Retail

Executive Summary

Metamorphosis is a retail store that specializes in chic and trendy furniture. The store offers a large merchandise assortment designed to furnish a dorm, apartment, or a house. The destination store offers services such as: free shipping and the ability to coordinate colors and room themes. An advantage of the store set-up is the consumers' ability to see the furniture displayed and having the furniture available for the sale immediately.

Market research shows an increase in furniture sales for 2006. The marketing objective is to aggressively sustain continued growth through execution of the communication mix and marketing strategy.

Mission Statement:

We focus on providing the services/supplies that will give
affordable style, comfort and peace of mind to students and their
parents while helping ease the students' transition from home to living
on their own in the college environment. Since going to college requires
lots of moving around, we offer services along with our products that
will make the frequent moves easy.

Situation Analysis:

Our product offerings focus on college students who are living in temporary housing and experience frequent moves. Our customers appreciate that our products are designed to appeal to their specific design tastes, satisfy their unique living needs and fit in their budget. Our market segments include Kent State University students, the parents of those students, the general population of Kent and any other incidental customers who order through the website. We will target our market through catalog distribution, the Internet, guerilla marketing and word of mouth. Catalogs must be requested or picked up from available locations on campus. Since the users of our products spend more time on average than the rest of the population, our website will increase sales significantly. Because our special combination of products and services are only available through our company, we do not have any direct competition. Our nearest competitors are Target and Ikea based on similar attributes.

Strategic Opportunities:

Company: Metamorphosis

Product Line: "Home away from home" Furnishings

Image: Student friendly, design conscious, individual

Technology: Convenient online services with coordinated, decorating help.
Links to a personal account that can be accessed by multiple roommates.
In store kiosks linked to personal account.

Culture: We want to make you feel at home. Our years of college experience
help us know how to service you and make you comfortable in a fun, new space.
We want to help you have a great college experience in a great living environment
without worrying about bills or moves.

Goals: To use the online service as a way to expand beyond Kent to other
college campuses by focusing retail stores in local areas surrounded by
university communities. We might have to limit services to those other
communities until we can physically locate there, but we can still provide great products!
Target Markets
Target Market Profile:
• Age: 18 through
29
• Gender: Male and Female
• Education: Some College
• Income/Allowance: Medium/High
• Lifestyle: Trendy, Computer Savvy
• Main Geographic Location: Northeast Ohio

We focus our marketing on three types of target consumers:
1. Kent State and Surrounding Area College Students: According to the Kent State web site, More than 19,000 undergraduate students and 4,900 graduate students enrolled at the Kent Campus for the fall 2004 semester. Approximately 60 percent were female students. Kent State University enrolls a total 35,458 students across the network's eight campuses. 14.4 million Students in United States according to http://www.census.gov/prod/2003pubs/c2kbr-26.pdf. About 27% of United States college students are in Ohio universities as stated in the American Fact Finder.

2. Parents Of College Students: The income for a family living in Ohio averaged $44,160 according to a census done by, U.S. Census Bureau, Housing and Household Economic Statistics Division. On average, an Ohio family will spend 35 percent of total income to send a student to a university in 2004. (http://www.policymattersohio.org/press_release/College_Bound_pr.htm)

3. Households Around Retail Store: The total population in Kent, Ohio is 27,906. The average income for a family in Kent is $29,906. The average household size is 2.27. (American Fact Finder).

4. Other: We will also sell to some buyers outside of the segments listed above. The website my attract consumers around the United States. The direct mail may attract consumers other then college students, households, or parents such as single family owner occupied homes.

