Gifts, Novelties, Souvenir Business Plan

The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors.

There are approximately 100 offices inside Avant-Garde Building, and roughly 1,000 visitors daily to Avant-Garde Building. The primary target customer of the Avant-Garde Shop will be the tenants with large disposable income, around 1,500 people.

The secondary target customers are the surrounding office community in the area, who often visit the Avant-Garde Building during lunch hour to meet their colleagues or friends.

The last target customer of the Avant-Garde Shop is visiting guests. As the store’s popularity increases, we expect to see an assortment of curiosity seekers, and local residents from the outside the Jakarta Metropolitan Area.

We are confident that we will capture the essence of the Avant-Garde brand appealingly, so when people visit Avant-Garde Building, they ought to purchase a memoir of visit through Avant-Garde theme merchandise offered.

4.1 Market Segmentation

Tenants
This category commonly includes Avant-Garde employees, who possess the strongest “sense of belonging,” although this also includes all employees whose companies reside inside the Avant-Garde Building.

This will comprise the largest segment of our target market (53%); we will focus on tenants for several simple reasons:

• The group will be the first to become aware that there is a new, revamped store.
• They have the sense of belonging or attachment to the whole idea of working inside one the most prestigious buildings in Jakarta.
• This group will also make the most “lifestyle” purchases, either buying for themselves or as a gift for a friend or relative.

Neighbors
The second potential segment (26%) is nearby workers within the “Golden Triangle” radius, who are drawn to the Avant-Garde building by the handful of retail food establishments. Perhaps, they will not be aware of the store’s existence until their second visit to Avant-Garde Building, but as they repeatedly spend lunch/break time here, they will become aware of the existence of the Avant-Garde Shop via sales literature (flyers, banners, etc.).

• This group does not necessarily have an attachment to Avant-Garde, but may make impulse purchases, if the selection of merchandise fits their styles and needs.
• This also means that the merchandise aimed at them does not have to be Avant-Garde-themed, as it could be generic products such as trinkets or ethnic arts and crafts.

Guests/ Visitors
This last segment (21%) has not yet been fully cultivated. This segment is as important as the other two, particularly in communicating the image of Avant-Garde Building itself as a destination spot within the Jakarta Metropolitan Area. They will maybe unaware of the store existence until several visit to Avant-Garde Building, this we will implement advertising effort such as guided tour, distribute flyer at the entry door, or positioning of banner inside the high traffic area of Avant-Garde Building.

• This group shops at Avant-Garde Building infrequently, but may be subject to impulse purchases once they are in the store.
• They will likely purchase the Avant-Garde-themed merchandise as a memoir of their only or rare visits to the Avant-Garde Building.

4.2 Target Market Segment Strategy

We want to clearly differentiate the Tenants from the other two segments (Neighbors and Guests). The focus strategy for the category of Tenants is to establish the sense of “belonging,” meaning that we need to create the Avant-Garde Shop as if it is their own. For example, the customers should feel a sense of pride in owning an “Avant-Garde” coffee mug, and displaying it in their office or home. This will give us a large opportunity for multiple sales and allow us to gain further access into the community’s numerous occasions, such as giving the themed merchandise for their friends and families as tokens.

While the Neighbors and Guests categories for the Avant-Garde Shop will be the next important ones, they mostly fall under the rubric of “accidental” shoppers or impulse shoppers. With the Tenants, purchases might be conducted after several visits to the store because of their close proximity and frequency of visiting the Avant-Garde Building. On the other hand, with Neighbors and particularly with Visiting Guests, the purchase decision will be decided instantly after viewing the selection of merchandise that is suitable to their own needs.

4.2.1 Market Trends

People around Jakarta Metropolitan Area have gradually but firmly recognized Avant-Garde as an historical, elegant and prestigious place to be; it is synonymous with modern Indonesia and its way toward excellence in the global economy. Avant-Garde Building is the “embassy” of commerce with representative offices of multi-national firms internationally. There is already a trend of putting the Avant-Garde image in every tenant’s logo or corporate name. We may feature some of the finest tenants’ logos, in conjunction with the Avant-Garde logo, in our merchandise.

