in the present but also offer future potential. Using this matrix, the countries selected are TURKEY, INDIA, UNITED STATES OF AMERICA.

Attractiveness 25%

Urban Population

Saturation 25%

Number and market share of international retailer

Country Risk 80%

Country Risk 25%

Market Potential 75%

Business Efficiency

Business Risk 20%

Time Pressure 25%

Political, economic, credit ratings, financing

Business cost of terrorism, crime, violence, corruption

Growth rate of retail sector

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

TURKEY Although, according to the A.T. Kearney ranking, Turkey occupies the number 4 position in the Global Retail Development Index, the recent political events have made this location unstable and risky for international business. Turkey added more than 1 million square meters of modern retail in the past year, the third highest absolute increase among countries in the Index. Its GDP has also increased, and its population is growing faster than other GRDI-ranked countries (1.6 percent vs. 1.1 percent). Seventy-three percent of the population lives in urban areas, and 16.5 percent of people are between the ages of 15 and 24. With this in mind, some local firms are expanding their presence by buying out international retailers and consolidating the traditional bakkals. A101, BÄ°M, and Ĺ&#x17E;ok Market are among those that have declared ambitious growth plans; collectively, they plan to open about 2,000 stores in 2017. Turkey relies on the income from tourism but the Number of foreign visitors dropped by 30% in 2016 and the country witnessed a lot of stores closing down.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

INDIA Rising income and demand for quality products are two very important factors that contribute to the attractiveness of the market. In 2018, the Government of India liberalized the rules on Foreign Direct Investment by allowing 100% FDI for single brand retail through automatic route. Another factor contributing to the attractiveness is the growing urban population. India is not a saturated market as compared to China. H&M entered the market in 2015 and has opened 15 stores within 2yrs. Prominent international retailers entered the market in 2016. These include Armani Exchange, Cole Haan, Muji, Massimo Dutti, Kate Spade. IKEA opened its first store in Hyderabad in 2018. Indian retail is one of the fastest growing markets in the world due to economic growth. Retail market in India projected to grow from US $680 billion in 2017 to US $1.2 trillion in 2018. Organized retail in India is expected to be double in size by 2020. Indiaâ&#x20AC;&#x2122;s online retail sector showed a growth of 23 per cent to US $17.8 billion in 2017. Revenue generated from online retail is projected to grow to US$ 60 billion by 2020. Based on the market potential and country risks, India is ranked first in the Global Retail Development Index 2017, backed by rising middle class and rapidly growing consumer spending. But the upcoming elections in 2019 and political scenarios including the Demonetization in 2017 along with the Crime rate and Corruption pose potential risks.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

UNITED STATES OF AMERICA USA is the Largest economy in the world and its GDP growth in 2017 accelerated to 2.25% from 1.49% in 2016. USAâ&#x20AC;&#x2122;s population is expected to grow 3.5% by 2022 (Census, USA Govt. 2016) The country has the highest household spending in the world. There is also a strong legal system to protect Intellectual Property Rights. Apart from that USA holds 18.5% of market share of cosmetics, fragrance, and personal care products (2017).

After the analysis of these factors, United States of America is the selected country for the geographical extensification for Urban Decay. The unstable political scenario in Turkey, the cosmetics Industry in US being much bigger than India and the absence of Urban Decay stores on the east coast gives an opportunity open a store on the east coast of the United States of America.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Pestel Analysis POLITICAL In the presidential elections held in November 2016, Republican candidate Donald Trump was elected as the 45th president after defeating Hillary Clinton of the Democratic Party. He assumed office on January 20, 2017. In March 2018, the US President imposed a tariff of 25.0% on steel and 10.0% on aluminium imported from all countries excluding Mexico and Canada. The country has a strong democratic setup. The principles of democracy are deep-rooted and the election process is considered fair and transparent, with an adequate citizen participation rate. A major strength of the US has been its ability to fight terrorist activity originating from both within and outside the country. In January 2017 President Trump pulled the US out of the TPP, thus keeping his election campaign pledge. Withdrawal from the TPP resulted in the US conceding leadership of the global trade order to China. The country is witnessing straining ties with Russia - In March 2018, sanctions were imposed by the US on Russian individuals and entities including Russian Intelligence Services for meddling in the US elections and cyber-attacks. With a stable political environment, advanced infrastructure, and technology, the USA positions itself as a great destination for foreign direct investment (FDI).

