clair de lune

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Lingerie Shop Business Plan

Market Analysis Summary

There is little reason to doubt that the Kansas City market is a reflection of the national market when it comes to a growing interest among women for intimate apparel.  This coupled with the continued economic strength of the Johnson County, KS and south Kansas City geographic portion of the market lends further credence to the great potential for clair de lune

This portion of the plan will explore the key target audiences we have identified as best prospects for the products and services clair de lune will provide. 

4.1 Market Segmentation

clair de lune will target specific market segments:

  1. Women 25-59 with household income of $75K+
  2. Women 18-24
  3. Brides

Market Potential for Target Segment 1:

Within a five (5) mile radius of our store location, 51.4% of the households have an income of $75K+.  This translates into 39,956 households that fall within our primary target income bracket.  This number is projected to grow to 54,560 by 2008.

Since one of our goals is to build clair de lune into a destination location for lingerie purchases, it is also pertinent to look at households with $75K+ income in a 15 mile radius of our location.  There are 130,986 households that meet this criteria, and that number is projected to grow to 183,630 by 2008.

There are 49,281 women aged 25-59 that live within five miles of our location.  That number is projected to grow to 53,671 by 2008.

Within a 15 mile radius, there are 256,303 women aged 25-59 with a growth projection of 270,040 by 2008.

While we do not have statistics that quantify the number of women 25-59 with household income of $75K+, we can estimate that number.  Within a 15 mile radius, 32.2% of households have an income of $75K+.  If we apply a 32.2% factor against 256,303 women aged 25-59, that gives us 82,529 potential customers in Segment 1.

Market Potential for Target Segment 2:

There are 7,140 women 18-24 that live within five miles of our location.  That number is projected to grow to 8,578 by 2008.

Since 18-24 year olds are much more likely to be impulse purchasers, we are limiting our market potential number to a five mile radius for this age group. 

We have not put a household income qualifier on this segment, since the age group includes students and young singles that are only supporting themselves rather than an entire household.  Many in this age group are Victoria's Secret shoppers, and Scarborough Research data shows us that two-thirds of their customers have a household income under $75K.  However, we believe it is realistic to assume that many women in this target segment still reside in those $75K+ households referenced above.  They take advantage of available disposable income to purchase lingerie.

Market Potential for Target Segment 3:

The Kansas City Star tells us that approximately 15,000 women get married in Kansas City each year.  If we conservatively estimate that an average of three persons (including the bride) will be purchasing bridal lingerie for the bride, that gives us a market potential of 45,000 women in this category.

Overall Potential:

Expenditures on women's apparel within a five (5) mile radius in 2003 was $113,444,950.  We can assume that approximately 14% of that total was intimate apparel, based on national averages.  We can then estimate that there were $1,588,293 expenditures on intimate apparel within a five mile radius.  clair de lune would only need to capture 2.8% of that potential market to meet our sales forecasts for 2004.  And that is only looking at expenditures within that five mile radius.

Source:  ESRI BIS forecasts for 2003 and 2008

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Women 25-59, HHI $75K+ 5% 82,529 86,953 91,614 96,525 86,953 1.31%
Women 18-24 20% 7,140 8,568 10,282 12,338 8,578 4.69%
Bridal 0% 45,000 45,000 45,000 45,000 45,000 0.00%
Total 1.07% 134,669 140,521 146,896 153,863 140,531 1.07%

4.2 Target Market Segment Strategy

Women have varying attitudes towards the role of undergarments in their lives.  This is evidenced by the different personalities that are projected through the contents of their underwear drawers.  For example, there's the "low involvement" segment, who buy just enough lingerie to get them through the week.  For them, underwear is a functional necessity, and they really don't care if it's all white or all black, as long as they have a clean pair of panties to wear. 

The fact that a woman spends a fortune on designer suits does not necessarily translate into designer labels on her bras. 

clair de lune wants to capture the attention of the Intimate Apparel Enthusiast (IAE).  According to a segmentation study done by the Cambridge Group, the IAE is aged 18-34, wears matching bras and panties, and loves to shop for underwear, especially on impulse.  Although IAEs are only 18 percent of the market, they account for 25 percent of the sales.  Their entire underwear collection looks like most women's "special occasion" section of their lingerie drawer. 

Many of these local IAEs are currently Victoria's Secret customers because that is the only specialty retailer in Kansas City that offers the variety they are looking for.  According to Scarborough Research (March 2002-Feb 2003) over 200,000 persons in Kansas City have shopped at a Victoria's Secret in the past 90 days.  Of those Victoria's Secret shoppers, over one-third (33.8%) are aged 18-24, and 82.1% are aged 18-44. 

What this means for clair de lune is that approximately one (1) out of every seven (7) women in Kansas City over the age of 18 has enough "involvement" with their lingerie to want to shop at a specialty store versus a department store or mass merchandiser. 

