Examples of retail distribution clients include sport-specialty chains such as Champs, The Sports Authority, and Foot Locker and department store chains such as The May Company, Federated Department Stores, JC Penney, Sears and K-Mart. These retail distributors seek private label manufacturing for several reasons. Primary is the desire to have basic, commodity items at a price point advantage. These items were introduced by branded apparel firms and after several seasons have become commodity items. Retailers no longer need brand name marketing appeal and can pass the lower price to their customers. A lower gross margin per item is compensated in higher volumes.
Established consumer brand name companies have achieved expertise and brand equity in product lines other than apparel. One example is a footwear company which has achieved impressive sales and wishes to capitalize on apparel. Rather than incur additional staffing and expenses, the client contracts Green to spearhead the creative direction, product development and manufacturing of the branded apparel products. Other opportunities exist in licensing such as forming joint ventures with companies experienced in sales and marketing to design and manufacture sports apparel under a licensed brand name.
Another example of potential clients are consumer goods companies such as Harley-Davidson or Hallmark Cards. These companies have achieved brand equity in products unrelated to apparel. Opportunities exist to expand their product line, especially if they have distribution channels already established. Green can provide the expertise to complement the client's brand equity and distribution channels.
In addition, Green seeks to supply corporate marketing departments with high quality promotional apparel products to promote their brand name and corporate identities. This client would purchase custom designed and manufactured apparel and accessory products for use in its promotional and customer loyalty programs.
Green Design Group LLC seeks differentiation by leveraging The Company's design track record to provide premium services to its customers. It is positioned to provide innovative design and high quality apparel products. The Company seeks to operate in a niche strategy. Concentration will be in the active sportswear sector.
Green Design Group LLC operates under a premium pricing structure. Prices are higher than competitors providing similar design services.
Until this point, all marketing activity for Green Design Group LLC has been through word-of-mouth.
The Company seeks financing to aggressively target customers and secure accounts and clients. Led by the Sales Manager, the Company seeks to proactively approach retailers with merchandised concepts which compete head-to-head with branded products. These products would incorporate distinct trends, themes, colors and graphics evolving in the marketplace.
Green plans to align with sales agents who have relationships with sporting goods specialty chains to assist in introductions and concept proposals. These sales agents will be paid a commission of 7%, which is standard in the industry. This will be added to the cost of goods sold.
The Company also plans to seek opportunities with member companies of the National Sporting Goods Association. Over 10,000 members exhibit at the annual trade show, the Super Show, held in February in Atlanta. Other sports associations have trade shows and are organized by sport, such as soccer, surf, golf, scuba, ski and young men's activewear, to name a few. These sales will be a direct sales effort.
Buying groups in the industry seek volume discounts for small "Mom and Pop" stores. By pooling orders, small retailers obtain the same discounts granted to large, multi store chains. Green will propose manufacturing commodity items specifically for individual buying groups and its members.
Green Design Group LLC seeks to establish relationships with marketing and consulting groups to attract companies who do not market apparel products. One company is IMG Technologies located in California and another company, Jonathan Logan is located in New York City. Marketing and promotional material will be created. A direct sales program will be developed to target corporate marketing and promotional departments.
The Company plans to establish a client portfolio with design projects, retail customers and corporate customers. It sets a goal of two production customers in the first year, increasing by two customers each year thereafter. Revenues will lag for one season since the time-to-market can stretch to nine months. Design consultant fees will defray operating expenses of The Company until production fees arrive.
A milestone of the business venture will be to attract clients with the potential to generate production orders of at least $2 million within two years. The break-even per client is estimated to be a production order of $2 million per year. Client confidence and a production track record will require time to establish.
BARRIERS TO ENTRY
Few barriers exist in the apparel industry. Capital expenditures will be required for supplying large retail distribution chains. EDI technology is required in supplying department stores such as JC Penny. Some retail chains request product shipments to a central warehouse, yet other retail chains request product shipments to individual stores which will require a warehouse, shipping staff, hardware and software.
Much of the industry is based on personal relationships. There are switching costs for retailers with established suppliers: (1) performance track record, (2) work in progress, and (3) the uncertainty of new suppliers. An ability to deliver products must be demonstrated to become an accepted supplier.
The product life cycle is very short and all products are easily imitated. Since the product development cycle can stretch to eighteen months, an opportunity exists for a "quick response" to innovation in the market. This would be an advantage The Company offers in working with retailers.
Other key success factors include the following: (1) the ability to accurately anticipate the direction of the market, (2) on-time delivery and (3) product sell-through at the retail store level.
|Green Design Group, LLC|
|Table of Contents||Appendices|
1. Executive Summary|
3. Product & Services
5. Sales & Marketing
8. Historical Financials
9. Projected Financials
Projected Income Statements
Projected Cash Flow Statements
Projected 4 Year Income Statement
Resume & Business
|© Green Design Group LLC. April 1,1997.|