Business Model
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RESEARCH AND DEVELOPMENT
1. Research
The first step of the research process consists in identifying the consumer’s behavior and fashion trends. Arezzo&Co is contantly monitoring trends of the world’s major consumption centers, which supports our creative team to create a wide range of products in each collection. Currently, we have records of products going back 40 years, with some 30 thousand pairs catalogued.
2. Development
Every year, approximately 11,500 models are developed and gradually sorted by the product development team. After sorting them out, about 65% of the models are presented to the sales team and operators and finally production starts so the models can be sold in stores, which represent 50% of the total number developed.
This process enables the Company to consistently provide customers with the most fashionable and successful models in every collection.
3. Sourcing
Constant research and studies are carried out before determining the most appropriate manufacturing process for each product (flexible sourcing model). The products are manufactured at the Company’s industrial facilities (located in the city of Campo Bom, state of Rio Grande do Sul) or in independent factories and manufactorers selected according to the particularities of the products. These manufacturers produce the items with part of the material supplied by Arezzo&Co and following the technical specifications and quantities requested.
4. Delivery
The products are distributed to the stores according to a coordinated program supported by a solid logistics structure with capacity to deliver thousands of items per day.
The collections are simultaneously presented to all sales points in Brazil. Extra care is taken in updating the decor of the stores not only aimed to enhance the product’s display, but to provide a unique shopping experience.
COMMUNICATION AND MARKETING
Communication and marketing are crucial for Arezzo&Co business model.
Considerable amount of time and cash are invested in the Company’s brands, which includes the continuous creation of marketing campaigns, as the Company strongly recognizes the importance of these actions to attain the brand positioning as market benchmarks.
Arezzo&Co has an efficient marketing strategy for its brands to constantly appear in the media by associating them to prominent artists and opinion-influencers and by opening flagship stores – concept stores in strategically located streets in the main cities of Brazil, such as the flagship stores of the five brands at Oscar Freire Street, the unrivaled shopping street in Latin America. The flagship stores are designed to promote brand recognition and to boost sales at our owned stores, franchises and multi-brand retail stores.
It is worth stressing that Arezzo&Co is not merely a fashion retailer, but rather a Company that offers a unique shopping experience to customers. Therefore, from the catalog with the products of a new collection, the ambience of the stores, the uniforms of salespersons to the packaging are renewed and adapted to each collection.
SOURCING & LOGISTICS
Arezzo&Co’s production model includes productions at its industrial facilities located in the city of Campo Bom, state of Rio Grande do Sul, and the façon system, which consists of hiring independent factories and manufacturers.
The Company provides the independent factories and manufacturers part of the raw material necessary for production resulting in gains of scale in the purchase process and in stricter quality and uniformity control of the material used.
This outsourcing model reduces the need for investment in permanent plants as well as optimizes production by using the best labor available in each specialty.
The products are simultaneously distributed according to a coordinated program to all sales points in Brazil, supported by a solid logistics structure.
In 2016 the Company opened a new distribution center in Cariacica (ES), which has allowed for an increase in the open-grid restocking capacity and, with the center being closer to the main consumer markets, has led to a shorter lead time for restocking.
DIVERSIFIED DISTRIBUTION
Arezzo&Co’s multiple distribution model is designed to capture chain value while widening distribution capillarity and brands’ visibility.
Its owned stores are strategically located to leverage sales and stands as a mean to acquire expertise on retail. Thus, the Company increases the ability to interact with the end customer and further develops retail processes and management of points of sale. The flagship stores are an excellent tool for visibility and brand promotion, complementing Arezzo&Co’s marketing and communication strategy.
The franchise model allows for rapid expansion in a way well adapted to the needs of the places where they are located. Arezzo&Co’s franchise model is very successful and prize awarded*
The multi-brand retail stores consolidate the strength of the other distribution channels by increasing the capillarity in smaller cities and for new brands launched by the Company. Sales to multi-brand channels reach all the Brazilian states, as well as more than 50 countries around the world.
The e-commerce channel reinforces the Company’s OMNI strategy, which involves a permanent presence at all major points of interaction with customers providing a unique shopping experience.
The Company also has an operation in the United States, with wholesale, e-commerce and retail channels, through flagship stores in New York and Los Angeles.
(*) AREZZO&CO has been awarded the Franchising Excellence Stamp from Brazilian Franchising Association (ABF) since 2004.
MANAGEMENT
Arezzo&Co has a team of very experienced professionals with extensive knowledge in the footwear industry. Its meritocratic environment seeks for professionals with complementary expertise and with communicative and interpersonal skills, encouraging discussions and dissemination of ideas within the Company.
The people management team applies a wide range of selection, training and retention techniques to develop staff in line with Arezzo&Co’s organizational culture and strategy.