Letter of Transmittal

1

DATE: November 16th, 2015

TO: Prof. John Keifer, Jamie Lambert, Nadège Lavellet, Luke McElfresh

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FROM: AM 101 Cohort, Team #4: Derek Feller, Spencer Ladig, Kayla Huff, Matt Muntean, Steve Sabo

SUBJECT: Feasibility analysis of Big D Sports Retailers in the Greater Dallas Area

As requested by the senior partners of Copeland Associates on October 13th, our team has performed a feasibility analysis of the sports retail industry and the demand through the target market. This report contains background research of the sports apparel industry to determine consumer trends suitable for a business concept. Through our research and evaluation, we have determined three demand scenarios, which create an appropriate estimate customer base for the company. To conclude the report, we weighed each demand scenario to determine a feasible figure of customers, in turn to determine the company's financials.

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This report was created in consideration of the following criteria:

• Derive consumer trends from the industry
• Create a credible business concept with significant positioning
• Determine weighted demand scenarios, which captured a customer figure
• Evaluate the company's concept feasibility and conduct a financial analysis

Our report showcases that there is opportunity in the greater Dallas, TX area to start a sports apparel retailer. The demand scenarios gathered primary data, through phone interviews and a consumer survey and secondary data, through internet resources, to determine an average amount of 21 customers per day completing transactions within the store and online. With this estimate, revenue for the first fiscal year was determined to reach $343,980. Further evaluations through a financial analysis determined whether or not Big D Sports was a feasible company or not.

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Our team would like to thank Prof. Nadège Lavellet and the other senior partners for their assistance in the creation and editions this report. It would be our pleasure to further discuss the analyses and business concept of our report upon request. Please contact Steve Sabo at ss843612@ohio.edu if you may have any questions or concerns.

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Big D Sports LLP

Prepared by:

Steve Sabo

Kayla Huff

Matt Muntean

Spencer Ladig

Derek Feller

Prepared for:

Catherine Penrod

Luke McElfresh

Jamie Lambert

John Keifer

Nadège Lavellet

Big D Sports LLP

Executive Summary

Executive Summary

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The licensed sports apparel industry is currently growing at a rate of 4.6% until 2020 and is considered in the growth stage. Brick and mortar competition is high, with the industry also being negatively impacted by consumer E-commerce trends. Still, the industry sees growth due to drivers such as the participation in sports and the popularity of professional athletes rising (Petrillo, 2015). Dallas, Texas provides opportunity for this industry, due to the growth of the city and the passion for Texas sports franchises. The objective of this report is to conduct a feasibility analysis of the sports apparel industry and evaluate and adjust a business concept that matches consumer trends. From this, two scenarios were constructed to analyze data and create a realistic average daily customer figure. We analyzed the scenarios through benchmarking similar competition customer data and calculated a customers per day based on our target market.

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Big D Sports focuses on selling high quality licensed professional and collegiate gear relevant to the Dallas and surrounding Texas markets, as well as sponsoring local high school teams. The current target market is aging millennial men and middle-aged men, with an age group around 18-44. This group is the primary driver for the sports market, being the most active with current sports news and making the majority of the industry's purchases. The location of the store is in Grand Prairie, TX a city located directly in between Arlington and Dallas. The stores address (within the grand Prairie Premium Outlet Mall) is 2950 W. Interstate 20 Grand Prairie, TX 75052, which has its own exit next to I-20. The interstate connecting the two large metropolitan areas.

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To set itself apart, Big D Sports plans to position itself through multiple marketing strategies. The store offers an entertaining and interactive atmosphere, by adding an extensive sports theme and viewing areas for current games on TV. The store also offers many price discounts to remain competitive with local companies. Discounts are given the day after a Dallas sports franchise wins a game and also through online competition. Big D Sports offers free fantasy leagues online to keep customers engaged as fans by giving weekly discount prices to winners. The store also has social media apps to keep the public updated with the latest store info, as well as current sports news. The store has a website and mobile app which allows customers to purchase products electronically as well.

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In order to add credibility to the business concept, two demand scenarios created to estimate the potential amount of customers the store could attract in a day. Weighing both to find an average number of customers per day allowed was then used to determine the revenue generated for the store for the first fiscal year. The demand scenarios estimated an average of 21 customers per day, with $343,980 in gross revenue for the year. The average transaction value calculations is further explained in the appendix. After further analysis of these findings we determined that Big D Sports is feasible with a positive net present value of $41,551.

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Table of Contents

Introduction

Industry Analysis

Competitive Landscape

Key Retail Drivers

Top Competitors

Business Concept

Store Information

Location

Store Layout

Employee Overview

9

10-11

10

10

10

12

13

14

14

Customer Service

14

E-Commerce Risks

11

Product Offerings

15

Inventory

Competitive Position Cont.

17

16

Target market

16

High School Teams

17

Fan Competition

17

15

Barriers to Entry and Costs

Business Overview

12

Competitive Position

11

12-17

4

Table of Contents

Demand Scenario 1-Benchmarking

Benchmarking

Weights

Benchmarking with General Population

Demand Scenario 2-Demographics

Demand Scenario Summary

Statement of Operations

Balance Sheet

Feasibility Analysis

18-19

18

18

19

20

23-25

23

24

25

Marketing Segment

26

Demographics with Target Market in Surrounding Area Continued

21

Product and Presentation

26

Name and Logo Design

Financial Summary

5

Distribution

26

26

Demographics with Target Market in Surrounding Area

Final Projections

22

20

22

Demand Scenario 2-Demographics

Table of Contents

Information Systems

IS Systems

BI Systems

Demand Scenario 2-Demographics

28

28

28

28

30-69

Appendices: A-Y

70-75

Works Cited

6

Conclusion

29

Payment System

Figure 2: Premium Outlets Operations

Figure 3: Map of Dallas, Texas Area

Figure 4: Store Map

Figure 5: Google Images: Jerseys

Figure 8: Benchmarking Companies Customers Per Day

Figure 10: Demand Scenario 1 Sales

Figure 11: Demand Scenario 2

Figure 12: Demand Scenario 2 Sales

Figure 13: Total Customers Per Day

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13

14

15

18

19

20

21

22

Figure 14: Total Sales Per Day

22

Figure 7: School Logos

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Figure 15: Monthly Costs

24

Figure 16: Total Assets Per Year

Figure 19: Shipping Costs

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26

Figure 17: Feasibility Analysis

25

Figure 20: Google Images: Square

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Figure 21: Outlet Mall Layout

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23

Figure 6: Mediamark, 2015

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Figure 9: Demand Scenario 1

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Figure 18: Distributers Logos

Figure 1: Sector vs. Industry

12

7

List of Figures

Figure 23: Popapp

Figure 24: Instagram

Figure 25: Twitter

Figure 26: Billboard

Figure 29: Consumer Survey

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30

30

31

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Figure 28: Vista Print Business Card

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Figure 27: Vista Print Flyer

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Figure 22: Grand Prairie Outlet Lease

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Figure 31: Detailed Store Layout

Figure 32: Average Transaction Price (Inventory Factor)

Figure 33: Average Transaction Price (Competition Factor)

Figure 34-36: Store Supplies (Bags)

Figure 59-60: Facebook

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39

39

43

54-55

Figure 50-58: Popapp

51-53

Figure 37-49: Google Sites (Website)

44-50

Figure 30: Benchmark Scores

37

Figure 61: Twitter

56

Figure 62-64: Instagram

57

Figure 65-67: IBIS World

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Figure 68-71: Tableau

66-69

8

List of Figures

Introduction

Introduction

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9

Introduction

The purpose of this report is to provide a fundamental analysis on maximizing profit for a start up company in the sporting retail industry, specific to the company’s positioning in the Dallas, Texas area. In order to gain investor confidence, a well rounded analysis of creating a company must be prepared. Potential for revenue in the region’s market is significant, due to the popularity and growth of the areas of athletic programs. This report includes an overview of the industry, proper estimation of demand for the company, and a financial analysis, which forecasts what direction the company is heading.

