A BUSINESS PLAN FOR AN
ARITZIA STORE IN SASKATOON
Client: Dragon’s Den
Aritzia LP
Ratika Chaudhary
Candace Hodgins
Sarah Jesberger
Client: Dragon’s Den
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY .................................................... 2
2.0 INTRODUCTION TO ARITZIA .............................................. 3
2.1 DESCRIPTION OF ARITZIA ...........................................................................................................................................3
2.2 ARTIZIA’S OPERATIONAL GOALS AND OBJECTIVES ...........................................................................................................5
3.0 STRATEGIC MARKETING CONSIDERATIONS ....................... 7
3.1 INDUSTRY OVERVIEW AND MARKETING RESEARCH .........................................................................................................7
3.2 SWOT ANALYSIS .....................................................................................................................................................8
3.3 MARKETING PLAN – 4 P’S, EXPENSES, SEGMENTATION ...................................................................................................9
4.0 OPERATIONS PLAN ......................................................... 13
4.1 LEGAL STRUCTURE..................................................................................................................................................13
4.2 ORGANIZATIONAL STRUCTURE AND FLOOR PLAN ..........................................................................................................13
4.3 OPERATING HOURS OF ARITZIA SASKATOON................................................................................................................13
4.4 INVENTORY SUPPLIERS ............................................................................................................................................14
5.0 HUMAN RESOURCES PLAN.............................................. 15
5.1 JOB DESCRIPTIONS .................................................................................................................................................15
5.2 TRAINING PROGRAMS AND HR STRATEGY ...................................................................................................................17
5.3 SHAREHOLDER AGREEMENT ....................................................................................................................................18
6.0 FINANCIAL PLAN ............................................................. 19
6.1 CAPITAL BUDGET ...................................................................................................................................................19
6.2 FINANCIAL PLAN ....................................................................................................................................................20
6.3 FINANCIAL GOALS: .................................................................................................................................................21
6.4 EVALUATION OF FINANCIAL GOALS: ...........................................................................................................................21
CONCLUSION ........................................................................ 23
Aritzia LP
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Client: Dragon’s Den
1.0 Executive Summary
We are three MPAcc entrepreneurs presenting today on an exciting idea to expand the fashion
offering for Saskatoon residents. Our goal is to pique the interest of an investor group that is
prepared to partner with Aritzia LP specifically to fund the opening of an Aritzia location in
Saskatoon, Saskatchewan. This will enhance the shopping experience for those living in and
visiting the city and will allow for the availability of a far greater variety of styles and labels than
those currently available in Saskatoon. The target audience is young women aged 14-30 and
anyone who might be purchasing clothes for this segment. We strongly believe an Aritzia
Saskatoon location will thrive based upon the growing population and the increased disposable
income. We anticipate that agreements would be reached such that a store opening of
Christmas 2010 would be feasible.
Aritzia LP
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Client: Dragon’s Den
2.0 Introduction to Aritzia
2.1 Description of Aritzia
History of Aritzia
Jim Hill founded Aritzia, and opened its first retail store in Vancouver in 1984. The Hill family
had a strong background in retail sales; Jim’s father was a senior executive for the Hudson’s Bay
Company and Jim founded the Kerrisdale department store, which continues to operate in
Vancouver. It was the company’s success in young-woman’s clothing sales that inspired Hill to
create a business that specialized in clothing for this unique customer-group. His son Brian, who
was a graduate of Queens University with a degree in Economics was appointed as the store
manager; today he is the CEO of the privately-owned Aritzia LP.
The company has grown steadily since the early 1980’s, first in Vancouver and then nationally in
the late 1990’s. Today it is a retail powerhouse with over 40 stores in operation. The majority of
these stores are in Canada, however expansion into the United States began in 2007 and there
are now 7 retail locations in various cities across the U.S. The company manages its growth by
limiting it to certain centres and locations in order to preserve an image of exclusivity.
The company has established several in-house brands, and some of the brands, such as the TNA
brand have grown to have their own retail locations. The planning for these brands is done in
Vancouver. The company is vertically-integrated, with over 70% of their revenues being
generated from their in-house brands – this helps us to be able to modify product design and
production and be up-to-speed on meeting customer demands.
