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Gemma Hagan International Retailing Case Study

Contents Section
The Company, Services and Products Location and Pricing Strategy Target Consumers Market Positioning Company Value Company History & Main Findings Mission Statement & Brand Values Brands Concept Stores Multichannel Retailing Strengths & Weaknesses Corporate Citizenship Going Global Reasons for Internationalisation, Trading Conditions in the UK and How the Factors Affected The Dune Group Conclusion Bibliography

3 4 5 6 7 8 9 10 11-12 13 14-16 17 18 19-22 23 24-25

The Dune Group

An Overview

The Company
The Dune Group is an international retailer specialising in mens and womens affordable luxury footwear and accessories. After its acquisition of Shoe Studio in 2009 it is now compromised of 20 brands, which offer the fashion forward consumer a range of high quality footwear and accessories on the high street. Due to considerable growth The Dune Group is now one of the most influential leaders in the footwear market and has ambitious plans to develop their brand within the UK and globally.

Products and Services

The company offer all types of footwear for both men and women suited for every occasion across all seasons. They have also expanded the brand by providing quality accessories including bags, belts, sunglasses, jewellery and winter accessories. As well as an ordering service from their webpage, The Dune Groups solus stores also have an ordering service in store to the customers chosen address and have recently started to trial Click and Collect in certain stores across the UK. This enables the customer to order products from the Dune website to be collected in store.


Location- Stores
The Dune Group trade internationally. They currently have 48 stand-alone stores in the UK and 165 concessions throughout UK and European department stores. They also currently have 28 franchised stores in the Middle East, Russia, Czech Republic, Poland and Libya with plans to grow to 100 stores by 2014

Location- E-commerce
The group also trade online with the Dune website as well as The Shoe Studio, Bertie, Pied A Terre and Chelsea Cobbler websites.

Pricing Strategy
The Dune Group prides itself on affordable luxury footwear and accessories available on the high street. Its portfolio of brands allows low to high price points across an array of products. Brand Price Points (average) Head Over Heels 15-65 Madden Girl 22-65 Roland Cartier 25-65 Roberto Vianni 29-130 Bertie 40-170 Pied A Terre 40-180 Dune 55-200 By having subsidiary brands under The Dune Group, the company are able to target a wider market offering fashion Fig 2 Fig 3 Fig 4

Brand Price Pro/Con

Dune Jones Bootmaker 70 130 Patent leather Patent leather outer, leather outer, leather lining lining The Dune shoe here is made entirely of leather at an affordable price, 70. Its competitors Jones Bootmaker is 60 more expensive for the same material whereas Aldo have used an entirely synthetic material and is only 10 cheaper.

Aldo 60 Entirely synthetic material

Target Consumers
The Dune Group have a variety of target consumer groups due to its diverse selection of brands under its name. There are four main consumer groups their customers can be categorised into:

Age: Gender: Marital Status: Education: Income: Lifestyle/interests:

Brand of choice: Desire:

15-20 Female Single School leavers, College, Beginning University Low level income, low disposable income Socialising, Fashion forward, Fast fashion interests Head Over Heels by Dune Madden Girl Cheaper footwear, trend lead

Age: Gender: Marital Status: Education: Income:


Brand of choice: Desire:

21-35 Female/Male Single, With Partner, Married University, Young Professionals Medium level income, medium level disposable income Career mixed with socialising, young family, fashion aware Dune Bertie, Pied A Terre Fashion forward trend lead, high quality 50+ Female/Male With Partner, Married Professionals Medium- High level income, medium level disposable income Career lead/retired, socialising, holidaying Dune Roland Cartier Roberto Vianni Good quality, affordable price, comfort

Age: Gender: Marital Status: Education: Income: Lifestyle/interests:

Brand of choice: Desire:

35-50 Female/Male Single, Married University Graduate, Professionals Medium-High income, Higher disposable income Family orientated, career, high quality and fashion forward desires Dune, Pied A Terre Black Sands by Dune High Quality, considerable comfort, universal style to suit many occasions

Age: Gender: Marital Status: Education: Income:

Lifestyle/interests: Brand of choice:


Market Positioning
The Dune Group places itself in the affordable luxury footwear and accessory market.

Fig 5 The highlighted brands make up The Dune Groups portfolio of brands. Its clear to see that their brands cover all areas of the footwear market; from the lower premium brands such as Roberto Vianni and Roland Cartier to the higher premium high fashion products by Pied A Terre and the Black Sand range by Dune.

The Value (as of 2010)

Fig 6

The Dune Groups annual turnover in 2010 was recorded at just over 130m. It is clear to see that the groups turnover nearly tripled after the acquisition of the Shoe Studio concession and its brands in 2009. Fig 7

The groups profit in 2009 before the acquisition of Shoe Studio was 884,000. In 2010 their profit increased significantly to just under 7m.

