ACKNOWLEDGEMENTS

First of all, I would thank Allah Almighty, the most Beneficent and Merciful for giving me the opportunity and strength to work on this report. I would like to thank our course instructor Mr. ZIA-UR-REHMAN for his help, guidance, support and cooperation in completion of this feasibility report. I am especially thankful to Ms. Sadia Faridi, Director Finance, Dress to the Nines (DESIGNERS BOUTIQUE), for taking out time from their busy schedules and addressing our queries.

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Contents
ACKNOWLEDGEMENTS ___________________________________________________________________
PROJECT BRIEF __________________________________________________________________________ Dressed to the Nines (DESIGNERS BOTIQUE) __________________________________________ Objectives: ________________________________________________________________________________ Non- financial objectives: _______________________________________________________________ Financial objectives ____________________________________________________________________ PROPOSED CAPACITY ____________________________________________________________________

CURRENT INDUSTRY STRUCTURE _______________________________________________________ MARKETING _______________________________________________________________________________

Usage of print media i____________________________________________________________________________ Advertisement in print media i.e__________________________________________________________________ Usage of electronic media________________________________________________________________________ Event arrangement_______________________________________________________________________________ Usage of e-commerce____________________________________________________________________________

RAW MATERIAL ___________________________________________________________________________

Fabric:______________________________________________________________________________________________ Accessories:_______________________________________________________________________________________ Labels,_____________________________________________________________________________________________

PRODUCTION PROCESS FLOW:______________________________________________________________________ Design:_____________________________________________________________________________________________ Pattern Making/Cutting:___________________________________________________________________________

Stitching: __________________________________________________________________________________________ Finishing:___________________________________________________________________________________________ Presentation/Market:______________________________________________________________________________

PREMISES FOR SHOP AND STITCHING UNIT ____________________________________________ Recommended mode for renting a Shop _______________________________________________

INFRASTRUCTURE REQUIREMENTS _____________________________________________________ MACHINERY AND EQUIPMENTS __________________________________________________________ KEY SUCCESS FACTORS: _________________________________________________________________ THREATS FOR THE BUSINESS ___________________________________________________________
Competitive Structure of the market:____________________________________________________________ Pilferage in the designs:__________________________________________________________________________ Selection of the wrong venue:____________________________________________________________________ Selection of the wrong design:___________________________________________________________________ Tax:________________________________________________________________________________________________

SWOT ANALYSIS __________________________________________________________________________

Strengths ________________________________________________________________________________ Weaknesses _____________________________________________________________________________ Opportunities ___________________________________________________________________________ Threats __________________________________________________________________________________

PRODUCTS ________________________________________________________________________________
Product Mix _____________________________________________________________________________ Ethnic Wear _____________________________________________________________________________ Contemporary Wear _____________________________________________________________________ Western Wear ___________________________________________________________________________

PRICING ___________________________________________________________________________________

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KEY ASSUMPTIONS _______________________________________________________________________
PRODUCTION ASSUMPTIONS ___________________________________________________________ COST ASSUMPTIONS ___________________________________________________________________ SALES ASSUMPTIONS: __________________________________________________________________ OPERATING ASSUMPTIONS ____________________________________________________________ CASH FLOW ASSUMPTIONS ____________________________________________________________ EXPENSE ASSUMPTIONS _______________________________________________________________ FINANCIAL ASSUMPTIONS _____________________________________________________________ PROJECT COST _________________________________________________________________________ SOURCES ________________________________________________________________________________