Today, Aritzia is known throughout Canada as a necessary experience for the fashion-forward.
Our stores are always busy and full of the latest fashions, from basics to special stylish items
just waiting to be incorporated into a customer’s personal style.
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Client: Dragon’s Den
Mission
At Aritzia, we seek to inspire our customers by establishing a connection for them to the
elements of urban culture. This is done by bridging fashion with elements of urban culture–
specifically, clothing, accessories, and music.
Vision
As emphasized by CEO Brian Hill, “We connect our clientele to the energy of the culture. Our
primary focus is fashion but we consider all elements: the music we play, the design of our
stores, the artists we feature. Culture is ever-changing, as are we." We aim to create a unique
experience for our customers and ultimately we want customers to leave feeling great about
their purchases.
Core Values
o Ensure the customer experience is second-to-none
o Assist customers in creating their own distinctive style
o Aim for a varied product offering, some of which is unique to Aritzia
o Strive to be the best and have fun doing it!
Market Awareness
Aritzia is well-known in larger Canadian cities, with locations (sometimes multiple locations) in
major centres from Vancouver to Montreal. "It's the hot Canadian retail property right now,"
says David Gray, President of Vancouver's Sixth Line Solutions, a retail information and strategy
company. "I was at an International Council of Shopping Centres conference recently and
people there were all bending over backwards to get Aritzia into their malls. They're Canadian
and they're different." As Saskatoon is growing into a major Canadian centre, we feel that the
Saskatoon market is ready for Aritzia.
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Client: Dragon’s Den
2.2 Artizia’s Operational Goals and Objectives
Short-Term Goals
Our short term goals relate to accomplishments which we will work to realize in one-year.
o A short term goal of the Saskatoon store will be to attract the clientele who will most
benefit from the Aritzia experience by creating a distinct ‘Saskatoon flavor’ for the store,
especially using local talent
o To meet the specific demands of the Saskatoon market by ensuring adequate levels of
stock to meet demand for popular products. Our SAP system will enable us to do this,
and is able to determine inventory levels throughout Canada, such that a certain style,
color or size that is sold-out in Saskatoon could be brought in from another location
o To have happy, satisfied customers. A link to a brief survey on the Aritzia experience can
be accessed from each sales receipt printed or upon request.
Long-Term Goals
Longer-term goals are those which we will work to achieve in a one-to-four year period.
o As previously mentioned, Aritzia is vertically-integrated and some of our in-house
brands also have retail outlets. It would be our longer-term goal for Aritzia to achieve a
level of success and demand for its product whereby a TNA store would be opened in
Saskatoon. As well, if successful, there may be the possibility of opening another
corporate location.
o To increase our customer list by 65%: names and e-mails are taken at each point of sale
and used to track customer spending. As well, it is our goal to significantly increase
annual sales per customer each year as we establish our position as a fashion leader in
the Saskatoon market.
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Client: Dragon’s Den
Key Success Factors
o Product variety relative to the retail clothing market in Saskatoon
o Product availability
o Expressing fashion beyond simply clothing; linking fashion to culture
o Friendly, Fastidious and Fashionable staff
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3.0 Strategic Marketing Considerations
3.1 Industry Overview and Marketing Research
Fashion Industry
It’s no secret that the fashion industry is one of the most lucrative out there – fuelled by
conflicting desires to conform to a certain trend or to look as unique as possible. People
everywhere fall prey to the desire to look good and the fashion industry is the ultimate provider
of all things that allow this to happen. While the recession has caused a cut-back in
discretionary spending, magazines such as People’s and In-Style’s monthly issues show North
American’s at any age what the celebrities are wearing, where it came from and where ‘the rest
of us’ can find it. This has created a frenzy to be fashionable and Aritzia is able to provide this
need, with designers adapting their in-house designs and buyers adjusting orders from
suppliers to ensure the latest demands are going to be available to customers.
