Retail Management PlanRusty Lopez Project

Table of Contents

I. Executive Summary

II. Retailing Environment Analysis

III. Competitor’s Analysis

IV. Target Market

V. Current Store Operations system

VI. Proposed Retail Marketing Objectives

VII. Store Retail Strategy

VIII. Marketing and Management strategy

IX. In Store Merchandising Plan

X. Contingency Plan

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I. Executive Summary

This retail management plan is designed for Rusty Lopez, the most

renowned company in the footwear industry in the Philippines. The plan

includes its retailing environment analysis, target market analysis,

competition, current store operations systems, plus all relevant advertising,

promotions, sponsorships, and merchandising. Finally, a retail strategy and

in store merchandise plan is included for proposing a successful retail

management plan are described and defined.

The overall goal of this retail management plan is to:

Gain more market awareness for Rusty Lopez, through exerting management and marketing efforts in promoting the store, in the minds of its consumers within the retail store’s vicinity.

Establish brand recognition amongst its competitors in the footwear industry within the retail store’s vicinity.

Prepare viable in-store retail strategies and merchandising, including advertisements, promotions, sponsorships, PoPs and other marketing communication tools for consumer market.

Create feasible and workable management and marketing retail strategies for the company to achieve its marketing objectives.

Develop a useful store retail program that will make the company’s tactical calendar work.

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II. Retailing Environment Analysis

The local footwear industry in the Philippines covers a range of products that include leather, dress and casual shoes, sports shoes, sandals and slippers. According to Pearl2 Project (2008), there about 2,148 footwear firms nationwide and the production of footwear in the country is concentrated in the National Capital Region (NCR), where about 43% of all shoe manufacturers are situated. Within this area, the city of Marikina is the center of the footwear business. As of 2001, the city accounted for almost three fourths of all shoe producers in the NCR. Most of manufacturers in the industry are micro to small in size. Firms usually have their own shop facilities, although a small number rely on subcontractors for production work.

For marketing and distribution, some companies have their own boutique stores while others rent space in large department stores and malls. The specific market segments for the sector are defined according to the price and quality of the product. These range from cheap, low-end footwear made from synthetic materials to high-end and well-crafted leather shoes based on European or American designs or brands.

A. Company History

Rusty Lopez began when Lolito Lopez, a businessman, opened a shoe store by the name of Centropelle in the Cubao Shoe Expo in 1977. Thereafter, the blossoming tandem of Lolito and his wife Lily, they have established helm of a shoe business empire renowned for its commitment to the development, manufacturing, and marketing of quality, authenticity and affordable footwear under the following brands: Centropelle, Russ, and Rusty Lopez.

Rusty Lopez were positioned by the Lopezes as the brand name that competes in the loca shoe industry. Building their success eventually

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popularized the brand Rusty Lopez which also exceeded the expectations of its consumers. As a result, Rusty Lopez holds one of the biggest market shares within the entire local shoe industry.

On December 17, 1996, Maritalia Manufacturing was established and soon became the official manufacturing arm of the company. The term Maritalia is basically came from the Filipino and Italian shoemaker tandem, “Mari from Marikina and “Italia”. Here still remains the said pride and honor of this collaboration, in a one-hectare property at E. Rodriguez Avenue in Sto. Nino, Marikina City.

Rusty Lopez underwent a subtitle makeover to achieve a more youthful look and image in the late December 2003, it was just one of the many touches intended to enhance the popular brand. Indeed, Rusty Lopez enjoys an unblemished reputation for the quality and affordability with a wide range of footwear and accessories products for its broad market. Its image is untarnished by shoddy workmanship, and its further bolstered by the influence of its Italian and other foreign consultants and the company’s corresponding investments in Italian technology, machine and state-of-the-art equipment.

