Home Accessories and Gifts Business Plan

Launching a new business venture during tough economic times can prove challenging, however, through extensive research and analysis the following market findings and projections support the launching of The Scarlet Tassel retail store in 2003.

While the U.S. economy and specific business sectors were hit by a stagnating economy during 3rd and 4th quarter of 2001, the “gift industry” which includes the product categories of home decorative accents, general gifts, collectibles, stationery and greeting cards, and seasonal decorations suffered only a 1% drop generating sales of $54.6 billion against 2000 sales of $55.2 billion. 

It has been reported in many industry trade publications that despite the downturn in the economy, American consumers are spending more and more of their disposable income on their home. The home decorative accents segment of the gifts industry continues to perform strongly posting a 2.2% growth over 2000 and reaching $16.9 billion in sales.

As predicted by Unity Marketing, “the future of the gifts and home accents market is positive for the next several years.” Source: Unity Marketing, The Home Report 2001: The Market, The Competitors, The Trends

Closer to home, homeowners in the Sandy Springs/Lower Roswell area of Atlanta spent $1.8 billion on home decorative products in the year 2000. We expect sales to continue to grow as home ownership grows by 8.8% and 61% of homeowners reach a level of earnings above $60,000 per year by the year 2005. Source: CACI Marketing Systems for Georgia 2000 Information Systems, The University of Georgia

The Pulse of the Industry

• “The home has become the most desired status symbol for Americans, and as such, a growing portion of the American families’ discretionary spending is budgeted for the home.” Source: Unity Marketing, The Home Report 2001: The Market, The Competitors, The Trends
• “The home market has been transformed from a largely functional to a fashion business, thus allowing consumers to dress and decorate their houses like they dress and accessorize themselves. Consumers are wanting products that reflect their tastes, values and sensibilities.” Source: Unity Marketing, The Home Report 2001: The Market, The Competitors, The Trends
  
• “In the past two years consumers spent more money on home furnishings than they did on clothes. Consumers are not just striving to make their homes more ‘beautiful,’ rather they are seeking decorative items that can positively impact the mood and emotional climate of their home.”  Source: Unity Marketing, The Gifts and Decorative Accessories Report 2001: The Market, The Industry, The Trends
• “As their lives become more ‘virtual’ and dependent upon computers and technology, consumers will seek out gifts and decorative products which will help ground them in the ‘real’ world.” Source: Unity Marketing, The Gifts and Decorative Accessories Report 2001: The Market, The Industry, The Trends

Shifting channels of distribution are a major trend in retailing today, with many consumers turning to e-commerce for their home needs. A business that establishes itself with multiple channels of operation will set themselves up for continued growth and success. The Scarlet Tassel plans to establish an e-commerce business segment in year 3 of operation.

The Market With More
As a city with dominant growth in the southern region, the Atlanta retail marketplace continues to benefit from the South’s dominance over other regions in almost every indicator of growth and affluence.

• The South has more discretionary income dollars, leading the U.S. with 33.5%.
• The South leads in households with $75,000+ income and $100,000+ income.
• The South leads in projected growth of total personal income.
• The South leads in the number of housing starts at 39.1%.
• The South generates more retail sales than any other U.S. region in every sales category.
• The South is number one in sales of furniture and home furnishings.

Source: U.S. Department of Commerce, Bureau of Census, 2001

4.1 Market Segmentation

The Scarlet Tassel intends to target specific market segments to generate sales.

BABY BOOMERS (age 38 to 56) still have kids at home, so they need bigger houses and possessions to put in those houses. Their affluence is reaching its highest level.

GENERATION X (age 24 to 37) is thriftier than previous generations, very home-oriented, and prefers more free time to more money.

ECHO BOOMERS (including people born between 1979 and 2005 – customers who have yet to be born!) will be the most affluent young generation ever (they have access to the Baby Boomers’ money), and they grew up with technology.

Market Segment Characteristics

• Within a 5 mile radius of the Sandy Springs/Lower Roswell area of Atlanta, the population statistics (age 0-59) encompassing the market segments targeted by The Scarlet Tassel totalled 124,964 in 2000. A growth rate of 6.8% is projected through 2005.
• By market segment, The Scarlet Tassel’s customer base will be represented as follows:
• 33.0% Baby Boomers
• 41.0% Generation X
• 26.0% Echo Boomers
• Targeting primarily female shoppers, 51.6% of the market segments targeted by The Scarlet Tassel are female with a growth projection of 6.8% through 2005.
• By race, The Scarlet Tassel’s market segments will be represented as follows:
• 77.5% White
• 7.8% African American
• 6.6% Hispanic
• 3.5% Asian
• 4.6% Other
• The total number of households in 2000 totalled 65,697 and is projected to grow by 8.8% through 2005, totaling 72,073.
• As incomes increase over the next several years, the discretionary income available to spend on home decorative and gift products will increase. In 2000, households generating in excess of $60,000 per year represented 56.8% of total household earners. By 2005 this number is projected to jump to 61.5% of total household earners.

