Naivas Crafts and Wares is a start-up retail store that will be based in Kitchener-Waterloo. It will offer Chinese gifts and crafts to the consumers, who love oriental culture and prefer personalized style. Naivas plans to locate its store in the Fairview Mall in the Kitchener area. The store will be opened on April 27, 2013. We intend to cater for the middle and upper class customers, who will look beyond the common crafts and gifts for the expression of an individual style and personality. Our emblematic customers will be those, purchasing a special gift to a loved one, or a person, who wants to own a unique craft. We also want to provide an extemporary customer care and services to our customers; the unique product value will be complemented by a positive customer experience. By the start of the second year, Naivas plans to develop an online presence. In the following year (year 3), Naivas will venture into e-commerce, where we intend to ship our products directly to our online customers.
Naivas intends to create an opportunity for the Chinese owners to combine our art and culture into an investment. We will use our innovative and creative ability to come up with products that will create a high demand. We want to create customer loyalty through customized services provided to our clients. Customer satisfaction will be our highest priority.
At Naivas, we intend to sell products that will provide quality and value to our esteemed customers by meeting their needs for the personalized lifestyle. Communication with our customers will be done through printing media advertisements, sending out coupons, newspapers and yellow pages, as well as home Décor models.
Naivas is a recently established retail store that offers unique, assorted, and innovative crafts and gifts to customers. It is located in the Fairview Mall of Kitchener, Ontario. Naivas will supply middle-and upper-class customers, who are fascinated with Asian style arts are looking for a gift that cannot be found in the national chain store in this very busy and very packed shopping mall. We plan to enlarge our business by carefully building a repeat client base and providing commodities they fancy. We also want to expand our business to e-commerce by the third year of operation. This additional business channel will allow us to reach a broader customer base. We feel it is important to offer personal customer support and services to achieve our business philosophy.
Naivas has a vision of being a store that provides the unique quality for the style-conscious consumers, who are fond of the Chinese arts and culture. Naivas intends to generate a fair return on investment and ensure continued growth and community involvement through the provision of affordable and unique Chinese fine arts.
We intend to inspire, inform, and show our customers the ways to create a personal expression within the confines of their homes, and, at the same time, creating a taste of elegance amongst their friends. Our desire is to use good customer care and service, smart pricing, and building trust with our customers in order to create loyalty.
We also intend to create a motivated and satisfied workforce to ensure they are committed to work. We will have respect for the diversity of ideas, skills, knowledge, and behaviors within our workforce, and use it to achieve the common goals of Naivas.
Naivas will inform, inspire, and show the customers the ways to create an expression of them within their homes and an elegant taste among their friends. Through customer services, smart pricing, and a sense of trust, it is our desire that you will look at us, as at your valued resource to achieve an experience of creative crafts and gifts.
Goals of Naivas
- To realize a yearly growth rate of about 15% in Year 2;
- To develop an Internet presence by Year 2;
- To take Internet presence to e-commerce by Year 3 of operations;
- To expand the customer base by 15% each year and increase demand to the point, where it exceeds supply;
- To build customer loyalty by providing innovative designs, high-quality art, and having a customer-centric approach.
- To maintain a direct cost of sales of 60% or less, and gross margin of 40% or more;
- To maintain operating expenses to equal or less than 40% of gross sales;
- To decrease the costs through operating efficiencies by 5% annually;
- To generate total revenue of $1,692,298 in Year 1;
- To reach profitability within ten months.
The table below examines Naivas’ competitive capacity by analyzing its Strengths, Weaknesses, Opportunities, and Threats.