B. Company Background

Rusty Lopez is one of the largest chains of stores for shoes in the Philippines. The company is known for its unique and traditional items, from footwear to clothing and accessories. Their wide range of merchandise includes men’s footwear line consists of casual, formal and athletic while women’s line consists of formal and casual. From casual to formal, from outdoor to corporate, you’ll surely find what you need. Rusty Lopez kids have a variety of footwear for the young ones including the basics such as school and casual as well as sporty and formal footwear.

Over the years, Rusty Lopez group of companies also has brands that cater to a particular market to assure that the needs of market are met.

Rusty Lopez remains to be classic. Varied, all-around, and for everyone, that’s what Rusty Lopez is. Men’s, Ladies, Kids, Footwear, Apparel and Accessories, there’s always a good find in Rusty Lopez.

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Centropelle, the high-end brand showcasing high-fashionable ladies footwear.

Maritalia, the genuine ether men’s shoes by Rusty Lopez‘s very own Maritalia.

Bags Unlimited, the newest addition to the group and the company carrying all types of fashionable and high-quality bags raging from casual, evening, school, travel and even laptop bags.

Russ is the brand primarily for the youth. Street wear for teens (both boys and girls) is it character. Russ also carries school shoes that are made from synthetic leather. Compared to Centropelle and Rusty Lopez, Russ has a lower price point to be able to reach out its primary market the youth.

Walk-over is a consignor-based brand which is limited to boys and girls’ school shoes made of synthetic leather. Its affordable price makes it competitive given its consignor-based set-up.

Azaleia on the other hand is the company’s franchise from Brazil. Having the working class as its primary market, Azaleia offers ladies’ shoes that vary from casual, formal and evening.

C. Retail Store Location Analysis

"We've got it all for you""The mall next to the city hall"

Location: Natividad Almeda-Lopez corner A. Villegas and San Marcelino Streets, Ermita, Manila Opening date: April 14, 2000 Developer: SM Prime Holdings

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Owner: Henry Sy, Sr. Total retail floor area: 166,554 m² Parking: Over 1000 cars No. of floors: 6 floors (Lower Ground Floor-5th Level)

SM Manila Description

SM City Manila is the second SM Supermall in the city of Manila next to the 1st SM Shopping Mall in Carrierdo, Quiapo, Manila. It is located at Natividad Almeda-Lopez (formerly called Concepcion) corner A. Villegas (formerly called Arroceros) and San Marcelino Streets, Ermita, Manila just near the Manila City Hall. The mall features major anchors like the SM Department Store, SM Supermarket, SM Cinemas & SM Food Court, junior anchors like Ace Hardware, National Bookstore, SM Appliance Center, Surplus Shop, Sports Central, Factory Sale Outlet & Watsons. It has a land area of 25,000 m² and a total GFA of 166,554 m².

SM Manila Location Map

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Figure 1: Map of SM City Manila

SM Manila Location Analysis

SM City Manila is strategically situated at the center of the city of Manila. The location

itself is complementary to its wide range of consumers since it is very accessible and

highly convenient. Among its captured market are students (college, highschool, and

elementary), working class (government employees and private firm’s employees), and

families.

SM City Manila’s site is physically fixed and economically flexible for its consumers as well. Part of which attracts consumers are the following factors:

► Identification of the activities in the area ► Analysis of the accessibility of the site to the surrounding area

► Degree of convenience or inconvenience involved in moving people, goods, and

services ► Degree of friction, or inconvenience, measured in terms of time, cost, and

aggravation. ► site’s accessibility ¯ cost to get to the site potential site return ► Accessibility on two levels:

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flow of people between one area and anotherhas advantage on residential areas and institutions

D. Current Market Trends

The Footwear Industry is rapidly changing every now and then. In 2010, the industry is starting the new decade with an interesting mix of must-have shoes, from gender-bending alternatives to stylish embellishments. This season boasts of stylish pieces not meant to be handled by the faint-hearted. And, if you’re beginning to pack those holiday ensembles to the back of the closet, this would be the time to try something new.