The industry analysis consists of a variety of macro and micro environmental factors, which help understand the implications of starting a new business. Through the industry analysis, thesis points should be formed about the state of the industry and current consumer trends. Knowing these trends, a proper business model and concept can be drawn out, which should tailor to the needs to the business’ specific location. The business concept should then be evaluated and adapt to barriers to entry, threats and existing competition within its location in order to mitigate the risks of a start up company.

The analysis includes two demand scenarios tailored to generating a proper estimate. These estimates include average customers per day and the average purchase amount from each customer. With proper averages, revenue can then be forecasted for the company, and a financial analysis can evaluate where the company stands. After further analysis of these findings we determined that Big D Sports is feasible with a positive net present value of $41,551.

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Competitive Landscape

Key Retail Drivers

Top Competitors

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In terms of internal competition, retailers compete on the basis of price, product range, customer service, and store location. Retailers must aim to stock apparel that is currently in demand based on fashion trends specific to the sports apparel industry and sports seasons. Stores need to be located along areas of high consumer traffic, such as malls or sports venues (IBIS World). In terms of external competition, department stores, such as Walmart and Target, have a significant amount of pressure on the industry by effectively offering a wider range of sports apparel at lower prices. Online retailers have the convenience of shopping from home with free shipping and product discounts. A survey conducted from Nielsen in 2014 indicated that clothing, accessories, and shoes are the most appealing category to customers shopping online. Consumers are naturally price conscious and purchase goods at the best available price, therefore, have increasingly turned to cheaper options that are offered online (IBIS World).

• The increase of participation in sports
• Need to continually rotate apparel displays to match corresponding sports seasons and sell popular player jerseys.
• Per capita disposable income and the health of the U.S. economy

(IBIS World)

The brick and mortar competition that Big D Sports will face is intense local competition from two established stores within a radius of 30 miles: Fanzz and Rally House. Rally House, located in Arlington sells sports apparel dealing with mainly the professional teams and some colleges. With their location just miles away from AT&T stadium they are able to draw large crowds of sports fans into their store on days of a game. Fanzz is located in Mesquite, Texas which is 30 miles from Grand Prairie. Fanzz mainly carries professional teams as well, with a small amount of college apparel. The biggest threat these stores have on Big D Sports is there known presence by the local community in the area. While these are our two main competitors, we would also face competition from others with a less similar business concept. We could also face competition from online retailers. This could potentially draw customers away from Big D Sports.

Industry Analysis

E-commerce Risks

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dd

Barriers to Entry and Costs

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11

Competition is also very high not only through local sports retail, but from e-commerce as well. Online retail is growing at a fast pace and is causing more and and more problems for brick and mortar retailers. The number of digital shoppers in the United States is expected to grow at 3.7% for the next three years. The e-commerce industry as a whole is expected to grow at least 13.4% from 2015 to 2020. Online retailers can offer lower prices and easy payment methods due to the regulation of sales tax. Key drivers for this sector of the retail industry include factors such as the increase in mobile purchases and the world price of crude oil (due to shipping costs). Mobile purchases now account for 30% of the country’s online purchases and the average price per oil barrel sits around 45-50 dollars, which is low (Carter, 2015). It is important to realize the industry is healthy and successful drivers can equate to strong growth. Certain procedures and marketing tactics, such as mild e-commerce integration should be considered.

New entry to the sports apparel industry is a crucial factor to measure when evaluating the micro environment of retail. The barriers to entry include a saturated market of established stores, the competition amongst stores regarding the constant battle over the lowest prices, and high overall fixed start-up costs. Figure 1 depicts the distribution of revenue of the sports apparel industry compared to the retail sector as a whole. Around 63.6% of revenue is invested into purchases of new inventory, with around 23.8% of revenue being spent towards fixed expenses (wages, rent & utilities). Only 3.4% is recorded as profit (Lerman, 2015). Regarding the market, the majority of established stores have strong ties with distributors and wholesalers which may lead to exclusive agreements. Customer loyalty has emerged with the healthy companies in the industry, due to their ability to set competitive prices. The larger companies with several chains can offer a larger product line, which is creating brand awareness.

Industry Analysis

Figure 1: Sector vs Industry Costs IBIS World, 2015

Business Overview

Store Information

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12

Big D Sports is a licensed apparel store assembled as a limited liability partnership. This is due to the feasibility of asset allocation amongst the Copeland Associate partners. Operating an LLP allows each owner to have benefits of limited liability and reduced risk. The purpose of the company is to serve and act as a distributor of quality sports apparel to specialized niche markets residing in the region. These apparel lines include licensed professional Dallas & Texas sports teams, Texas NCAA apparel and tailored to supplying the local market with personalized local sports clothing. Dallas is a prominent sports market, with four successful professional sports franchises and ties to collegiate teams such as the Texas Longhorns. The popularity of sports is growing relatively fast nationwide, especially in the state of Texas, as seen by the growing Texas team fanbases. Big D Sports retail tailors to local market by supplying high school sports team apparel.

Big D Sports will be open seven days a week, Monday through Sunday from 10am to 9pm. There will be many different variations to the hours of operation due to the holiday schedule as well. The store's hours will incorporate Thanksgiving, Black Friday and Christmas as notable holidays and will have variating store hours as shown in Figure 2.

The store’s hours have been setup to meet the demands of most consumer’s time schedules. Retailer consumers have a broad range of shopping times, which is why the store must have extended hours of operations on Holiday weekends such as Black Friday, where extended shopping hours will be provided in order to maximize revenue. The store will be open 364 days of the year, due to the demands of retail purchases over the course of a complete week. The one day that Big D Sports will not be open is Christmas Day.

Business Concept

Figure 2: Premium Outlets Operations

Location

13

Big D Sports will be located at 2950 W. Interstate 20 Grand Prairie, TX 75052, just 10 miles between both Dallas and Arlington in Grand Prairie, Texas, shown in Figure 3. Being located between these two populated areas, Big D Sports expects to receive many traveling customers, especially with help from our billboard shown in Appendix B. The store will be inside the Grand Prairie Premium Outlets, which is apart of Simon outlets, the leading company in outlet malls in the United States.

The Dallas/Arlington area has a current annual growth rate of 2% and the standard of living continues to increase. (Department, 2014). The average median family income between Arlington, Grand Prairie and Dallas is approximately $76,736 with a population of 5,044,585 within a 30-mile radius (SPG Research, 2015). According to simply map, the greater Dallas area, including Grand Prairie, is a feasible location to start a sports apparel store. On average between the three cities, the population is spending $70,252,736 on sports apparel, however, $14,261,780 of that is being spent outside of the region (Simplymap, 2015). This means consumers are spending more on sports retail outside of the region, due to lower local revenue. A reasonable gap between greater Dallas expenditures and greater Dallas apparel revenue suggests there is an opportunity to target consumers closer to home.

Companies within the mall include the Nike factory store, which has roughly 140 customers per hour. With foot traffic within the mall, the store is exposed to many potential shoppers. The location of the mall is crucial for the stores success. The visual map to the right displays the positioning of the store. Located off of I-20 and State Route 360, the mall is competitively located between the two large metropolitan areas and has direct access from the highway through exit 454 (CBS-DFW, 2015.) Traffic between the two cities is expected, especially since the four sporting franchises are split between Arlington and Dallas. Refer to Appendix A for more information on leasing and location within Grand Prairie Premium Outlets.

Figure 3: Map of Dallas, Texas area

Business Concept

13

Employee Overview

Store Layout

Customer Service

14

14

Employees will have a range of job requirements and tasks that will revolve around keeping the store functioning. The main priority of employees is to properly serve the customer, through floor assistance, checkouts and return transactions. Employees will be able to interact with customers at a comfortable and social level, since the store will have a smaller and more personal setting. It is important that the customer understands the products offered and which products fit their spending budget. It is crucial for employees to offer the products that match each customer’s expectations. If a customer is not satisfied with their purchase, full compensation is available upon return of the product (unless product is worn/damaged).