Source: CACI Marketing Systems for Georgia 2000 Information Systems, University of Georgia

Who Is The Scarlet Tassel Customer?

• Middle to Upper Class
• Primarily Female
• 30 – 60 Years of Age
• Educated
• Homeowner
• Social, Enjoys Gatherings With Friends
• Family Oriented
• Values the Comforts of Home
• Relaxed and Approachable Lifestyle
• Quality Conscious
• Value Conscious
• Possesses Style Awareness

4.2 Service Business Analysis

The state of the industry is being determined in a positive way by consumer attitudes and changes in behavior. Following are a few observations:

• Having seen growth prior to September 11, 2001, the home decorative and gift industry is experiencing continued success as Americans begin to refocus their priorities and place more emphasis on the core values of home and family. This shift in priorities has driven many consumers to sprucing up their homes in a desire to make it more pleasing and personal.
• As consumers become more time-deprived, they are looking to shop at stores whose service offerings are as equal in quality and value as their product offerings.
• As consumers are overwhelmed with choices in their lives, they look for stores to offer them products that will enhance their lifestyle, make their lives more comfortable and provide unique and uncommon product selections beyond the mass market retailers.
• More and more consumers are seeking independent retailers that offer them the feel of home with a more personalized shopping experience.
• In many cases, retail stores are beginning to “look alike” to many consumers. The more personal and interesting the product, the better it reflects your personality. Personalization is making a huge difference. Eclectic doesn’t just mean you have a mix of styles, it means you have things that are intensely personal and can reflect one’s individual style and taste.
• In the service arena, making business easier for consumers is a winning element. Simple things like offering convenient hours, free delivery, and easy return policy will win big points in the consumer’s mind.

4.2.1 Competition and Buying Patterns

The home decorative and gift marketplace is a diverse arena encompassing many choices for the consumer. While The Scarlet Tassel recognizes that our competition in the Sandy Springs/Lower Roswell areas comes in many shapes and sizes, our in-depth analysis of each, as outlined below, has allowed us to identify our market strengths, areas of uniqueness and competitive edge. The following analysis reflects competition located within a three mile radius.

Hospitality House: Located in the Sandy Springs Plaza shopping center as well as several other locations in Atlanta, this gift and decorative accessories store has established itself as a classic and traditional resource for brass, pewter, glass, crystal and wood decorative items. A large percentage of the assortment focuses on tabletop and dining accessories such as bowls, serving utensils, ceramic tableware, vases and linens. They do not offer any decorative items within the lighting, furniture, rug, textile and garden categories. The gift offering is positioned as “special occasion” gifts appropriate for weddings, baby, anniversaries and birthdays. To address seasonal holidays, the store offers small decorative elements such as ornaments and tabletop decor for Valentines, 4th of July, Halloween, Thanksgiving and Christmas.  The overall product selection offered by Hospitality House is of high quality and represents a more formal decorating style. The clientele that shops at Hospitality House tend to be older in age. Prices range from $10 for small gift items to $350 for a more formal decorative item. Hours of operation are Monday through Saturday 9:00 a.m. to 6:00 p.m. As they are closed on Sundays, they are not taking advantage of the Sunday traffic the center draws.

What Fun: With a single location in the Sandy Springs Plaza shopping center, this highly whimsical and eclectic gift store offers playful, comical and creative gifts for all occasions, serious or fun. Within the store, items are grouped by gift giving occasion or recipient such as, “For Him,” “For Her,” “Wedding,” “Pet” or Birthday.” Products range from fur covered telephones, novelty books and hand-painted pottery to a chair shaped like a shoe, lava lamps and novelty pet dishes. The store environment is colorful, festive, playful and fun, and reinforces the store name and brand positioning. Opening price-points start at $5.00 and reach $250 on the high end.Establishing a brand position that resolves around elements of “fun,” they have gone so far as to apply this to their store hours: Monday through Saturday 9:59 a.m. to 6:01 p.m. and Sunday 12:01 p.m. to 4:59 p.m.

Store House: This national retail furniture chain store has many locations around Atlanta, with one located in the Sandy Spring Plaza shopping center. With the primary focus on large home furnishing pieces, items within the store can be described as modern, classic and contemporary, with a distinct Scandinavian or Swedish style. The store offers furniture pieces for all rooms in the home as well as a narrowed assortment of decorative accessories such as lamps, ceramics, and artwork and wall decor. As with the furniture, the decorative accessories are more contemporary and modern in style. Observations indicate that the customer that shops at this store is younger to middle age with a distinct decorating style. Pricing starts at $50 for a small decorative accessory to $1,000’s for larger furniture pieces. Interior decorating services are available for an additional fee. Store hours are Monday through Saturday from 9:00 a.m. to 6:00 p.m. and Sunday 12:00 p.m. to 6:00 p.m.

