Avant Garde Gift Shop
Company Summary
• "Gift Shop" at Avant-Garde Building is an established
retail business that offers a wide range of novelty inside
one of the most prestigious landmark buildings in Jakarta,
Indonesia
• Now operating with minimal overhead, and a limited
staff, the new, revamped "Avant-Garde Shop" will serve a
wider customer base
Executive Summary
The "Gift Shop" at Avant-Garde Building has long offered a wide
range of novelties and stationary inside one of the most
prestigious landmark buildings Jakarta, Indonesia
• The Gift Shop's customers were primarily employees of the
Avant-Garde Building's tenants.
• The new venture, "PT. Avant-Garde Shop" is taking over this
space
•Redesigning it as the flagship store of the Avant-Garde
Building
• A joint operation with PT. ABC Company Indonesia.
Executive Summary
•
OBJ:
Broaden our customer base by focusing not only on tenants,
but also on neighbours of and visitors to the Avant-Garde
Building
The grand opening is slated for December 9th.
To refurbish the existing outlet to become an official store
Associated with the lifestyle of the professionals who are the
focus of our marketing program.
[NOTE: PT is an abbreviation for Indonesian Perseroan
Terbatas, meaning Limited Company.]
Executive Summary
• This business plan lays out our strategy for re-positioning the
"Gift Shop" from "just-another-store" to the "Official
Store of Avant-Garde."
• This plan will detail services to be provided by ABC Company
in the joint operation
– ABC Company will provide several strategic
recommendations
– How to enhance the traffic and image of the retail
facility?
Through re-naming and image revamping, re-modelling of
interior and merchandise resource planning.
Executive Summary
Strengths of the products:
• 3 people out of 5 were very enthusiastic about our project
• 2 were concerned about the feasibility of our project
Market response:
• 2 people out of 5 “DEFINITELY WOULD BUY’
• 2 people out of 5 “PROBABLY WOULD BUY”
• 1 people out of 5 “ MIGHT OR MIGHT NOT BUY”
The Market
•
•
•
•
100 offices inside Avant-Garde Building
1,000 visitors daily to Avant-Garde Building
1500 tenants
The Avant-Garde Shop has identified three distinct
market segments:
- Tenants,
- Neighbours,
- And visitors
The Market
• 1,500 Tenants our primary target customers:
- White-collar workers with large incomes
The secondary target customers:
- Surrounding office community in the area, who often
visit the Avant-Garde Building during lunch hour to meet
their colleagues or friends
Both of these groups have already proven their
willingness to buy from retail stores within the AvantGarde building
The Market
The last target customer of the Avant-Garde Shop are
visiting guests, both tourists and residents of the Jakarta
region who
The Avant-Garde Building is attractive because it has a
taste of glamour, as the symbol of high-class, high-tech,
fast and modern living in Indonesia's new economy.
The Strategy
The Avant-Garde Building will be changed into a
formidable brand that reflects power, modernity, wealth, and
sophistication
We will enhance the existing retail space with a new design,
and supplement retail sales with catalog and website
orders
We are not selling merchandise, we are selling a brand, and
an image: the New Indonesia.
All monetary amounts in this plan are in 1,000's of
Indonesian Rupiahs (IDR), abbreviated here as Rp.
The Strategy
Objectives
To re-position the current "Gift Store" as the Official Store of
Avant-Garde
Through re-modelling of the retail space and various
marketing program to generate more revenue and contribute to
the overall Avant-Garde Building equity
To achieve a modest net profit of Rp. 1,801,000 by year two
and Rp. 6,807,000 by year three
To achieve revenue of Rp. 90,299,000 by year one, Rp.
95,717,000 by year two and Rp. 101,460,000 by year three.
The Strategy
Mission
• The store, however, will emphasis the sale of official
merchandise of the Avant-Garde brand with a full
assortment of apparel, accessories and stationary, as well
as other lifestyle related novelties.
• Our goal in ABC Company is to be the sole supplier to
those official merchandise of Avant-Garde
• Need to be consistent within the theme according to
lifestyle association of the target customers.
Keys to Success
• Added value
By creating an image where visiting guests can associate
themselves with the merchandise offered
• Provide customers with personalized customer service in an
atmosphere of professionalism and hospitality
• Advertise and promote in areas where our target customer
base will learn about our store:
–
–
–
–
Banners
leaflets
flyers
website
Continuous reviews
our inventory and
sales and adjust our
inventory levels
accordingly
• and other method of marketing medium to attract visitors to
visit the location…
Keys to Success
All merchandise will be purchased and supplied according
to the company's mission and customer focus profile,
according to the image associated with Avant-Garde or
Avant-Garde Building
Industry Attractiveness
• Retail businesses with similar target
markets tend to concentrate together in malls.
