Te’s printed tees started out as a home business, selling at the market and to a few local independent clothes shops. They took out a short lease on a run-down shop with a workshop at the back, but that’s coming to an end. Growing reputation and demand mean a good opportunity to grow the business, but scaling up needs more room.
Te looks at the current production setup for inspiration.
Te identifies a few options. The top two are:
The courier’s depot was picked for its accessibility, and they already visit the city centre every day. A cheap production location nearby would help Te afford a bigger workshop. They could continue to sell through the existing network of small shops, with efficient stock replenishment using the courier. They would be vulnerable to changes in the sales network (the independent shops often go out of fashion and close down, so there is quite a bit of ‘churn’). But changes to their ‘shopfront’ locations won’t lose them custom. Their fans will follow them on social media to keep up to date with sales outlets. They could even try out another pop-up shop if they need to.
The t-shirt manufacturer only takes up part of the warehouse they use, and the building owner is happy to lease Te the remaining space. Te could move in and benefit from more flexible supply (especially if the manufacturer is happy to set up a new supply agreement). The warehouse already has the waste disposal and safety systems they need. The warehouse has a small area they could set up as a factory shop — fans like getting to chat to Te and their staff. And they could set up an online store too, extending the area they sell to. Swapping from the independent shops to ‘clicks and mortar’ for their storefronts would give them better margins. They’d probably lose a few sales from the town centre shops, but they’d no longer risk losing out if a store goes into receivership.
Both options save rent and fit-out costs over a new central location, where rent would be higher and they would need to install ventilation and fire equipment. Te uses the five-step process above to weigh up the two locations, and decides to co-locate with the t-shirt manufacturer. Saving on equipment costs lets them set up and market their online store. Exciting times!