Revised Aritzia Team Group Project Shiv

Table of Contents
COMPANY PROFILE........................................................................................................................................................1
BUSINESS LEVEL STRATEGY............................................................................................................................................1
CORPORATE LEVEL STRATEGY........................................................................................................................................2
GENERAL ENVIRONMENT ANALYSIS..............................................................................................................................2
INDUSTRY ANALYSIS......................................................................................................................................................4
KEY SUCCESS FACTORS..................................................................................................................................................6
COMPETITOR ANALYSIS.................................................................................................................................................7
INTERNAL ANALYSIS......................................................................................................................................................8
Value Chain Analysis......................................................................................................................................................8
Competitive Advantage...............................................................................................................................................11
1) Resources............................................................................................................................................................11
i. Tangible Resources..............................................................................................................................................11
ii. Intangible Resources...........................................................................................................................................11
2) Capabilities..........................................................................................................................................................11
3) Core Competencies.............................................................................................................................................12
Financial Analysis........................................................................................................................................................13
1) Profitability..........................................................................................................................................................13
2) Liquidity...............................................................................................................................................................13
3) Leverage..............................................................................................................................................................14
SWOT ANALYSIS...........................................................................................................................................................15
CRITICAL ISSUE STATEMENT........................................................................................................................................16
CRITERIA...................................................................................................................................................................... 16
STRATEGIC ALTERNATIVES...........................................................................................................................................17
EVALUATION................................................................................................................................................................19
RECOMMENDATION....................................................................................................................................................20
IMPLEMENTATION PLAN.............................................................................................................................................21
Corporate Objectives...................................................................................................................................................22
Operations................................................................................................................................................................... 24
Human Resource.........................................................................................................................................................26
Finance........................................................................................................................................................................ 26
Timeline...................................................................................................................................................................... 28
Risk and Mitigation......................................................................................................................................................28
CONCLUSION...............................................................................................................................................................28
COMPANY PROFILE
Aritzia, a well-known fashion luxury brand, founded and established by the Hill family with the opening of
its first store at Oakridge shopping Centre in Vancouver. It is known for its innovative and in-house fashion
design that it sells to its customers. It primarily sells in-house brands, such as Wilfred, TNA, Babaton 1.
Currently, the company is serving its customers through e-commerce and other 84 retail stores in North
America. The company began with the idea of serving customers with its beautifully designed clothes and
exceptional service and has continued to maintain its position since then 2.
BUSINESS LEVEL STRATEGY

The business-level strategy adopted by Aritzia is differentiation. This is achieved by providing in house
designs and innovative products to its customers. It is focused on innovation and artistic design without
compromising with the quality standards. This has helped the company in getting the premium for their
products.
WHO (Target market) - The company primarily serves upper middle- upper class women, aged 18 – 35
years and has stores currently in Canada and United States.
WHAT (Products) – They company offer its products under various brands, treating each brand as an
independent label. They are focused on creating in-house fashion designs and style clothing for its
customers that helps in getting premium for its products.
HOW – The company is able to attract its customers through its premium quality fabrics they use for their
products and serving them with the excellent customer service. 3
https://issuu.com/audreyltaylor/docs/aritzia_marketing_plan_-_ent_mkt.do
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CORPORATE LEVEL STRATEGY
The corporate level strategy is related constrained with moderate level of diversification. It is a vertically
integrated fashion house that offers various brands to its customers where each brand has its own
independent label and service. All these brands share the common technological and distribution channel
under Aritzia, forming a related constrained corporate strategy. Moreover, it gives Aritzia more market
power to have vertically integrated brands under this strategy.
GENERAL ENVIRONMENT ANALYSIS

1) The Political/Legal Segment
Political stability (Opportunity) – Political stability of a country puts a large impact on the environment of a
company. No doubt in the current pandemic situation of COVID-19, a lot of companies are facing challenges
that has affected their running business operations, the whole world will soon get back to its economic
position. Running business in this situation is an opportunity for most of businesses.
Stringent Labour law (Threat) – The strict labor law rules prevailing in the whole world typically affects the
company’s operation. It has a direct impact on hiring labour, their rights and responsibilities, standard set
for working conditions, which creates threat for the firm.
Diversified and Systematic Taxation Law (Threat & Opportunity)– Every country has a mixed and
complicated taxation system. The tax on an income depends on the province where it is earned, the type of
income, where it is spent. So, it can be proved as both threat and opportunity.
2) The Economic Segment
Inflation Rates (Threat) - The inflation rates are predicted to rise in 2021 to around 3.29% from 2.99% in
20204. This would mean that there would be an increase in prices of the product. Retail industry would
suffer from fluctuating prices. This can prove to be a threat for growing industries.
2
Unemployment level (Threat) : During the current pandemic situation, the whole world has gone under
recession. Unemployment rate has increased to reach 8.4% as compared to 5.5% in March 5due to many businesses
shutting down. Lower wage position holders have been on the top list among the people who have got affected.
3) The Sociocultural/Demographic Segment

Workforce Diversity (Opportunity)—Due to increased immigration, people from all over the world are
travelling to other countries. People with different talents and skills work together. This means diversity in
the people that will have different tastes, preferences and cultures. Workforce consisting of Multicultural
backgrounds creates an opportunity for the firms to expand its market share.
Shift in work and career preferences (Opportunity & Threat) – The gradual shift in the career due to the
ever-increasing demand of the fashion and clothing creates an opportunity for the new entrant to enter the
market. On the other hand, it can be a threat too due to the increased competition from already
established and recognized brands.
Inadequate Income distribution (Threat) - Nowadays, as the gap between the poors and riches is widening,
it has created a lot of problems for businesses in selling its products. This gap reduces the number of
consumers. This thereby, increases the threat for the companies to set up and establish in the market.
Awareness regarding education- As awareness towards education is increasing day by day, funds are being
directed towards education facilities. This is bringing a rise to student loans and thus bringing more demand
to banking and finance industry.
4) The Technological Segment