• New shopping centers are entering market
• The trend works well for retailers
Industry Attractiveness
• Different malls, different targets:
- computer and electronic markets.
- dedicated to fashion retail
- youth fashion and sports merchandise
- serving high-end segments of the retail market.
Market Timeline
• People around Jakarta Metropolitan Area recognized
Avant-Garde as an historical, elegant and prestigious
place.
• Avant-Garde Building is the "embassy" of commerce
with representative offices of multi-national firms
internationally
Market Timeline
• Trend of putting the Avant-Garde image in every
tenant's logo or corporate name.
• We may feature some of the finest tenants' logos, in
conjunction with the Avant-Garde logo, in our
merchandise.
• Plans for expansions to the area outside Java and Bali
to take advantage of growth opportunities within a
wider region.
Market Analysis
• The Avant-Garde Shop has identified three distinct market
segments: tenants, neighbors, and visitors
• The Avant-Garde Shop has identified three distinct market
segments
- Primary Target
: Tenants
- Secondary Target
: Neighbor
- Last Target
: Visitors
Tenants
This is the largest segment of our target market (53%),we
will focus on tenants for several simple reasons:
• The group will be the first to become aware that there is a
new, revamped store.
• They have the sense of belonging or attachment to the
whole idea of working inside one the most prestigious
buildings in Jakarta.
• This group will also make the most "lifestyle" purchases,
either buying for themselves or as a gift for a friend or
relative.
Neighbors
The second potential segment (26%) is nearby workers
within the "Golden Triangle" radius, who are drawn to the
Avant-Garde building by the handful of retail food
establishments
• This group does not necessarily have an attachment to
Avant-Garde, but may make impulse purchases, if the
selection of merchandise fits their styles and needs.
• This also means that the merchandise aimed at them does
not have to be Avant-Garde-themed, as it could be
generic products such as trinkets or ethnic arts and crafts.
Guests/Visitors
This last segment (21%) has not yet been fully cultivated.
• This group shops at Avant-Garde Building infrequently,
but may be subject to impulse purchases once they are in
the store.
• They will likely purchase the Avant-Garde-themed
merchandise as a memoir of their only or rare visits to the
Avant-Garde Building.
Market Analysis
Year 1
Potential
Customers
Year 2
Year 3
Year 4
Year 5
Growth
CAGR
Tenants
1%
1,590
1,606
1,622
1,638
1,654
0.99%
Neighbors
1%
780
788
796
804
812
1.01%
Guests or
Visitors
1%
630
636
642
648
654
0.94%
0.99%
3,000
3,030
3,060
3,090
3,120
0.99%
Total
Target Market Segment Strategy
• The focus strategy for the category of Tenants is to
establish the sense of "belonging" meaning that we need
to create the Avant-Garde Shop as if it is their own.
• While the Neighbors and Guests categories for the AvantGarde Shop will be the next important ones, they mostly
fall under the rubric of "accidental" shoppers or impulse
shoppers
Web Plan
• Avant-Garde Building has launched its first international
website in January of 2004. And the Jakarta Stock
Exchange also owns a domain.
• Both can be utilized to advertise the new Avant-Garde
Shop, as well as linked to our own website that list all the
merchandise and services we offer.
Development Requirements
•
•
•
•
Development Costs
Site Design - Rp. 22,000,000
Hosting fee of Rp. 1,700,000 per year, including 60 email addresses
Ongoing Costs
Search Engine Registration - $200 per year.
Site Design Changes - Changes in the site, such as
photography costs (estimated at Rp. 300,000 - Rp.
600,000 per shot), are considered to be part of Marketing
and Advertising.
Management
The management of the Avant-Garde Shop is made of the
interim management team from PT. ABC Company, who
will monitor the growth of the retail store, as well as
making improvements and business maneuvers, if
necessary. The many administrative functions of the
Avant-Garde Shop would become the primary focus of
the other team member, PT. Avant-Garde.
Organizational Structure
• The organization will be a relatively dynamic one, since
the majority of personnel are involved in both planning
and operation.
• There are three functioning groups within the company:
Shareholders, who make the final decisions, then the two
teams from PT. ABC Company, acting as Interim
Management and Business Development Consultants, in
as well as the Corporate Communications Division of PT.
Avant-Garde.
