Retail Mix

Fossil's Retail Mix

Pricing

In a time of casual, everyday $2,000 handbags, $1,000 fashion watches and $500 sunglasses, Fossil remains a moderate-priced fashion brand for those unwilling or unable to fork over big bucks. Fossil’s target customers will be those of students or stylish working adults who can afford to pay from $28 to $800. In times of recession, consumers are still willingly to purchase low-ticket priced items for gifts or even a little self-indulgence of a higher-priced item. Fossil's customer is younger than a Coach shopper and more value savvy. Fossil shoppers try to duplicate the higher-end designer lines, and Fossil is addressing her needs." It's a formula that especially works well in this economic environment, Fossil watches cost $150, and handbags can be had for under $250, with sunglasses priced under $90. The most expensive item in the store is a $800 handbag from Fossil's Fifty-Four upscale line launched 3 years ago.

Retail Atmosphere



















Fossil's style draws its inspiration from vintage creative culture and mid-century modern design.
The atmosphere is described as comfortable and inviting, with an ambience reflective of Fossil’s authentic and friendly personality.
The music in the shop’s background was playing evergreen music from The Beatles to Indie or upcoming singers or groups like Snow Patrol, Hoobastank or fun music from Sheryl Crow.
All these choices of music are just like their fashion style/ design – Evergreen, Upcoming and Fun.
It is definitely a unique shopping experience compared to many competitors’ shops like Guess and Aldo.

Fossil Locations in Singapore


















Singapore’s famous shopping strip is Orchard Road where large numbers of customers and tourists visit every day each year. Fossil shops are in Ion Orchard, Heeren and Somerset 313, which is the latest addition to the orchard road strip. (Fossil is also located in one of Singapore’s largest shopping haven and also holds many offices in this area which is called Suntec City Mall and e-biz hub@Suntec City. Another newly opened shop was at Marina Bay Sands.) Fossil presences are at these places where human traffic is high. Another non-traditional retail location of Fossil Group is in airports where Fossil is able to show their brands’ concept to the world. All these good locations help to develop Fossil brand and increase brand awareness where all shoppers from around the world or locally enjoy their shopping at the same places.

CRM

Acquiring customers is a difficult task in retail business and retaining them is a challenging one too. Considering all the cost involved in advertising, promotions, networking and sales force. The bulk of these expenses are targeted at converting prospects into customers. But also, it is not necessary that many customers are profitable ones. But when customers are retained, the expenditures are mentioned in the latter, become smaller. Therefore is easier to sell additional products or services with up-selling and cross-selling once credibility of brand is built.










































Action

Fossil Singapore has intelligent POS system which enables Fossil to track the demographic of their customers and their purchases. It is also able to analyse sales performances like Average Unit per Transaction (AUT) and Average Sales per Unit. The program could feed the office on their stock inventory like stock sold per week which allows the office/logistics to replenish stocks fortnightly. Sadly, Fossil Singapore is unable to neither develop nor implement any customer loyalty program to retain existing customers or entice new consumers, which most shops in Singapore are attracting customers with many different loyalty programs. Perhaps Fossil Singapore directly enhances its product/service value proposition or broaden the availability of products and services. Competitors are sure to counter their moves on other brands’ or Fossil’s programs by giving better rewards or offer a price cut rather than rewards. For the past years, Fossil Singapore has not increased much of its pricing and has remained at moderate-price range for good quality merchandises.

Selling Environment: playful expression of vintage 50’s retro materials, details and imagery,” including bright colors, graphics, props and visual displays.

The store’s material palette consisted of maple wood stained in cherry or honey and clear coated, high-gloss chrome metal trim and accents.The store’s updated material palette consists of maple wood with a dark rich Jacobean stain, white oak, marbella cork panels, grass cloth, midnight Caff-stained concrete, ledge stone and custom mid-century modern-inspired wall coverings.

Fossil Shop is divided into Ladies’, Men’s, SLG,Accessories.

