Introduction
In this report I will discuss the options Sofia can take with her new business venture. Sofia
has experience of working as a buyer for a well-known fashion retail business and has also
completed a design course at her local college. She is looking at setting up a successful
designer fashion retail business and wants to commit to this as a sole trader. Sofia can go
with two options for this: Option 1 is an affordable designer clothing business which will
operate from a stall in a popular city market or Option 2 which is a luxury designer fashion
shop in a city centre location. I will continue to evaluate these options in seeing which is the
best choice for Sofia and give my recommendation on which route she should take.
Market Trends
The retail fashion market and is a large market which in history has seen to be growing
vastly as between 2018 and 2019 there was a market growth of 4.5%, not only did this show
that the market was expanding it also shows that Sofia could enter the market and still be
very successful. However, due to COVID-19 and the restrictions put in place from this such
as social distancing and working from home retail stores were forced to close which resulted
in sales falling by 30% in 2020. In recent reports it is shown that the sales report from retail
business in 2021 had a 5to15% decrease which is most likely due to COVID-19 and the levels
of growth aren’t expected to be what they used to be until late-2022 or mid-2023. While
this can make it look like the market is a difficult market to work in it actually can show that
the market is regrowing as COVID-19 and its restrictions die down, this can show that right
now is an ample for Sofia to open a retail business as the market is expected to grow.
Especially due to COVID-19 people are very welcoming on supporting small businesses
rather than large corporations which can give Sofia a leading edge.
Prior to 2019, the highest levels of growth in the retail fashion industry were in the luxury
and discounted segments of the market, which can demonstrate that option 2 of Sofia
opening her own luxury business can be a good business venture as this market shows the
highest levels of growth in recent history. In addition to this, there were much lower levels
of growth with the mid-price segments of the market and in 2020 and 2021, where the
retail fashion industry saw a decline, the luxury and discounted segments continued to do
better than the mid-price segments of the market.
In the retail fashion industry, there are also many difficulties especially with trading from
2010 such as the average sector profitability was 5% as in 2019 which was at the hight of
the market growth which can show that there will be difficulties for Sofia with both options.
Retailers were going out a business which reduced the number of shops open in which they
can operate as in 2021 between January and June an additional 1060 stores closed. This
may be good for Sofia as there will be many locations and options for her to choose when
opening her new business, it can also be bad for her as starting a new business focusing on
an instore location may limit her success levels. Online selling was used to balance the profit
margins which online sales being responsible for 30% of sales in late 2020. Increased shop
1
, rents with inflation and the current world trends can make option 2 hard for Sofia as she
may have to delve into a long-term business agreement to lower these rental costs for
herself which can pose a big risk as if her success levels are low, she could be a victim to bad
debt. Increases in the National Minimum Wage and shortages of staff leading to higher
wages can put cost pressures on the market, although Sofia may not have to face these with
option 1 as she will be solely working from a smaller location and may not need other staff
apart from the suppliers.
There are other factors and trends in the retail fashion market which can limited Sofia’s
business ideas such as the large supply chain disruption due to Brexit which can cause Sofia
to have extended wait times with products disregarding which option, she chooses which
can displeases consumers. Social media now poses a big advantage for business with the
correct use of it as business are using social media to demand the new fashion trends which
are reaching consumers fast. In addition to this research has shown that business that
haven’t been using this approach have been losing out on sales and are expected to even
lose loyal customers. With this Sofia should invest some of her time promoting her business
through social media which may be hard for option 2 as it is a high luxury brand, and these
brands rarely use forceful advertising if any. A big trend which was predicted in 2018 and
has followed through until 2021 is personalisation and that customers want to buy items
that are unique or specifically recommended to them by retailers which was information
fund out through data shared by consumers. This allows both of Sofia’s business options to
meet up with the current trends in the market.
Financial Resources
The financial resources for option 1 would be a small start-up loan of £10,000 that Sofia
would need for initial rent payments for a stall in a popular city market, to invest in a
website and social media campaign, initial stock and shelving for the stall. A small start-up
loan would be easily achievable as she would just have to be approved by a bank and given
that this loan is not of a vast amount, she would be able to pay it back. Including average
interest rates, within the first year or two of the businesses successes. This would deem
option 1 as a smart idea as there is a lower risk due to not as much capital being leveraged.
The financial resources for option 2 would be start-up capital of £30,000 which Sofia would
need for initial rent payments, stock of designer products to display in the shop, business
rates, wages and marketing promotional costs. This capital would be harder to obtain than
option 1 but with the right credit would still be achievable for Sofia to get with her paying it
back over a couple of years. However, with option the 2 the start-up costs are expected to
be triple the times of option 1’s start-up cost, yet only allowing for 1.5 times increase in
sales revenue for the first year, which can make option 1 look more affordable.
