DELIVERABLE 02 SURYA

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Deliverable 2: Market Analysis and Summary Name, Surname: Surya Santhosh Student ID: 150731214 Course & Section: IBS 630 ZGB Company: Roots Product: Seymour Jacket Market Target Country: GERMANY Evaluation and Analysis of Information Sources 5% References in all the positions: 5% On the basis of the information in this Deliverable 2, draw conclusions about market suitability for your business venture. Are you satisfied that you have enough reliable evidence to make a decision? If not, what additional information would you need? Evaluate sources of information you used for this research. Is the information available on the markets complete? What information is missing? Based on the data sources, accessibility, and availability, the content in this study is thorough. But, because there are no Root retailers in Germany, additional research is needed. As a result, everything is dependent on my research, and more accurate information has to be posted online. Is it reliable? All of the material was acquired from reliable sources such as credible websites and insightful study studies. Is it comparable? The content comprises information that may be compared to get the desired conclusion. Will it be difficult to make meaningful comparisons? It is difficult to make meaningful comparisons because the products have not yet been released to the market, and internet resources do not guarantee how they will perform in relation to other products . Macro-Environmental Analysis (PESTLE)5% Following information is based on research and analysis in relation to availability of the market data. Country Profile: Current market size and future growth potential Population size: 84.3Mn Source Population growth: -0.05% Source GDP: $ 4.983 trillion Source Import 2019- 41% Import 2020- 37.4% Import: 2021 –41.7% Source Export 2019 – 46.7% Export 2020 – 43% Export:2021 – 47% Source Target market size: E.G. 35.5 million Source The economic growth rate is in 2019; 1.1% 2020; -3.7% 2021; 2.6% Source Analysis: 1

Market Target Country: GERMANY The increased popularity of internet purchasing has fueled industry expansion in recent years. Consumers are drawn in by the convenience, variety, and lower pricing that online clothing merchants can provide. As a result, the internet channel has grown, with online experts now representing for 22% of the industry's total value. The COVID-19 epidemic has also increased this trend, as the closure of physical clothes retail establishments under lockdown restrictions has encouraged people to make purchases on online platforms. In 2022, the German apparel industry continued to rebound, with positive results in the majority of sectors. Germany is responsible for 16.7% of the value of the European clothes retail industry. The sector's performance is expected to accelerate, with a CAGR of 3.9% between 2021-26, driving the industry to a value of $76.6 billion by the end of 2026. Info Sources : https://advantage-marketline-com.libaccess.senecacollege.ca/Analysis/ ViewasPDF/germany-apparel-retail-165971 Political characteristics and stability Germany is a federal, parliamentary, democratic republic with a representative government. The Federal Republic of Germany has a long history of political stability. German has a decent Stability Index of 0.76. (-2.5 weak, 2.5 strong) Analysis: Germany is a Federal Republic, consisting of 16 federated states having political autonomy over domestic policies while keeping within the political and legal borders of the state or Federation. The legislative, executive power, and judiciary are the three branches of government. This system exists to prevent the concentration or abuse of political power. Furthermore, the division of powers ensures a high level of legal clarity. Germany is a constitutional democracy as well. This means that a core document describes the set of regulations that defines who has power and how people are elected. Info Sources: https://www.make-it-in-germany.com/en/living-in-germany/discover-germany/ politics-eu https://en.wikipedia.org/wiki/Germany#Politics Government policies affecting business In Germany, practically all goods and services are subject to a 19% VAT. Import VAT is a type of VAT levied by Customs officials on items imported into Germany from non-EU countries. Foreign firms must pay import VAT in Germany, particularly for imports through 2