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

ECONOMIC The USA is the largest economy in the world in terms of nominal GDP. According to MarketLine, the country’s real GDP in 2017 stood at $17.3 trillion with a per capita level of $52,969 (at 2010 US$ prices). Real GDP growth in 2017 accelerated to 2.25% compared to 1.49% recorded in the previous year. It is a forerunner in industries such as automotive, aerospace, telecommunications, chemicals, electronics and IT. companies such as Coca Cola, McDonald’s, Subway, Microsoft, Apple, Facebook, Google, and many others are shaping and leading the socio-economic discussions of the world. The US has the 11th largest oil reserves and fifth largest natural gas reserves in the world as of 2016, with 2.2% of the world’s total crude oil reserves and 4.6% of the natural gas reserves. The condition of public infrastructure has been limited when compared to the growth of the economy. Infrastructure is a key focus of the newly elected President, Donald Trump; as of January 2018, the president has set a budget of $1.7 trillion dollars for the next ten years on the country’s roads, railways, airports, bridges and water systems.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

SOCIAL The USA is the third most populous country in the world with a total population of approximately 326 million. highest household spending in the world - $13 trillion (Statista, 2016). According to the Better Life Index 2016, the US has an average household net-adjusted disposable income per capita of $44,049. Population is expected to grow to 3.5% by 2022 ( Census, USA Govt. 2016). 89% population has a high school diploma and 33.4% have college graduate (Statista 2016) Population is evenly divided between generation z to Boomers II or Generation Jones. It sees one birth in every 8 seconds, and one death in every 11 seconds (US Census Bureau, 2017). By 2020 almost 1 in 3 Americans will have African, Asian, Latino, or Native American ancestry.

TECHNOLOGICAL The USA is the global leader in science and technology. Companies such as Apple, Microsoft, Google, Facebook, and many others have addressed the technological needs of the Americans and the people around the world. The rate of technological innovation and change is extremely rapid in the USA. However, the country faces strong challenges from a number of countries e.g. China, South Korea, and India Highest number of registered patents (Select USA GOVT.)

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

ENVIRONMENTAL The USA has an extremely diverse geography, climate, and wildlife. However, the USA faces some of the toughest weather conditions in the world. The country has sustained 218 weather and climate disasters since 1980. In 2017 alone (as of October 6), there have been 15 weather and climate disasters with losses exceeding $1 billion each across the United States (NCEI, 2017). Apart from financial damages, these disasters also cause disruption to everyday life in the most technologically developed country in the world.

LEGAL Each state in the USA has its own government structure and legal scheme. Businesses come under the regulatory environment of the state in which they operate. The country upholds equal treatment of nationals and foreigners. The USA also offers a strong legal system to protect Intellectual Property Rights.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Market Analysis Understanding the current industry trends and the future predictions for the cosmetic and beauty market will be crucial for beauty brands such as Urban Decay in order to strategically build a strategy for future growth to ensure the health of their company. According to Reuters, a business and financial news agency, the global cosmetic market was valued at 532.43 billion (USD) in 2017 and expected to grow to 805.61 billion (USD) by 2023 (Reuters). A large and growing sector part of the cosmetic market is color cosmetics. Today, Euromonitor reported, color cosmetics comprise 25% of global beauty sales (“U.S. Beauty Sector…”). Despite any economic or political pressures, the beauty industry is an industry continues to grow globally. While emerging industries in North Africa, the Middle East, and Asia rise, premium beauty is predicted to drive a large portion of that future growth (“U.S. Beauty Sector…”). Around the world, beauty products are distributed through many different channels with retail chains holding the biggest largest share of distribution at 22.65% (Statista report, pg. 16). Some of the factors however that are affecting the performance of the beauty market globally is the new interest in using cosmetics by men in their daily routine, the rising disposable incomes, as well as the increased interest of natural ingredients. The market faces a few threats such as import penetration as consumers demand more luxury products and an increase in the world price of crude oil, taking away from market margins (Ibis World).