For instance in Fossil Ion, the moment you stepped in on your left,is Ladies’ wall displaying small to medium handbags to smaller accessories. On the right, Men’s leather goods like duffle bag, travelling pouches or leather jounels were there for your touch, feel and try-outs. Accessories like leather belts, sunglasses or scarves were nicely displayed along-side with merchandises like bags to complete the look. Wood shelves on walls to contain Fossil famous tin-watch boxes are nicely displayed at cashier-counter. This wall display of watch boxes made it easier for staff to get customers to choose their favourite watch-box (different watch boxes’ designs according to seasons!) when they made their payment for watch purchase. There are a few free standing shelves with wheels that contain SLG – small leather goods like clutches,wallets or coin purses for both men’s and ladies. These shelves are easily shifted/added/removed to/from desired spots to attract consumers to pick up SLG. So are the tables that had half mannequins to display bags and other accessories.

Mirror at the side of the wall for customers’ try-out look. Movable Shelf for SLG and belt rack for both Ladies and Mens.

There are also small trays on the tables or cashier-point, where customers could pick up gifts of small cute/pretty accessories like key fob or jewellery like rings,which priced between $18 - $48. These small accessories sell like hot-cakes especially during festive seasons or when just when you want to top-up purchases to get a GWP(gift with purchase).

Format
Fossil Singapore sells products through a diversified distribution network that includes department stores, specialty retail locations like travel retail, specialty watch shops like watch station in Somerset 313 or MBS as well as e-commerce/e-tailing, www.fossilsingapore.com.sg.

Brief History of FOSSIL. INC.

Fossil. Inc was founded by Tom Kartsotis. On the advice of his brother, Kosta Kartsotis who noted the recent success of Swatch fashion watches and was aware that watches could be imported from Asia, particularly Hong Kong at very low cost. Tom invested his savings of $200,000 and started a watch import business in 1984.

Between 1987 and 1989 sales of Fossil watches grew from $2 million to $20 million. Fossil’s managers and designers had created this growth by applying their knowledge of design, outsourcing, and distribution of branded fashion watches.

Market Segmentation of Watch Retail Industry

According to Fossil, the market of watch retail industry can be segmented using the Price Quality Approach.

In the middle range of watch brands collection, it can be further divided into two segments.

• Conservatively styled Watches, Example brands: Citizen and Seiko.

• Trendy & Fashionably styled Watches. This segment consists of fashion-conscious consumers who considered watches as fashion accessories and often owned multiple watches. This market segment is targeted by the Company. Fossil and its licensed Brands’ like DKNY, Diesel, Fossil, Marc by Marc Jacobs, Michael Michael Kors, and Relic lines compete in this segment, over 50% of their watch revenues were from brands selling in this target Market. It’s competitors in this segment are Swatch, Guess?, Anne Klein, Kenneth Cole, and Gucci.
  

It was the Fossil Inc that first brought value and style to the world of watches by using a fifties Americana design in its brand image was very effective in drawing customers. And with this concept, Fossil Inc. soon grew into a leader of the watch industry. In 2007, Fossil had a 12% market share in the global fashion watch market.

Business Strategy

The Company’s long-term goal is to capitalize on the strength of its growing consumer brand recognition and capture an increasing share of a growing number of markets by providing consumers
with fashionable, high quality, value-driven products. In pursuit of this goal, the Company has adopted operating and growth strategies that provide the framework for the Company’s future growth, while maintaining the consistency and integrity of its brands.

Operating Strategy

Fashion Orientation and Design Innovation.

The Company is able to market its products to consumers with differing tastes and lifestyles by offering a wide range of brands and product categories at different price points.

Example:

Fossil, Inc.’s luxurious brand, Michele and middle range(US$200-300) watch brand Michael Kors are two of Fossil’s watch brands that were newly launched to cater the different segment markets.

Fossil proprietary luxury brand, Michele’s great brand identity, styling and luxury value offerings outperformed the overall category of luxury watches in the market throughout last year and saw this trend continue during the first quarter this year.

The Company stays abreast of emerging fashion and lifestyle trends affecting accessories and apparel and it responds to these trends by making adjustments in its product lines several times each year.
Fossil's in-house team of renowned designers constantly study and draw inspiration from emerging lifestyle and fashion trends to bring customers the most innovative and unique products worldwide while ensuring consistency with the Company's Brand images. Design prototypes of watches were created in Hong Kong in as little as a week, and lead-time from committing orders to shipment ranged from two to three months. The company has relatively short leadtimes on reorders.
The Company differentiates its products from those of its competitors principally through innovations in fashion details, including variations in the treatment of dials, crystals, cases, straps and bracelets for the Company’s watches, innovative treatments and details in its other accessories and through unique product packaging for its products.

Coordinated Product Promotion.