Along with the product line opportunities, customers will be attracted to the store's atmosphere. The layout of the store will consist of multiple athletic themes that are preferred by the Dallas demographic. The floor will consist of football turf for an athletic feel, along with proper display of jerseys and other lines of apparel. There will be multiple TV’s located throughout the store that will be playing professional and collegiate sporting events to keep customers up to date and engaged with the region’s most popular teams. The idea behind the design is to attract customers that not only expect quality products & service, but to be entertained as well. Creating an atmosphere which not only offers the top team apparel but offers social interaction is a great way to attract business. Offering a great place to shop and stay up to date with the current games will create a buzz with the local sports demographic. Figure 4 below shows our store map, but Appendix H has a more detailed version.

Business Concept

Figure 4: Store Map

Big D Sports aims to employ around 4-5 part-time time workers, along with one assistant manager and one full-time manager to help oversee the majority of operations. Based off of start up costs and the skillset needed for the job, wages will be around $7.25 an hour, or the minimum wage rate in Dallas, TX. The assistant manager will make $10.25 an hour, while the full-time manager will receive a salary of $40,000 a year. It is important, with lower wages, to keep employees motivated to serve the store’s customers.

Product Offerings

Inventory

15

15

A number of sporting apparel offerings will be available for purchase at Big D Sports. We plan to sell licensed sporting products, which deal with the NFL, MLB, NHL, NBA and the NCAA. Since the store is located in the greater Dallas area, the main product offerings will consist of Dallas professional teams, such as the Dallas Cowboys, Stars, Mavericks and the Texas Rangers. Since Texas is a large sports market, the store is not limited to just Dallas professional sporting apparel. Franchises from the San Antonio and Houston markets will be also available for our customers to select from as well. As well as professional sports, the NCAA teams in Texas have a large customer base, with the majority of the fan base being generated from football. College football is the store’s main NCAA line, considering revenue numbers generated from collegiate programs are primarily from their football teams. Among your professional and collegiate lines, products such as jerseys, t-shirts, sweatshirts, and athletic accessories will be available through in-store and electronic purchase. Schools and teams can conduct business through the school to acquire the licensed products they need for athletic events.

The inventory of the store will be comprised of mainly team jerseys, as shown in Figure 5, along with t-shirts, jackets, hats and other small accessories. Jerseys will be the most expensive product line offered, ranging from $75-200, averaged at $138. Jackets will be sold for an average of $90. The majority of the apparel and accessories will average around $20. Compared to Big D Sports’ competitors, the store’s prices for products are very affordable. Inventory will be marked-up around 100% from the wholesale purchase price, based on the industry norm (Waits, 2010). Even though the price of jerseys remain fairly expensive, Big D sports plans to further separate itself with special deals that will have jerseys on sale on a cyclical basis. These premiere deals can be explained on the marketing position slide. The breakdown of the product mix within the inventory is explained in the Appendix I.

Business Concept

Figure 5: Google Images: Jerseys

Target Market

Competitive Position

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16

Big D Sports sole purpose is to deliver quality fan apparel to customers in the Dallas area. However, competition is relatively high, with an abundance of locally owned and operated sports apparel stores in the city of Dallas. There is approximately 152 sports apparel stores (SIC code 569903) in the Greater Dallas area, with five centralized competitors within Grand Prairie (Mergent, 2014). This is not including larger stores such as Nike or a larger sports retailer. It is important for Big D Sports to separate itself from the competition. The company’s goal is to not only sell quality licensed team wear, but to attract customers through a social environment as well. With multiple couches and TVs, Big D Sports doubles as a store and as a viewing area for all the current sports events. Adding to the shopping experience is crucial to attract new customers. Creating customer loyalty by targeting social factors will allow the store to see positive growth year over year.

Another competitive tactic the company institutes is the use of online media channels. Big D Sports attempts to attract customers through mediums such as a website, mobile purchase app and social media accounts (including Facebook, Twitter and Instagram). Not only do these sites allow customers to view specials on in store products and make online purchases, the sites double as an interactive sports site. Simple widgets included on the website keep fans up to date with current game boxscores and news about the local teams. For full details, social media will be explained further in the marketing segment portion of the report.

The preferred target market for professional and collegiate apparel will be primarily millennials, with ranging ages 18-44. With millennials aging, consumers are moving out of the metropolitan areas to start families in places such as Grand Prairie. According to Figure 6, this group shows the highest collective potential to purchases sporting apparel. The Dallas demographic is feasible, due to the south and west regions of the United States having the highest percentage of the population (59.4%) making regular purchases within the industry. Big D Sport’s plans to market mainly to just men, considering the total male average percentage to make a purchase is 9.61% higher than the total population (Mediamark, 2015).

Business Concept

Figure 6: Mediamark, 2015

Competitive Position Cont.

High School Teams

Fan Competition

17

17

Business Concept

It is important to capitalize on demand and attract as many customers as possible, due to high competition and a saturated market. Without differentiating the store and its products, the company cannot maximize revenue. The stores sporting/fan atmosphere is not enough to attract the maximum amount of consumers. It is not expected that fans will stay for the duration of full games while shopping for their favorite products. To add to the value of the shopping experience, the store has many offers that effectively set competitive prices. Big D Sports offers significant deals on apparel based off of the performance of each team. For example, if the Dallas Cowboys were to win the night before, the store would issue a 10% sale on Cowboy’s apparel for the next day. This deal will be provided multiple times throughout each season with different teams being chosen each week for discounts. The store’s social media sites help with this, by using up-to-date scores and team news powered by ESPN. The overall goal for Big D Sports is to be able to give consumers not only a great shopping experience, but a great experience for the passion of sports we all share.

Big D Sports plans to set up contracts with local high schools to supply and sponsor them with their schools gear. Jerseys and clothing lines will be personalized and screenprinted with each high school's design and logos. The students of the local high schools will also be eligible for discounts through the store’s student program. Any customer with a sponsored school’s student ID will receive 10% off any purchase. Currently, Grand Prairie High School and South Grand Prairie are locally supplied and sponsored by Big D Sports. Figure 7 shows the school logos.

To keep fans interested in the stores product offerings, the store offers many online competitions including fantasy leagues. These leagues are free for anyone to join and have in store benefits for playing. Customers will be selected each week based off of their fantasy performance and will receive vouchers for discounts up to 10-20% on anything in the store. The fan interaction will bring a fun and competitive environment to our store that will want people to continue to do business with Big D Sports. The store’s fantasy leagues are powered by ESPN and customers can sign upon visiting the store or website/mobile app.

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Figure 7: School Logos

Benchmarking

Weights

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Demand Scenario 1 - Benchmarking 60%

The first demand scenario is benchmarking, where we called four companies and asked them their number of customers per day. Rally House is located in Arlington, Texas; Fanzz is located in Mesquite, Texas; Team LA Sports is located in Carson, California; and Score Sports is located in Long Beach, California; (See Appendix E for more information on these stores). Using the population and their customers per day, we projected the number of customers per day for Big D Sports. Figure 8 below shows the four companies that we benchmarked from and the amount of customers that purchase their products per day. These four companies were chosen because their location and products are similar to Big D Sports.

Figure 8: Benchmarking Companies Customers per day

Each of the four companies that were used for benchmarking were weighted based on how similar they are to Big D Sports. Rally House received the highest weight at 50% because they are the most credible due to similar regional trends and business concept. Fanzz received a lower weight of 25% because even though their business concept is similar, Fanzz is located in a less populated area 36 miles away from our targeted region. Team LA Sports and Score Sports are both located in California, which made their weights significantly lower; although, benchmarking two companies from California was helpful because of its similar large population and variety of sports teams. Team LA was given a 15% because they do not offer any NFL nor local sports team apparel, which is a huge product segment of Big D Sports. Score Sports was given the lowest weight at 10% because their business concept strictly focuses on providing uniforms for national, state, and local levels instead of selling fan based apparel (See Appendix F-G for an in depth analysis on the weights).

