Art Supply Store and Gallery Business Plan

Market Analysis Summary

In West Hawaii, the mauka community of Holualoa in Kona, Kealakekua and South Kona, as well as Waimea and Hawi in Kohala are three communities with large artist populations and galleries. In West Hawaii, the Holualoa Foundation for Arts and Culture, the Society for Kona's Education and Art, the Kailua Village Artists, the Kona Arts Center, the Waimea Arts Center and other well-established non-profit groups offer arts classes and instruction in various media year-round to children and adults.

NALB Creative Center will market to four primary customers:

1. Professional artists.
2. Amateur artists and crafters, including hobbyists.
3. Businesses, such as architects, graphic designers, interior designers, or direct mail advertisers. 
4. Teachers and students.

4.1 Market Segmentation

Average household income has steadily grown with about 36 percent of Big Island households reporting incomes of $25,000 - $50,000 and another 36 percent in the $50,000 - $75,000 range. Predictions for West Hawaii include continued population growth, economic growth and business opportunity.

1. Professional artists. There are currently at least 39 Fine Art Galleries on the west side of Hawaii. Each gallery represents several artists.
2. Amateur artists and crafters, including hobbyists. Many of the amateurs are retirees* with relatively high disposable income levels. 
3. Businesses. Architects (36 companies on island), technical drawing, interior/graphic design (18 companies on island), advertising/direct mail companies (12 companies on island).
4. Teachers and students. This group will include K-12 teachers and students as well as those attending art classes at the store.  (25,000 public school students).

*The total population of Hawaii County has grown by about 20 percent in the past decade, the older segments - such as those from 45 - 54 and those 55 and up have increased at rates of 100 percent and 64 percent, respectively.

4.2 Target Market Segment Strategy

1. Professional Artists. With only one existing art supply store on this side of the island, if the professional's need for customer service is not met, they will utilize the Internet and mainland stores. The area we can impact most heavily is having the actual products in the store that artists can manipulate, study, etc. This would especially apply to products that a customer may not take a chance on ordering from an Internet site (because of variations in quality, or new techniques/products).
   
2. Amateur artists and crafters, including hobbyists. In general, this segment has the same needs, desires, and fulfillment requirements as the professional artists. Some will be purchasing from lower and mid-priced product lines, but many are avid in pursuing their avocations, and appreciate, buy and use the professional quality materials.
   
3. Businesses such as architectural, technical drawing, interior/graphic design, advertising/direct mail companies. Currently, this segment is not served in any way on the west side of the island, except by casual shopping at the existing art supply store. Much of the purchasing by this group is done on the Internet.
   
4. Teachers and students. This is a much neglected segment on our island. Students and teachers currently have access to products in Wal-Mart, K-Mart, a small school supply specialty shop (open part-time), and the sole existing art supply store. We plan to have a store big enough to accommodate the art supply needs of the education community.

4.3 Service Business Analysis

NALB Creative Center is a specialty retailer filling an underserved niche market on the island.

Currently customers can buy low end art products at Wal-Mart, K-Mart, Long's, and Ace Hardware. The products offered at these outlets is severely limited. Products include: a few small canvases, a small selection of papers in limited sizes, a few paint sets, and writing pens and pencils. The same stores offer limited selections of craft and hobby products as well, usually aimed at general interest and unsophisticated shoppers.

Hawaii Printing Corp. and Kona Coast Office Supply, Inc. stock a limited variety of drafting supplies: pens, pencils and paper products that could be used for arts and crafts but are usually associated with writing.

Art and craft products can also be purchased at Art Supply Hawaii in the old industrial area. This store offers a much better selection in terms of variety, type and quality, but has a reputation for poor customer service satisfaction.

4.3.1 Competition and Buying Patterns

Art Supply of Hawaii is the closest competitor to NCC. ASH is located in the old industrial area of Kona. It is a small two-story facility of 1,300 sq ft. The store has been in business for 10 years, seven years in Hilo and three years in Kona. They offer a variety of fine art supplies, canvas, paints, stained glass, ceramics, oriental arts, beads, textile arts, crafts, scrapbooking, and children's craft kits. The store is currently for sale with an asking price of $395,000. According to their advertising, the store serves a growing local artist community, retirees and both public and private schools.

Many artists known to the owners, refuse to shop at ASH because they are dissatisfied with the level of customer service, and generally uncomfortable in the shopping experience. They currently shop off the Internet, and in mainland stores during infrequent visits out-of-state. These artists represent a significant customer base for NALB Creative Center.

Customers in the educational segment buy at the discount stores, due to the convenience of one-stop shopping for all their household needs as well as school supplies for the kids. We will market directly to the art teachers in the local schools. We will supply order forms to the classrooms, and deliver directly to the schools.

Many professional artists buy from Internet sources due to the still limited selections in the local marketplace in the quantities needed. With a store space nearly three times the size of ASH, we will be able to stock appropriate quantities, styles and sizes, and deliver orders much more quickly than Internet sources. We will provide free delivery to the North Kona area on purchases over $300. We will also provide friendly, professional customer service. We'll provide a generous return and exchange policy. We'll provide hands-on access to materials and make NALB's a gathering place for artists. None of these benefits are available through Internet sources.