PROJECT BRIEF
Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visual manner, what people of different cultures and styles want socially. Fashion, through times, has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. However, in a boutique business, the specifications and descriptions of the designs and clothes are so general that they can fit more than one costume, which actually are quite different in nature from each other and this is solely dependent on the taste of the people. The range of Pakistani dresses is remarkably wide, according to the vast cultures, geographical differences, purchasing capacities, influence of the western culture, and bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate, and then relate and bring together, the ideas for creating various designs, which can fit in the context of the fashion in vogue and

the culture in practice. Its Easy to be Trendy

Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visual manner, what people of d i f f e r e n t cultures and styles want socially. Fashion, through times, has gone through many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function. However in a boutique business the specifications and description of the designs and clothes are so general that they can fit more than one customer, which actually are quite different from each other in nature and this is solely dependent on the taste of the people. The range of Pakistani dresses is remarkably wide, according to the vast cultures, geographical differences, purchasing capacities, influence of the western culture, and bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate, and then relate and bring together, the ideas for creating various designs, which can fit in the context of the fashion in vogue and the culture in practice. In reference to Pakistan, the Boutique business is quite in vogue but has yet to be formalized. The market of this enterprise is quite scattered and unorganized. There are a few major players in Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. However, there is a massive potential in this field, if one has the ability to design and market his/her products through introducing innovative designs both in stitching as well as the fabric sector.

Furthermore, there is massive export potential in this sector, as the demand of Pakistani dresses, especially in countries like UAE, USA, and UK, is massive due to a high number of Pakistani expatriates who have settled in these countries. The Boutique business can also be expanded into a more profitable venture by providing stitching facilities to other boutiques, which do not own a stitching unit or are lacking this facility.

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Dressed to the Nines (DESIGNERS BOTIQUE)

In reference to Pakistan, the Boutique business is quite in vogue but has yet to be formalized. The market of this enterprise is quite scattered and unorganized. There are a few major players in Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. However, there is a massive potential in this field, if one has the ability to design and market his/her products through introducing innovative designs both in stitching as well as the fabric sector. This feasibility study focuses on the establishment of women designer wear Boutique including the operations of apparel designing, manufacturing, selling and marketing. The study has been designed to capture the dynamics of the Boutique industry, with its many components and possible strategic opportunities.

Similarly in our boutique we are going to provide the highly trendy and fashionable clothes first time ever in the history of Pakistan. Right now our main focus is on women aging 20 to55. But in the near future we are having plans to expand it to other segments as well. We are also having plans to open the men boutique under the same name in near future. We are focusing b u s i n e s s w o m e n , a n d h o u s e w i v e s f i n d i n g l e s s t i m e f r o m t h e i r w o r k t o s t i c k t o t h e f a s h i o n magazines, TV and others. We will provide them the platform where they can come select the trendy ones and feel confident in their circles.

The proposed project is for setting up a DT9 Boutique. The project will cater to the needs of the domestic market. This project will be capable of integrated designing clothes starting from cutting of clothes to retailing of product to the customer. All the process of buying of clothers till finishing would be our business.

Objectives:

Non-financial objectives:
To be among the top ten favorite brands To add new designs in every season To drive awareness and build sales through mentions in both local print and the nation'stop fashion magazines

Financial objectives
To maintain an inflation growth in earning per year at a rate of 12% To obtain a return on equity of at least 30% Providing stitching facilities to other boutiques in 2012 who are lacking this facility To maintain profit margins at 15-20% through close attention to expenses and cost of goods sold

PROPOSED CAPACITY
The Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. Furthermore, the women fashion wear garments will be designed through a contracted designer and then stitched through in-house stitching unit. On average, a designer can supply forty designs per month from which nearly twenty designs are selected on average. Approximately, total capacity of the defined unit with 5 stitching machines (basis on 8-10 hours shift) will be about 500 1 dresses. The breakup of the total number of dresses will be as follows: Total designs selected by designer 20 Number of dresses in each design 5 Number of dresses in each size 5 Total Number of dresses 500 This production and sales capacity is estimated to be economically viable and justifies the capital as well as operational costs of the project.

CURRENT INDUSTRY STRUCTURE

Currently, the boutique industry is relatively unorganized and is scattered in and around the posh areas of the metropolitan cities of Pakistan i.e. Lahore, Islamabad, Karachi, Peshawar, and Quetta. The boutiques in Peshawar and Quetta, mostly sell the traditional dresses having indigenous/local designs, whereas the ones in Lahore, Islamabad, and Karachi deal in fashion wear greatly influenced by the west and the local trends in vogue. As such, there is no exact detail available of the number of boutiques; especially in women wear, because there is no association or link between these enterprises. The reason being the business rivalries and the competitive structure of this industry. However, one can name a few major players in the business such as Indifference, Generation, Parahan, Nee Punhal, Bossini, Kapre Waghera, Maria B, Ninas, and some individual designer players like Beegees, Nilofar Shahid, Nadia Mistri, Amir Adnan, Shayan Malik, and Sahar Saigol.

