retailing3r

8/7/2019 retailing3r

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Retail Strategy


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Strategy Is Over UsedRetailers Talk About A Lot of Different

Strategies

Sales Strategy

Advertising Strategy

Merchandise Strategy

Location Strategy

Strategy Is Not Just Another Term for

A Management Decision


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Strategic vs. Tactical Decisions

Strategic TacticalDirection Implementation

Strategy statement Annual plan

Broad Specific, detailed

Unstructured Structured

Problem solving Problem solving

Creativity Analytical

External focus Internal focus

Irregular Regular

Long-term Short-term

Difficult to evaluate Easy to evaluate

Note: Success Comes for Having a Good Strategy and Executing It Well


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Elements in Retail Strategy

1.Target Market

Retail Format

Bases for BuildingSustainable

Competitive

Advantage


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1. Target Market the market segment(s) toward which the retailer

plans to build a sustainable competitive

advantage.

1. Retail Format

is the retailers mix

1. Bases for Building Sustainable CompetitiveAdvantage

It is the distinctive edge (s) that company has

over the other players in the target market


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1. Target Market

Customer Needs

1. Retail Format

Method for Satisfying Needs

1. Bases for Building Sustainable Competitive

Advantage

a better value proposition to satisfying the

customer needs that the other players cannot

copy or very difficult to copy


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An Apparel Retailers Strategy

Target Market

Woman 35 to 55 Who Want Comfortable, Casual,

But Stylish Apparel

Retail FormatSpecialty Apparel Stores in Malls and Strip Centers

Selling Private Label, Coordinated Outfits

Bases for Building Sustainable Competitive Advantage

Unique Merchandise Sized 0,1,2,3


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Analyzing Traderjoes Retail Strategy

What Is Traderjoes:

-Target market?

-Retail offering (format)?

-Bases for competitive advantage?

What Threats Might Traderjoes in the Future?


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Why Does a Retailer Need to

Focus on a

Specific Target Market?

Why Not Sell to Everyone?


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Retail Market Opportunities for

Womens Apparel


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Segmentation


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Methods for Segmenting Markets

Demographics

Geographic

Lifestyle, Psychographics

Buying Situations

Benefits Sought


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Criteria For SelectingA Target Market

Attractiveness -- Large, Growing, Little

CompetitionMore Profits

Consistent with Your Competitive Advantages

C A R il D l


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Can A Retailer Develop aSustainable

Competitive Advantage by: Dropping the Price of his Merchandise?

Building a Store at the Best Location?

Deciding to Sell Some Hot Merchandise?

Increasing his Level of Advertising?

Attracting Better Sales Associates by

Paying Higher Wages?

Providing Better Customer Service?


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Internal and External Bases for

Competitive Advantage

Retail Firm

Low Cost

Large Size

Efficient

Distribution,

Operations

Unique

Knowledge

Loyal Employees

Sources of

Capital

Vendors,

Suppliers Customers


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Sources of Competitive

AdvantageMore Sustainable Location

Customer Loyalty

Customer Service Exclusive Merchandise

Low Cost Supply ChainManagement

Information Systems

Buying Power withVendors

Committed Employees

Less Sustainable

Better Computers

More Employees

More Merchandise Greater Assortments

Lower Prices

More Advertising

More Promotions

Cleaner Stores


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What does loyalty mean?

Going to the store frequently?

Is It the same as liking a store?

Loyalty


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Approaches for BuildingCustomer Loyalty

Unique Positioning

Customer Service

Information About Customers (Database

Retailing)

Unique MerchandiseLocation


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Example of Positioning


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Basis of Loyalty, Commitment

Costs

LocationFrequent Shopper Programs

Unique Merchandise

Mental, Emotional Attachment

t t t


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reat ng tore oya tyMental and Emotional

Attachments Elements in a Strong Brand

Top of the Mind Awareness

Associations with Brand/StoreName

Methods Used to Develop aStrong Brand

Massive Exposure

Symbols to Reinforce Image

Consistent Positioning CreatingStrong Associations

Limited Brand Extensions


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Vendor Relationships

Low Cost - Efficiency Through Coordination

Electronic Data Interchange (EDI)

