Avant Garde Gift Shop

Company Summary

• "Gift Shop" at Avant-Garde Building is an established retail business that offers a wide range of novelty inside one of the most prestigious landmark buildings in Jakarta, Indonesia

• Now operating with minimal overhead, and a limited staff, the new, revamped "Avant-Garde Shop" will serve a wider customer base

Executive Summary

The "Gift Shop" at Avant-Garde Building has long offered a wide range of novelties and stationary inside one of the most prestigious landmark buildings Jakarta, Indonesia• The Gift Shop's customers were primarily employees of the Avant-Garde Building's tenants.• The new venture, "PT. Avant-Garde Shop" is taking over this space •Redesigning it as the flagship store of the Avant-Garde Building• A joint operation with PT. ABC Company Indonesia.

•OBJ:Broaden our customer base by focusing not only on tenants,

but also on neighbours of and visitors to the Avant-Garde Building

The grand opening is slated for December 9th.To refurbish the existing outlet to become an official store Associated with the lifestyle of the professionals who are the

focus of our marketing program.

[NOTE: PT is an abbreviation for Indonesian Perseroan Terbatas, meaning Limited Company.]

Executive Summary

• This business plan lays out our strategy for re-positioning the "Gift Shop" from "just-another-store" to the "Official Store of Avant-Garde."

• This plan will detail services to be provided by ABC Company in the joint operation–  ABC Company will provide several strategic

recommendations– How to enhance the traffic and image of the retail

facility?Through re-naming and image revamping, re-modelling of

interior and merchandise resource planning.

Executive Summary

Executive Summary

Strengths of the products:• 3 people out of 5 were very enthusiastic about our project• 2 were concerned about the feasibility of our project

Market response:

• 2 people out of 5 “DEFINITELY WOULD BUY’• 2 people out of 5 “PROBABLY WOULD BUY”• 1 people out of 5 “ MIGHT OR MIGHT NOT BUY”

The Market

• 100 offices inside Avant-Garde Building• 1,000 visitors daily to Avant-Garde Building• 1500 tenants• The Avant-Garde Shop has identified three distinct

market segments: - Tenants,- Neighbours,- And visitors

The Market

• 1,500 Tenants our primary target customers:- White-collar workers with large incomes

The secondary target customers:- Surrounding office community in the area, who often visit the Avant-Garde Building during lunch hour to meet their colleagues or friends

Both of these groups have already proven their willingness to buy from retail stores within the Avant-Garde building

The Market

The last target customer of the Avant-Garde Shop are visiting guests, both tourists and residents of the Jakarta region who The Avant-Garde Building is attractive because it has a taste of glamour, as the symbol of high-class, high-tech, fast and modern living in Indonesia's new economy.

The Strategy

The Avant-Garde Building will be changed into a formidable brand that reflects power, modernity, wealth, and sophisticationWe will enhance the existing retail space with a new design, and supplement retail sales with catalog and website ordersWe are not selling merchandise, we are selling a brand, and an image: the New Indonesia.All monetary amounts in this plan are in 1,000's of Indonesian Rupiahs (IDR), abbreviated here as Rp.

The Strategy

Objectives To re-position the current "Gift Store" as the Official Store of Avant-Garde Through re-modelling of the retail space and various marketing program to generate more revenue and contribute to the overall Avant-Garde Building equityTo achieve a modest net profit of Rp. 1,801,000 by year two and Rp. 6,807,000 by year threeTo achieve revenue of Rp. 90,299,000 by year one, Rp. 95,717,000 by year two and Rp. 101,460,000 by year three.

The StrategyMission

• The store, however, will emphasis the sale of official merchandise of the Avant-Garde brand with a full assortment of apparel, accessories and stationary, as well as other lifestyle related novelties.

• Our goal in ABC Company is to be the sole supplier to those official merchandise of Avant-Garde

• Need to be consistent within the theme according to lifestyle association of the target customers.

Keys to Success• Added value By creating an image where visiting guests can associate

themselves with the merchandise offered• Provide customers with personalized customer service in an

atmosphere of professionalism and hospitality• Advertise and promote in areas where our target customer

base will learn about our store:– Banners– leaflets – flyers– website

• and other method of marketing medium to attract visitors to visit the location…

Continuous reviews our inventory and sales and adjust our inventory levels accordingly

Continuous reviews our inventory and sales and adjust our inventory levels accordingly

Keys to Success

All merchandise will be purchased and supplied according to the company's mission and customer focus profile, according to the image associated with Avant-Garde or Avant-Garde Building

Industry Attractiveness

• Retail businesses with similar target markets tend to concentrate together in malls.

