ZARA Suzhou

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ZARA Suzhou
Yang Cao, Kalele Perreira, Hunan Lei, Nicholas
Case
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Business Vision

• ZARA is committed to satisfying the desires of
  our customers. As a result we pledge to
  continuously innovate our business to improve
  your shopping experience. We promise to provide
  our customers with new designs that are
  affordable, made from quality materials, and
  follow the latest fashion trends.

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Value Proposition

• Fashionable clothes at a reasonable price
• Quick response to customers needs and wants
• Offer customers a comfortable environment

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Where is Suzhou?
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Location

• Suzhou, China
• Population 11 million
• China Singapore Industrial Park

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Suzhou
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Economic Statistics of Suzhou

• 2006 GDP 450 Billion RMB (58.2 Billion USD)
• Income per capita in 2006 was approximately
  10,000
• February 2007 Individual Income Average
• 3324.16 RMB (Approximately 430 USD)
• Disposable Income - 3117.36 RMB (Approximately
  404 USD)

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Average Spending Breakdown
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Matro Mall

• Located on the Guanqian Shopping Street
• Operated by Suzhou Function Group
• Matro Mall Revenue
• - 2003 400 Million RMB
• - 2006 900 Million RMB
• Designer and Name Brand Retailers
• Gucci, Channel, Estee Lauder,
• Swiss Watch

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Matro Mall Interior

• Store size is approximately 1300 sq ft
• Rent expense based on revenue
• Estimated at 22,500 per month
• 272,800 per year
• Limited merchandise

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Target Markets

• Matro Mall attracts a wide age group of shoppers
• Our Target Includes
• Middle class women from Suzhou
• Foreign Employees and Family
• Tourists

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Marketing

• No mainstream advertising
• Strictly window displays
• Because of the stores location inside of the
  mall, an outside window space will need to be
  purchased.
• Bottom Line Marketing is not needed as the
  store location is in the best place with lots of
  shoppers.

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Start-up Costs

• 100,000 to Cover
• Interior Decorations
• Lighting
• Clothing Racks and Display Stands
• Computer Systems
• Initial Inventory Purchase

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Management Organization
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Who are we looking for?

• Desired Employee Skills
• Customer service
• Familiar with fashion trends
• Basic job requirements
• Stock Store
• Cooperation
• Computer skills
• Leadership

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Employee pay

• Sales associates
• 4,000 RMB per month ( 521)
• Extra bonus
• Managers
• 7,000 RMB per month ( 913)
• Extra bonus

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Government Taxes

• Import tax
• Commercial retail tax
• 7,800 per month 93,600 annually
• Earning tax
• 218,313 annually
• Value increase in good tax
• 17,745 per month 212,940 annually
• Other tax estimate
• 26,200 annually
• Total Annual Tax Expense 551,000

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Borrowing Funds

• 100,000.00 start up cost
• Interest rate is 6
• 5 years
• 2,230.38 per month
• 26,765 annually
• Source Bank of China

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Gross Sales

• Estimated annual sales of 2,372,000
• (5/ sq ft)(1300 sq ft) 6,500 per day in sales
• Zara Shanghai sells 80,000 per day in 20,000 sq
  ft of retail space
• Zara Beijing sells 90,000 per day in 15,000 sq
  ft of retail space

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• Annual Estimated Income Statement
  
• Revenue
• Total revenue from sales 2,372,000
• Expenses
• Cost of goods sold
  lt1,186,000gt
• Rent expense lt272,800gt
• Wages expense lt72,000gt
• Interest expense lt26,765gt
• Other expenses lt10,000gt
• Tax expense lt551,000gt
• __________________________________________________
  _______________ Total expense lt2,118,565gt

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Growth Potential

• The Suzhou market can easily support two stores
• Possible development site - Kunshan
• Flagship Store
• Economic growth and potential of China makes many
  other areas of the country potential markets

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Questions?