Feasibility study for a new chain of fast fashion stores
Raising read flags, early on.
Goals
- Measure the market size for 15 - 25 year-old female shoppers.
- Identify location for 2 new stores.
- Gain market share.
Obstacles
The fast fashion market in the UAE was assumed to be over-saturated and close to decline. The investor, an affiliate of one of the UAE’s most prominent family businesses was wondering if the market was receptive for an additional fast fashion brand and chain of stores.
Analysis
Market research showed that the market was promising and positive for a new entrant. However, a closer look at the brand’s strategy and product quality left something to be desired.
The founder of the brand was counting on the local investor to make a full investment in this new venture without shouldering any of the risks.
The brand was present in key U.S. and European cities, but their business model and pitch raised questions about the security of this investment on the medium and long terms.
Actions
- Conducted a comprehensive competitive analysis.
- Evaluated product quality and design vis-a-vis local tastes and preferences of a sophisticated clientele.
- Conducted a thorough risk analysis that focused on credibility and long-term financial exposure.
- Assessed trends in the global fast fashion industry regarding profitability and sustainability.
- Reviewed the brand's franchise program to identify strengths and weaknesses and the integrity and value of the chain.
Results
When the investor demanded the franchisor to make a modest financial contribution in the project, the latter baulked. This raised red flags in the minds of our client.
Eventually, the client chose another brand that had proven more credible and more financially solvable.
3 years later, our suspicions were proven right when the brand had closed all of its stores in the U.S. and Europe and ended up with 1 store only (in its country of origin) and an online shop.
Our feasibility study saved our client from a potential loss amouting to millions of dirhams.
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