Business Plan Report for The Gifting Fish Shop

3.0 Macroenvironmental overview

Political Factors: Gift shops are charged a common 20% VAT rate on goods priced below £135 or more than the figure (Government Digital Service, 2014). However, the VAT amount is reduced for goods priced at a maximum rate of £39 (Government Digital Service, 2014).

Economic Factors: The average Consumer Price Index changes, impacting goods including gift items, were affected by levels between 6.2% to 8% as of 2023 (Lynch, 2023).

Social Factors: At least 70% of Generation-z consumers are interested in buying gift items by opting for direct store purchases (Jacobs, 2024). Their motive arises from the non-availability of gift items on E-commerce platforms. Therefore, the majority of thrift stores can capitalise on the same (Jacobs, 2024).

Technological Factors: Small business proprietors in the UK believe that generative AI-tools assist in better promotions of products (Itrportal.com, 2024). This is evident from studies which reveal that AI-generated promotional material is influencing 45% of Generation Z customers (Itrportal.com, 2024).

Environmental Factors: Gift shops can focus on ‘zero-waste’ manoeuvres, with almost 35-40% of small businesses using packaging generated from recycled content (Moss, 2019). ‘The Gifting Fish’ can similarly bring sustainability from the onset of its business processes (Moss, 2019).

Legal Factors: The distribution and disbursement of thrift and gift items are regulated under the UK’s ‘Consumer Rights Act of 2015’ (Moss, 2019).

4.0 Market and Industry Analysis

Chief segments focused by ‘The Gifting Fish’

Geographic segmentation: Medway, Kent was selected as the location because of its regenerated central location, thriving from regional shoppers engaging on a going basis (Kotler and Keller, 2016, p 328). A capital funding program with £45 million was allocated, with a further £1 million each year to help gifting distributors grow in the area (Room 151.Co.UK, 2019).

Behavioural segmentation: 63% of Generation Z consumers share a common trait before purchasing gifting items or thrift-related products (Hebert, 2024). When one consumer representing the Generation Z market spends their money on a product that has potential life experience, like representing a place recently visited by the customer or sharing a memory with the customer like the iconic Simpsons figurines (Hebert, 2024). The other customers are likely to follow the same habit of purchasing. For such reasons, 'The Gifting Fish' will target this market segment.

Target market: 'The Gifting Fish' will target Generation Z consumers (aged 19-23), who might be domestic British travellers or locals from Medway who pursue different thrift stores in the same location (Mintel, 2024). Competitors like the Gillingham Street Angels store and the Demelza charity shopping outlets can hinder the target market strategy, as they cater to 38% of normal customers in the fragmented nature of the competitive market (Mintel, 2024).

5.0 Competitor Analysis

Bargaining power of buyers: Over 75% of Generation Z buyers have expressed a newfound interest in thrift and gift items (Inquirer.net, 2020). Their demand requires different thrift and gift shop distributors to sell at a lesser price, which increases their bargaining power as buyers (Inquirer.net, 2020).

Bargaining power of suppliers: Suppliers dealing in thrift and gift items are minimal in the UK. Such thrift and gift shop owners rely on overseas suppliers to bring the items at a premium value (Technavio.com, 2023). This decreases the bargaining power of suppliers, with minimal store operations available in the UK. The supplier growth is anticipated at a year-on-year value of 9.53% only (Technavio.com, 2023).

The threat of substitutes: Numerous personalised gift and thrift shops like Gift Inspiration Ltd and Hallmark Card Ltd have taken over the majority of the thrift and gift distribution market in the UK (Researchandmarkets.com, 2023). The market has over 25 or more vendors located in different areas generating a CAGR of 9.61% overall during a year (Researchandmarkets.com, 2023).

Threat of new entrants: Some newcomer souvenir or gifting product sellers include Lambert Souvenirs, Zoingimage, Love London Souvenirs, and others (Researchandmarkets.com, 2023). Although they have market advantages due to their range of products, they can trouble ‘the Gifting Fish’ at a minimal level (Yelp.com, 2024).