Saskatoon, Saskatchewan
Saskatoon is growing while the rest of the continent is feeling the effects of a recession. The
population of Saskatoon and the immediate surrounding area is estimated to be 250,000 in
2009. This is attributable in part to the growth of Saskatchewan as a whole. Indeed, Saskatoon
and Regina are some of the only Canadian cities to have an increase in consumer spending in
2009. Retail sales growth was 11% in 2008 and 6% in 2009 (Colliers).
The housing market in Saskatoon shows that the average house price has jumped from
approximately $160,000 in 2006 to around $300,000 in 2010. This combined with multiple
consecutive periods of net in-migration, increased tourism and an increase in the events taking
place in the city are all positive indicators of growth and signal a trend towards the selection of
more expensive products and that people would be willing to pay for these items.
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Client: Dragon’s Den
At present, Saskatoon has few suppliers for fashionable women’s clothing. Those who are in the
market have limited supplies and are able to mark-up their products higher than in other
locations since they have a monopoly. A recent shopper commented that the same jeans in
Saskatoon were on average $20-40 more than we sold them for at Aritzia. At an average price
of $200 a pair in our stores, that’s getting pretty pricey! While Aritzia is not interested in being
known for inexpensive shopping, there are people in the city who are willing to spend money
on clothing, they’ll just be spending a little bit less by shopping at our store.
3.2 SWOT Analysis
Strengths
-
Aritzia is a well known, established brand amongst its target audience
There is a proven demand for our product in all major cities across Canada
Exclusive brand of clothing in the store
Weaknesses
-
Merchandise is expensive in comparison to competitors
Our market is limited to young females
Opportunities
-
There is a young population in Saskatoon
Retail forecasts for upcoming years is strong
Retail market has increased in the last five years
There are limited competitors in the market. Additionally, of those competitors most of
our brands are not carried by them
Threats
-
-
There are limited clothing retailers in our target market – this could mean increased
competition in upcoming years with others wanting to capitalize on the untapped
market
Currently, many Saskatoon females do not shop in the city and instead travel to other
destinations as there is a limited selection in Saskatoon
With the exception of our in house brands, other retail stores could carry the same
brands
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Client: Dragon’s Den
3.3 Marketing Plan – 4 P’s, Expenses, Segmentation
Product
We are not proposing to sell clothes. Aritzia is selling an experience that begins at the store and
is recaptured every time our customer wears our clothing. Aritzia provides our customers with
a medium to enhance their image. Fashion has been globalized and Aritzia allows for women to
express their fashion personality without travelling to Paris.
Our company employs a technical team to create apparel that reflects our company’s
personality. We have four distinctive lines: Talula Babaton, Talula, TNA, and Wilfred which
account for about 70% of the store sales. These lines are very diverse, ranging from T-shirts
and blouses to sweaters, jackets and coats. The Talula brand fits our target market’s budget
while the Talula Babaton and Wilfred products are a little pricier and are sized for a more
mature clientele. TNA addresses the need for a sportier and more casual aspect of our client’s
lifestyle. Additionally, our buyers work with young designers and brands to bring in clothing
that enhances our customer’s closet.
Place
Aritzia stores are distinctive
Aritzia’s strategy is to be available in select cities. Our real estate strategy is sound and proven.
Unlike our competitors, we are not interested in being readily available and in every mall. This
concept adds to our marketing strategy – of being the “it” store. For our Saskatoon location, we
have targeted the downtown core, specifically a lease space on 2nd Avenue between 22nd and
23rd street, a prime retail location at The York Building. This area is consistent with our
approach of being in the trendiest, most upscale shopping district.
The store will have the feel and ambience of our other stores. However, as in the case with
each city, the décor and product will be customized to the Saskatchewan environment. Aritzia
stores break the mold of traditional retail locations by incorporating attractive forest inspired
materials. Flooring and walls will incorporate mostly wood materials, plants will be used as
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Client: Dragon’s Den
accessories, and there is a focus to use natural light whenever possible – a very urban,
fashionable feel. Further, music is a part of our mission and is incorporated into our stores. In
line with our vision, top 40 hits are not played within the store. Instead, we work with a small
independent record company that has alliances with major recording labels. As this new store
will be inspired by the Saskatchewan environment, we look forward to featuring local DJs both
in store and on our playlist.
