Tuesday, April 27, 2010

Sun Tzu - War On Business Part 4 (Asian Woman)

We have come to Part 4 of the Sun Tzu series, and so far it’s getting more and more interesting with many examples of how to improve on business operations and how to apply strategic thinking. James is articulate and has good insights on all sorts of businesses; and he also engages “consultants” in the form of experienced entrepreneurs who are knowledgeable about a particular industry to give their expert views and opinions. This all adds up to a holistic appraisal of the business, and he is able to deliver his “verdict” on how to improve. My lingering grouse is that totally no numbers are presented at all throughout the episodes thus far, and this is one aspect which can be improved on.

Episode 4 goes back to Singapore again, and shows an entrepreneur called Kavita Thulasidas (an Indian lady) who designs a specialized line of clothing. She has a retail shop somewhere near Selegie area and her shop is called Asian Woman. The designs are a fusion of Western and Indian styles and in her own words, are supposed to reflect contemporary designs catered to a higher-end clientele. Unfortunately, James’ first observation is that the location of the shop is poor, in that it is located in a run-down building where there is only one other retailer present. In true Sun Tzu style, he mentions that Terrain (“Di” in Chinese) is one of the important aspects of a battlefield, and one must position oneself in a good location to be able to capture maximum consumer traffic and give good visibility to the business frontage.

As James steps into the shop, he is pleasantly surprised by the rich and elegant designs of the clothing, many of which have been hand-sewn with beads and sequins. Kavita then shows James a room upstairs where many of the gowns and dresses are further altered and “made-to-measure”. It appears that many of the garments are customized and James is forced to rethink the business model, as he previously thought that the shop attracts walk-in customers. When he speaks to one of the customers, who is an Indian lady buying a gown for her wedding to be held in Scotland, he realizes that Kavita attracts a dedicated customer base who seek her out for her special expertise in designing beautiful gowns, meaning she serves a niche segment of the market.

The problem, as Kavita relates, is that she had previously tried to expand by opening another retail shop in a busy mall but was forced to close it down as she did not want to divide her time between the two outlets, and also because of family commitments. Also, she does not have the expertise in terms of a good Management team to help her out, and like Dominic and Feng, is a very “hands-on” entrepreneur. She is thinking of how to expand her business instead of staying as a one-shop business, but is unable to break out of her current business model. That’s where James comes in, as he also enlists the assistance of Elim Chew, the founder and CEO of the clothing line 77th Street.

First, James did a simple test. He took some of Kavita’s designs and put them on models and “displayed” the models in Orchard Paragon and asked some passers-by (shoppers) for their opinions. The surprise came when many of these “contemporary” women felt that Kavita’s designs were somewhat old-fashioned and antiquated, while others remarked that there was “too much cloth” and the dresses look too layered. James then suggested to Kavita in the War Room that she had to start a new clothing line to differentiate from the old line, all the while keeping both lines distinct and separate so as to not create confusion. Another point James brought up was Kavita’s business model of selling her clothes in her own retail shop. Elim also agrees that this does not give the brand much visibility and Kavita is unable to scale up ther operations easily. Elim herself owns about 16 outlets and has expanded her brand successfully over the years. James therefore suggests using different channels to push the brand, and to market it through retailers. He gives Kavita 3 months to work on this and to hold a fashion show to display her new line to potential retailers.

The process of starting a new line and organizing the fashion show is far from easy, and Kavita works hard at it. James also enlists the help of an expert with fashion shows, who is on hand to give Kavita some advice about salient aspects of a successful fashion show, like the timing of the models and the banners to be used. Kavita starts a new fashion line called “Vita”, but in the end the fashion show is hurried and is described it as “Schizo”!

The lessons which can be garnered from this episode include:-

1) Owning a good location for a retail outlet – Obviously, a retail outlet specializing in high-end fashion needs to be located in a good mall where human traffic is high. This contributes to the perception of the store even though rental costs would be higher. James did mention that being located in a remote part of Singapore would “cheapen” the image of the brand.

2) Understanding your target customer and consumer behaviour – Apparently, Kavita did not have much clue as to what her consumers were looking for or found desirable. When James conducted a street survey using her clothing decked on models, the result was surprisingly unpleasant. So it pays to be aware of one’s consumers and to keep up with trends, especially if you are in the fast-moving fashion industry. Unless you are carrying a line which is a timeless classic, it will be prudent to innovate and evolve to remain relevant.

3) Product Segmentation is the key to a successful business – Notice how James encourages her to start a separate line in addition to her own existing line? This is to cater to more than one customer segment and to create multiple streams of income; plus broaden her customer base. This is one reason why drink companies like Coca-Cola have come up with variants such as Coke Zero (without sugar) to cater to health conscious people. If one segments their product lines clearly and creates brand loyalty in each segment, this could lead to significantly improved sales performance and clear revenue growth.

4) Succession Planning – A key theme of this episode was also succession planning, as Kavita was the only one who truly knew how to run her own business and no one else did! She herself admitted that she had not planned for any contingencies should she suddenly be unable or unavailable to run the business, and this could have a negative impact on her legacy.

5) Lack of proper delegation – Another problem seen her with Kavita which was similar to previous episodes is that the owner tends to be a little too “hands-on” and does not have proper delegation of key duties to skilled personnel to handle. If this is fulfilled, it can free up the CEO (i.e. boss) of valuable time to strategize and plan, which is basically what a CEO is for!

Watch out for Episode 5 of Sun Tzu where I will be discussing on a gym business in Beijing called Ozone Gym, which has interesting implications on understanding demand, and how lifestyle trends and culture affect business decisions.

Check out Asian Woman's website at http://e-stylemart.com/

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