THE FARAWAY FANTASY DROP
"Let’s go somewhere far, far away...
with our new faraway fantasy drop."
To research, design and plan the launch of a Spring/Summer '22 range for the sustainable online brand House of Sunny, according to insights from competitor, market and trend analyses.
A full buying and distribution report outline the range plan, including industry models and calculations. Download the full reports by clicking below:
These reports were projects for my BA Fashion Marketing and Promotion at the University of Westminster.
Plain text version without references here:
Part 1 - Buying Report
In fashion, there is presumably no other role with such a diverse range of tasks as that of the buyer. Buyers have to understand the realms of fashion design, trends and cultural influence, planning, manufacturing, finance and trading. Throughout the buying cycle, they are in contact with almost every department involved in the success of a fashion product, often simultaneously (Clark, 2020).
“Buyers must think on their feet,” as Clark puts it, meaning that often processes have to be adapted on the go, with the buyer determining the priorities across departments. The conclusion of each buying cycle provides learning for the next (Clark, 2020, p42).
In the initial stage of what Clark calls the “concept-to-carrier-bag” journey, buyers conduct research - looking at the previous options and identifying their performance; extracting trends and customer preferences; reviewing competitor’s ranges to gain a clear picture of the market (and potential gaps); researching trends - in the area of fashion as well as on a macro level; and gathering insights about the target customers’ life in order to anticipate their preferences (Clark, 2020).
All this information is then used to envision the concept for a new range. Mood boards with inspirations are made, and “initial ideas of price point strategies, colour palettes, key product types, and shapes for the season” (Clark, 2020, p44) are identified. The buyer then decides which styles can be continued and updated from previous seasons, and which ones have to be developed from scratch. If needed, example products can be acquired for reference (Clark, 2020).
At the next stage, the buyer works together with the merchandiser to develop the range plan. Every detail about each product is determined, including fabrics, fashionability level (core, fashion or high fashion), suppliers, cost and selling price, intake margin and unit buys. This information is the basis on which buyers and merchandisers work with suppliers to develop prototypes and mock-up samples, covering every aspect of the features planned for the products (Clark, 2020).
At the sourcing stage, buyers have a key responsibility. They oversee the sourcing of the required fabrics and trims and identify the factories best suited for producing the range (Clark, 2020).
When it comes to manufacturing, buyers are supported by the quality assurance team in their task of testing the garments at every stage, assuring they meet the desired quality, colour, composition, sizing and fit attributes, as well as the legal requirements of the retailer. Buyers are in charge of negotiating everything from payment terms and cost prices to delivery dates, and finally placing purchase orders confirming all these details (Clark, 2020).
After the finished product has been inspected and the merchandiser has given his consent, “the buyer authorises the product to be shipped to the distribution centre, where the buyer and the quality assurance team will inspect them in detail, checking for damages or faults. In case they find any, the cost price can be re-negotiated or even the order cancelled. Otherwise, the product is distributed to the stores and handed over to the marketing and retail teams for sale (Clark, 2020).
During the retail stage, buyers take the role of product experts, providing samples and product information to various departments, while also remaining in contact with suppliers, adjusting or repeating orders according to sales performance. For the end-of-season sale, they establish the range’s markdown policy together with merchandisers (Clark, 2020).
In a final step, the buyer reviews the planning and manufacturing process and store and customer feedback, in order to optimise the next season’s plans in terms of operations, sourcing and “product range direction.” (Clark, 2020, p46)
The merchandiser’s role has evolved from being “the poor relation to the buyer (with) less glamour and less power,” (Clark, 2020, p49) to a very important job with a lot of responsibility concerning their company’s performance.
For merchandisers, the research stage of the concept-to-carrier-bag journey “is all about poring over historical planning and trading data,” (Clark, 2020, p50) and, after taking into account the numerous variables such as weather and fashion trends, extracting learnings from a trading perspective. This not only means looking at “what happened but also to identify what should have happened” - where opportunities were not fully utilised (Clark, 2020, p96).
In the concept stage, merchandisers communicate with buyers and the finance department to calculate budgets for product development and manufacturing, taking into account historical financial data as well as anticipated product trends. They have to ensure the budget is both realistic and in line with planned strategic initiatives (Clark, 2020).
