The document provides an external analysis of Arte Soleil, an art gallery and coffee shop. It summarizes the mission and vision, provides an industry overview, and examines economic, sociocultural, technological, and legal influences. Key opportunities identified include improving the neighborhood, reaching consumers through technology, and leveraging increasing incomes and diversity. Main threats include industry decline, rising e-commerce, low switching costs for buyers, high local competition, and growth of DIY crafts.

1. BA 495: Business Strategy - Spring Term 2017
“Team Brooke”
Drew Bugni, Tatyana Collier, Katlin Combest,
Ryan Ordonez, Brooke Rawson & Yavuz Sefunc
Arte Soleil External Analysis

2. Overview and Purpose of External Analysis
To gain perspective on how to make Arte Soleil profitable, we
need to examine the themes and forces within your industry
and location. Our analysis will include the following:
• A look at your Mission and Vision
• Overview of the industry
• Economic, Sociocultural, Technological and Legal influences
• Forces within the market that help to identify the nature of
the industry competition
• Summary of most important threats and opportunities

3. Mission and Vision
To serve the East Portland community through
supporting independent creators by giving
them a cost effective venue to showcase their
creations.
Our goal is to help you achieve this mission and
develop Arte Soleil’s competitive advantage
through the use of in depth analysis and
research.

4. Industry Overview
Graphics & Sources:
Miles, R. (2017). IBISWorld Industry Report 45399 Small Specialty Retail Stores in the US. Retrieved from http://www.ibisworld.com
Small Specialty Retail Stores in the US: 45399
• Industry on the decline overall
• Small retailer store opportunities
• Owner-operators account for 83.3% of industry

5. Themes Influencing Your Industry
Economic Technological
Sociocultural Legal

6. Economical
City of Portland Neighborhood Economic Development Strategy
• Five year strategic plan
• Three major goals
Graphics & Sources:
http://www.pdc.us/Libraries/Neighborhood_Economic_Development/Neighborhood_Economic_Development_NED_Strategy_pdf.sflb.ashx

7. Sociocultural
Trends in Southeast Portland:
• City policies are turning
undesirable neighborhoods into
prime real estate
• Diversity is decreasing
• Median incomes are rising
Graphics & Sources:
Claritas, Inc. "My Best Segments Zip Code Look Up for 97236." Claritas.com. Claritas, n.d. Web. 18 Apr. 2017.
Oregonian/OregonLive, Casey Parks | The. "New Wave of Gentrification? Incomes Rising near SE Portland's 82nd Avenue." OregonLive.com. The Oregonian, 03 Dec. 2015. Web. 20 Apr. 2017.

8. Sociocultural
Trends in Art and Crafting consumers:
• Single people, teens, women ages 18-44,
and parents are most likely to be crafters
• Nearly six in 10 adults participated in art
and crafts projects in the last 12 months
• Cake and dessert decorating, photo crafts,
painting, drawing, and coloring were most
popular projects
Graphics & Sources:
Mintel. (2017). The Arts and Crafts Consumer -­ US -­ January 2017. Retrieved April 12, 2017 from Mintel Reports database..

9. Sociocultural
Trends in Art and Crafting:
• Brick-and-mortar stores may face competition
from e-commerce retailers
• Monthly subscriptions extend to arts and crafts
• Traditional crafting activities decline slightly
among adults, contemporary crafts attract
greater participation (ex: cake/dessert
decorating, interior design, and photo crafts)
• Digital channels allow crafters to explore other
projects, showcase their own creations
Graphics & Sources:
Mintel. (2017). The Arts and Crafts Consumer -­ US -­ January 2017. Retrieved April 12, 2017 from Mintel Reports database..