Figure 8 also shows the average customers per day with the weights. After taking into consideration of the weights, finding the average of the four companies was an effective way to determine the realistic amount of customers Big D Sports should expect to get purchases from.

Benchmarking With General City Population

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19

The first demand scenario involves using primary data to effectively project an average customer base. This demand scenario will help us get a broad look at our demand by looking at the general city population. This is important because although our store targets a specific group of people, we can still expect a wide range of people coming to our store purchasing our goods.

Figure 9 shows how Big D Sports calculated the projected number of customers per day. We first multiplied each number of customers by the company's weighted percentage getting a more accurate number of customers, considering the company’s similarities to our store. Dividing that number by the population unique to that store’s location gave us a small customer per population percentage. We came up with a final percentage by averaging those numbers and that percentage was then used to be multiplied by the population in Grand Prairie, Texas to come up with our amount of customers per day, which is approximately 16 people for Demand Scenario 1. After finding the customers per day, we calculated the sales we would receive for this demand scenario shown in Figure 10.

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Demand Scenario 1 - Benchmarking 60%

Figure 9: Demand Scenario 1

D.S. 1 Sales

$262,080

Figure 10: Demand Scenario 1 Sales

Demographics With Target Market in Surrounding Areas

20

20

Demand Scenario 2 - Demographics 40%

The second demand scenario involves using secondary demographic data to effectively project an average customer base. Since Big D Sports plans to market to a Greater Dallas area, the three cities and their respective populations were selected. The population was then centralized to the store’s target market to capture a smaller, more credible customer base. The variables used in the demand scenario include men ages 18-44, the preferred income level of the target market, the annual regular purchase population of sports apparel and the conversion rate (amount of customers on average that actually make a purchase).

Figure 11 depicts the breakdown of the population into the variables in respect to the target market. The population was first reduced by the overall target market to men ages 18-44, due to the analysis conducted by mediamark earlier in the report. Then, by analyzing the average median income of Dallas and the surrounding income within a 30 mile radius of Grand Prairie outlets, the preferred income range was determined to be $50,000-$75,000. Referring back to Mediamark, it was earlier determined that 62.5% of the target market made regularly purchases within the industry over the past 12 months. The last variable used was the conversion rate.

Figure 11: Demand Scenario 2

Demographics With Target Market in Surrounding Areas (continued)

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21

Demand Scenario 2 - Demographics 40%

According to Labstore, an average conversion rate for retail stores was around 20% (Labstore, 2013). This number is necessary because not every person in the store will make a purchase, and the actual amount of customers needs to be determined. Once the populations of the three cities were condensed into more appropriate numbers, the sum was calculated at 10,674.3 customers, which can be regarded as an annual customer projection. To create an average number of customers per day, the sum of the annual customers was divided by 365. This created a final number of approximately 29 customers per day. After finding the customers per day, we calculated the sales we would receive for this demand scenario shown in Figure 12.

D.S. 2 Sales

This demand scenario helps Big D Sports understand the secondary data amongst the region in order to maximize profit. Having a good understanding about the target market and a forecasted amount is crucial to the growth of the company. Comprehending the customers the store can attract from the current population can also help predict growth rates for future fiscal years.

$475,020

Figure 12: Demand Scenario 2 Sales

Final Projection

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Demand Scenario Summary

To give the two demand scenarios more credibility, they were assigned a weight based off of their relevance to consumer trends and conceptual behavior. Figure 13 allocates a weight to each demand scenario, to create a more favorable number for customers per day. Demand Scenario 1 received the highest weight, at 60%. This is because competition amongst sports apparel retailers, as well as retail in general, is crucial. Similar stores will reflect the same consumer trends and behaviors, which help illustrate a similar daily customer scenario. Demand Scenario 2 received the lower weight, at 40%. This is because demographic information can be reliable in Grand Prairie and the surrounding markets, but cannot fully match the demand forecasted from primary data. Demographic data is reliable information to use, but this information is always subject to change. Factors such as the economy and shifts in consumer behavior can ultimately affect the demographic data. Consumer trends can therefore be compared, but the information isn’t a guarantee that the demographics will match. Once both scenarios were given a weight, the average of the two were used to determine the final projection of daily customers being approximately 21. Figure 14 shows that year one sales are determined to equal $343,980.

*Average Customers Per Day

60%

40%

Figure 14: Total Sales Per Day

Figure 13: Total Customers Per Day

Statement of Operations

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23

Financial Summary

Big D Sports can expect to have a positive net income in year two and so forth. The previous demand scenarios showed that the average customer per day for year one was determined to be 21. The growth rate that was calculated from year one to year two was 50% because that is considered “hyper growth” for our industry (Harvath, Mike, 2013). Hyper growth is considered for the first year because of the highly populated outlet mall that our store is located. The growth rate from year two to year three was 40% and then 30% for the ongoing years because that is where our demand is expected to mellow out at for the following years. The average transaction value of $45 dollars was calculated by taking the average transaction values of similar companies and our amount of inventory to be sold. Those two scenarios were then weighted to come up with the $45 transaction value for Big D Sports, calculated in Appendix J. Big D Sports also has a markup of 100% on all products, so the cost of goods sold for each year will be 50% of our overall sales.

The total monthly cost for Big D Sports is $25,868 and each cost is broken down in Figure 15. Marketing will be one of Big D Sports most expensive cost in the early years of our business’ operations because getting our store’s name out there is crucial to our long-term success. In year three, the marketing cost will decline to a more steady rate of $5,300 per month. More on how the marketing cost are broken down can be found in Appendix X. Big D Sports will also have fixed costs each month for rent, utilities, company phone/internet, and information systems. The variable costs each month that will depend on the amount of items sold will be inventory and store bags. After all cost have been accounted for, Big D Sports will lose only $85 in year one and turn a profit of $66,768 in year two. To view the entire income statement in more detail, it can be found in Appendix S.

Figure 15: Monthly Cost

Balance Sheet

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Financial Summary

Prior to Big D Sports opening their doors we will have $297,350 of total assets, $116,000 of that is inventory and $103,470 of assets is in cash. The amount of cash on hand at the beginning of the project is enough to cover four months of Big D Sports monthly cost and the inventory is expected to be enough to cover the whole first year of operations. Big D Sports also has an intangible asset that is the companies LLP insurance to protect each owner of the store. As you can see in Figure 16, the amount of total assets from the start of the project to year five of the project has more than doubled. With the growth of the company, Big D Sports based the amount of inventory to carry off expected sales. A more in-depth inventory analysis can be found in Appendix X. The distribution to the owners section of the balance sheet was zero for years 1-4 because the owners did not want to take cash from a new business in the early years, and instead watch it grow and mature. However, by year five a larger amount of $250,000 was taken out because at this point Big D Sports is a stable business and is able to begin to compensate the owners for the risk that was taken by them to start and fund this business. The $250,000 will be a $50,000 salary for each of the five owners by year five and this is expected to increase in the coming years because of the continued growth that is expected to happen within the Big D Sports store. To view the entire balance sheet, refer to Appendix R.

In Figure 16 above, the amount of total assets for each year is displayed. This figure helps displays the growth Big D Sports will see in their business with each year the amount of total assets increasing.

