ONDRAYA STORE CASE:

The Concept

The Opportunity

K. Ondraya is considering entering the womenswear market by opening a store in Calgary and has collected the following information. Because of the expansion of Stephen Avenue into "Fashion Central" and the opening of a new Holt Renfrew, there is a definite market for retail stores there. Calgary's demand is being boosted by increasing household income levels. The three sources of demand consist of tourists, young professional downtown workers, and rural stay-at-home wives.

The store will carry dresses, skirts, shirts, pants, and shorts, as well as accessories including hats, scarves, belts, purses, and gloves. Brands will be carried in the store that are currently not available in Calgary, including Alexander McQueen, Christian Dior, Marc Jacobs, Rachel Roy, Nina Ricci, and Zac Posen. Successful brands to be carried already available in Calgary include MARC by Marc Jacobs, Nanette Lepore, and Twenty8Twelve. Of these recognizable brands, the ones already offered in Calgary are only available at Holt Renfrew.

Service of Ondraya will be first class: the ultimate goal is to create an experience for customers unlike anything else. Individualized service would be provided through personal styling with a professional stylist. The store website will feature special ordering services for customers, allowing customers to shop online and reserve items they wish to purchase. To further facilitate spending, in-store fitting will be made available. A skilled seamstress will be on location where tailored items will be ready in 48 hours or less.

Suppliers

K. Ondraya will be dealing with companies directly instead of working with suppliers, due to the fact that the majority of Canadian suppliers do not carry the brand names K. Ondraya wishes to carry. Orders would be placed through sales representatives where a distribution contract would be signed. Supplier sources for brands carried would be:

1. Alexander McQueen (New York City)
2. Christian Dior (Paris, France)
3. Marc Jacobs (New York City)
4. Rachel Roy (New York City)
5. Nina Ricci (Paris, France)
6. Zac Posen (New York City)
7. MARC by Marc Jacobs (New York City)
8. Nanette Lepore (New York City)
9. Twenty8Twelve (London, England)

Staff

Staff will be hired based on experience in the retail industry, where at least three years in the industry would be required. A mandatory training program will be provided for employees. Due to the fact that an owner would be on location at all times, initially two part-time employees would be hired. The method of payment for employees would be hourly pay based on the market pricing.

The following will be required of all staff:

1. Welcoming and pleasant, going beyond what customers expect
2. Educated about all products and brand names carried
3. Clean, attractive, and polished appearance
4. Up to date on current trends in industry
5. Tailoring and measurement skills
6. Basic skills required to use computer programs

Store Layout

The layout of the store would focus on making it easy for customers to move around and view products easily. Music would be played at a soft level, not too intrusive, creating a relaxed atmosphere. Entering the store, a cashier desk would be to the immediate left, allowing employees to directly greet customers and watch for any type of theft. The cashier desk would double as a display case for accessories as it would be made of glass. Appropriately and professionally merchandised clothing racks would display matching outfits and colours.

The size of the store will be 747 sq ft.

Competitive Analysis

Industry Overview

The Canadian Apparel Market is a competitive environment. According to Statistics Canada, in 2020 the market consisted of 2,150 establishments and employed 69,911 individuals. The Canadian womenswear market includes dresses, suits, coats, jackets, shirts, skirts, blouses, sweatshirts, sweaters, and underwear. The sale of dresses, skirts, and trousers accounts for 42.4% of the market's value. According to Data Monitor, the market grew by 6.7% in 2020, generating revenues of $12.6 billion. The market is forecast to have sales of $17.8 billion in 2025, a 41.2% increase from 2020.

In Canada, there are currently two major industry leaders in womenswear. The first is TJX Companies Inc. which operates the large off-price retailer Winners (25% of the market). The second is Gap Inc. which operates a number of high-quality retailers including Gap, Old Navy, and Banana Republic (20% of the market). The high end of the market is 30% of the total market in Canada and this percentage is the same in Calgary. According to Statistics Canada, women's clothing and accessories purchases account for 50 cents of every dollar spent on clothing and accessories?almost double the amount spent on men's. Research shows that with the $307 billion spent in retail, there is only a $2 billion difference between clothing/accessories and gasoline/motor oil. Calgary accounts for 1.15% of the total Canadian womenswear market and in Calgary the retail industry leader is Holt Renfrew. Sales of women's clothing stores in malls grew in 2020 by 15.4% in Alberta, higher than any other Canadian province. Specialty apparel had the strongest sales growth in the Alberta market.

Summary:

Womenswear market size in Canada in 2020.... $12.6 billion

High end of the market ........................ 30%

Calgary womenswear market ................ 1.15%

Competition

K. Ondraya will be competing against 337 women's clothing stores in Calgary. A number of factors were taken into consideration when evaluating the competition. Each competitor offers a large range of products and services, making the shopping experience more enjoyable. The quality of the competitors' products and services ranges from extremely high to mid-range. Based on the market evaluation, there are five main operators in Calgary and twoare at the secondary level. All information for analysis was gathered through personal interviews, secondary research, and mystery shopping.