Philippines is standing on the threshold of a retail revolution and witnessing fast changing retail landscape, with footwear market is set to experience phenomenal growth in coming years. Besides, the ongoing financial crisis is unlikely to have any significant impact on the Indian footwear market as the demand for Indian footwear will continue to grow, according to our recent report, “Philippine Footwear Market Forecast to 2012”.

Demand for high quality footwear produced in other parts of the world is expected to slowdown as people will look for medium or lower priced products. This is a good sign for the Philippines footwear industry since Philippines along with China is the main supplier of low-priced footwear. However, Chinese producers are facing serious problems due to rising labor cost, which has risen by around 40% since January 2008, and currency appreciation. Chinese products, which used to be cheaper by around 10% compared to the Indian products, are no longer cheaper. Implementation of the European Union (EU) anti-dumping duty.

Under these circumstances, Philippines is the only major source for supplying medium and low-priced footwear. Moreover, most of the global footwear manufacturers, particularly European manufacturers who were sourcing from China, have now turned to India. Nike, Adidas and Puma are some of the footwear majors are expected to route parts of their production and purchase out from China to Philippines.

This report provides extensive research and in-depth analysis on the Philippines footwear market. The detailed data and analysis given in the

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report will help the client to evaluate the leading-edge opportunities critical to the success of the footwear market in Philippines. 

The forecasts and estimations given in this report are not based on a complex economic model, but are intended as a rough guide to the direction in which the market is likely to move. This forecast is based on a correlation between past market growth and growth of base drivers.

III. Competitor Analysis

Local shoe retailers face stiff competition in the market mainly from low-priced products coming from China and other Asian countries. The industry also has difficulties regarding raw material supply. Local leather, as well as other shoe components, is not of the desired quality and price. Producers generally have to rely on imports for their materials and supplies. Problems on the production side include lack of skilled workers, use of outdated technology, and low worker productivity and efficiency. Also, the sector has no standards for shoe sizes, resulting in variations in product sizes.

As competition arises, Rusty Lopez brand still enjoys the trust and loyalty of the market having been an established name since 1977. Even with the growing population at an annual rate of over two percent, the Philippines is compelling market for the manufacturers, footwear and Rusty Lopez is blessed to pioneer and continues to be one.

A. Porter’s Framework

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Suppliers:

New Entrant:

Direct Competitors:Gibi ShoesMendrez

Otto ShoesItti Shoes

Substitutes:Direct Selling Footwear

IndustrySandals/Slippers Industry

Locally Branded FootwearsImported Footwears

Analysis:

Figure 1 shows the Porter Framework of the Footwear Industry

consisting of 5 boxes which are the new entrants, the direct

competitors, the substitutes, the suppliers and lastly, the customers.

Large established companies with strong brand identity such as its competitors does make it more difficult to enter and succeed within the marketplace; new entrants find that they are faced with price competition from existing retail firms. Thus, the lack of any of the barriers to entry results to high threat of new entrants.

The footwear industry defines a red ocean industry. Firms compete for market share in a saturated market. Growth is very slow so the customer base is not growing as fast as the industry. This leads to high rivalry among firms.

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With so many firms in the footwear industry, low switching costs, similar products, and trendier options, the threat of substitutes is very high.

Firms have thousands of suppliers to choose from and select theirs through a competitive bid process. They can switch suppliers easily and tend to make up a large portion of the supplier’s revenue. This severely limits the bargaining power of suppliers.

Figure 1.1 Conclusion for the Porter Framework

Conclusion

Threat of New Entrants High

Rivalry Among Firms High

Threat of Substitutes High

Bargaining Power of Suppliers Low

Bargaining Power of Customers High

This figure basically concludes the analysis of the Porter

Framework of the Footwear Industry. It is shown that the threats

of new entrants to the industry is high, the rivalry among the

players in the industry is also high, the threats of substitutes to

the industry is also high, the bargaining power of suppliers is low

and lastly, the bargaining power of the customers is also high.