Figure 16: Total Assets per Year

Feasibility Analysis

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25

Financial Summary

Big D Sports apparel store was determined to be feasible, as you can see in Figure 17, which displays the net present value, internal rate of return, and the payback period. Due to the fact that the calculated net present value was $41,551 and the internal rate of return was 23.01%, the project proves to be feasible. The internal rate of return of 23.01% was greater than the required rate of return, which was 19.53%. The required rate of return was calculated using the weighted average cost of capital method. The equity cost of capital was determined by the following factors: the return for the retail apparel market as a whole, the risk free rate of return, and the overall cost of funding the project. After these factors were evaluated the cost of equity capital was determined to be 25% for the weighted average cost of capital (Cherewyk, P. (n.d.)). The payback period was calculated by taking the total start up cost and dividing by the average annual cash flows. The payback period came out to be approximately 4.55 years. This means that it will take four and a half years for the investors in Big D Sports to earn their money back from the initial investment. Overall, Big D Sports has a feasible business model and if the success of the business goes as planned, Big D Sports would determine a strategy to expand heavily into the apparel e-commerce industry after the fifth year of operations. All financial information can be found in Appendices R-X.

Net Present Value

Internal Rate of Return

Payback Period

Figure 17: Feasibility Analysis

4.55 years

Product and Presentation

Company Name and Logo Design

Distribution

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26

26

Our product line consists of four main items: sports team jerseys, t-shirts, jackets and accessories. The jerseys are going to be sold for ~$138, the t-shirts and accessories for ~$20, and the jackets for ~$90. Every main item will have products from all the teams we’re holding in our store. This will give each consumer the flexibility to choose from a variety of options. The products will be put in the shopping bag shown in Appendix N, which will display our company logo. This bag was chosen for being higher quality and would be comfortable to carry in an “outlet mall” setting. Our store will have several mannequins on display to show off our products.

Marketing Segment

The name “Big D Sports”, was named based off the nickname for Dallas, paying homage to the large city based 20 minutes away from our store location. The logo shown in the bottom-left was designed to give our consumers a “Texas feeling”. The logo displays a silhouette of the Dallas skyline, and also the Texas “lone star”. While this name and design were made to cater to our Texas customers, it was made keeping the idea of expansion in mind. While both the name and logo pay homage to Dallas, they shouldn’t hinder the company in expanding outside of Texas. For more information on personal marketing refer to Appendix C.

Our products will be coming from several different wholesalers shown in Figure 18. We have to use different wholesale providers because some companies have rights to different franchises that others may not. From there, most of our products we plan to sell in our physical retail store. However, we also have a website set up for people who wish to make their purchases from our store online. Big D Sports uses United States Postal Service (USPS) Business to ship online purchases to customers. Monthly expenses will range from $100-150 depending on the amount of packages shipped. A pricing system powered by USPS to calculate shipping costs can be seen in Figure 19.

Figure 18: Distributers Logos

Figure 19: Shipping Costs

IS Systems

Payment System

BI System

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27

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Information Systems

After analyzing different systems and systems processes, our company chose to go with a cloud based system that links accounting, finances, and even helps to track inventory. After coming to the conclusion to use a cloud based system, we then analyzed a few different companies, those being, Quickbooks, Xero and Freshbooks. We then came to the conclusion that Quickbooks was our best option. For further information, see Appendix K-L. The reason behind this is they are one of the market leaders within the industry and specifically for small businesses. After coming to this conclusion, we then had to decide on which Quickbooks system would fulfill our needs. The system we then chose to implement was going to be the Quickbooks Plus; after the initial point-of-sale system, which would be Quickbooks Desktop Pro bundled with hardware installation (Quickbooks, 2015). The initial fee of installing the point-of-sale system with the hardware is going to be $2,000, which includes a $40 monthly fee to use and operate the cloud system. Therefore, with adding this system we will be able to manage our supply chain management properly, strengthen our customer relationship management, and control our enterprise resource planning management.

Big D Sports will also invest in the Square App, an electronic device used to charge customers on the go. The device is designed to attach to smartphones and tablets to complete credit transactions mobily, rather than from a single cash register location. Customers can easily pay for products by swiping their credit card. Employees will have the square device attached to store tablets and will be able to easily assist customers on the floor with any purchases. Each Square device costs $50, and charges a 2.75% fee per purchase (Square, 2015). The Square device is pictured in Figure 20.

Business Intelligence (BI) Systems are used to help organize data in a way to spot or discover new trends about the company and/or the industry. With this in mind we decided it was necessary to implement a BI system. We then analyzed companies and came to the conclusion that Tableau (See Appendix M for more information) would be the most effective option. Looking at Tableau’s different systems and which option would be optimal for our business, we decided our best option would be their cloud system as it provided all the features we needed at the most efficient cost, which totalled to $3,000 per year (Tableau, 2015).

Figure 20: Google Images

Conclusion

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Conclusion

This report represents the feasibility of opening up a sports team apparel retail store outside of the Dallas, Texas area, located in the Grand Prairie Premium Outlets. Before constructing a business concept, a brief industry analysis had to be conducted. Understanding the industry can help discover certain consumer trends, which helped formulate the business concept. One trend that is becoming popular in the United States is online shopping, which can either hurt or harm a retail business. The Greater Dallas area, as well as the state of Texas as a whole, devotes significant loyalty for their sports teams. This allowed the proposal of a sports team apparel retail store that will sell jerseys, t-shirts, jackets and accesories to residents around the area.

​

The name of the retail store in which the Copeland Associate partners chose was Big D Sports Retailers. The store was devoted to providing sports team apparel to adults who want to support their favorite Texas team, whether it is professional sports regarding football, basketball, baseball and hockey, or collegiate football associated with the state of Texas. Apart from the Dallas and Texas sports market, the store will provide a section of top grossing jerseys for adults who are fans of a specific player around the United States. Big D Sports mainly targets the male generation ages 18-44. Assistance through information systems will help determine key performance indicators through data mining from business intelligence systems, specifically through Tableau for our company.

​

In order to determine whether the business concept can be successful and compete with established stores, demand scenarios had to be generated to depict an accurate estimate of customers the store could attract. The two demand scenarios developed for Big D Sports added credibility to the business concept by weighing in primary and secondary data factors. The first demand scenario dealt with benchmarking data derived from competition in the area and in similar sports markets. Through cold calls and company research, the demand scenario determined the average number of customers per day was 16. The second demand scenario dealt with demographic data in regards to the three cities Big D Sports was targeting and the target market within the region. Factors were added to the population, such as income levels and regular purchases within the targeted population. This demand scenario created a number of 29 customers per day on average.

​

After calculating the necessary data for an average daily customer figure, the two scenarios were appropriately weighted, which created a singular

figure of 21 customers per day. With this number and the average transaction amount per customer already calculated, revenue for the first year was determined to be $343,980.

Grand Prairie Premium Outlets

29

Grand Prairie Premium Outlets, as stated in the report, is located at 2950 W. Interstate 20 Grand Prairie, TX 75052, on the exit 454 of I-20 and SR 360. The 3,000 sq. ft. space designated for Big D Sports will be strategically positioned next to the top sporting apparel companies shown in Figure 21 above. Foot traffic is important to capitalize on, considering there will be customers in this wing of the mall oriented towards purchasing athletic apparel. This complements Big D Sports nicely, considering the neighboring stores aren’t direct competitors. They offer athletic apparel used for recreational, sporting or workout clothing, whereas Big D Sports offers licensed team apparel tailored towards the Texas sports market. The Nike Factory Outlet estimates around 140 customers entering the store per hour, which can positively affect our store. Having team apparel similar to the needs of the targeted shoppers, a “spillover effect” is expected and shoppers will browse not only Nike’s offerings, but its neighboring stores products as well.

Below, Figure 22 is a condensed and extended portion of the lease agreement. Within the contract, regulations for each tenant include design and furniture restrictions, advertising and store sign requirements, start up contractor expense information, and possible fines for not following regulation protocol. General liability Insurance for the leasing company is suggested, which can be purchased for around $200 a year (Consumer Agent Portal, LLC, 2015). The outlet also requires around $1,000-$1,500 in trash and fire safety start up expenses. For more information about Grand Prairie premium outlets, please visit http://business.simon.com/leasing/grand-prairie

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Appendix A

Figure 21: Outlet Mall Layout

Figure 22: Grand Prairie Outlet Lease

Social Media

Website and Mobile App

E-Commerce Offerings

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30

Big D Sports focuses mainly on in store operations as a brick and mortar company, but does have online channels of marketing. The store can be accessed through its online website, mobile phone app, and three social media accounts, including facebook, Instagram and Twitter. Through these sites, customers can learn more about the store, browse and purchase and even follow their favorite sports teams. The goal of the E-commerce side of the company is to expand product offerings to the greater Dallas, Fort-Worth, Arlington area and maximize revenue potential. The company’s website can be accessed by visiitng https://sites.google.com/site/bigdsportsretailer/home. Our online site, mobile app, and social media can be viewed in detail in Appendices O-Q.