• New shopping centers are entering market• The trend works well for retailers

Industry Attractiveness

• Different malls, different targets:

- computer and electronic markets.

- dedicated to fashion retail

- youth fashion and sports merchandise

- serving high-end segments of the retail market.

Market Timeline

• People around Jakarta Metropolitan Area recognized Avant-Garde as an historical, elegant and prestigious place.

• Avant-Garde Building is the "embassy" of commerce with representative offices of multi-national firms internationally

Market Timeline

• Trend of putting the Avant-Garde image in every tenant's logo or corporate name.

• We may feature some of the finest tenants' logos, in conjunction with the Avant-Garde logo, in our merchandise.

• Plans for expansions to the area outside Java and Bali to take advantage of growth opportunities within a wider region.

Market Analysis

• The Avant-Garde Shop has identified three distinct market segments: tenants, neighbors, and visitors

• The Avant-Garde Shop has identified three distinct market segments - Primary Target : Tenants - Secondary Target : Neighbor - Last Target : Visitors

Tenants

This is the largest segment of our target market (53%),we will focus on tenants for several simple reasons:

• The group will be the first to become aware that there is a new, revamped store.

• They have the sense of belonging or attachment to the whole idea of working inside one the most prestigious buildings in Jakarta.

• This group will also make the most "lifestyle" purchases, either buying for themselves or as a gift for a friend or relative.

Neighbors

The second potential segment (26%) is nearby workers within the "Golden Triangle" radius, who are drawn to the Avant-Garde building by the handful of retail food establishments

• This group does not necessarily have an attachment to Avant-Garde, but may make impulse purchases, if the selection of merchandise fits their styles and needs.

• This also means that the merchandise aimed at them does not have to be Avant-Garde-themed, as it could be generic products such as trinkets or ethnic arts and crafts.

Guests/Visitors

This last segment (21%) has not yet been fully cultivated.

• This group shops at Avant-Garde Building infrequently, but may be subject to impulse purchases once they are in the store.

• They will likely purchase the Avant-Garde-themed merchandise as a memoir of their only or rare visits to the Avant-Garde Building.

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Tenants 1% 1,590 1,606 1,622 1,638 1,654 0.99%

Neighbors 1% 780 788 796 804 812 1.01%

Guests or Visitors 1% 630 636 642 648 654 0.94%

Total 0.99% 3,000 3,030 3,060 3,090 3,120 0.99%

Target Market Segment Strategy

• The focus strategy for the category of Tenants is to establish the sense of "belonging" meaning that we need to create the Avant-Garde Shop as if it is their own.

• While the Neighbors and Guests categories for the Avant-Garde Shop will be the next important ones, they mostly fall under the rubric of "accidental" shoppers or impulse shoppers

Web Plan• Avant-Garde Building has launched its first international

website in January of 2004. And the Jakarta Stock Exchange also owns a domain.

• Both can be utilized to advertise the new Avant-Garde Shop, as well as linked to our own website that list all the merchandise and services we offer.

Development Requirements

Development Costs• Site Design  - Rp. 22,000,000• Hosting fee of Rp. 1,700,000 per year, including 60 e-

mail addressesOngoing Costs

• Search Engine Registration  - $200 per year.• Site Design Changes  - Changes in the site, such as

photography costs (estimated at Rp. 300,000 - Rp. 600,000 per shot), are considered to be part of Marketing and Advertising.

Management

The management of the Avant-Garde Shop is made of the interim management team from PT. ABC Company, who will monitor the growth of the retail store, as well as making improvements and business maneuvers, if necessary. The many administrative functions of the Avant-Garde Shop would become the primary focus of the other team member, PT. Avant-Garde.

Organizational Structure

• The organization will be a relatively dynamic one, since the majority of personnel are involved in both planning and operation.

• There are three functioning groups within the company: Shareholders, who make the final decisions, then the two teams from PT. ABC Company, acting as Interim Management and Business Development Consultants, in as well as the Corporate Communications Division of PT. Avant-Garde.

Personnel Plan

Personnel Plan

Year 1 Year 2 Year 3

Store Staff $9,600 $11,000 $11,000

Marketing/Store

Manager $12,000 $12,400 $12,400

Total People 2 2 2

Total Payroll $21,600 $23,400 $23,400

The personnel plan is included in the following table. It shows the Store Staff's salary as other functions are working inside both PT. Avant-Garde and PT. ABC Company.