The Company coordinates in-house product design, packaging, advertising and in-store presentations to more effectively and cohesively communicate to its target markets the themes and images associated with its brands.

For example, many of the Company’s FOSSIL brand products and certain of its accessory products are packaged in metal tins decorated with designs consistent with the Company’s marketing strategy and product image.

Product Value.

The Company’s products provide value to the consumer by offering fashionable and high quality watches, at competitive prices, compared with watches of similar quality.

Cost Advantage.

The Company is able to offer its watches at a
reasonable price point by manufacturing them principally in the Far East at lower cost than comparable quality watches manufactured in Switzerland. Unlike certain of its principal competitors, the Company does not pay royalties
on most of its products, so the Company is able to achieve better profit margins.

Close relationship with suppliers.

The Company owns a majority interest in a number of watch assemblers in Hong Kong and China. The Company also maintains close relationships with accessory manufacturers in the Far East. The Company believes these relationships create a significant competitive advantage as they allow the Company to produce quality products, reduce the delivery time to market and improve overall operating margins.

Actively Manage Retail Sales.

The Company manages the retail sales process by monitoring customer sales and inventory levels by product category and style, primarily through EDI.

The Company enjoys close relationships with its main retailers, by assisting retailers in the conception, development and implementation of their marketing programs. often allowing the retailers to influence the mix, quantity and timing of customer purchasing decisions.

Centralized Distribution in Supply Chain.

The Company distributes substantially all of its products sold in the
United States and certain of its products sold in international markets from its warehouse and distribution centre in Richardson, Texas. The Company also distributes its products to international markets from warehouse and distribution centres located in Germany, Italy, Hong Kong, the United Kingdom, Spain and Japan. The Company believes its centralized distribution capabilities enable it to reduce inventory risk, increase flexibility in meeting the delivery requirements of its customers and maintain significant cost advantages as compared to its competitors. Locally, Fossil has its own warehouse and distributes to department stores, travel retail and wholesales. E-commerce products come from same merchandise.

In Conclusion,
Using Porter’s Generic Competitive Strategies Model,
Fossil is pursuing both Cost leadership and Differentiation Strategies by generating a high profit margin and a relatively low asset turnover, while controlling operating expenses .


Growth Strategy

Fossil, Inc. Future Outlook

The debt problems in countries, like in Greece, won’t affect Fossil much because it is a relatively small market. The Company continued to see improved performance in larger European markets like Italy, Germany, UK, France. The company’s focus on brands growth like Michael Kors in Europe, Asia and Michele and the emphasis in potential growth markets like China, Korea, Japan, India will contribute to the company’s growth globally. The company continues to maintain a strong balance sheet and remains optimistic about the future.

Quote from Kosta Kartsotis - Fossil, Inc. - CEO

“One of the benefits we have in our business model is the watch business does not change as fast as other businesses. It is not seasonally driven and we don’t have a lot of seasonal products.
So part of the reason we are so optimistic on the watch business is we are seeing — it has been broad-based, consistent. It has been happening for several months; it is happening in all brands.
I mean we are seeing a very positive future for watches over the last several months.”

Non-traditional Forms of Retailing: Airport Retailing

Now virtually at every large airport, as well as medium ones, there are full blown shopping areas, increasingly resemble shopping malls. The potential retail market is huge. World-wide, more than 1,200 commercial airports handle nearly 5 billion passengers each year. Overall airport retailing generates $30 billion in global sales annually and many airports generate annual retail revenues of at least $50 million.

Distinctive features of airport retailing:

• Large group of prospective shoppers. A typical mall attracts 5-6million annual visits while a big airport may have more than 20 million or more people passing through the concourse.

• Air travellers are temporarily captive audience at the airport and looking to fill up their waiting time, which could be up to a few hours. They tend to have above-average incomes.

• Sales per square foot of retail space are much higher than at regional malls. Rent is about 20-30 percent higher per sq foot for airport retailers.

• Airport stores are smaller, carry fewer items and have higher prices than traditional stores.

• Replenishing merchandise and stocking shelves may be difficult at airport stores because they are physically removed from delivery areas and space is limited.

• The sales of gift items and forgotten travel items, from travellers not having the time to shop elsewhere, are excellent.

• Passengers are at airports at all times of the day. Thus, longer store hours are possible.

• International shoppers are often interested in duty-free shopping.