Competitive Rivalry: Major competitors of 'the Gifting Fish' include the likes of Rokit Camden, Atika London, A Dandy in Aspic, and Oxfam who have been in the market for longer durations (Amberstudent.com, 2024). They are aware of the strategies better than the 'Gifting Fish', which can threaten the latter during challenging market conditions (Eisenhardt and Martin, 2022).

Strengths

Firstly, more buyers allow 'the Gifting Fish' more space to manoeuvre using its products into the market.

Secondly, the smaller new entrant thrift companies can assist ‘the Gifting Fish’ to learn market roots, and even hatch strategic partnerships of diverse natures.

Thirdly, as customers need products suitable to their tastes, ‘the Gifting Fish’ can make it available due to its access to overseas market suppliers.

Weaknesses

Firstly, supplier strength to bring demanding products is minimal in the thrift market.

Secondly, 'the Gifting Fish' will experience terse competition from the likes of Rokit Camden, Hallmark Card Ltd and others.

Thirdly, customer interests change at a faster rate within the thrift market, which can dwindle the product popularity as represented by ‘the Gifting Fish’.

6.0 Marketing and Pricing Strategies

Price: As the 'the Gifting Fish' deals in thrift and gift items, the price range will be around £9.50-£25. However, imported items will cost around £35 or more. The principle is based on competitive pricing to match competitor prices in the market and attain a higher value from returns.

Products: The chief products of 'the Gifting Fish' will involve travelling places souvenirs like Machu Picchu, Stonehenge, and others, fridge magnets, home decor items, pop-icon figures and others. These products will have unique styles and designs that will be difficult to replicate for the competitors.

Promotion: The thrift shop will promote the majority of its products through updates, timeline inclusions, and random revision of categorisation via social media platforms like Facebook and Instagram. It will assist customers in acquiring knowledge when the products are arriving in direct stores.

Place: The three branches of 'The Gifting Fish' will be located near Medway in Kent for now.

7.0 Operations Plan

Warehousing: All products brought in by the ‘the Gifting Fish’ will be stored in a central warehouse located in central Kent, with inventory supplied from suppliers domestically and internationally (Swink et al., 2020, p 254). The location of the store will be convenient for constant access to other branch stores. Management of the warehouse will be controlled under the Warehoused Goods Regulations of 1999.

Transportation: The business will use two minivans to transport products, it will be company-owned and will look to meet demanding seasons through distribution via the warehouse and into the stores (Slack et al., 2016, p 367).

Suppliers: The suppliers include the likes of Vintage Wholesale Ltd for 'the Gifting Fish' (Slack et al., 2016, p 367). Whereas, the overseas market connections will serve the company through air freights for delivering to the company warehouse (Guo et al., 2021).

8.0 SWOT Analysis

Strengths

Firstly, 'the Gifting Fish' will provide unique style, customised, and architectural prowess-shaped souvenirs, thrift items, gifting items, household decors, and others to customers.

Secondly, products will be available at a discounted rate throughout the year, with specialised trimmed prices during seasonal holidays (Latifi et al., 2021).

Thirdly, due to access to three branches, customers will not have to worry about poor inventory retention (Wirtz, 2020, p 285).

Weaknesses

Firstly, being a new company 'the Gifting Fish' is still relatively unaware of the market needs and changing customer requirements (Wirtz, 2020, p 210).

Secondly, the competitor products will be better trusted by the customers, compared to that of ‘the Gifting Fish’ due to their market reputation (Latifi et al., 2021).

Thirdly, 'The Gifting Fish' will not rely much on physical advertisements or print media which can push their popularity down.

Opportunities

Firstly, Generation Z customers have a specialised interest in sustainable products and goods with eye-catching features like artistry or decor. This can depend upon 'the Gifting Fish' due to their niche to bring similar products into the store.