MARKETING
The marketing of boutique follows the conventional marketing pattern, which is dependent on selection of venue of the outlet/s and the product mix (designs and sizes), as well as the promotional strategy. Furthermore, the boutique owner has to marketing techniques like:

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Usage of print media i.e. printing of posters and pamphlets well displaying it and
distributing it at proper places

Advertisement in print media i.e. newspapers and fashion magazines, etc. Usage of electronic media Event arrangement
shoots. i.e. projection of the boutique in fashion programs, advertisement on television, and provision of dresses to various television plays and films. like fashion shows and photo-

Usage of e-commerce
and advertising on web.

i.e. launching of website

Moreover, in order to keep abreast with the emerging trends and client tastes, surveys regarding customer satisfaction/needs should be a regular feature of this project. As this project of Boutique deals in designer women wear, therefore the product mix will comprise of different styles of the female dresses in different sizes. Whereas, the styles will be Shalwar Kameez, Qlots, Pajama Kameez, Frocks, Kurta, Peeshwaz, Party dresses, Casual Dresses and other prevalent dresses based on the market trends. The average sale price per dress is assumed to be Rs.2100. Apart from this, there is a vast export potential in this industry, which is evident from the export figures of 1998-99 (available from the data of Federal Bureau of Statistics-FBS) (Source: Federal Bureau of Statistics)

SITC 2 Code 8422102 8422103 8422104 8422202

Product Classification Suit women cotton not knitted Suit women synthetic not knitted Suit women (other textile material not knitted) Suit women (other textile material not knitted) 46,861 Dresses women not knitted Dresses women man made fiber not knitted

2000 2001 Value (Rs. 000) 1415124 501917 46861 2107

8424002 8424003

463346 63438

8424004 8424006 8427006

Dress women other textile not knitted Shisha embroided dresses of cotton Balochi Kameez of Silk Total

17723 286 27 2510826

Even these figures represent the formal export patterns of women dresses from Pakistan and are not representative of the export of these dresses taking place on informal level. Most of the women dresses prepared in Pakistan are exported to USA, UK, Germany, UAE, Saudi Arabia, France, Belgium, Netherlands, and South Africa. The end users of these dresses in foreign countries are mostly Pakistani and Indian women who have immigrated to these countries.

RAW MATERIAL
The raw material required for such sort of projects, would be as follows: Fabric: The fabric, which is the basic raw material requirement for a boutique and a major component of the cost, can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore.

Accessories: Accessories such as buttons, laces, zippers, elastics, threads,

needles, embroidery threads, glasses, etc. will be procured from the local market at competitive rates.

Labels, tags and packaging: Labels and tags can be obtained on order, as these
serve as an identity for the boutique and are useful for promotion.

PRODUCTION PROCESS FLOW:

The process for converting fabric in designer wear garments follows the below mentioned sequence:

Design: The initial process starts from the designing phase. Various patterns of

clothing and the fashions in vogue, which also relate to the tastes of the concerned clientele, are designed. The contracted designer as does this he/she will provide the basic designs of which the fabric will be converted into the designer wear garment. On average, a designer is supposed to provide 40 designs per month or 100-120 designs per season i.e. three months. From these designs, approximately 50% of the designs are selected for further development of clothes.

Pattern Making/Cutting: Based on the designs selected, patterns for cutting

are developed and based on these patterns, fabric is cut, embroided, block printed, and processed accordingly 3 .

Stitching: The cutting is then followed by stitching, which can either be done by

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the in-house stitching unit or by outsourcing it 4 . Labels are also attached to the apparels in this process.

Finishing: The final phase is that of finishing, in which the garment will be checked

for quality control and will cleaned (if required) for final presentation at the outlet. The garments will also be tagged for identification of sizes, prices, addresses, handling instructions, etc.