Although the young IAE is buying a lot of undergarments, she is not necessarily the most profitable customer.  Mediamark Research (MRI) from Fall of 2003 shows that adults who spend over $100 per year on lingerie tend to be in the 25-59 age group.  Adults 25-59 account for 65.5% of all Adults 18+ in the U.S., whereas Adults spending over $100 per year on lingerie account for 80.7% of all Adults 18+. 

Expenditures by Age of Lingerie Purchasers 

                                     Nightwear                           Bra                       Panties       Night/Bras/Panties/Shape

 

U.S. 18+

<$50

$50-99

$100+

<$50

$50-99

$100+

<$50

$50-99

<$50

$50-99

$100+

18-24

13.1

10.8

14.5

10.4

12.8

10.1

10.2

11.5

14.0

12.0

12.6

10.1

25-29

8.5

8.3

10.0

11.1

7.8

9.5

9.3

8.6

9.2

8.3

9.0

10.2

30-34

10.0

9.9

9.9

16.9

9.6

10.8

13.2

10.3

10.3

9.9

10.6

13.2

35-39

9.9

12.7

9.2

11.0

10.5

10.0

12.4

10.7

11.4

10.7

10.2

12.0

40-44

11.23

13.1

11.9

6.7

10.6

11.9

17.7

11.3

15.1

11.5

12.9

16.2

45-49

10.0

8.9

10.2

10.9

10.5

13.6

11.1

10.5

12.4

10.4

12.3

11.4

50-54

8.9

10.1

13.2

13.2

9.8

11.5

8.7

10.1

10.1

9.8

11.0

9.2

55-59

6.9

8.7

8.1

9.1

8.6

7.4

7.7

8.0

7.0

8.0

7.6

8.5

60-64

5.4

5.1

5.4

6.4

5.7

5.1

4.0

5.4

3.8

5.4

4.7

4.0

65-69

4.3

4.1

2.2

2.8

4.4

3.8

2.5

4.4

2.1

4.3

3.3

2.4

70-74

3.9

3.0

2.1

1.5

3.6

2.8

1.8

2.9

2.4

3.3

2.8

1.5

75+

7.9

5.4

3.4

0.0

6.2

3.6

1.5

6.4

2.1

6.3

3.1

1.4

Source:  MRI Fall 2003

Income is another key factor in amount spent per year on lingerie.  It also influences the types of brands that a consumer purchases.  clair de lune is most interested in consumers who are spending at least $100+ per year on lingerie.  These consumers tend to have a household income of $75K+.

Expenditures by Household Income of Lingerie Purchasers

     Night/Bras/Panties/Shape

HH Income

U.S. 18+

<$50

$50-99

$100+

<$25K

22.3

20.0

12.9

7.7

$25-35K

11.4

11.2

7.6

6.1

$35-45K

10.7

10.4

9.7

11.1

$45-60K

13.7

14.6

15.3

12.6

$60-75K

11.4

11.4

11.3

9.2

$75-100K

12.9

14.0

19.0

20.6

$100-150K

11.1

11.9

14.8

21.2

$150-200K

3.6

3.7

5.7

7.4

$200K

2.9

2.8

3.7

4.2

Source:  MRI Fall 2003

Characteristics of our target customers:

  • Women 25-59 with household income $75K+
    • Of this segment, women over 35 are more lifestyle and status conscious; they favor European brands with high design and quality, shop less often, but favor premium brands.
  • Young women 18-24 shop more often and are likely to be current Victoria's Secret customers
    • We can offer this segment better customer service, higher quality merchandise and more selection that they are used to receiving at Victoria's Secret.
  • Teens (13-17) often have media created tendencies; they are avid readers of fashion magazines.
    • With ever-increasing disposable income, purchase decisions are influenced by those publications and peers. While not with in our core target demographic, they are also influenced by mothers and older sisters and may follow their purchase paths.

4.3 Industry Analysis

Mass merchandisers lead the women's innerwear market in share, as they do in a variety of consumer products.  Mass merchandisers like Target not only offer the convenience of one-stop shopping for a variety of needs, but they are increasing their selection of designer labels at lower prices.  Brands sold at mass merchandisers include:

  • Hanes
  • Vassarette
  • Fruit of the Loom
  • Bestform
  • Jockey

Department stores hold second place in terms of market share, offering a wider variety of merchandise, more high-end products, more hard to find sizes, and, if you're lucky, some customer service.  Brands sold at department stores include many of the above, plus:

Mid-Tier: (Kohl's, JC Penney)

  • Vanity Fair
  • Warners
  • Playtex

Major: (Dillard's, Jones)

  • Bali
  • Olga
  • DKNY
  • Tommy Hilfiger

Better Dept: (Saks, Nordstrom's)

  • Wacoal
  • Chantelle
  • Donna Karan
  • On Gossamer

Victoria's Secret is the leading specialty chain and garners approximately a 20% share of the U.S.  bra market, according to NPD Group.