Human Resources
The human resources for option 1 would be minimal as it would just be Sofia operating as a
sole trader and operating the stall herself. This makes option 1 feasible as Sofia can just
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In this report I will discuss the options Sofia can take with her new business venture. Sofia
has experience of working as a buyer for a well-known fashion retail business and has also
completed a design course at her local college. She is looking at setting up a successful
designer fashion retail business and wants to commit to this as a sole trader. Sofia can go
with two options for this: Option 1 is an affordable designer clothing business which will
operate from a stall in a popular city market or Option 2 which is a luxury designer fashion
shop in a city centre location. I will continue to evaluate these options in seeing which is the
best choice for Sofia and give my recommendation on which route she should take.
Market Trends
The retail fashion market and is a large market which in history has seen to be growing
vastly as between 2018 and 2019 there was a market growth of 4.5%, not only did this show
that the market was expanding it also shows that Sofia could enter the market and still be
very successful. However, due to COVID-19 and the restrictions put in place from this such
as social distancing and working from home retail stores were forced to close which resulted
in sales falling by 30% in 2020. In recent reports it is shown that the sales report from retail
business in 2021 had a 5to15% decrease which is most likely due to COVID-19 and the levels
of growth aren’t expected to be what they used to be until late-2022 or mid-2023. While
this can make it look like the market is a difficult market to work in it actually can show that
the market is regrowing as COVID-19 and its restrictions die down, this can show that right
now is an ample for Sofia to open a retail business as the market is expected to grow.
Especially due to COVID-19 people are very welcoming on supporting small businesses
rather than large corporations which can give Sofia a leading edge.
Prior to 2019, the highest levels of growth in the retail fashion industry were in the luxury
and discounted segments of the market, which can demonstrate that option 2 of Sofia
opening her own luxury business can be a good business venture as this market shows the
highest levels of growth in recent history. In addition to this, there were much lower levels
of growth with the mid-price segments of the market and in 2020 and 2021, where the
retail fashion industry saw a decline, the luxury and discounted segments continued to do
better than the mid-price segments of the market.
In the retail fashion industry, there are also many difficulties especially with trading from
2010 such as the average sector profitability was 5% as in 2019 which was at the hight of
the market growth which can show that there will be difficulties for Sofia with both options.
Retailers were going out a business which reduced the number of shops open in which they
can operate as in 2021 between January and June an additional 1060 stores closed. This
may be good for Sofia as there will be many locations and options for her to choose when
opening her new business, it can also be bad for her as starting a new business focusing on
an instore location may limit her success levels. Online selling was used to balance the profit
margins which online sales being responsible for 30% of sales in late 2020. Increased shop
1
, rents with inflation and the current world trends can make option 2 hard for Sofia as she
may have to delve into a long-term business agreement to lower these rental costs for
herself which can pose a big risk as if her success levels are low, she could be a victim to bad
debt. Increases in the National Minimum Wage and shortages of staff leading to higher
wages can put cost pressures on the market, although Sofia may not have to face these with
option 1 as she will be solely working from a smaller location and may not need other staff
apart from the suppliers.
There are other factors and trends in the retail fashion market which can limited Sofia’s
business ideas such as the large supply chain disruption due to Brexit which can cause Sofia
to have extended wait times with products disregarding which option, she chooses which
can displeases consumers. Social media now poses a big advantage for business with the
correct use of it as business are using social media to demand the new fashion trends which
are reaching consumers fast. In addition to this research has shown that business that
haven’t been using this approach have been losing out on sales and are expected to even
lose loyal customers. With this Sofia should invest some of her time promoting her business
through social media which may be hard for option 2 as it is a high luxury brand, and these
brands rarely use forceful advertising if any. A big trend which was predicted in 2018 and
has followed through until 2021 is personalisation and that customers want to buy items
that are unique or specifically recommended to them by retailers which was information
fund out through data shared by consumers. This allows both of Sofia’s business options to
meet up with the current trends in the market.
Financial Resources
The financial resources for option 1 would be a small start-up loan of £10,000 that Sofia
would need for initial rent payments for a stall in a popular city market, to invest in a
website and social media campaign, initial stock and shelving for the stall. A small start-up
loan would be easily achievable as she would just have to be approved by a bank and given
that this loan is not of a vast amount, she would be able to pay it back. Including average
interest rates, within the first year or two of the businesses successes. This would deem
option 1 as a smart idea as there is a lower risk due to not as much capital being leveraged.
The financial resources for option 2 would be start-up capital of £30,000 which Sofia would
need for initial rent payments, stock of designer products to display in the shop, business
rates, wages and marketing promotional costs. This capital would be harder to obtain than
option 1 but with the right credit would still be achievable for Sofia to get with her paying it
back over a couple of years. However, with option the 2 the start-up costs are expected to
be triple the times of option 1’s start-up cost, yet only allowing for 1.5 times increase in
sales revenue for the first year, which can make option 1 look more affordable.
Human Resources
The human resources for option 1 would be minimal as it would just be Sofia operating as a
sole trader and operating the stall herself. This makes option 1 feasible as Sofia can just
2