Presentation/Market: Once the designer wears garment is ready after going

through the above-mentioned process, it is presented at the outlet/shop for sale to the clientele.

PREMISES FOR SHOP AND STITCHING UNIT

Recommended mode for renting a Shop
It is recommended that the proposed location for the said enterprise be a posh area, where people have the buying capacity for women fashion wear. The size of the shop should be at least 800 Sq.ft i.e. 20 feet front and 40 feet depth. Furthermore, a small building will be required to establishing the stitching unit. One viable option is to rent a small house for this purpose. The shop will be obtained on rental basis, and the rent estimation for such a shop is Rs 30,000/month. According to the prevailing practice, six months rent as advance and three months rent, as security would be required for renting the shop. It is assumed that security is a one-time expenditure, whereas pre-paid rent will only be given at the beginning, while establishing the boutique. After first six months, rent will be paid on monthly basis. The cost estimates for setting up the Boutique are as follows: Security for renting shop/outlet (Rent @ Rs.30, 000per month. 3 months rent as security) Interior decoration (installing lighting, mannequins, hanging racks, mirrors, glass panes, cash counter, and other furnitures, etc.) 90000 300000

Security for renting a house for installing the stitching unit (Rent @ Rs.6, 000 per month)

6000

INFRASTRUCTURE REQUIREMENTS
The project will have the following infrastructure components: INFRASTRUCTURE REQUIREMENTS Main shop Try room Small store Building for stitching unit 10 Marla house Sq .fts 600 36 100

MACHINERY AND EQUIPMENTS

Single needle lock-stitch machine Over-lock stitch machine Accessories (Scissors, Cutting Board, Table, stools, carpet, etc.) Air-conditioner Stereo System Computer and Printer Telephone & Fax 4 1 20,000 50,000 50,000 30000 23000 35000 10000 80,000 50,000 50,000 30000 23000 35000 10000

1 1 1 1

KEY SUCCESS FACTORS:

There are a number of factors, which contribute towards the success of a project. In case of the project of Boutique, some of the Key Success Factors are as follows: Proper care while producing dresses should be adopted. Proper Inventory management i.e. keeping minimum inventory as per past sales trends. The dress designs should be according to the emerging trends and fashions. Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys. The location of the outlet should be properly selected and attractively decorated so as to target the clientele effectively. The customer satisfaction should be given due importance, because it is the customer satisfaction, which can increase the sales. Hence, excellent customer service should be provided.

[DRESS TO NINE (DESIGNERS BOUTIQUE) THREATS FOR THE BUSINESS

Competitive Structure of the market: Market of the boutiques is highly

competitive; therefore if the entrepreneur is not well responsive to the tastes and response of the clientele as well as the fashions in vogue he/she may not be able to capitalize the opportunity properly.

Pilferage in the designs: The designs, which a designer produce can be sold by the
staff even before that design is launched and that can pose serious threat to the business because in the fashion industry it is the uniqueness of the design which matters.

Selection of the wrong venue: Selection of the wrong venue can be a major hurdle in
achieving the desired business objectives.

Selection of the wrong design: if the designs are not selected according to the tastes
of the clientele then it can be detrimental for the business, so the clientele taste should be properly tracked.

Tax: Improper documentation of the sales receipt record may lead to problems with Tax
department.

SWOT ANALYSIS

Strengths
Good and high quality Exclusive outlet Highly qualified staff Adaptability to newness Diverse brand portfolio machinery

Weaknesses
High rates and prices L e s s s u p p or t i v e f i n a n c i a l a n d g o v t institutions Lack of idea sharing

Opportunities
Expand into emerging economy Enter new product market Acquire more market

Threats
Lack of knowledge Brand cannibalization Substitute New entrants Competitors Political instability

PRODUCTS
Product Mix
Products will be priced at the high end to reflect the quality and exclusiveness Associated with the brand. High-end materials such as Crinkle Chiffon, Georjot Chiffon, Chinese Raw Silk, Medium Silk, Leafy Print Jamawar, Chamose Silk etc will be used. This boutique will offer following product categories of women wears: Casual Wear Semi Formal Wear Formal Wear Each product category will include the following product lines:

Ethnic Wear
Formal Wear Party dresses and special occasion dresses

Contemporary Wear
Fusion Wear Combination of eastern and western wear, suitable for the International market as well.