E-commerce (Opportunity) - Many companies have launched e- commerce on the mobile website and their
respective applications. This makes shopping easier and convenient for consumers as they can order their
desired products online, which can be shipped directly at customer’s place. Moreover, due to the current
pandemic, most of the stores have limited their capacity and are encouraging online shopping by giving
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discounts. This puts impact on the functionality of many industries. This creates an opportunity for
businesses to grow and compete with other firms in the market.
Artificial Intelligence (Opportunity) – In the tech-savvy era, AI has become an essential part of our lives
that helps businesses in getting their work done efficiently and effectively. AI in fashion industry has helped
replaced most of the manual task to computerised, thus saving costs. This proves to be a good opportunity
for businesses to enter the market.
New equipment- Modernisation also means regular need to update devices, machines and computers in
the warehouses and stores. A big chunk of investment is required frequently to upgrade the machines to
keep pace with the advancement of technology to attract customers.   This can prove as a threat for a
company that has recently established and can not afford to frequently update its plants and machines.
5) The Sustainable Physical Environment

Producing environment-friendly products (Opportunity & Threat) - Producing environment-friendly stock
has raised the standard of living of the individuals in terms of reduced illness and diseases. Nowadays,
companies try to use sustainable, organic and recycled fabrics which makes their demand even higher. On
the other hand, these are little expensive and can increase their cost of production. This is a both
opportunity and threat for companies.
Natural and man-made disaster management (Opportunity) - A strong natural or man-made disaster
management authority that plays a great role in protecting people and property of a country. This is an
opportunity for companies as it creates a safe working environment for businesses to run successfully.
6) Legal restrictions (Threat)
The legal restrictions vary from country to country but the current outbreak of COVID -19 has created numerous
restrictions for the companies in terms of trade. These has impacted the working of the business resulting in
the shut down of many companies.
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INDUSTRY ANALYSIS
Analysis of industry becomes important as this environment has a more direct effect on competitive actions as
compared to the general environment. Porter’s 5 Forces is an analytical model that will help identify the
structure of an industry and help determine competitive strategies. 6
1) Threat of New Entrants – Medium to High

Product Differentiation (High)–With already existing large number of firms in the market, it becomes
difficult to achieve the level of product differentiation that can give a new firm its own identity. A firm can
enter the industry by initializing its operation with producing unique designs and innovated products.
Barriers to Entry (High) – Investment is a major barrier to new firms. It starts with infrastructure to
marketing, distribution, and human resources.
Government Policy (High) – The clothing and fashion industry follows stringent policies in terms of using
eco-friendly raw materials in their products. This makes the entry of the firms much more difficult.
2) Bargaining Power of Suppliers – Low

Supplier Concentration (Low) - The suppliers of this industry are third world manufacturers and do not
have any control over the product price. Hence, the suppliers have relatively small and insignificant power.
Substitute Products (Low)– Substitutes of cloth supplies are usually available. These cannot be easily
replaced and therefore the threat is relatively low.
Switching Costs (Low) – Suppliers are easily available and switching suppliers is not a big challenge in this
industry. The brands want to get cost-effective cloth material and suppliers must confide by the prices set
by buyers.
3) Bargaining Power of Buyers – Medium to High

Buyer Concentration (High)–In this industry, there is a huge competition among companies as buyers can
easily switch locations and preferences. The buyers are in large numbers and have various brands to choose
from. This, this gives an indirect power to buyers to bargain.
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Portion of Industry’s Total Output and Seller’s Revenue (Medium)–The clothing and fashion industry
contributes a significant portion in their revenue as buyers are always willing to style in according to latest
fashion which increase the sale of the industry.
4) Threat of Substitute Products – Low

Clothing industry faces a little threat in terms of substitutes. Although huge competition exists within the
industry who are competing among themselves to focus their attention on price conscious buyers, but a
substitute of clothing is not available as it is a necessity. Therefore, there is a little risk from substitutes.
5) Competitive Rivalry – High

Numerous Competitors–The industry has a high level of competitive rivalry in it because of the existence of
large group of competitors. Different buyers provide similar products at different prices and varieties.
Differentiation (High) –Switching brands is easier for the buyer especially when there are numerous
competitors available in the industry. Brands having a good public image charge in charging high prices. This
is because every competitor competes for selling a differentiated and unique product.
Fixed Costs (High)– There are high level of risk involved in relation to the investment made by the firms on
machinery and factories for manufacturing, including storage costs of maintaining inventories.
KEY SUCCESS FACTORS

