Lesson 5 - Retail Market Strategy

RETAIL MARKE T STRATE GY
Thursday, January 16, 14
What is a retailing strategy? How can a retailer build a sustainable competitive advantage? What steps do retailers go through to develop a strategy? What different strategic growth opportunities can retailers
pursue?
What retailers are best positioned to become global

retailers?
L I A RET KET R A Y M G E T A R ST
ELEMENTS OF RETAIL STRATEGY

Target Market the market segment(s) toward which the retailer plans to focus its resources and retail mix Retail Format the nature of the retailers operations its retail mix Sustainable Competitive Advantage an advantage over the competition
Target Market? Retail Format? Sustainable Competitive Advantage?
TARGET MARKET AND RETAIL FORMAT

A retail market is a group of consumers with similar needs (a market segment) and a group of retailers that satisfy those needs using a similar retail format.
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
SEGMENTS
TRADITIONAL TRENDY
RETAIL FORMAT
SPECIALTY STORE
DEPARTMENT STORE
OFF PRICE RETAILER
QUESTION
If SM Store decides to focus upon
a limited set of markets for womens apparel, which should it pursue? What should the retail strategy be for that target market?
BUILDING SUSTAINABLE COMPETITIVE ADVANTAGE

builds a wall around its position in a retail market IS PRICE A SOURCE OF SCA? DOES OFFERING MORE MERCHANDISE PROVIDE SCA? all advantages erode due to competitive forces so build
high walls
DEVELOPING SUSTAINABLE COMPETITIVE ADVANTAGE

1. Building strong relationships with customers 2. Building strong relationships with suppliers 3. Achieving efficient internal operations.
BUILDING CUSTOMER RELATIONSHIPS CUSTOMER LOYALTY

a particular retailer - reluctant to buy from others 1. Developing a strong brand image 2. Having a clear and consistent positioning 3. Providing outstanding customer service
not simply liking - committed to buying merchandise and services from
4. Undertaking customer relationship management (CRM) programs.
L I A T RE KET R A Y M G E T A R ST
Developing a strong brand image
Well known and attractive image of

brand and name
Favorable beliefs about brand

How does it facilitate loyalty?
Reduce risk Emotional tie with a customer

that leads the customer to trust the retailer
Developing a strong brand image
Well known and attractive image of

brand and name
Favorable beliefs about brand

How does it facilitate loyalty?
Reduce risk Emotional tie with a customer

that leads the customer to trust the retailer
Positioning
The design and implementation of a

retail mix to create an image of the retailer in the customers mind relative to its competitors.
Perceptual Map
Unique Merchandise
Not just carrying National Brands

but Private Label Brands (Store Brands or Own Brands)
Unique Merchandise

Unique Merchandise

Unique Merchandise

Customer Service
Difficult to Achieve People Are Not Machines -Inconsistent
Retail Sales Associates At

Bottom of Labor Pool
Goes Beyond Hiring Good People
at High Wages and Training Them -- Organizational Culture
CRM Programs
or Loyalty or Frequent shopper
programs, are activities that focus on identifying and building loyalty with a retailers most valued customers.
Rewards based on amount or

merchandise purchased
May appear not to provide SCA
but the information you get gives personal relationship
BUILDING SUPPLIER RELATIONSHIPS

Low Cost - Efficiency Through Coordination Electronic Data Interchange (EDI) Collaborative Planning and Forecasting to Reduce Inventory and Distribution Costs Special Treatment Early Delivery of New Styles Shipment of Scare Merchandise Exclusive Sale of Desirable Brands/Collaboration with Vendors
EFFICIENT INTERNAL OPERATIONS

HUMAN RESOURCES
DISTRIBUTION AND INFORMATION SYSTEMS
Employees are key to build a sustainable competitive advantage Strategies for Recruiting and Retaining Talented Employees Employee Branding Develop positive organizational culture Through its data sharing about merchandise sales, information flows
seamlessly from Walmart to its vendors to facilitate quick and efficient merchandise replenishment that avoids costly stockouts. Tailor store merchandise assortments and promotion
LOCATION
Location is a critical opportunity for developing competitive advantage 1. The most important factor determining which store a consumer patronizes 2. It is not easily duplicated
MULTIPLE SOURCES
Building more than one - greater walls
MULTIPLE SOURCES
MULTIPLE SOURCES
GROWTH STRATEGIES
Market Penetration
directed toward existing customers using the retailers present retailing form
attracting new consumers from current target market who dont patronize the retailer currently get current customers to visit the retailer more often or buy more merchandise on each visit.
open for longer hours. displaying merchandise to increase impulse purchases training salespeople to cross-sell.
Market Expansion
using the retailers existing retail format in new market segments
Market Expansion
Market Expansion
Market Expansion
Develops a new retail format with a
Retail Format Development
different retail mix for the same target market
Diversification
New format for a new market segment Related - retailers present target Unrelated - as little commonality
between the retailers present business and the new growth opportunity
market or retail format shares something in common with the new opportunity.
Vertical Integration
Diversification
New format for a new market segment Related - retailers present target Unrelated - as little commonality
between the retailers present business and the new growth opportunity
market or retail format shares something in common with the new opportunity.
Vertical Integration
GLOBAL GROWTH OPPORTUNITIES
ATTRACTIVENESS OF INTERNATIONAL MARKETS
the potential size of the retail market in the country

and
the degree to which the country does and can

support the entry of foreign retailers.