Western Wear
Tops, Pants and various other styles The combination of outfits for the proposed outlet will be as follows Designing Pattern Making Embroidery Finishing Stitching Cutting Presentation Market/Clien tele

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Category Casual wear Semi Formal Wear Formal Wear

% of total outfit 34% 33% 33%

%Cost of Sales 35% 32% 30%

PRICING
Pricing is set according to market indicators. Set in such a way that it covers cost and generate revenue for the boutique. In the start it requires lower prices in order to penetrate in the market. Than high the price for the assurance of high quality as it is perceived. Version Upgrade/Competitive Upgrade Matrix Product Intro. Price After 9 months Proposed Competitive Price for Future Rs. Rs. Rs. Casual Wear Semiformal Wear Formal Wear 3000 2900 4500 4200 15000 16000 3500 5000 18000

KEY ASSUMPTIONS
PRODUCTION ASSUMPTIONS
Number of Stitching Machines Production Capacity (No. of dresses per month) Capacity Utilization for the first year (No. of dresses per month) Self Production (% of total production) Dresses manufactured on CMT basis (% of total production) 5 500 200 60% 40%

Monthly self production (Year 1) Monthly Dresses manufactured on CMT basis (Year 1)

120 80

COST ASSUMPTIONS
Material & Fabrics Accessories Embroidery Cost Direct Labor Cost Direct Electricity Cost Machine Maintenance Cost Admin & Rent expenses & promotional expenses Fixed electricity Average unit cost per dress (Rs.) 400 25 100 280 20 4 446 30 1305

SALES ASSUMPTIONS:
No. of dresses sold per month (Year 1) Average unit price per dress (Rs.) Average Monthly Sales through retail outlet (Rs.) No. Of dresses sold on CMT basis per month (Year). CMT manufacturers are garments manufacturer, they are like the out source for the company, In boutiques such garments are also available. Average unit price per dress on CMT basis (Rs.) Average Monthly Sales through outsourcing (Rs.) Total Average Monthly Sales (Year 1) (Rs.) Sale growth rate (Units) Sale growth rate (price) 120 2100 252000 80 250 20000 272000 10% 13.33%

OPERATING ASSUMPTIONS
Hours operational per day Days operational per month (Production) Days operational per month (Boutique) 8 25 25

CASH FLOW ASSUMPTIONS

Account Payable Cycle (Days) 10

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Account Receivable Cycle (Days) Raw Material Inventory (Days) 10 15

EXPENSE ASSUMPTIONS
Initial Promotional Expenses (Year 1) (%age of expected sales) Promotion Expenses after Year 1 (% of expected sales) Machine Maintenance per annum Direct Electricity per month (Year 1) Fixed Electricity per month (Year 1) Telephone and Internet charges (Year 1) Raw Material Price Growth rate Payroll growth rate Machine Maintenance growth rate Direct electricity growth rate Fixed electricity growth rate 3% 1.5% 10000 4000 6000 3000 11% 7% 2% 10% 10% 5% Telephone and Internet charges growth rate 5% Depreciation Method STRAIGHT LINE

FINANCIAL ASSUMPTIONS
PROJECT LIFE DEBT: EQUITY INTEREST RATE ON LONGTERM DEBT DEBT TENURE TAX RATE 10 YEARS 50:50 18% 5 YEARS 40%

PROJECT COST
DECRIPTION Machinery & equipment Furniture & Fixture (Interior Decoration) Security Deposits for Premises COST (RS) 278000 300000 108000

Pre-operating expenses Salaries Promotional Expenses Total Capital Cost Working Capital Raw material (Fabric & Accessories) Accounts Receivable Prepaid Rent (Boutique and Stitching Unit) Total Working capital Project Cost

98000 97920 881920 28800 108800 432000 569600 1451520

SOURCES