Retail store fitting rooms are where buying decisions are made. As such, we focus a large
amount of energy on making this space inviting and relaxing. Further, we financially commit to
this area. Our fitting rooms are spacious, attractive and comfortable. More importantly, a
purchaser’s guest has an area to sit, and participate in the buying decision. Allowing our
customer to spend more time and become more comfortable with their purchase. Finally, the
natural lighting of the store provides our customer with ideal lighting and an ability to envision
themselves wearing our clothes outside of the store.
Price
Aritzia sells a distinct image and ensures that this image cannot be duplicated. Since we are
vertically integrated and internally design and produce the majority of our inventory, we cannot
be undercut by department stores or other locations in the mall. In other words, we have
control of the merchandise and the mark downs. As such, our average product selling price is
$90. Within the fashion world, our product is at the mid-range when considering price. Since
our competitive advantage is our vertical integration and in-house design and production, we
can charge higher margins and prices on our clothing.
Promotion
Aritzia sells an image. Our product is recognizable amongst our target market. Our upscale
clothing does not have any branding on it – however, our target audience still recognizes where
it is from. Our TNA brand features significant branding on the product and serves as a form of
advertising and recognition from those outside of our target market. Due to the current brand
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Client: Dragon’s Den
recognition, advertising channels are limited to only those that incorporate our mission and
vision. Thus, our promotion is accomplished through word of mouth, store locations, and
celebrity use of our merchandise. Aritzia is continuously being featured in both local and
National magazines, and web based blogs.
Marketing Expenses
As our promotional channels are limited to only those that fit with our image, marketing
expenses are not large. Additionally, marketing is handled by our head office with costs being
allocated amongst all store locations.
Segmentation
Aritzia caters to a demographic of females aged 14 to 30. These individuals are prepared to
spend money to look good. Unlike the recent boom in the retail clothing industry, we are not
catering to the teen or tween market. Aritzia passionately believes that the true untapped
market is those females between the ages of 14 to 30. Our younger demographic of 14-16 year
olds want to look older and are prepared to purchase the clothing 18-19 year olds are wearing.
While our older teens experience a merging of their tastes with those in the twenties. Finally,
those women in their mid to late 20s like to dress down, or wear fashion that makes them look
younger. As a result, our clothing attracts a clientele spanning the age range of 14 to 30.
Targeting
Within the 14-30 female age demographic we are segmenting, we are targeting the young,
professional unmarried woman. Women in the category are in the marriage market and image
and style are very important. Further, once women get married, their per capita spending on
clothing drops tremendously. Thus, Aritzia has segmented the market to cater to 14-30 year old
women while within this segment we have target the professional, unmarried woman.
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Client: Dragon’s Den
Positioning (branding)
Our brand is positioned in line with our vision. We are in line with our consumer’s changing
tastes as evidence of our 14 years in business. With the globalization of the fashion industry,
our consumers in Vancouver are choosing the same fashions as those in Quebec, Denver,
Winnipeg and all over the world. We are confident in our determination that our brand in
Saskatoon will be consistent with the rest of North America.
Customer Value Proposition
Please refer to Appendix 2 for our customer value proposition. Our customer value proposition
identifies the characteristics upon which our customer’s will rank us. Specifically, we believe the
following attributes are of importance to our customers:
-
Quality
-
Price
-
Customer Service
-
Diversity in Product
-
Brand Recognition
We identified our indirect and direct competitors and outlined each party based on the
applicable characteristics. These parties, including ourselves, were ranked on a scale of 1 – 4
with 4 being best.
As outlined in the graph, Aritzia performed extremely well on all fronts. Aritzia has high quality,
customer service, diversity in product, and brand recognition. However, all of these
characteristics result in a higher price point than some of our competitors. Based upon the fact
that we consistently perform superior to our competitors on all other fronts, and we have a
vertical integration competitive advantage that prevents our competitors from undercutting
our prices, we strongly believe we can price our clothing higher than that of our competitors.
