Retail Market Strategy ~Eden Clifford

What is a Retail Strategy? Sustainable Competitive Advantage Retail Format Target Market What is a Retail Strategy? Retail strategy is identifying the retailers target market, the format the retailer plans to use to satisfy the target market’s needs, and the bases on which the retailer plans to build a sustainable competitive advantage. The target market is the market segment where the retailer plans to focus its resources & retail mix by type of merchandise & services offered pricing policy advertising & promotion programs, store design & visual merchandising, typical locations & customer services A sustainable competitive advantage is an advantage the retailer has over its competition that is not easily copied by competitors & can be maintained over a long period of time. SEE pg. 112

Target Market & Retail Format Fashion Segments Retail Formats Conservative Traditional Fashion-Forward Specialty Store Fashion Bug The Gap The Limited Talbots Bebe Urban Outfitters H&M Department Store JCPenney Kohl’s Saks Fifth Ave. Bloomingdale’s Neiman Marcus Discount Store Family Dollar Dollar General Off-Price Store Ross Stores T.J. Maxx Steinmart Bluefly.com Macy’s Target Market & Retail Format Kmart Walmart Target Retail Concept Retail Market The retail concept is a retail management orientation that focuses on determiing the needs of the retailer’s target market & satisfying

Building a Sustainable Competitive Advantage Relationship w/ Customers Customer Loyalty Building a Sustainable Competitive Advantage

Customer Loyalty Brand Image Positioning Unique Merchandise Customer Service CRM Programs Customer Loyalty Customer loyalty means that customers are committed to buying merchandise & services from a particular retailer. Loyalty means that customers will be reluctant to patronize competitive retailers

Relationships with Suppliers Vendor Relations Relationships with Suppliers

Efficiency of Internal Operations Human Resource Management Distribution & Information Systems Efficiency of Internal Operations

Location Starbucks creates a competitive advantage by picking multiple good locations that saturate an area

Multiple Sources of Advantage McDonald’s long-term success is based on providing customers with a good value that meets their expectations, having good customers with a strong brand name, and offering convenient locations By pursuing all these strategies effectively, McDonald’s has developed a strong competitive position in the quick-service restaurant market

Diversification (unrelated/related) Target Markets Retail Format Existing New Market Penetration Market Expansion Format Development Diversification (unrelated/related) Growth Strategies Market Penetration Market Expansion Retail Format Development Growth Opportunities & Competitive Advantage Diversification

Market Penetration Market Penetration growth opportunity Cross-Selling Can involve either attracting new consumers from the retailer’s current target market who don’t patronize the retailer currently Cross-Selling Ex. BBW Market Penetration

Market Expansion Market Expansion Growth Opportunity Ex. Dunkin’ Donuts has been opening new stores outside its traditional target market in the northeastern United States. Market Expansion

Retail Format Development Retail Format Development Growth Opportunities Ex. The UK based retailer Tesco has employed a retail format development growth strategy by operating several different food store formats that all cater to essentially the same target market. Retail Format Development

Diversification Diversification Growth Opportunity Related vs. Unrelated Vertical Integration Diversification

Growth Opportunities & Competitive Advantage When retailers pursue market expansion opportunities, they build on their advantages in operating a retail format & apply this competitive advantage in a new market. Growth Opportunities & Competitive Advantage

Global Growth Opportunities Of the 50 largest retailers in the world, only 12 operate in one country In India, men’s ready-made apparel generates about 2-3 times more sales than women’s apparel Global Growth Opportunities

Attractiveness of International Markets Country Potential Country Support Population (+) Market share of modern retailing (+) Population growth rate (+) Quality of infrastructure, transportation & communications (+) GDP (+) Urban population (+) GDP per capita (+) Market share of leading domestic retailers (-) Retail sales (+) Ease of doing business (+) Growth rate in retail sales (+) Business-friendly laws & regulations (+) Retail sales per capita (+) Political stability (+) Income distribution (+) or (-) Age distribution (+) or (-) Attractiveness of International Markets Factors The potential size of the retail market in the country The degree to which the country does & can support the entry of foreign retailers

