Business Plan Retail

Lontessa
Retail Business Plan - 2016

Lontessa
 Retail objectives : sales revenue, turnover per m2, profit
 Location, Location, Location !
 Target market – who they are, where they shop, what they want ?
 Retail image – combination of attributes
 Composition of product mix – style & design
 Pricing – cost of production – value equation of product vs price
 Competition – what are the trends and who is our market?
 Dichotomy of distinct product offering, positioning in the market and the attraction of
the right consumer segment ?
 Definite opportunities - but also Risks in terms of length of return on investment
 Customer Service – shopper experience
 Advertising & Promotional tools – communication
Executive Summary

Lontessa
Positioning :
The business opportunity is for a differentiated female fashion boutique that caters for female
consumers looking for a distinct Maori infused design and styling that is attractive,
fashionable, and sexy; making ladies feel attractive and gives them a pleasurable shopping
experience
Retail Strategy : Right Location to meet the target market needs
 Physical Attributes – Location for footfall, Visibility, Exterior
 Product & Merchandise – Assortment & range
 Customer Service – shopper experience in store
 Pricing – from value to premium offerings
 Promotional tools – communication & perfect sizing / fit
Market Gap

Lontessa
4
Market Dynamics
The biggest spenders in the Underwear category are : Singles at home, Young
couples and Families (25 - 34); Single Parents
The fashion market has a bias to 21- 35 years and always bouyant to trends
Growing middle income group that is price and value oriented
Consumer Category Drivers :
Need new underwear
Specific occasion need – special day
Emotional need – spoil myself
Impulsive buy – Feel like it
Something new – feel special

Lontessa
Physical Attributes : Location !!!
 Exterior facilities – aesthetic surroundings
 Visibility and uniqueness of exterior
 Geographic Area and surrounding retailers
 Outer window attraction, branding and display
 Accessibility and parking
 Visual representation : Positive Brand colours and image
 The look and layout : Fixtures, fittings, lighting and ambience
 Dressing room facilities – fitting service
 Allocation of space and traffic flow
 Customer shopping Experience - pleasurability
 Merchandise layout and displays
 Service strategy – moment of truth : connect on service
Retail Image

Lontessa
Store Atmosphere and Experience :
 Exterior : Storefront, Entrance, Display windows, Branding,
Visibility and uniqueness
 Visual : Colours, lighting, flooring, temperature, scents,
Fixtures, wall textures, dressing facilities, display,
Staff interaction, service, merchandise, pricing and Payment Technology (card),
modern tills, cleanliness
 Store Layout : Floor space, product groupings, ease of flow,
Display stands, units, cupboards, couches, arrangement, relaxed
 Interior display : Assortmnet, themes, racks, signage, wall decorations
Overall ambience, visual representation, quality and image
Retail Image

Lontessa
VALUE PREMIUM
Growth + +
Size ++ +
Motivations Convenience Treat myself
Market Dynamics
Marketing mix Price and value Quality and Style
Role of brands Low importance Very important
Ability to compete Low - competitive Good
Rationale
Role of brands is low
Compromising brand image
(quality)
Retail margins good – more
volume at a value price
Match consumer profile
Meeting consumer expectations
Build Consistent brand values
Expertise in product design,
quality, function and fashion

Lontessa
Product Portfolio
CONVENIENT ASPIRATIONALSEGMENTATION
CHANNEL
STATUS
• General retail
• Multi-category chains
• Department stores
• Independant boutiques
• Specialized Chains
1. Low product differentiation
vs Private Label
2. Product quality issues
1. Perceived aesthetics or
design appeal
2. Product superiority and
quality

Lontessa
Class of trade segmentation
CONVENIENT ASPIRATIONALSEGMENTATION
• Accessibility / more Traffic
• Variety and Choice
• Value for money
• Shopping experience
• Quality / styling / comfort
• Brands – meet specific
•needs
REASON
TO BE
High
Varies a lot …
Meet consumer expectations
PERFORMANCE
LEVEL

Lontessa
Mass
Market
Mail
Order
Depart.
Stores
Specialty
Chains
Other
Indep.
retailers
Channel Growth (%)
-10%
+10%
0.750.50.250.1 1.5 2.0 2.5 3.0
Source : Consumer panel TNS (Europe : France, UK, Spain, Italy)
Multi
Brands
Chains
Distribution channel Analysis
Web
based

