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Franchise strategy

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  • 1. Arezzo&Co Investor Day Multibrand Strategy and Expansion Maicon Moraes Commercial Officer
  • 2. Multibrand channel accounted for 27% of the Company’s revenues in 2012, presenting a growth of 28%per year in the last 4 years Multibrand Channel Context 2 133.7 188.4 234.0 285.8 2009 2010 2011 2012 Multibrand Sales (R$ mm) 332 franchises + 17 owned stores(i) + 994 multbrand clients (i) 4 outlets 23 franchises + 28 owned stores(i) + 1.546 multibrand clients (i)1 outlet TOTAL 9 owned stores 858 multibrand clients 2 owned stories + 7 multibrand clients 361 Franchises + 56 Owned Stories + 2,425 Multibrand Clients = 2,842 Points of Sale Points of Sale (2Q13)
  • 3. Arezzo&Co multibrand strategy design has 4 dimensions 3  Integrated studies to map cross-sell among brands  Validation of Arezzo brand potential per city and creation of scenarios  Adjustment to Schutz brand potential by considering market growth and knowledge acquired in implementing brand growth strategy  Refining of Anacapri targets  Union of commercial policies  Unified commercial policies for Key Accounts and large clients  Commercial intelligence and centralized support for brands  Definition of shared structure principles  Coordination and central structure  Support model for Key Accounts  Mapping of sales territories  Definition of variable compensation for multibrand commercial staff Multibrand strategy of 2 3  Development of a specific sell-in calendar for the multibrand channel  Support model per supply model::  Showroom vs. In field  Made-to-order vs. made-to-stock 1 4 Multibrand Channel Strategy
  • 4. The mapping of areas to be supported by Multibrand channel involves a detailed feasibility study  The starting point to map potential clients was Schutz brand, which has the highest penetration in the channel  Analysis of lower potential areas, so as to make them profitable, both in client attractiveness and logistic costs  Cross-selling opportunities were identified, increasing the potential of each area  Each region has a structure of representatives and consultants Example of mapping of the South Region Multibrand Channel Potential
  • 5. The new support model increases synergy among brands and reduces dependence on fairs Antes Each brand with its own sell-in calendar Same supply model for all types of products Greater reliance on fairs Depois Greater coordination of sell-in calendar among brands Differentiated supply model depending on footwear fashion content Client support model reduces dependence on fairs Multibrand Channel Sell-in model
  • 6. New sell-in Multibrand model aims to adjust sales to new types of supply and to optimize results 6 Fast Fashion Collection Classic Continuables Replenishment of renewed Fashion Complement (Summer II, Winter II, Resort/ Cruise*) Showroom (Summer I and III, Winter I) Automatic replenishment Life Cycle Scenario Compatibility Major Launches New supply models with purchase of available inventory Multibrand Channel Sell-in model
  • 7. Launches are divided into major launches and new supply models 7 Major lauches (Winter, Summer, High Summer, Fairs and Cruise/Resort) New supply models (Fast-Fashion, Classic/Essentials, Basics/AllDay)  Growth in portfolio coverage  Speed in field sales using electronic tools  Brands coordinated in the showroom to increase cross-selling  Fast Fashion will replace minor collections, keeping the same frequency of purchases  Specific sell-in mechanism for Classic/Essentials and Basics/ AllDay- EveryDay lines  Efficiency gain Focus Open sale in regional showrooms Complementary ready fashion Closed sale in field + contact center + web Multibrand Channel Sell-in model
  • 8. Fonte: Arezzo&Co. Escala ilustrativa # Owned Stores # Franchises 365 3T13 2013 55 420 334 2012 56 390 31 29 394 55 449 58 2014 464 43 507 +8% +7% +13% 8 -1  Increase in 2013 guidance for net openings of 59 stores, particularly as a result of the Anacapri brand expansion project with 10 franchises in 2013  In 2014 the Company will maintain its pace of openings with a total of 58 planned stores  Considering Anacapri roll-out in the franchise channel and following the multichanel strategy, in 2014 the Company plans to convert12 owned stores into franchises 12 -12 # Conversion Expansion Plan Guidance update 2013 and 2014
  • 9. Strong franchise growth plan, with a significant part of the 2014 plan already identified 9 33 58 10 7 5 Prospecting Initial negociation Intermediate negociation Advanced negociation Contract signed Total 3 1 2 Arezzo&Co Stores 2012 Notas: 1. Intermediate negotiation: franchisee or point defined 2. Advanced negotiation: franchisee and point defined 3. Company estimate Current Operators 40% New Operators 60% Arezzo&Co owned Store and Franchise Opening Stage (2014)³ Arezzo&Co Stores Regional Distribution (%) Operators Profile Arezzo&Co Stores 20133 GDP: 5% 4% 5% GDP: 9% 8% 9% GDP: 17% 14% 14% GDP: 14% 22% 20% GDP: 55% 52% 52% Expansion Plan Detailed Expansion Plan 2014
  • 10. In 2013, 8 stores are were expanded, adding 338 m², in line with the goal of expanding sales area by 1,000 m² in sales area in 2013 and 2014, repeating 2011-2012 performance 435m² 564m² 512m² 825m² 3T13 999m² 1,337m² 261m² 77m² Owned storesFranchises 2011 Area expansion of existing stores since 2011: 10 Expansion Stores Area Expansion 152m² 268m² 2012 Goal to expand 1,000m² at every 2 years 412m² 167m² 579m²
  • 11. 24 stores expected under the new Arezzo brand architectural project in 2013 11 Expansion New store layout roll-out 11 Iguatemi Ribeirão Preto - SP Ilha Plaza - RJ Shopping Iguatemi -SP Diamond Mall - MG Aldeota - CE Shopping Goiabeiras - MT BH Shopping - MG Shopping Moinho dos Ventos - RS Shopping Natal - RN Pátio Batel - PR Shopping Buriti - GO Manauara Shopping - AM Araras - SP Plaza Niterói - RJ Ipatinga - MG Rua Catalão - GO Salvador Shopping - BA Shopping Metropolitano - RJ Ariquemes - RO Shopping Ibirapuera - SP Cadima Shopping - RJ Shopping Morumbi - SP Shopping Anália Franco - SP Key Opened Project in execution Praia do Canto - ES