During product development, merchandisers work on details of the range plan such as calculating cost prices and making sure unit buys for each option reflect expected sales performance, size ratio and duration of their availability. During the sourcing period, merchandisers create a master delivery schedule, according to which deliveries are phased. Through close contact with suppliers, merchandisers can review influences on planned delivery dates, hold them up against stock budgets and negotiate, aiming to comply with the delivery schedule (Clark, 2020).
At shipping stage, merchandisers occupy the key role of tracking the deliveries, making sure stock is dispatched on time, logistics move it correctly and warehouses are prepared for allocating stock when it arrives. At arrival, merchandisers update stock records and chase up potential late orders (Clark, 2020).
During distribution and retail, the merchandiser is in charge of continuously evaluating sales performance, issuing promotions for underperforming styles and reordering bestsellers. Another domain is returns management. Merchandisers need to find out the reasons for returns and figure out in which manner this stock should be reintroduced into retail (Clark, 2020).
As the end of the season approaches, merchandisers help ensure that financial and sell-through targets are met, trying to sell out as much of remaining stock as possible. In communication with the finance team, merchandisers ensure that markdowns operate within their set boundaries (Clark, 2020).
The Buying Cycle
The buying cycle is an eight-stage model for a retailers process from conceiving a fashion range to selling it. Traditionally, the full cycle took twelve months with orders being placed six months ahead of launch. Most retailers now follow a much faster cycle of up to as little as twelve weeks, but still go through most of its stages (Clark, 2020).
1. Range review
A “post-mortem report” - a document examining the performance of the previous season’s range - is compiled. This helps the finance team to plan budgets, and buyers and merchandisers to set up a skeletal range plan (Boardman, 2020).
2. Research and Planning
As a basis for planning the new range in detail, research relevant to the brand identity and corporate strategy is conducted around “product, trend, market, consumer and suppliers” and circulated among all the teams to create a “shared vision of identity” (Boardman, 2020, p49). This research includes comparative as well as directional shops (Boardman, 2020).
3. Range Development
Now the range with all its specifications - colours, materials, prints, quantities and size ratios - is planned. In pre-selection meetings it is presented to the buying and merchandising team, as well as to the senior management, using samples, CAD-drawings and costings from suppliers. Here it is decided what products to go ahead with and where to alter or drop particular samples (Boardman, 2020).
4. Sourcing and Negotiation
Suppliers are chosen and informed about all the range’s product requirements. They in turn produce samples that are as accurate as possible in terms of fit and colour and give an idea of the fabric quality. At the same stage, “accurate cost prices, quantity, the recommended retail price, a breakdown of size ratios, and required delivery time” are also determined (Boardman, 2020, p50).
5. Range Finalisation
Now all the details are finalised and confirmed at a selection meeting. Order confirmations are issued to suppliers, marking the end of the decision-making and development process (Boardman, 2020).
Manufacturing is usually done by external suppliers, but closely monitored by buyers and merchandisers, who check progress against the critical path, identifying issues as early as possible and aiming for a timely delivery to warehouses. Also at this stage, photographic material is produced (Boardman, 2020).
7. Allocation and Distribution
The deliveries from different suppliers all arrive in the warehouse, where they are quality checked and allocated to each store according to its specific needs, depending on its local consumers and store capacity (Boardman, 2020).
8. Retail Sales
In this last stage, the products are sold to customers, with merchandisers constantly monitoring the sales figures in order to find out whether products should be reordered, outstanding orders cancelled or promotions used to push a certain line (Boardman, 2020).
The Comparative Shop in the Buying Cycle
Particularly during the research phase, but also at any later stage, buyers visit competitors’ stores to collect information about the product offer, pricing, promotional activities and visual merchandising, systematically ordering and analysing it. This helps the retailer asses its position in the market and enables it to make relevant adjustments within any stage of the buying cycle (Boardman, 2020).