Collaborative Planning and Forecasting to

Reduce Inventory and Distribution Costs

Exclusive Sale of Desirable Brands

Special Treatment

Early Delivery of New Styles

Shipment of Scare Merchandise


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High Quality Customer Service

Difficult to AchievePeople Are Not Machines -- Inconsistent

Retail Sales Associates At Bottom of LaborPool

Goes Beyond Hiring Good People at HighWages and Training Them -- Organizational

Culture


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Critical Tradeoff In DevelopingStrategic Advantage

Focus Leads to Developing

A Competitive Advantage

But

Focus Reduces Flexibility

Low Cost, Consistent Image, VendorRelationships Reduces Flexibility

Similar to Dating and Marriage Commitment to aRelationship (Vendor) Reduces Flexibility


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Growth Opportunities

Market Penetration

Market Expansion

Retail Format Development

Diversification

-Related vs. Unrelated


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Growth Opportunities

Steps in the Strategic


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Steps in the StrategicRetail Planning Process

1. Define the business mission

2. Conduct a situation audit:Market attractiveness analysisCompetitor analysis

Self-analysis

3. Identify strategic opportunities

5. Establish specific objectives and allocate resources

7. Evaluate performance and make adjustments

6. Develop a retail mix to implement strategy

4. Evaluate strategic alternatives


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Elements in a Market Analysis

0

0 0

MARKETMARKETFACTORSFACTORS

COMPETITIVECOMPETITIVEFACTORSFACTORS

ENVIRONMENTALENVIRONMENTALFACTORSFACTORS

ANALYSIS OFANALYSIS OFSTRENGTHS &STRENGTHS &

WEAKNESSESWEAKNESSES

Barriers to entry

Bargaining power of

vendors

Competitive rivalryThreat of superior

new formats

Technology

Economic

Regulatory

Social

Size

Growth

Seasonality

Business cycles

Management

capabilities

Financial resources

Locations

Operations

Merchandise

Store Management

Customer loyalty

Questions for


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Questions forAnalyzing the Environment

New developments or changes --

technologies, regulations, social

factors, economic conditions

Likelihood changes will occur

Key factors determining change Impact of change on retail market

firm, competitors


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Porters Five Forces

Competitive

Rivalry

BargainingPower ofVendors

Barriers toEntry

LargeCustomers

Threat ofSubstitution


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Strengths and Weaknesses Analysis

Management Capability:Capabilities and experience of top management

Depth of Management--capabilities of middle management

Managements commitment to firm

Financial Resources:Cash flow from existing business

Ability to raise debt or equity financing

Operations:Overhead cost structure

Quality of operating systems

Distribution capabilities

Management information systems

Loss prevention systems

Inventory control system

Merchandising Capabilities:Knowledge and skills of buyers

Relationships with vendors

Capabilities in developing private

capabilities

Store Management CapabilitiesManagement capabilities

Quality of sales associates

Commitment of sales associates to firm

Locations

CustomersLoyalty of customers

Market Attractiveness/Competitive


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Market Attractiveness/CompetitivePosition Matrix

Mar

ketAttractiv

eness

Competitive Position

High LowMedium

Maximum

investment

Consolidate

position

Invest to

challenge leader

Opportunities

investment

Build strength or

exit

Selectiveinvestment

Build on strengths

Cautiousinvestment

Harvestor

divest

Protect

position

Manage for cash

generation

Harvest or

divest

Harvest

or

divest

Aggressive

investment

Cautious

investment

Minimal

investment

Evaluation of Merchandise


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Evaluation of MerchandiseCategory Opportunities

1,0

00

MarketAtt

ractiv

eness

High LowMedium

Softhome

Mens clothing

Womens

clothing

Childrens

clothing

Consumer

electronics

1 000 667 333

Low

High

Medium

333

6

67

Juniors

clothing

Furniture

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