BUILDING COMPETITIVE ADVANTAGE IN RETAILING The Eight Ways to Win BUILDING COMPETITIVE ADVANTAGE IN RETAILING The Eight Ways to Win! Lawrence J. Ring, Chancellor Professor & John S. Strong, CSX Professor of Finance & Economics Mason School of Business The College of William and Mary, Williamsburg, Virginia USA john.strong@mason.wm.edu (1)757-221-2864

The Eight Ways To Win In Retailing The Pentagon & The Triangle PLACE SYSTEMS COMMUNICATION PRODUCT LOGISTICS SUPPLIERS PEOPLE VALUE

Five Key Questions for Each Pentagon Corner Do we win? By how much? (a little or a lot?) Is it getting better or worse? (direction) Does anybody care? Is it sustainable?

Pentagon Concepts 8 Ways 2 Win Size PLACE Location

Notion of Inside Vs. Outside Draw 9 miles 6 miles 3 miles UPD = 1,000 persons/sq.m.

Pentagon Concepts 8 Ways 2 Win Size PLACE Location Layout & Design

Pentagon Concepts 8 Ways 2 Win PLACE PRODUCT Intensity Assortment

Merchandise Intensity and Sales Sales/Sq Ft Inventory/Sq Ft

A Strategic Approach to Inventory Management Old Game Convenience Assortments Competitive Dominant (Power) Differentiated (Focused) Velocity Opportunistic New Games

Pentagon Concepts 8 Ways 2 Win PLACE PRODUCT Intensity Assortment Style & Fashion

Fashion versus Value

Pentagon Concepts 8 Ways 2 Win PLACE PRODUCT VALUE Price EDLP v Hi Lo Quality

Price x Quality = Value

Pentagon Concepts 8 Ways 2 Win PLACE PRODUCT PEOPLE VALUE Service Knowledge Climate PEOPLE VALUE

Pentagon Concepts 8 Ways 2 Win PLACE COMMUNICATION PRODUCT PEOPLE Brand COMMUNICATION PRODUCT Positional Promotional PEOPLE VALUE

Triangle Concepts 8 Ways 2 Win SYSTEMS LOGISTICS SUPPLIERS Provide the mechanisms for controlling flows and operations ... Essential for managing categories item by item, store by store, market by market. LOGISTICS SUPPLIERS Physical movement of goods from vendors to stores ... A major frontier for improving asset management and reducing costs throughout the channels of distribution. Partners in marketing and distribution ... Effectiveness of the relationships determine both the rate and cost of sale, and the ability to implement some of the key triangle activities.

Automatic Replenishment Triangle Activities Quick Response and Automatic Replenishment EDI Software [Electronic Data Interchange] UPC/Barcode [Universal Product Code] CL [Carton Labelling] PSS [Planogram Software System] Programmed Supply Relationships Information Sharing Perpetual Inventory and VMI ECR [Efficient Consumer Response] CPFR [Collaborative Planning, Forecasting, and Replenishment] RFID JIT and LTO Replacement of Labor by Technology Front-End Scanning Labor Scheduling Systems Workforce Optimization Electronic Shelf Stickers Automated Warehouse/DC Self-Scanning and Checkout Automated Picking Lines Store Security Systems Environmental Controls Supply Chain and Logistics Merchandising and Space Management Greening of the Supply Chain Global is here to stay RFID Continues to Grow Focus on Risk Management Supply Chain Vendor Consolidation Voice Technology in Distribution Grows SKU Data Capture DPP [Direct Product Profitability] Rapid Intensification and Delisting Modularization in Store Design Price Optimization Software

New Triangle Technologies Open Systems Client Server Rapid Technological Advances Niche Vendors Mergers & Acquisitions Outside Data Client Server End User Empowerment GUI [Graphical User Interfaces] Walk Up & Use Touch Screen Multimedia Interactive Training [scheduled &JIT] Customer Self-Service Sales/Marketing Kiosks Services Delivered To The Home Data Manipulation Technology Data Base Management Systems On-Line Transaction Processing Decision Support Systems [Inventory Flow] Knowledge Processing [Promotions] Object Oriented Technologies Wireless Technologies RF ID [EAS & Multi-Bit] Produce Identification

The Eight Ways To Win In Retailing The Pentagon & The Triangle Size PLACE Location Layout & Design SYSTEMS Style & Fashion PRODUCT COMMUNICATION Intensity Positional Assortment Promotional Service LOGISTICS SUPPLIERS Knowledge Price Climate PEOPLE VALUE Quality