Market Analysis
Potential Customers Growth 2006 2007 2008 2009 2010 CAGR
College Students 2% 144,000 146,304 148,645 151,023 153,440 1.60%
Parents 3% 150,000 153,750 157,594 161,534 165,572 2.50%
Households 5% 440,000 462,000 485,100 509,355 534,823 5.00%
Other 5% 100,000 105,000 110,250 115,763 121,551 5.00%
Total 3.99% 834,000 867,054 901,589 937,674 975,385 3.99%

Market Needs
Design: Since we will mainly focus on campus living design is very important. The designs need to be trendy enough to attract the college student, but practical enough for the parent to invest.
Service: Moving services are a commodity for college students/parents. College students will have to move up to four times in four years. We will offer cheap moving services anywhere around Kent. The normal Postal prices will apply for the website. We will also offer to buy back and move furniture after use depending on the quality.
Quality: Durability is very important since the furniture will be shipped and moved.
Market Growth
Retail furniture sales should jump 6.5% in 2006 -- more than double this year's growth -- according to a new forecast from Mann, Armistead & Epperson.

Market Attractiveness

*Why Kent?
The largest metropolitan area in Ohio is the
Cleveland Akron Elyria Combined Statistical
Area with 2,942,303 people.

Constant influx of new customers who have very specific housing
needs which can be matched with products and services not currently
offered to college students.

Suppliers: Create a unique product line targeted to college students and
only found at our stores or our website

Alliances: The universities & community groups such as U.S.S., feature
our products in home decorating sources such as the make over programs,
magazines and websites that offer dorm/small space living solutions.
Another resource is all the students studying at Kent State who need work
experiences we can offer them to enhance their resume.

Channels: Online, catalog and Retail (warehouse format with kiosks)

Buying process: Shopping product (careful comparison)

Seasonal Factors: usually in the tail end of summer until fall, then
sporadic purchases during Christmas. Typically the beginning of
semesters. Very slow in early summer.

Quantity: depends on size of living space and budget

OHIO ECONOMY:

Ohio is in the recovery stage along with the rest of the nation.
However, if Ohio does not prioritize higher education, they risk falling
far behind compared to national economic growth rates.

Higher education

The Federal Reserve Bank's Schweitzer said he is working on a study that
suggests there are two factors that successful economies have shared:
investment in higher education, and a population that has a large number
of patents in other words, it is innovative.

``There is a rising importance on higher education,'' Schweitzer said,
``but Ohio certainly is not a state that specialized in higher education.''

Ohio always has done well getting its young people through high school,
but not through college, he said.

A May 2005 report by the Ohio Legislative Office of Education Oversight
says that studies link ``Ohio's poorly performing economy to the state's
inability to attract high tech, knowledge based industries. These types
of industries locate in states that have educated work forces.''

Ohio's poor support of higher education has been well documented.

National Center for Education Statistics data show that the state
already was lagging 33rd on a per capita basis before it cut aid
to colleges in 2002.

Now, students at Ohio's state supported universities on average pay the
sixth highest tuition in the country, but their universities seldom rank
among the best academically.

Loss of young workers

Another factor is that Ohio has an aging population, and its young
people are leaving.

Census figures show that Ohio lost a larger share of its core work force
in the 1990s 146,000 people aged 20 to 54 than any other state.
Nearly three quarters of the losses were members of Generation X,
younger workers born between 1966 and 1980.

``The demographics are changing glacially, and it's very clear which
direction they're changing,'' Mayland said. ``That's a head wind for us
a very strong head wind.''

Ohio higher education sets records

Ohio's colleges and universities are doing their part to advance Ohio's
economy by enrolling and graduating more Ohioans than ever before and
setting a research funding record. More than 600,000 students attended a
public or private campus in the fall of 2004, and more than 100,000
students were awarded a degree during the year. These are just a few of
the achievements included in Ohio's "Performance Report for Colleges and
Universities, 2005,"released at the January meeting of the Ohio Board of
Regents.

Sociocultural

Increasing trend on designer home furnishings and home decorating

The popularity of Ikea and Target as "designer" furnishers clearly shows
the need for affordable, attractive furniture. Popular cable television
programs like HGTV promote home decorating also as part of the
design conscious trend.

Ideas for services:

designing advice from interior decorator undergrads (discussion board?)
online space planner
communal buying
involve community
reward people who are kind to furniture with buy back programs
offer contests for the best designed room
offer moving services (room ready before
you even arrive?)

