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Can Aritzia cater to both luxury and mainstream clients?

Aritzia is a business that manufactures, distributes and retails fashionable clothes. It sells online and in-stores, under the Aritzia label, targeting mainly urban women ages 16 to 40 years. The company says it’s a luxury retailer that also wants to lure mainstream customers.
To do that, the company carries a diverse mix of merchandise ranging from a $1,200 wool shearling-lined leather bomber jacket (that sold out online in the fall before it ever hit store shelves), to a more affordable $22 pair of leggings (stretch pants for women). The retailer’s refurbished store on Toronto’s main fashion street is a reflection of the multifaceted approach.
At more than twice the size of the shop it replaced, it’s designed with fancy touches while still aiming to welcome all types of shoppers. They can sip cappuccinos at its new café, or admire the oak pillars and marble floors while lounging on velvet-upholstered sofas. Sales staff bring new clothing items to the comfortable customers to help them select styles to try on in the spacious changing rooms.

It’s a model for Aritzia’s future flagship stores. But Brian Hill, the company’s chief executive, expects the bigger stores to generate fewer sales-per-square-foot. That’s because he is stocking them less densely, with fewer products for the space they occupy, while trying to ensure enough consumers engage with each product line. “We like to be attainable to the vast majority of the population,” Mr. Hill said as he toured the expanded flagship. “But we consider ourselves to be a luxury retailer.”

Now, Mr. Hill, who founded Vancouver-based Aritzia 35 years ago and took it public in late 2016, needs to demonstrate his cater-to-all strategy is working. “It is clear that the product, stores, and strategies are resonating well,” said Patricia Baker, retail analyst at Bank of Nova Scotia.

In its third quarter, Aritzia’s profit rose by more than 15 percent to $32.6 million. What is more, about 40 percent of the retailer’s sales growth came from its U.S. business, which has defied the odds by gaining ground over the past 12 years even as many other Canadian retailers floundered south of the border.
Still, Aritzia faces some challenges: it expects to feel the pain of the weakening Canadian dollar, and steeper raw material costs. With 96 stores in all, and 27 in the USA and growing, Aritzia still needs to boost its brand awareness, especially in the American market. The retailer also has a problem that others would envy – running out of popular items. Aritzia quickly was out of stock of a new line of leather fashion goods it launched in the fall, including the $1,200 bomber jacket, which is roughly twice the price of many of its other leather jackets. In fact, analysts predict that next season it can charge even more for the bomber jacket, with little impact on demand. It still can’t keep up with demand for its new denim-wear items either, Mr. Hill said. “It’s always good to sell out of something.”

So far, to grab attention, the retailer pays influencers such as celebrity Kendall Jenner to wear its clothing. Aritzia also gets buzz when other celebrities choose to wear Aritzia clothes. For instance, when Meghan Markle, Duchess of Sussex, sported one of the retailer’s coats, the Instagram post sparked hundreds of thousands of likes.

What’s happening now? Aritzia is putting a push on international expansion. It already sells online in more than 200 countries. “We still have a long way to go,” Mr. Hill says.

2. Explain what the Aritzia brand means to its customers in terms of brand equity and brand loyalty.

3. In the US, at what stage of the product life cycle do you believe Aritzia to be in and why?

4. Aritzia claims to be a luxury retailer. How would you classify these consumer goods?

5. Is the demand for the shearling-lined leather bomber jacket – mentioned in the case – inelastic or elastic? Explain your reasoning.

6. Pretend you are a professional buyer at Aritzia and you are in charge of determining what price you should sell the new version of the shearling-lined leather bomber jacket for. Using the Four-Step Pricing Process, explain how you would set the right price for this product. In your explanation, make sure to refer to the jacket and explain the steps using the considerations you think would be important when pricing this jacket.

7. Explain 2 pricing tactics that Aritzia could use (with a specific example for each).

8. Does Aritzia use a direct or indirect channel of distribution? Explain each.

9. Explain 1 advantage and 1 disadvantage for the marketing channel(s) that is being used by Aritzia.

10. In order to reach out to the wider global market, Aritzia will be working with intermediaries. What are three reasons that companies use intermediaries?

11. Aritzia is opening a new flagship store in Calgary Alberta, a city with over 1 million people. Outline how you would promote the new store using the six tools of the promotional mix. Include one specific example for each tool.

12. Explain how the influencer, Kendall Jenner, increases the sale of Aritzia clothing through her personal social media accounts.

13. Describe two bases for segmenting that Aritzia uses to identify its target audience(s).

14. Aritzia is now looking to enter the British market and needs a CREST analysis for factors they need to consider. Research online to find one specific example for 4 of the 5 factors.

15. Complete a SWOT analysis for Aritzia with one specific example for each letter.