Keys to Success Globally Sustainable Competitive Advantage Adaptability Global Culture Financial Resources Keys to Success

Entry Strategies Direct Investment Joint Venture Strategic Alliance Franchising Entry Strategies

Strategic Retail Planning Process Define the Business Mission Conduct a Situation Audit - Market Attraction Analysis - Identify Strategic Opportunities - Self-Analysis Competitor Analysis Evaluate Strategic Alternatives Establish Specific Objectives & Allocate Resources Develop a retail mix to implement strategy Evaluate Performance & Make Adjustments Strategic Retail Planning Process

Step 1: Define the Business Mission Mission Statement Ex. Maxine Clark, founder & chief executive bear at Build- A-Bear Workshop, in discussing her goals for the company says, “We also believe strongly that we need to give back to communities in which we have stores. Step 1: Define the Business Mission

Step 2: Conduct a Situation Audit Market Factors Competitive Factors Barriers to entry Scale economies Bargaining power of vendors Competitive Rivalry Environmental Factors Strengths & Weakness Analysis Step 2: Conduct a Situation Audit

Step 3: Identify Strategic Opportunities Kelly Bradford presently competes in gift retailing using a specialty store format See Exhibit 5.4 pg. 137 Step 3: Identify Strategic Opportunities

Step 4: Evaluate Strategic Opportunities Both the market attractiveness and the strengths and weaknesses of the retailer need to be considered in evaluating strategic opportunities Step 4: Evaluate Strategic Opportunities

Step 5: Evaluate Performance & Make Adjustments The performance sought may be measured Components: A time frame within which the goal is to be achieved The level of investment needed to achieve the objective Step 5: Evaluate Performance & Make Adjustments

Step 6: Develop a Retail Mix to Implement the Strategy Develop a retail mix for each opportunity in which an investment will be made & control & evaluate performance Step 6: Develop a Retail Mix to Implement the Strategy

Step 7: Evaluate Performance & Make Adjustments Evaluate the results of the strategy & implementation program Step 7: Evaluate Performance & Make Adjustments

Strategic Planning in the Real World Define the Business Conduct a Situation Audit Identify Strategic Opportunities Evaluate Strategic Alternatives Establish specific Objectives Develop a Retail Mix to Implement Strategy Evaluate Performance & Make Adjustments Strategic Planning in the Real World

Assignment 1 Prepare an analysis of a company, using Glogster. Identify its direct competitors, its target market & positioning, its strategy w/ respect to its competitors, its retail format (the elements in its retail mix: merchandise variety & assortment, pricing locations), and its bases for developing a competitive advantage to is competitors. Assignment 1

Pick a company and outline the retailer’s strengths, weaknesses, opportunities & threats relative to its competitors. Use Animoto (www.animoto.com) for each element of the SWOT analysis. Assignment 2

Explain & provide an example of each of the growth strategies using Prezi or Photopeach. Include Market Penetration, Market Expansion, Retail Format Development, Diversification, and Competitive Advantage Assignment 3

Visit 2 stores that sell similar merchandise categories and cater to the same target segments. How are their retail formats (the elements in their retail mixes) similar? Dissimilar? On what base do they have a sustainable completive advantage? Explain. Create a podcast or use blabberize explaining your findings. Assignment 4

Pick a store that you believe has an effective customer loyalty Pick a store that you believe has an effective customer loyalty. Explain why you believe it is so. Remember to include the activities that retailers engage into to build loyalty: (1) developing a strong brand image, (2) having a clear & consistent positioning, (3) providing outstanding customer service, (4) unique merchandise, and (5) customer Service Use any media to sum your explanations. Assignment 5

Using Comic Life choose a retailer and describe how it has developed a competitive strategic advantage. Include barriers to entry, scale economics, customer loyalty, and the availability of great locations. Assignment 6