If a type of product is discovered that most competitors are stocking, but that isn’t included in their retailer’s range, buyers might order a range of this product, even after range finalisation, using their open-to-buy budget, so as not to miss out on potential profit. If they find products that don’t seem to be selling well with competitors (often hinted by a dedicated promotion), they can review their own order plans to prevent overheads on risky products. Should buyers identify areas where they are lagging behind their competition, e.g. in competitive pricing, use of technology or the amount and quality of promotional activity, they can adjust their strategy in order to match their competitors (Boardman, 2020).
House of Sunny (HoS) is a young, sustainable womenswear brand that very pronouncedly operates on a small scale, aiming to foster a community of “Homies” - customers who identify with the brand (HoS, 2021). Collections consist of limited, rigorously edited ranges that sell out frequently. Inspiration draws on 70’s Bohemia “drenched in retro nostalgia” (Vogue, 2020). What makes the brand stand out particularly is its “vintage-inspired colour palette of burnt orange, blonde, pistachio green, amber and oatmilk” (Vogue, 2020).
The brand’s “shop-it-before-we-drop-it” model means that customers can order clothes far in advance and have to wait until they are manufactured. The amount of pre-orders determines the size of the drop (HoS, 2021).
The brand’s average customer could look like this:
Rose Nolan is 35 years old, lives in Brighton and works for the Guardian, writing for the lifestyle segment. In her spare time, she loves dressing up, making her own jewellery and selling it through her Instagram page. With her old friends from university, she goes picnicking, takes walks or goes to the odd birthday party. Until recently, she lived in a shared flat with three other girls of similar age, but after breaking up with her boyfriend - a DJ who often hung out with them - she moved into a small apartment. As a new companion, she has a West Highland terrier that she adores and likes pampering.
HoS consumers see their clothes as staples that extend their personality. They hold onto them much longer than average consumers, relating to them as companions for a particular life stage rather than as commodities for a season. In consequence, they prefer high quality and timeless, often vintage-inspired items.
Last year, the most searched fashion terms on Google in the UK were “loungewear,” “dresses” and “prom dresses” (Pi Datametrics, 2020).
According to a Statista Market Forecast, 24% of global fashion sales will take place online by 2023.
“By 2025, most fashion e-commerce users will live in China,” predicts the Statista Digital Market Outlook 2020. China is also expected to see remarkable increase in online revenue share, reaching 58% in 2023 (Statista, 2020 b).
In the UK, online sales are estimated to reach 29% by 2023 (Statista, 2020), with a revenue of 34.2 billion U.S. dollars (Statista, 2019). E-commerce user penetration is already high in the UK, with 62% of women across all ages stating they bought clothing online in the last three months (Office for National Statistics, 2020).
While the number of online fashion shoppers in the UK is expected to climb steeply in the next few years, the average revenue per user is excepted to see only a slow rise (Statista, 2019).
According to a 2019 Nosto fashion report, “fashion e-commerce has hit the mobile tipping point globally,” meaning that mobile sales have overtaken desktop sales in terms of traffic and caught up in terms of average order value (AOV). In the UK, AOV via mobile was still slightly lower than via desktop: 86 Euros compared to 95 Euros respectively (Nosto, 2019).
98% of all UK fashion retailers use Instagram (ecommerceDB, 2019).
In the UK, the portion of consumers mainly opting for sustainable clothing is still relatively small, at around 18%. The most inclined female age groups are women between 35 and 44 as well as 55 and above, each at 12% (Ibbetson, 2020).
In 2018, a survey showed that in buying, researching and taking action for sustainable clothing, consumers in the UK were much less active than in the US and many European countries, including Poland, France, Italy, Spain and Germany. However, “74% of British consumers agree clothing brands should take responsibility for what happens in their manufacturing processes, and ensure it is done in an environmentally friendly way.” (Wheeler, 2018) Consequently, for the future a strong rise in interest is also expected in the UK.
A global survey from 2018 also testifies to an unwillingness to spend, with only 13% of respondents prepared to pay more, compared to 63% who would “prefer sustainable fashion if the price is the same as normal fashion” (KPMG, 2019, p9). Price/value is listed as the key factor “that would encourage consumers to buy more sustainable fashion,” (KPMG, 2019, p12) with the largest group of people only prepared to spend 10% more (KPMG, 2019, p10).