Market Target Country: GERMANY the ports of Hamburg and Bremen. Import VAT is levied on the total worth of the products plus transportation costs, customs duties, consumption tax, and transport costs within the EU. This VAT is levied at the standard rate of 19% or, in some situations, 7%. Language law: There is no legal necessity that label information be in German, a German-language label is recommended in order to effectively promote a product in Germany. A label may have information in multiple languages. Textile labeling law: The German consumer protection law includes a labelling law. Textiles widely sold in Germany, imported commercially into Germany, or manufactured for commercial sale in Germany must include a label specifying the kind and fraction based on weight of the textile raw materials used. In addition, the content of the textiles to be sold must be stated in any catalogue, brochure, or other sort of marketing. There are certain rules for determining and calculating weight fractions. Textiles are defined under this regulation as any good, fabric, component of a mattress or camping good, lining of shoes and gloves, floor-covering, and a variety of other commodities that contain at least 80% textile raw materials. Textile raw materials are spun filaments or hairs, such as bands and flexible tubes no wider than 5mm. https://www.german-tax-consultants.com/vat-services/import-vat- germany.html https://en.wikipedia.org/wiki/Textile_Labelling_Act_(Germany) https://www.globaltrade.net/f/market-research/text/Germany/Processing-of- Food-and-Agricultural-Products-EU--Language-Requirements-for-Product- Labels.html Germany is an important economic partner for Canada, with the largest economy in the EU and the fourth largest in the world. With a two-way merchandise trade of $25.9 billion in 2021, Germany is Canada's largest merchandise export market in the EU and its fifth-largest trading partner globally. In 2021, Canada's exports to Germany were valued $6.9 billion, while imports from Germany were worth $19.0 billion. CETA is also a trade deal between the European Union and Canada. It lowers taxes and makes it easier to export goods and services, benefiting both EU citizens and businesses in Canada. 3

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Market Target Country: GERMANY Commercial Infrastructure ● World Bank (WB) Infrastructure Index: 4.37 in 2018 ( source ) ● WB Logistics performance index: 1 in 2018 ( source ) ● Technological services trends: changes by 7% by 2019/20. ● Communication infrastructure is 106,400,000 in 2021 ● Mobile penetration is 83.37 Million in 2022 which is 81.9% of the population. ● Network readiness index is 76.11 ranked 8 ● Third place in the Bloomberg innovation index ● Internet infrastructure penetration 93 % in 2020-2021 https://networkreadinessindex.org/country/germany/ https://newzoo.com/insights/rankings/top-countries-by-smartphone- penetration-and-users https://www.bloomberg.com/graphics/2015-innovative-countries/ https://data.worldbank.org/indicator/IT.CEL.SETS?locations=DE https://datareportal.com/reports/digital-2022-germany Analysis: Overpass development costs in Germany rose faster than any other type of infrastructure in 2021. Since the price index was set at 100 in 2015, it has risen to 128.43 for overpasses, 124.75 for roads, and 126.25 for canals in 2021. Germany, located in the heart of Europe, is the continent's largest economy and most vital logistics hub, providing world-class infrastructure and cutting-edge logistics services. Sales revenues in the German IT industry will have increased by more than 20% by 2022, reaching 280 billion euros. As a result, the technology sector will increase at a rate that is 7 percentage points faster than Germany's nominal GDP over the same time. There is every reason to expect a prosperous and productive future if Germany's technology sector continues to build its successful model in these dimensions. The quality of an economy's infrastructure, particularly power and communications, is an essential factor in both domestic and foreign investment decisions. ( source ) Physical Factors Analysis:  Germany has roughly 650,000 km of road, of which 231,000 km are non- local roads. There are no speed limits on 65% of Germany's roadways, known as the Autobahn.  FTL and LTL containers are transported via ships, railways, trucks, and aeroplanes. German public transportation is efficient, convenient, and secure. Most German cities have train stations and bus stops. In addition, there are numerous additional possibilities for public transportation in Germany, such as the U Bahn, S Bahn, Ferry Boats, Domestic Air Travel, Bikes, Taxis, and Automobiles.  Distribution channels: 4

