Lushe Boutique Business Plan

Andra Hiles Professor Knaus, FASM 410 11/15/2011

Executive Summary

Lushe is a boutique jewelry store exclusively offering Flüd watches, making us the only

brick-and-mortar retailer in Atlanta to sell the brand. We strive to provide the best customer

service to our clients and treat our employees fairly with great wages and rewards. We also

extend our business online through our interactive blog and magazine to keep our customers

continuously updated on the latest jewelry, shoes, and accessory news. The Lushe team includes

the owner, social media and website coordinator, writers, Flüd watch specialists, managers, and

sales associates.

Environmental Analysis

Industry Size and Trends

In 2010, the industry revenue for jewelry stores was $30,019.5 million with 63,641

establishments. Employment accounted for 171,392 units, and total wages totaled $4,412.6

million. Diamond jewelry accounted for almost half of the total industry, and watches followed

behind. Fashion jewelry accounts for more than 30% market share of the worldwide accessory

pocket. The price of gold has risen from $255 per ounce in 2001 to $1,422.60 in 2011. Therefore,

since fashion jewelry is not made from precious metals, this makes fashion jewelry a better value

for a more affordable price for the consumer. Consumer spending worldwide is expected to rise

4-5% in the jewelry and fashion accessories industry.

Target Customer

The Lushe target customer is females and males between the ages of 21-35. They are

bold, fashion-forward, modern people who are always on the lookout for that one special

statement piece to take their ensembles to the next level. They are mainly black or white, single

with disposable income, and work within the creative industry or service sector and are overall

fashion lovers in general. Their yearly income is approximately $30,000 and up. They enjoy

nightlife and networking events.

Competitors

Pinkheart

Karmaloop.com

Amazon.com

House of Adrene

Each of these stores and websites carries fashion jewelry and watches and are well established.

Although Pinkheart has a different target market age and only serves females, they do specialize

in accessories and fashion jewelry and actually have a brick-and-mortar store, so they have

potential to become a main competitor for Lushe. House of Adrene will only be a competitor

because the Lushe boutique will be located adjacent to them, and they may carry one of our

jewelry vendors.

Economy (Local and National)

Although Atlanta’s economy is not doing so well, there is still potential for success with

opening a new company in the city. The unemployment rate for people between the ages of 16

and 34 is 16.02% with a negative job growth from 2006 to 2011. Although the unemployment

rate is extremely high, there are still many people who are employed and earn great salaries. As

of June 30, 2011, Fulton County had the 16th

highest average salary in the nation out of 331

counties. The average salary per job was $74,712, making Fulton the county with the highest

salary in the state of Georgia as well.

The United States has the largest and most technologically powerful economy in the

world with a per capita GDP of $47, 200 in 2010 making it 11th

in the world. In that year, the

industry sector accounted for 22.1% of the country’s GDP while services accounted for 76.8%.

The labor force was the 4th

in the world totaling to 153.9 million. The unemployment rate in

2010 was 9.6%, up .3% from 2009, and the population below poverty was 15.1%. In 2010, the

budget deficit was 8.8% of the GDP, taxes were 14.7%, and public debt was 62.3%.

Legal and Environmental Issues

The actions of competitors

Changes in consumer demand and changing tastes

Legal changes

Changes in technology

Changes in the economic environment

Ethics

Minimum wage

Retail Concept and Strategy

Mission Statement:

Lushe is an online magazine and jewelry and accessories boutique exclusively offering

Flüd watches. We exist to provide our customer with unique statement pieces that will

add the finishing touch to his or her outfit. We promise to always inform our clients on

the latest fashion and accessory news in an online interactive format. Lushe's ultimate

mission is to bring together a community of jewelry and accessories lovers.

Target Market:

Here are a few demographic details of the Castleberry Hill area, zip code 30313:

Percentage of never married males 15 years and over: 20%

Percentage of never married females 15 years and over: 36.1%

Percentage of males in arts and design: 4%

Percentage of females in arts and design: 6.3%

Largest male occupation: Sales and office, 23.4%

Largest female occupation: Service, 42.6%

Median household income in 2009: $31,002

Percentage of people in undergrad colleges: 41.1%

Estimated zip code population: 26,283

Castleberry Hill population: Males outnumber females 427:239, total population= 725

people

(Source: City-data.com)

Retail Format

There will be an open space in the center of the store with seats. The cash register will be located

against the back wall in order to allow the employee at the register to view all store activity.

There will be two female and male bathrooms and three separate office spaces behind the back

wall. One office will be the owner’s, one will belong to the watch specialist, and the other will

belong to the website and social media coordinator.