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Market Analysis Narrowing down on the US specifically, Euromonitor reported the US cosmetic market is valued at $14 billion in 2014 and has seen 7% growth (“U.S. Beauty Sector…”). Statista reported that the US held 18.5% market share in 2017 of all leading cosmetics, fragrances, and personal care products (Statista report, pg. 8). China followed in second place with 11.5% market share (Statista report, pg. 8). The average expenditures on cosmetics per consumer in the US has also rose in recent years from $152.03 in 2007 to $170.30 in 2016 (Statista report, pg. 14). The American cosmetic market has already seen the shift to premium products. Many American beauty consumers “are now looking for higher quality products at a variety of price points” to satisfy all their personal care needs (“U.S. Beauty Sector…”). This segment of premium beauty products reported a 7% year-overyear growth in 2017 and is also noticing a large growth related to BB/CC creams, lipsticks, mascaras, and skin care (“U.S. Beauty Sector…”). Meanwhile, the US beauty market has also reported a growth of 11% in premium foundations and concealers between 2014 and 2015 (“U.S. Beauty Sector…”). The biggest growth in the premium beauty products in the US however was premium color cosmetics with an expect growth at 2.16% between the years 2015 and 2020 (Statista report, pg. 12). The United States commonly sources these premium, high-end products from France, Canada, and Italy, while the lower-value products are often sourced from China and Mexico (Ibis World). Looking specifically at the products that make up the market, Statista reported the cosmetic sales (in millions) in the US by segment in 2016 with foundation at $984.9, mascara $941.1, lipstick $630, eyeliner $617.6, and powder at $365.6. Statista also reported that the US holds 29% of the market value of color cosmetics worldwide (Statista report, pg. 8). The US beauty market is continuously growing, evolving, and improving. As new trends appear globally, the US market will continue to respond and capitalize off of every environment.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

The Key Players

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Competitive Strength Assessment The competitor strength assessment was conducted by sending out a survey that was completed by 45 individuals. The brands of Urban Decay, Too Faced, Smashbox, NARS, Anastasia Beverly Hills, Kat Von D and MAC. The key indicators that were assessed were product quality, brand image, customer service, product assortment, store size, and store position. The survey asked from a scale of one to ten how they perceived the key indicators of each brand. The numbers were them averaged to achieve each number that is displayed in the columns under each brand. The total of each brands customer perceived number are displayed on the bottom row. Urban Decay has the highest number and Too Faced has the lowest.Â Â

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Weighted Customer Strength Assessment

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Target Customer: demographics • • • • •

Gender: Female Age: 24-45 Income: 60.000+ Geography: South Florida / tourists Occupation: Professional

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Target Customer: psychographics • Leisure activities: shopping, fancy restaurants, rooftop martinis, yoga • Interests: latest fashion trends, Youtube makeup tutorials, art gallery openings, indie music concerts, healthy food • Relevant opinions and beliefs: wants to be a trendsetter, likes edgy colors for apparel and makeup, tries to look and feel unique a little rebellious