None of these stores carry the international brands and up and coming labels that will be offered at clair de lune.

The rest of the women's intimate apparel sales are primarily through non-chain specialty stores, other national chains (e.g.  Gap) and Internet/direct mail (catalog sales).

4.3.1 Competition and Buying Patterns

In Kansas City, the choices of outlets for women to purchase intimate apparel is more limited than many other markets in the U.S.  THERE ARE NO INDEPENDENT LINGERIE BOUTIQUES TO SPEAK OF IN KANSAS CITY.

The only store that can be classified as a lingerie boutique in Kansas City, is a 200 sq. ft. shop in the downtown area called Birdies.  It opened in late 2003 and carries approximately 200 SKUs and three to four brands that are primarily trendy and youth oriented with low to moderate pricing.  The store does very little promotion, and is in a low traffic area (hard to find), with little retail surrounding it.  We don't consider Birdies to be direct competition in its current state, but it does have some awareness among younger shoppers.

There are nine (9) Victoria's Secret stores in Kansas City with a 10th location opening in May '04 in north Kansas City.  If you are an Intimate Apparel Enthusiast (IAE) in Kansas City, chances are that you shop at Victoria's Secret since your other retail options are so limited.  According to Scarborough Research, 15% of all women in Kansas City have shopped at a Victoria's Secret in the past 90 days.  Considering that this number takes into account women over 65 years old and all economic brackets, that number is significant. 

The fact that there is a Victoria's Secret in Town Center Plaza across the street from clair de lune is considered a positive.  Customers who are lingerie shopping and do not find what they want at Victoria's Secret can easily cross the street to visit clair de lune.  Although Town Center and Hawthorne are technically different retail venues, traffic patterns suggest that consumers treat them as one destination.  The challenge will be to attract the younger customers.  According to Scarborough Research, over one third of Victoria's Secret shoppers in Kansas City are 18-24, and 56% are 18-34.  The demographics of Town Center Plaza skew younger than Hawthorne Plaza, so we will need to encourage Moms to bring their daughters into clair de lune to shop.

Other chain specialty lingerie retailers in Kansas City include BodyGap and Inner Self.  BodyGap appeals to similar demographics as Victoria's Secret, and has a location across the street at Town Center Plaza.  We believe that this is a positive for the same reasons as stated above for Victoria's Secret.  Inner Self has one location on the Country Club Plaza, which is approximately 15 miles away.  Inner Self targets the 30 to 45 year old, size 12 woman, who is looking for comfort, not fashion.  It is not a store for IAEs, and is not considered to pose a geographic or demographic competitive threat.

Of the various channels described above, clair de lune will most likely share customers with the Department Stores and Specialty Chains as those are the only true retail options currently available in Kansas City with the types of products that appeal to the IAE.  However, both of these channels fall dramatically short in terms of customer service and depth of quality product.

Tom Wyatt, President of Warnaco--"The department store is confusing. It's hard to find a product, there's no service and it's very sterile.  Until a decade ago, the department store dominated the bra industry.  But it has ceased to be at all inspirational.  It's no longer a place where a woman shops and feels special."

According to Warnaco focus groups, women HATE the underwear shopping experience at department stores.  Bras and underwear are jammed onto racks that are packed too close together; the layout is determined by brand rather than purpose; and customer service is non-existent, which is a crucial component to bra shopping, hence about 80 percent of women wear the wrong size.

CLAIR DE LUNE HAS A TRUE VOID TO FILL.

The U.S. Intimate Apparel industry appears to be healthy.  Women's Wear Daily reported that for the 12 months ending October 2003, total volume in dollars was up 4.3 percent, and total volume units were up 6 percent.  The largest percentage increases came from the daywear category with sales up 27.1 percent and units up 27.5 percent. 

Women's Wear Daily reports that department stores and chain specialty stores are losing market share.  We assume that much of that erosion is a result of the increasing confidence in Internet shopping and where available, specialty retailers.  IAEs recognize that a specialty boutique such as clair de lune will offer excellent customer service, product knowledge, personal fitting service, custom order options and wonderful product.

Innovations in textiles and manufacturing have caught consumer's attention.  Seamless undergarments that permit a greater range of motion and a smoother silhouette as well as new generations of microfibers that keep a body warmer, cooler or drier have encouraged consumers to seek out garments and fabrics that meet and exceed their demands.

The hottest trends at the intimate apparel shows in New York in March 2004 were:

  • Increased interest in and availability of plus-size undergarments
  • Innerwear that crosses over to outerwear
  • Multiple silhouettes in panty styles, with popular junior styles such as boy briefs showing up more in mature lines