Competitor Analysis

Target Brand:

Strengths
Has a large selection of furniture on line that is easily searchable
including storage and organization, bathroom, accent furniture, media
furniture, living room, home office, bedroom, and kitchen and dining

An entire section on the website is dedicated to dorm furniture and is
reasonably priced

Offers the California Closet company line for storage and also has the
Global Bazaar line to let you see a decorated room and buy items that
could help your room look that particular way.

Has designer brand Todd Oldham by La Z Boy and Isaac Mizrahi.

Customer is able to pick the way they would like their item to be
shipped. A flat rate applies depending on the category the item falls
under and poundage of the item adds to the cost.

Target provides one stop shopping for everything that a student would
need including furniture.

Weaknesses

Most of the furniture that Target offers is not offered within stores.
That merchandise that is offered in stores, may be seasonal in nature or
just be at certain high volume stores, making it difficult to find at times.

Although Target is a large retailer, location issues still arise.
Distance from Kent, Ohio would be approximately 10 15 minutes and not
many students know where the Target in Stow is located.

Target does not offer any sort of used goods buy back system.

Target does not sell any large furniture items such as couch's or futons
in the store (seasonal futons yes).

Transportation becomes a factor when purchasing at the store level.

Ikea Brand:

Strengths

Ikea handles its own private label merchandise including sofa and
armchairs, bookcases and storage, chairs and tables, work area, kitchen,
and bathroom. They also cater to businesses by offering suggestions
for the office, conference room, or waiting area.

Most products are able to be assembled by the customer if delivered.
Ikea will deliver to almost anywhere in the continental US with a fee of
at least $16 for ground UPS or $159 for Ikea's Carrier and Handler.

Ikea provides home furnishing advice on line and has comparable prices
to Target. Ikea also utilizes catalogs order to increase sales. A bistro is in every store for dining and a children's supervised play
area is also provided.

Weaknesses

Ikea specializes in furniture and home décor. This does not allow
customers to partake in one stop shopping which is a growing trend.

The closest Ikea to the area is in Pittsburgh, PA. Among the US, there
are limited Ikea stores, but the company is growing.

Shipping prices for Ikea are very high because of the bulky nature of
most goods and the distance factor.

Ikea provides no used item buy back. The company is also foreign in
nature which can deter certain customers interested in American companies only from purchasing at Ikea.

SWOT Analysis
Metamorphosis
Internal Analysis

Strengths Ideas for building upon these strengths
Little competition in Kent
One stop shopping experience
Unique merchandise
Free shipping
Good communication mix Expand our location
Work with Kent State to advertise to new students
Keep up with trends
Advertise free shipping
Have coupons on web-site
Weaknesses Ideas for minimizing or strengthening these weaknesses
Expensive start-up cost
Will make most of our money during the month of august
Competitors like Wal-Mart and Target

Create good relationships with vendors
Offer deal throughout the year
Emphasis our one stop shopping experience

External Analysis

Opportunities Ideas for investigating or taking advantage of these opportunities
Expanding into different states through the website
Gain buying power
Being able to rent a larger space
Create a relationship with Kent State and market to incoming freshmen Gain traffic to website
Sustain good relationship with vendors
Have power to negotiate buying more space

Threats Ideas for minimizing or overcoming these threats
Everyday low price strategy of Wal-Mart and Target
Other competitors copying our business
Specialty stores in the area Advertise quality and style
Create a competitive advantage that will be hard to copy
Offer a large assortment or specialty/unique items

Break-Even Analysis

Resources $250,000 (Need more resources for size of business)
Costs
One group member salary $35,000
Building rent for one year $240,000 (16,000 sq ft X $1.25/sq ft/month X 12 months)
Direct Hourly Labor $289,080 12 employees at all times in store paid $5.50/hour
Open 12 hours/day 12 months/year 365days
Overhead $578,160 is 200% of direct labor hour (online business source)
This includes electricity, cleaning, heating, plant depreciation
Graph is representative of advertising only on the internet
Using both keywords dorm furniture and college furniture would cost about $1,000/month normally
We would limit our budget amount by setting $500 maximum using google.com/ yahoo.com
Total Costs $1,148,240-$250,000= $898,240