The crafts and giftware industry makes more than $6 billion Canadian dollars in Canada from sales at the wholesale level annually. Consumers in 2005 spent about $282 billion on buying gifts and house decorations. That amounts to roughly 10 percent of the total $2.8 trillion retail market. Strong growth is happening in the gift and home decorative market. The state of the industry is being determined in a positive way by the consumer attitudes and changes in buying behavior (Statistics Canada, 2007). Following are a few observations:
- Consumers in Canada today spend more money on crafts and giftware than they spend on clothes. With a fresh emphasis on the core importance of family and home, not only are consumers in Canada striving to beautify the living space, but they are also looking for the ornamental items that can affect the emotional climate of their home;
- As consumers are overwhelmed with choices in their lives, they look for stores to offer them products that will enhance their lifestyle, make their lives more comfortable, and provide unique and uncommon product selections beyond the mass-market retailers.
- Consumers around Canada are looking for the products that can reflect their individual style and taste. The more personal and interesting the product is, the better it reflects one’s personality. The Chinese is the largest visible minority group in Canada, comprising 3.5% of the population in 2005. According to the 2006 Census, Chinese are accounted for 26% of the visible minority population in Canada. More and more Canadians are getting familiar with the Chinese culture. The shopping experience with high quality Chinese handicrafts will continue bring them the most personal feeling.
- In the service arena, making business easier for consumers is a winning element. Simple things like free delivery and easy return policy will win big points in the consumers mind. The Canadian giftware and crafts industry is being strongly impacted by the Internet, with more and more web sites offering very competitive services, and many products being available for electronic mailing at a relatively low cost.
In Kitchener-Waterloo there is a limited choice of arts and crafts stores. There are no stores specializing in Chinese crafts and giftware in the Kitchener-Waterloo area. Specialty gift and crafts dealers have the capacity to make a distinction by the types of goods and services that they offer to the consumers, and Naivas is not an exception. Naivas will set itself apart by offering Chinese arts and crafts that are unique in style and design. However, the craft and giftware marketplace is a varied field surrounding many choices for the customer. Other people selling products, such as decorative accents for homes, collectibles, general gifts, and seasonal decorations, could still have an impact on the business.
The independent gift and craft shop has two stores located in Kitchener-Waterloo area; the first one is located in Fairview Park Mall, and another one in Conestoga Mall. Their products include candles to exasperate, home décor, jewelry, gardening, and gifts. Their home décor, gifts, and other products are original and distinctive in style. From the jungles of Bali to the villages of Mexico and Africa, the artisans have carved, sculpted, and painted unique Christmas gifts to accent a home or office, and they are not very expensive. They also offer native masks, scones, metal lanterns, wall hangings, Aztec glyphs, wooden statues, and wicker cabinets, and indescribable wall hangings from Indonesia colored to look like moons, suns, big cats, and other wild animals. Green Earth attracts customers, who love nature, unique home décor, and crafts of different cultures. Green Earth is franchising, so the franchise agreement may contain some restrictions that inhibit the franchisees freedom, such as product or service offered and line forcing (Greenearth, 2013).
Hallmark is a retailer of gifts, cards, and ornaments. It has many locations around the area of Kitchener-Waterloo. One store is located in Fairview Park Mall. A large proportion of collection focuses on cards. They do not have decorative items within textile furniture, and handmade arts products. The gift offering is placed for the special occasion. During such occasions, the appropriate gifts for wedding, anniversaries, graduations, and birthdays are offered. They also offer decorative assortments, such as tabletop ornaments and décor for holidays, like Valentines, Halloween, Christmas, and Thanksgiving. The overall product collection offered by Hallmark represents a more ceremonial gift idea (Hallmark, 2013).
Target market segment strategy
To generate sales, we intend to have specific market segments within the area. Our marketing strategy will be seeking to create customer awareness first. This is because of products are new and unique in the region. This will help us to create a reliable customer base. Our services will also help us to generate sales through return customers and referrals. Our market will be segmented in to two groups:
- Customers purchasing giftware and crafts for their loved ones;
This forms our first market segment. This group of people is looking for something unique to obtain it as a gift for someone else. The gift must stand out in order for it to achieve its purpose to the one receiving it and to the one that is buying it. The giver must feel that the gift is suitable for the purpose of appreciation, while the receiver must see the beauty and uniqueness in it. We will, therefore, target this group by being innovative and creative.