Customer value- Aritzia emphasizes on providing its valued customers a reason to come to them by
satisfying their wants. The choice of different brands where each has a unique specialisation gives the
customers more choice and satisfaction while shopping.
Fabrics quality- The company never fails to maintain its standards by providing high quality fabrics to its
customers making it worth to purchase their clothing from Aritzia.
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Design and styling- The major factor is styling and designing of the apparels which is done by highly
experienced staff and innovative minds. Several brands having lots of designs coming together to form a
company is the type of company Aritzia is.7
http://www.vancouversun.com/wilfred+steps/10836922/story.html
COMPETITOR ANALYSIS
COMPETITOR ARITZIA LULULEMON PEEKABOO BEANS CANADA GOOSE
ANALYSIS
Future Objectives  Build economies  Product  Creating e-  Invest more in
of scale in U.S.8 innovation9 commerce and retail
 Expand  Expand deeper wholesale  Expand globally
Internationally globally strategy by increasing
 Enhance its e-  Develop social brick and
commerce media strategy mortar stores
 Establish as
leader in child’s
apparel10
Business Strategy Differentiation Focused Focus Differentiation
differentiation
Strengths  Private brands  Quality  Environment  Product
 In-house designs products friendly innovation
 Niche market  Strong
strategy distribution
network
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Weaknesses  Expensive for  Relatively  Limited target  Restricted
some people expensive audience success outside
 Female focused products11  Less scope for primary
 Considered a expansion business
yoga brand  Slow
investment in
research and
development
INTERNAL ANALYSIS
Value Chain Analysis
1) Primary Activities
Supply Chain Management
 Global Supply Partners (Cost) – Company’s value chain activities start with building strong networks and
relationships with the suppliers to maintain efficient flow of supplies for operations. Aritzia has its main
suppliers located primarily in Asia and Europe that provide them with high quality material and products at
competitive costs12. Their global reach strives on choosing the supplier with lowest costs relative to
competitors.
 Direct dealing with Suppliers (Differentiation) – Aritzia deals directly with their suppliers to get the best raw
material for their products. They plan their capacity right at the beginning of the season to ensure
flexibility in order quantities13. This strategy differentiates them on optimum procurement of the raw
materials and creating high quality products for its customers.
Operation Activities
 Virtual-Meeting Technology (Differentiation) – Operational activities include designing efficient production
processes and physical layout of the operations facilities. Aritzia is managing these activities with its virtual-
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meeting technology available at all its locations14. This differentiates the company from other competitors
as company can utilise those resources and time by reducing business travel.
 Sustainable Packaging (Cost) – Aritzia has done excellently well in planning to minimize e-commerce
packaging and fully recyclable15. Their cost-effective strategy of using protective paper bags works well with
providing sustainable environment to its customers.
Outbound Logistics
 Third-party distribution (Cost) – For distribution, Aritzia uses independent third-party transportation
providers to ship their products to different locations 16. But this may result in increased costs because of
unanticipated changes, such as increase in fuel prices, thereby increasing shipping costs 17. The current
pandemic situation has adversely impacted transportation facilities resulting in late deliveries.
Marketing and Sales
 Omnichannel Strategy (Differentiation) – There are not many companies that use omnichannel strategy but
Aritzia has made its ways by integrating between variety of channels to provide service. This provide
customers with the seamless shopping experience where they can check the availability, browse new styles
at different store location. This adds value in providing hassle free service to its customers.
 Digital marketing Channels (Differentiation) – Aritzia continually focus on establishing its network and
directing resources through digital marketing that includes social and email programs 18. These have helped
them earned the greatest market share.
 Customer loyalty program (Differentiation) – Aritzia marketing approach to using customer loyalty
programs has also helped the company gain the huge market share. The company is making every effort to
understand the customers requirements through optimizing the online operations to enhance
personalization, driving towards achieving customer loyalty.
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 Growing e-commerce business (Differentiation) – Aritzia is setting the foundation to expand its operations
internationally by identifying the potential markets, creating brand awareness through delivering their
premium quality products.
 Warehouse Sale (Cost) - Aritzia has its warehouse management system that is intended to improve the
flexibility and scalability in supply chain system, and this provides the greatest opportunity for growth of
business19. They set up the limited time to sell their clothes at cheaper prices at warehouse sales.
Follow-up Services
 Excellent Customer Service (Differentiation) – Providing after sale services is an important element of
providing good customer service. Aritzia’s follow up services includes free returns and exchanges on online
orders, 30 minutes time to cancel the order after order has been submitted 20. These services add value in
offering customers’ loyalty and ensure customer satisfaction.
2) Support Activities
Finance
 Forward-looking information (Cost) –It is the crucial and mindful decision to expend in long-term
investments in the development of new technology. Aritzia make a planned investment in capital
expenditures and related infrastructure based on their forecast estimates and opinions so that they can
invest cost-effectively21.
Human resource management
 Executive Leadership (Differentiation) – Selecting human resource that creates capability and core
competency is crucial. Aritzia has its human resource department dedicated towards achieving vision and
mission with their expertise and skills and driving towards growth of the company.
 Human Resource IS (Differentiation) – To enable strategic human capital decisions, Aritzia launched and
implemented human resource information system during 2017 22. This adds value to the firm in providing
good services to its customers.
Management Information System

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 Creative development (Differentiation) – In tech savvy era, it becomes mandatory to establish excellent
information systems that provides up-to date market intelligence and real-time information relevant for
operational decisions. Aritzia’s digital infrastructure has helped delivered designed across various
boutiques23. The investments and developments in these infrastructure increase efficiency and support
future growth.
 Usage of SAP (Differentiation) – Aritzia uses sophisticated enterprise resource planning system to support
its business functions24. This has a flexibility to support global business processes and manage
merchandise, production, accounting and finance which thereby increases efficiency and support growth.
Competitive Advantage
1) Resources
i. Tangible Resources
Financial Resources Organisational Resources
 Ability to borrow at variable interest rates  Internal control over reporting structure
because of credit facilities  Well-trained employees and sales associate
 Issue equity to generate necessary fund
Physical Resources Technological Resources

 Warehouse management system to support  Major trademarks include Wilfred, Babaton,
distribution and TNA26
 65 stores in Canada and 22 stores in United  Internationally and domestically registered
States 25 over 300 trademarks and 200 domain names 27
Human Resources Innovation Resources

 2,594 employees (excluding seasonal  Digital infrastructure supporting operations
employees) in 2018 28  Capacity to innovate technology to manage
 Expertise management and employees which operations across countries
enable them to collaborate with others
Reputational Resources
 Brand recognition
 Uses high quality fabrics, consider detailing and superior fit29
ii. Intangible Resources

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2) Capabilities
 Numerous e-commerce platform – Aritzia’s core capability is the expansion of its operation internationally
through e-commerce. They have a dedicated team of customer care professionals who contribute in
providing recommendations on the designs and products.
 Premium Brand – Aritzia is a high-class premium brand selling their unique in-house designs to its
customers. The quality they assure for their product attracts the customers base. They further
complement their product mix with premium denim, apparel and accessories 30.
 Fashion Forward – Aritzia believe in offering its customers with the beautifully designed, high quality
products, by maintaining the balance between the fast fashion and affordable luxury. The company has its
in-house creative team who continually monitors the fashion base to provide its customers with the latest
designs which thereby increase the opportunity for its growth.
 Executive Leadership – Selecting human resource that creates capability and core competency is crucial.
Aritzia has its human resource department dedicated towards achieving vision and mission with their
expertise and skills and driving towards growth of the company.
 Distribution Centres – Aritzia has its operation spread across different countries with its major dealing
across Canada and the United States. It has around 65 stores in Canada and 22 in United States all located
within high performance retails malls and streets 31.
 Management Information System – Aritzia’s digital infrastructure has helped delivered designed across
various boutiques32. Aritzia also uses sophisticated enterprise resource planning system to support its
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business functions33. This has a flexibility to support global business processes and manage merchandise,
production, accounting and finance. The investments and developments in these infrastructure increase
efficiency and support future growth.
3) Core Competencies
Core-competency Valuable Rare Costly to Non- Competitive Advantage

