Market Analysis Summary
Consumer awareness of proper bra fitting has been on the increase for the last eight years. Many independent stores across the country have been experiencing double digit sales increases for the last five years. This has been due to two factors,the clothing industry has featured more skin exposing fashions that require speciality foundation garments, and fashion column writers, who for the most part, yearly feature the importance of bra fitting, mentioning the speciality stores in the area and their services. (The Detroit News, February, 2001)
Results from The Detroit News February column, regarding bra fitting, proved to be a motivator for the metro Detroit customer to seek out a local store to get fitted. Stores in the area reported a 20% increase in sales the two weeks following the article.
The full-busted/full-figured customer, when happily served, historically has developed into a loyal customer, telling those that share the same body traits, about her experience and will tend to make a shopping trip with her friend for her next store visit.
4.1 Market Segmentation
Our concentration and expertise is in fitting the full-busted and full-figured woman who seeks a better fit in intimate apparel. The table and chart below summarize the population analysis of the Tri-county (Oakland, Wayne, and Macomb counties) area.
4.1.1 Market Needs
We have estimated the number of prospective customers as 94,201, and, knowing the missed opportunities of our competitors, this strongly indicates that there is a large void in the market. Therefore we see an underserved market niche opportunity for an intimate apparel store that can serve all the needs of the Tri-county woman.
Her needs are listed below:
- For the full-busted/figured customer, finding a garment that fits, supports and is fashionable.
- An expert fitter who has a working knowledge of the fit that each brand offers.
- A fitter that has the ability to develop a rapport with the customer, offering advise about the importance of proper fit and when she should be refitted.
- She wants a professional fitter who has a sensitive and personable way about her and is eager to work with her until she is satisfied.
- A store that tracks her purchases, preferences and size information and will contact her when an item arrives that may interest her.
- A store that will carry a variety of fashion brands, some not currently available in this market, one that will stay current with trends.
- A store that will do minor alterations, to ensure the fit.
- A store that maintains stock in basic items and will place special orders for speciality items.
- A store that has a friendly atmosphere and decor that gives the customer a pleasant shopping experience.
4.1.2 Market Trends
Market trends are favorable for the continued growth and development of the Detroit metro area. Growing an average of 10.25% each year, this trend shows there is a definite need for an intimate apparel store. Current plans for the metro Detroit area include: development of the river walk, expansion of convention facilities, casino development and a future sports stadium. Planned development for Royal Oak includes: hotel/condos, upscale retail shops, a well known chain book store and the beautification of the business district.
According to a recent report by The Michigan Retailers Association, many Michigan retailers are projecting that sales will rise over the next three months, but most don't expect the current economic slump to be over soon.
Sixty-one percent of retailers expect their second quarter sales to top last year's figures, according to the monthly Michigan Retail Index Survey, a joint project of the Michigan Retailers Association and the Federal Reserve Bank of Chicago. That's the highest level of optimism since last September for sales during the next three-month period. The Index found that 35% of Michigan retailers increased year to year sales during March, down slightly from 36% in February. Fifty percent recorded sales decreases and another 15% reported no change. The last time the Index found a majority of the state's retailers posting year to year sales gains was June of last year.
4.1.3 Main Competitors
Approximately 10 miles from Royal Oak. Competitor #1 has been in business for 45 years and located in Birmingham for the last 20. Due to her age, approximately 83 years old, she has not kept current with new brands and technology. She has a reputation of being difficult to deal with, as a customer or an employee. Her approximate yearly sales volume at one time was up to approximately 1,200,000 units with a decline in store traffic and high turnover in staff the volume is now closer to 875,000. All inventory and product ordering is done manually. This store has a following from these groups: the upscale Birmingham customer, the local tourist and the local full-figured customer. With the last segment declining more than the other two. The store is merchandised by size with most product behind the counter and only sleepwear available for the customer to browse through. Since this owner has not attended an industry market show in the last 10 years, she has very few of the new European brands now distributed in the U.S. Most of the store's advertising is placed in immediate local papers and does no in-store promotions or yearly sale. Her current staff has been with her less than seven months, which is unexperienced compared to competitors. With her age she takes one to two weeks per quarter off and does not have a manager that is able to make decisions while she is absent.
Competitor #2 is 33 miles from Royal Oak, and has been passed down from mother to daughter. Competitor #2 purchased the store six years ago, and has excellent buying skills. Most of her staff has been with her on the average of 2 years. This store's approximate yearly sales volume is 1,100,000 units and until last year has been on a steady increase. Competitor #2 gave birth to her third child in December 1999 and has not returned to work except on a limited basis. All inventory and product ordering is done manually. The majority of her customers are middle income, conservative suburban women with the average age being 50. The merchandise is displayed by brand and the store is in need of redecoration and updating of fixtures. The merchandise is moderate with some brands also carried at Kohl's and Hudson's. The buyer has not attended a Midwest industry market in the last five years and has never attended a major market, therefore not learning about new brands, products or technology. Advertising is placed in local Plymouth papers with no in-store promotional activity. This store is situated in a small one-story mall on a side street of the downtown shopping area, with no signage or windows on the street front. Therefore, capturing any walk-in traffic is difficult.
