D2 Stategy Project - Gisela v1.4

8/7/2019 D2 Stategy Project - Gisela v1.4

1/13

Competitive Strategy Team Project

Team D2

17 th March, 2011


2/13

4. 0

5.1

5.2

7.1

7.9

8.8

9. 1

9.9

17 .1

19.1

Marry Hat

Primise

Shatis leather

Parissime iberica

Manufacturas teleno

Diseo y Fantasia

Eurocorset

Confecciones Ory

Selmark

Vilaseca

Sales (m)

The underwear industry in Spain

Industry growth stalling

Source: CITYC, con datos del Departamento de Aduanas .

In 2010 more than 313 million units were sold in Spain

10

236 262 275 288337 313

0

100

200

300

400

2005 2006 2007 200 8 200 9 2010

Millions units

Sales focused on traditional channel

39%24%

9% 12 % 9% 7%

40%

0%10 %20 %30 %

3%

-1%

1%

-1%

-15 %

12 %

10 %

-10 %

4%

24%

Margin

Proportion of sales by sales channel ()

Competition significant but not always profitable

Sales and margin by competitor in wholesale channel

Source: Isda (200 9)Source: Spanish Textile and Clothing Association


3/13

Analysis of the underwear industry in Spain

Direct imports clients can godirectly to China to buy (onlybig ones )

Substitutes

Buyers

Many competitors

Traditional channel decreasing

Price competition

Rivalry Purchasing power

Access to distribution channel

Expertise needed (fashionindustry )

Barriers to Entry

Suppliers


4/13

Diseno y FantasiaA broadening product line

Core private label business

Five product lines including

0

1

2

3

4

5

6

7

2005 2006 2007 200 8 200 9 2010

Private label Basics Play Suite

Evolution of volume sales by product lineUnits (millions )

A small business

Family owned business founded in 1 99 3

14m turnover 2010

46 employees

80% of revenues from Spain 20% of revenues from Portugal & Russia

Increasing focus on Gisela brand

Underwear (3 lines ) Swim wear Beach wear

Strong reliance on the traditional channel

All Gisela branded products sold throughmercerias small independent shops

Channels buy direct from D&F or throughwholesalers

Private Label sales direct to retailers

70%


5/13

Diseo y Fantasas strategy

199 3 2005 2011

N o strategy

No differentiation No cost advantage

Differentiation within thechannel

New Management team Strategy built on existing capabilites

focus on design

???

Lead the reinvention of the channel from followers toleaders

1.

2 .

Start production in China to become costcompetitive

Copy what is starting to work on other channels:

Young design (Play ) Sofisticated desing (Suite )15 25 4535 55 65

7

60

16,000

500

Product : Cost(/unit )

Geography : Density (people/Km2 )

Customers : Age

2005 2011199 3

2005

Gisela 1993

V ictorias Secret 1993

Gisela 2008

V ictorias Secret 2011


6/13

Activities

Design

Manufacturing

Selling

Distribution

Marketing

HR

Manufacturing

Selling

Distribution

Marketing

HR

Design of both product and packaging

Strong focus on fashion trends (trade and fashion fairsand traveling to other markets, mainly for pronto modacollections and private lable ) and market response (for sale by order in traditional channel )

Exclusive licences for the traditional channel

Different process for different clients:

Private label: client buys the whole colletion so allthe products in the colection have to follow acommon theme (in stores, they are displayedtogheter )

Gisela brand: for each collection they have to givetheir clients very different products , so there isless sense of collection

Design

Manufacturing

Selling

Distribution

Marketing

HR

Production in China

Cost competitiveness, no cost leadership

Top quality within China

Design

Manufacturing

Selling

Distribution

Marketing

HR

99% of Diseo and Fantasa business in B2B

100 agents sell to wholesalers and small stores

P ronto moda: selling what you already haveproduced High risk

Sale by order: produce what you have already soldLow risk

Direct sale for private label clients

Design

Manufacturing

Selling

Distribution

Marketing

HR

Own warehouse (plan to outsource in 1 year )

Distribution through three channels:

Direct (big retailers with private label products )

Distributors (for the small stores ) Internet (B2C . Current presence in Privalia and on -line shop in less than a year )

Design

Manufacturing

Selling

Distribution

Marketing

HR

High level of professionalism

Continous improvement (modernization )

Brand image

Comunication

Web

Design

Manufacturing

Selling

Distribution

Marketing

HR

Top talent (web develop by IESEs technical notes writers )

Specialization > when there are new needs(internationalization ) new positions are opened and filled withexperienced workers


7/13

Activities inconsistency among market and strategy

Design

Manufacturing

Selling

Distribution

Marketing

HR

Low consistency withtheir channel

High consistency withtheir channel

H igh standars

REVISAR TITULO


8/13

Diseo y Fantasas resources and capabilities

Tangible

Resources Capabilities Results

Financial: 1m profitLow debt (< 3M )

PriceCost

2nd best margin inindustry

Volume

Flexibility to invest innew opportunities

On -line channelExplore new ways tomarkets (pronto moda )Exclusive licences

Purchasing power

Quality/price # collections

Intangible 300 % increase insales in last 5 years

Expert (former chief designer of WS ) andengaged (owner ) design team

Network

Design excelenceCustomer Knowledge

Organizational Management team

Entreprenerial spiritInnovationMotivation

Vision


9/13

The current strategy is unsustainable

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010

Evolution of the channel mix ( )

Traditional Chain Market

Gr. Almacen Department s tores V.P.C

Other

Traditional channel 5 8% 39% Markets channel important butlow priced

Chains are winners Oysho, Womans Secret Etam Intimissimi

Internet growing but small

1Shrinking channel

2Increasing pricepressure Stagnant market following crisis Early commitment to seasonal orders leaves businesses with large

inventories to move


10/13

D&F can focus on one of two strategies going forward

y Gisela has already started to pursue international markets

y Today it has presence in Portugal and Russia

y However, we do not consider this an strategic move primarily because:

2 Difficulty to develop valuable contacts (BTE )

2 Future tendency towards chains

O PTI ON 1 Further geographical Expansion

-

y Launch its own stores targeting a women between [35 55 years]

y The loss of traditional channel has been the gain of stores in terms of channels

3 There is a gap of unattended market below the high -end and the affordable markets

3 Diseo and Fantasa has some of the resources and capabilities needed to succeed on this market

3 Higher posibility to export the business model in the future

O PTI ON 2 Target another market through another channel in Spain


11/13

We recommend that D&F enter the chains channel

Strategy: Enter Chains channel selling direct to customer

Growth channel with highest value

30-45 age category currently underserved, with maincompetitors focusing on younger markets

Leverages core competencies in design and innovation:Diseo y Fantasas existing design leadership combinedwith a focus on quality materials would enable adifferentiation within the channel

Concept proven in other countries

Requirements for success

Investment in branding

Investment in quality

High quality production partner

Key challenges

Financing availability

Lack of expertise in B2C channel

Increasing complexity

No second chances


12/13

Potential competitive reactions

Customers: A ge

Product :Price (/unit)5 15 25 35 45 5565 75

55

15

45

35

25

Oysho

La Perla

WomensSecret Intimissimi

EtamD&F

? ?

Existing competition plays at the extremes of the market


13/13

Q & A

D2 Stategy Project - Gisela v1.4

Documents

Transcript of D2 Stategy Project - Gisela v1.4