With the retail industry seeing lower growth percentages year to year, it is important to stay relevant with consumer trends. The mobile website is designed to act as an online store for customers to purchase products from home. The site is setup to break down the different products offered by sporting leagues. Customers can then navigate through certain pages to select what team they want and what product to purchase. Along from purchases, website viewers can also keep up on current sports news and scores of their favorite regional teams, due updates powered by ESPN.

Big D Sports has three social media sites, including FaceBook, Instagram in Figure 24, and Twitter in Figure 25. These sites are designed to give customers information on the store and update customers of current offerings. Big D Sports is also devoted to offer the best sports news as possible and to keep customers updated on their favorite teams. The accounts are very active and customers can rely on fast sports news. The accounts also capitalize on the different sporting seasons and can help customers figure out which sports team has the lowest price offerings, due to offseasons.

Figure 23: Popapp

Appendix B

The mobile app, shown in Figure 23, has a similar concept, where customers can easily search products offered and have their favorite apparel items shipped to them hassle-free. It is crucial to keep up with a mobile offering, due to the fast growth of mobile e commerce. With 22.9% annual growth of Mobile users from 2010-2015, the market

is becoming saturated. The majority of customers targeted now have a smartphone.

Figure 24: Instagram

Figure 25: Twitter

Billboard

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Figure 26 shows the billboard created for our sports apparel retail store. Big D Sports is located in Grand Prairie, Texas in the Grand Prairie Premium Outlets. This outlet mall is located off of I-20 and State Route 360. With that said, a billboard would be a great marketing strategy because of the traffic on the highway going to and from Arlington and Dallas. The Dallas Cowboys’ stadium is located in Arlington and those who are traveling to the game can purchase last minute fan apparel by taking exit 454 with the help from Big D Sports new billboard.

Figure 26: Billboard on I-20 and Route 360

Appendix B

Personal Marketing

32

In order to market the store personally, Big D Sports and its employees will hand out business cards and flyers around town to create an initial buzz around the store. Along with the billboard, online marketing, and customer traffic from the outlet mall, the personal handouts will help get the word out about the company. The flyers will cost approximately $15 for 25 and the business cards will cost $8 for 100. The total expense for flyers and business cards will be recorded in the pre-opening expense section of the financials.

Appendix C

Figure 28: VistaPrint Business Card

Figure 27: VistaPrint Flyer

Consumer Survey

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Appendix D

The Dallas Texas area was chosen for Big D Sports because of the large sports participation and a strong following. This location is a suitable place where our company would have the best chance of being feasible. To determine potential opportunity in the Greater Dallas area, Big D Sports conducted a survey. The survey has currently received 87 responses and counting. The survey was created and posted to a Texas Sports Fan page on Facebook and was also completed by a handful of students at Ohio University. Due to the fact that a percentage of our target market is college students and the location in Texas, the information that was gathered will be sufficient. The survey asked questions to gain a better understanding of how often people make sports apparel purchases. This helped Big D Sports understand what the possible demand will be when opening the doors to the retail store. With the survey providing an idea for the number of potential customers, Big D Sports was able to utilize this information for decision like startup inventory and the number of employees.

Figure 29: Consumer Survey, 2015

As you can see in Figure 29, the data from the survey was gathered to help determine the possible opportunity for Big D Sports. Big D Sports expects a significant amount of business to come from these locations because of the easy access to our store, from traveling to the two major cities (See Page 13). The largest portion of Big D Sports customers are expected to come from Dallas because of the larger population base. The number of males from 18-44 was taken from each city because that is our main target market. The number was then multiplied by 26.44% because that was the percent in the survey who made 10 or more purchases a year. This then gave Big D Sports the possibility of attracting 105,320 customers per year.

A Closer Look At the Benchmarking Companies

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Appendix E

Rally House is a specialty sports boutique that offers a large selection of apparel representing local NCAA, NFL, MLB, NBA, NHL and MLS teams. Rally House currently operates stores throughout Kansas, Missouri, Texas, Philadelphia and Cincinnati. The one we contacted was located in Arlington, Texas. Every store is unique to the city in which it is located, with a selection of merchandise customized to the specific professional and college teams in that area. Customers can also shop 24/7 on rallyhouse.com, where they offer the same apparel located in stores (Rally House). This company is weighted the highest, 50%, because it is the most similar to Big D Sports with offering a wider selection of local sports teams apparel.

Fanzz has a significant amount of locations around the country with one of them being Mesquite, Texas. This sports apparel retail store is similar to Big D Sports because each location focuses on the regional market with minimal variety of national sports team apparel. Fanzz.com is committed to serving customers on a national basis. Fanzz offers apparel for the NFL, NBA, MLB, NCAA, NHL, and MLS (Fanzz). Fanzz, weighted 25%, isn’t weighted the highest because they only offer professional team apparel, whereas Big D Sports also offers college and some high school sports team apparel.

Unlike Rally House and Fanzz, Team LA Sports is only located in Carson, California, a similar market of population and sports fans as Texas. Similar to Fanzz, Team LA focuses specifically on professional sports team apparel unique to the area. They distribute apparel only for professional baseball, basketball, soccer, and hockey (Team LA Store). We weighted this at 15% because Team LA does not offer football apparel, which is a huge product segment of Big D Sports (due to the popularity of the sport in Texas).

Score Sports is located in Long Beach, California. They have been a loyal partner in the sports industry for over 35 years working at the national, state, and local levels. Score sports only offers soccer, basketball, and baseball apparel. They focus mainly on providing the highest quality uniforms at the best possible prices for youth soccer teams. Their showroom displays jerseys that customers can order for their team. Similar to Big D Sports, they provide a comfortable atmosphere where customers can view non-stop soccer games on the televisions (Score Sports). We weighted this the lowest, 10%, because Big D Sports focuses more on fan apparel rather than actual team jerseys.

Weighing the Benchmarking Stores

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Appendix F

Each of the four competitors that were used for benchmarking in Demand Scenario 1 analysis were given both weights and scores to create a more credible average customer base. The business model and concept received the the highest weight at 50%, due to similarities in consumer behavior. If the competition has a near-identical business concept, meaning similar product offerings and targeted market, the customer base will also be just as accurate. Regional competitor location, weighing in at 35%, is the next most important factor. Local competition could hurt the store’s business, which must be taken into consideration. The stores that have a similar amount of competition in their surrounding area receive a higher score, meaning it is most similar to our own business. The third and least important weight is the start up location, which was determined to be 15%. Businesses with a location similar to ours, factoring in population and surrounding cities, received a higher score. Before factoring in the three percentages, each store was given a raw score for the three factors, scaling 1-10, which measured their performance in each category. All three category scores were added up and the weights were applied to each store to determine the competitors relevance to Big D Sports.

​

Figure 30: Benchmark Scores

Scoring the Benchmarking Stores

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Appendix G

Rally House is a specialty sports boutique that offers a large selection of apparel representing local NCAA, NFL, MLB, NBA, NHL and MLS teams, as well as local sports teams apparel. This is extremely close to our business concept, therefore we gave them a score of 9. Rally House, similar to Big D Sports, had about three major competitors around them. These competitors had a similar business concept to our own competitors. Therefore, we gave a score of 8 for local competitors. The Rally House location we called was located in Arlington, Texas, a city extremely close to where our own store is located. However, they are not too similar, considering Dallas is 40 minutes away from them, in comparison to our store’s 20 minutes. Therefore, they were given a location score of 7. After weighing and adding the raw scores, we gave Rally House a weight of 50%.

