International Business Plan
Griselda Lopez
Jennifer Sonco
Betzy Matitico
Laura Johns
Executive Summary
Our plan is to bring Target to the UK and have them be a retail store for dress and career
wear. We think it is best if Target were to expand to the UK by partnering with River Island
stores. This would be a great fit for Target because River Island is known for their dress and
career wear pieces. Target would take over all their stores, but they would still incorporate River
Island pieces in their stores. Target would have an advantage this way because River Island is a
well-known established brand in the UK and internationally. With Target taking over all of the
River Island stores they would have a big opportunity for growth because there are many stores
throughout the UK. With Target’s great styles and customer service they should be able to use
this to grow big throughout the UK.
Introduction
Target is expanding to the United Kingdom, specifically London. Currently, Target has
headquarters in the United States and India. This is a disadvantage for Target because the
company is only limited to the locations in the U.S. This is preventing the company to grow
internationally. In 2013, Target began its expansion journey in Canada where it failed miserably.
The main reason it failed miserably was because they were not able to conduct enough research.
Target aimed to standardize its operations throughout the Canadian market by continuing to
market to a similar customer base as it does in the United States. “What Target may not have
fully appreciated was that the Canadian discount sector is a particularly tough market. Unlike the
luxury segment, the discount market is fairly saturated by competitors such as Wal-Mart, Costco,
Giant Tiger, and Sears” (Dahlhoff, 2015).
The impact of globalization in the United Kingdom can be positive for Target. The UK is
one of the nearest international markets to the U.S. latitudinally, approximately the same distance
(3000 miles) as between New York and California, and is the 6th largest economy in the world
(Jones). When looking at the social and cultural factors in London, it is not surprising to find out
that it is one of the most culturally vibrant cities in the world. London, is a city accounting for
12.5 percent of the UK’s population and 20 percent of its GDP. Target will transition to London
through an existing established retailer. A partnership with River Island will be the ideal because
the company is a London-headquartered high fashion brand. They operate in worldwide markets
and have an existing partnership with an online British fashion store, Asos. Target will be taking
over all River Island stores and still be able to incorporate River Island pieces. As the merchant
team for dresses and career wear, we believe this is one of the best options for Target. Since,
River Island is a high street fashion store and they do offer a great selection of dresses and career
clothes for those fashion savvy consumers.
The Situational Environs
According to WGSN, the top five essential dress styles for Spring/Summer 2016 are the
glam mini, delicate white dress, boho midi, casual midi, and structured shirt dress. Due to major
retro influences and 1960’s styles, the shift dress has become a popular style. The glam mini
features mini lengths, boxy to A-line shapes, and bold colors. In addition, prints, patterns, and
embellishments are present in this design in order to refresh the style of the glam mini. The
delicate white dress is composed of fabrics like lace, chiffon, and eyelet that take a whimsical
style. Short romantic, bohemian, and slip dress styles become a must-have for the season. Also,
flowy bohemian dresses are an essential piece for Spring/Summer 2016. These dresses come in
different lengths varying from midi to ankle lengths. These styles take an impact with bold
colors, patterns and asymmetrical angles. Some fabrics that are expected to be seen in the flowy
bohemian dresses are chiffon and silk. Also the casual midi dress is expected to be a big hit for
Summer/Spring 2016. With midi lengths, the casual, slim style conveys a relaxed yet sporty vibe.
This dress style is extremely versatile. It can be worn with slip-on sandals and sneakers for a
relaxed look, or with heels for a more sophisticated look. Lastly, the structured shirt dress is a
modern twist to the iconic shirt dress. With deconstructed panel placements and asymmetric
angles brings newness to the core shirt dress silhouette. The most popular colors in this style are
in pure white and blue shirting which create the modern tennis dress.
Furthermore, when researching the upcoming trends for Spring/Summer 2016 in the
career wear category we found that the fitted and feminine blazer was going to be a huge hit.
Also, a modern twist to the trouser will be a key product for the season. This trouser design will
feature a crop, loose fitting look instead of a fitted, long trouser. In addition, a classic top is
important to pull all the pieces in the collection together. According to WGSN, a prim and proper
cardigan is important for a business woman. Lastly, WGSN is forecasting that a tailored dress
will be a great hit during the spring season in the career wear department.
