"Successful

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"Successful BaltikaGroup re-branding strategy.
"Mosaic" case in Lithuania".

• Daina Daubare
• September, 2007

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Baltika today

• Baltika Group is a rapidly growing fashion
  retailer in the Baltics and Eastern Europe
• four retail concepts
• 124 stores with shop floor space of 23,011 m2
  (June 2007)
• retail coverage of six countries
• vertically integrated business model
• The company aims to be the leading specialist
  fashion retailer in Central and Eastern Europe
• The Group employs 1,900 people
• Since 1997, it has been listed on OMX Tallinn
  Stock Exchange

Baltikas retail markets
CEE region
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Some history

• 1928  Gentleman is established in Tallinn
• 1959  The company is restructured and named
  Baltika 1988  The company starts to manufacture
  ladies clothes 1991  Baltika is privatised
  1991  The first gentlemens clothes collection
  Baltman 1993  The first ladies clothes
  collection Christine Collection (CHR)
• 1995  The Evermen collection is created 2002 
  Strategic changes are launched to make the
  company into a clothes retailing company 2002 
  Monton fashion brand is launched in five markets
  2006  The names of CHR and Evermen retail
  concepts are changed the new name becomes Mosaic
  2006  Baltika opens its 100th store 2006
   Baltika acquires an Estonian well known fashion
  brand Ivo Nikkolo 

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Vertical model in fashion business
? CUSTOMER ?
?
?
?
Heavy competition Differentiation speed counts
Retail company (net profit margin 3-7)
Retailer
V e r t i c a l (10)
Creating a brand - expensive complex
Brand manufacturer
Wholesale company (3-5)
Retailer makes the decision
Label manufacturer
China attacks
Product manufacturer (does not own label)
Production company (0-3)
Subcontractor
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Vertically integrated business model unique in
the Baltic's
Centralised management

• Centralised brand-based management product
  design, supply chain, logistics, etc.
• Efficient inventory control and sales information
  systems monitoring and analysis on a daily basis

Sourcing

• Own production base (four factories)
  specialisation in mens and womens tailored
  suits, shirts, jackets, coats (ca 40 of sales)
• Worldwide purchasing (ca 60 of sales)

Retail ca 80 of total sales
Wholesale ca 20 of total sales

• Distribution through wholesale to department
  stores in the Baltics, Finland and Eastern Russia

• A balanced portfolio of different brand store
  chains (Monton, Mosaic, Baltman and Ivo Nikkolo)
• Strong retail organisations in target markets

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Retail Brands

• trendy and fashionable fast fashion brand for
  ladies and men
• store format 350600 m2
• end 2008 65-75 stores
• possible franchising
• stylish and high-quality professional and smart
  casual apparel for women, men and children
• store format 200350 m2
• end 2008 65-75 stores
• enlargement of wholesale business
• stylish, classic and high-quality clothes for men
• store format 100130 m2
• end 2008 ca 30 stores
• premium level fashion brand for women

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Retail network
Baltikas retail markets
Preliminary data
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Sales division between retail concepts, 2006
56 yoy
39 yoy
31 yoy
Ivo Nikkolo other
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Why new name?

• Main reasons
• For the brand development, one name for menswear
  and womenswear was needed
• The brand has become international and more
  quality, new name should reflect that better
• Also
• The name was complicated to pronaunciate and
  difficult to remember, that is why in some
  countries Christine was used instead of CHR it
  has been making our marketing activities more
  complicated and expensive
• CHR/Evermen was not a brand, just combination of
  menswear and womenswear label
• No sole rights in Latvia

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The Process of Choosing the New Name

• International competition
• A choice made between several hundreds of names
• Evaluation from different markets feedback
• When comparing the logotypes of the names, we
  observed the values communicated by CHR/Evermen
  brand warmth, naturalness, self-confidence, joy
  of life and reliability
• The name needed to have a good international
  sound while being easy to pronounce and remember,
  visually distinctive and able to communicate the
  brands values

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CHR/Evermen became
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Baltika Lietuva

• 1993. First Baltman shop in Kaunas.
• 1996. Christine Collection and Respect brands
  for ladies clothing in Baltman shops
• 2002. Launched new fashion brand and retail chain
  Monton.
• 2003. Launched new fashion brand and retail
  concept CHR/Evermen.
• 2006. Re-branding of CHR/Evermen to Mosaic.
• 2007. Launched new fashion brand and retail
  concept Ivo Nikkolo.

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Baltika Lietuva shops
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Why Mosaic?

• Each item or object that we see has been pieced
  together from smaller pieces that connect with
  each other forming a whole entity.
• On an emotional and personal level, each human
  being is an individual comprised of different
  ingredients - character, thoughts, behavior,
  upbringing, preferences etc.
• Part of this individuality is clothing, which is
  an integral part of creating an impression.
  Clothing and the other components must harmonize
  to achieve equilibrium between outside and inside

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Mosaic target customer

• Age 35 years, majority of buyers should be
  30-40-year-old
• MC client woman, man, a person with family
  (children) and encoded sense of loyalty and
  traditions
• Occupation middle level manager, specialists
  (incl. private and public sector, doctors,
  teachers, white collar workers etc)
• Mindset stability, conservativeness,
  responsibility, respect for traditions, but still
  professionally and socially active and searching
  for harmony both at work and personal life
  member of different professional and social
  organisations.
• Need stylish clothing for feeling good at work
  and after 5 p.m.
• Important style, quality and comfort

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USP, differentiation and values

• USP is built upon clients needs
• stylish clothing for work at a competitive price
• targeted collection
• USP - contemporary stylish apparel for feeling
  good in the office and after 5 p.m.
• Keywords style, comfort, quality
• Values
• Warm
• Natural
• Happy
• Confident
• Reliable

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Mosaic launch

• Objective
• Keep the current clients and attract new clients
  to the stores
• Strategy
• 2006-1 transition period to connect CHR/Evermen
  to Mosaic
• 2006-2 new brand communication

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Communication Solutions for the transition period

• Idea
• Maintaining strong developmental linkage between
  the old and new names clearly demonstrating
  that CHR/Evermen is going to be Mosaic
• Used
• In retail outlets of the Baltika Group
• In media channels (depending on the country)

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Transition period communication in shops

• Wall behind the cash desk
• Stickers on the window
• Plastic bags
• T-shirts for sales assistants
• Catalogues
• Additional paper labels on every garment

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Mosaic Shop During the Transition Period
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Plastic bags
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T-shirts
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Catalogue (examples of different pages)
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Additional label on products
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Transition period communication in media channels

• Prind advertisements
• Outdoor
• TV clip

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Mosaic marketing communication

• Objective to become a strong international brand
  in our own targeted niche and with our own focus
• Very important shop environment, marketing
  communication and customer service (staff
  training set-based compatibility)
• The customer is more conservative -gt lower speed
  of achieving desired results -gt need for better
  targeted channels and stronger communication
• Image of styling brand Mosaic will help you
  look great advice for stylish wardrobe together
  with cosmetics, perfume etc
• Style Editor styling advice through one person,
  stylist
• Testimonials of the clients (famous and ordinary)
  local opinion leaders
• Local strong co-operation projects
  (communities, forums, www, events) through local
  opinion leaders and by word of mouth
• Marketing communication on different levels
  brand, market, city.

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Mosaic development
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Thank you!