Fanzz offers apparel for the NFL, NBA, MLB, NCAA, NHL, and MLS, however they do not sell local sports apparel like Big D Sports will (Fanzz). Therefore, we gave their business concept a score of 6. Fanzz had only a couple competitors compared to Big D Sports. Due to the fact that the store isn’t as similar, Fanzz was also given a score of 6 for local competitors. For location, since Mesquite has smaller population from Grand Prairie and is only close to Arlington, Fanzz was given a lower score for location at 5. Overall, Fanzz was given a weight of 25%, largely because the idea of local sports teams is something that is a key differentiator for Big D Sports. After weighing and adding the raw scores, we gave Fanzz a weight of 25%.

Team LA, unlike Big D Sports, does not offer any NFL apparel nor local sports team apparel. Considering these two major differences from Big D Sports, Team LA was given a business concept score of 4. Team LA has very few competitors in their area compared to Big D Sports. Therefore, Team LA sports was given a score in local competitors of 5. For location, Team LA is located in Carson, California. While this is a similar market to Texas, the store is not exactly similar. The population of Carson is also half that of Grand Prairie. Therefore, Team LA was given a score in location of 4. After weighing and adding the raw scores, we gave Team LA a weight of 15%.

Score Sports primarily offers athletic apparel, rather than sports team apparel. This is extremely different from the offerings of Big D Sports. For the business concept, we gave Score Sports a score of 2. Score Sports had a level of competition similar to Team LA, therefore the store was given the same score at 5 for local competitors. Score Sports in Long Beach, California has a population of about 500,000, which is the closest to the population numbers of the areas around Grand Prairie. However, it is also located in California rather than Texas, which is a factor to consider. We gave Score Sports a location of score of 7. After weighing and adding the raw scores, we gave Score Sports a weight of 10%.

Store Atmosphere (Detailed)

37

Upon entering the store, customers can not only browse for their favorite team’s jerseys and apparel, but they can also keep up with their favorite teams. Viewing areas have been placed around the store to offer a relaxing alternative to shopping. Customers can watch games that are currently playing, which complements the social/athletic atmosphere. The theme of the store will also include memorabilia and sports portraits to add to the athletic experience.

A sufficient amount of the store will be allocated towards the company office and storage room. Inventory will be kept here, which will be fully stocked to meet customers personal demands.

As stated in the report, it is expected to have 4-5 employees with a full-time and part-time manager that will operate the store. Employees will be readily available to assist customers with selection, fitting and purchasing. Aside from the cash registers, employees will be equipped with iPad and Square App technology to complete product transactions mobile.

Big D Sports’ product offerings will be strategically placed around the store to add to the atmosphere and marketing concept. Top brand jerseys and apparel will hang from the walls to create an appealing image. Clearance items, smaller accessories and seasonal items will be placed on racks throughout the store to be more readily available, due to their lower prices.

Appendix H

Figure 31: Detailed Store Layout

Product Mix- Popularity of Sports

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Appendix I

In order to figure out proper inventory offerings, data analytics research was conducted to determine the amount of inventory purchased for each sports team. Fan bases were measured by taking the amount of weighted online fans through Facebook, Twitter and Instagram, and average season attendance for each franchise. These numbers were factored into the Greater Dallas population and the population of Grand Prairie to determine the popularity of each team amongst the population. For example, teams such as the Dallas Cowboys and the Texas Longhorns have higher fans per capita in the area, so Big D Sports would have more offerings for these franchises.

Average Transaction Value

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Appendix J

53

40.75

$45

To find the stores average transaction value, analytics were used to determine that customers spend about $45 per store visit. To figure out this number, prices based off inventory and primary data from similar competitors were factored in. Weights were assigned to each product line, based off of the price per item and the percentage of the product line compared to the total inventory. After weighing the variables, it was determined that $53 was the approximate transaction value based off of store purchases. Primary data from each store was used as well. The four competitors used for the Demand Scenario 1 also provided information on their average transaction value. The companies were assigned the same weights from the demand scenario to create an appropriate transaction value of $40.75. When averaging these two numbers, the overall transaction value for Big D Sports was estimated at approximately $45.

Figure 32: Average Transaction Price (Inventory Factor)

Figure 33: Average Transaction Price (Competition Factor)

Cloud System

IS System

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Cloud computing is everything from computing power to computing infrastructure, applications, business processes, to personal collaboration that can be delivered as a service when needed. Cloud based systems are designed to compute information for a company that comes from an integration of hardware, networks, storage, devices, and possibly interfaces (Dennis 2014).

​

To breakdown the cloud system further, you must look at it as private or public systems. Private cloud systems are designed as single-tenant systems that are self managed with high customization ability, stronger security, as well as the possibility to expand the server more rapidly. The downsides of these systems, however, are that they are more difficult to implement, more costly, and the constant need of maintenance from the company. Looking at public cloud based systems, they have multi-tenants where a company pays for a portion of the server or “cloud” to use for a fee. The advantages to public systems are that they are cost efficient, limited maintenance, and take less time to implement. The disadvantages, however, are restricted customization, lack of growth ability, and not as secure information as the systems are outsourced (Online Tech, 2015).

​

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When looking at which type of systems to implement for Big D Sports, we could either choose a hardware system or a cloud system. Looking at the hardware system that would need to be installed, maintained, as well as run a process in organizing, data mining and processing the information. Whereas a cloud based system is a system that connects all the different devices like the hardware, storage, database server and any other specific systems together. We then decided primarily on cost efficiency, factoring in implementation time, usability, and an analysis of the industry looking specifically at the future projections for the industry for start-up companies.

Appendix K

Quickbooks

Quickbooks System

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Quickbooks is a public cloud system that controls 80% of the market share for cloud based systems used by small businesses (Chicagonow, 2015). They give the ability for smaller/start-up companies to integrate their different business processes into one network, with some limitations. This is done by offering a System as a Service, or an SaaS, which by definition they give other companies and organizations a “piece” of their system database in-turn for a payment. With this payment, there is an initial point of sale cost as well, which will vary depending on the needed equipment and variation of software.

When looking at the Quickbook systems, we chose to go with the cloud “Plus” system because it fulfilled the criteria needed for our company. The factors that specifically stuck out were the tracking of income and expenses, ability to manage vendors and options to secure different portions of the system. “Plus” is one of their more expensive cloud systems, at $40 a month (Intuit, 2015), but aligned with our needs.

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We had to evaluate the point of sale (POS) system, which comes from the initial system set-up, as well as necessary hardware installation. When doing so, we decided as a company that we wanted the Quickbooks desktop option, which gave us the most options to work with and manage our day-to-day operations. This option supplied a cash-register, the ability to use iPads and mobile device connections. The cost of this system amounted to $2,000 at this point of sale (Intuit, 2015).

Appendix L

Business Intelligence (BI) Systems

Tableau

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Business Intelligence (BI) Systems are databases used to describe the organization and analyzation of raw data, which comes from and is stored in the data warehouse. It is then broken down into different, more specific systems, which includes Data Mining Systems, Decision Support Systems, Expert Systems, and Artificial Intelligence. These are parts of the overarching BI system that use raw data collected and stored in the Data Warehouse (Dennis 2014).

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The use for these systems in a company is to, during analysis, take raw data stored in data warehouses and use it to develop company and market trends. Doing this gives managers and business owners a better sense of what decisions to make, to enhance/grow a company from previously collected data. As the market continues to expand in the realm of big data analysis, companies must develop or install a BI system in order to analyze a company and properly understand the market.