The Neutral Environment:
The Media Environment
Britain is going through one of its biggest times of change. The Prime Minister David
Cameron was reelected this May 8. Therefore Tories are currently the party in charge of the most
important decisions in the United Kingdom. According to Time Out magazine, one of the
changes that will be implemented is the reduction of benefits caps from ₤26,000 to ₤23,000. This
affects retailers like us, because the same magazine explains that this measure will fund 3 million
apprenticeships. It can be a possible opportunity for Target to begin a positive connection with
the UK’s public opinion. For example, Starbucks became the center of a retail scandal when they
were accused of not paying domestic taxes since they were a foreign company, now there are
numerous publications applauding Starbucks for hiring and encouraging apprenticeships. One of
the persons interviewed by CBI said “The apprenticeship is allowing me to develop my
interpersonal and practical skills”. Thus, this is definitely a change that can be used for the better.
Special Interest Environment
There are two establishments that will be a huge influence on the success of Target in
London. The primary influence will be the UK government. It is commonly known that it is
difficult to establish a company in a foreign country. In order to combat this, Target will partner
with River Island This will ease the transition for Target’s grand premiere in London, rather than
dealing with intense and lengthy negotiations for independent permits and licenses. The same
establishment will also be affecting the discretionary income of our consumer. Time Out
magazine writer Andy Hill explains that the 40% percent tax rate will be raised to ₤50,000
instead of ₤42,000. Andy Hill also went on to explain that this will increase non-taxable
allowance to ₤12,500. In the retail world, more discretionary income translates to vast
opportunities to higher sales. On the other hand the second influence is retail organizations and
events. The best way to get to understand a foreign market is to understand your competition.
There are vast opportunities to network as well. For example, Target can go to the annual UK
Retail Conference. Numerous companies attend this event including: Estee Lauder, GAP, and
Georgio Armani. Rather than just invading London, there must be a transition. That is why
joining organizations like the British Retail Consortium, is so important. London may be a big
city but it can also be a small world, you can be most influenced by your landlord and your
neighbor.
The Competitors Environment
Founded in 1975 by Amancio Ortega and Rosalia Ortega, Zara has evolved into a
flagship chain store of the Inditex group, known to be the world’s largest apparel retailer. Their
product's target market are females, comprising of 65% of their sales, within the age group of 1840. They are fashion conscious, educated and fall in the middle class category. As a spanish
clothing and accessories retailer, Zara has manufactured and distributed their products to stores,
evolving into a successful vertically integrated retailer. With over 2,000 branches worldwide and
launching around 12,000 new designs each year, Zara has accounted for nearly 70% of Inditex’s
income (Burgen).
One of the major strengths of the company is that it is able to respond very quickly to the
changing needs of their customers. Zara does not source its manufacturing process, making it
fully in control of the products it produces. New styles are normally available on the sales stores
within two weeks, four weeks maximum. If a product is not selling in the stores, it is
immediately pulled from the stores. Small and regular product shipments are designed to keep
the inventory scarce and fresh; compelling customers to buy urgently and frequently visit the
store for new inventory. Bar coding, online shopping and computer, aided purchases are all
successful measures designed to increase sales and make it a global brand (Thompson).
Zara has also resisted the industry-wide trend towards transferring fast fashion production
to low-cost countries. Their most unique strategy would have to be their policy of “Zero
investment in marketing”, where the company prefers to invest a percentage of revenues in
opening new stores instead. Zara has differentiated itself from the rest of the competition making
their key marketing strategy based on exclusivity, experience, differentiation and affordability
(Bhasin). In essence, the company relies heavily on the word of mouth advertising more than
anything else, which has been a pending weakness for the company. In addition, Zara’s
weakness would be their over-dependence on the European market, having 50% of Zara stores
located in Spain and their surrounding countries. Zara has developed a high dependence on the
Spanish and European market to sustain its revenues, making them highly vulnerable to
economic changes that take place in these markets (Gudz).
Zara’s business model also aims to contribute to the sustainable development of society
and that of the environment. Within their mini, midi and maxi dresses, Zara has uses a variety of
prints, silhouettes and fibers. Zara supports organic farming and makes some of its garments out
of organic cotton (100% cotton, completely free of pesticides, chemicals and bleach). All Zara
products, including materials of animal origin, also comply with the applicable Inditex animal
welfare policy. This policy requires products to come from animals treated in an ethical and
responsible manner at all times. “Under no circumstances may animal products deriving from
animals slaughtered exclusively for the sale of their skins, shells, horns, bones, feathers, down or
any other material be used” (Environmental).
