competitors in the clothing industry include Buckle, Pac Sun, Aeropstale, Urban Outfitters, American Eagle Outfitters (AEO), Express, Wet Sea, Abercrombie & Fitch and Gap: however, Chic Boutiques’ main niche competitors are Wet Seal and American Eagle Outfitters (AEO) since they both target the same age demographic. Wet Seal deals in clothing for teenagers between 13-19 years and young women between 25-35 years of age, through its separate mall-based Wet Seal and Arden B chains of retail stores. Wet Sea stores sell fashionable clothing and accessories for female teenagers while, the Arden B. stores sell fashionable and contemporary office and casual wear. Wet Seal has over 422 Wet Seal stores and 79 Arden B. stores all over the US, but despite their economies of scale Chic Boutique is registers higher operating and profit margin because of low costs.
American Eagle Outfitters (AEO) is a mall-based retailer in apparel and accessories throughout the US and Canada. AEO has two brand names American Eagle and Aerie stores which sell branded products targeting both men and women between 15-25 years. Aerie however, mainly sells ladies personal care products claiming 9% f total AEO sales, men’s wear contributes to about 40% of net sales while women’s wear is 51% of net sales. Despite tough economic times and stiff competition, AEO is the 14-30 year old clothing market leader in terms of profitability. The company sells denim wear, sweaters, graphic T-shirts, outerwear and accessories in its 76 stores worldwide and, by using their e-commerce website ae.com and 77kids platforms. Despite having, online sales services, economies of scale and proprietary products Chic Boutique can beat AEO by keeping low margins since AEO’s branded products are highly priced.
Some of the underlying factors currently affecting business in the clothing industry include:
- Back to school: since most of Chic Boutique’s sales are within the teenage bracket, sales tend to sore higher as student begin preparing for school. This trend is especially observed in the junior high and high school cohorts and, is observed also in competitors like AEO and Wet Seal. Chic Boutiques’ price leadership strategy ensures the smooth transition of students back to school without straining the parents who pay for these expenses.
- Holidays: clothing retailers experience expanding sales as holidays approach, especially the November to December holidays. During this time, individuals normally increase their spending to the benefit of retailers.
- E-commerce: although Chic Boutique lacks an online sales platform, significant growth in this area has prompted the boutique to rethink their position. Most of the youth spend most of their time surfing the internet than in physical stores; therefore, online trade is key in keeping customers shopping. Offering clear item details in inventory, convenient payment and delivery options provide customers convenience of saving time that was meant for a trip to the store.
Chic Boutique sells apparels and accessories for teenage girls and young women between 13-21 years of age, a cohort that is very fashion sensitive. Chic Boutique stores are located favorably where teenagers frequent e.g. malls, in order to offer convenience to customers and help others locate us easily. All stores stock girls’ and women’s’ apparel and accessories at very low prices compared to other stores, leading to high customer turnout since it’s a form of promotion by itself.
Since the boutique is still small in size with several stores, retailers are placed in major towns and cities where fashion trends are important and in high demand. The target market of teenagers and the youth is good for business, since their spending is not heavily affected by factors like economic downturns in the short-run.
Teenagers and young women are greatly influenced by what they see on their televisions, including music videos and films where current trends are displayed and promoted. This therefore, makes them frequent consumers as trends keep changing as observed by the US Census where, households spent double on girls and women apparel compared to men and boys (US Census2012).
US Census (2012). Average Annual Expenditures of All Consumer Units by Race, Hispanic Origin, and Age of Householder. United States Census Bureau