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Client: Dragon’s Den
4.0 Operations Plan
4.1 Legal Structure
Consistent with other Aritzia locations we would be a corporately-owned location, operated
under Aritzia, LP. As with all locations, upper management would be those from the Aritzia
head-office, who would perform the business development, external ordering and accounting
functions for the store. A store manager would be on-site to manage operations and order
inventory from internal buyers; shift supervisors being responsible for closing duties and cash
reconciliations.
4.2 Organizational Structure and Floor Plan

Although each store is unique, the layout of the stores is essentially the same, with
some in-house brands scattered throughout the store; typically the more fashionable
and expensive items are at the front of the store, with more athletic wear concentrated
at the rear of the store. The sale desk would be located mid-store, where some sales
associates would be, with others on the floor.

The perimeter of the store will have multiple shelving units – mainly to house hanging
items. There are low tables throughout the store that have less-delicate items ranging
from flip-flops to tank tops in the summer or scarves and mittens in the winter.
4.3 Operating Hours of Aritzia Saskatoon
Artizia will be open 7 days a week. Mondays through Saturdays the store will be open from 106; Sunday’s hours of operation will be 12-5. The hours are consistent with those of competitors
and with other businesses in the neighbourhood, allowing us to take advantage of the high
volumes of pedestrian/shopper traffic during this time.
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Client: Dragon’s Den
4.4 Inventory Suppliers

Artizia, LP for in-house brands such as TNA, Wilfred, Talula Babaton

Designer Denim Suppliers

Various other brands – varies with location and consumer demand Refer to Appendix 1
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5.0 Human Resources Plan
5.1 Job Descriptions
The location would be of medium-size, and we would anticipate a manager/supervisor being
on-duty at all times, with several (5) non-commissioned sales associates who would be
allocated among various tasks such as fitting rooms, merchandising, cash, assisting customer’s
on the floor etc. We have thus identified the following staffing needs:

1 full-time store manager

2-3 full-time Staff Supervisors

15 Sales Associates (staff), (both full- and others part-time)
Store Manager

The store manager will be required to manage the shift supervisors and sales associates
as well as be the main point of contact between the store and Head Office.
o Managing staffing needs and creating staff schedules;
o Preparing the daily accounting reports from their system and ensuring that cash,
credit slips, etc are complete and properly remitted.
o Approval of staff hours and submission to Head Office
o Managing inventory levels; re-ordering inventory as necessary
o Solid understanding of the products carried and close monitoring of what is
popular

The manager will be responsible for any new staff hiring decisions, and managing
current staff training
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Client: Dragon’s Den

The manager will be responsible for implementing marketing activities as provided by
Aritzia Canada.
As the manager is the only employee at the location with this level of responsibility, they will be
paid accordingly and will be on Salary. The successful candidate will have at minimum a
Bachelor of Commerce and previous experience working with numbers.
Staff Supervisors
o The staff supervisors will be on-site for daily operations and will provide guidance to
sales-associates
o Supervisors must have an in-depth knowledge of inventory levels and be able to handle
special orders or stock transfers from other locations for customers
o Supervisors are responsible for performing the cash-out and reconciliation of amounts
at the close of business; the manager will review this
o Beauty supervisors must be able to effectively manage the team and resolve any
conflicts arising involving customers and/or other employees.
o Candidates are expected to have previous experience in retail and demonstrate
leadership qualities.
Sales Associates
o The sales associates will work on a full or part time basis
o These associates represent the initial client contact point for customers and must be
friendly, helpful and innovative to assist the customer in finding a style that suits their
individual needs
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Client: Dragon’s Den
o Some associates will be trained to handle sales transactions/cash transactions.
Supervisors would be required to authorize some returns under unusual circumstances
(without receipt etc) and for transactions on layaway.
o Sales associates will be required at the fitting rooms and will need to lock up customer’s
bags before they use the fitting room, as well as retrieve them after
o Sales associates will be responsible for merchandising the store and maintaining a
presentable shopping environment throughout the day. This may involve folding and rehanging items as well as moving items back to their proper locations. As well, at times
the associates will be required to re-merchandise the entire store; this is typically done
outside of store hours.
o It is expected that some sales associates will be students, therefore there is no minimum
education level so long as they are of-age and eligible to work in Canada.
