How to calculate absolute change

Charles tyrwhitt shirts

Assignment 1

MGMT 20143 Think BiG

Lecturer

Student

12345678

30 march 2018

Charles Tyrwhitt Shirts Student 12345678 Page 14 of 14

Executive summary
This report explores the Charles Tyrwhitt business model using the nine component Business Model Canvas approach to identify the features that had such an immediate impact on Australian fashion retailing. The analysis relies on publically available information.

Charles Tyrwhitt’s online model draws on core elements of a direct mail order business relying heavily on renting mailing lists of potential customers with the propensity to buy using the internet capture orders.

Growth in inventory holdings and a slowing of the inventory cycle have been compounded by opening new stores in low growth markets and largescale owner capital drawings.

Charles Tyrwhitt can reshape its business model and avoid being disrupted by potential new entrants. The following are recommended to achieve future growth:

· Move from a propensity driven to a job to be done customer segmentation model

· Better understand whether the disruptive innovation concept of zero consumption competition applies to CT

· Halt UK store growth and focus on applying the lessons learned in Germany and Australia to Scandinavia and other English speaking markets respectively.

Charles Tyrwhitt Shirts Student 12345678 Page 3 of 14

Table of Contents
Executive summary 2

Table of Contents 3

List of Tables 3

I. Introduction 4

II. Business model 4

A. Building blocks 4

1. Customer segments 4

2. Key partners 4

3. Value proposition 5

4. Key activities 5

5. Channels 5

6. Revenue streams 5

7. Cost structure 6

8. Key resources 6

9. Customer relationships 6

B. Interrelationships 6

C. Critical success factors 6

D. Downside risks 7

E. Business model changes 7

III. Conclusion 7

IV. Recommendations 8

Appendix 1 – Charles Tyrwhitt Business Model Canvas 9

Appendix 2 – Charles Tyrwhitt performance benchmarks & comparators 10

References 12

List of Tables
Table 1 Charles Tyrwhitt UK & US mailing list profiles 4

Table 2: Charles Tyrwhitt web referral commissions Australia 5

Table 3: Charles Tyrwhitt sales supported per store by major market 5

Table 4: Charles Tyrwhitt Australian sales (2013-2016) 6

Table 5: Charles Tyrwhitt Business Model Canvas 9

Table 6: Charles Tyrwhitt Australian fashion industry comparison 10

Table 7: Charles Tyrwhitt LLP & Shirts Ltd financial performance (2011-2017) 11

I. Introduction
In 2012 Charles Tyrwhitt (CT) launched an Australian website selling men’s English-style cotton business shirts (Loadman, 2013) with the promise to ‘make it easy for men to dress well’ (Charles Tyrwhitt Shirts Ltd., 2017) and save money buying proper quality shirts in multiples of four. The launch followed the Australian arrival of two fellow tennants from London’s Jermyn Street, the famed home of English shirtmakers for 200 years. Thomas Pink and TW Lewin both opened Australian stores in 2012 (Loadman, 2013). CT offered a web-based shopping experience tailored to men’s apparent dislike of shopping drawing on the infrastructure of a traditional mail-order business. Since 1986 CT has sold over 34 million made-to-measure shirts off the shelf (Confessions of a shirtmaker, 2017) in its principal markets in the UK, USA, Germany and now Australia.

II. Business model
CT runs a traditional high/low retail strategy (Kaufmann, Smith, & Ortmeyer, 1994) also drescribed as ‘was/now’ (ACCC 2016) where new season stock is quickly discounted and sold cheaply driving sales and moving stock. Their Australian arrival was accompanied by a huge direct marketing and newspaper insert brochure campaign that also sold Jermyn Street in seeming equal measure to CT itself.

A. Building blocks
Osterwalder & Pigneur’s (2010) nine building blocks approach details CT’s business model (see Appendix 1 – Charles Tyrwhitt Business Model Canvas).

1. Customer segments
The defining feature CT’s direct mail advertising is precisely targeting people with a propensity to buy by renting lists. CT now rents its own lists out. Table 1 below describes affluent professional males.

Table 1 Charles Tyrwhitt UK & US mailing list profiles

Note: nd not disclosed

Source: (NextMark Inc, 2018), (NextMark Inc, 2018a)

2. Key partners
Access to mailing lists, newspapers and third party referral websites (see Table 2) are essential for CT to develop brand awareness and generate sales traffic.

Table 2: Charles Tyrwhitt web referral commissions Australia

Source: (Charles Tyrwhitt Shirts Ltd., 2017)

Australia Post and couriers to deliver brochures, catalogues, customers orders and product returns.

Manufacturers in Vietnam, Sri Lanka and India ensure consistent product quality and supply at lowest cost.

3. Value proposition
i. Make it easy for men to dress well,

ii. Make Jermyn Street quality and style affordable for everybody by cutting out the middle man and selling direct. (Confessions of a shirtmaker, 2017)

4. Key activities
Reliable brochure mailing and courier delivery of finished orders accepted over the internet.

A direct mail advertising ‘match back’ process links individual purchases with the particular offer presented to the customer and the rented mailing list by a code (Data Services Inc, 2015).

5. Channels
Table 3 details CT sales supported per store in each major market assuming Jermyn Street store supports all sales globally. Australia, Germany and the Rest of the World have no in country stores and buy exclusively online but support 26 percent of 2015 sales at £44.16 millon.

Table 3: Charles Tyrwhitt sales supported per store by major market

Source: (Charles Tyrwhitt LLP, 2016)

6. Revenue streams
In 2012 CT recognised approximately £1 million of Australian turnover driven by former expats that had jumped to £10 million by 2014 (see Table 4). Long term operating profit averages 10 percent (see Table 7)

Table 4: Charles Tyrwhitt Australian sales (2013-2016)

Source: (Data Services Inc, 2015), (Charles Tyrwhitt LLP, 2016), (Speed, 2014)

7. Cost structure
Stock costs are 40 percent of the sale price (see Table 7). Distribution and selling costs are about 30 percent of revenue while administration costs account for approximately 20 percent.

8. Key resources
Mailing lists and match-back capabilities/infrastructure are indispensible for direct mail advertisers, along with a website to accept orders.