Sustainable World Company Business Plan

Sustainable World Company Business Plan

Industry research

The NAICS code for the business

Apparel Knitting Mills

Codes	Titles	Total Marketable US Businesses
3151	Apparel Knitting Mills	1,491
315110	Hosiery and Sock Mills	678
315190	Other Apparel Knitting Mills	813

Footwear Manufacturing

Codes	Titles	Total Marketable US Businesses
3162	Footwear Manufacturing	617
316210	Footwear Manufacturing	617

Clothing and Clothing Accessories Stores

2007 NAICS	2012 NAICS	2017 NAICS	Index Entries for 448150
448150	448150	448150	Apparel accessory stores
448150	448150	448150	Clothing accessories stores
448150	448150	448150	Costume jewellery stores
448150	448150	448150	Handbag stores
448150	448150	448150	Hat and cap stores
448150	448150	448150	Jewellery stores, costume
448150	448150	448150	Neckwear stores
448150	448150	448150	Tie shops
448150	448150	448150	Wig and hairpiece stores

Size of industry (sales volume, value, and growth rate)

The global market for shoes is estimated at $384.2 billion in 2021 and is anticipated to reach $440 billion by 2026. The market for shoes in the United States is estimated to generate $105.8 billion by the end of 2021 due to the COVID-19 disruptions with a CAGR of 1.9%. In China, the footwear market is expected to generate $80.9 billion by 2026, with a CAGR of 3.6%(ReportLinker, 2021). China, therefore, presents a lucrative market for the company and could be the main avenue for business expansion due to Favorable regulatory initiatives relating to national exercise programs and fitness, rapid urbanization, global sporting events that are regularly held in the country, and increasing participation in recreational activities.

The global sales volume for clothes is also rising gradually from 15.3% in 2018 to 7.6% by 2022. The CAGR in the sector is expected to rise 3.3% by 2024. The CAGR is also expected to settle at 8.7% in Europe,8.8% in the United States, and 14.1% in China by 2022(Orendorff, 2021). The accessories market also has significant sales volume with an anticipated growth rate of 8.7% by 2022.Orendorff(2021) argues that the global market value of jewellery is also expected to reach $291.7 billion by 2025.

Typical financial margins

The revenue generated by footwear, apparel, and accessories has increased by 8.28% in 2021. The Gross profit increase is currently at 7.33% resulting in the contraction of the Gross Margin to 50.82%, higher than the average (CSIMarket, 2021). The operating profit increased by 24.6% in the third quarter of 2021, while revenue increased by 8.28%. This has led to an improvement in the Footwear, Apparel, and Accessories industry’s operating margin to 15.83%, which is above the operating margin. The industry’s pre-tax income also increased by 29.32% in the third quarter of 2021while revenue increased by 8.28% resulting in an increase in the pre-tax margin (CSIMarket, 2021). Revenue increased by 8.28% resulting in an improvement in the Net Margin to 13.5%, which is above the industry’s Net Margin.

Major trends influencing the industry (Political, Economic, Socio-cultural, Technological)

One of the significant trends affecting the industry is fast fashion. According to Gazzola et al. (2020), there is an increase in competitive pressures, and global demand continues to be characterized by rising demand for new collections. Consumers are therefore purchasing apparel, footwear, and accessories based on the latest trends. Gazzola et al. (2020) add that this trend is becoming prevalent globally as consumers focus on spending less to dress in a different way and dress well hence prompting fast fashion. The second trend is personalization. Currently, consumers have become more demanding and always have high expectations for customization experiences, quality products, and low prices. Consumers are also placing more value on personalized footwear, apparel, and accessories hence prompting designers to focus on customizing their products to attract more customers and maintain existing ones. The third trend is the use of artificial intelligence to improve the supply chain through designing, manufacturing, sales, and advertising (Gazzola et al., 2020). Companies are also using artificial intelligence to understand customer preferences, thus allowing proper customization and personalization of products in the fashion industry.

Identify any potential legal, regulatory, and environmental constraints on the business

The primary potential legal and regulatory constraint that may affect the business is labour regulations dictating the minimum wage that the workers have to be paid and the working hours. These restrictions may affect the company’s production rate if the operating hours are less and reduce profitability if the minimum wage is high. The main environmental constraints relate to sustainability and environmental protection. According to Cerchia & Piccolo (2019), sustainability is a significant challenge in the fashion industry due to the internet era that has enabled the spread of information, making consumers more familiar with the notion of ethical fashion. Consumers may also purchase goods from a company based on its ethics code and engagement in corporate social responsibility. In environmental protection, environmental legislations regulate the disposal of manufacturing waste to ensure that no waste affects human health (Kleinhückelkotten & Neitzke, 2019). The company, therefore, needs to make proper arrangements with local authorities on waste disposal.