- People buying crafts and giftware for themselves;
These are people with specific styles or design in mind. The group opts for the unique products that are of a high quality, and whose style matches their ideas and perception on arts. These people will, therefore, go for the unique products. Since the people buying this crafts are conscious about the style, we exquisite craftsmanship is needed in order to make elegant objects. This group will include the Chinese population living in the area. The group forms our main target market.
BABY BOOMERS (people aged between 42 to 60 years) are the customers, who still have children at home, so they need spacious houses and assets to put in there. Their wealth is reaching its premier level. Our target market will include this generation for the reason that millions of boomers have aged, their involvement in the labor force and their income have increased, making them a vital customer market. As a group, Baby Boomers have shifted their focus from extravagance and luxury to value and quality life.
GENERATION X (people aged between 30 to 41 years) is thriftier than baby boomers generation. They are very home-oriented, and prefer more free time to money. It is an age group of customers, who are not prone to over-spending, and are likely to follow lifestyles and favor products and services that are very different from those, favored by the Baby Boomers
BABY BOOMLET/GENERATION Y (this refers to those, born after 1977) will be the most comfortable young generation ever, who have grown up in the technological dispensation. In the 21st century, the group has influenced markets, attitudes, and the society. The table below shows Canadian demographic statistics as of the year (Statistics Canada, 2012).
The above data shows that Baby Boomers generation occupies almost one third of the entire population. They also posses half of the purchasing power. Their income is the highest and takes pleasure in the chance to be the ones to purchase a new product first. They are technologically tilted and care about style and trends.
Our ornamental goods enable our consumers to experience support, assemble ideas and options, and achieve their decorating objectives. They will be capable of creating a look that is unique to them and their homes. These cannot be achieved through other resources at their disposal. Our gift products, on the other hand, bring an overseas Chinese style to our clients. This makes it possible for them to share our special products with their friends and relatives. Our product strategy is, therefore, based on creating the unique goods that meet the style and design preferences of our customers.
Fairview Mall is located in the city of Kitchener. It is easily accessible from the Highway 8. Fairview Mall is also well-known all over the greater Kitchener Waterloo area, and attracts customers from the neighboring cities as well. As a major shopping area, customers come here due to the variety of business venues accessible. Some of the advantages that are primarily intended to assist our business include: the surrounding residents, major retailers as The Bay, Mal-Mart and Sears, home frills stores and food court that will enhance the shopping experience of Naivas customer base.
At Naivas, we will use cost-based pricing method in order to price our products. Once we determine the cost, we will add a marginal markup that will serve as our profit. Value will be determined using the best quality available, expediency, and timeliness in the acquisition of a product. Our aim is to offer lower prices than those, offered by interior designers, but slightly higher than the prices offered through the wholesale/warehouse stores. The prices will not compromise our quality and value selection.
We intend to use five sales promotion tools. They include:
- Newspaper advertisements to be done twice a week. We intend to use various newspapers this will be ideal in having a customer awareness within the area;
- We will promote our products online through the internet. This will help to reach our potential clients using the list cost;
- Use of coupon. This will help us to attract the return customers;
- Posters and wall decorations: this will create awareness among the local consumers;
- Home décor models. This will enable us to present a different decoration method to our customers.
0 – 12 Months
- Advertising in the newspapers;
- Giving Opening Coupons that will allow clients to save up to 20% on return purchasing;
- Designing posters and window decorations at the store at least once a month.
1– 3 years
- Organizing home décor shows in the store. At least two shows should be held before the year ends;
- Launching of annual anniversary and holiday coupon distribution;
- Launching of the store website and using the social media platforms to promote our products.
Naivas products will be positioned in a customer’s minds as "very unique and finer Chinese crafts and gifts". Naivas’ products will be eye-catching to a wide range of citizens, who value overseas decorations and gifts, while also enjoying traditional oriental cultures.