imitate Substitutable
Numerous Yes Yes Yes Yes Sustainable Competitive
eCommerce platform Advantage
Premium Brand Yes Yes Yes Yes Sustainable Competitive
Advantage
Fashion Forward Yes No Yes No Competitive Parity
Distribution Centres Yes No Yes No Competitive Parity
Financial Analysis
1) Profitability
Profitability ratios Lululemon Aritzia 2019 2018
(Q1 2020) (Q1 2020)
Gross Margin (%) 51.30 34 41.14 35 39.22 36 39.76 37
Operating Margin (%) 5.02 38 15.53 39 13.28 40 12.70 41
Net profit Margin (%) 4.39 42 9.24 43 9.00 44 7.68 45
Gross Margin (Poor) – From above analysis, it can be observed that Aritzia is doing well so far in 2020 in
comparison to 2019 and 2018. Compared to 2018, the gross margin dropped off in 2019 with slighter
margin but the company regained its position in 2020 again which indicates that the growth and profits.
However, the situation may have changed due to the decline in economy because of pandemic. As
compared to its competitor Lululemon, Aritzia is still behind the curve and need to improve.
Operating Margin (Good) – Aritzia’s operating profit has been increasing over the last two years and has
marked its growth in Q1 of 2020 as well. This means company is making enough sales to cover its costs and
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operating expenses. In comparison to Lululemon, Aritzia’s operating margin is high which means company is
way too good in managing its operation and is earning a great margin.
Net Profit Margin (Good) – Aritzia’s net profit margin is growing since 2018 which indicates that the
company is following good pricing strategies and controlling costs very well. Net profit margin is the
company’s bottom-line after all expenses. Company is doing well in comparison to its competitor as
Lululemon is still behind Aritzia when it comes to net profit margin.
2) Liquidity
Liquidity ratios Lululemon Aritzia 2019 2018
(Q1 2020) (Q1 2020)
Current ratio 2.9146 1.5047 1.3048 2.0949
Quick ratio 2.0850 0.8951 0.6252 1.2153
Current ratio (Good) – Current ratio simplifies that the company current assets are more than current
liabilities which means that the company is able to pay off its debt and liabilities. In 2018, the company’s
current ratio is slightly high and then it dropped in 2019. Further, in 2020 the company again regained the
ratio marking it at 1.50 which means that the company’s performance is better from the previous year and
when compared to its rival ratio is significantly high at 2.9 which is not a good sign.
Quick ratio (Poor) – This ratio measures the company’s ability to use its liquid assets to retire its current
liabilities. In 2018, Aritzia’s quick ratio is more than 1 but after that, in 2019 it dropped badly. In 2020, its
better than 2019 but still below 1 which shows that company don’t have enough liquid assets to pay its
current liabilities. Aritzia still have the scope for improvement as Lululemon has a better quick ratio than
Aritzia.
3) Leverage
Leverage ratios Lululemon Aritzia 2019 2018
(Q1 2020) (Q1 2020)
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Debt to asset 0.4154 0.6855 0.7056 0.4557
Debt to equity 0.6858 2.1259 2.3660 0.8161
Debt to asset ratio (Poor) – Debt to asset ratio defines the total debt relative to the assets owned by the
company. Debt to asset ratio increased from 2018 to 2019, meaning that the company purchased
additional assets on debt in 2019. Thereafter, it decreased in 2020 which means that the company has paid
off some of its debt. But Aritzia’s debt to asset ratio still high in comparison to rival.
Debt to equity ratio (Poor) – A good debt to equity ratio should be around 1 to 1.5 but also depends
upon the performance of the company whether the ratio is good or not. It is clear from above table that the
ratio has increased from 2018 to 2019. It means Aritzia used large proportion of its shareholders equity and
debt to finance the assets. It decreased from 2019 to 2020 but at very less proportion. Aritzia is behind in
comparison to the industry.
SWOT ANALYSIS
Strengths Weaknesses
1. Brand reputation (Reputational Resources) 1. No physical stores in Asian countries (Physical
2. Serving customers with the Premium quality Resources)
products (VRIS) 2. Under staffing because staff have to meet quota
3. Customer Loyalty program (Value Chain) of $500 62 (Human Resources)
4. Strong relationships with partners and 4. Limited brand awareness outside North America
stakeholders (Human Resources) 5. Rely on suppliers for raw materials because of no
5. Experienced and co-operative staff (Human manufacturing units (Organisational Resources)
Resources)
6. Strong capital structure to grow and expand
(Capabilities)
7. Stable sources of finances (Financial Resources)
Opportunities Threats
1. Growing E-commerce and omni-channel 1. Designs can be imitated to sell at lower prices
capabilities (Technological Segment) by competitors (Competitive Rivalry)
2. Growing demand for innovative and designer 2. Due to high prices, customer tend to shift other
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products (Sociocultural Segment) brands (Demographic Segment)
3. Excellent feedback and response from 3. Currency fluctuations and increasing cost of
community (Sustainable Physical Environment) raw material add in the cost of finished good
4. Low Interest Rates (Economic Segment) (Economic Segment)
5. Increasing use of Artificial Intelligence 4. Changes in trade rules and laws in U.S.
(Technological Segment) (Political/legal Segment)
5. Decrease in demand and consumer spending
due to current pandemic situation of COVID-19
(Economic Segment)
CRITICAL ISSUE STATEMENT