Market Research

The size and potential value of the customer segment(s) in the geographic area(s) the business will serve

The global market size for clothes, shoes, and accessories continues expanding as the fashion industry grows, introducing new designs. A report prepared by Grand View Research in 2021 indicated that the global market size for women’s clothes is anticipated to rise at 4.7% annually by 2025, while that of men’s clothes is expected to increase at 6.3% annually by the same year. On the other hand, the global market size for children’s clothes is expected to grow to $135.5 billion by 2025, while that of sustainable shoes is anticipated to be valued at $7.5 billion by 2025(Grand Review Research, 2021). There is also significant growth in the accessories market, although it is currently dominated by luxury brands creating awareness of sustainable jewellery to create unique jewellery.

The demographic profile of customers in the identified segment(s)

The largest part of the market size will include females, who will represent 55% of the market size, children will represent 25%, while males will represent 20%. Women are expected to represent the largest part of the market because they have a high propensity to purchase unique apparel and accessories so that they can stand out. They may also buy unique clothing and accessories for their partners and children when presenting gifts. The market will be segmented based on geographical location, socio-demographic, and age. The business will target customers located in the United States at the low and middle-income levels as well as customers aged between 25 to 50 years.

Trends in the target market segments (growth, customer preferences, product development)

The main trends in the target market segments are a growing preference for unique apparel, footwear, and accessories because they are social people who constantly interact with other people and would like to look presentable. Another preference for the target market segments is the need for a customer-friendly shopping experience where they can get a variety of clothes, shoes, and accessories to choose from in one store. The target segment also includes customers with a preference for customized clothes and shoes, especially for children, to create a unique look.

Competitor analysis of both direct and indirect customers

The main competitors are Vetta Capsule, Vitamin A, Made Trade, Groceries Apparel, Arielle, and Reformation. Vetta Capsule is a cloth manufacturing company that uses sustainable fabrics to manufacture clothes for women. Vitamin A is an eco-friendly cloth manufacturing company that specializes in luxury beachwear, swimsuits, and bikinis. Made Trade is a cloth manufacturing company and retailer that specializes in women’s and men’s basic clothing and sportswear, including accessories and footwear. Groceries Apparel is a clothing manufacturing company that specializes in activewear and loungewear for men and women by using recycled and natural fabrics such as hemp, organic cotton, recycled plastic, and lyocell. Arielle is a sustainable fashion label manufacturing clothes for women using zero-waste, recycled fabrics such as polyester.

The potential market shares the business could capture 

We anticipate capturing a market share of at least 30% due to the fact that we are still a small brand that has not yet gained recognition in the fashion industry dominated by luxury brands. We anticipate increasing the market share to 45% by the end of 2022 as we continue gaining recognition.

Distribution channels

The main distribution channels will be online platforms such as Alibaba and eBay and physical stores located in different cities in the United States. We intend to first open physical sties in small cities across different states to create brand awareness before venturing into big cities to reduce the cost of hiring space for the stores. We will collaborate with various retailers to sell our clothes in the big city before we gain a good customer base. We will also be posting the clothes on Alibaba and eBay as well as on the company’s social media platforms and offering delivery services to ensure that the products get to the customers on time.

The best market entry strategy for the business

Based on the limited level of brand awareness in various regions, we are considering strategic alliances as the best entry strategy for the business. We will form partnerships with retailers in different areas and organizations that promote local businesses within communities. We will also approach retailers with websites promoting other products in the fashion industry to increase the exposure of our products.

References

Cerchia, R. E., & Piccolo, K. (2019). The ethical consumer and codes of ethics in the fashion industry. Laws, 8(4), 23. https://doi.org/10.3390/laws8040023

CSIMarket. (2021). Apparel, footwear & accessories industry profitability by quarter, gross, operating and net margin from 4 Q 2020. CSIMarket – Company, Sector, Industry and Market Analysis. https://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=401

Gazzola, P., Pavione, E., Pezzetti, R., & Grechi, D. (2020). Trends in the fashion industry. The perception of sustainability and circular economy: A gender/Generation quantitative approach. Sustainability, 12(7), 2809. https://doi.org/10.3390/su12072809

Grand Review Research. (2021). Textile market size | Industry analysis report, 2021-2028. Market Research Reports & Consulting | Grand View Research, Inc. https://www.grandviewresearch.com/industry-analysis/textile-market

Kleinhückelkotten, S., & Neitzke, H. (2019). Increasing sustainability in clothing production and consumption ‐ opportunities and constraints. GAIA – Ecological Perspectives for Science and Society, 28(1), 240-248. https://doi.org/10.14512/gaia.28.s1.11

Orendorff. (2021). The ecommerce fashion industry in 2021: Statistics, trends & strategy. Shopify Plus. https://www.shopify.com/enterprise/ecommerce-fashion-industry

ReportLinker. (2021). Global Footwear Market to Reach $440 Billion by 2026. GlobelNewswire.

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Attached is a Presentation overview created on my Business Plan for my company Sustainable World

Attached are the guidelines for the Industry and Market section of the Business Plan