1 Market Research Report 2018 by Evie Nairne
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MARKET RESEARCH REPORT 2018 BY EVIE NAIRNE 1 2 3 4 - 5 Introduction 6 - 9 Marco Market Research 12 – 16 Demographic and Ethnographic Shifts CONTENT 20 – 21 Secondary Brand, Retailer Research and Performance 24 – 31 Current Marketing/ Branding Mix 4 32 – 33 Competitor Analysis 34 – 39 Primary Consumer Research CONTENT 40 – 51 Primary Brand Research – Shop Report 52 - 53 Conclusions and Recommendations 54 - 55 Bibliography 5 Kappa is an Italian sports brand that was founded in 1916 by Abramo Vitale in Turin, Italy. Before it became Kappa, the brand simply rebranded some socks that were mismanufactured in 1956. People went crazy for them, soon placing Kappa on the market as one of the leading sock and underwear brands. Later in 1968, the founder’s great-grandson furthered the reputation of the brand by setting out to make casual unisex clothing, which was received well by young consumers due to its creation of the now iconic Omini logo. As time went by Kappa began to thrive more, with its innovative research and development of technical sportswear. After its official branding in 1967, Kappa took off, with appearances throughout the 1984 LA Olympics. In the 90s, sportswear has become part of the everyday look, so the brand used this advantage to slip into the everyday market too. Today, we see Kappa on many sports kits as well as on the street, proving that Kappa is a multidis- ciplinary brand. Although we must notice that it has lost its respect along the way, causing it to only be stocked in sporting or department stores. Therefore in this report, I am going to research into the current market as well as Kappa’s brand performance to see what Kappa needs to be doing in order to gain its leading title back. WHO? AND WHAT? AND WHERE? WHO? AND WHAT? 6 7 8 MACRO MARKET RESEARCH The ongoing global political shifts have affected the state of the fashion industry due to its ongoing problems such as ‘geopolitical instability, terrorism, Brexit, and stalled trade deals’ as they are causing a ‘pervasive sense of uncertainty in the global economy’ (McK-BOF, 2017 report). This has had a knock-on effect causing the prices of luxury products to increase. This will not be helped by the recent US elections, as this could weaken trade deals even more. Furthermore, fast fashion brands continue to struggle with the effects of war/conflict in the Middle East. POLITICAL The UK’s political state has not been aided by the 2008 recession, which has caused the economy and employability rates to suffer. Therefore as prices have risen, fast fashion sales have decreased, as people need to spend their money on survival staples. Furthermore, this has caused the level of competition between brands to rise, causing individual brands to see effects on their sales and profits and even face the threat of closure. ECONOMICAL 9 The main source of social change is millennials. The new generation is focusing on sustainability and ethics, as well as wanting great prices and great quality. Therefore while fast fashion is struggling to comply with consumers need for cheap products that aren’t made in sweat- shops, high fashion is struggling to get noticed with such high pric- es. Also, these young people are so influenced by celebrities styles, that brands are struggling to keep up with them. ‘43% of consumers SOCIAL look for inspiration before buying and 23% says that social media is that influence.’ (Mintel) proving that people are now relying on feedback from other sources and not on advertising or marketing campaigns. The biggest changes have come from the ever-developing world of technology. It has changed the way retail works by making it so easy to shop online, but still gain a personal experience through online chats with interactive sales assistants. ‘In 2018, we anticipate that online sales of clothing and accessories in the UK will rise 8.2% to £16.3 billion.’ (Mintel) Technology has also improved the production and supply chain and has brought greater effectiveness to the sales and marketing of fashion products. It has also helped with ‘overseas expansion through E-commerce having helped them go past borders and sell to a larger customer segment.’ TECHNOLOGICAL 10 MACRO MARKET RESEARCH The fashion industry has always had to comply with legal rules and regulations, such as following, ‘tax restrictions, export restrictions, and inflation costs.’ Not to mention the growth in environmental laws. As well, they must stick to the workers’ rights, but with the increase in fast fashion the need for cheap workers expands, but the cheapest LEGAL source of work is illegal sweatshops. However, if brands show legal and ethical compliance it could increase their reputation. within the market. Environmental problems that fashion brands are facing is the carbon emissions that are released during the transportation of clothes. As well as the sheer amount of non-recyclable packaging they use that gets dumped into a landfill. As for ethical impacts, it is apparent that people are very focused on this before deciding to buy a product. Additionally, fashion brands that use real animal fur/skin, face being boycotted by groups such as PETA. Another focus of consumers is sustainability, therefore it is good to see that ETHICAL ‘more than 65% of the consumers are seeking sustainable fashion actively.’ 11 12 13 What have consumers have spent more money on in the last 12 months? G1 “MINTEL ESTIMATES Clothing THAT CONSUMER Holidays SPENDING ON CLOTHING AND Technology ACCESSORIES WILL Eating Out RISE 5.3% TO £60.8 0 2 4 6 8 1 BILLION IN 2018.” % More The same Less When looking at retail markets performance, it vital to look at what consumers are spending their money on. This also How much do consumers spend on clothing? helps to determine what other markets are key competitors. G2 8 In Graph 1 we can see that in the last 12 months people have not only just spent more on clothing, but more on that market than any other. Graph 2 proves that consumer spending habits have risen 5.3% to £60.8 billion and it estimates that it 70 will continue to grow till 2023. Findings from Mintel state that in recent years menswear has outperformed womenswear, but this sudden surge has been driven by womenswear. 6 1 1, With Kappa being part of this most popular market, the brand has the potential to thrive, but it must 5 consider new consumer trends and brand relevancy otherwise it will be lost to the many other competitors. 4 213 216 219 222 1412 DEMOGRAPHIC AND ETHNOGRAPHIC SHIFTS Where do consumers shop most? G3 It is important to consider where people are sourcing their clothing from, and Others how that is affecting the market. Graph 3 shows that clothing specialists still gain the biggest percentage of the market, but also how ‘online-only retailers now capture 12.3% of consumer spending.’ With Kappa choice Supermarket to only stock in sports specialist and department stores, it could be that Kappa is missing out on a major consumer market. The brand does, however, have the online market covered. Mintel estimated that online Sports Specialsts consumer spending on fashion items will rise 8.6% to £19.0 billion in 2018. Graph 4 shows that people have been shopping more frequently too. Department Stores How often do consumers shop? Online Only Retailers G4 Once a week or more Clothing Specialists 2-3 times a month Where do consumers shop most? Others Once a month Supermarket Sports Specialsts Once every 2-3 months Department Stores Once every 6 months Online Only Retailers 0 5 1 15 2 25 3 35 4 Clothing Specialists % 15 Why don’t consumers shop online? OVERALL, 89% OF one of these G5 CLOTHES BUYERS Dont trust online ARE SATISFIED Delivery time WITH THE Delivery price Enjoy in-store shopping RETAILER THAT Browsing THEY USE TO BUY Sizing CLOTHING MOST uality FREQUENTLY - Try before you buy G6 Why consumers do shop online? Why consumers do shop online? one of these one of these Dont like shopping in-store Dont like shopping in-store With the internet now extinguishing Time saver the need for in-store shopping why Time saver do brands still do it? Research shows Prefer to try at home us that some consumers do still ReviewsPrefer to try at home prefer the traditional way. Graphs 5 and 6 prove to us that at the moment More uniqueReviews products it is still vital that brands have both online and offline shops. Even Fast delivery More unique products though Kappa does have a clear online presence, it lacks in stores. Better selection Fast delivery Perhaps the impersonal experience Online is cheaper of buying in sport department stores Better selection is the reason for Kappa’s decline. 16 DEMOGRAPHIC AND ETHNOGRAPHIC SHIFTS Online is cheaper Do consumers care about ethics when making a purchase? G7 We must also consider the main influences on customer spending habits. They often Prefer to buy brands involve social and that are reducing their ethical factors. Graph impact on the environment 7 suggests that most people do buy items they have seen on social media or in fashion magazines. Would like to receive Therefore Kappa needs rewards for recycling unwanted clothes to promote their brand according to these 0 2 4 6 8 1 influences. Graph 8 tells us that consumers % are bothered if brands Yes Sometimes No harm the environment. G8 Again, Kappa must consider their choice Do consumers care about ethics when making a purchase? of manufacturing and means of transport in order to gain a wider audience.