Market Target Country: GERMANY  e-commerce platform  retail stores  third-party retail sites  Products might be stored in country warehouses, making availability easier and saving time. Canadian experience in the country Canada and Germany have a deep and cordial relationship, which is reflected in our active international cooperation as well as our healthy economic and investment partnerships. Germany, the EU's largest economy and the world's fourth largest, is an important economic partner for Canada. With two-way merchandise commerce averaging $25.9 billion in 2021, Germany is Canada's largest merchandise export market in the EU and its fifth-largest trading partner internationally. In 2021, Canadian exports to Germany were valued $6.9 billion, while imports from Germany were worth $19.0 billion. The provisional entrance into force of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union has benefited Canadian and German businesses and residents since September 2017. The Youth Mobility Agreement (YMA) between Germany and Canada allows young Germans and Canadians aged 18 to 35 to spend up to a year in the partner country to get work experience, travel, or gain insights into culture and society. Info Source : https://www.international.gc.ca/country-pays/germany-allemagne/ relations.aspx?lang=eng Analysis: Germany is the largest country in the EU, with a population of 83.5 million people. The country's large market size, economic and political stability, and friendly business environment make it an appealing market for Canadian exporters. Germany is known for its robust corporate infrastructure and capacity to support innovation, with Berlin serving as a startup centre. The likelihood of government meddling in commercial matters is extremely low, and governance indices, institutional quality, and the regulatory environment are among the best in the world. Via our local representative in Düsseldorf, Export Development Canada (EDC) helps Canadian firms in Germany. Customer profile: Wealth and ability to pay Income level: Ranked sixth according to OECD Disposal income: US$38,971 Info Sources: https://www.oecdbetterlifeindex.org/countries/germany/ https://www.dw.com/en/germany-what-poverty-looks-like-in-a-rich-country/a- 5

Market Target Country: GERMANY 63393501 Analysis : Germany's consumer expenditure in 2021 is expected to be $2,097.99 billion, a 7.2% rise from 2020. Germany was placed 20th in the world in terms of GDP per capita in 2021. This implies that if you sum up the worth of all products and commodities produced in a nation and divide the total by the population, you obtain an average of $50,700 (€52,200) per person each year in Germany. Product fit with customer preferences Analysis : The German fashion market is a key component of consumer life in Europe's largest economy. The customers are aged between 25 to 34 who follow current fashion trends. A typical winter outfit in Germany includes a pair of warm pants, a sweater, a coat, and a pair of sturdy shoes. Germans will also wear a scarf, hat, and gloves if the weather is very chilly. Roots goods are made of high-quality materials and appealing textiles, which adds to the wearer's comfort. Germany always demands its items to be of excellent quality and current enough to fit in with its sense of style. https://www.statista.com/topics/9055/fashion-in-germany/#topicOverview Strength of demand for product service Roots has long worked with environmental organisations such as Friends of the Earth, Canadian Wildlife Federation, Environmental Defense, World Wildlife Fund, David Suzuki Foundation, and the Toronto Green Awards to safeguard the environment which showcase them as responsible organization. Analysis : It is one of the top Canadian clothing companies in terms of both style and product quality. Consumers of all income levels are drawn to the company's long-lasting, low-cost products, proving the company's dedication to providing the best products on the market. Consumers' purchasing decisions are largely impacted by brand value, and with so many prominent businesses selling branded clothes in the German market, Roots Canada may face hard competition. Info Sources : https://ivypanda.com/essays/roots-canada-companys-strategic-analysis/ Competitive barriers to entry Analysis Among so many German brands, Roots Canada's product distinguishes out 6

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Market Target Country: GERMANY because it is made of soft jersey material and features the familiar cooper beaver logo. To acquire a presence in the German market, the corporation may need to create brand awareness in the eyes of consumers. While exporting to Germany, enterprises must overcome many tariffs and non-tariff trade obstacles. For example, laws controlling customs and tariffs, non-tariff restrictions, and bans and constraints on the export of products, services, and intellectual property. https://www.trade.gov/country-commercial-guides/germany-market-entry- strategy Regulatory barriers to entry Analysis : Germany's relatively high marginal tax rates and convoluted tax regulations may be an impediment for investors, while deductions, exemptions, and write-offs assist to reduce effective tax rates to internationally competitive levels. Germany's rules and bureaucratic procedures may be a significant barrier for enterprises looking to join the market and need exporters to pay special attention. Complicated safety regulations, which are not generally discriminatory but are occasionally strictly enforced, hinder market entry for many items. Yet, the long-term trading connection between the Canadian and German governments, as well as the CETA trade agreement, reduce tariffs and make it simpler to export goods and services between the two nations. Additionally, regulatory constraints in the sneaker industry must be studied further. https://www.trade.gov/country-commercial-guides/germany-market-entry- strategy Macro-Environmental Analysis (Porter 5 Forces Model, 4Cs Model) 5% Using research on the country of interest use Porter’s 5 Forces model and the 4 C’s Model ( Clients, Cost, Communications and Convenience) to collect and analyze data for making executive decision for potential export market opportunities . Client (as related to the product) What are the customer needs and wants in relation to your product? Analysis: According to studies, German consumption in the winter clothing sector is becoming increasingly design-focused. Fashion has a greater effect on purchase decisions than utility or need. The customers seek various parameters such as durability, washability, insulation value, etc. while purchasing the jacket which is fulfilled through the Seymour jacket of Roots. Info Source: https://www.fortunebusinessinsights.com/winter-wear-market- 104622 What unique position does your product fill? (Price Focused VS Differentiation). How Analysis: Majority of the items are manufactured from sustainable materials. Roots uses a variety of natural fibres and materials in their products to be closer to nature and 7