From the above SWOT analysis, we see that the critical issue faced by the companies at this time being the
current pandemic because of COVID-19. This has resulted in the decrease in the demand for fancy clothing
and stylish outfits because, nowadays mostly people are working from home. This has affected the entire
sales of the company and this for the first time ever that the entire malls and stores has been closed
because of the pandemic. The economy has been affected by this situation because of decreased demand
and Aritzia is no exception. Thus, to overcome the situation and maintain the demand, companies tried
selling their products through e-commerce. Aritzia having a strong e-commerce and excellent omni-channel
capabilities provided an opportunity to sell the variety online while stores were closed. Though the physical
locations have been closed for months now, but the online shopping has increased and Aritzia having a
strong e-commerce and customer support services has fully utilized this opportunity.
Now the biggest question arises is that how the company can survive and serve the customers better in this
pandemic situation? How Aritzia can grow its market share while facing the slowdown of the economy?
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CRITERIA
1. Market share (5) – Will the company be able to attract the potential customers? This is important for the
company to determine because it will help company to determine the growth in the market. The business
results will give an idea on how the strategies will help in attracting the customers and generating revenue.
As it will determine the growth in the market that is why it makes sense to rate this criterion as 5, because
this will decide whether the company is able to achieve the sales target or not which is the most important
factor to measure growth.
2. Return on Investment (ROI) (4) – Will the company be able to earn the desired returns in relation to the
amount invested? ROI can help Aritzia to understand how well business is doing according to the
investment made in business and which areas need improvement to achieve company goals. After market
share, ROI is another important factor, which will reflect if the company’s financial decisions are made
effectively or not.
3. Longevity (1) – How long will the company be able to survive in the market? This is important for the
company to determine if the company is able to adapt to the changes in the environment or not. Where
market share and ROI accounts for the highest percentage, longevity would account for just 10% because
market share and ROI will determine the success of the company and then the company will decide on its
stability accordingly.
STRATEGIC ALTERNATIVES
1. Launch the Men’s Section – Since the company is running for over many years now and is highly reputed
brand amongst women, it can plan to expand by entering men’s clothing. Aritzia is the premium brand that
is famous for women clothing. Adding a new line would make the company’s share much broader and they
can then reach out to not only women but men. They can start by entering the existing market and then
expand gradually into new markets. The company can create the awareness of its expansion by
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commercialisation and advertising. Buyers are aware of the quality they have in their women clothing so
the expansion into men would be a good alternative strategy.
Pros:
 The company will have an extended market share with the increased sales and profits.
 This will help the company in creating a strong professional network within the clothing industry.
 The company will gain the exposure to large group of stakeholders.
Cons:
 Adding a new line of men’s clothing comes with a risk of not being so successful in comparison to
the sale of women clothing.
 There is a huge risk involved in investing the significant amount of capital in product development.
2. Launch a new Cost Leadership line – Aritzia is known for selling its in-house innovative designs ranging
from comfortable outfits to chic work-appropriate pieces. They have maintained the superior quality
standard for their products which limits their focus to only premium customers. Therefore, in order to cover
the broader market, company can adopt the cost leadership strategy providing the acceptable quality
products at lower price. This can be done by controlling costs, limiting wastes and increasing productivity
and efficiency. This will offer the differentiation that customers are willing to accept but at competitive low
cost.
Pros:
 The company can gain the huge market share by covering the broader market area and not limited to
just premium customers.
 Broader market size will help in enhancing the profitability of the firm.
 This will help the company create a successful market for its sustainability stepping towards a good
competitive position in the marketplace.
Cons:
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 Considering to be a low-cost leader can result in loss of premium customers, thinking that the quality is
compromised.
 It can further result in financial cuts in the critical area if the strategy does not work out to be
successful.
3. Expanding to Asian Markets – Aritzia should plan their expansion into Asian fashion markets as it will
provide the company with a well-established market for fashion and clothing. Countries like Thailand,
Singapore, Hong Kong, China and India have much bigger opportunities for foreign investors. Moreover, in
these areas raw material and labour is easily available as compared to the west. Many existing Canadian
firms import their products from Bangladesh and India. Therefore, hiring some new local talent for
innovation can be a good idea as they wish to analyze the industry trends and market projections.
Pros:
 The raw material is easy to procure in Asian countries like Bangladesh and India because they itself are
the producers and marketers of raw materials.
 They have highly skilled labour staff and experienced labour.
 This will help in gaining exposure into different market trends and behavior.
Cons:
 There is high risk involved in making new designs that needs market analysis to see where customer
demand is focused.
 The company may have to face political and cultural challenges while entering the Asian markets and
making the designs that are different from their traditional clothing. 63
https://smallbusiness.chron.com/advantages-disadvantages-establishing-companys-own-subsidiary-overseas-
34167.html
19
EVALUATION
Criteria/ Alternative Launch the Men’s Launch a new Cost Expanding to Asian
Section Leadership line Markets
Market Share (5) 8 8 9
Longevity (4) 6 7 8
ROI (1) 10 10 9
Total 74 78 86
RECOMMENDATION
Based on above evaluation, we see that introducing a new cost leadership line and launching
men’s section score the lowest of three which means that the company shall not be better of by
adopting these two alternatives.
1. The strategic alternative of introducing a new line of men’s section might not prove to be a good
alternative strategy for Aritzia because the company might take time to establish within the already
developed markets and therefore the response from the customers might not be initially as good in
20
comparison to its competitors. The company might also face issues to stabilize itself into the industry where
numerous competitors for men’s clothing already exist.
2. The idea of launching a new cost leadership line might work well but not as good as considering
expanding to Asian markets. The reason behind this is that the company will have two diversified categories
to choose from and premium paying customers might feel the quality is being compromised. The company
might gain the huge market share but how well the company is able to perform and stay in the market
depends on the response of the customers. As Aritzia is a brand known for selling unique designs to its
customers. The company might not be able to maintain this position with the launching of cost-leadership
line.
3. The alternative of expanding to Asian markets is the best among all three strategic alternatives. This is
because of the needs in the Asian markets for designers and quality products. There is a high chance for the
company to stabilize in the long run because of the established brand name. Moreover, it can also be seen
that returns are expected to be high in this case which means that the company will be able to earn high
profits after break even. Lastly, Aritzia can gain a broader market share by reaching out to the large group of
customers. Therefore, it can be inferred that this strategy might prove to be a good alternative strategy.
Some of the potential risks the company might face is that:
i. The company require huge investments to expand globally with the potential risk of not receiving
the required response.
ii. Due to the recent pandemic situation, the economies all over the world have been hit, especially in
Asia where large producers like India and China have been shut down for production. So, the
company might face challenges in commencing the operations.
IMPLEMENTATION PLAN
Overview
21
As per the above evaluation and recommendation, expanding in the Asian markets scored the highest of all
the three alternatives. Therefore, below is the detailed implementation plan for the expansion and we are
considering expanding in India first with the three major cities, named Delhi, Bangalore and Mumbai. The
expansion strategy will be multi-domestic as it is already known for innovation and designs. The company
thrives to meet customer demands by making latest products and going into new markets will give it much
broader scope. This is because countries have different traditions, cultures, choices, and color prefer
combination. It will give Aritzia a bigger room for creation and innovation. Therefore, it can design new
products according to the markets.
In India, the fashion industry in these cities is very fast and updated. The chances to grow in these cities are
very high. These are the most developed cities because of the high standard of living which means high
consumer spending. Many Indian celebrities resides in these cities which demand for variety in fashion.
Therefore, Aritzia has high chances to gain market share because of high demand of fashion clothing.
Aritzia, being the high-class luxury brand has the ability to deliver the best designs in Indian market and can
eventually acquire the major portion in fashion industry. Aritzia is popular for its quality products and
innovative designs which will help Aritzia to attract wealthy customers. In Delhi, Aritzia would open its store
in DLF Emporio. Phoenix market city mall in Mumbai is the second location for Aritzia and in Bangalore
Mantri square mall is the place where Aritzia would open its third store. These malls are the largest mall of
these cities which means that the company will launch their new stores starting from the best malls in India.
Corporate Objectives
Specific – The corporate objective of the company is to establish market initially at three main cities in
India – Delhi, Bangalore and Mumbai.
Measurable – This can be measured through the positive response from the customers towards the
designer Aritzia clothing.
22
Attainable – The corporate objective of creating the market for Aritzia clothing can be achieved because
these cities mostly consist of women who are career oriented, earning a considerable amount of disposable
income.
Realistic – This will increase the market share covering the broader market area and will help establish a
strong network with the stakeholders as well.
Time-bound – Company will be able to achieve and attract market hopefully at the start of April 2021, after
the marketing plan has been set up.
Mission Statement
“Aritzia is an innovative design house and fashion retailer. They believe in high-quality, beautifully designed
fashion” 64. Their mission is to offer beautiful clothes in aspirational spaces with exceptional service
globally65.
Marketing
 Objective