Personnel Plan
The personnel plan is included in the following table. It
shows the Store Staff's salary as other functions are working
inside both PT. Avant-Garde and PT. ABC Company.
Personnel Plan
Year 1
Year 2
Year 3
$9,600
$11,000
$11,000
Manager
$12,000
$12,400
$12,400
Total People
2
2
2
Total Payroll
$21,600
$23,400
$23,400
Store Staff
Marketing/Store
Financial feasibility
• TOTAL START-UP CASH NEEDED
– Most of the store/office equipments of the old Avante
Guard Store will still be used by the newly renovated store.
– The initial funding from investors (let’s just say they are
ABC and XYZ Company) will enable us to renovate the
space and buy initial inventory.
– We will keep 2 full-time employees will run the shop,
while advisors and directors from AMC Company will
oversee operations
START-UP FUNDING
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Rp 72,000,000
94,597,000
Rp 166,597,000
Assets
Non-cash Assets from Start-up
Rp 25,282,000
Cash Requirements from Start-up
69,315,000
Cash Balance on Starting Date
69,315,000
Total Assets
94,597,000
Liabilities and Capital
Total Liabilities
-
-
Capital
Planned Investment
PT. XYZ (32%)
PT. ABC Indonesia (62%)
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital
Total Capital and Liabilities
Rp 63,307,000
103,290,000
Rp 166,597,000
( 72,000,000)
Rp 94,597,000
94,597,000
Projected Profit and Loss (figures are in Rp 1,000s)
Year 1
Sales
Direct Cost of Sales
Rp 90,299
Year 2
Year 3
Rp 95,717 Rp 101,460
25,282
22,530
22,980
RPp25,282
Rp 22,530
Rp 22,980
65,017
73,187
78,480
72.00%
76.46%
77.35%
RPp21,600
Rp 23,400
Rp 23,400
4,515
4,786
5,073
Rent
28,800
28,800
28,800
Utilities
12,000
12,000
12,000
2,400
2,400
2,400
Rp 69,315
Rp 71,386
Rp 71,673
Profit Before Interest and
Taxes
(4,297)
1,801
6,807
EBITDA
(4,297)
1,801
6,807
(Rp 4,297)
Rp 1,801
Rp 6,807
-4.76%
1.88%
6.71%
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Marketing/Promotion
Other
Total Operating Expenses
Net Profit
Net Profit/Sales
Projected Cash Flow (figures are in Rp 1,000s)
Year 1
Cash Received
-
Year 2
-
Year 3
-
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Subtotal Cash Received
Expenditures
Rp 90,299 Rp 95,717 Rp 101,460
90,299
95,717
101,460
Rp 90,299 Rp 95,717 Rp 101,460
Year 1
Year 2
Year 3
Expenditures from Operations
Cash Spending
Rp 21,600 Rp 23,400 Rp 23,400
Bill Payments
59,711
66,981
71,309
Subtotal Spent on Operations
81,311
90,381
94,709
Subtotal Cash Spent
Net Cash Flow
Cash Balance
Rp 81,311 Rp 93,381 Rp 97,709
8,988
2,336
3,751
Rp 78,303 Rp 80,639 Rp 84,390
Comparison of the Financial Performance of
Proposed Venture to Similar Firms
Assessment Tool
Annual Sales Estimate of Proposed
Venture’s
Annual Sales—Year 1
We used the average 6% growth of sales per
annum of Gifts, Novelty, Souvenirs Industry in
Indonesia
Estimate of Year 1 Sales Rp 90,000+
Summary: This number shows a little above average of the usual sales of Avante Guard,
which is in anticipation of the expansion & better location of the store. Trend in Indonesia,
especially in major cities shows that new stores attract more customers.
Estimate of Year 2 Sales Rp 95,000+
Summary: Using the 6% average growth sales, this figure will come out. This is however
including the possible competition & uncollected sales.
Comparison of the Financial Performance of
Proposed Venture to Similar Firms
Assessment Tool
Net Income Estimate of Proposed
Venture’s
Net Income—Year 1
Due to capital investment from outside
finance, the company is opt to payback the
cash first.
Estimate of Year 1 Net Income (Rp 4,000)
Summary: As expected, the income for the 1st year will be very low due to the huge
amount of outside financing. Also, as a small business selling small items, the margin to
attain large income is very steep.
Estimate of Year 2 Net Income Rp 1,800,000
Summary: This is when the store operation starts to pick-up after the first year of
relaunching. However, the monthly net income will still average low since at the start of
the year the outside investment still needed to be paid & it is only towards the end of 3rd
quarter wherein the company achieve the break-even point.
Thank you !