Case Study Description of Armarium: Luxury Fashion Brands for Rent
Armarium, a two-sided online platform that offered consumers the opportunity to rent the most coveted, current season high fashion clothing and accessories from the top global luxury brands, had emerged from its first sales season with two distinct customer segments: the High Net Worth (HNW) woman and the High Earner, Not Rich Yet (HENRY) woman. As it began to scale its operations, it had to decide which customer segment was the more desirable target market and how to refine the company's value proposition to maximize value creation for both consumers and the luxury brands that supported the business model. The jury was still out on whether a rental model could attract higher income women who could afford to buy luxury brands and whether it could support the $400 rental price points Armarium would need to charge for its one-of-a-kind pieces with retail values that could reach as high as $15,000. The two founders faced significant scaling challenges, from how to establish guardrails around curation of the collection to go-to-market distribution channel strategy and customer acquisition strategy.
Authors :: Jill Avery, David G. Fubini, Natasha Dossa, Devon Stewart
Swot Analysis of "Armarium: Luxury Fashion Brands for Rent" written by Jill Avery, David G. Fubini, Natasha Dossa, Devon Stewart includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Armarium Luxury facing as an external strategic factors. Some of the topics covered in Armarium: Luxury Fashion Brands for Rent case study are - Strategic Management Strategies, Entrepreneurship, Sales, Strategy and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Armarium: Luxury Fashion Brands for Rent casestudy better are - – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, geopolitical disruptions,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Armarium: Luxury Fashion Brands for Rent
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Armarium: Luxury Fashion Brands for Rent case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Armarium Luxury, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Armarium Luxury operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Armarium: Luxury Fashion Brands for Rent can be done for the following purposes –
1. Strategic planning using facts provided in Armarium: Luxury Fashion Brands for Rent case study
2. Improving business portfolio management of Armarium Luxury
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Armarium Luxury
Strengths Armarium: Luxury Fashion Brands for Rent | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Armarium Luxury in Armarium: Luxury Fashion Brands for Rent Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Armarium: Luxury Fashion Brands for Rent firm has clearly differentiated products in the market place. This has enabled Armarium Luxury to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Armarium Luxury to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Armarium Luxury is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Armarium Luxury in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Armarium Luxury has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Armarium Luxury has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Armarium Luxury has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Armarium: Luxury Fashion Brands for Rent Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Armarium Luxury has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Armarium Luxury has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Armarium: Luxury Fashion Brands for Rent - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Armarium Luxury in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Armarium Luxury is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Armarium Luxury has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Armarium Luxury to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Armarium Luxury digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Armarium Luxury has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Armarium Luxury
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Armarium Luxury does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Armarium Luxury are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Armarium: Luxury Fashion Brands for Rent | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Armarium: Luxury Fashion Brands for Rent are -
Slow decision making process
– As mentioned earlier in the report, Armarium Luxury has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Armarium Luxury even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Armarium: Luxury Fashion Brands for Rent HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Armarium Luxury has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Armarium Luxury, firm in the HBR case study Armarium: Luxury Fashion Brands for Rent needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Armarium Luxury is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Armarium: Luxury Fashion Brands for Rent can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Armarium: Luxury Fashion Brands for Rent has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Armarium Luxury 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Armarium Luxury has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Armarium: Luxury Fashion Brands for Rent, in the dynamic environment Armarium Luxury has struggled to respond to the nimble upstart competition. Armarium Luxury has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Jill Avery, David G. Fubini, Natasha Dossa, Devon Stewart suggests that, Armarium Luxury is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Armarium Luxury has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Armarium Luxury has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Armarium: Luxury Fashion Brands for Rent should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Armarium Luxury needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Armarium: Luxury Fashion Brands for Rent | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Armarium: Luxury Fashion Brands for Rent are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Armarium Luxury can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Armarium Luxury in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Armarium Luxury to increase its market reach. Armarium Luxury will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Armarium Luxury can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Armarium Luxury has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Armarium: Luxury Fashion Brands for Rent - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Armarium Luxury to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Armarium Luxury can use these opportunities to build new business models that can help the communities that Armarium Luxury operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Leveraging digital technologies
– Armarium Luxury can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Armarium Luxury can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Armarium Luxury can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Armarium Luxury is facing challenges because of the dominance of functional experts in the organization. Armarium: Luxury Fashion Brands for Rent case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Armarium Luxury in the consumer business. Now Armarium Luxury can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Armarium Luxury to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Armarium Luxury can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Armarium: Luxury Fashion Brands for Rent External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Armarium: Luxury Fashion Brands for Rent are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Armarium Luxury needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Armarium Luxury high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Armarium Luxury business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Armarium Luxury with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Armarium Luxury will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Armarium Luxury can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Armarium Luxury needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Armarium Luxury can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Regulatory challenges
– Armarium Luxury needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Shortening product life cycle
– it is one of the major threat that Armarium Luxury is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Armarium Luxury can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Armarium: Luxury Fashion Brands for Rent, Armarium Luxury may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Armarium Luxury in the Sales & Marketing sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Armarium: Luxury Fashion Brands for Rent Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Armarium: Luxury Fashion Brands for Rent needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Armarium: Luxury Fashion Brands for Rent is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Armarium: Luxury Fashion Brands for Rent is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Armarium: Luxury Fashion Brands for Rent is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Armarium Luxury needs to make to build a sustainable competitive advantage.
