World Company-2005


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Possibly the worlds best fashion retailer!

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World Company-2005

  1. 1. Fashion In Japan
  2. 2. Fashion In Japan
  3. 3. World Co., Ltd <ul><li>Japan based retailer that HBR rates as the company that achieves the highest GMROI of 300% more than any they have ever studied </li></ul><ul><li>45 year old company </li></ul><ul><li>¥ 240bn turnover with operating profit of ¥ 15.3bn, YE Dec 2004 </li></ul><ul><li>2061 employees, avg. age of 37.8 years old </li></ul><ul><li>1051 directly managed outlets area of 14,83,199 sq.ft </li></ul><ul><li>61 brands of which 43 are retail brands, rest wholesale. </li></ul>
  4. 4. World Co., Ltd Break up by brands <ul><li>UNTITLED-career women 26.6 BN </li></ul><ul><li>OZOC –young casuals 21.3 BN </li></ul><ul><li>INDIVI 21.2 BN </li></ul><ul><li>CORDIER 18.2 BN </li></ul><ul><li>VILLE D’AZUR 9.6 BN </li></ul><ul><li>COUP DE CHANCE 8.5 BN </li></ul><ul><li>HUSHUSH-baby boomer family 7.9 BN </li></ul><ul><li>ADABAT 6.7 BN </li></ul>
  5. 5. World Co., Ltd Lines of Business <ul><li>Wholesale division for specialty shops </li></ul><ul><li>New Business Models </li></ul><ul><ul><li>Fashion Commodity Models, targeting 20s and 30s couples in metropolitan neighbourhoods </li></ul></ul><ul><ul><li>SPA Model where own and other brands are sold through concept stores </li></ul></ul><ul><ul><li>Specialty Private Apparel Division, uses only department stores as main channel </li></ul></ul><ul><ul><li>One brand one shop concept, brands like INDIVI, OZOC, UNTITLED </li></ul></ul><ul><ul><ul><li>Fashion Conscious brands sold from Aquagirl, Dressterior </li></ul></ul></ul><ul><ul><ul><li>Competitively priced brands sold from Index & Emporium </li></ul></ul></ul><ul><ul><ul><li>Store Business Models Opaque and Ginza which sell an assortment of goods with fashion accessories. </li></ul></ul></ul>
  6. 6. World Co, Ltd <ul><li>Two kind of Demand </li></ul><ul><ul><li>Incidental Demand: Fundamentally desire driven, customers shop when they feel like, for things that they would like to own, not necessarily need </li></ul></ul><ul><ul><li>Actual Demand: Customers buy what is essential and not for what is desirable not essential </li></ul></ul><ul><li>Lifestyle Retailers survive on the Incidental demand and that’s where their future lies </li></ul>
  7. 7. SPARCS Concept <ul><li>Considered to be the ideal business model for the fashion industry </li></ul><ul><li>Incorporates four platforms representing World’s core operations-production, development, merchandising and retail operations </li></ul>Super Production Apparel Retail Customer Satisfaction
  8. 8. SPARCS Concept Super Production Apparel Retail Customer Satisfaction Personnel Platform Management Accounting Platform Information Support Platform Operational Platform Management Platform Maximising Customer Value Maximising Productivity Development Operations Merchandising Operations WP2 Factory Production Operations Retail Outlet Operations Retail Outlet Customers
  9. 9. World Co., Ltd Platform <ul><li>A Platform is a reproducible system of business that embodies both operational procedures and the decision making process </li></ul>
  10. 10. Customer Classification <ul><li>Objective is always to offer new values to customers </li></ul><ul><li>Customers are of two kinds </li></ul><ul><ul><li>Fashion Aware : Great Knowledge of What’s In and What’s Not, but Little Inclination to Buy the things that are in </li></ul></ul><ul><ul><li>Fashion Active: Have Both Knowledge and the Inclination to Buy Things that are in </li></ul></ul><ul><ul><li>The drop out from Fashion Aware to Fashion Active tends to increase by age groups </li></ul></ul>