Paper Affair:  As the name indicates, the primary focus of this store is a large and diverse offering of paper products: Stationery, cards, gift-wrap, invitations and announcements. One of many locations in Atlanta, the Sandy Spring Plaza store is a bit smaller than their typical store, thus offering less depth in all the product categories they carry. Cards, invitations and announcements make up the largest percentage of the assortment and are further enhanced with custom printing services available. A small offering of personal gifts such as writing instruments, picture frames, books and bath and beauty products are also available. Holidays are addressed with a narrow offering of themed gift and paper products specific to the season. Paper Affair attracts a broad demographic audience as their paper products address many looks, styles, colors, formats and needs. Within the paper goods industry, their main competitors are stores such as Swoozies, Papyrus, Crane and Queen’s Paperie. Given the range of products offered, prices start at $1.25 for a greeting card to $40 for a picture frame. Following a company policy, all locations are open Monday through Friday 10:00 a.m. to 7:00 p.m., Saturday, 10:00 a.m. to 6:00 p.m. and Sunday 12:00 a.m. to 5:00 p.m.

The Beaded Lizard: This independent jewelry and gift store has three locations in the Atlanta area. The Sandy Springs Plaza store has opened in the last year and is smaller than its sister stores. Handcrafted and beaded jewelry make up a large percentage of the assortment with small “all occasion” gifts rounding out the offer. Many pieces are whimsical in style and inexpensive in price. Prices range from $5.00 to $70 for a more intricately designed jewelry or gift item. This store attracts a younger audience, which seemingly looks for more “stylish” pieces that do not require a large investment. Store hours are Monday through Saturday from 10:00 a.m. to 6:00 p.m. with limited Sunday hours of 1:00 p.m. to 5:00 p.m.

Ross Dress for Less: This National Discount Apparel and Accessories store is new to the Southern region and Atlanta Area. The Sandy Springs store is newly opened (September 2002) and is of significant square footage. Primarily selling adult and kids apparel, personal accessories and footwear the store does offer a selection of home decorative accessories and linens. A majority of the items are overstocks or second quality items purchased in the market from full price stores and are being sold at deep discounts. Quality levels tend to be lower because of the price-point positioning and item selections limited given the source of goods. A customer purchasing from this store will not find any decorating inspiration or decorating services available. Ross attracts a wide customer base, primarily those looking for value and discount pricing. The store is open Monday through Sunday.

K-Mart: As a national chain discount store, K-Mart has a diverse product offering that appeals to consumers looking for value pricing. Product statements range from clothing and footwear to assemble-it-yourself furniture, lamps, mass marketed decorative accessories, household linens and electronics. Because of recent bankruptcy filings and stiff competition from Wal-Mart and Target, K-Mart has lost market share.

Marshall’s: Much like Ross Dress for Less, Marshall’s is a national discount store offering clothing, footwear and home products. They too purchase overstocks and “seconds” from the after-market suppliers and offer them at heavily discounted prices. Selections are limited and shopping is a “hunt-and-peck” experience. Items are positioned on shelves by category with little merchandising criteria applied other than get as much on the selling floor as possible. The store is open Monday through Sunday.

Target: This highly recognizable multi-channel discount store offers a wide range of products and styles that appeal to a broad audience. Target has positioned itself as a source for the latest styles and trends at value pricing. Offering clothing and footwear, home decor, cleaning supplies, bath and beauty products, electronics, outdoor camping and sports equipments as well as toys, Target is a one stop shopping source. Because they focus on offering the latest trends and styles many of the gifts and home decorative products tend to be more contemporary and modern in feel. Quality is acceptable but is not recognized as being truly long lasting. Design inspiration is limited within the store and personalized services consist of a baby and wedding registry service. Store Hours are 8:00 a.m. to 10:00 p.m. Monday through Saturday and 9:00 a.m. to 7:00 p.m. on Sundays.

Lakewood Antiques Mall: With a single store located in Sandy Springs, this antiques mall supplements the Lakewood Antiques Fair that comes to Atlanta the second weekend of each month. Set up with individual booths within a larger complex, the primary focus is on antique furnishing, accessories, rugs and garden decor. Because antiques reflect a unique decorating style, this store does not have mass appeal. Pricing can range from $5.00 to many $1,000’s for larger furniture pieces. Each booth owner merchandises his or her own space so there is no pattern or style that flows throughout the store. Sales help is located at the front of the large square footage building so it is difficult to receive personalized assistance. This store is open Monday through Sunday.

The Scarlet Tassel sets itself apart from the “masses” by offering products that are unique in design and style, and are decorative in application. Our goal is to target quality-conscious homeowners who seek personal service, smart pricing, and a sense of trust in where they shop for those unique elements that express their character in their home. We want OUR HOME to be their HOME.