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B. Competition in the Footwear Industry

Indeed, the competition in the industry is very stiff as companies compete closely with one another as one just has a little advantage over the other nor lesser over the other. Among its competitors include Gibi Shoes, Itti Shoes, Otto Shoes, and Mendrez.

Retail Store Comparison

Key Factors RUSTY LOPEZ

GIBI ITTI OTTO MENDREZ

Location W W W W W

Price W W W W W

Store Ambiance/Layout

L W W W L

Stocking W W W W L

Store Displays L W L W L

Store Advertisements

L W L L L

Sales Promotions

L W L L W

Product Offering W W W W L

Customer Service

W W W W L

Customer Benefits

L W W W W

OverallMarketing strategy

L W W W L

This table shows the competitor’s retail store evaluation and

comparison against Rusty Lopez. It is shown that Rusty Lopez has

advantages on their store location, price, stocking, product offering

and customer service but has a great weakness on exerting on their

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overall marketing efforts. In analyzing this way, we can now determine

the focal points of which Rusty Lopez has to improve on.

Competitor’s Message Differentiation:

Rusty Lopez GIBI ITTI OTTO MENDREZ

Theme Old Manila School oriented Quality oriented

Pinoy Quality oriented

Formal

Types of communication/

advertising used

Inside store,Billboard

Advertising; outdoor

Inside store,Billboard

Advertising; outdoor

Inside store, outdoor, website

Inside store,Billboard

Advertising; outdoor

Inside store

Billboard Advertising; outdoor

Advertising none none none

Message medium / vehicle

Billboards; PoP’s Billboards; PoP’s Billboards; PoP’s

Billboards; PoP’s

Billboards; PoP’s

Media support / mix

Sales Promos Sales Promos Sales Promos Sales Promos

Sales Promos

This table explains the different message strategies of Rusty Lopez direct

competitors. It shows how they are really left behind by its main competitors

in the industry. This most likely analyzes how Rusty Lopez should redeem its

place in the footwear industry.

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IV. Target Market

This campaign will aim to convince the consumers all over the country that BK has great

value for their products and services. Their target market, which are families with

sufficient incomes (particularly belonging to upper class C, class B, class A), young

professionals and students, will be the main focus of the campaign and that they will be

the ones who will be catered by the company in its campaign.

3.1 Key Evaluation Criteria

The target audience of this campaign includes the following with the intended goals for

each category:

Audience Goal Potential Challenges

Target IMC Output

Upper Middle Class

To attract portion of this market

which is a profit generating market

Loyalty to the finest restaurants will be a threat.

Media

Lower Middle Class

To attract portion of this market

which is a profit generating market

as well

Loyalty to the finest restaurants will be a threat.

Media

Working Class To convince them Budget-conscious Outdoor, Online

Students To persuade them Budget-conscious Online, Media

3.2 Target Audience Profile

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In the years of Burger King’s existence, consumers have been consistent with how they

respond to their wants. It is experiencing a great and satisfactory taste on all the product

lines the company offers.

Burger King’s target audience is divided the industry’s market into distinct groups of

customers with different demands, tastes and behavior who require separate products

or marketing mix.

We have made segments of the market on the following bases:

Demographical

Behavior

Geographical

In demographics their first segment is consisted of the income factor i.e. high income,

average income and low income.

In behavioral aspect they segmented the market on the basis of quality, taste and price.

Following are the different possible segments in this regard and concerned to those who

are Taste conscious, Quality conscious, Class conscious, and the Combination of price

and quality.

CURRENT TARGET MARKET:

Table 8 Summary of Ways to Attract these Social Classes

Social Classes Ways to attract them

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Upper middle class (45%)

Lower middle class (25%)

Working class (20%)

Students (10%)

Delicious tasteQuality Service (fast and efficient) Good store ambianceLocated in malls like SM & Robinsons etc. Located near schools and working placesBranches may also be located on busy places and main roads

V. Current Store Operations System

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