2. Agenda
● Company Profile
● SWOT Analysis
● Financial Graphs
● Brand Positioning
● Customer Profile
● Statement of Strategy
● Achieving the Financial Goal
● Introducing Love Soma Subscription
● Customer Survey
● The Future of Love Soma Subscription: A 4 Year Plan
● Sub-commerce For Soma, Why It Works
● Things To Consider
3. Soma’s Company Profile
● Brand apart of Chico’s FAS,
Inc.
● Specializes in intimate apparel
○ Best At: Bras
○ Winning At: Sleepwear
● Product focus = Fit & Comfort
5. Internal Strengths Internal Weakness
Merchandising:
○ High quality private label
○ Products manufactured with “beautifully cool
technology” and “slimming technology”
○ Large amount of bra SKUs
○ Broad offering of bra and panty silhouettes,
prints, and colors
○ Offers specialized features to their customer’s
complications
Marketing:
○ Vast product knowledge and information
advertised on mailers and e-commerce website
○ Incentivizing panty sales: promotions if
purchase in a bundle
○ No in-house design team, only CAD/print
○ Less fashion-forward than other intimates
brands
○ Message is not emotional
○ Need to create “desire” vs. “need”
○ Brand positioning is unclear toward the public
○ Average customer only shops 2x a year
6. External Opportunities External Threats
Consumer Trends:
○ Growth in sales for products that appeal to
emotion
○ Quality and fabrication of merchandise now
has a greater impact on the purchasing decision
○ Increasing online shopping market
Industry Trends:
○ Growing popularity of subscription programs
○ Pop up store events
○ Collaborations with popular celebrities and/or
aspirational designers
○ Push for a seamless omni-channel shopping
experience
○ Price conscious consumer
○ Decrease in customer loyalty
○ Rapidly evolving market with growing shift
toward e-commerce vs. brick and mortar store
locations
○ Promotional driven marketplace
○ Loyalty discounts/ store credit cards
7. External Opportunities External Threats
Competitors:
○ Promote omni-channel presence
○ Remain competitive with promotional strategy
○ Product that tells more of a story
○ Social media contests and frequent customer
engagement
○ High level of emotional drive to buy
competitors’ products
Who is the competition?
(WeConnectF
ashion, 2013)
8.
9. Internal Strengths Internal Weakness
Financial:
● Increased 2014 annual sales 16.32% over LY
○ A reflection of Soma’s increasing brand
recognition and growing loyal customer base,
the company increased total transactions.
● 2014 Inventory Turn increased to 5.31 from 4.91 LY,
and is above 2013 Industry Norm of 5.16
○ “Our strong preference is to buy tightly in
shape if necessary rather than buying too much
and clearing excess goods at the end of the
season.” (CEO, Dave Dyer)
● 2014 Current Ratio increased to 1.86 from 1.61 LY,
and is above 2013 Industry Norm of 1.83
○ Soma increased its liquidity by decreasing
inventories.
● 2014 Quick Ratio increased to 1.08 from 0.74 LY
● 2014 Total Debt to Equity Ratio of 0.52 is lower than
2013 Industry Norm of 1.68
● 2014 Operating Expenses increased to 47.20% of Net
Sales, almost double 2013 Industry Norm of 24.0%
○ According to Todd Vogensen, SVP and CFO ,
the increase is “primarily reflecting sales
deleverage of store expenses, costs associated
with new store growth and the impact of
approximately $5 million in strategic
initiatives.”
● 2014 Net Profit Margin decreased to 2.40% from
2.50% LY, and is below 2013 Industry Norm of 5.50%
○ Although total transactions were increased, it
was offset by a lower average dollar sale due to
a heavy promotional strategy. This in turn
affected margins negatively.
12. Soma’s Customer Profile
● 25 years old and up; average age is 46
● Average household income $100,000
● Average customer shops 2x year
● Top customer shops 4.4x year
What is her story? …
13. Statement of Strategy
“By introducing the Love Soma Subscription service into Soma
Intimates’ business portfolio, we intend to transform the average
Soma customer into the top Soma customer. Our subscription
service will increase the average number of times the current
Soma customer shops from two to four, while generating a
forecasted 13.81% increase of annual revenue for the brand.”