10. Technological
The level of technology change is low
• E-commerce Sales: as a percentage of overall retail sales, is expected to
increase to 14.5% by 2022
Technologies that add value to industry operators
• Social Media Advertising (Facebook, Twitter)
• Company Websites
• Data Collection (RFID)
• Transaction Processing (Square, POS systems)
Graphics & Sources:
IBISWorld. (2017). Operating Conditions, Small Specialty Retail Stores. Retrieved April 22, 2017 from
http://clients1.ibisworld.com.proxy.lib.pdx.edu/reports/us/industry/operatingconditions.aspx?entid=1106#TAS

11. Legal
Business License
• Must register business with the Secretary of State of Oregon (can be done
online)
• Must register business with City of Portland and Multnomah County
Multnomah County Health Department
• Food carts must be licensed and pass health inspection.
• You must get a plan reviewed and food service license before:
o Opening a new food cart
o Extensively remodeling a mobile food unit
o Reinstating a mobile food unit that been out of service for 12
consecutive months
*Food handlers cards are required for all persons working in a mobile food unit or base
of operation
Graphics & Sources:
"The City of Portland, Oregon." Starting a Business RSS. N.p., n.d. Web. 23 Apr. 2017.

12. Forces That Impact Your Industry
Graphics & Sources:
https://managementpocketbooks.wordpress.com/tag/porter-­five-­forces-­analysis.
Complements:
Positive-­Sum Co-­opetition

13. Threat of Entry
● Competition is high
● Heat map indicates food store, eating
and drinking locations in the Southeast
area
Graphics & Sources:
Reference USA (2017) Major Industry Groups Food Stores, Eating & Drinking Places: . Retrieved from http://www.referenceusa.com/Home/Home .
“The risk that potential competitors will enter your industry.”

14. Power of Suppliers
Art Retail Space:
Lower Power of Suppliers
• Multitude of suppliers that are competing for retail stores to
purchase and sell their products.
High Power of Suppliers
• Variety of spaces in Portland for artists to sell their products,
Arte Soleil must compete for these artists.
“Pressures that industry suppliers can exert on your industry’s profit potential.”

15. Power of Buyers
Bargaining power of buyers in small specialty retail store
industry is low and high.
Low contributing factors
• Number of buyers and businesses
• Unstandardized products
High contributing factors
• Low switching costs
• Backward integration
• Per capita disposable income
Graphics & Sources:
Miles, R. (2017). IBISWorld Industry Report 45399 Small Specialty Retail Stores in the US. Retrieved from http://www.ibisworld.com
“Pressure your industry’s customers can put on the producer’s margins.”

16. Threat of Substitutes
For Workshops:
• “Paintnights” or “Sit and Spins”
• Art project subscriptions such as Smart Art Box / Hello
Subscriptions / Sketchbox
For Art Retail:
• Online display such as Amazon Handmade, Etsy, and many
others
For Coffee
• There are two tea houses within 5 miles
“What would consumers buy in place of your product or services?”

17. Rivalry Among Existing Competitors
• Nearest coffee shop is 6 blocks away
(Starbucks)
• Within 5 miles there are 4 art galleries
• YMCA 3 miles away offers art classes
• 2 other food cart hubs within 4 miles
• No open mic’s close and the closest ones
are bars
“The intensity with which companies within your industry fight for market share.”

18. Complements
Value adding sources for the primary product:
• Food trucks provide foot traffic for local companies
• Art workshops and classes enhance Brand Recognition and Awareness
• Local art vendors support the “buy local” movement for business
• Coffee service allows for longer customer presence
• Open mic / Live music / Music recording all support the business
financially and bring in customers from outside the local area
Graphics & Sources:
Olick, Diana. “Food Is Ruling Retail Real Estate, and Food Trucks Are Moving in.” CNBC. N.p., 22 July 2016. Web. 23 Apr. 2017.
Billings, Randy, “Buy Local Movement Emerging in South Portland.” The Forecaster. N.p., 25 Feb. 2010. Web. 23 Apr. 2017.

19. Summary
Opportunities
• Improve the socioeconomic status and
quality of neighborhood
• Consumers with increasing disposable
income
• Leverage technology to reach
consumers
• Diversity
Threats
• Industry in decline
• E-commerce sales increasing
• Low switching costs for buyers
• Local industry competition is high
• DIY crafts gaining momentum