Retail Strategy
Retail Strategy
Retail Strategy
Chapter 5
Retail Marketing Strategy
Retailing Strategy
Retail Locations Chapters 7,8 Human Resource Management Chapter 9
Tactical
Implementation
Strategy statement
Broad Unstructured Problem solving Creativity External focus Irregular
Annual plan
Specific, detailed Structured Problem solving Analytical Internal focus Regular
Long-term
Difficult to evaluate
Note:
PPT 5-5
Short-term
Easy to evaluate
Target Market
Customer Needs
Retail Format
PPT 5-6
Strategy
Target Market Woman 35 to 55 Who Want Comfortable, Casual, But Stylish Apparel Retail Format Specialty 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
PPT 5-7
Target 7 Eleven
Olive Garden
What is the target market, retail offering, and source of competitive advantage for each retailer?
PPT 5-9
PPT 5-12
Attractiveness -Large, Growing, Little Competition More Profits Consistent with Your Competitive Advantages
PPT 5-14
PPT 5-15
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?
Vendors, Suppliers
Customers
PPT 5-16
Sources of Capital
PPT 5-17
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
Loyalty
What does loyalty mean? Is It the same as liking a store? Going to the store frequently?
PPT 5-18
Unique Positioning Customer Service Information About Customers (Database Retailing) Unique Merchandise Location
PPT 5-19
Example of Positioning
PPT 5-20
Frequent
Massive Exposure Symbols to Reinforce Image Consistent Positioning Creating Strong Associations Limited Brand Extensions
PPT 5-22
Vendor Relationships
PPT 5-23
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
PPT 5-24
Growth Opportunities
Market Penetration
Market Expansion
Retail Format Development Diversification
Growth Opportunities
PPT 5-27
Europe China
PPT 5-28
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
PPT 5-29
PPT 5-30
COMPETITIVE FACTORS Barriers to entry Bargaining power of vendors Competitive rivalry Threat of superior new formats
ENVIRONMENTAL FACTORS
PPT 5-32
Competitive Rivalry
Large Customers
Threat of Substitution
PPT 5-34
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
Locations
Merchandising Capabilities:
Knowledge and skills of buyers Relationships with vendors Capabilities in developing private capabilities
PPT 5-35
Customers
Loyalty of customers
Illustration of the Strategic Retail Planning Process Kelly Bradford Owner of Gifts To Go
Two Store Chain in Chicago Target Market Upper Income Men and Women Looking for Gifts between $50 and $500 Strong Customer Loyalty Based on Knowing What Customers Want, Providing Good Customer Service Low Turnover Among Associates
PPT 5-36
PPT 5-37
Market Factors Chicago is an attractive market. (+) Relatively expensive gifts are not affected much by the economy. (+) Gifts are highly seasonal. (-) Competitive Factors Many in area. Primary department stores, craft galleries, catalogs, and Internet retailers (-) Lack of large suppliers, customer (+) Opportunities for differentiation (+) Limited competitive rivalry. (+)
PPT 5-38
Environmental Factors
Potential Threat - Development of electronic channel by traditional bricks and mortar retailers (-)
Management Capability Limited Financial Resources Good Operations Poor Merchandise Capabilities Good Store Management Capabilities Excellent Locations Excellent Customer Loyalty Good Customer Database - Good
PPT 5-39
Market Expansion
Open gift stores outside Chicago area Sell lower priced gifts in present stores
PPT 5-40
Sell non-gift merchandise to same customers in present or new stores Sell similar gifts to same customers through an electronic channel Manufacture craft gifts Open an apparel store targeting teenagers Open a category killer store selling a broader assortment of gifts
Diversification
PPT 5-41
Market Penetration
Market Expansion
Increase size of present stores (low) Open additional gifts stores in Chicago area (medium) Open gift stores outside Chicago area new geographic segment (medium) Sell lower priced gifts in present stores new benefit segment (medium)
PPT 5-42
Market Attractiveness
Sell non-gift merchandise to same customers in present or new stores (High) Sell similar gifts to same customers through an electronic channel (High) Manufacture craft gifts (High) Open an apparel store targeting teenagers (High) Open a category killer store selling a broader assortment of gifts (High)
Diversification
PPT 5-43
Market Expansion
Open gift stores outside Chicago area (Low) Sell lower priced gifts in present stores (low)
PPT 5-44
Sell non-gift merchandise to same customers in present or new stores (Low) Sell similar gifts to same customers through an electronic channel (Medium) Manufacture craft gifts (Low) Open an apparel store targeting teenagers (Low) Open a category killer store selling a broader assortment of gifts (Low)
Diversification
PPT 5-45
Medium
Invest to challenge leader
Low
Opportunities investment Build strength or exit
Market Attractiveness
Consolidate position
Aggressive investment
Selective investment
Build on strengths Protect position Manage for cash generation
Cautious investment
Harvest or divest
Cautious investment
Harvest or divest
Harvest or divest
PPT 5-46
PPT 5-47
Germany 82 10 Good
PPT 5-48
PPT 5-49
PPT 5-50
PPT 5-51
Mexico
Argentina
Peru
Venezuela
Low
Medium
High
RISK
PPT 5-52
Source: Coopers & Lybrand Analysis, Global Retailing: Assignment Latin America, Chain Store Age Executive, April 1996, seciton 2, p. 4.
Low
ITALY FRANCE
GERMANY
LUXEMBOURG BELGIUM PORTUGAL
IRELAND
GREECE DENMARK
GROWTH
PPT 5-53
Weight
Growth
Vendor power Competitive intensity Social trends Score
20
15 20
4
5 4
3
4 3
6
10 10
5
9 2
4
2 5
8
1 2
6
8 10
25
10
5
540
5
445
6
720
6
505
6
485
4
435
9
805
PPT 5-54
Factors Location Vendor relationship Costs Skills of buyers Image with customer Score 20 25 20 10 25 100 9 8 8 6 8 800 9 7 8 7 8 785 8 5 5 5 5 560 6 7 6 9 6 655 4 4 3 5 5 415 2 3 1 4 2 225 4 7 7 8 8 675
PPT 5-55
High
Medium
Soft home
Low
High
Market Attractiveness
667
Mens clothing
Womens clothing
Medium
Childrens clothing
Low
333
Juniors clothing
Furniture
Consumer electronics
1,000
PPT 5-56
667
333