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Target Customer: behavioral information The target consumer shops online for generic products, but for trendy items prefers the brick and mortar experience in order to try the products before buying them. Going to purchase cosmetics becomes an afternoon plan, alone or with friends, an small escape from the real world. She is connected to work and leisure 24/7: latest smart phone, iPad at home, currently sharing Instagram stories or artsy pictures. Follows the latest fashion and beauty influencers and loses herself in afternoons of video-tutorials. Occasionally enjoys purchasing a printed publication or browsing catalogs mailed to her.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Personas Christine (34) Education: Masterâ&#x20AC;&#x2122;s degree Occupation: retail executive Location: Chicago, IL Income level: $80.000/yr. Lifestyle and psychographics: Christine has a food blog and enjoys trying out the finest restaurants. She is single, lives with her cat and spends most of her free time with her friends over a nice bottle of wine. Likes weekend escapes to cities with beaches.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Personas Catherine (25) Education: Bachelorâ&#x20AC;&#x2122;s degree Occupation: Junior art director Location: Miami, FL Income level: $65.000/yr. Lifestyle and psychographics: Catherine works for a fashion magazine as a junior art director. She is always involved in high fashion events, especially if they are beauty industry-related. She lives with two roommates and her miniature pig at Brickell, enjoys yoga and vegetarian food.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Personas Alice (43) Education: Master’s degree Occupation: Artist Location: West Palm Beach, FL Income level: $130.000/yr. Lifestyle and psychographics: Alice is a plastic artist who’s studio is located at Wynwood. She is involved with the Miami art scene, participating on the event planning (Art Basel, open gallery nights…) and sponsor relations. She is divorced and has 2 kids. She doesn’t miss a gallery opening or any art-related event in the South Florida.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Personas Carmen (29) Education: Bachelorâ&#x20AC;&#x2122;s degree Occupation: Model / influencer Location: Colombia, South America Income level: $70.000/yr. Lifestyle and psychographics: Carmen is a model who has a travel blog and 250K Instagram followers. She constantly travels to Miami, for shopping and events. She enjoys working out and taking pictures of herself in exotic locations around the world.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Indirect competition at consumer level

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Trading Area Analysis Design District In the north of Miami and just blocks north of the famous Wynwood neighborhood and 10 minutes from South Beach, The Miami Design District is “a neighborhood dedicated to innovative fashion, design, architecture, and dining experiences” (“Welcome To The Neighborhood”). The relatively new neighborhood and development is owned by Miami Design District Associates, made up of a partnership between Dacra and L Catterton Real Estate, a global real estate development and investment fund who specializes in creating luxury shopping developments (“Welcome To The Neighborhood”). The Miami Design district has rejuvenated this section of the city and created a shopping destination that combines the fun flavor of the city, historic architecture, and modern luxuries. Relatively still young, the district continues to evolve with newly planned new shops, restaurants, galleries, boutique hotels, and residences. Located in the Northern part of the city, with close proximity to the large tourist attraction of Wynwood Walls and 10 minutes west of Miami’s South Beach, the neighborhood is filled with a diverse group of tourists and locals. Through the rapid development, the pedestrian-friendly neighborhood has stayed true to its mission of encouraging creative experiences (“Welcome To The Neighborhood”). The neighborhood also has a variety of events daily to attract more people ranging from art exhibits, personalized products, public art tours, family days, and live performances. Development is constant, and in November of 2017, The Design District finished construction on the second half of the district with numerous brand new retail, restaurants, and a new hotel (“Design District Retail Sales…”). The neighborhood has seen large growth in the past few years, specifically Craig Robins, CEO of Dacra, the original developer, reported retail sales have increased 40% over the past six months (“Design District Retail Sales…”). Robins reports that the future of The Design District “will become a cultural destination and place to hand out at all different price points rather than just about luxury” (“Design District Retail Sales…”).

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

History of the Design District

In the early 2000s, entrepreneur and Miami native Craig Robins of Dacra, slowly started acquiring property in the area and renovating them (“History”). Through this process and “careful stewardship, the Design District began to juxtapose design brands with internationally important art collections, phenomenal temporary and permanent art and design installations, and great restaurants” (“History”). Partnering up with Real Estate developer, L Catteron Real Estate, the group was able to attract many LVMH brands solidifying the importance of the neighborhood (“History”). Today the development continues as new buildings are continuing to be built and historic buildings are being carefully revived. Focused on the future and sustainability, the neighborhood recently became the first LEED ND Gold Certified project in the Miami Dade county and the 33rd property with that title in the US (“History”). The neighborhood has seen design showrooms, art exhibition spaces, and retailers flock to the area.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