Competitive Advantage

Lushe will be the only retailer in the whole state of Georgia exclusively selling the whole

line of Flüd watches. The Flüd website displays that there are no other retailers selling the

watches in the whole state except for the store inside of the W Hotel Midtown, but people do not

go to hotels specifically to shop, so that will put Lushe at a major advantage. Websites like

Amazon and Karmaloop also sell the watches, but Lushe customers will actually be able to try

the watches on and have them customized to fit their wrists and likings. In addition to the

watches, customers will be able to find unique fashion jewelry not found at other stores for better

prices. The Lushe magazine will also attract people to our website where they can find our

merchandise and hopefully entice them to want to visit the store. We will also hold in-store

events to help create a community, which customers will not be able to find with our

competitors. In addition, we will feature one local artist’s artwork on our walls each month to

show our involvement in the creative community.

Implementation

Merchandise

Flüd watches- all lines

Rings

Bracelets

Earrings

Necklaces

All selected rings, bracelets, earrings, and necklaces will be purchased from Golden Stella and

jewelry wholesalers along Buford Highway such as Jenny’s Place Wholesale.

Pricing

All items will be $100 and under placing us in direct competition with Amazon,

Karmaloop, and PinkHeart. We will offer special discount sales for holidays and special causes

such as Breast Cancer month and AIDS awareness. Sales may be as much as 40% off. Markup

will be at least 80% to allow us to still gain profitability after the discounts are taken.

Customer Service

Lushe will offer all customers specialized individual services with in-store watch

repairers. We will accept cash and all major forms of credit. Customers will be able to return all

merchandise purchased within 90-days for a full return or store credit as long as the merchandise

is in the same condition as when it was initially purchased with no defects or damage. We will

also offer gift wrapping for the holiday season. In addition, we will offer coffee and hot

chocolate in the colder months.

Facility

Customers will enjoy natural lighting in the daytime and a more intimate, dim-lighted

atmosphere at night perfect for nightly networking events. Lamps will hover over glass cases

spotlighting and highlighting the merchandise. The glass cases will be lined along the walls, and

customers will be able to relax at the lounge area in the middle of the store. This will also be

beneficial when we host in-store events in which we may have an abundance of guests. The cash

register will be located at the back of the store to allow the employee at the register to be able to

view all activity inside the store. There will also be a flat-screen LCD high definition TV on each

wall displaying runway shows, music videos, and other things contributing to the atmosphere we

want to achieve for the day or night. There will also be a bathroom, office, and separate

workroom for the watch specialist.

Location

The boutique will be located at 264 Peters St. in Atlanta in the Castleberry Hills area next

to the House of Adrene boutique. This district has numerous restaurants and nightclubs, small

boutique stores, and art galleries creating a very lively atmosphere. We will rent a 2,650 sq. ft.

space from the Dinerman Group. Rent will cost $3000 per month with an initial deposit of $3500

and a 3-year lease contract. The suite features 18' high ceilings, an outdoor patio, 1,500 gallon

grease trap, and private offices. The building has off-street parking, easy access, good exposure,

and is located near I-85, I-75, and I-20. Also, the property is located in close proximity to

Centennial Olympic Park, Georgia Dome, Philips Arena, Georgia Aquarium, CNN Center,

Federal Court Buildings and the Central Business District.

Promotion

Our one year promotion plan will include the following:

January: New Year’s Day Sale

February: Valentine’s Day Sale

March: St. Patrick’s Day Sale

April: April Fools’ Day Sale, Trunk Show

May: Mother Day Sale

June: Father’s Day Sale

July: Independence Day Sale, Trunk Show

August: Back to School Sale

September: Fashion’s Night Out Sale and Event

October: Halloween Sale

November: Black Friday Sale

December: After Christmas Sale, Trunk Show

We will set aside $8,000 for advertising and events for the first year. September,

November, and December will be our highest selling months because of fashion week and the

holiday season, so we want to make promoting at those times a priority. We mainly want to

focus on social media and word of mouth for marketing purposes. However, for the Fashion’s

Night Out event, we will run an ad in the Atlantan and Jezebel magazine. Aside from that, all

events will be advertised through social media, email, and accessatlanta.com’s event calendar.

Staff and Employee Responsibilities

Owner:

Keep track of all expenses

Manage open-to-buy money

Choose which stories to include in the magazine and blog

Interact with customers

Owner’s pay will depend upon balance after all other employees and expenses are paid

Research the latest trends

Research our competitors’ merchandise

Visit market week

Budget the OTB money wisely

Keep track of vendor orders

Create the time and action calendar

Establish vendor relationships

Review past sales history

Owner’s pay will depend upon the amount of money left over after all other expenses

have been paid

Website and Social Media Coordinator:

Track all online orders

Promote Lushe using social media websites

Design the magazine page layouts and upload the magazine to the website using

Issuu.com

At least 1 year experience of using social media and knowledge of Photoshop, Illustrator,

and InDesign required

This person will be trained on how to track the online orders

Pay: $13.50/hr

Work Monday-Friday, 9am-5pm

Writers:

Gather information for interesting magazine stories

Attend networking events and fashion parties

Meet deadlines

Must have at least 1 year experience in blogging

Must have exceptional writing skills

Pay: Commission

Work schedule varies

Watch specialists:

Repair watches

Adjust the fit of the watch

Customize watches with embellishments, etc.

