D2 Stategy Project - Gisela

8/7/2019 D2 Stategy Project - Gisela

1/13

Competitive Strategy Team Project

Team D2

17th March, 2011

Uday Balaji

Marta Coderch

Tomoya IwasakyOlivier Levant

Gerardo Manrique

Javier Martn

Francesca Pacitti


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 275288

337 313

0

100

200

300

400

2005 2006 2007 2008 2009 2010

Millions units

Sales focused on traditional channel

39%24%

9% 12% 9% 7%0%

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 (2009)Source: Spanish Textile and Clothing Association


3/13

Analysis of the underwear industry in Spain

Direct imports clients can go

directly to China to buy (only

big ones)

Other fashion apparel

Substitutes

Buyers

Many competitors

Traditional channel decreasing

Price competition

Rivalry Purchasing power

Access to distribution channel

Expertise needed (fashion

industry)

Barriers to Entry

Suppliers


4/13


5/13

Diseo y Fantasas strategy

1993 2005 2011

No strategy

No differentiation

No cost advantage

Differentiation within the

channel

New Management team

Strategy built on existing capabilites

focus on design

???

Lead the reinventionof the channel from followers to

leaders

1.

2.

Start production in China to become cost

competitive

Adopt best practives from other channels:

Young design (Play)

Sophisticationdesing (Suite)15 25 4535 55 65

7

60

16,000

500

Product : Cost(/unit)

Geography : Density (people/Km2)

Customers : Age

2005 20111993

2005

Gisela 1993

Victorias Secret1993

Gisela 2008

Victorias Secret2011


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 fairs

and traveling to other markets, mainly for pronto moda

collections 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 all

the products in the colection have to follow a

common theme (in stores, they are displayed

togheter)

Gisela brand: for each collection they have to give

their clients very different products, so there is

less 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

Pronto moda: selling what you already have

produced High risk

Sale by order: produce what you have already sold

Low 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

Communication

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 with

experienced workers


7/13

Activities Consistencies

Design

Manufacturing

Selling

Distribution

Marketing

HR

Low consistency with

their channelHigh consistency with

their channel

High standards


8/13

Diseo y Fantasas resources and capabilities

Tangible

Resources Capabilities Results

Financial: 1m profitLow debt (


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 stores V.P.C

Other

Traditional channel 58%39%

Street markets channel

important but low priced

Chains are winners

Oysho,

Womans Secret Etam

Intimissimi

Internet growing but small

1Shrinking channel

2Increasing price

pressure 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 the best strategic move primarily

because:

2 Difficulty to develop valuable contacts (BTE)

2 Future tendency towards chains

OPTION 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

OPTION 2 Target another market through another channel in Spain


11/13

We recommend that D&F enter the chains channel

Strategy: Target a new market

35-55 age category currently underserved, with main

competitors focusing on younger markets

Leverages core competencies in design and innovation:Diseo y Fantasasexisting design leadership combined

with a focus on quality materials would enable a

differentiation within the channel

Open in high street / malls in high density areas

Concept proven in other countries

Req irement f r e

Investment in branding

Investment in quality

High quality production partner

Key hallenge

Financing availability

Lack of expertise in B2C channel

Increasing complexity

No second chances


12/13

Potential competitive reactions

Customers:Age

Product :Price (/unit)5 15 25 35 45 55 65 75

55

15

45

35

25

Oysho

La Perla

Womens

SecretIntimissimi

Etam

D&F

??

Existing competition plays at the extremes of the market


13/13

Q & A

Documents

D2 Stategy Project - Gisela