4.2.2 Market Needs

There are several important needs in the official theme business that are being either undeserved or not met to any standard of quality at all. Avant-Garde and ABC Company plan to meet and service those needs.

• ABC Company will provide a large assortment of sizes to compliment the theme series of all merchandise of the Avant-Garde Shop.
• Focus and attention to customer’s personal preferences and customer retention will be given high priority. The inconsistency in positioning the current Gift Store has caused the decline of the store’s image, which is preventing the establishment from growing.

4.3 Industry Analysis

In general, retail businesses with similar target markets tend to concentrate together in malls. As this strategy has generally worked well for retailers, such a trend is expected to continue, with new shopping centers coming into operation. For instance, Harco Mas Mangga Dua and Glodok Plaza are focusing on the computer and electronic markets. In contrast, smaller outlets from the development of ITC Kuningan are dedicated to fashion retail, whilst STC Senayan is targeting retailer of youth fashion and sports merchandise, while Plaza Senayan and Plaza Indonesia are serving high-end segments of the retail market.

Most low- to mid-range merchandise and knick-knacks are heavily Chinese-manufactured products, as they offer a lower cost of purchasing and slightly higher quality than locally-manufactured products.

Retail sales in Indonesia according to a recent study by MasterCard International (MasterIndex of Retail) for the first half of 2004 are expected to manifest year-on-year growth of 8.0% to reach 120.1 trillion Rupiah in the first six months. Consumer confidence in Indonesia has declined from previous optimistic level of 57.5 to the current 49.0. This could possibly be attributed to the rising uncertainty leading up to the presidential election.

* Excludes hospitality, catering and auto sales
Source: MasterIndex of Retail Forecast 2004.

Due to its current rapid expansion, the retail property sector in Greater Jakarta is expected to become saturated, with new retail developments over the next three to four years as land for retail projects become increasingly scarce. In light of the situation, several major retailers, including Ramayana and Matahari, have confirmed plans for expansions to the area outside Java and Bali to take advantage of growth opportunities within a wider region.

Theme-based merchandise stores vary in terms of the scope of their merchandise:

• One (Few) Merchandise Categories: many of these offer only apparel, for establishments in the core of the entertainment district, such as Hard Rock Cafe or Planet Hollywood, along with their brand-building-through-merchandising strategy.
• Multiple Merchandise Categories: these are retail stores with a wide range of product categories, varying from electronics, to stationary, apparel, novelties, etc.; for example, Duty Free Shops at various airports, with broad product mixes, including both their own brands and those of other vendors.

4.3.1 Competition and Buying Patterns

Competition in this particular retail area is relatively low, as the Avant-Garde Shop uniquely belongs to the whole identity of Avant-Garde Building or Avant-Garde image and lifestyle. Knock-off products will be our biggest threat in this market, thus product differentiation and standards must be implemented to limit such damage to the image and value of the Avant-Garde Shop.

Ethnic arts and crafts based upon Indonesia’s Sabang to Merauke, will face stiff competition from other stores in the area such as Pasaraya Grande or Sarinah that mostly offer similar products, from traditional wooden masks to charms. To anticipate this, a branding strategy on each product must be implemented to differentiate between standard commodities and premium items. One solution is to put only a minimum amount of this kind of product in the display, as a positioning method to give this merchandise a premium value.

With other items, such as magazines, books and generic stationary, we will face competition from retail vendors inside the Avant-Garde Building such as AmPm and Paper Clip.

However, we are not really selling mugs, or caps, or t-shirts; we are selling the image of the Avant-Garde Building. The Avant-Garde brand relies on the building’s reputation for high-class, high-tech, fast and modern living in Jakarta. Avant-Garde is the symbol of Indonesia’s economic success, and a mug or cap casually displayed links the owner to that success. The key to the consumer’s buying decision is the image the brand communicates to its audience. The signage and interior of the shop, the appearance and demeanor of the staff, and the kind of merchandise offered will all reinforce this image. 

4.3.2 Main Competitors

The Avant-Garde Shop will be the official specialty shop of Avant-Garde in the metropolitan area. We are competing with other stores selling similar merchandise, and also with other stores selling similar icons of modern life in Jakarta. [Competitors’ data omitted.]