Lontessa
Aspirational classes of trade
Prediction
Flat - loyal
Probability of
destination shop
On decrease
Long term risks
Web sales
continue to
increase
DEPARTMENT
STORE
INDEPENDANTS MAIL to WEB
Size + + +
Growth - -+ +
Attractive -
ness
Average Ave / Low Ave/ High
DIAGNOSIS
Investment ?
Mass production
Current strategy Future Opport

Lontessa
Future Opportunities
INTERNET CATALOGUES HOME PARTIES DOOR TO DOOR
Activity
Sell through
website
Sell through a
catalogue / email
Sell through
ambassadors in
consumers' house
Sell @ home
through
ambassadors
Rationale
Matches
consumer profiles
Succesful in other
categories
FIT and comfort ?
Matches
consumer profiles
Intimate way of
choosing
underwear
Communicate on
all range (image)
Lingery very
talkative topics
Women's story
Intimacy amongst
friends
Intimacy
Women's story
Brand Fit High Med High High

Lontessa
Product Segmentation - 6 groups
More special
lingerie
Everyday
underwear
Basic
Everyday
Pretty
Everyday
Weekend /
Relaxed
Everyday
Fancy Lacy
Sexy Feel
Good
confidence
each group fulfils a particular need or occasion.
Super Sexy
Attractive

Lontessa
Modern Fulfilled Trendy
Total Fancy Elegant Sexy
30 - 40 40 - 50 21 - 33
Base 1380 166 (12%) 260 (18%) 260 (18%)
Marks & Spencer / Farmers 49 34 70 47
Superstores (ASDA, Sainsburys, Tesco)/ K- Mart 19 19 19 23
Department stores (Debenhams, John Lewis, House of
Fraser) / Farmers
30 27 26 36
Specialized underwear chain stores (e,g, La Senza,
Knickerbox, Top Shop) : Bendon, NZ
8 9 5 20
Fashion clothing chains that also make underwear
(e,g, Gap, H&M, Benetton )
10 16 7 17
Independent underwear shops 9 7 7 9
Mail / Internet -order - catalogues (Euro) 25 28 17 24
Other (e,g outdoor markets, bargain basements) 7 11 4 9
Q - Type of stores where
you usually buy underwear
Consumer Access

Lontessa
Create Sexiness and superior differentiation :
Customer pleasure and experience
Distribution
• Retail Independents
• Internet
• Home parties
Product
Innovation &
differentiation : speciality
Product offer :
Designs, styles, range,
colors, more frames to
meet consumers’ needs
and sexy fashion trends
Communication
Awareness in Wellington
25 – 40 years
• Show what the brand is
about
• Made for you !
Radio advertising ?
Relevant brand
ambassador to tell it :
I’m attractive when I
wear Lontessa
Build strong brand values

Lontessa
FACT ISSUE OPPORTUNITY
Comfort expectations are
increasingly high
Can we deliver on comfort or
will it be average ?
Develop comfort through ’perfect
fit’ measurements.
Innovation
Aesthetic appeal is the main
driver, for bras in sexiness and
attractiveness
Aesthetic : design, gore detail,
material or finishings
Invest in gore details and finishings
that set us apart and create premium
perceptions
Perceived premium is driven by
a multi sensorial experience :
pleasurable experience, sensual
colours, patterns, designs, shapes
& forms
Create emotional connection
with sexy, sensual, attractive
and appealing to consumer
tastes
Create more emotion through
product features :colours, styles and
design.
Tell an emotional story !
Attention given to the inner part
of the bra (design, logo) : means
that the brand is for me / it cares
for my needs
Attention to brand values -
meet consumer expectation
Relook brand and swing tags - inner-
side of the bra
Product Strategy

Lontessa Brand Strategy
THE
BRAND
LAUNCH
PLAN
PRODUCT
The sexy superior
offer…
DISTRIBUTION
In the right place
IMAGE
of an aspirational
and modern brand
Own sexiness & superiority :
Intensive product differentiation
Improved perceived value in design,
attractive, attention to details,
portfolio : product type, colours, shapes,
lace, materials
Branding & packaging
Out of store :
Brand communication
Special PR project - endorsement
In-store : Merchandising / Brand ID
Own stores
Other Retail stores - need Volume
Online – website orders

