Reference no: EM133638328
Assignment:
Case
Firstmark is a European fast fashion retailer. It stands out from the crowd by thriving without venturing into the world of online sales. While the past decade has witnessed e-commerce sales more than doubling, Firstmark, with 9.5 billion in sales revenue, remains resolute in not embracing online shopping.
The company owns and operates its APP, which is the first of its kind in the market. Customers can get access to fashion feed in real-time shared by customers across the world. They can use photos to find similar items that are in stock. The APP also allows users, once they have a verified receipt from a physical store to exchange or sell their items among themselves. The company sells its own branded items under the following logos 'Firstmark', 'Rebel', and 'Quickstart'.
The global fashion retail landscape is intensely competitive, particularly in the fast fashion sector where profit margins are notoriously slim. A prevailing notion in the industry is that online presence is essential. However, online shopping entails significant costs for retailers, including logistical hubs, local distribution centres, and last-mile deliveries. These operational expenses erode profit margins, a matter of heightened concern in the fashion industry. Moreover, online shoppers are more prone to product returns, further impacting profitability.
Firstmark stands apart by adhering to its unconventional strategy: no e-commerce. The retailer has been unwavering in this choice. The rationale behind this approach is to preserve profit margins by avoiding the costly infrastructure required for online sales and to address the high likelihood of product returns, which can be economically draining.
The COVID-19 pandemic presented challenges to this unconventional business model. While other retailers found solace in e-commerce during lockdowns, Firstmark had to temporarily close all 189 of its European stores, having no digital sales to fall back on. The pandemic posed a test to Firstmark's traditional approach, and while it resulted in reduced revenues, it was not sufficient to trigger a fundamental rethink of its business model.
Firstmark maintains its position in the market by offering a wide variety of products at competitive prices. The retailer sources a significant portion of its inventory from Asia, contributing to its capability to offer lower prices. Moreover, Firstmark diversifies its product offerings to encompass beauty, home, and travel items, essentially functioning as a department store within a fast fashion framework. When a customer buys Firstmark home products, they receive a booklet explaining the features of the products and how to care for them.
They do not have a presence in Canada, and the rest of North America, they have plans to enter these markets before winter 2024. Keeping in mind the company's strategy, answer the following questions:
- Identify three market entry strategies that Firstmark should consider in order to expand into the Canadian market, and for each, explain how the business can use this strategy to enter the market. Do not discuss direct online sales to consumers.
- Which of the three strategies would you recommend to Firstmark? Provide 3 reasons for your answer.
- If Firstmark decides to negotiate a contract to sell its products through an already-established company in Canada. Describe 4 important clauses that Firstmark should include in its contract with this company to address risk and explain how each clause does this.
- If Firstmark does enter the Canadian market, it will need to protect its intellectual property. Identify three different types of intellectual property that Firstmark should protect and specify the aspect or element of its product that the intellectual property relates to. For each, also explain how Firstmark can ensure that its intellectual property rights are protected in Canada.