14. -2014 Net Sales: $311,174,000
-CAGR 2014-2019: 3.46%
= $321,940,620.40
-80% of sales: =$257,552,496.30 ← 80/20 rule, 80% of business comes from 20% of top customers
-(Divided by) # of times
top customer shops per year: 4
=$64,388,124.08
-(Divided by) # of times
average customer shops per year: 2 (Increase needed to leverage average customers into top customers)
=$32,194,062.04
($321,940,620.40 + $32,194,062.04) - $311,174,000
$311,174,000
Achieving the Financial Goal
13.81 % Sales Increase
15.
16. “Customers of subscription-based
brands often embrace social
media to share their experiences
and products with others, which
can help to exponentially grow
the business.” (Internet Retailer)
17.
18.
19.
20.
21.
22. Consumer Psychology:
Why We Love Subscriptions
Consumers have been signing up for subscriptions for years, and yet sub-commerce has
become a new buzzword that is trending now. This is because personalized and unique
subscription models are being offered.
● “Michael McCall, consumer behavior expert and chair of marketing at Ithaca College, says part of
the subscription box magic is the thrill of wondering what you’ll receive in the mail
each month” (Forbes).
● Amanda Doman, site manager at the Illinois Institute for Addiction Recovery, expands upon the
correlation between personalization and the success of subscriptions. She says, “When
something’s being handpicked for someone, it’s feeding their self-esteem. It makes them feel
unique and keeps them continuing to purchase” (Forbes).
23. Subscription Service
● Sales in subscription commerce have “ increased 29% over
12 months” (BigCommerce)
● Fill a variety of needs including auto replenishment, distaste of
shopping and an outlet to try new products.
● Subscription commerce is growing into a 200 billion e-
commerce market. (Crains)
● Companies that have participated in subscription services such
a Birchbox have seen “a roughly 30% increase in online sales”
(Crains)
● With the boxes, "merchants now have a more effective way than
ever to put their products in front of people likely to be
interested in them." (Crains)
● “This is attractive to companies because it creates a steady,
predictable revenue stream” (Forbes)
24. ● Adore Me has “raised close to $12 million in funding, hired a former
design director from Victoria’s Secret and charted an ambitious plan to
make Adore Me a household name” (NewYorkTimes).
● They have seen a decrease in return rate is just 6 percent, according to
Mr. Hermand-Waiche, versus 20 percent to 40 percent for other e-
commerce companies. (NewYorkTimes)
● In four years, Adore Me has matched the sales of competitors like La
Perla, bringing in $5.6 million in revenue, according to Inc. (Fast
Company)
● From Jan 2014-December 2014 Adore Me saw a “+220% increase in
monthly VIP’s” (Adore Me).
● “Last year, our sales increased by 40-50 percent month over month”,
said Morgan Hermand-Waiche, CEO and co-founder of Adore Me
(InternetRetailer).
25. ● Trunk Club has seen immense success and was purchased by Nordstrom last year for “350 million
in Nordstrom stock”. (ChicagoBusiness)
● Birchbox receives 30% of their revenue from the sale of full sized products. (Fortune)
● Birchbox is currently valued at 485 million. (Fortune)
● The Prime service has been extremely successful and it is estimated that “a Prime member now
makes $1,224 in Amazon purchases each year, on average, compared with $505 for non-
Prime customers” (Time).
● While Target says, 15% of online sales of the eligible items are subscriptions orders. (USAToday)
● Blue Apron Inc. grew 550.2% last year to an estimated $65.0 million. (InternetRetailer)
● Dollar Shave Club grew 242.1% to $65.0 million from $19.0 million. (InternetRetailer)
● Overall decline of mall traffic.
26. ● Guaranteed Income - March, July, September and December
● Increased Store Traffic - With the offer of a 10% in-store discount for the lifetime of the Love
Soma Subscription, Soma becomes a priority destination for the consumer.
● Product Testing Ability - Creates a large, loyal consumer focus group to test out products on
and receive valuable feedback.
● Returns- Make sure to track returns and evaluate to ensure the customer’s satisfaction
● Purchase Patterns - “Track upsells and additional purchases of subscription customers [to]
help you identify the true success factors in your inventory model”(EcommerceInsider).
Things to Consider
27. Why You Should Choose The Love
Soma Subscription
● Increasing customer purchases is the greatest opportunity to elevate the
business.
● By introducing the Love Soma Subscription service into Soma Intimates’
business portfolio, we intend to transform the average Soma customer into
the top Soma customer. Our subscription service will increase the average
number of times the current Soma customer shops from two to four, while
generating a forecasted 13.81% increase of annual revenue for the brand.
● Her incentive to subscribe
○ Discounted cost of merchandise
○ Exclusive in-store coupons
○ Ease of purchase
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