The Dune Group

History & Main Findings Dune celebrates its 20th anniversary this year and is celebrating the event with the release of an iconic shoe, celebrations in stores, gift vouchers issued with Elle magazine and customer competitions. The Dune brand was first launched in 1992 as a concession in Faith Shoe stores across the UK. In 1993 the first Dune stand-alone store was opened on Kings Road, London. The Dune brand was expanded in 1999 when the first mens collection was launched. The brand launched its international expansion operation in 2001, and opened its first stores in Dubai and Abu Dhabi. In 2005 Dune chose to invest in multichannelling retailing and launched its website www.dune.co.uk. The Dune Group tripled in size and turnover in 2009 due to the acquisition of The Shoe Studio concession located in Debenhams department stores. This acquisition enabled the brand entry into department stores to set up concession format shops and an increased brand portfolio.

Mission Statement and Brand Values 8

The companys mission statement is: To develop leading affordable luxury brands in the footwear and accessories market in the UK and globally. The Dune Group have a selection of Core Brand Values that are practiced by staff in both the store and head office environment: Fig 8

This ensures excellent customer service and a pleasurable place to work.


Since the Shoe Studio acquisition in 2009 The Dune Group has increased its brand portfolio, most recently added are The Steve Madden and Madden Girl ranges. Steve Madden is a fashion forward American brand available in House of Fraser, whereas the Madden Girl range is a lower priced brand, which is available in Debenhams concessions. These along with the other Shoe Studio brands are available in prestigious department stores such as Selfridges, John Lewis, House of Fraser, Debenhams and Topshop according to their customer demographics

Fig 9 The wide variety of brands and products on offer from The Dune Group ensure they capture all target consumers within the footwear and accessories market. The products offer the consumer various price points and fashion trends to choose from to suit their needs and budgets.

Concept Stores

The group have heavily invested in creating contemporary concept and flagship stores. The newest concept stores include The Trafford Centre (Manchester), Westfield (London), Mega Typoplistan (Moscow) and the first Bertie and Pied A Terre stores (London City). The stunning new retail concept and the highest level of service provided at the new stores has proven to have driven footfall and conversion rates for The Dune Group. Fig 10

The company average weekly visits to a store in a/w 2011 is 5.200. The new concept stores have more than doubled this amount and therefore increased brand awareness amongst the public.


Fig 11 The increased footfall consequently increased sales. The average weekly sales per Sq foot of a Solus stand-alone store is 19.87 whereas the concept stores sell 50% more per sq foot. The Dune Group have confirmed plans to expand into India and China with new concept stores opening Spring/Summer 2013.


Multichannel Retailing
The group is comitted to delivering the ultimate consumer experience and has heavily invested in multichannel retailing instore and online. The companys aim is provide a seamless shopping experience in-store and across all of its five branded websites. The Dune Group has over 1 million visits per month across its e-commerce sites. The introduction of multichannel functionality is predicted to have a dramatic positive impact on sales and conversions online. The group plan to expand the brand online by launching new Dune webpages for Germany, USA and France by 2013 Fig 12


Strengths and Weaknesses

Strengths Stunning retail concept designs which drive footfall and sales Commitment to investment in technology to increase customer satisfaction and sales Occasional footwear Matching accessories (add on sales) Weaknesses Sizing format consistency and quality of the Madden Girl range Shoe Studio brands sales

No ordering service in concessions No Dune designed shoe care available

Commitment to investment in technology to increase customer satisfaction The Dune Group has recently launched the HARRY. This is a hand held wireless device that is used by staff in Dune solus stores. It enables them to search for stock in the warehouse to order for consumers to the store or their personal address if the store has none of the selected product in stock. The group also launched the mobile website in 2011. This allows browsing and shopping facilities to be accessed by the Dune consumer on the go.

Occasional footwear and matching accessories The Dune groups strength lies within the occasional footwear market. Their consumers are loyal to the brand knowing they will receive luxury affordable high quality footwear. The group also create strong matching accessories. These additional products along with an intensive staff-training program allow the company to drive add on sales to increase turnover and profit.


Sizing format consistency and quality of the Madden Girl range Madden Girl is an American range; therefore the lines are manufactured with American sizes printed onto the shoe. However during the manufacturing stage both American and UK sizes were printed on the shoe, product stickers and on the shoeboxes. This caused confusion within the company and the consumers resulting in many unnecessary returns and exchanges. Shoe Studio brands sales The Shoe Studio brands are currently the worst performing brands under The Dune Group name. This could be due to lower quality because of lower price points and that the products are sold in a department store the brands target audience do not choose to shop in. No ordering service in concessions The company have only recently started to trial the HARRY device and its ordering service in stores. However this is only currently in selected high performance stores and there are no plans yet to introduce this into The Dune Group concessions. Fig 13

This table shows the HARRY sales for Dune Week 38. The company is now taking an extra 20,000+ each week from HARRY transactions alone. While this is not available in concessions the company is loosing potential sales and therefore profit 15

No Dune designed shoe care available There is currently no shoe care produced by The Dune Group specifically for the brands products. When requested by customers the group is losing shoe care sales to its concessions host store.