Market Target Country: GERMANY does it compare with the competitors? What is its competitive advantage? contribute towards a brighter future for our world. They are also created from natural materials, sourced from farms addressing the effects of overgrazing, which may lead to barren land, erosion, and desertification, and from responsibly-sourced wool, supplied from farms dedicated to the 5 Freedoms of Animal Welfare which place them in a unique position in the market. Info Source : https://www.roots.com/ca/en/our-materials.html How would customers in target market perceive the product? Analysis: Roots products are popular among customers due to its high degree of quality, comfort, and craftsmanship. Roots is about how people feel when they wear Roots apparel and how our real items feel. The major components of Root's product strategy are patterns, materials, and logo design, and their distinct style is what pulls purchasers to their offers. Foreign manufacturers dominate most of the German apparel market. Hence this product would be perceived very highly by the target market customers. Info Source : https://www.similarweb.com/website/roots.com/#overview Consider parameters such as product variety, design, sizes, varieties, labeling and packaging as well as services and warranties when looking at client needs. Analysis: Germany loves to buy products that are one-of-a-kind, maybe unique to them, and difficult to get in most retailers. Consumers place a premium on unusual patterns, colors, and textiles. Therefore, selecting a sustainable brand is critical. The company's major positioning tool is its logo, the beaver. The emblem helps clients recognize the business as a typical Canadian brand. The firm has Canadian value as well, which supports its position as a domestic brand. This Classic Fit is designed for comfort. Not too close to the body, but not too far away. It has an enormous plaid check and a longer length for added warmth. This item is manufactured of 55% wool, 32% polyester, and 13% acrylic. It comes in five different sizes: extra small (XS), small (S), medium (M), large (L), and extra-large (XL). This product's primary distinguishing features are: • Cozy wool blend • Funnel neck • Zipper pockets • Zipper closure at front – which creates a cool look. The objective of the firm is to respect the culture in all places where it works, to comply with local laws and regulations, and to respect its people who are entrusted with making the company's products. https://ivypanda.com/essays/roots-canada-companys-strategic-analysis/ Cost (as related to the product) How would customers on each market perceive the product? Pricewise, perception map Analysis: Price: Ranging from $125 to $198 throughout Canada. Price is equal to average, The company prices its items consistently, whether they are offered online or in retail shops. The pricing strategy of the firm is 8

Market Target Country: GERMANY defined by the type of product. Items for the general market are less expensive than those for the wealthy. Product costs vary according on size and intended market. Aritzia, Canadagoose, Arc'teryx, Holt Renfrew, Barneys New York, Reformation, ZARA, Lauren James, Tobi, Indigo Books & Music, Gap, and H&M are among Roots' top 12 competitors. They have raised over 1.9 billion dollars amongst their estimated 302.2K workers. Roots employs 2,044 people and is rated ninth among its top ten competitors. The top ten contestants had an average of 23,403. Price competition will be medium. Info Sources : https://www.owler.com/company/roots Consider parameters such as product variety, design, sizes, varieties, labeling and packaging as well as services and warranties when looking at client needs. Analysis: Roots must give retailer warranties against product flaws and workmanship. Environmental consciousness is widespread among German customers. This is reflected in consumption, with the creation of organic products, veganism, the use of less energy, and so on. Internet shopping has become the standard in Germany, and the country now boasts the largest online market in Europe. German customers are among the world's most demanding. Some customers are ready to spend a higher price for a higher quality goods. https://www.thecanadianencyclopedia.ca/en/article/roots-canada-ltd How much would the customer pay for the product? Will the market be profitable at that price? Price range CAD $ 125 to $ 198 Info Sources : https://www.similarweb.com/website/roots.com/competitors/ Analysis: Roots is recognised for delivering low-cost items, with most shoes and accessories falling under the mid-range price bracket. The brand's pricing are often cheaper than those of comparable premium brands, giving them a more affordable alternative for many clients. Communication (as related to customers) How does the customer communicate? Where do they get their information from? Analysis: The official Roots Canada website provides product information, allowing the brand to engage with its target audience. Fashion magazines are not the only places to find references to social groups. Social networks are also important such as: •Facebook •YouTube •Instagram https://yuanshenzhu.weebly.com/uploads/4/7/3/7/47375343/ roots_marketing_report.pdf Are there different segments that require different methods of Analysis: In this generation, the organization could communicate to its audience through online platforms to all segment of customers because of the advancement in the 9