These specialists will be trained by Flüd employees

Must have at least 1 year experience in accessory design

Pay: $14.50/hr

Work Monday-Friday, 11am-5pm

Managers:

Store maintenance

Assist customers

Check-in freight

Train new sales associates

Must have at least 1 year retail management experience

Must possess great leadership and selling skills

Must be personable and outgoing

Pay: $11/hr

Work Monday-Friday, 10:30am-6pm, Saturday 10:30am-8pm

Sales Associates:

Store maintenance

Assist customers

Distribute freight to the floor

No prior experience necessary

Must possess a positive attitude and love for fashion

Must be willing to learn

Pay: $7.50/hr

Work schedule varies

Employee reviews will be completed every 3 months with potential for a raise every 6

months. The owner will complete a review for each employee, and each employee will complete

a review for the owner. The employee discount will be 30% off all regular priced items, and all

employees except sales associates will receive health benefits after 6 months. Sales associates

will not receive health benefits until after a year because we are expecting to hire younger

employees around ages 18-20 who are in school, so the position is looked at as more of a

temporary job. However, sales associates with the highest sales each month will earn free

jewelry.

All managers and sales associates will have on the job training and be expected to learn

store operations within two weeks. The owner will train the managers, and the managers will

train newly hired sales associates on how to operate the POS along with product knowledge and

selling skills.

If qualified, Lushe will hire family employees. While at work, all employees will be

expected to wear all black. We will hire both male and female employees ages 18 and up. There

will be at least 1 manager, 1 sales associate, and 1 watch specialist working at all times. To begin

with, there will be 2 full-time managers, 2 sales associates and 1 watch specialist in total.

Security

The Lushe boutique will be equipped with a fully-armed alarm system. There will also be two

sets of locks on the front doors. Each piece of merchandise will be equipped with a sensor. We

will also have a computer security system. In addition, we will have retail store insurance which

will include:

Bodily injury insurance

Property damage liability insurance

Property insurance

Business income coverage

Medical payments coverage

Product liability insurance

Crime insurance

Equipment

Necessary equipment for the boutique will include the following:

One cash register

One sales desk

Four glass jewelry display cases

POS software/register

2 MAC desktop computers

Two office desks

Miscellaneous office supplies

Three flat screen TV’S

Controls

All merchandise will contain SKUs allowing for convenient inventory control. When inventory

of selected styles is getting low, the POS will send a notification for the store buyer to manually

order more merchandise. All financial performance will be tracked through the POS as well as a

manually created Excel spreadsheet.

Team

We will rent our 2,650 sq. ft. space from The Dinerman Group

Interior designer- Turkeshia Albright

Friends and family will help paint and move furniture and equipment into the store

Funding Request

We will not be requesting funding from any banks. We will utilize indiegogo.com to post a

fundraiser for $100,000. In addition, we are going to request funding from private investors and

apply for grants totaling $250,000 in the case that we do not reach our fundraising goal on Indie

Gogo. All money received will be used for store rent, equipment, insurance, employee pay, and

other necessary store-related activities. The return on investment for our investors will be 5% in

the first year.

Financial Plan

Income Statement

First Year Income: $280,000

Cash Flow

We are projecting monthly purchases of at least $23,400 in order to allow for leftover open-to-

buy money and cover all other expenses.

Balance Sheet

Assets: Cash on hand, inventory, savings account, regular checking account, payroll checking

account, equipment, furniture, deposits.

Liabilities: Insurance, federal and state taxes, sales tax, income tax, employee benefits and

wages, product sales, sales returns and allowances, cost of goods sold, and all other budget

expenses.

Break-Even Analysis

In order to break even, Lushe will need to bring in revenue of at least $280,000 in order to cover

all of our budget expenses and our investors’ ROI of 5%.

First-Year Budget

3-Year Sales Projection

Sales will increase by the following:

10% in the 1st year after opening- $308,000

15% in the 2nd

year- $322,000

20% by the 3rd

year- $336,000

Rent 36,000$

Utilities 6,000$

Employee Compensation 150,000$

Equipment 15,000$

Insurance 12,000$

Promotions and Events 8,000$

Merchandise OTB 23,000$

Total 250,000$

Sources

http://atlanta.backpage.com/CommercialForRent/2650-sf-officestudio-space-in-historic-

castleberry-hill-peters-street/7886896

http://www.city-data.com/zips/30313.html

http://www.city-data.com/neighborhood/Castleberry-Hill-Atlanta-GA.html

http://www.exceptyou.org/costume-jewellery-and-fashion-accessories-industry-report-2011

http://ibisworld.com/industry.com/industry/default.aspx?indid=1075

http://atlantabankruptcynews.com/2011/06/atlanta-ranked-52nd-among-best-cities-for-starting-a-

a-career.html

http://atlantabankruptcynews.com/2011/06/average-salary-in-fulton-county-is-16th-highest-in-

the-nation.html

http://www.cia.gov/library/publications/the-world-factbook/geos/us.html

http://www.thetimes100.co.uk/theory/theory--environmental-constraints--273.php