About the Design District Site Characteristics: The new location will be a rectangle shape with a glass facade. This rectangle location will allow the store to have ample room on walls for displays and an inventory room in the back. The site is located next to COS and Tom Ford and within walking distance of 2 parking garages. Traffic Flow & Accessibility: The Miami Design District is conveniently situated 2.8 miles from the heart of downtown Miami, 5 miles from the Miami International Airport, and less than 7 miles from the heart of South Beach. Situated between highway 195 and I-95, the Miami Design District is very accessible by motor vehicle. There is self-parking that costs $3 for the first 3 hours in 4 parking garages spread throughout the district. Valet parking is also offered starting at $5. Cost Factors: Retail rents are as high as $300 per square foot per year, however, closer to 40th street the rents get slightly lower (Rabines). Owning property in the design district is continually rising. A retail building that hit the market in mid 2018 is predicted to sell between $12 million and $15 million based on comparables (Rabines). In 2017, a building in the district sold for $21.5 million, which equates to about $2,450 per square foot for the building and $4,300 per square foot for the land (Rabines). Median Household Income: $34,705 Average Household Net Worth: $272,729

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Store Location

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Estimating Direct/Indirect Competition Urban Decay does not have any direct competitors within the Miami Design District. Urban Decay's indirect competitors are displayed below.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Prizm • Customer segmentation system for marketing in the US to help companies find customers, quickly and at scale • Combines demographics, consumer behavior, and geographic date • PRIZM classifies every US household into one of 68 consumer segments based on the household's purchasing preferences

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Area Demographics Total Population: 50,505 Males: 25,545 Female: 24,962 Median Age: 34 Household Income and Average Income: Median Income Under 25: $25,120 Median Income 25-44: $35,928 Median Income 45-64: $33,784 Median Income Over 65: $26,688 Average Household Income: $44,956 Median Household Income: $34,705 Average Household Net Worth: $272,729

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Miami Tourism Stats Overnight Visitor Orgins:

Distribution of International Visitors 2017:

Latin American Visitor Distribution:

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Miami Tourism Stats Cont. Purpose of Visit:

Overnight Visitors to Greater Miami and The Beaches Age of Visitor by Origin, 2017

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

SALES POTENTIAL - stability of trading in the area in terms of seasonality Miami has averaged 2 to 4 percent growth in key measures over the past 10 years. Overnight visitors spent $26 billion from September 2016 to August 2017, a record and an increase of 2 percent over the same time last year. 15.9 million visitors travelled to Miami-Dade, representing a slight increase of 0.5 percent from the previous year. International arrivals to Miami International Airport were up 1.2 percent in that time period from the same months the year prior. The pie chart shows that the percentage of expenditure on shopping by the people visiting Miami in 2017 was 32.8%. This provides an estimate of the sales potential since the Design District attracts the majority of visitors coming to the city.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Area Attractions • • • •

South Beach Wynwood Walls Miami International Airports Downtown Miami

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Human Resources MERCHANDISE MANAGER

STORE MANAGER

ASSISTANT STORE MANAGER

BEAUTY EXPERTS (3)

Merchandise Manager - Responsible for the management of visual displays, advertisement and promotional activities and the strategic placement of the merchandise depending on the season and the collections. Store Manager - Responsible for the budget and annual reports. At the same time they will handle the human resource and their training and they will be supervising the beauty experts and assistant store manager. Assistant Store Manager - Responsible for assisting the store manager and take up responsibilities of the store manager in his absence. Also responsible for managing the inventory and provide updates to the store manager. Beauty Experts -Three beauty experts would be responsible to deal with the clients, introduce them to the merchandise and offer makeup sessions. They will be assisting the customers in order to increase the conversion rate.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Legal Issues The Design District does not necessarily has any legal issues but the retailers need to get approval from the development and go through a leasing process. They also need to follow the sustainability requirements for optimum use of energy since the Design District received the LEEDS certification.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Details of the physical structure: exterior

Street-art wall (Localization) Purple + logo (Internationalization)

Tall window Glass storefront Screens with current ads and seasonal looks

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Floorplan and merchandise positioning

Selfie Wall

Stock room

Interactive Sculpture

Beauty Bar

Merch.

Face + Tools

Eyes + Tools

Entrance

Lips

Interactive Screen

1550 sq ft

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Stock

Lips

Merch.

Interactive Sculpture

Space allocation and productivity

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Bea

Fac + To

Ey + To

room

yes ools

Selfie Wall

ce ools

Interactive Screen

auty Bar

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Fixtures

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Visual Merchandising, merchandise presentation

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Ambiance •Fixtures •Interior Design •Visual Merchandising •Interactive Components •Artistic Elements

•Chill Out •Industrial •Urban •Trip Hop

•Fragrance marketing: Custom, on brand, fragrance design that mixes UD with the Miami feel.