• There is much tighter security at airports than before, which has had a dampening effect on shopping.

Fossil Singapore

Fossil Singapore Pte Ltd. is a subsidiary of the US quoted company Fossil Inc. Fossil Singapore Pte Ltd. as been wholly owned since 2004.

Target Customers

Consumers who like retro, Fossil then to exemplify those values in their designs. Their market is 17- to 45-year old, students to working adults. They don't have personal memories of the mid-century, and don't necessarily know where this style comes from, but they like nostalgic designs. To them, the design looks classic. They are also the group who loves good materials, good craftsmanship and simple lines.

Products (Tangible and Intangible Features)

Fossil is a lifestyle brand, which includes an extensive line of fashion watches sold under the company's proprietary and licensed brands. The company also offers complementary lines of small leather goods, belts, handbags, sunglasses, jewelry and apparel. Fossil also added a line of man's leather goods to its merchandise mix from leather key fobs, money clips, wallets to duffle bags. All shopping experiences in stores will make you feel like you have stepped into a real American concept stores.

Locations

(Fossil at Heeren)

The company's products are sold in department stores and specialty retail stores in over 90 countries around the world. In Singapore, Fossil can be found in department stores like Isetan, CK Tangs, Takashimaya and OG. Products mainly consist watches. Fossil stand-alone stores include Heeren, Suntec City, Ion, 313 Somerset and its latest store on Marina Bay Sands.

Products like watches,leather bags, accessories like wallets, belts or sunglasses are sold exclusively at these stores. Travel retail boutiques are found in Changi Airport.

Pricing

Retailing between $28 and $800, Fossil’s pricing fits the pockets of students to stylish working adults who like nostalgic designs on accessories like watches, jewellery,sunglasses to handbags.

Promotion Mix

Fossil Singapore uses an in-house advertising/ marketing department for design and production of packaging, advertising, and sales promotions. Fossil felt that extensive use of computer-aided design speed up production time and encourage greater creativity in developing these programs. In their advertising themes "aim at evoking nostalgia for the simpler values and more optimistic outlook of the 1950’s through the use of images of cars, trains, airplanes, and consumer products that reflect the classic American tastes of the period. These images are carefully coordinated in order to create the flair for fun, fashion, and humor which the Company associates with its products".

Fossil came up with cooperative advertising programs with major retail customers by holding design competitions to develop an in-store visual support through its packaging, signs, and fixtures. Consumers were offered promotional items, including unique tin boxes as watch packaging, T-shirts, caps, and pens.

Fossil Singapore made use of:

Advertorials

Advertorials in local magazines, direct mail, brochures and catalogs, signs, in-store displays and BDM. Sale promotion (Media and non-media marketing communication)

Examples: Coupons in magazine/flyers, contests, GWP, tie-ins with credit cards or schools /institution, in store discounts or trade-ins. E-commerce aka online shopping, offers free delivery above certain amount.

Public relations

Newspaper and magazine articles/reports, TVs and radio presentations, charitable contributions/sponsorship and seminars.

Shopping Experience (Physical or Online)

Last week, we patronise the newly opened Fossil store at Somerset 313, one of Fossil Concept Stores in Singapore. We observed that the store adopted a freeform/boutique layout. This kind of design will provide the store flexibility in their display. However limited space area has given Fossil some constraint in displaying as well. Thus, shopping in their physical store may not be great if consumers were to visit the store during peak/sales period or even weekend shopping.


















The store is immersed in soft warm lighting, together with the wooden shelves and display gives off nostalgic feel that can brings back fond memories of customers. Surrounded within this environment, this will also entice customers to buy more. Sales associates are friendly and and well-trained in providing good customer service. However, not all sales associates are well-versed in product knowledge, except for senior and manager. But 'traditional' signages like 'New Arrivals' is not present in this shop. But we realised Fossil has showcases to feature 'New Arrivals' which is unique but again, no signages or indication to let shoppers know.





















In conclusion, we felt that its a pretty comfortable shopping experience where we can find the something for ourselves as well as a perfect gift for someone.

Apart from patronising the boutique, we visited www.fossilsingapore.com.sg, their online store. As Fossil is targeting at consumers from different places, therefore they had both local and global websites. Their online store is simple to navigate. Sufficient pictures were used to illustrate their products, however details like dimension of bag or watches were not provided. It is highly commendable that Fossil provides free delivery for purchases above $99.