  11. 11. World Co Ltd Leadership Strategies <ul><li>Only three ways to achieve leadership </li></ul><ul><ul><li>Better Product Mix </li></ul></ul><ul><ul><ul><li>Better in terms of quality, , availabilty, fashion or timeliness </li></ul></ul></ul><ul><ul><li>Higher Service Delivery </li></ul></ul><ul><ul><ul><li>Retail Service must be interactive and friendly </li></ul></ul></ul><ul><ul><li>User Friendly Layout and Design </li></ul></ul><ul><ul><ul><li>Environment must be aspirational and reflect what the customer fantasizes for herself. </li></ul></ul></ul>
  12. 12. Three Fundamental Perspectives for Directing any Strategy <ul><li>Customer Profile: Needs to get defined and revisited as frequently as required </li></ul><ul><li>Outlet Choice: Customers chose outlets based on comfort they provide and not just their clothes </li></ul><ul><li>Competition Status: World Stores must always be a step above the next competitor in a category </li></ul>
  13. 13. Operations Divisions <ul><li>First operations division that takes care of existing concepts and business models </li></ul><ul><li>Second Operations Division that takes care of developing new models and implementing them to offer new values to customers </li></ul><ul><li>Older Businesses must pursue efficiency and speed, New Business must create New Values </li></ul>
  14. 14. World Co Ltd Time to Market Strategies <ul><li>Ability to get concept to store in two weeks </li></ul><ul><li>How it achieves this: </li></ul><ul><ul><li>Work Closely with Supply Chain Partners </li></ul></ul><ul><ul><ul><li>Stores Grey Fabric, Buckles, Zippers and other trims </li></ul></ul></ul><ul><ul><ul><li>Holds raw material inventory and reserves production capacity in anticipation of demand </li></ul></ul></ul><ul><ul><li>Manufacturing teams in factories work with Designers at World Office </li></ul></ul><ul><ul><ul><li>Changing designs to enable easier manufacturing </li></ul></ul></ul><ul><ul><ul><li>Suggesting alternate routes or designs and fabrics </li></ul></ul></ul><ul><ul><li>High Empowerment to Product Design, Merchandising and Store Operations </li></ul></ul><ul><ul><li>Plan bulk for all stores and then determine allocations, World will not design or make for individual stores “efficiency mentality” </li></ul></ul>
  15. 15. World Co. Ltd Some Beliefs <ul><li>If it does not sell in first ten days, its not going to sell </li></ul><ul><li>Track demand in first ten days, then re-price for the next week onwards </li></ul><ul><li>Product, Packaging, Presentation, Timing and Pricing are five variables measured </li></ul>
  16. 16. World Co.Ltd SPA Brand Portfolio <ul><li>Career Oriented Individuals, late 20s: UNTITLED, INDIVI and COUP DE CHANCE-restructuring therefore brought under new business. </li></ul><ul><li>Young Married in 30s and 40s: REFLECT, VOICEMAIL, DESVISO </li></ul><ul><li>Young Generations Teens & early 20s: OZOC, largely young casualwear </li></ul><ul><li>Menswear lines: TAKEO KIKUCHI, BOYCOTT </li></ul>
  17. 17. World Co.Ltd Fashion commodity <ul><li>Fashion Commodity is a Business Model Targeting Style Choices between daily wear and fashion wear, largely in malls and shopping centres ( fashion specific buildings & railway stations) </li></ul><ul><li>This constitutes the chunk of the consumption sector and where the volumes lie. </li></ul>
  18. 18. World Co.Ltd Fashion Commodity <ul><li>Main target groups are 30s young couples </li></ul><ul><li>Their style preferences are not changed by marriage or by children </li></ul><ul><li>Target is to serve them with highly fashionable products at reasonable prices </li></ul><ul><li>They want their children to also have fashionable goods </li></ul><ul><li>To be attractive to them FCOM businesses must have very young image to attract these groups </li></ul>
