Retailing mix strategy

Customer Service

Store Design and Display

Merchandise Assortment

Retail Strategy
Pricing Location

Communication Mix

Retailing Strategy
Retail Locations Human Resource Management

Retail Market Strategy Financial Strategy

Information and Distribution Systems

Customer Relationship Management

Strategy Is Over Used

Retailers Talk About A Lot of Different Strategies
Sales Strategy Advertising Strategy Merchandise Strategy Location Strategy
Strategy Is Not Just Another Term for A Management Decision

Strategic vs. Tactical Decisions

Strategic Direction Strategy statement Broad Unstructured Problem solving Creativity External focus Irregular Long-term Difficult to evaluate
Note:

Tactical Implementation Annual plan Specific, detailed Structured Problem solving Analytical Internal focus Regular Short-term Easy to evaluate

Success Comes for Having a Good Strategy and Executing It Well

Elements in Retail Strategy

Target Market
Customer Needs Retail Format Method for Satisfying Needs Bases for Building Sustainable Competitive Advantage Defending Position Against Competitors

Raymond Strategy
Target Market

Men 18 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 Size

Analyzing McDonalds Retail Strategy

What Is McDonalds:
-Target market?

-Retail offering (format)?

-Bases for competitive advantage?

What Threats Might McDonalds Face in the Future?

Examples of Retail Strategies

World of Titan and Tanishq Reliance Fresh KFC What is the target market, retail offering, and source of competitive advantage for each retailer?

Strategy for Looking for a Job

Determine Your Target Market
Area of Country Type of Company Type of Position

Assess and Exploit Your Competitive Advantage

Unique Skills, Experience, Knowledge

Why Does a Retailer Need to Focus on a Specific Target Market?

Why Not Sell to Everyone?

Methods for Segmenting Markets

Buying Situations
Benefits Sought
Geographic

Lifestyle, Psychographics Demographics

Criteria For Selecting A Target Market

Attractiveness -- Large, Growing, Little Competition More Profits

Consistent with Your Competitive Advantages

Can A Retailer Develop a 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?

Opportunities for Retailers to develop Sustainable Competitive Advantage

Customer Loyalty Location HRM Distribution and Information Systems Unique Merchandise Vendor Relations Customer Service

Internal and External Bases for Competitive Advantage

Retail Firm Low Cost Large Size Efficient Distribution, Operations Unique Knowledge Loyal Employees

Vendors, Suppliers

Customers

Sources of Capital

Sources of Competitive Advantage

More Sustainable Location Customer Loyalty Customer Service Exclusive Merchandise Low Cost Supply Chain Management Information Systems Buying Power with Vendors Committed Employees Less Sustainable 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?

Approaches for Building Customer Loyalty

Unique Positioning Customer Service Information About Customers (Database Retailing) Unique Merchandise Location

Basis of Loyalty, Commitment

Developing a strong brand for the store or store brands Developing clear and precise positioning strategies Creating emotional attachment with customers through loyalty programs

Creating Store Loyalty Mental and Emotional Attachments

Elements in a Strong Brand Top of the Mind Awareness Associations with Brand/Store Name

Methods Used to Develop a Strong Brand Massive Exposure Symbols to Reinforce Image Consistent Positioning Creating Strong Associations Limited Brand Extensions

Vendor Relationships
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

High Quality Customer Service

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

Multiple Sources of Advantage

No single approach : low cost (or) excellent service Multiple approaches : builds high wall against competitors
Mc Donalds Multiple Approach
Meeting value of customers , Excellent customer service, Possessing strong brand names, Offering great locations Mc Donalds has built a high wall around its position as a service retailer, using a fast-food format directed toward families with young children

Growth strategies

Market Penetration
Market Expansion

Retail Format Development

Diversification

- Related vs. Unrelated

Growth Opportunities

International Growth Opportunities

Key to Success in Global Retailing

Domestic market leadership strong base
Exploiting core competencies competitive advantage
Low cost - Wal-mart, Carrefour Fashion Reputation - The Gap, Zara Category dominance - Toys R Us, Office Depot Unique Image, Brand Disney, IKEA, Starbucks

Adaptability Global Culture Long-term commitment

International Market Entry Strategies

Direct Investment Joint Ventures Strategic Alliances Franchising

Steps in the Strategic Retail Planning Process

1. Define the business mission
2. Conduct a situation audit: Market attractiveness analysis Competitor analysis Self-analysis 3. Identify strategic opportunities

4. Evaluate strategic alternatives

5. Establish specific objectives and allocate resources 6. Develop a retail mix to implement strategy 7. Evaluate performance and make adjustments

Business Mission
In developing the mission statement, managers need to understand five questions: what business are we in? what should be our business in future? who are our customers? what are our capabilities? what do we want to accomplish? Goals and Objectives

