Aritzia’s Current Business Situation Report

Introduction

Aritzia is a Canadian women’s fashion brand headquartered in Vancouver, British Columbia. The fashion brand has been linked with innovative design, individual style, and quality. It focuses on the differentiated global strategy and its unique selling proposition (USP): innovative and creative development. Through this, the company can transform its supply chain continuously, place greater emphasis on clients and thus increase its profits. This report offers an overview of Aritzia’s current business situation, a SWOT analysis, Identifies an Issue that arises from the SWOT, explores strategic alternatives, a tabular evaluation of other options, and concludes by providing a recommendation. Through this analysis, the current perspective of the company is grasped.

SWOT Analysis

Strengths

1. Robust brand recognition: The fact that Aritzia products are firmly in the apparel retail industry has made it possible for the company to have a prominent premium price compared to its competitors.
2. Offering brand in diverse apparel client segments: The company’s wide-ranging product offering has enabled easy penetration in various client segments and has made it possible to have diverse revenue streams.

Weaknesses

1. Lack of uniqueness in its business model: It is easy for competitors to imitate Aritzia’s business model. To help address this challenge, the company should develop a platform model that makes it possible to assimilate end users, vendors, and suppliers.
2. Decreasing revenue: Profitability in the apparel sector has reduced due to the effects of the Covid-19 pandemic. To help address this, Aritzia ought to assess the current value proposition of its several products and boost its online presence.

Opportunities

1. Low inflation rate: Low inflation rates permit the market to stabilize, enabling Aritzia to offer its clients lower interest rate credits. This helps increase Aritzia product consumption.
2. Drop in the cost of new product launches: This has been made possible by launching products through dedicated social networks and third-party retail associates. This way, Aritzia leverages on emerging trends to ensure a product’s success.

Threats

1. Scarcity of skilled human resources: Owing to high employee turnover and augmented reliance on innovative solutions, Aritzia is prone to finding skilled human resources in the future.
2. Pressures in competition: As the service industry is experiencing reduced product launch cycles, players such as Aritzia are experiencing added competitive pressures. Owing to the vast client base, it is problematic for Aritzia to respond swiftly to the niche market need that disruptors focus on.

Issue Identification

A critical issue from the SWOT analysis is a decline in the company’s revenue. This has been majorly due to increased competition and the Covid-19 pandemic. The pandemic has resulted in people working from home, and some have lost their jobs. This has resulted in reduced demand for stylish outfits and fancy clothes and, thus, a decline in revenue. Further escalating the problem is that the pandemic caused the closing of stores, and Aritzia is no exemption.

Aritzia tried to address the situation and ensure demand is maintained by offering its products via e-commerce. Enabling the company to exploit the opportunity internet offers and thus increase its sales. Though the physical locations have reopened by now, the effects of the pandemic are still raging among markets worldwide. Thus, the question is how the company can subsist and better serve its clients in the pandemic situation.

Strategic Alternatives: Status quo

Currently, Aritzia is a design house that is vertically integrated. The focus is on serving the markets with home, daily luxury, and an expansive portfolio of exclusive brands for individual aesthetics and function. While they design quality materials with great style, they have not yet figured out: some markets, explored diverse costing, and whether they can introduce new products. Below are the strategic alternatives that the company is aiming to capitalize on.

Expand to new markets

Exploring new markets would help Aritzia increase its revenue. Particularly the company does not have a presence in the African and Asian markets. Entry into these two markets will ensure a greater client reach. It will also offer more foreign investor opportunities. Particularly, it will focus on the east african countries of Kenya Uganda and Tanzania.This is because these countries have a huge youthful population. This means that by targeting this population and offering youth, both male and female, with friendly products, Aritzia can significantly increase it sales. Youth also have specific taste of fashion which is easy to meet thus by focusing on them sales will increase significantly.

On the other hand, in the Asian continent the comany, will focus on the top 5 most populous countries which are China, India, Indonesia, Pakistan and Bangladesh. With a high population this means, a large market, Aritzia will capitalize on this to ensure success in its market expansion strategy. The median age of the population in these countries is 32 years and Artizia will have products targeting the youth both male and female in the countries.The products to be offered in these markets include trenchcoats, dresses, blouses, pants, accessories and sweaters.It is expected that expansion to these new market will yield $900 million revenue for Aritzia.

Pros:

• African and Asian countries offer an environment with easily accessible raw materials.
• It will help in exploring diverse market behavior and trends.
• Africa and Asian markets have experienced and skilled labor.

Cons:

• Political instability in the two continents might affect the company adversely.
• The production of new designs poses a high risk that necessitates analyzing the market to have a clear view of client demand.

Introduce a new cost production line

Aritzia is famous for its innovative in-house designs, including chic pieces that suit work environments to comfortable outfits. Their focus on greater quality has enabled them to ensure their products maintain superior quality and thus reach a broader market. Aritzia can try out the cost leadership strategy, allowing them to offer products of acceptable quality at a low price. Here the focus will be making an additional $300 million in revenue. The focus will be on students who needs quality at affordable price. The target will be both male and female students in it new Aisan and African continent markets. The products to be offered include crop top, skinny Jeans, blouses and coats.

Pros:

• With a broader market, the per-unit revenue will increase.
• The company will be creating an efficacious market to ensure sustainability and competitiveness
• Aritzia will gain a bigger market and not limit itself to premium clients.

Cons

• If the strategy fails to work out, this can further lower the revenue obtained.
• Opting to be a low-cost leader can cause a loss of premium clients, who think the company has compromised quality.

Unveiling a men’s section

The brand has existed for many years and has a high reputation among women. It can now expand its offering by entering men’s clothing, ensuring a wider product offering. The focus will be on youthful men as they have a clear taste that Aritzia can satisfy and thus increase its chances of success. It will focus to increase $700 in revenue under the men’s section in Asia and Africa. Some the products will include: weather proof fabrics, puffer vests and jackets, knit wear, contours and other more sustainable products.

Pros:

• This will increase the company’s exposure to a more extensive market base.
• Increased market share will mean an increase in revenue.
• This will help create a robust professional network for the company in the clothing industry.

Cons:

• Investing a considerable amount of capital in product development poses a significant risk.
• Adding a new line of men’s clothing comes with the danger of reduced success.

Evaluation of Alternatives

The best criteria to asses strategic alternatives is by assessing Return on Investment, attained market share, time it will take for implementation, the risk involved and the strategic fit of the alternatives. As far as return on investment is concerned, the key is to ensure that through the alternatives, the company can earn the anticipated returns. On Market share, the company should be able to attract potential clients through the alternatives. The company should be able to get a return on investment in the shortest time possible. The table below summarizes the valuation and rankings on a scale of 1 to 10. 1 is the lowest score, and 10 is the highest score, through addition, the total overall score is then obtained.

Recommendation

In conclusion. from the evaluation expanding new markets has the highest score. For this reason, I will not be proceeding with the other two. The high score for expanding to new markets can be ascribed to the detail that the African and Asian market exhibit a high demand for quality and designer products. This gives the company a high chance of stabilizing. Unveiling a man’s section has scored lowly as Aritzia is mainly known for women’s products, and thus it will be hard to convince a new market of a new offering. Introducing a new cost production line might not work well because having two diversified choices to select from will leave clients with the notion of compromised quality.

Bibliography

Aritzia. 2022. Annual Report 2022. 10-13. Web.

2022. Aritzia. Web.

Janja, Rudolf, Andrej, Udovˇc. “Introducing the SWOT scorecard technique to analyse diversified AE collective schemes with a DEX model.” Sustainability (2022): 2-9. Web.

ProjectCubicle. 2022. Web.