'Hot Coffee, Cool Clothes' Case Study

In our latest seminar we were asked to carefully look and evaluate into a case study detailing a new retail store concept which has been provided disappointing for the 2 owners 'Julie and Anna.' It opened 12 months ago based on a store that they had seen visiting New York. They wanted to combine a gourmet coffee shop and a ladies clothes shop into the same store. The shop itself was aimed at a target market of 15-30 young fashion-orientated females and after being given all of the prices and research I have compiled this conclusion of information into what went wrong.

Firstly they didn't do enough research, the pair only asked 25 people all of which were friends (who would give a biased opinion) and even then only 30% of them said that they are recreational shoppers (7.5 people). The only other research done was into atmosphere to influence the consumer to shop longer and purchase more. In my personal opinion more research should've been done into a specific target market and into the area in which their store would be placed as the case study said that they turned away a shopping complex because of costs but spending that little bit more on a good location would've benefitted them vastly. 

Secondly the money borrowed of friends and family to start the business wasn't wisely spent. In total $500,000 was borrowed to invest, $100,000 was spent on the clothes, $300,000 on the look of the store and finally $100,000 was saved for staff costs. Eventually after a failed number of months $10,000 more was spent on radio advertising. Using the radio wasn't wise, it would've been more effective to make flyers or TV adverts rather than the radio. Less money should've been spent on on the look of the store, it seems that they just threw away money. In conclusion, if they had invested money into extensive research they would've developed a store which would've made a profit. 

With 4 years left on the lease of the coffee shop there are many different things that they can do, if it was me I would sell up and attempt to get back some of the money which I spent in order to give my family and friends back their investment. Another option could be to sell on the clothes and use the money to make a high end gourmet coffee store. The business partners had a very good USP but didn't pull it off as well as they expected. This activity helped me to get to grips with the idea of rebranding to make more money and to succeed rather than fail.