•Touch Screen •iPads •Testers

•Lip product testers •Indulgences for special events (i.e. Cupcakes, mimosas...)

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Safety and security • • • •

In-store cameras Anti-theft devices Only tester displayed Design district guidelines

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Store Design The Urban Decayâ&#x20AC;&#x2122;s Miami flagship store will combine the core brand elements with characteristic accents from the area. Inspired in the growing Miami art scene, this instagrammable playful space delivers physical, digital and personalized experiences to its visitors.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Store design The customer can find the core categories that define Urban Decay as well as special limited editions and merchandise exclusive to the Miami location. The virtual look station allows to test different seasonal looks without actually putting makeup on. The selfie wall encourages the user to share the pictures on social media platforms that will help to promote the new store.

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Experience design Kano Model Value Proposition

Attributes

Customer Service

Assortment

Digital / Physical Interaction

Packaging

Threshold

Performance

Excitement

• Availability of testers of all products in the store.

• Personalized recommendations from beauty experts.

• Makeup mini workshops with purchase. • Virtual screen testers.

• Availability of full UD portfolio. Core products as well as trendy ones.

• Wide assortment of extras such as merchandise (t-shirts, coffee mugs etc...)

• Miami flagship limited edition products.

• Online / brick and mortar parallel assortment.

• Instagramable in-store features such as selfie wall and tree sculpture.

• Live-sharing selfie walls (store and Wynwood) into store screens through hashtags.

• Properly packaged goods, gift-worthy.

• Personalized bags with the name of the customer.

• Extra surprise gift inside the bag (not previously mentioned in the store).

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Email to Locals pre-launch Explanation: A mass email will be sent to individuals to announce the opening of an urban decay in the miami design district Objective: Inform locals of the grand opening of a local urban decay Cost: Pay employee to create and send the email Measuring Effectivness: Tracking how many people open the email/engage and click on email elements

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Grand Event Opening Launch Explanation: The launch of the store will take place during art basel and Urban Decay will host an instore event with a dj and giveaways that occur during the day. Objective: Create buzz and attract individuals to attend the event Cost: DJ: $1,500 Giveaway: $400 Catering: $1,500 Measuring Effectivness: Survey to people who attended

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Promotional Wall at Wynwood Launch Explanation: Wall with be painted by a well known local graffiti artist - wall be cohesive with the in store design and will include the brand hashtag Objective: Marketing tactic to promote the new store at a high traffic tourist location Cost: $2,300 Measuring Effectivness: How many people posted a photo with the wall and included the hashtag trending

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Miami Influencers Launch Explanation: Local miami influencers will be invited to attend the grand opening Objective: To endorse the urban decay brand and engage with customers Cost: The Fashion Poet: $800 for the day Daniela Ramirez $1900 for the day Vicky Alvarez $400 for the day Measuring Effectivness: Posts on social media with influencers and with hashtag

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Instagram Filter Launch Explanation: Filter on instagram that will promote the store opening in the Miami area Objective: Encourage consumers to engage with the brand through social media platform Cost: $10,000 for three days for the instagram filter Measuring Effectivness: Posts on social media of people using the filter

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Banner on Urban Decay Website Launch Explanation: Banner on Urban Decay homepage website promoting the store Objective: Alert customers of new store opening Cost: Human resources costs Measuring Effectivness: How many people click on the banner

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Makeovers & Photoshoots Post-Launch Explanation: In store makeovers and photoshoot with photographer Objective: Make customers feel special, host community building event, create buzz Cost: Cost to pay employees - $1000 a day for photographer Measuring Effectivness: Customer survey

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Timeline

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Promotional Budget PROMOTIONAL BUDGET Email to Locals Grand Opening Event Influencers Wynwood Wall Instagram Filter (Miami) Banner on Website Makeovers and Photoshoots

$0 $3,400 $3,100 $2,300 $10,000 $0 $1,000

Total

$19,800

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Financial plan The financial forecast provides an overview of the investments in store, personnels, promotions and logistics. Due to Urban Decayâ&#x20AC;&#x2122;s presence in the market, the new flagship store would break even and make profit through the sales in the very first year. A key factor leading to the success of this store is the high attractiveness of the Miami Design District that attracts a large number of visitors for shopping and leisure. The following data provides an overview of the estimated budgets for each activity performed.