A recent survey taken after the first lockdown in the UK showed that consumers are concerned about sustainable fashion, with 83% stating that “clothing should be designed to last longer (…), be repairable (…) and use less plastic in production,” but again only 34% thought “we should be prepared to spend more on clothing” (Populus, 2020).
Comparative E-Commerce Shop
Choice of Competitors
HoS and JW Anderson have a similar design approach, offering high quality garments with a “thought-provoking” (JW Anderson) and fun style. Reformation compares well to HoS in terms of the target customer, both geared towards young women who want to celebrate femininity. Looking at brand awareness, all three brands operate on a similar playing field. Recently, HoS overtook JW Anderson in the global amount of Google searches (see below. All three brands have different price points, and HoS can learn a lot from its sisters with bigger budgets.
Summary and Evaluation
A clear result of this comp shop is that JW Anderson is brand driven, Reformation is option-driven and House of Sunny is staples-oriented but price-driven.
The way JW Anderson communicates is all about reinforcing the high-end designer brand image. Emails are not infrequent, very toned back, without blatant buying-enticements, and offer clear service guidance. Online store visuals are of very high quality, offering an excellent basis for decision-making. Overall, the shopping journey is a very comprehensive and enjoyable experience. It seems that the strongly product-focused online store relies on its audience to be pre-informed about the brand. Slightly more storytelling elements - in the product descriptions or in newsletters - would improve the emotional connection to the brand.
Reformation wins the comparison in terms of selling the product. The use of styled images throughout, the different paths to discovering a product, and the strong storytelling about sustainability are very enticing and make the brand engaging and relatable. While the overt tone overall can be pushing limits at times (e.g. talking about “bragging to your friends about how much CO2 you saved”), Reformation understands and serves its customer’s need for validation very well, and the large amount of options gives room for a lot of individuality.
In comparison, HoS does not perform too well. While its designs are very interesting, and the brands social channels (Instagram, TikTok and newsletters) publish engaging content, the store is not professionally developed yet and clearly misses sales opportunities. The different sections, with products appearing in multiple places and messages being formulated in various ways, can be very confusing. Images are of insufficient quality, product information not consistently laid out, and the customer journey overall not comprehensive. This is largely due to the fact that the store is still operating via the hobbyist e-commerce provider Wix, an easy-to-use but hardly customisable service. That said, the front-and-centre live chat support, with staff providing clear and detailed information, compensates a lot of the store’s deficiencies, and the comparatively high value for money ensures a high level of tolerance.
House of Sunny only stocks a small range of items, introducing them in limited drops. In the “upcoming releases” section of their store, only a small number of products can be found, but from a diverse range of categories.
The focus on individualist staples should be reflected in the new range, as it is key to the brand’s essence. However, in view of the strong rise of fashion e-commerce, the range could be carefully expanded.
Part 2 - Distribution Report
The proposed House of Sunny range for Spring/Summer 2022 has been confirmed at a selection meeting, so it is time to detail financial and distributional plans.
This report gives an overview of the main KPI’s and applies them to the new range in a calculation table. Further, the HoS e-commerce performance is examined in a SWOT analysis, based on which a homepage, product data page and product recommendations are proposed. Finally, a detailed launch strategy for the new range is outlined.
The Main KPIs
The sell-through rate tells merchandisers what percentage of bought units were sold. It is calculated using a simple formula:
(Units Sold / Units Bought) x 100
This figure comes in useful when considering the markdown budget, determining what markdowns are needed to achieve as high a sell-through as possible (Clark, 2020).
The sell-through is always presented as a percentage with two decimal points.
The “probably most universally used (…), most versatile, quickest and easiest-to-use retail calculation within B&M” (Clark, 2020), is the week’s cover. It measures the amount of weeks for which the current stockholding will last, based on current rate of sales.
When examining the performance of just one style, unit numbers are used, for the performance of more than one style, i.e. a trend or overall stockholding, value numbers are used (Clark, 2020). The formulas are:
Closing stock value (stock holding) / weekly sales = x weeks; or
Closing stockholding units/weekly units sold = x week
The intake margin measures the difference between cost price (CP) and retail price (RRP) excluding VAT (a 20% tax that is included in the RRP on most goods and services in the UK). The formula:
((RRP/1.2)-CP)/(RRP/1.2) x 100 = Margin (%)
The larger the margin, the more flexible a business can be. Margins are needed to cover all the companies overheads, and they are a key factor for staying in the black and growing profitability. Based on the margin, the RRP is established (Clark, 2020).