The Company Environment
Target carries a variety of dresses and young career wear with multiple silhouettes and
fabrications. From a-line, maxi, sheath, swift and wrap dresses to blazers, trousers, blouses, and
skirts, Target offers a chic and stylish collection. These dresses and career wear include fabrics
such as polyester, rayon, spandex and cotton for a comfortable fit. With subtle prints and soft
pastel color schemes, Target products offer a variety of styles for the working females we cater
to. In 2011, Target also became a founding member of the Sustainable Apparel Coalition (SAC),
a group of more than 80 apparel retailers, suppliers, nonprofits and NGOs who work to reduce
the environmental and social impacts of apparel and footwear products around the world. The
coalition’s first major project was to create The Higg Index, a tool to help the industry measure
the impact of materials, packaging, manufacturing processes and transportation on the
environment. Target has also learned how harvesting and spinning of raw materials and
consumer laundering has the greatest impact on water and energy consumption. In 2013, they
added a reminder to the labels of Target-brand apparel encouraging guests to "consider coldwater wash to save energy and money." They also made the labels themselves more sustainable
by switching to polyester made from recycled water bottles, a change that will divert about 9
million water bottles from landfills every year (Supply-Chain).
Target works in close partnership with suppliers around the world. They are constantly
seeking new and innovative ways to not only deliver more value to their guests, but also
strengthen the communities where they do business. Target is committed and actively engaged to
supplier diversity to support all areas of their organization. While every business unit at Target
has specific needs and requirements, they look for certified diverse suppliers who can provide
innovative, competitively priced goods and services, foster community and economic
development, and enhance their ability to deliver shareholder value (Responsible Sourcing).
Targets greatest strength would be their focus on the satisfaction of their guests. By
maintaining a fast, fun and friendly experience for every shopper, Target has increased their sales
for the past two years. From $71,279 in 2013 to $72,618 in 2014, Target has maintained the
loyalty of their guest with their Target Redcard savings, 120 day return policy, and weekly sales
promotions (Target). Through the Target Debit and Credit Red Card, guest are able to save up to
5% of every transaction at Target stores as well as Target online purchases. Guests are also
granted an additional 30 days to return any items, a total of 120 days to either get their money
back or purchase other products. As for promotions, Target provides weekly ads every two
weeks with multiple coupons, allowing the guest to save up to 50% off of selected items. There
are also promotions including free gift cards and exclusive items from the Cartwheel app where
guest can download to their tablets and cell phones.
Through the triumph of their strengths there are also weaknesses that have affected the
company. In the year 2013, between November 27 and December 15, Target was the subject of a
data hack at its bricks-and-mortar stores. As many as 40 million customers saw their credit and
debit cards become subject to potential fraud after malware was introduced to the POS system in
almost 1,800 stores (Munson). Target has therefore committed themselves to making this right
and are investing in the internal processes and systems needed to reduce the likelihood that the
breach will happen again. For example, they are accelerating their plans to put chip-enabled
technology in their stores and on the Target Redcards by early 2015, six months ahead of our
previous plan. Nothing is more important to Target than their customers and ensuring that their
trust and loyalty is continuously growing.
Marketing
The fashion icon that was chosen for dresses and young career wear was Kelly Osbourne.
We selected Kelly, because she is both influential in the United States and in the UK (See figure
1). She was also part of Fashion Police for 5 years. Just last year she was featured and
interviewed in BeautyCon Los Angeles. The BeautyCon website explains that “BeautyCon is the
world’s premiere fashion, beauty & lifestyle destination for fans, brands, and creators.” This is
fairly important as well because she has such a vast social media following, it is no mystery why
she was featured (See figure 2). Being only 30 years old, not only is she the right age for the
target market, she is also extremely successful and influential. She has her own clothing line with
HSN called Stories and a makeup line with MAC. As a singer-songwriter, actress, television
presenter and fashion designer, she boasts a networth of approximately 15 million dollars (NTD,
2014.) Given the correct marketing plan execution, this Westminster native can become the
perfect face for Target in London.
(Figure 1) Google Trends Region Interest for “Kelly Osbourne”
(Figure 2) Kelly Osbourne’s Social Media Outreach
Kelly Osbourne
Social Media Platform
Followers or Likes
Twitter
4.02 Million
Instagram
1.8 Million
Facebook
1.5 Million
Although Kelly Osbourne’s image can give Target the opportunity to thoroughly expand
its market in the UK, there is much more that can be attained when examining promotional
efforts. For example, since most of the specific places where the Target stores will be opening
are tourist attractions, we needed a face that was not only British, but international as well. In
addition,the partnership with River Island will also help Target’s transition into the UK. One
must carefully note that when entering a foreign country, there must be a clear analysis of the
market prior to entering. The following figure helps explain the significance in the 4 P’s for
Target in London.