Percentage of business from category

To Break-Even, each of these categories would need to bring in the revenue seen in a one year time period
Couches 25% $224,560
Chairs 8% $71,860
Futons with mattress included 10% $89,824
Beds with mattress 18% $161,683
Small Tables (Bedside, End, Coffee) 3% $26,947
Bookcases 5% $44,912
Dressers 6% $53,894
Desks 9% $80,841
Dining Tables (Excluding Chairs) 7% $62,876
Accessories (Rugs, Clocks, Mirrors, Lamps, Ready to Hang Decorations) 9% $80,841

Realistically, it will take our business three, maybe four years, to become big enough online and in the area to make a substantial profit. Our business will also need more funding upfront closer to $500,000 to start with. The following figures represent a more realistic estimate of category breakdown of revenue from a first year of operation.
Couches 25% $112,000
Chairs 8% $30,000
Futons with mattress included 10% $42,000
Beds with mattress 18% $75,000
Small Tables (Bedside, End, Coffee) 3% $12,000
Bookcases 5% $20,000
Dressers 6% $21,000
Desks 9% $40,000
Dining Tables (Excluding Chairs) 7% $30,000
Accessories (Rugs, Clocks, Mirrors, Lamps, Ready to Hang Decorations) 9% $40,000
$422,000 done in sales for the first year of operations
$476,240 that we would still owe after sales
If we were allowed our $500,000 startup costs, this number would decrease.

Long-term Goals

In the next three to five years we hope to bring in enough revenue to be successful and start expanding our business to other college communities throughout Ohio and possible other nearby states. We hope to be the leading used furniture store throughout college communities providing the most stylish and quality furniture at low prices.

Location

Park Plaza
4494 St. Rt. 43

Strengths
• 16,000SF
• $1.25/SF/Month
• 8 Foot Glass Store Front
• High traffic area
• Built 2006
• Ample Parking
• ¼ mile north of I-76

Weaknesses
• Further from Kent versus the location on Rt. 59
• Large area to heat and cool
• Expensive maintenance

Merchandise Strategy

At first, we will purchase all of our furniture and accessories from a few different wholesalers. We will add an average of 300% markup on larger items such as sofas and beds so that we may make a profit yet stay relatively cheaper compared to most other home furnishing retailers that markup their items up to 1000%. Over time we hope to gain valuable relationships with some of these vendors and be able to negotiate deals and decrease the wholesale price. We also hope that these relationships will lead to opportunities to eventually create unique product lines exclusive to our store.

Pricing

Couches (3 Seaters)
$100-$600

Chairs
Swivel Desk Chairs - $50-$110
Folding Chairs/Kitchen Chairs/Small Chairs/Stools – $15 - $80
Arm Chairs - $50 - $350

Futons with mattress included
$99 - $250

Beds with mattress
Single beds - $170 - $700
Double beds - $200 - $700
Bunks/Lofts - $80 - $350

Small Tables (Bedside, End, Coffee)
$15 - $170

Bookcases
$50- $80

Dressers
$70-280

Desks
$20 - $250

Dining Tables (Excluding Chairs)
$60 - $450

Accessories (Rugs, Clocks, Mirrors, Lamps, Ready to Hang Decorations)
$3 - $200

Communication Mix

Since our products are created to be low price for the consumer, sales should be avoided as much as possible except maybe to increase sales during the off-season. The communication mix must emphasize the services, products and culture of the company. It also must solve the problem of reaching incoming freshmen who have not attended college yet or moved to the area.

Catalog: must be requested by recipient via website, phone or in store. Shorter in length with only selected products highlighted. Features our products in use at the dorms with real students at Kent State (or even on campus) instead of traditional product silhouettes or photographs of assembled rooms without the human element. This also capitalizes on the appeal of getting your photograph published in a distributed magazine while showing the individuality of the products in use. Benefits: low cost, personalized to Kent State and can create a buzz.