Corporate Citizenship
The Dune Group is in partnership with Teenage Cancer Trust. As part of their corporate citizenship the group have been helping to raise money for the charity since 2007. The Dune Group have done this by producing and selling specific products such as jewellery modelled by celebrities and the Limited Edition Sparkling Shoe, which retailed at 90 with 50 from each shoe donated to TCT. The company continue to raise money by selling pin badges (so far raised 13,150) in store fundraising days and staff sponsored mountain hikes, competitions, sky dives and more.

TCT Image 1The store manager of Chapelfield, Norfolk cycled 125 miles on an indoor bike in heels to raise money for TCT.

TCT Image 2The Dune Limited Edition Pink Sparkle Shoe produced specifically for TCT


Going Global
The Dune Group began its International Operation in 2001. Since then the group have achieved a steady growth with more than 22 stores in UAE, Qatar, Bahrain, Russia, Poland and Libya. By A/W 2012 The Dune Group will of expanded into 6 new concessions in Karstadt department stores across Germany, International expansion is a key priority for The Dune Group over the next two years with focus on South East Asia and South America. The aim of the International operation is to treble the groups international store portfolio to 100 stores by 2014. Fig 14


Reasons for Internationalisation

There are several factors within the current UK trading environment that have affected The Dune Group and encouraged them to internationalise.

Economic Factors The RecessionThe current double dip recession in the UK has severely affected trade within the country. The increased levels of unemployment and consumers reduced disposable income levels have had a negative effect on trade especially within the affordable luxury market The Dune Group is placed in. Consumers are spending less and are more cautiously when spending to reduce personal deficit and stick to spending reduction plans.

Affects on The Dune GroupThe Dune Group is placed within the affordable luxury medium premium market. The consumers reduced disposable income prevents them from purchasing luxury footwear and instead they are opting for a lower premium fast fashion brand substituting quality for quantity.

Fluctuating VATSince the recession the VAT rate has fluctuated between 17.5% and 20% rate. When the VAT rate reverts back to 17.5% it will have a significant impact on the UK fashion business as re- pricing tens of thousands of items is a mammoth and costly task - BRC director of business environment, Tom Ironside. Affects on The Dune GroupThis would effect the company as it will require Head Office staff time to re-price products accordingly and send these to the store till systems as well as store staff time to replace all pricing on the products in store. This is costly to the company as staff would need to be removed from the shop floor to re-price stock which in turn leads to less sale conversions and more hours would need to be paid to the Head Office staff.


Social Factors Ethical ExpectationsThere is an increased expectation of society for retailers to become more ethical. This often involves natural materials and products used in production and recycling to protect the environment in which a company trades. The cost in becoming more ethical is often higher than usual methods used by fast fashion retailers, this cost is then usually reflected in higher product price points which in turn effects the consumer and their budgets.

Affects on The Dune GroupThe only ecological practice Dune currently has in place is to use recycled paper for store and Head office paperwork. The cost of implementing ecological materials in manufacturing and a recycling scheme to dispose of paper packaging waste from shoes would be seen in product prices increasing. This would no longer make Dune affordable luxury in which it prides itself on.

Environmental Factors Bi-Seasonal WeatherThe UK experiences Bi-Seasonal weather, which is where, seasons overlap and there is no clear definition between summer and winter for example. Last year The Dune Group reported that due to warmer weather boot sales were down and the sales of sandals were increased. This year however, due to the colder weather boot sales have increased on LY by 13% but this in turn has resulted in sandal sales decreased by 19% compared to LY.

Affects on The Dune GroupThe Dune Group look at past year sales and what types of products were selling well and certain times. This switch in weather this year affect what the company plan to manufacture and arrive in store first. The opposite cold weather compared to last year means the company would have ordered summer stock to still be in stores when in fact boot sales were proven to be more popular. This causes a problem as all of the boots wouldnt have arrived in stores and the company is loosing out on higher priced sales.


Political Factors Foreign Manufacturing and Exchange RatesFluctuations in the exchange rates and the cost of importing and exporting goods from abroad have been seen to fluctuate since the recession in the UK and the Euro zone Crisis. This fluctuation could affect companies as import costs could become too high, therefore increasing their manufacturing costs and tightening their profit margins. Affects on The Dune GroupThe majority of the groups products are made abroad due to highly skilled labour and quality materials being cheaper. This allows The Dune Group to produce affordable luxury for its target audience. However, if the exchange rates be come too high the price of the product would have to increase or the groups profit margins become tighter meaning less profit for the brand.