and


and

local shops, owner-operated

INDIA
general stores, convenience stores, and handcart and street vendors. shops and independent shops (kirana) partner with Indian firm
Most prefer to shop in open
Restricts foreign investment Thursday, January 16, 14
More open than India Increasing operating costs Lack of managerial talent Underdeveloped and inefficient
supply chain
CHINA
KEYS TO SUCCESS IN GLOBAL MARKETS
GLOBALLY SUSTAINABLE COMPETITIVE ADVANTAGE
H&M, Forever 21, Uniqlo - low priced fast fashion
ADAPTABILITY adjust to taste and preference of target market
Merchandise Peak selling period - School Supplies (August - US, but not in Europe, April in Japan but not in the Philippines) Store Layout and Design Culture
ENTRY STRATEGIES
DIRECT INVESTMENT
a retail firm invests in and owns a retail operation in a foreign country highest investment and greatest risk
ENTRY STRATEGIES
DIRECT INVESTMENT
a retail firm invests in and owns a retail operation in a foreign country highest investment and greatest risk
ENTRY STRATEGIES
JOINT VENTURE
The entering retailer pools its resources with a local retailer to form a new company in which ownership, control, and profits are shared reduces the entrants risks sharing the financial burden, understanding of market, local resources
ENTRY STRATEGIES
JOINT VENTURE
The entering retailer pools its resources with a local retailer to form a new company in which ownership, control, and profits are shared reduces the entrants risks sharing the financial burden, understanding of market, local resources
ENTRY STRATEGIES
FRANCHISE
lowest risk and requires the least investment.
ENTRY STRATEGIES
FRANCHISE
lowest risk and requires the least investment.

Lesson 5 - Retail Market Strategy

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Lesson 5 - Retail Market Strategy

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RETAIL MARKE T STRATE GY

Thursday, January 16, 14

What retailers are best positioned to become global

ELEMENTS OF RETAIL STRATEGY

Target Market? Retail Format? Sustainable Competitive Advantage?

Thursday, January 16, 14

Thursday, January 16, 14

TARGET MARKET AND RETAIL FORMAT

Thursday, January 16, 14

OFF PRICE RETAILER

OFF PRICE RETAILER

OFF PRICE RETAILER

OFF PRICE RETAILER

OFF PRICE RETAILER

OFF PRICE RETAILER

Thursday, January 16, 14

BUILDING SUSTAINABLE COMPETITIVE ADVANTAGE

Thursday, January 16, 14

DEVELOPING SUSTAINABLE COMPETITIVE ADVANTAGE

Thursday, January 16, 14

BUILDING CUSTOMER RELATIONSHIPS CUSTOMER LOYALTY

not simply liking - committed to buying merchandise and services from

4. Undertaking customer relationship management (CRM) programs.

Developing a strong brand image

Well known and attractive image of

Favorable beliefs about brand

Reduce risk Emotional tie with a customer

Thursday, January 16, 14

Developing a strong brand image

Well known and attractive image of

Favorable beliefs about brand

Reduce risk Emotional tie with a customer

Thursday, January 16, 14

The design and implementation of a

Thursday, January 16, 14

Thursday, January 16, 14

Not just carrying National Brands

Thursday, January 16, 14

Not just carrying National Brands

Thursday, January 16, 14

Not just carrying National Brands

Thursday, January 16, 14

Not just carrying National Brands

Thursday, January 16, 14

Thursday, January 16, 14

Difficult to Achieve People Are Not Machines -Inconsistent

Retail Sales Associates At

Goes Beyond Hiring Good People

at High Wages and Training Them -- Organizational Culture

Thursday, January 16, 14

Thursday, January 16, 14

or Loyalty or Frequent shopper

Rewards based on amount or

May appear not to provide SCA

but the information you get gives personal relationship

Thursday, January 16, 14

BUILDING SUPPLIER RELATIONSHIPS

Thursday, January 16, 14

Thursday, January 16, 14

Thursday, January 16, 14

Thursday, January 16, 14

EFFICIENT INTERNAL OPERATIONS

DISTRIBUTION AND INFORMATION SYSTEMS

Building more than one - greater walls

Building more than one - greater walls

Building more than one - greater walls

Thursday, January 16, 14