Academic journal article Business Case Journal

A Tale of Two Markets: NYC Subway Line

Academic journal article Business Case Journal

A Tale of Two Markets: NYC Subway Line

Article excerpt

Introduction

Lynne Lambert was lost in thought as she made her way through the crowded New York City sidewalk. She had just left the offices of the Metropolitan Transportation Authority (the "MTA") where she had once again been awarded an annual renewal of the license for use of New York City subway maps and graphics for her apparel business. Lynne had invested years of her life and her life savings in her small business, and she was at a crossroad. Her business, NYC Subway Line, had just passed a $1 million benchmark in annual sales (see Tables 2-3), but she was concerned about the future of her small enterprise. On one hand, her business was well-established in the New York City gift market, which was somewhat profitable but limited and under constant threat of competition from unlicensed counterfeits. On the other hand, she believed there was a much larger and potentially more lucrative urban-chic lifestyle apparel market. She had worked hard to establish the NYC Subway Line ("NYCSL") brand in this market, but she had a long way to go to achieve the success she needed.

Her company was a small operation and resources were limited. She slowed as she approached the subway steps. The economy was in the doldrums, and she needed to make some decisions. Should she give up on her dreams of turning her small company into a broadly-recognized brand and simply focus on the New York gift market? Could she make the major investment that might be required to grow as a lifestyle brand? Or should she simply sell off her assets and close her business without ever having reached her ultimate goals?

Industry Background

The New York City Gift Market

New York City was the largest city in the United States, with a population in 2008 of over 8 million people and over 18 million in the New York City Metropolitan Area (U.S. Census Bureau, 2010). As a major international tourist destination, New York City was visited by 46 million people in 2007, including 37 million domestic and 9 million international visitors who spent close to $29 billion (City of New York, 2009). The subway system was also one of the largest in the world, including average daily ridership of 4.9 million people on 6,200 subway cars and 660 miles of track, with 468 stations on 26 different subway routes (City of New York, 2009).

The New York City gift market could be broken into two major segments: the tourist market and a more upscale market for gifts purchased in more pricy shops, such as the gift shop of the Museum of Modern Art (MoMA). The gift market in New York City was served by a large diversity of retail outlets from the gift shops of such well-known tourist stops, as the New York Transit Museum and the rest of New York City's 86 museums (NY.Com, 2009), to the hundreds of gift stores lining New York's more frequented streets. Given the large number and enormous diversity of retail outlets, producers relied heavily on intermediaries, such as sales agents, to identify appropriate retail outlets, convince them to stock their products, take orders, ensure appropriate in-store product display and promotion, and provide ongoing sales support. Likewise, stores benefited from working with sales agents as a single point of contact for multiple product lines and manufacturers.

One of the largest trade shows for the gift market, the New York International Gift Fair, was held annually in New York City in August. The show attracted 36,000 buyers and 2,900 exhibitors, covering thousands of product lines. The show considered itself the premier gift and home accessories trade show in the U.S. and worked with industry trade groups such as the Gift Association of America and the Gift and Home Trade Association to ensure a successful experience for all trade participants involved (New York International Gift Fair, 2009).

To be successful in the tourist gift market, price competitiveness and wide distribution were paramount. …

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