Specific – With the increase in store locations, the objective is to increase the market share and the sales
of the company by 15% by the end of second quarter of 2021.
Measurable – To achieve the increase in sales by 15%, promotional events will be organised to increase
the sales by 5% per month on an average (April to June, 2021).
Achievable – Achieving Sales by 15% within three months after the set up won’t be an issue for the
company because of its brand reputation and quality of clothes it sells.
23
Realistic – The economy has been slowed down due to current pandemic situation of COVID-19 and
people are not spending much on clothes, but by the end of second quarter of 2021, economy will likely
tend to progress and further the manufacturing units set up will be able to handle the demand of the
market.
Time-bound – The current objective of achieving 15% increase in sales is realistically based on achieving
it within three months looking at the present scenario.
 Target Market
Target audience will be group of upper middle – upper class career women falling within 18 – 35 years of
age and earning the above average disposable income. Since we recommended choosing the alternative
to expand to cities in India starting from establishing in Delhi, Bangalore and Mumbai first. This will
provide the company with an opportunity to expand as these areas demands differentiation and variety.
Also, Aritzia is well-known designer brand and shall be highly welcomed by these cities.
 Strategies
i. Product – This shall include the design, quality, style, packaging, delivering customer service etc. that
Aritzia already provides. The standard and quality of the product would remain same when establishing
in the above-mentioned cities and the company will then raise the demand for their products through its
quality and differentiation.
ii. Price – Marketing also involves setting up the prices for their products. Aritzia, being a high-class brand
selling premium quality clothes would set up the original high price only while establishing in the
Bangalore, Delhi and Mumbai. Aritzia won’t compromise in quality standards and brand reputation by
lowering the price.
iii. Place – This includes the defining the appropriate distribution channels, supply chain networks,
managing logistics, etc. which company shall use to market their product. Aritzia having a strong
distribution network can manage to cover the broader market area while marketing its product to
Bangalore, Delhi and Bombay because these will be areas that will be most focused on initially.
24
iv. Promotion – Promotion is an important factor when it comes to expanding into different countries. As
Aritzia will be expanding in the city like Bombay where the number of models and celebrities resides.
The company should appoint celebrities and models, like Priyanka Chopra and Deepika Padukone, to
organise the show event or launch party to market their product. By this, Aritzia can gather and attract
customers through sales promotion activities, advertising through televisions and creating awareness
about the quality of the product they sell.
 Tactics
i. Company should market their products by offering the celebrities and models with the sample clothing
that will help in attracting the customers. This will help in promoting the brand when they will style
themselves in Aritzia clothing.
ii. Company can offer coupons initially on signup when the customers will shop from the newly set up
store location.
Operations
 Objective
Specific - Achieving 15% increase in production means that it needs skilled and experienced labour to
make the production efficient.
Measurable - It would be focus of Operations department to do the production in such a way that it is
able to meet the sales target of 15% increase after minimum amount of wastage.
Achievable - Achieving the set target seems achievable and realistic as India has vast opportunities for
fashion industry due to the presence of Bollywood industry.
Realistic - As the company plans to start its sale by April 2021 in India, it has to start its production by
February 2021, to meet the sales target.
25
Time bound - The current objective of production department is to increase production by 15% to meet
the sales target. The objective of Aritzia would be to manufacture superior quality clothes which would
maintain the reputation of the company.
 Strategies
The first strategy would be to procure raw material required for its production from Jaipur and Andhra
Pradesh where the raw material is easily available. Then, the company will acquire skilled labour and
experienced staff that will help in the production process. Factories will be set up in Mumbai from where
manufactured products will be transported to the other two locations, Delhi and Bangalore. As fashion
industry is in Mumbai, it will give a boost to the company and production. 66
This will help in lowering the unemployment level of region. Thus, helping the community which will
help the brand to build prestige in the market.
Semi-automated machines will be bought to make the production process efficient and employ
labour. These machines will be bought from Surat, Ludhiana, Ambala Cantt and Mumbai
as manufacturers of machines are in these areas.67
 Tactics
Firstly, they can have vertical integration with Apna Lenin and Cotton Textiles which is one of their
major suppliers to decrease the cost of raw material.
Horizontal Integration can be done with Monte Carlo which is among one of its many competitors
by acquiring or merging to decrease the effect of competition. Monte Carlo has been in India for
many years. Thus, its experience ca be used for the growth of company.
Human Resource
Objective
26
Specific: To hire skilled and experienced employees who can put their efforts to well establish this new brand in
their home country. Hiring process will take in Delhi, Mumbai, and Bangalore only but applications from across India
will be accepted. The focus is to finish this process within time and budget.
Measurable: The HR hiring will start from January 15 th, 2021 and will continue till March 18th, 2021. The budgeted
cost for this task is …………………………………………
Achievable: The desired results are easily achievable if Aritzia’s Current HR managers will be present in India at that
time.
Realistic: The rate of unemployment has gone up in India in past few months due to the increase in number of
patients of Coronavirus. This can prove to be an opportunity for Aritzia to get the best of skilled and eligible
candidates who are willing to work. Moreover, giving them comparatively higher salaries will attract many
candidates.
Time bound: The entire process will be done during the budgeted time span of January 15 th to March 31st, 2021.
Strategy
People have lost their jobs and many companies are not operating since last four months due to lockdown of the
country by government. Young and skilled people are willing to work and looking for jobs. This can be a great
opportunity for HR establishment.
The major task would be to let the interested and eligible candidates know about this opportunity to work with
Aritzia. This will be done through advertising on-
1. Television- The Essel group of companies (also referred as Zee Group), and
2. Newspaper advertising- The Hindu, most read newspaper by the youth.
These ads will run through during January 1st,2021 – February 26th, 2021 giving the department enough time and
resources to finalize the staff on their respective positions. This will be followed by application selection, interviews,
and training.
Tactics
It includes the following-
27
 Recruiting- Recruitment process will be starting on January 18 th till March 12th, 2021.
The applications for jobs will be accepted till February 26 th,2021.
Application selection may take up to a week till March 5 th,2021.
Virtual and Face-to-face interviews will be conducted from March 8 th,2021 to March 19th, 2021.
 Employee Training- Training employees is important to make sure they know what standards of work are
expected from them to meet the organization’s goals.
A 5-day training week would be from March 22 nd, 2021 to March 26th, 2021.
Retention- Appreciations and bonuses would be rewarded at the end of every quarter because the employees work
better in a positive environment. Money is not the only thing that matters. They will be given appreciations and
bonuses as well to keep up their interests and appreciate their efforts. 68
Finance
 Objectives: The main objective of finance is that it will help company to give shape of its planning regarding
expansion of business into Asian countries. Finance will help you in setting up your own offices and outlets
whether the company is thinking to purchase it or lease it. The purchase of additional raw material for new
global locations and for day to day operating expenses there will be need of finance. To expand business
globally huge investment is required for which company need a good financial structure.
 Strategies:
1. From existing business cash flow – Aritzia have positive cash flow from its existing business operations.
This is the best option for company to use this cash flow for global operations. In this case company will
not need to finance much from other financial institutions.
2. Financial institution – A financial institution always do not agree to finance a company for global
business but for Aritzia it is very easy to get financed from any financial institution because company is
running successfully in Canada as well as America. The company can borrow from the financial
institution against the assets pledged or credit that company already have in the existing business. Bank
can also increase the line of credit of Aritzia by watching its past credit pay ability.
3. Other international finance facilities – There are other different international financial instruments
which will help company to purchase goods for e.g. International letter of credit, international factoring,
confirming.69
28
 Tactics: There are tactics that company can follow to get finance for their new business market. The
company can lend money from bank by showing their previous financial statements, company’s ratios,
tangible and intangible assets. As we already discussed in financial analysis that company’s ratios are pretty
good and company’s financial statements also showing a positive income balances which help company to
lend money from financial institutions easily.
 Performa compared to status quo: As we discussed in value chain that company is deciding to make long
term investment in the development of new technology. But if company is planning to expand
internationally then company need huge finance to grow as well as to develop new technology for its
existing business.
 ROI: Return on investment shows how much return the company expects to earn on its investment. The
company will expect to have a negative return at initial stages because this is the time where the company
needs to mark its place in the new market, adjust to the environment and the customer’s demand. Once
established, the company can expect to earn higher returns.
Timeline
Financing: Starting August 1 2020, first three months until October end would be spent on getting
loans from various financial institutions and banks to gather funds required for the initial
investment and set up.
Acquiring infrastructure: Aritzia will need to invest another quarter for its establishment to acquire
infrastructure such as factories and retail outlets.
Raw material procurement: Another two months will be needed to make contracts with suppliers
and get raw material.
Hiring personnel and labour: Almost one quarter of the year starting from January 15 to March 31
2021 would be spent to hire personnel and train them.
Operations: The production of final goods will start on April 1 2021.
29
Marketing and publishing: Marketing of the brand in various forms like advertisement, publishing
in social media and various marketing campaigns will start on April 1 2021.
Return on investment: Ten years are required to get the required earnings on investment.
Risk and Mitigation

