SUSTAINABLE

COMPETITIVE
ADVANTAGE
DONE BY, J YOGALAKSHIMI
Retailer Develops 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
Sources of Competitive
Advantage
MORE SUSTAINABLE LESS SUSTAINABLE
Location Better Computers
Customer Loyalty More Employees
Customer Service More Merchandise
Exclusive Merchandise Greater Assortments
Low Cost Supply Chain
Management
Lower Prices
Information Systems More Advertising
Buying Power with More Promotions
Vendors Cleaner Stores
Committed Employees
Sustainable Competitive
Advantage
Final element in a retail strategy
Retailer builds a wall around its position in a
retail market
By building a high thick wall retailers
sustain their advantage, minimize
competitive pressures, and boost profits for
a longer time
Sustainable Competitive Advantage is the
key to positive long-term financial
performance
Seven Ways to Develop an
Advantage
Customer Loyalty
Location
Human Resource Management
Distribution and Information Systems
Unique merchandise
Vendor Relations
Customer Service
 Customer Loyalty
Customers are committed to buying merchandise and services from a
particular retailer. Having customer loyalty is an important method of
sustaining an advantage over competitors
Ways to build loyalty
Develop a strong brand image
Develop a clear and precise positioning strategy
Create an attachment with customers through loyalty programs

Less Sustainable
Habitual repeat purchasing
Repeat purchases because of limited competition in the local area

More Sustainable
Building a brand image with an emotional connection with customers
Uses a database to develop and utilize a deeper understanding of customers
Location
Location is the critical factor in
consumers selection of a store

More Sustainable
Convenient locations

Example: Once Walgreens has put a store at

the best location at an intersection, CVS is
relegated to the second best location. People
are more likely to shop by where they live
and by what is more convenient for them.
 Human Resource
Management
Employees are key to build a sustainable competitive advantage
Strategies for Recruiting and Retaining Talented Employees
Employee Branding
Develop positive organizational culture
Successful companies know that to be successful you must have a strong
employee base because they play a major role in providing services for
customers and building customer loyalty.
Less Sustainable
More employees

More Sustainable
Committed
Knowledgeable employees
Distribution and Information
Systems
Flow of Information
By decreasing costs here,
Vendor
there is more money available
Distribution Center to invest in:

Store
-Better services
-Increase in breadth and depth
-Decrease in prices
 The use of sophisticated distribution and
information systems offers opportunity
for retailers to achieve efficiencies.
Less Sustainable
Bigger warehouses
Automated warehouses

More Sustainable
Shared systems with vendors
Unique Merchandise
Less Sustainable
More merchandise
Greater assortment
Lower price
Higher advertising budgets
More sales promotions
More Sustainable
Exclusive merchandise
Private Label Brands (store brands)
Products developed and marketed by a retailer
and available only from that retailer
 Vendor Relations
Less Sustainable
Repeat purchases from vendor due to limited alternatives
More Sustainable
Coordination of procurement efforts

Ability to get scarce merchandise

Develop strong relations with vendors, retailers may gain exclusive
rights to
1. Obtain special terms of purchase that are not available to
competitors who lack such relationships
2. Receive popular merchandise in short supply

3. Sell merchandise in a specific region

Retailer and vendor relationships are developed over a long period of
time
 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
Customer Service
Less Sustainable
Hours of operation

More Sustainable
Knowledgeable and helpful salespeople
Excellent customer service
Hard to build a good customer service
reputation
Takes considerable time and effort with
customers
 Multiple Sources of
Advantage
Retailers typically do not rely on a single
approach, such as low cost or excellent
service
They need multiple approaches to build as
high a wall around their position as possible.
Good value
Good customer service
Brand name
Great locations
Growth Strategies

Target Markets
Existing New

Existing
Market Market
Penetration Expansion
Retail Format

Diversification
Format
New

(unrelated/
Development
related)
Growth Strategies

Market Penetration
Market Penetration Growth
Opportunity- directed toward existing
customers using the retailers present
retailing format
Ex. Opening more stores in the target market.
Cross-selling- sales associates sell items
that are not in their department
Ex.Electronics Associate take a customer to
clothing and sells them a pair of pants.
Growth Strategies

Market Expansion
Market Expansion Growth Opportunity- directed
toward new customers using the retailers
present retailing format
Ex. Dunkin Donuts opening outside the US
Retail Format Development
Retail Format Development Growth Opportunity -
directed towards existing customers using the
retailers newly developed retailing format
Ex.
Tesco having both Tesco Metro and Tesco
Express stores
Growth Strategies

Diversification
Diversification Growth Opportunity-
directed toward new customers using the
retailers newly developed retailing format;
either Related or Unrelated
Related Diversification Growth
Opportunity- retailers present target
market or retail format shares something in
common with the market or format being
considered
Growth Strategies

Diversification
Unrelated Diversification Growth
Opportunity- retailers present target
market or retail format and its new market
or format have nothing in common
Vertical Integration- retailers go into
wholesaling or manufacturing
Global Growth
Opportunities
Attractiveness of International Markets
Only 12 of the 50 largest retailers
internationally have stores in one country.
Two Factors used to determine the
Attractiveness of Different International
Opportunities
Potential Size of Retail Market in the country
Degree of Support form the country
See Exhibit 5-5 (page 126)
Global Growth Opportunities

Keys to Success
Globally Sustainable Competitive Advantage
Mostsuccessful when then expansion opportunity
builds on the retailers core bases of competitive
advantage
Ex. Walmart
Someretailers have a competitive advantage due to
emulation of American culture
Adaptability
Retailers
realize they must adapt their core strategy
and store designs/layouts to the needs of the local
market
Ex. Color preferences, sizes
Government regulations and cultural values may also
affect how a store is operated.
Global Growth Opportunities

Keys to Success
Global Culture
Retailers must thing globally
Ex. Carrefours global management structure
Financial Resources
Long-term commitment with considerable up-
front planning
Can be difficult to generate short-term profits.
All stores initially have difficulty achieving
success in new global markets
Global Growth Opportunities

Entry Strategies
Direct Investment
Retailfirm invests and owns a retail operation in
a foreign country
Joint Venture
Enteringretailer teams up with a local retailer to
form a new company in which profits are shared
Strategic Alliance
Collaborativerelationship between two firms for
a single project
Franchising
THANK
YOU