5.2 Training Programs and HR Strategy
In the hiring process, Aritzia seeks candidates that are passionate about fashion, have their own
unique sense of style, and are friendly and personable. As such, Aritzia’s staff training costs are
low at the store-level. Staff will be trained on merchandising the store, tips on customer
interaction and trained on the point of sale and cash systems as necessary. Product education
seminars will be held after store closings from time to time to help educate staff on new and
exciting lines offered by the company. As the mix of brands offered changes so frequently, it
will be important for all staff to be up-to-date on what is offered at their location.
Labour Costs
The details of staffing and related costs can be found in the Staffing and Operating Expenses
tabs of the financial plan. The store manager will be on salary, while the sales associates and
shift supervisors will be paid on an hourly basis. We have included costs for an employee health
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plan; it is difficult to recruit and maintain staff in a retail position and this helps to attract
quality staff and reduce turnover.
Human Resources Strategy
The organizational structure can be found in Appendix 3. In-store, the sales associates will
report to the shift supervisors, with both levels reporting to the store manager. The store
manager will report to the regional manager (designated as being for the Prairie Provinces)
who, in-turn will report to the executive sales team. Aritzia encourages open lines of
communication between staff at all levels.
Since the shopping experience Aritzia aims to offer is so unique, the staff is an essential
component. The staff will be integral to the success of the company and staff must embody the
culture or Aritzia and project this to customers; as CEO Brian Hill notes, “It takes a certain type
of someone to do the work here. Not only do they have to have a sense of fashion, but a
youthful energy and confidence are also essential”
All employees working in the store should be wearing at least one Aritzia piece at all times.
They are encouraged to incorporate pieces from the store into their own unique wardrobesthis helps to give shoppers a sense of how to wear the clothes. As such, employees are offered
a 30% discount on all merchandise. While sales will be tracked by sales associate, this will be for
monitoring purposes only; no commissions will be paid.
5.3 Shareholder Agreement
A shareholder agreement will be drafted by a lawyer and will outline the ownership interest as
follows:
- Aritzia LP will have a 70% ownership interest with an initial investment of $500,000
- Angel Investor will have a 30% silent ownership interest with an initial investment of $200,000
- Profit sharing through common stock
When a share sale takes place, the share price will determined according to the value assessed
by a Certified Business Valuator.
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Client: Dragon’s Den
6.0 Financial Plan
6.1 Capital Budget
Store Space
In line with contributing to the ‘Aritzia experience’, the ideal location for the boutique is a
prime retail space in the Saskatoon downtown core. A stand-alone boutique retail location is
preferable to mall space in a high-end mall such as Midtown Plaza as the stand-alone location
would allow Aritzia to target its market and get the required foot traffic it requires to make
sufficient sales. The identified lease space is on 2nd Avenue, across the street from Saskatoon’s
prestigious 2nd Avenue Lofts and King George at the York Building, in the heart of downtown.
Equipment
The most significant start-up costs involve shelving equipment, displays tables and racks,
counters, changing room equipment and mirrors, a sufficient security system to mitigate
against shoplifting and chairs and mirrors required for a retail boutique. Other equipment is
comprised of network computers and the SAP system that is linked to the overall Aritzia
inventory and business operating system. This includes the standardized accounting software
utilized by all Aritzia locations, worldwide. The system allows for the generation of various
reports that assist in performance measurement in terms of sales tracking by product, style and
brand to assist in inventory management for the Saskatoon location. Refer to Appendix 7 for all
capital expenditures required over the next five years. Leasehold improvements include costs
that will be incurred to create the ‘unique Aritzia experience’ at the leased space in downtown
Saskatoon. Examples of the necessary leasehold improvements include specialized flooring,
lighting, installation of signage and décor.
Operating Expenses
Appendix 8 shows a five year projection of the expected operating costs for Aritzia Saskatoon.
Corporate Administration Costs are calculated at 5% of annual sales for the Saskatoon location
and relate to general corporate administration overhead charges. Expected annual operating
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costs are approximately $1.1M with the largest charges relating to payroll and corporate
administrative charges (as a % of annual sales).