Risks Mitigation
Strong competition with other fashion brands Identify the consumer preferences and respond
accordingly
Uncertainty in terms of acceptance Research the market and know the targeted
audience
Political/legal and cultural Challenges Learn Cultural trend and appreciate difference
CONCLUSION
30
1 https://www.aritzia.com/en/brands
2 https://www.aritzia.com/en/aritzia/about-aritzia/about-us.html
3 Taylor, Audrey L, and Audreyltaylor. “Aritzia Marketing Plan.” Issuu. Accessed June 17, 2020.
https://issuu.com/audreyltaylor/docs/aritzia_marketing_plan_-_ent_mkt.do.
4“ Global inflation rate from 2009 to 2021,” statista, last accessed July 20 2020
https://www.statista.com/statistics/256598/global-inflation-rate
5 “Unemployment rates,” OECD, last updated June 2020 http://www.oecd.org/newsroom/unemployment-rates-oecd-
update-june-2020.htm
6 Bush, Thomas. 2016. Review of Five Forces Analysis of the Fashion Retail Industry. Pestle Analysis. May 5,
2016. https://pestleanalysis.com/five-forces-analysis-of-fashion-retail-industry/.
7 Harris, Aleesha. 2015. Review of Wilfred Steps Out. Vancouver Sun. February 23, 2015.
http://www.vancouversun.com/wilfred+steps/10836922/story.html.
8- Gibillini, Nicole. 2020. Review of “They Know What They’re Good at”: How Aritzia Is Bucking the Retail Trend. BNN
Bloomerang. February 14, 2020. https://www.bnnbloomberg.ca/they-know-what-they-re-good-at-how-aritzia-is-
bucking-the-retail-trend-1.1390530
9“Lululemon Unveils ‘Power of Three’ Strategic Plan to Accelerate Growth | Lululemon Athletica Inc.” n.d.
Investor.Lululemon.Com. Accessed August 2, 2020. https://investor.lululemon.com/news-releases/news-release-
details/lululemon-unveils-power-three-strategic-plan-accelerate-growth#:~:text=The%20Company%20plans%20to
%20fuel
10 Lewis, Katie. 2019. Review of Peekaboo Beans Aims to Create Clothing That’s Both Practical and Profitable.
Proactive Investors. January 2, 2019. https://ca.proactiveinvestors.com/companies/news/211867/peekaboo-
beans-aims-to-create-clothing-thats-both-practical-and-profitable-211867.html.
11 Farooq, Umar. 2018. Review of SWOT Analysis of Lululemon Athletica Inc. Marketing Tutor.Net. April 22, 2018.
https://www.marketingtutor.net/lululemon-swot-analysis/#:~:text=Lululemon’s%20one%20of%20the
%20weakness,wouldn’t%20hurt%20the%20business.
12https://s21.q4cdn.com/489771965/files/doc_financials/2018/Annual/2018-AIF.pdf
14https://www.aritzia.com/en/aritzia/corporate-responsibility/sustainability-operations.html
20https://www.aritzia.com/en/returns
23https://s21.q4cdn.com/489771965/files/doc_financials/2020/ar/Aritzia-AIF-2020-SEDAR.pdf
34 Investor.lululemon.com, https://investor.lululemon.com/news-releases/news-release-details/lululemon-athletica-
inc-announces-first-quarter-fiscal-2020-0
35 s21.q4cdn.com, https://s21.q4cdn.com/489771965/files/doc_financials/2020/q4/Aritzia-Inc-Q4-2020-ARIAL-
FINAL.pdf
36 s21.q4cdn.com, https://s21.q4cdn.com/489771965/files/doc_financials/2019/Aritzia-Annual-Report-Final.pdf
37 s21.q4cdn.com, https://s21.q4cdn.com/489771965/files/doc_financials/2018/Annual/2018-Final-Aritzia-Annual-
Report-05-30-18.pdf
FINAL.pdf
Report-05-30-18.pdf
FINAL.pdf
Report-05-30-18.pdf
FINAL.pdf
48 s21.q4cdn.com, https://s21.q4cdn.com/489771965/files/doc_financials/2020/q3/Q3-2020-Financial-Statements-
SEDAR.pdf
49 s21.q4cdn.com, https://s21.q4cdn.com/489771965/files/doc_financials/2019/q3/Aritzia-Inc-Q3-2019-FINAL-
SEDAR.pdf
FINAL.pdf
SEDAR.pdf
SEDAR.pdf
FINAL.pdf
SEDAR.pdf
SEDAR.pdf
FINAL.pdf
SEDAR.pdf
SEDAR.pdf
62 Ibid
63 Quain, Sampson. 2019. Review of What Are the Advantages & Disadvantages of Establishing the Company’s
Own Subsidiary Overseas? Chron. January 28, 2019. https://smallbusiness.chron.com/advantages-
disadvantages-establishing-companys-own-subsidiary-overseas-34167.html.
66 “ A Closer look at Mumbai, the Fashion capital & Retail hub of India,” Apparel resources, last updated 12 February
2019 https://in.apparelresources.com/business-news/retail/closer-look-mumbai-fashion-capital-retail-hub-
india/
67 “Companies-Drying machinery and equipment fro the textile industry-India,” Kompass, last accessed July 21 2020
https://in.kompass.com/a/drying-machinery-and-equipment-for-the-textile-industry/50710/
68 “Creating an HR Plan to Support Your Company’s Growth.” n.d. BDC. Accessed August 2, 2020.
https://www.bdc.ca/en/articles-tools/business-strategy-planning/manage-growth/pages/creating-talent-plan-support-
business-growth.aspx.
69 https://www.allianceexperts.com/en/knowledge/exports/finance-export-growth/