The Baby Boomers, being our most important target market, will force us to provide the customers with the quality products at a great value. We intend to provide the boomers with the unique Chinese products that will strike them and force them into buying our products. We want to use our innovation in enriching the Chinese culture, while also providing a fusion between the two cultures. We also intend to position ourselves at the top of the crafts and giftware industry by providing extemporary customer based service and care to all our clients.
Naivas plans to establish multiple distribution channels in order to boost its growth and success. We plan to use three distribution methods at an efficient and cost effective way.
- direct Sales within the Fairview Mall Retail Store and surrounding areas;
Within the Fairview Mall region, Naivas will retail its products in five distinctive categories of products that will provide quality and value to our consumers, while also meeting the needs for expression of a personalized style.
We will also accept orders made by phone, and will provide free delivery for the orders made by clients who are within 30 kilometers for the products above $100.
- The Booth at Art and Craft Fairs;
Becoming visible at the regional arts and crafts fair will be a secondary channel of business. The fairs are collections of artists, craftsmen, and prospective customers, who come together at an event in order to sell and/or to buy goods. We will set up a booth at these fairs and bring a stock of goods that we can sell on-site.
With the growth in social media presence and growth in technology, we intend to use the available technology for expanding of our business. By the third year, we intend to be able to serve our online customers by ensuring that we integrate the e-commerce business segment to our operations. Our website will allow us to pursue this market by incorporating banner advertising, email links, customer support, and shipping arrangements. After a customer pays for the products (and for shipping, if necessary), we will make a shipping arrangement or will complete a simple delivery, if an order is placed by the local citizen.
Since we intend to make quality products that will have a high demand not only among the Chinese people living in the region but also among the local people, who choose personalized crafts, we intend to realize high sales. According to the market research, 29 miscellaneous store retailers in this region have occupied 9000 sq feet retail space. Naivas’ store will occupy 200 square feet. All our revenue will be based on the direct retail sales and will not include any miscellaneous income. Dips in sales will be expected particularly, for the months of January, February, and March.
Direct Cost of Sales
Our direct costs will include the shipping cost of our products, the store hiring, licensing of business, hiring of our employees, and paying of bills.
Our estimated costs will be as following:
Naivas will be formed as a partnership business in the Kitchener area of Ontario. Rachel Zhao and I will own the business. Rachel has a great passion for Chinese arts and crafts. Rachel and I will work full time, with Rachel being the overall manager, while I will be the marketing and distribution manager. Rachel will be responsible for running the business sales, buying, and production of products. We will also hire a sales person and an accountant, who will be directly under my supervision.
Organizational Structure refers to the ways, in which an organization divides it tasks and then coordinates them. Well-designed organizational structures will help to Naivas to fine the functions and responsibilities of all the employees. My partner will act as the CEO for a term of five years, after which we will review her position. She will be eligible for re-election to that post.
In order to safeguard our properties and our employees from potential risks that could cause considerable damage to our business, we intend to insure our employees and business. We will consider taking the following forms of insurance:
- Property insurance;
This will cover all the assets owned by our business. It covers damage caused by fire, theft, and floods. We will take an insurance cover that will take care of all our assets.
- Liability insurance;
This will cover people, who suffer injuries to their bodies, while working for us. This will help to safeguard the business from legal cases arising from such injuries. People, who come to our premises, will also be covered. They will include delivery persons, customers, and investors.
- Workers compensation insurance;
This will take care of reimbursing our employees’ costs incurred through payment of medical bills. The compensation procedure and amount will depend on the individual position within the organization, as well as their income.
Other government controls
To ensure our business operates within the law, we will be required to do the following:
- Make sure our business is licensed;
- Make sure we file our tax returns to the relevant authorities;
- Ensure that we observe all the laws and regulations regarding the partnership business;
- Ensure that we observe environmental friendly operation systems.