Store Atmosphere: energetic, easy to navigate, high-tech, casual shopping and bright. Small sales floor staff complimented by self-serve kiosks linked to personal accounts. While smaller products can be placed in carts, the conveniently located kiosks allow shoppers to easily and quickly add larger products to their account which will be closed at checkout. If the customer needs further assistance or advice, the kiosks will allow customers to call an employee over without moving from the area or searching for assistance. Then the furniture will be brought out to their vehicle or delivered to their house.

Moving vans: an opportunity for a moving billboard. Design of van will reflect brand and give information about website and store location.

Website: will reinforce the brand, provide lots of information, offer used products in addition to new, give opportunities for more services, increase traffic to store and link together a social network of roommates. It will also feature a spotlight article that will serve as a source of advice for college students who are living on their own for the first time. (Examples: storage advice, cooking, roommate advice etc.) This outlet will also provide a way to convert the incoming freshmen to Kent State into customers. Links from the Google and Yahoo search engines should be utilized in association with the search keywords Kent State University, Kent Ohio, dorm furniture or our name.

Other ideas:

grand opening celebration and direct mailer

sponsor contests for the best designed dorm/apartment using our furniture.

Offer to donate furniture to Kent State's lounge areas in order to increase visibility of products (maybe ask for permission to stock our catalog in these lounges in return for the donations).

Hire students to walk around campus "moving" a couch, chair (some heavy product) all day sometime early in the semester and attach advertising about our moving services that come with our products.

Sponsor a helpful hints booklet about dorm/apartment life to be handed out to visiting prospects of Kent State.

Store Design and Display

Floor plan design must be clear, logical and easy to navigate with clear directional signs. Whenever stock becomes low, empty shelving will be covered with signs advertising products or enforce brand. In order to store as much merchandise as possible we will utilize the grid layout with end caps. These end caps will also feature the kiosks (which must be easy to use and inviting) at the end of every aisle. The aisles will group together complimentary products based on usage and/or aesthetics, for example either by color or style. All display materials and colors must reinforce brand image. A more risky display idea is to allow customers to come up with their own design ideas on the planning program at a kiosk and see them implemented at the store? This would tie into the idea that personality and individual style is important to us and we shouldn't tell you what to buy with what. Another way we could empower the shopper to create a unique experience is link up the sound system to a library of music from which the customer can select in the store at a kiosk while they shop

Customer Service

We will do customer research to understand the customers' perceptions about our products and services through the website and mailed out surveys. We will also do focus groups in order to evaluate the appeal of our new products.

Our employees will be hired from the actual target market so they understand and genuinely empathize with our customers. The sales floor employee is right under the customer at the top of the pyramid. Employees take ownership through detailed company briefings each week, carefully tracked sales records and goals met, continuous training and bonuses. Creativity and individuality is encouraged.

Our return policy is no questions asked or receipt needed for up to a month after purchase. Individual accounts link every purchase to customer so returns don't need inconvenient receipts. No questions are asked but survey about service and product problems is offered. All returns and reported problems are organized and evaluated at the end of each week.

Evaluate

Our business will evaluate our success on the ability to retain customers while attracting new customers to our store as well as our online store. Part of evaluating our success and failure as a business will be our gross margin percentages and amount of profit that can be made within the first three to four years of opening. We would expect our profit to continually increase as time increases and our success would also rely heavily on increasing marketing to direct customers that reside outside of the sales area to visit our online store and purchase. As our business begins to grow, we would also measure our success on better relationships with vendors which would result in lower prices at cost for our company. Another aspect to consider when evaluating would be the inventory turnover within the store. Because of the specific nature of our offering, we would expect a certain turnover rate that could be measured against annually. Employee turnover would also be an evaluation of success as we would expect to be able to hire trusted employees and to save costs on re-hiring and re-training new employees.

Retail 9.7 of 10 on the basis of 2847 Review.