Tableau is defined as a database system used to help organize and analyze the raw data from a data warehouse. Tableau has near 32,000 customer accounts (Tableau, 2015), this number has grown from 2010, when they had 4,400 customers. This growth is not expected to stop anytime soon, as they are projected to have nearly 71,000 customers by the year 2021 (Forbes, 2015). Not only have they seen a major increase in customers, but the business analytics database systems industry is one that is going to continue to see growth, faring even better for Tableau.

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As we analyzed different companies in the database system industry, we established that the most effective and efficient system, for Big D Sports, would be Tableau. We saw strong reviews, a growing number of users, as well as a system that was very affordable but yet still efficient. The decision became easy for us once we understood its validation of candidency based on market value and cost affordability. Once we came to the conclusion on Tableau, we then had to evaluate the different possible programs they offer varying from a desktop software to an online cloud based system. For our company the cloud system offered the most convenience with more affordablility. Once we chose the cloud system factoring number of users, the price came to $3,000 per year.

Appendix M

Store Bags

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Appendix N

Big D Sports will be providing small bags for accessories such as a hat. Small bags will be a cost of $14.50 per 100.

We will also be providing medium size bags for those who purchase multiple items. Medium bags will be a cost of $20.50 per 100.

Large bags will come in handy for when customers purchase many items at Big D Sports. Large bags will be a cost of $32.50 per 100.

Figure 35: Store Supply

Figure 36: Store Supply

Figure 34: Store Supply

Website

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44

Appendix O

Figure 37: Google Sites

Figure 38: Google Sites

Check out the website to stay current with the latest sports news (powered by ESPN).

Select league for easier search of store product offerings.

Website

45

45

Appendix O

Figure 39: Google Sites

Figure 40: Google Sites

Once a league has been selected, you can then select an individual team for product offerings.

Website

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46

Appendix O

Figure 42: Google Sites

Figure 41: Google Sites

Select a different league to keep browsing current product offerings.

Browse current product offerings and add to order when you are ready to purchase.

Website

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47

Appendix O

Figure 44: Google Sites

Figure 43: Google Sites

Website

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48

Appendix O

Figure 46: Google Sites

Figure 45: Google Sites

Website

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49

Appendix O

Figure 48: Google Sites

Figure 47: Google Sites

Search the website for favorite team offerings.

Quick and easy to pay!

Website

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50

Appendix O

Figure 49: Google Sites

Set your billing information.

Mobile App

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51

Appendix P

Figure 50: Popapp

Figure 51: Popapp

Figure 52: Popapp

Create an account with Big D Sports or sign in through your preferred social media account.

Use the app’s navigation bar at the bottom of the screen to access different features.

Set profile information, including billing and shipping presets.

Check out the store’s social media pages for the latest sports news and store deals.

Mobile App

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52

Appendix P

Figure 53: Popapp

Figure 54: Popapp

Figure 55: Popapp

Preset or update your shipping and billing information.

Select your desired product for more information or for a larger product view.

Search Big D Sports for a desired product offering. You can also access your current shopping cart.

Mobile App

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53

Appendix P

Figure 56: Popapp

Figure 57: Popapp

Figure 58: Popapp

Track your shipment, offered by the United States Postal Service.

Select products to see additional information and to add the item to your shopping cart.

Customize your order before you ship the product.

Update shipping/billing information.

Facebook

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54

Appendix Q

Figure 59: Facebook

Check out the stores information.

Check Big D Sports’ facebook timeline to stay updated with store offerings and the latest sports news.

Facebook

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Appendix Q

Figure 60: Facebook

Find out store information, such as hours of operation, the store location and price ranges.

Send a message to Big D Sports for questions regarding products and additional info.

Twitter

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56

Appendix Q

Figure 61: Twitter

Check out the company website and tweet @Big D Sports.

Check out current tweets dealing with in- store deals and keep up with the latest sports news.

Instagram

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57

2,154

Appendix Q

Figure 62: Instagram

Figure 63: Instagram

Figure 64: Instagram

See where Pictures are being posted.

Like a post, or comment with your opinion.

Check out the store website & browse previous instagram posts.

Financials

Big D Sports Pro Forma Statements of Financial Position (Balance Sheet)

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58

Appendix R

Financials

Big D Sports Pro Forma Statement of Income

59

59

Appendix S

Since the store offers annual discounts for customer satisfaction, an estimated 11.25% of revenue will be removed from the bottom line. Each discount will be weighted, due to relevant effect on sales. Sports team victories will generate the most of the store’s discounts, due to consistency of team schedules. The fantasy league and high school discounts received a smaller weight, due to a smaller high school market and a lower expected amount of fan involvement. Aside from the discounts, the store’s square system will deduct 2.75% of credit sales from revenue as well.

Financials

Big D Sports Capital Budgeting Analysis

Year One Cash Flows

60

Appendix T

Financials

Pro Forma Income Statement Q1, Q2, Q3, Q4

61

Appendix U

Financials

Depreciation Schedule

62

Appendix V

Financials

Amortization Schedule

63

Appendix W

Start-Up Costs

Inventory T-Accounts

Financials

64

Appendix X

Key Performance Indicators (KPIs)

65

Appendix Y

At first glance in analyzing Key Performance Indicators (KPIs), start with analyzing and evaluating the industry indicators first. The first KPI for us looks at the revenue of the sports apparel retail store’s market and the performance of the industry. Seen in Figure 65, the industry has been growing over the last eight years, after factoring out the skewed data from 2009 when the US was stuck in a recession. The industry is projected to continue to grow at about 5% over the next five years (IBISWorld, 2015).

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The second KPI we developed and analyzed about the Industry is comparing growth and projected growth of a market with similar interests. Comparing men’s clothing stores to the sporting apparel retail stores, as they hit a similar target market, their revenue hasn’t kept the same consistent growth and is only projected to grow around 2.5% over the next five years (IBISWorld, 2015), which can be seen in Figure 66. Proving for more demand in our industry.

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The final KPI for the industry we looked at was comparing competing markets. The major competition that comes from another market to most retails stores and specifically to sports apparel retail stores is E-Commerce, or online sales. Seen in Figure 67, E-Commerce has been and is projected to continue to grow, with a projected growth rate of 11.6% (IBISWorld, 2015)

Men’s Clothing Stores

E-Commerce

Licensed Sports Retail Apparel

Figure 65: Industry Revenue: IBIS World

Figure 67: E-Commerce Sales: IBIS World

Figure 66: Industry Revenue: IBIS World

Key Performance Indicators (KPIs)

66

Appendix Y

Getting into the KPIs for our company, we start with the relationship of Cost of Goods Sold compared to Sales. Seen in Figure 68 (top-left corner).

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The second KPI we found was Quarterly Sales, which is seen in Figure 68 (top-right corner).

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The third KPI we established, seen in Figure 68 (bottom-left corner), the number of customers per day and the the total increase from year to year.

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Looking again at Figure 68 (bottom-right corner), you see our company’s average transaction value which established to be a KPI and a way to spot the growth of a company over time.

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Figure 68: Tableau

Key Performance Indicators (KPIs)

67

Appendix Y

The next key performance indicator we established was the correlation of the number of customers per day with the amount of sales per day, shown in Figure 69.

Figure 69: Tableau

Key Performance Indicators (KPIs)

68

As shown in Figure 70, you can see the relationship between total current assets and total current liabilities. Which once you subtract total current liabilities from total current assets you get a company’s net working capital. We then analyzed and decided to be another KPI.

Appendix Y

Figure 70: Tableau

Key Performance Indicators (KPIs)

69

The final KPI was looked at was the amount of retained earnings for our company per year. The reason we established this as a KPI is because retained earnings is the amount of capital you have left over that can be put back into the company.

Appendix Y

Key Performance Indicator Conclusion

These KPIs are drivers for how to access a company as well as see where improvement is needed. These systems are comprised from raw data converted into different figures and/or graphic aides to help professionals understand and absorb the important information. Our company, as expressed earlier, will use Tableau to use this raw data from our data warehouse and convert it into understandable information. This system will be able to be seen by all five owners as well as the one full-time manager.

Figure 71: Tableau

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