Competitor #3 is 57 miles from Royal Oak and has been open two years. Competitor #3 has developed her assortment well for her local clientele, with the majority of her customers coming from Downriver (a price point sensitive customer), Grosse Isle, and some from Detroit. XXX has been in the lingerie industry for seven years. This store was in the black at the beginning of the second year. I estimate her sales as being approximately $300,000. She carries mostly a moderate product line and is merchandised according to brand. She carries more stock than she needs, and like her competitors, she performs all inventory checks and reorders manually. She does attend major industry markets, however is very hesitant to try new styles or brands. Her customer is a conservative, suburban middle income woman between the ages of 35 to 55. She does little advertising and no in-store promotion. She has one part-time employee that has been with her since she opened and is in the process of hiring another.
4.2 Industry Analysis
Information on the industry was supplied by the Intimate Apparel Advertising Manager at Women's Wear Daily. WWD conducts the largest portion of fashion industry (retail and wholesale) statistics and investigative reports. The paper has recently reported that the innerwear or intimate apparel industry from 1997 to 1999 grew by 10% or $11.8 billion. The topics in this section will go into further detail using the recent WWD report on the industry.
4.2.1 Industry Participants
Information below is from Women's Wear Daily's U.S. Market Innerwear Strategic Market Report 2000 (based on 1999 reported numbers).
"Women tend to purchase intimate apparel (meaning foundations), from specialists."
Non-Chain Speciality stores in 1997 captured $304 million of the total $10,702 million market and in 1999, $341 million of $11,797 million intimate apparel market. Direct mail merchants gained the largest portion of market share in the past two years, at $914 million in 1999. Most of the increase was due to Internet sales.
Below features the latest market share percentages.
Distribution Channel % of market
|Other Speciality Stores||3%|
Innerwear Channel Sales Statistics 1997 and 1999
|Distribution Channel||1997 $MM||1997 Avg. Price $||1999 $MM||1999 Avg. Price $|
4.2.2 Distribution Patterns
According to the WWD, U.S. Market Innerwear 2000 strategic market report.
From 1997 to 1999 the total women's intimate apparel, or innerwear, market grew by 10%, to $11.8 billion. All product categories saw robust growth during this period, with the highest growth occurring in Bras (17%) and Bottoms (12%).
Bras/Intimate Apparel represent the largest percent of total women's intimate apparel sales for 1999 at 39%, followed by sleepwear at 24%.
We will continue to see growth in this category with an increase in the number of consumers as well as the proliferation of novelty fabrics and fashions. Growth will slow to about 10% from 2000 to 2002, still respectable, but less than it has been.
Bottoms also had substantial growth increasing 12% from 1997 to 1999. There will be a strong surge in growth of comfort control briefs in newer fabrics. Baby boomers who need some smoothing in the bottom will wear these lightweight alternatives to shapers.
Loungewear/At Home-wear continues to build momentum. Robes, a mainstay of older consumers' lifestyles will see sales increase by over 10% over the next two years. As At Home-wear and home inspired themes continue to be key consumer interests, this category will continue to grow. Draw string pants and bottoms in general will also continue to grow.
Sleepwear, the second largest product category in innerwear, continues to gain momentum increasing 7% from 1997 to 1999. At nearly a quarter of the total innerwear volume, sleepwear will continue to be a key category. Sleepwear will increase by 20% from 2000 to 20002 driven mostly by young styles and brands.
Shapewear continues to build momentum and volume increasing 10% from 1997 to 1999. Shapewear will continue to increase in conjunction with consumers' waistlines and rates of obesity. Shapewear will grow by 20% from 2000 to 2002, with one-piece shapers and minimizers the big beneficiaries of this increase.
According to a study reported in USA Today "Growth in bra sales has outpaced most other categories of women's apparel the past five years."
|Vs. Growth for all Women's Apparel||3.7%|
Source: The NPD Group
The volume of the bra business has continued to have a steady increase each year. This is due to two main factors: 1) the aging of the baby boomers, 2) intimate apparel is one of the only fashion businesses that does not experience the "seasonal" markdown period. Bras can stay at full price all year long, giving a better profit margin than other fashion products such as ready-to-wear.
4.2.3 Competition and Buying Patterns
Future trends for industry participants are reported as follows, again from WWD's, U.S. Market Innerwear 2000 Strategic Market Report.
Key strategic issues facing retailers in the different channels, and opportunities.
- Department Stores- Department stores need to figure out how they are going to generate traffic without resorting to price promotions. We think that department stores are going to continue to lose share to other formats because they are just too difficult to shop,and provide no service or information for innerwear.
- Speciality Chains- The main portion of this channel is Victoria's Secret. This channel has lost some ground over the last two years. Those like The Gap and Ann Taylor can gain share due to product development and transactions from existing traffic.
- Discounters- Their biggest fear is inflation, worrying what it will do to the real disposable income of mainstream America.
- National Chains- Generating store traffic will be a top priority for National Chains. This channel is caught in the middle, neither fish nor fowl, in that they have some great national and private label brands.
- Direct Mail- These merchants love being hot again. However, being in apparel they are still finding it difficult, as the costs of doing business continue to rise.
This report does not offer information regarding non-chain speciality stores and this channel has been left out of this paper in the last five years. It is unfortunate since this is the channel that is known for excellent fitting services, as well as high customer and employee retention. Those women who need an expert fitting service are still visiting a local fitting shop. If WWD did a little more investigative reporting on this channel it may show more insight as to why the department stores and chain speciality stores are losing market share.