(Figure 3) Marketing Mix
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Product
Kelly’s style will be used as an
inspiration for the fashion forward
lines
The colors that Kelly wears
consistently will be used to inspire a
color board for the dresses (like her
MAC line)
Since Kelly has been a role model for
body image, we will tailor to a broad
line of sizes
Using the services of companies like
WGSN, we will better focus on a
market that was previously foreign to
Target
The clean and smart design of Target
can be executed on a fashion forward
level to emphasize on the products
Using River Island’s existing products
as an inspiration for fabrication and
design, we have a better idea on the
precise product the customer needs
Promotion
Rather than just having a small
clothing line in HSN, Kelly can be an
opportunity to promote a private label
brand with her name
Kelly’s modeling images can be used
as a focus of advertising
Using Kelly’s social media platforms
we can reach out to her following
Since Kelly has recently made
headlines, we can use that hype and
direct it to Target
Promoting apprenticeships in our store
can also lead to better image and more
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●
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●
●
●
●
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Price
Kelly’s name can be used to elevate
Target’s prestige, thus price
People will pay for what the product
makes them feel, if it is a designer
exclusive, they will pay a higher price
Offering some basic private label
products with the chosen silhouettes
can lead to cross-shopping &
simultaneously offer a variety of
prices
The control of a private label with
Kelly’s name helps us have more
control of the prices, thus gross margin
The prices can reflect the positive
values of Target’s company image
Breadth and depth of the product will
be precisely what the customer needs,
no stockouts & array of products, thus
the Price will be validated
The Prices will also closely resemble
that of River Island since it will be
more of an upscale establishment
Place(distribution)
Since there will be an emphasis on
making Kelly Osbourne a private label
brand for our store, we will have a
better opportunity for distribution
The partnership with River Island will
also give us an opportunity to use their
vendors and distributors and cut our
costs
Using the same Target values, there
will be an emphasis on supplier
diversity, with an addition of domestic
suppliers
Using the location of one of the
influence of positive shopping
● Using the Target values for
domestic/diverse suppliers, there will
be an opportunity to show care for the
UK
● Bi weekly mail insert that shows all
the promotions going on in the store
existing River Islands will ease the
transition and decrease delays in
execution
(Figure 4) Line Sheet for Dresses:
Silhouette
Glam Mini
Delicate
White
Boho Midi
Casual Midi
Structured
Shirt Dress
Pattern[s]
Print as
image
Eyelet
Print as
image
Fiber
Content
Cotton,
Polyester
Cotton,
Lace
Polyester
Viscose,
Rayon
Cotton
Fabrication
Stretch
Sateen
Broderie
anglaise
Chiffon
Jersey
Broadcloth
Price in ₤
50.00
55.00
60.00
65.00
55.00
Image
Color[s]
Stripes
Silhouette
Fitted and
feminine
blazer
Cropped
Trouser
Classic Shell
Prim and
Proper
Cardigan
Tailored
Dress
Pattern [s]
solid
solid
solid
solid
solid
Fiber
Content
Polyester
Polyester
Acetate (antimicrobrial)
Acrylic
Cotton
Fabrication
Worsen
Fabrics
Twill Fabrics
Sateen
Jersey Knit
Stretch
Sateen
Price in ₤
55.00
35.00
24.00
65.00
55.00
Image
Color [s]
Summary/Conclusion
A big advantage Target has coming into the United Kingdom is that the UK has one of
the largest economies in the world. London, as a whole, makes up about 12.5 percent of all of the
UK’s population. Target can use this big economy to grow big like they are the United States.
Having a big name, like Kelly Osbourne, be the fashion icon for the brand would also be a great
advantage because so many people admire her self-confidence and style. Target’s biggest
competition in the UK would definitely be Zara. Since Target is known for their variety of styles,
environmentally friendly business, supplier diversity, and most of all customer service, they
should be able to have an advantage over Zara. Zara is not known for their great customer
service and we think Target applying that here in the UK will be the greatest advantage of all.
Since customer service isn’t as big over in the UK as it in the US, this plan will succeed because
Target will be bringing something that customers have been lacking and wanting.
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