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Market Target Country: GERMANY communication? technology. Consumers can access a collection of frequently asked questions (FAQs) online. However, Roots can market via billboards and banners in areas where internet access is limited. With the expanding number of internet users in Germany, they may communicate with them through online adverts or videos. https://yuanshenzhu.weebly.com/uploads/4/7/3/7/47375343/ roots_marketing_report.pdf How would you effectively communicate the value of your product to the customer and what would cause them to engage with your firm? Analysis: To successfully interact with clients, the corporation should optimise the use of all prominent marketing channels in the nation while also focusing on Brand Awareness. Almost 90% of consumers are more inclined to purchase from businesses that provide tailored experiences. Clothing retailers and manufacturers may tailor their marketing tactics to each stage of the client journey. Roots, a Canadian clothing store, is expanding its worldwide relationship with new and existing customers through its internet channel. Roots has deployed IBM® WatsonTM Customer Experience Analytics to obtain fine- grained insights and respond faster to better the digital experience for online shoppers from browsing to purchasing. https://www.ibm.com/case-studies/roots-watson-customer-engagement-retail- digital-experience Convenience (as related to place) Is there a place (channel) the customer traditionally buys the product in their country? Can this be improved or changed? Local chains, retail stores, e-commerce, shopping complex Analysis: Roots may continue to market the brand in Switzerland because online purchasing is more popular than in-store shopping. While there are numerous retail enterprises in the home country, there are few in international markets. This may be improved by gradually shifting from Switzerland's online selling to the development of new brick-and-mortar businesses as the economy expands. Info Sources : https://www.similarweb.com/website/roots.com/competitors/ Would there be any sort of barrier that would prevent your customer from accessing your product in any of the markets? How would you overcome this? Analysis: The most significant hurdle might be if the EU imposes barriers or new laws and regulations that harm the garment business. The European Union is worried about product safety and how it may effect consumers. Furthermore, the EU imposes a variety of taxes on various items. Yet, because Roots makes environmentally beneficial items and the Canadian government has a strong trading relationship with Germany, the EU will have no difficulty entering the 10

Market Target Country: GERMANY German client market. Would a specialized outlet be preferable for your product, or would it be better to use multiple outlets? How would you access the required outlets? Analysis: Indeed, having numerous locations is normally preferable since it allows clients from all cities to visit the business without having to drive a big distance. Customers may also use online sites due to the simple shipping and return policies given. Yet, due to technological limitations, people may be unaware of how to access an online site, reserve a product, or make a payment. All of this may occasionally cause a stumbling block in the market. It is surmountable if the firm provides clear directions on how to navigate their website, which would be extremely beneficial to the business in overcoming these difficulties. What type of customer support is required? How would you provide it? Analysis: Customers require assistance when picking items online or in-store, and they may want to know about the availability of sizes and materials utilised, the longevity of the products, and discounts and warranty information. As a result, I advocate appointing experienced employees to assist them with these criteria, and for the web site, we may form a customer care team to assist clients. What coverage (e.g. number of cities or towns in the country) is required and how would you access them? Analysis: Berlin, Frankfurt, Düsseldorf, Cologne, Munich, and Hamburg are among Germany's wealthiest cities, thus they should be prioritized. China has one of the greatest road/train systems, so connecting and accessing will be simple. 11