Secondly, as digitisation prevails in the thrift market, consumers targeted by ‘the Gifting Fish’ could be attracted easily compared to its competitors. Facebook and Instagram are potential crowd pullers for 14% or more users in the UK (Mintel, 2022).

Thirdly, situated in a busy district like Medway which has potential development value, 'the Gifting Fish' could thrive in its business with growing customers in the same area.

Threats

Firstly, the thrift product or gifting goods market is oversaturated for ‘the Gifting Fish’.

Secondly, a competitive pricing model might dissuade customers due to their unawareness of the thrift store’s reputation (Wirtz, 2020, p 128).

Thirdly, being situated in a sub-urban zone within the UK, ‘the Gifting Fish’ might lose out on many prospective customers in other cities.

9.0 Financial requirements

Startup-cost Particulars	Amount (£)
Building space cost (x3)	600000
Fixtures and Furniture	1200-1450
Legal Fees	1450
Opening stock	12500
Salary and Wages	20000
Warehouse cost	220000
Insurance	3250
Miscellaneous cost	8000
Total	866400-866650

Assumed Income statement for The Gifting Fish

The selling prices will feature both non-premium and premium prices

Non-premium products will be available from £9-£25

Premium products will cost more than £35 depending on the product type.

Particulars	Amount (£)
Assumed Turnover from the project	425000
Less: Cost of Goods Sold	125000
Assumed Gross Profit	300000
Less: Administrative Expenses	55700
Less: Other Operating Expenses	82900
Assumed Operating Profit	161400
Less: Taxes @20%	32280
Assumed Net Profit After Taxation	129120

Breakeven= Fixed Costs/Sales per unit-Variable Costs per unit)

Assuming, that the fixed costs for 'The Gifting Fish' will be around=150000

Sales per unit=28.5

Variable costs per unit=15.65

=150000(28.5-15.65)

=150000/12.85

=11673.1 units

This shows that to achieve breakeven, ‘the Gifting Fish’ will have to sell over 11673 units in the first month from its three branches.

Figure 2: Breakeven graph

(Source: self-created)

10.0 Conclusion

The business plan report inspected different layers of studying for 'the Gifting Fish', especially to gauge its prospects in and around Kent as a permanent thrift store. As the business will look to run for the long run, its marketing, operational, competitor examination, industry speculation, and financial control-based elements have to be kept in check.

References

Amberstudent.com (2024). 16 Best Thrift Stores In London In 2024. [online] Amberstudent.com. Available at: https://amberstudent.com/blog/post/16-best-thrift-stores-in-london [Accessed 29 Oct. 2024].

Eisenhardt, K.M. and Martin, J.A. (2022). Dynamic capabilities: what are they? Strategic Management Journal, 21(10-11), pp.1105–1121.

Government Digital Service (2014). Tax and customs for goods sent from abroad. [online] GOV.UK. Available at: https://www.gov.uk/goods-sent-from-abroad/tax-and-duty [Accessed 28 Oct. 2024].

Guo, Z., Zhang, R., Wang, L., Zeng, S. and Li, Y. (2021). Optimal operation of regionally integrated energy system considering demand response. Applied Thermal Engineering, 191, pp.116860–116860. Doi: https://doi.org/10.1016/j.applthermaleng.2021.116860.

Hebert, O. (2024). Gen-Z is willing to pay more for wedding gifts than older generations, a study says. [online] The Independent. Available at: https://www.independent.co.uk/life-style/gen-z-wedding-gifts-millennials-b2614722.html [Accessed 28 Oct. 2024].

Inquirer.net (2020). Thrifting thrives in the UK as millennial and Gen Z shoppers embrace sustainability. [online] Inquirer.net. Available at: https://business.inquirer.net/289195/thrifting-thrives-in-the-u-k-as-millennial-and-generation-z-shoppers-embrace-sustainability [Accessed 28 Oct. 2024].