Rate of Sale
The average number of units of an option a store sold per week over the product’s entire life cycle, is called the rate of sale. It is calculated using this formula:
(Total sales units/Stores ranged/Life cycle)
The rate of sale “helps understand the sales turnover budget analysis” (Clark, 2020), identifying an average figure for each option.
The range homepage follows the way HoS usually introduces new ranges: with an interesting header image, a short introduction text to the range, and product highlights. Buttons allow visitors to click through to the full range overview.
In terms of the style, the editorial images and title fonts follow the 70’s nostalgia trend that formed the basis for the range and that is prevalent in a lot of HoS visual content. After trying different textures and images to serve as a backdrop for the products, a toned-down version of a palm beach painting seemed most suited, as it best exemplified the range’s narrative and offered sufficient white space for placing the product. Product Data Page
As mentioned in the SWOT analysis, product pages on the HoS online store are far from satisfactory. Therefore the product page proposed here provides information commonly available for HoS products, but organises it in a more comprehensive and faster accessible way. It also provides the much needed detailed, high quality photographs of the garment.
Displaying products in matching groups reportedly helps increase basket value (Mintel, 2018 b).
A Mintel report from 2014 concluded that product recommendations “encourage the shopper to increase their basket size.”
The World Advertising Research Center identifies that “successful businesses are combining products that sell well together to make buying easier and maximise basket value” (WARC, 2020).
In 2019, ASOS could report “a fifth consecutive year of growth in average basket value,” driven by AI-based technology that allowed more personalised recommendations (Mintel, 2019).
WGSN senior retail strategist Laura Saunter recommends brands to “develop personalisation that offers entry points and [ensure] recommendations reflect current consumer interests” (Business of Fashion, 2020).
Surprisingly, a Mintel survey from 2020 found that the second “most important factor when choosing one retailer over another” online was a wide range of products.
This suggests that small retailers like HoS should make their limited range as “explorable” as possible, with product recommendations a key driver to a positive shopping experience. Competitors like Reformation already use this technique very effectively, always embedding products into a styled context.
Trying to increase basket sizes is crucial for online fashion retailers, since larger baskets mean smaller proportions of handling expenditures.
For all these reasons, it is important for HoS to implement product recommendations in their online store. The recommendations suggested here make a point of displaying products that would serve well for building an entire outfit around the viewed product, while also making sure to incorporate all price categories to make sure customers potential price needs and spending potential are addressed.
Released for Spring/Summer 2022, the new range will be available from February the 1st. All through the planning and manufacturing process, sneak-peeks of individual products are spread on all social channels. Three weeks prior to launch, a five-minute fashion video, showcasing all the new styles in a visually striking way, is published on Youtube and the homepage, and shorter, edited versions on Instagram and TikTok. In order to build anticipation among a wider fan base, samples of core products are distributed to influencers aligning with the brand values, who will announce the launch on their channels.
HoS should aim to feature in the January issues of high-end fashion magazines like Elle, Vogue and iD, who address the HoS audience of female, strong fashion spenders in their early thirties.
HoS works with limited drops of 100-200 SKU’s, released in two seasons per year. Consequently, the product life cycles are at least 26 weeks. However, in order to keep excess stock and waste down, product supplies are not initially aimed to last for the whole season, but are rather reproduced in successive drops, depending on demand (House of Sunny, 2020).
It is expectable for high fashion items to sell exceptionally well in the first few trading weeks, since these items allow for more hype to be built on social media in advance. Basic items can be expected to underperform slightly in the first few weeks, but still sell through well over the course of the entire life cycle, since they form the bread-and-butter of the range and are more need-driven than impulse-bought.
A table containing all KPI calculations for the range, in a full working Excel sheet, can be found here.
The growth of the sustainable as well as the e-commerce fashion market presents HoS with promising opportunities. With the strategies proposed in this report, the brand is well equipped to fulfil practical and logistical task in order to serve its growing market in a more meaningful, experiential and ultimately more profitable way.