Financial feasibility

• TOTAL START-UP CASH NEEDED– Most of the store/office equipments of the old Avante

Guard Store will still be used by the newly renovated store. – The initial funding from investors (let’s just say they are

ABC and XYZ Company) will enable us to renovate the space and buy initial inventory.

– We will keep 2 full-time employees will run the shop, while advisors and directors from AMC Company will oversee operations

START-UP FUNDING

Start-up Expenses to Fund Rp 72,000,000

Start-up Assets to Fund 94,597,000

Total Funding Required Rp 166,597,000

Assets

Non-cash Assets from Start-up Rp 25,282,000

Cash Requirements from Start-up 69,315,000

Cash Balance on Starting Date 69,315,000

Total Assets 94,597,000

Liabilities and Capital

Total Liabilities - -

Capital

Planned Investment

PT. XYZ (32%) Rp 63,307,000

PT. ABC Indonesia (62%) 103,290,000

Total Planned Investment Rp 166,597,000

Loss at Start-up (Start-up Expenses) ( 72,000,000)

Total Capital Rp 94,597,000

Total Capital and Liabilities 94,597,000

Total Funding Rp 166,597,000

Projected Profit and Loss (figures are in Rp 1,000s)

Year 1 Year 2 Year 3

Sales Rp 90,299 Rp 95,717 Rp 101,460

Direct Cost of Sales 25,282 22,530 22,980

Total Cost of Sales RPp25,282 Rp 22,530 Rp 22,980

Gross Margin 65,017 73,187 78,480

Gross Margin % 72.00% 76.46% 77.35%

Expenses

Payroll RPp21,600 Rp 23,400 Rp 23,400

Marketing/Promotion 4,515 4,786 5,073

Rent 28,800 28,800 28,800

Utilities 12,000 12,000 12,000

Other 2,400 2,400 2,400

Total Operating Expenses Rp 69,315 Rp 71,386 Rp 71,673

Profit Before Interest and Taxes (4,297) 1,801 6,807

EBITDA (4,297) 1,801 6,807

Net Profit (Rp 4,297) Rp 1,801 Rp 6,807

Net Profit/Sales -4.76% 1.88% 6.71%

Projected Cash Flow (figures are in Rp 1,000s)

Year 1 Year 2 Year 3

Cash Received - - -

Cash from Operations

Cash Sales Rp 90,299 Rp 95,717 Rp 101,460

Subtotal Cash from Operations 90,299 95,717 101,460

Subtotal Cash Received Rp 90,299 Rp 95,717 Rp 101,460

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending Rp 21,600 Rp 23,400 Rp 23,400

Bill Payments 59,711 66,981 71,309

Subtotal Spent on Operations 81,311 90,381 94,709

Subtotal Cash Spent Rp 81,311 Rp 93,381 Rp 97,709

Net Cash Flow 8,988 2,336 3,751

Cash Balance Rp 78,303 Rp 80,639 Rp 84,390

Comparison of the Financial Performance of Proposed Venture to Similar Firms Assessment

Tool

Annual Sales Estimate of Proposed Venture’s Annual Sales—Year 1

We used the average 6% growth of sales per annum of Gifts, Novelty, Souvenirs Industry in Indonesia

Estimate of Year 1 Sales Rp 90,000+

Summary: This number shows a little above average of the usual sales of Avante Guard, which is in anticipation of the expansion & better location of the store. Trend in Indonesia, especially in major cities shows that new stores attract more customers.

Estimate of Year 2 Sales Rp 95,000+

Summary: Using the 6% average growth sales, this figure will come out. This is however including the possible competition & uncollected sales.

Comparison of the Financial Performance of Proposed Venture to Similar Firms Assessment

Tool

Net Income Estimate of Proposed Venture’s Net Income—Year 1

Due to capital investment from outside finance, the company is opt to payback the cash first.

Estimate of Year 1 Net Income (Rp 4,000)

Summary: As expected, the income for the 1st year will be very low due to the huge amount of outside financing. Also, as a small business selling small items, the margin to attain large income is very steep.

Estimate of Year 2 Net Income Rp 1,800,000

Summary: This is when the store operation starts to pick-up after the first year of relaunching. However, the monthly net income will still average low since at the start of the year the outside investment still needed to be paid & it is only towards the end of 3rd quarter wherein the company achieve the break-even point.

Thank you !