Lontessa
Product strategy - Major initiatives
PRIORITY TOPIC INITIATIVE
1 INNOVATION
•Develop a strong product pipeline
•Launch new styles and innovation every month :
‘new rack’
2 COMFORT CUES
•Define the new standards of comfort
•Implement ‘perfect fit’ with customers
• Enhance shape
3
PERCEIVED QUALITY :
ATTENTION TO DETAILS
•Reinvest in details and finishings
4 PRODUCT BRANDING
•Leverage branding
•Implement improved logo and label tags

Lontessa
Key Initiatives
PRIO
RITY Priority INITIATIVE DESCRIPTION TIMING
1
PRODUCT
Launch PR Launch of the brand April 16
4 Innovation
New styles each month – seasonal
colours
June 16
5
COMM
Brand communication
Wellington catchment – radio / media
(Exciting launch campaign)
June 16
9 Events / Sponsoring Product Endorsement 2017
3 BRANDING Create brand identity Branding & packaging April 16
8
SERVICE
Bra Fitting service Service in store - provide superior fit Sept 16
6 Web Online Website, direct mail orders 2017
2 DISTRIB Location - Categories Wellington store / Auckland stores
April 16 /
Sept 16
7 OPPORTUNITY
Home parties
Extend the brand franchise 2017Sleep and Night wear
Swim wear

Lontessa
Distribution Strategy
Positive Consumer trend :
Luxury and superior quality : high attractive power
I indulge with expensive items for spoiling myself and for on occasion, specific
reasons
I can afford luxury, but expect more from the product to justify the premium
Location of stores in high traffic fashion areas - Independent Boutique stores,
specialty stores
Retail department stores – mass convenience in shopping malls – highly price
competitive (lower margin but volume drives costs down)
Online website growth trend – but correct fit for underwear
Having the right product, in the right place, at the right time to offer complete
customer service
Benefits of a Test store : Cuba street with 63m2 @ $4000 per month / short term
lease

Lontessa
Pricing Strategy
Grow Sales – what is the demand for the product range ?
Production Costs versus competition - affects on Gross margin and profitability
The cost of goods is a major profit determinant – weakness is the lack of volume to
achieve lower prices through manufacture
Service and customer retention will lead to improved financial gains
The Retail mix : Balancing quality and price is a key element to the profitability equation
– what is the product mix that will achieve max profit
The consumer will pay the premium if the styling, quality and service are superior and
can be justified – low volume, high price will affect demand and profit
Invest in building the brand image with advertising message that informs, persuades
and grows awareness and positioning, but product range must deliver on the promise
Communicate service excellence and ‘made for me’ individual service
Radio, print, online media communication – up-front investment in brand awareness

Lontessa
Retail pricing / margins
Product Costings / Retail Pricing
Example Value Added Value Premium
Standard cost 16 22 25
W/sale price 24 44 52
Retail price 46 83 100
GP% 35% 43% 52%
Margin is eroded selling through large retail department stores
But, Can achieve the volumes required to achieve critical mass and reduce costs

Lontessa
Product range
Multiple styles and shapes – balconette,
contour, padding
From market fashion norm to super-
sophisticated & sexy
Palet of colours
Specialized (dept stores/
independent retail)
Entry price $45 to Premium $90

Lontessa
Merchandising & store lay out
Consumer based sizing : start with A – C cup (may need D for segment needs)
Sales data will help support and validate customer base x frequency
The number of garments we currently sell vs future demand in each consumer
segment – determine future range
Consider store ambience and which parts of the store are more important
the more ‘special product’ areas are key for drawing people in and enhancing their
shopping experience.
Understand product range and choice available – space for display
Attract a specific consumer market (the more involved shoppers)
Think about who we are competing with and where our range will do do best –
where can we excel and take the lead ?
24

Lontessa Merchandising - visible & easy navigation.
The vibrant and exciting product should draw shoppers in.
25
Natural flow from one sub-category to next to
encourage browsing
ENTRANCE POINT
ENTRANCE POINT
Price
competitive
Fancy Lacy
Super Sexy
Fancy Sexy
Feel Good
Value range - using back wall
Prominent display
position to pull
shoppers in
Given more privacy & draws shoppers deeper
Bright & aspiration – good tone
Staff point
(manned)