Elements in a Market Analysis

MARKET FACTORS Size Growth Seasonality Business cycles

COMPETITIVE FACTORS

ENVIRONMENTAL FACTORS

ANALYSIS OF STRENGTHS & WEAKNESSES

Management capabilities Financial resources Locations Operations Merchandise Store Management Customer loyalty

Barriers to entry Bargaining power of vendors Competitive rivalry Threat of superior new formats

Technology Economic Regulatory Social

Questions for Analyzing the Environment

New developments or changes -- technologies, regulations, social factors, economic conditions
Likelihood changes will occur Key factors determining change

Impact of change on retail market firm, competitors

Porters Five Forces

Barriers to Entry

Bargaining Power of Vendors

Competitive Rivalry

Large Customers

Threat of Substitution

Strengths and Weaknesses Analysis

Management Capability:
Capabilities and experience of top management Depth of Management--capabilities of middle management Managements commitment to firm

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

Store Management Capabilities

Management capabilities Quality of sales associates Commitment of sales associates to firm

Locations

Merchandising Capabilities:
Knowledge and skills of buyers Relationships with vendors Capabilities in developing private capabilities

Customers
Loyalty of customers

Retail Strategic Planning and Operations Management Model

Competitive Environment : Behavior of Consumers, Competition, Supply Chain Members

Mission

Goals and Objcetives

SWOT

Retail Marketing Strategy

Operations Management

High- Profit Retailing

Social and Legal Environment: Socio economic environment, State of technology, Legal system, Ethical behavior

Illustration of the Strategic Retail Planning Process

Gift Corner

Target Market Men and Women Looking for Gifts between Rs 300- Rs 30,000 Strong Customer Loyalty Based on Knowing What Customers Want, Providing Good Customer Service Low Turnover Among Associates

Mission Statement for Gifts Corner

The mission of Gifts Corner is to be the leading retailers of higher-priced gifts in the Banglore and provide a stable income of Rs 100,000 per year for the owner. Define growth opportunities will and wont consider Indicates objective of company

Situation Analysis of Gifts Corner

Market Factors

Banglore 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. (+)

Situation Analysis of Gifts Corner (continued)

Environmental Factors
Potential Threat - Development of electronic channel by traditional bricks and mortar retailers (-)

Strengths and Weaknesses

Management Capability Limited Financial Resources Good Operations Poor Merchandise Capabilities Good Store Management Capabilities Excellent Locations Excellent Customer Loyalty Good Customer Database - Good

Growth Opportunities for Gifts Corner

Market Penetration
Increase size of present stores Open additional gifts stores in Bangalore area

Market Expansion
Open gift stores outside Bangalore area Sell lower priced gifts in present stores

Growth Opportunities for Gifts Corner(continued)

Retail Format Development
Sell non-gift merchandise to same customers in present or new stores Sell similar gifts to same customers through an electronic channel

Diversification
Manufacture craft gifts Open an apparel store targeting teenagers Open a category killer store selling a broader assortment of gifts

Evaluating Growth Opportunities for Gifts Corner

Market Attractiveness
Market Penetration
Increase size of present stores (low) Open additional gifts stores in Bangalore area (medium)

Market Expansion
Open gift stores outside Bangalore area new geographic segment (medium) Sell lower priced gifts in present stores new benefit segment (medium)

Evaluating Growth Opportunities for Gifts Corner (continued)

Market Attractiveness
Retail Format Development
Sell non-gift merchandise to same customers in present or new stores (High) Sell similar gifts to same customers through an electronic channel (High)

Diversification
Manufacture craft gifts (High) Open an apparel store targeting teenagers (High) Open a category killer store selling a broader assortment of gifts (High)

Evaluating Growth Opportunities for Gifts to Go

Competitive Position Market Penetration
Increase size of present stores (High) Open additional gifts stores in Bangalore area (Medium)

Market Expansion
Open gift stores outside Bangalore area (Low) Sell lower priced gifts in present stores (low)

Evaluating Growth Opportunities for Gifts Corner(continued)

Competitive Position
Retail Format Development
Sell non-gift merchandise to same customers in present or new stores (Low) Sell similar gifts to same customers through an electronic channel (Medium)

Diversification
Manufacture craft gifts (Low) Open an apparel store targeting teenagers (Low) Open a category killer store selling a broader assortment of gifts (Low)

Market Attractiveness/Competitive Position Matrix

High
Maximum investment

Medium
Invest to challenge leader

Low
Opportunities investment Build strength or exit

Market Attractiveness

Consolidate position Selective investment

Aggressive investment

Cautious investment

Harvest or divest

Build on strengths
Protect position Manage for cash generation Harvest or divest Harvest or divest

Cautious investment

Minimal investment Competitive Position

Steps in Using Market Attractiveness Competitive Position Matrix

Define strategic opportunities
Identify market attractiveness and competitive position factors Assign weight based on importance of factors Rate opportunities on market attractiveness and competitive position

Calculate scores and evaluate opportunities