By going global The Dune Group can still grow and increase turnover and profit whilst avoiding some of the factors that make trading difficult in the UK today. The most important reason for expanding the brand internationally is that there is greater wealth elsewhere which in turn means greater turnover and profit to be made. A key area is the Middle East, which The Dune Group have already expanded into and are planning to open new concept stores within this part of the world. Stable VAT rates internationally are also attractive to The Dune Group, as this will reduce timely and costly processes of re-pricing products. The lack of bi-seasonal weather means the group can predict easily what weather seasons will be in each country and plan their product distribution effectively. This will reduce full price stock going into sale and maximise full price sales. Other key reasons for developing globally are: New Markets- The group would be entering countries where they do not have affordable luxury footwear and accessories. The countries will therefore have consumers with high demands for Dune products and there will be little other retailer to compete with. 21

Lower Costs- Due to different laws abroad the company costs for employee salaries will be less as well as having less expensive access to raw materials. Growth Areas- The Dune Group are able to look at which countries economy is booming and chose to expand into that country. This means consumers on average will have higher levels of disposable income to spend on footwear. Awareness- Generally increase brand awareness and recognition as it expands worldwide.

Despite the economic down turn and the factors currently affecting trade within the UK, The Dune Group is still growing as a business within the country and globally. The success of their concept stores, new ordering services, multichannel retailing and continuously expanding brand portfolio the group remain the leading brand to delivery affordable luxury products to their target consumer.


Fig 1- [online] Available at: www.dune.co.uk, The Dune Group [accessed 22/10/12] Fig 2- [online] Available at: http://www.aldoshoes.com/uk/women/shoes/low-midheels/91282794-mcmenomy/95, Aldo [accessed 22/10/12] Fig 3- [online] Available at: http://www.dune.co.uk/aimee-d-patent-leather-pointedtoe-court-shoe-0085500620015010/, The Dune Group, [accessed 22/10/12] Fig 4- [online] Available at: http://www.jonesbootmaker.com/main/details/Courts__All/00330652B92/CLARE_3_BlackPatent, Jones Bootmaker, [accessed 22/10/12] Fig 5- [online] Available at, http://www.thedunegroup.com/brochure/brochure.pdf, The Dune Group, [accessed 22/10/12] Fig 6- DUNE GROUP LIMITED [online] Available at: http://www.worksmart.org.uk/company/company.php?id=02127866, WorkSmart, [accessed 23/10/12] Fig 7- DUNE GROUP LIMITED [online] Available at: http://www.worksmart.org.uk/company/company.php?id=02127866, WorkSmart, [accessed 23/10/12] Fig 8 Retail Operations Core Values [online] Available at: https://dun.retailcloud.net/frameset.cfm The Dune Group Intranet, [accessed 23/10/12] Fig 9 Google Images [online] Available at: http://www.google.co.uk/imghp?hl=en&tab=wi, Google, [accessed 23/10/12] Fig 10- Stunning New Retail Concept [online] Available at: http://www.thedunegroup.com/brochure/brochure.php, The Dune Group Brochure, [accessed 23/10/12]


Fig 11- Stunning New Retail Concept [online] Available at: http://www.thedunegroup.com/brochure/brochure.php, The Dune Group Brochure, [accessed 23/10/12] Fig 12- Website Home Pages [online] Available at: www.bertieshoes.com, www.dune.co.uk, www.shoestudio.com, www.piedaterre.com, www.chelseacobbler.com., [accessed 23/10/12] Fig 13- The Dune Group News- Week 38 [online] Available at: https://dun.retailcloud.net/frameset.cfm, The Dune Group Intranet, [Accessed 24/10/12] Fig 14 Distribution Overview [online] Available at: http://www.thedunegroup.com/brochure/brochure.php, The Dune Group Brochure, [accessed 24.10.12] TCT Image 1- Norwich Eventing News 24, [online] available at: http://www.eveningnews24.co.uk/news/new_cancer_unit_for_east_anglian_teens_ 1_1222328, Archant Community Media Ltd., [accessed 24/10/12] TCT Image 2- Dune [online] Available at: http://www.teenagecancertrust.org/getinvolved/as-a-company/our-partners/dune/, Teenage Cancer Trust [accessed 24/10/12] When the VAT rate reverts back to 17.5% it will have a significant impact on the UK fashion business as Re- pricing tens of thousands of items is a mammoth and costly task- Tom Ironside, Issues Currently Affecting The UK Fashion Industry PDF: [online] Available at:

media.wix.com/.../a8ab1b_225809546c175184f1750766b0b2c016, [accessed 24/10/12]