Allocation and merchandise PRODUCT PLAN EYES FACE LIPS EXTRAS

% 0.4 0.3 0.2 0.1

TOTAL

PRODUCT CATEGORY EYES FACE LIPS EXTRAS

AVR.PRICE $33.00 $30.00 $18.00 $27.00

Average units sold per day Day 1

EYES FACE LIPS EXTRAS

AVR.UNIT 125 103 114 38

Day 2

AVR.UNIT 62 51 57 19

Day 3

AVR.UNIT 62 51 57 19

Day 4

AVR.UNIT 62 51 57 19

Day 5

AVR.UNIT 62 51 57 19

Day 6

AVR.UNIT 125 103 114 38

Day 7

AVR.UNIT 125 103 114 38

TOT.

623 514 571 190

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Financial plan Sales forecast

F.T.D. % Conversion Footfall Conv. % Avr.Basket

COGS EYES FACES LIPS EXTRAS

# of Visitors

S 45000 0.008

Day 1 346 0.3 $99.00

TOT.REV

$10,280.77 $4,112.31 Day 1 $4,112.31 $3,084.23 $2,056.15 $1,028.08

M 22500 0.008

Day 2 173 0.3 $99.00

TOT.REV

$5,140.38 $2,056.15

Day 2 $2,056.15 $1,542.12 $1,028.08 $514.04

T 22500 0.008

Day 3 173 0.3 $99.00

TOT.REV

$5,140.38 $2,056.15

Day 3 $2,056.15 $1,542.12 $1,028.08 $514.04

W 22500 0.008

Day 4 173 0.3 $99.00

TOT.REV

$5,140.38 $2,056.15

Day 4 $2,056.15 $1,542.12 $1,028.08 $514.04

TH 22500 0.008

Day 5 173 0.3 $99.00

TOT.REV

$5,140.38 $2,056.15

Day 5 $2,056.15 $1,542.12 $1,028.08 $514.04

10800000

Annually

225000

Weekly

900000

0.008

F 45000

Day 6 346 0.3 $99.00

TOT.REV

Monthly

0.008

SA 45000

Day 7 346 0.3 $99.00

TOT.REV

$10,280.77 $4,112.31

ANNUAL REVENUES

$2,467,385

Day 6 $4,112.31 $3,084.23 $2,056.15 $1,028.08

Day 7 $4,112.31 $3,084.23 $2,056.15 $1,028.08

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Financial Plan Annual HR budget HUMAN RESOURCE BUDGET ANNUALLY Merchandise Manager Store Manager Assistant Sales Manager Beauty Experts Annual Estimated Commissions

# 1 1 1 3

$70,000 $77,000 $60,000 $37,000 TOTAL

$70,000 $77,000 $60,000 $111,000 $74,022 $392,022

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Financial Plan Annual operations budget OPERATIONS BUDGET ANNUALLY Rent Utilities Insurance Maintenance subtotal Others TOTAL

$310,000 $12,000 $9,850 $4,800 $336,650 $16,833 $690,133

88%

Annual logistics budget LOGISTICS REPLENISHMENT FREIGHT QUARTERLY ANNUALLY

$1,850 $7,400

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

Financial plan Income statement

INCOME STATEMENT

Net Sales Cost of Revenue Gross Profit

$2,467,385.00 $986,954.00 $1,480,431.00

Operating Human Resource Logistics Promotion Total Expenses

$690,133.00 $392,022.00 $7,400.00 $19,800.00 $1,109,355.00

Operating Income

2019

$371,076.00

Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

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Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018

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Geographical Expansion for Urban Decay | Nivedita Govila, Shannon Hessen, Sarah Nickle, Maria Osorio | LXFM 745 Global Distribution for Luxury Brands | Professor Alessandro Cannata | SCAD Fall 2018