1. Recent Trends in Canadian Retail
Increased globalization
New store formats and locations
Increased use of technology
Channel blurring
Changing consumer behaviour
Increased globalization – 6 of top 10 Cdn retailers is US owned; Wal-Mart
New store formats and locations – dollar stores, power centres, lifestyle centres
Increased use of technology – back end systems bt also more web presence and e-commerce capabilities especially multi-channel
Channel blurring – hard to tell some retailers apart once inside; Gavin example
Changing consumer behaviour – increasingly demanding of higher levels of service; more price sensitive (dollar stores; warehouset clubs and dollar stores)

2. Special Characteristics
Small average sales
Impulse purchases
Popularity of stores
Small average sales –
w/ razor thin margins
~13% net margin for a successful retailer; grocery ~1-2%; Hbc ~.05%
Impulse purchases
Good b/c can get ppl to spend more once in store
BUT, requires correctly anticipating demands (what and how much) correctly
Popularity of stores
Ppl want convenience of web, but also want tangibility when shopping
Multi-channel growing but pure web players won’t displace trad’l retailers as once thought

3. Strategic Planning in Retailing
Chapter 3
Strategic Planning in Retailing
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,

4. Class Agenda
Discuss retail strategy and apply concepts to a short case

5. How Retail Institutions are Evolving
Mergers, Diversification, Downsizing
Cost-Containment and Value-Driven Retailing

6. Figure 5.1 The Wheel of Retailing

7. Figure 5.3 Scrambled Merchandising by a Shoe Store

8. Figure 5.4 Retail Life Cycle

9. Figure 1.10 Applying the Retail Concept
Customer Orientation
Retailing
Concept
Coordinated Effort
Retail
Strategy
Value driven
Goal Orientation

10. Benefits of Strategic Retail Planning
Opportunity for analysis
Direction
Coordination of the firm’s total efforts
Identify points of differentiation
Appeal to a group of customers
Anticipation and avoidance of crises

11. Figure 3.1 Elements of a Retail Strategy
Forzani
Conducted a situation analysis and found:
Department stores getting out of sporting goods
Small regional players making little money because of economic and weather conditions
Independent retailers pay much higher prices for merchandise
Concluded:
A few national retailers would eventually dominate the industry
Their strategy:
Offer superior front line sales & service personnel
Achieve and maintain low cost position
Increase segment dominance in specific product categories
Develop and maintain a clear differentiated retail offering
Today:
Canada’s largest sporting goods retailer

12. Sobey’s Inc. Canada Goals: Sales growth between 6 and 8 percent
Operating earnings per share growth between and 16 percent
Companywide capital expenditures of approximately $550 million to $600 million
National share of requirements of 20 percent
Maintenance of first-quarter supplier rating

13. Positioning Approaches
Mass merchandising is a positioning approach whereby retailers offer a discount or value-oriented image, a wide or deep merchandise selection, and large store facilities
Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market
An image represents
how a given retailer is
perceived
by consumers and others

14. Figure 3.7 Selected Retail Positioning Strategies

15. Target Market Identification
Three techniques
Mass marketing
Concentrated marketing
Differentiated marketing
See Table 3-3 for a detailed comparison

16. The Positioning Approach of High-End Jewellery Stores
Case #4, p. 74

17. The Positioning Approach of High-End Jewellery Stores
Positioning Chart – Jewellers
Blurred positioning?
Pros and cons of Tiffany’s low price strategy
How would you expect the total retail experience to differ in Wal-Mart, department stores and high-end retailers?

18. - Kevin Coupe, Morningnewsbeat.com
“It is critical … for a retailer to choose his or her spots…to accept the notion that you can’t be everything to everyone.”
- Kevin Coupe, Morningnewsbeat.com

19. Overall Strategy Components
The Retailing Strategy Mix is a combination of:
Product
Price
Location
Communication
Operations Management
Need to balance with uncontrollable environmental and marketplace factors
Controllable Factors
Note: Communication = Promotion, customer service and image
Uncontrollable Variables:
Consumers
Competition
Technology
Economic
conditions
Seasonality
Legal restrictions
A firm’s positioning is the consumer’s perception of the firm that results from who the target market is, the overall positioning strategy and the specific elements of the strategy mix.

20. Wal-Mart http://www.walmartfacts.com/FactSheets/
Watch the Wal-Mart video and consider the elements of its strategy.
What does Wal-Mart do well?
Is Wal-Mart the perfect retailer?
Some interesting Wal-Mart sources:

21. Retail Growth Strategies
Market Segment
Existing
New
Market Penetration
Market Development
Existing
Retail Format
New
Retail Format Development
Diversification

22. Consider Home Depot Growth
Classify the type of growth strategies employed by Home Depot through:
Home Depot Canada
Multiple store openings in one market
New stores opening in previously unserved markets
Smaller version stores for higher-end urban customers
Launch of their Canadian website
Expo Design Center
Market penetration
Market development
Diversification
Retail Format Dev.
Diversification

23. Takeaways Developing a successful retail strategy requires:
Careful analysis and planning
Balancing controllable and uncontrollable variables
Accurately defining target market(s) and satisfying their needs and wants
Understanding your position in the market
Coordinated effort

24. Q10
A retailer can become a _____ through low prices, specialized products, a large selection, and superb customer service.
a. destination retailer
b. relationship retailer
c. parasite store
d. value-based retailer
What is a parasite store?

25. Earning Destination Retailer Status
Be price oriented and cost efficient
Be upscale
Be convenient
Offer a dominant assortment
Offer superior customer service
Be innovative or exclusive

26. Figure 3.1 Elements of a Retail Strategy
Forzani
Conducted a situation analysis and found:
Department stores getting out of sporting goods
Small regional players making little money because of economic and weather conditions
Independent retailers pay much higher prices for merchandise
Concluded:
A few national retailers would eventually dominate the industry
Their strategy:
Offer superior front line sales & service personnel
Achieve and maintain low cost position
Increase segment dominance in specific product categories
Develop and maintain a clear differentiated retail offering
Today:
Canada’s largest sporting goods retailer

27. Overall Strategy Components
The Retailing Strategy Mix is a combination of:
Product
Price
Location
Communication
Operations Management
Need to balance with uncontrollable environmental and marketplace factors
Controllable Factors
Note: Communication = Promotion, customer service and image
Uncontrollable Variables:
Consumers
Competition
Technology
Economic
conditions
Seasonality
Legal restrictions
A firm’s positioning is the consumer’s perception of the firm that results from who the target market is, the overall positioning strategy and the specific elements of the strategy mix.

28. Benefits of Strategic Retail Planning
Opportunity for analysis
Direction
Coordination of the firm’s total efforts
Identify points of differentiation
Appeal to a group of customers
Anticipation and avoidance of crises

29. How does Wal-Mart plan to grow?

30. Retail Growth Strategies
Market Segment
Existing
New
Market Penetration
Market Development
Existing
Retail Format
New
Retail Format Development
Diversification

31. Takeaways Developing a successful retail strategy requires:
Careful analysis and planning
Balancing controllable and uncontrollable variables
Accurately defining target market(s) and satisfying their needs and wants
Understanding your position in the market
Coordinated effort