Labor Costs
Labor charges are outlined in Appendix 9 and range from approximately $330K - $440K annually
(allowing for growth and inflation). Growth is determined at 5% as increased demand for
products will require more staff on hand and will increase payroll costs in the upcoming years.
Additional training costs have been included to introduce new employees to the Aritzia brand
and train them so they are well-versed in the products, both in-house and contemporary
brands. These training costs have been reduced in latter years as it is expected that once Aritzia
becomes a household name as the desired location for women’s clothing in Saskatoon, training
on the Aritzia brand will not be as intensive for new employees.
6.2 Financial Plan
Aritzia has developed a unique name that commands a specific level of prestige in the women’s
retail industry. Accordingly, with marketing a promotion of the grand opening in downtown
Saskatoon and Aritzia’s proven history of strong sales in the first year of introduction in other
cities worldwide, sales are expected to be high in the first year and to continually improve in
subsequent years.
Sales:
Aritizia CEO, Brian Hill, reports $200M in sales over 40 stores, with some stores reporting a
‘whopping $2,000 per square foot, reportedly four times the industry average’ 1Our base case
projection for sales has been assessed at $400 per square foot, worst-case at $250 and bestcase scenario assessed at $600 per square foot. We have significantly decreased our sales per
sq. ft. for the downtown Saskatoon location in comparison to other locations in Canadian and
1
Amed, Imran. “CEO Talk: Brian Hill, Chief Executive Officer, Aritzia”. The Business of Fashion, August 25, 2009.
http://www.businessoffashion.com/2009/08/ceo-talk-brian-hill-chief-executive-officer-aritzia.html#more-5968
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American cities as this will be one of the first premium women’s retail boutiques in Saskatoon,
sales therefore, will not be at comparable levels to those in Vancouver or Toronto, for example.
Aritzia’s margins range between 50-70% depending on own-label product (70% margin) in
comparison to contemporary brands sold at the boutique. We have calculated an average gross
margin on sales at 60%, resulting in a mark-up of 40% on all product. These mark-ups are the
result of low-production costs from economies of scale and the ability to charge a premium for
prestigious brand names.
6.3 Financial Goals:
1. To earn, at minimum, a 25% return on investment in Aritzia
2. To earn profits, at the outset, based on the proven success of the Aritzia brand name
3. Have monthly inventory turnover to ensure that Aritzia is providing its customers with
the latest fashions
4. To eliminate long-term debt within five years
Financial statements for Aritzia for the following 10 year period have been provided in
Appendix 10.
6.4 Evaluation of Financial Goals:
1. A minimum 25% return on investment
Scenario
IRR
Worst Case
9%
Base Case
67%
Best Case
134%
Provided sales projections under the base-case scenario are met, the required rate of return
under the base-case greatly exceeds our expectation for a minimum 25% return on investment.
2. To earn profits based on the proven success of Aritzia’s brand name.
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Scenario
Year 2 Income
Worst Case
$(19,780)
Base Case
$334,222
Best Case
$792,778
In every situation except the worst-case scenario, Aritzia will be earning positive profits by the
second year. This is consistent with Aritzia’s proven success, worldwide, at earning profits 4
times greater than the industry average for retail. By the third year, in all scenarios we will be
earning substantial, positive profits.
3. Have monthly inventory turnover to ensure that Aritzia is providing its customers with
the latest fashions
Days in
inventory
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
81.04
28.50
28.50
28.50
28.50
28.50
28.50
28.50
28.50
28.50
The table outlines days in inventory under the best case scenario showing that by the second
year, the goal of inventory turnover monthly will be achieved. This is consistent with
expectations as we expect the Saskatoon market to take at least a year to fully accept the
Aritzia brand and require up-to-date fashions as market conditions and growth in the city
improves.
4. To eliminate long-term debt within 5 years
Under all scenarios, a long-term debt repayment within 5 years has been assumed with success
and no related cash flow issues to achieve this goal.