Itrportal.com (2024). Nearly half of UK shoppers believe AI directly influences purchasing decisions. [online] Itrportal.com. Available at: https://www.itrportal.com/nearly-half-of-uk-shoppers-believe-ai-directly-influences-purchasing-decisions [Accessed 28 Oct. 2024].

Jacobs, T. (2024). The Real Reasons Gen Z Are More Likely To Return Gifts Than Their Grandparents - IMRG. [online] IMRG. Available at: https://www.imrg.org/blog/the-real-reasons-gen-z-are-more-likely-to-return-gifts-than-their-grandparents/ [Accessed 28 Oct. 2024].

Kotler, P. and Keller, K.L. (2016). Marketing management. 15th ed. Boston: Pearson.

Latifi, M.-A., Nikou, S. and Bouwman, H. (2021). Business model innovation and firm performance: Exploring causal mechanisms in SMEs. Technovation, [online] 107, p.102274. Doi: https://doi.org/10.1016/j.technovation.2021.102274.

Lynch, F. (2023). Challenging month for UK retail as inflation and consumer spending dip hit March sales. [online] www.bdo.co.uk. Available at: https://www.bdo.co.uk/en-gb/news/2023/challenging-month-for-uk-retail-as-inflation-and-consumer-spending-dip-hit-march-sales [Accessed 28 Oct. 2024].

Mintel (2022). UK Impact Of Social Media On Retail Market Report 2022 | Mintel.com. [online] Store.mintel.com. Available at: https://store.mintel.com/report/uk-impact-of-social-media-on-retail-market-research [Accessed 28 Oct. 2024].

Mintel (2024). Gifting Trends for the Holiday Season | Mintel. [online] Mintel. Available at: https://www.mintel.com/insights/retail/gifting-trends-for-the-holiday-season/ [Accessed 28 Oct. 2024].

Moss, S. (2019). The zero-waste revolution: how a new wave of shops could end excess packaging. [online] The Guardian. Available at: https://www.theguardian.com/environment/2019/apr/21/the-zero-waste-revolution-how-a-new-wave-of-shops-could-end-excess-packaging [Accessed 28 Oct. 2024].

Researchandmarkets.com (2023). Personalized Gifts Market in the UK. [online] Researchandmarkets.com. Available at: https://www.researchandmarkets.com/report/united-kingdom-personalized-gifts-market?srsltid=AfmBOoqx4C_gvf0aVzqkQzeMPGjU_NfK-ikgo54f0BfBMmo8VbtXzc3- [Accessed 28 Oct. 2024].

Room 151.Co.UK (2019). Medway stumps up £45m for regeneration - Room 151. [online] Room 151. Available at: https://www.room151.co.uk/151-news/medway-stumps-up-45m-for-regeneration/ [Accessed 28 Oct. 2024].

Slack, N., Brandon-Jones, A. and Johnston, R. (2016). Operations management. 8th ed. Harlow, England: Pearson.

Swink, M., Melnyk, S.A. and Hartley, J.L. (2020). Managing operations across the supply chain. 4th ed. New York, NY: Mcgraw-Hill Education.

Tagalys.com (2023). Tagalys - Gen Z consumer traits: What you need to know. [online] www.tagalys.com. Available at: https://www.tagalys.com/blog/gen-z-consumer-traits-what-you-need-to-know [Accessed 28 Oct. 2024].

Technavio.com (2023). UK Personalized Gifts Market Size, Share, Growth, Trends, Industry Analysts Forecast 2027. [online] www.technavio.com. Available at: https://www.technavio.com/report/uk-personalized-gifts-market-analysis [Accessed 28 Oct. 2024].

Wirtz, B.W. (2020). Business Model Management: Design - Process - Instruments. Cham: Springer International Publishing.

Yelp.com (2024). Top 10 Best Souvenir Shops Near Gillingham, Medway. [online] Yelp.com. Available at: https://www.yelp.com/search?find_desc=Souvenir+Shops&find_loc=Gillingham%2C+Medway [Accessed 28 Oct. 2024].