  19. 19. World Co.Ltd Fashion commodity Customer Service- Right Product at Right Time Responsive Supply Chain Accurate Forecasts
  20. 20. World Co. Ltd Forecasting <ul><li>Replenish existing style in two weeks </li></ul><ul><li>New styles in 3-6 weeks </li></ul><ul><li>Pre-positioning of lead time materials, reservation of capacity with suppliers and local production for fashion sensitive products </li></ul><ul><li>Design deals directly with factory with Category interface almost prohibited </li></ul>
  21. 21. World Co.Ltd. Accurate Response <ul><li>Mock up store of the next seasons collection is made in Tokyo </li></ul><ul><li>20 sales assistants evaluate these items </li></ul><ul><li>Each team individually scores them on 7 pt scale </li></ul><ul><li>Items everyone ranks high are bought aggressively </li></ul><ul><li>Items with high standard deviation are piloted and seen for ten days on floor. </li></ul><ul><li>Principle is simple </li></ul><ul><ul><li>Use early sales data to update forecasts </li></ul></ul><ul><ul><li>Information based forecasting is always preferable to gut feel </li></ul></ul>
  22. 22. World Co.Ltd. Creating Fashion <ul><ul><li>Fashion Businesses are about creating Interesting and Desirable Product Lines </li></ul></ul><ul><ul><li>High Emphases on Originality </li></ul></ul><ul><ul><li>Customers rarely know what they want, its our power of creation that makes them want to buy them </li></ul></ul><ul><ul><li>Focus on how we can create products that people are willing to pay more for </li></ul></ul><ul><ul><li>Customers must want to own what World gives them rather than World purely giving what they want-that’s how World would like to differentiate. </li></ul></ul>
  23. 23. World Co.Ltd. Role of Category <ul><ul><li>Primary provider of product to the Outlet </li></ul></ul><ul><ul><li>Has knowledge and understanding of how product should be displayed and presented on the floor </li></ul></ul><ul><ul><li>Determines the lifecycle of the product </li></ul></ul><ul><ul><li>Helps build the target consumers image to the retail outlet </li></ul></ul><ul><ul><li>Communicates the product features and attributes to the retail outlet </li></ul></ul><ul><ul><li>Extracts the best price value equation from design and the factory </li></ul></ul><ul><ul><li>Ensures that product lines are in adherence to brand personality. </li></ul></ul>
  24. 24. World Co.Ltd. Private Label Brands <ul><ul><li>Not more than six months taken to develop new brand and store concepts </li></ul></ul><ul><ul><li>Tweaking is allowed only for first six months </li></ul></ul><ul><ul><li>Once tweaking is done, no changes permitted for three years in positioning, identity or product strategy </li></ul></ul><ul><ul><li>World has brand filtering systems. If design does not fit into brand they do not produce it. </li></ul></ul>
  25. 25. World Co.Ltd Other Interesting Facets <ul><li>They actually have stores “ off the wall” and “be an angel” which sell purely basics </li></ul><ul><li>World sees them as indispensable items for fashion coordination </li></ul><ul><li>Collections are only presented in mock shops </li></ul><ul><li>Once a collection is produced, no one is allowed to question the viability of the line(lag time insensitivity) </li></ul>
  26. 26. World Co.Ltd Other Interesting Facets <ul><li>World believes that shopping growth in Japan is coming from suburbs </li></ul><ul><li>Their research shows that the baby boomers are the most difficult to satisfy because they buy from different stores with varied environments and marketable prices </li></ul><ul><li>Career-Oriented people are more fashion conscious than the others, and they also expect efficient shopping choices </li></ul><ul><li>VM and packaging is done when lines go into production </li></ul>
  27. 27. Aarigato Gozaimasu