Retail Market Strategy

Retail strategy

The overall plan or framework of action that guides a retailer

Strategic Direction Strategy statement Broad Unstructured Problem solving Creativity External focus Irregular Long-term Difficult to evaluate Note: Tactical Implementation Annual plan Specific, detailed Structured Problem solving Analytical Internal focus Regular Short-term Easy to evaluate

Success Comes for Having a Good Strategy and Executing It Well

What goes in the strategy ?

Elements in Retail Strategy

On a high level Retail strategy discusses Increase bottom line Target Market in terms of Customer Needs Retail Format as Method (how) for Satisfying Needs Bases for Building Sustainable Competitive Advantage

Why Does a Retailer Need to Focus on a Specific Target Market? Why Not Sell to Everyone?

Retail Market Opportunities for Womens Apparel

Methods for Segmenting Markets

Buying Situations Geographic

Benefits Sought

Lifestyle, Psychographics Demographics

Criteria For Selecting A Target Market

Attractiveness -- Large, Growing, Little Competition More Profits Consistent with Your Competitive Advantages

Competitive advantage

Can A Retailer Develop a Sustainable Competitive Advantage by:

Dropping the Price of Your Merchandise? Building a Store at the Best Location? Deciding to Sell Some Hot Merchandise? Increasing Your Level of Advertising? Attracting Better Sales Associates by Paying Higher Wages? Providing Better Customer Service?

Internal and External Bases for Competitive Advantage

Retail Firm Low Cost Large Size Efficient Distribution, Operations Unique Knowledge Loyal Employees

Vendors, Suppliers

Customers

Sources of Capital

Sources of Competitive Advantage

More Sustainable

Less Sustainable

Location Customer Loyalty Customer Service Exclusive Merchandise Low Cost Supply Chain Management Information Systems Buying Power with Vendors Committed Employees

Better Computers More Employees More Merchandise Greater Assortments Lower Prices More Advertising More Promotions Cleaner Stores

Mother care Strategy

Target Market
Early mothers or pregnant women, age group - 22 to 40 Who want everything required for toddlers, babies or wanna bies

Retail Format
Specialty Stores in Malls and Selling Private Labels, standalone stores, etc

Bases for Building Sustainable Competitive Advantage Please think What Threats Might mother care Face in
the Future? Or do a swot ?

Basis of Loyalty, Commitment

Costs
Location

Shopper Programs Unique Merchandise Mental, Emotional Attachment

Frequent

Creating Store Loyalty Mental and Emotional Attachments

Elements in a Strong Brand

Top of the Mind Awareness Associations with Brand/Store Name Massive Exposure Symbols to Reinforce Image Consistent Positioning Creating Strong Associations Limited Brand Extensions

Methods Used to Develop a Strong Brand

Critical Tradeoff In Developing Strategic Advantage

Focus Leads to Developing A Competitive Advantage But Focus Reduces Flexibility

Low Cost, Consistent Image, Vendor Relationships Reduces Flexibility Similar to Dating and Marriage Commitment to a Relationship (Vendor) Reduces Flexibility

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

High Quality Customer Service

Difficult to Achieve

People Are Not Machines Inconsistent

Goes Beyond Hiring Good People at High Wages and Training Them -- Organizational Culture

Growth Opportunities

Market Penetration
Market Expansion
Retail Format Development Diversification
- Related vs. Unrelated

Growth Opportunities

Key to Success in Global Retailing

Domestic market leadership strong base Exploiting core competencies competitive advantage

Low cost - Wal-mart, Carrefour Fashion Reputation - The Gap, Zara, H&M Category dominance - Toys R Us, Office Depot Unique Image, Brand Disney, IKEA, Starbucks

Adaptability Global Culture Long-term commitment

How to strategize ?

Process of Retail Strategy

Organizational Mission

Retailers commitment to a type of business and to a distinctive role in the marketplace

Elements in a Market Analysis

MARKET FACTORS

COMPETITIVE FACTORS

ENVIRONMENTAL FACTORS

ANALYSIS OF STRENGTHS & WEAKNESSES

Management capabilities Financial resources Locations Operations Merchandise Store Management Customer loyalty

Barriers to entry Size Bargaining power Growth of vendors Seasonality Business cycles Competitive rivalry Threat of superior new formats

Technology Economic Regulatory Social

The Focused Organizational Mission of Frischs Restaurants

Image and Positioning

An image represents how a given retailer is perceived by consumers and others

Positioning Approaches
Mass

merchandising is a positioning approach whereby retailers offer a discount or valueoriented image, a wide or deep merchandise selection, and large store facilities Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market

Selected Retail Positioning Strategies

Target Market Selection

Three techniques
Mass marketing Concentrated marketing Differentiated marketing

Strategic Implications of Target Market Techniques

Retailers

location Goods and service mix Promotion efforts Price orientation Strategy

Developing an Overall Retail Strategy

Controllable Variables: Store location Managing business Merchandise management and pricing Communicating with customer

Retail Strategy

Uncontrollable Variables: Consumers Competition Technology Economic conditions Seasonality Legal restrictions

Market Attractiveness/Competitive Position Matrix

High
Maximum investment

Medium
Invest to challenge leader

Low
Opportunities investment Build strength or exit

Market Attractiveness

Consolidate position

Selective investment
Build on strengths Protect position Manage for cash generation

Cautious investment

Harvest or divest

Aggressi ve investme nt Cautious investme nt

Harvest or divest

Harvest or divest

Minimal investme nt Competitive Position