The private company Holt Renfrew is in its growth stage and currently the leading competitor in the Calgary market. The store is anticipating a move into the Calgary Eaton Centre, giving them an additional 60,000 square feet of space. The store is inviting and organized, styled by professional merchandisers according to brand. They are a highly respectable establishment offering extensive customer services such as a concierge service, as well as personal shoppers and stylists. The employees were extremely knowledgeable, friendly, and professionally attired. The store is unique in that they offer to go to a client's home for a personal styling, have frequent special events, and carry brands exclusive to Holt Renfrew.

Worth, commencing business in May 2007, is a new store in the growth stage. The store carries unique brands with designers based mainly out of New York City, making them exclusive to Calgary. Owner Carl Abad, offers personal styling services based on his own experience of living overseas working as a professional stylist.

Purr is a more alternative store aimed at a younger target market. Opening 6 years ago, they have been very successful with a store move to a prime location and a second store opening. They are unique in that their clothing is very versatile, yet the lowest quality within the competition. Employees were very friendly and stood out in attire, yet did not know much about the products being sold. Purr's largest downfall is their lack of promotions. Word of mouth and location are their only sources.

FocusClothing, a contemporary, strictly womenswear, store offers a unique variety of products. They do not offer any exclusive brands and their store has a large amount of open space. Amongst the competition, they were the only store that did not have window displays. The employees were very friendly yet knew very little about the products in the store. Management was relied upon for any questions.

Shisomiso has been open in Calgary for the past four years and is in the growth stage. Carrying only Canadian designers, the store is unique in that it doubles as an art gallery. With a majority of the products being handmade, many are distinct and one of a kind. The small space is very inviting and the employees are extremely helpful in regards to the products carried. The atmosphere was much more casual and easygoing in comparison to other competitors.

Secondary Competition

Club Monaco is a recognizable retailer in its growth stage. Currently in Calgary there are two locations: Chinook Centre and TD Square. Inside, the atmosphere was unusually colourful for Club Monaco?as they are infamous for carrying black, white, or grey items. Employees were polite, professional, and very knowledgeable about the entire company. They appeared very clean cut as an all-black uniform (Club Monaco brand only) is required. The store offers only the Club Monaco private label, and books and home dcor were also available for sale.

Banana Republic is another very recognizable retailer in the growth stage. Currently in Calgary there are four locations: Chinook Centre, TD Square, Southcentre Mall, and Market Mall. Inside the store displays were neat, although sale items were noticeably messy and disorganized. The employees were polite and seemed slightly knowledgeable about the products, yet they were no experts. Their appearance was polished as they were required to have a "Banana Republic" style. All products carried are the Banana Republic private label and they are the only competitor offering online purchasing.

Competitive Matrix

See attached excel file.

Market Analysis

Trends in Purchasing

• Clothing and accessory purchases in Canada are constantly evolving. It is more important to the average person today to "show off their individuality." Accessorizing is becoming increasingly important in order to obtain one's sense of individuality. Also, aiding in the creation of one's own sense of style, "Canada's long winters also provide a strong underpinning of solid consumer demand for hats, scarves and gloves, which make up the bulk of accessory sales.
• Purchase trends in the clothing itself are leaning more towards a casual look and there is a move "towards high fashion in a less dressy style than years past, especially in Calgary.
• Though casual is in, the demanding consumer needs more than just a closet full of casual wear. Because of the high demand for diversity, "both men's and women's suits showed stronger growth in 2020. Men are more fashion conscious and are shopping as much as women.
• Based on a survey done by the Labour and Household Surveys Analysis Division for Statistics Canada, "consumer spending rose as a percentage of economic activity from 52.8% to 58.9%."
• Daily Statistics Canada shows that "spending on clothing increased6% to an average of$2,330, mostly owing to an increase in spending on women's and girls' wear."

Calgary Demographics

Calgary is home to a younger arrangement of demographic characteristics, with an average age of 35.7 years.The overall descriptions of Calgary's demographics are:

Education level Persons within #

People with tradeson-university certif/diploma......... .................. 94,660

People with post-sec. education (not completed).............................. 44,338

People with univ. diploma............................................................ 8,345

People with univ. degree............................................................ 75,353

Note: Population surveyed were >19 years old....................................321,368

#'s based on amount of both genders divided by 2 = approximated amount of females

Calgary Psychographics

Cluster Characteristics

Cluster Group Name and Corresponding Number	Income ($)
Cosmopolitan Elite (01)	333,144
Urbane Villagers (02)	166,716
Suburban Gentry (03)	111,254
Asian Affluence (04)	103,998
Money & Brains (08)	91,815
Mr. & Ms. Manager (10)	88,255
Pets & PCs (11)	86,316

Alberta is the lowest taxed jurisdiction in Canada and the greater Calgary area has the same number of households with annual incomes over $100,000 as the greater Vancouver region, which has twice the population."

Price Quality Grid Analysis

Quality of Dresses Based On

1. Uniqueness of design
2. Materials used
3. Handmade/machine made
4. Attention to detail
5. Overall appearance

Exhibit 1 below shows differences in price and quality of the current stores in Calgary.

Exhibit 1 Price Quality Grid: Increase size of chart to see clearly.

Price/Quality Grid seven eight 480 one- Purr two- Banana Republic 400 three- Club Monico four- Shisomiso five- Focus Clothing six-Worth 320 seven- Holt Renfrew Price $ five eight- Kyra Ondraya(us) 240 four two three 160 one 80 Low Medium High Quality