Aritzia LP
Page | 22
Client: Dragon’s Den
Conclusion
As noted above, it will be our key success factors that will contribute to the success of an Aritzia
location in Saskatoon’s downtown core. These are:
Key Success Factors
o Product Variety relative to the retail clothing market in Saskatoon
o Product availability
o Expressing fashion beyond simply clothing; linking fashion to culture
o Friendly, Fastidious and Fashionable staff
Both our short- and long-term goals are in-line with these points, which will be continuously
measured to ensure we are meeting our goals.
The base-case financial projections indicate that a downtown Aritzia location would be viable,
providing a 67% return over 10 years. We hope that you consider this presentation and the
opportunity to be a part of the next fun, fresh initiative in Saskatoon.
Aritzia will be able to fulfill these financial projects through many competitive advantages as
follows:
-
Proven sales
-
Brand recognition
-
Strong management
-
Retail sales market in Saskatoon
Aritzia LP
Page | 23
Client: Dragon’s Den
References
Saskatoon Commercial Real Estate Statistics. Retrieved June 25.
http://www.buysaskatoon.com/resources/pdfs/SREDA_Saskatoon_Commercial_Real_Estate_St
atistics_Jan-07.pdf
Colliers International – Saskatoon. The Knowledge Report. Retrieved June 25.
<http://www.colliersmn.com/prod/ccgrd.nsf/City/EEEBE5C4DBEEC5AD852575EE0055496D/$Fil
e/2009+Q2+Retail+Market+Report.pdf>
Saskatoon Real Estate Market. Brunsdon Junor Johnson Appraisals Ltd. Retrieved June 25.
http://www.realestateappraisals.com/bjj/saskatoon.shtml
IT World Canada. Aritzia Dresses up in SAP retail software. Retrieved June 25.
http://www.itworldcanada.com/news/aritzia-dresses-up-in-sap-retail-software/103589
The Business of Fashion. CEO Talk Brian Hill, Chief Executive Officer, Aritzia. Retrieved June 25.
http://www.businessoffashion.com/tag/aritzia
Canadian Retail Institute. Aritzia Rises Above The Fashion Crowd. Retrieved June 25.
http://www.retaileducation.ca/index.php?option=com_content&view=article&id=72&Itemid=6
1
Berkshire Partners Invests in Aritzia LP. Retrieved June 25.
http://www.thefreelibrary.com/Berkshire+Partners+Invests+in+Aritzia+LP.-a0139947566
Aritzia LP
Page | 24
Client: Dragon’s Den
Appendix 1
Brands Carried by Aritzia
*not exhaustive, as brands offered are constantly changing and vary between locations
In-house Brands
- Talula
- Talula Babaton
- TNA
- Wilfred
Designer Denim
- 7 for all Mankind
- Citizens of Humanity
- Cheap Monday
- J Brand
- Paige Premium Denim
- Rock & Republic
Other Brands
- Acne
- Adidas
- Central Park West
- Community
- Ernst Sewn
- Habitual
- James Perse
- Mackage
- Marc by Marc Jacobs
- MM6
- Park Life
- ORION
- Quicksilver
- See by Chloe
Aritzia LP
Page | 25
Client: Dragon’s Den
Appendix 2
Customer Value Proposition
6
Current Boutiques
LuluLemon
The Bay
Aritzia
Other Mall Stores
4
2
0
Quality
Price
Customer Service
Diversity in Product
Brand Recognition
Note:
-
Current Boutiques include Manhattan Casuals, MINT boutique, VOGE Couture, Sandbox
in the City for example
-
Other mall stores include stores such as Le Chateau, and Ricki’s
Aritzia LP
Page | 26
Client: Dragon’s Den
Appendix 3
Organizational Chart
Brian Hill
(President and
CEO)
VP Design
VP Sales
VP Marketing
VP Finance
Design Staff
Regional Sales
Managers
Marketing and Promotion
Associates
Accounting Staff
(outsourced)
Clothing Production
Staff
Store Managers
Store Supervisors
Sales Associates
Aritzia LP
Page | 27
Client: Dragon’s Den
Appendix 4
Market Research – Retail Industry in Saskatoon
Aritzia LP
Page | 28
Client: Dragon’s Den
Aritzia LP
Page | 29