Lontessa Segmenting the store - We need to build a story around the
segment to bring it to life and aid visibility
26

Lontessa Use displays, decoration, imagery, atmosphere and accessories to
maximise the total effect
27

Lontessa Window dressing done well - attractive
28

Lontessa The segments aren’t just about underwear.
Add accessories and other items that build the mood
29

Lontessa Bare minimum – female heads and a few accessories make all the
difference.
30

Lontessa The segments ARE a continuum – lead onto each other .
Sexy lingerie - trendy sexy – fashion lace : creates the impact and
inspiring
31

Lontessa The sections must be exciting. Break up colours,
display matching sets, and mix and match
32

Lontessa Displays don’t have to be hanging - break up the area and
pace accessories for impulse buys
33

Lontessa Loose panties get placed in the most relevant theme section
Promotions and placement that encourage impulse purchase
work well.
34

Lontessa
35
3 Things WE Have to Do
Make a statement on launch
Launch with Point of sale / photography of product in the range and PR
Launch a range together, not just a style, visible in store difference
Filling Gaps in our range
Targeted approach to Product, Channel and Price – draw customers and take
market share from competitors
Filling gaps in the Market
Review complete ranges of all products and prices on offer, and determine
market gaps that exist
Need to be outward focused on trends identified – not just personal tastes
What does the market want ? Listen to your shoppers.

Lontessa
36
How we can Differentiate ourselves
Develop who our “core” market is
Develop styles and colours across the size curve that meets customer needs
Core product range that competes effectively must have full availability –
our ‘bread and butter’ to revenue realisation
Price to product
Develop product based on consumer perceived value and develop to that price
point and have specific costs objective.
If product cost too high for perceived value, do not launch – Its Risky !
Product for the channel : it will sell if high value = exclusive ranges
In store merchandising must be different
Go “Crisp and Fresh”
Get retail consultants to be actively involved in customer needs and
experience
merchandise display and layout with customer shopping flow in mind

Lontessa 37
Action Key Tasks & Activities Timing
Retail Action Plan
Store Location,
Lease
agreement,
and Fittings
Range of
Products
April 2016
Negotiate store
Lease
Agreement
Book in January
for 1 March
start of work
Launch first store in Wellington
• Store Location & selection of position in CBD Cuba street boutique
district
• Opportunity to take up current Rex Royale store from March 2016
• Negotiate a 1 year lease – 1 month for renovations : store plans and
refurbishment
• Test our product concept and range of styles
Fittings and Furnishings
• Space allocation and store layout
• Investment in loose fittings that are moveable without additional costs
• Agree with shop fitters what furnishing are required
• Opportunity for Window display and front shop impact
• Logistics of store, systems, concepts and aesthetics
Product range and mix of merchandise
• Confirm the launch Range and commission full buying and production
with suppliers – manage supplier leads times once stock turn achieved
• March delivery : inventory planning, analysis and merchandising guide
• Product Photographic shoot and brand ambassador – creative
development
• Development of style rests with understanding local trends and design
instinct
February
March
April

Lontessa 38
Action Key Tasks & Activities Timing
Retail Action Plan
Communication
Initiatives
Price
Realisation
April
Feb
Monthly
from May
PR Campaign
• Launch event with local PR and relevant target market
representation, free radio
• Create excitement around the new store and product concept
Communication campaign
• Distribute Leaflets in the area, print in local newspaper, radio
campaign
Pricing Plan
• Pricing strategy that makes sufficient margin to cover overheads to
start.
• Position product mix to cater from mid market value to premium
quality and style
• Growth in profit as revenue generated - Stock turns and inventory
management key metric : rate of sale, days cover, supply