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Table of Contents

BUSINESS LEVEL STRATEGY

years and has stores currently in Canada and United States.

customers that helps in getting premium for its products.

products and serving them with the excellent customer service. 3

power to have vertically integrated brands under this strategy.

GENERAL ENVIRONMENT ANALYSIS

position. Running business in this situation is an opportunity for most of businesses.

for working conditions, which creates threat for the firm.

2) The Economic Segment

3) The Sociocultural/Demographic Segment

established and recognized brands.

to banking and finance industry.

4) The Technological Segment

businesses to grow and compete with other firms in the market.

for businesses to enter the market.

5) The Sustainable Physical Environment

opportunity and threat for companies.

6) Legal restrictions (Threat)

the shut down of many companies.

structure of an industry and help determine competitive strategies. 6

1) Threat of New Entrants – Medium to High

marketing, distribution, and human resources.

2) Bargaining Power of Suppliers – Low

replaced and therefore the threat is relatively low.

3) Bargaining Power of Buyers – Medium to High

from. This, this gives an indirect power to buyers to bargain.

fashion which increase the sale of the industry.

4) Threat of Substitute Products – Low

5) Competitive Rivalry – High

KEY SUCCESS FACTORS

customers more choice and satisfaction while shopping.

customers making it worth to purchase their clothing from Aritzia.

company is the type of company Aritzia is.7

COMPETITOR ARITZIA LULULEMON PEEKABOO BEANS CANADA GOOSE

materials and creating high quality products for its customers.

 Virtual-Meeting Technology (Differentiation) – Operational activities include designing efficient production

providing sustainable environment to its customers.

Marketing and Sales

them earned the greatest market share.

personalization, driving towards achieving customer loyalty.

premium quality products.

offering customers’ loyalty and ensure customer satisfaction.

Human resource management

good services to its customers.

Management Information System

Physical Resources Technological Resources

Human Resources Innovation Resources

ii. Intangible Resources

providing recommendations on the designs and products.

designs which thereby increase the opportunity for its growth.

expertise and skills and driving towards growth of the company.

within high performance retails malls and streets 31.

efficiency and support future growth.

Core-competency Valuable Rare Costly to Non- Competitive Advantage

Distribution Centres Yes No Yes No Competitive Parity

Lululemon is still behind Aritzia when it comes to net profit margin.

Debt to equity 0.6858 2.1259 2.3660 0.8161

comparison to the industry.

CRITICAL ISSUE STATEMENT

factor to measure growth.

the expansion into men would be a good alternative strategy.