Lontessa
39
Objectives, Goals, Strategies
Objective Goals Strategies
Createasustainable Financial Wheretoplay
longtermtoplinegrowth Growtoplinesales quarter Priceproductrelevanttocompetitorsatincreasedmargin
paththroughpricepoint byquarter Channel:Getlingeriebrandintootherboutiqueretailstoresatthe$100pricepoint
initiatives
Enhancemarginsthroughcost Increasemargindollars Product-findagoodvalueproductwithhighvolumepotential(sexyset/panty)
reductioninitiatives Holdpricepointstocompeteeffectively
Commercial
Structureproduct,priceand Positionbrasatpricepoints Testtheproductinotherretailstores(competewithLonely)
promotionsinordertoensure competitivepositionstocater Testupperendproduct-exclusiverange-intopcenters(egultimatestrapless)andhighendstores
wecreateexcitementand for$45-$75market Producttobeofftheshelfpurchased,exclusiveandimported
drawcustomerstoourstore andafullsetfor$100tooffer
goodvalueversusLonely Doresearch,ensureproductremainsfashionable,ntunewithcustomerneedsandouterweartrend
Productisdifferentiated,makesastatementinpresentationandmerchandising-sellin-sellout.
DevelopnaCoreprogramofwhite,blackandskintoneforeverydaywear
Ensureproductistruetoitspromise

Lontessa
Product Costings
Units 3000
List Sales per unit 15
Discount promo
Net Sales 45000
Raw materials 30%
Packaging 10%
Direct labour 5%
COGS
Transport / freight 4%
Warehousing 4%
Direct retail costs 5%
COS
Gross Margin / GP 35%
Product Costings – model

Lontessa Profit & Loss – Financial Projection
Projected Forecast 2015 2016 2017
A Key Action Sales: 5,245 16,445 18,600
Volume 135 139
Mix + Price 334 344
NET SALES 5,245 16,445 18,600
% Growth in Revenue 213.54 13.10
B Key Actions GPM: 2,000 4,963 5,212
Volume 62 64
Mix + Price 196 202
GPM 2,000 4,963 5,212
GPM % 25.0% 33.0% 35.0%
C Key Actions MAP: 260 600 700
PR & Communications (21) (24)
Promo activity + Out of Store Sales (28) (42)
MAP 260 600 700
% SALES 5.0% 3.6% 3.8%
D Overheads: 2,000 3,500 4,000
S G & A 2,000 3,500 4,000
% SALES 38.1% 21.3% 21.5%
Financial year
Financial Model - Example

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42
Retail P&L – Model
Retail Metrics Wellington Auckland Total
Stock Balance 1,387 1,087 2,474
SALES 1,400 2,000 3,400
COS / PURCHASES 950 1,150 2,100
PAYROLL 60 105 165
RENT - SHOP 4,000 6,000 10,000
ADVERTISING 15 15 30
TRANSPORT & FREIGHT 4 8 12
SECURITY 10 10 20
SERVICE CHARGE 9 10 19
OTHER OPERATING COSTS 38 59 97
TOTAL COST 250 230 480
PROFIT 200 620 820
•SQM 65 75 140
•Turnover per square (YTD) 21.5 26.7 24.3
•Ebitda 200.3 619.8 820.2
•Store line contribution rands and percentages 228.3 652.2 861.5
16% 47% 62%
•Stock Turns (YTD COS) 5.8 3.8 4.7
•Payroll % of turnover 4% 5% 5%
•Rental (Monthly) $5,000 $12,000 $12,000
•Rental % of turnover 286% 300% 294%

Lontessa
Appendix – for further development

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44
Profit and Loss
P&L EXTRACT Lontessa
FY16 FY17 FY18
Avg WSP / Unit ($) 4.57 4.71 4.90
Index to PY 103 104
Avg RSP / Unit ($) 9.83 10.13 10.54
Index to PY 103 104
Units (K) 415 524 662
Index to PY 126 126
Net Sales 1896 2468 3244
Index to PY 130 131
Standard COGS 938 1189 1667
Index to PY 127 140
Total GPM 958 1279 1577
Index to PY 134 123
GPM % of Net Sales 50.5% 51.8% 48.6%
Media 76.4 67.2 83.7
Index to PY 88 125
Media % of Net Sales 4.0% 2.7% 2.6%
Promotion 27.0 28.0 45.0
Index to PY 104 161
Promo % of Net Sales 1.4% 1.1% 1.4%

Lontessa
Retail Launch plan
April 16 May 16 Oct 16 Jan 17 July 17June 16
Winter range,
eg. Outerwear /coats
Well. Store
Opening
Launch /PR
Communication /
awareness to attract
Akl. Store opening
Launch /PR
Assessment of Well. Store
Production economies /
Develop the range

Business Plan Retail

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