Retail Strategy
What is strategy?
Strategy is knowing your customers and their needs and helping them
espouse those needs.
Strategy is part of the overall planning process. It is the part that gets you
from where you are to where you want to be.
Strategy is the blueprint to achieve the identified goals of an organization.
It goes beyond just being a document to follow, but extends into the
thought process and, ultimately the culture of an organization.
What is strategy?
Four main characteristics
Long term direction
Achieving some advantage
- Different benefits from other retailers
Scope of an organization´s activities
- Boundaries of the business in terms of products, services, territory, etc.
Search for strategic fit
- Matching the activities with the environment
Retail Strategy
In order to define the effective strategy we need to know our organization and its
environment.
Therefore it is useful to perform a strategic/ situation analysis.
Do you know any methods?
PEST(EL) Analysis
Analysis of Competitive Forces
SWOT
Retail Strategy
PESTEL analysis
Retail Strategy
Analysis of Competitive Forces (by Porter)
Retail Strategy
Vision and Mission
What is a vision and a mission? Any difference?
A strategy is dependent on a vision in order to give it form and direction. A
vision is a description of a place, or a state where you wish to be. It is what you
want to be (Journal of Business Strategy, 1996).
A mission should declare why we exist. Why we are on the market with respect to
our environment – customers, stakeholders, etc.
Questions:
Where are we?
How did we get here?
Where should we be?
How would we get there?
Retail Strategy
Vision and Mission
TESCO
No one tries harder for customers
We treat people how they want to be treated
◼ Work as a team
◼ Trust and respect each other
◼ Listen, support and say thank you
◼ Share knowledge and experience
Every little help makes a big difference
◼ Helping and encouraging our colleagues and customers to live healthier lives and through this
helping to tackle the global obesity crisis
◼ Leading in reducing food waste globally
Retail Strategy
Routes to Competitive Advantage
What can be a source of competitive advantage in retailing?
Overall cost leadership
Problems: inflation, innovation of competitors, being second cheapest does not work
Differentiation
Problems: too high price, imitation of competitors
Focus on special - niche target segments
Problems: change in the market, focus of competitors, limited growth
Retail Strategy
Creating Customer Value
Example:
Ikea
- Complexity saving (catalogues, easy to find products)
- Time saving
- Uncertainty saving
- Recreation
- That all together goes well with costs savings.
Retail Strategy
Strategies for Growth
Ansoff´s product – mission matrix:
1. Market penetration - present product/ present segment(s)
2. Market development - present product/ new segment(s)
3. Product development - new product/ present segment(s)
4. Diversification - new product/ new segment(s)
Retail growth vectors:
- Market penetration (grow market share)
- New segments (different/ adjacent)
- New products/ services (related/ unrelated)
- New formats (modified/ new)
- New channels (linked/ separate)
- Geographical development (national/ international)
Retail Strategy
Strategies for Growth
Diversification x Specialization
Specialization:
1. Broad category range, narrow target market
2. Narrow category range, specific target market
3. Deep choice within categories
Category killers (Toys´R´Us, IKEA)
1. Specialized range, depth of selection
2. Branded goods
3. Large stores in suburban areas
4. Bulk pruchases – low prices
Retail Strategy
Strategies for Growth
Diversification x Specialization
Diversification (most of the current general stores, formerly grocers)
- Escape from the present sector
- Spreading risk
- Even out cyclical effects
- Opportunity to utilize excess cash
- Exploiting resources and competencies
- Synergies – customer databases
Examples???
- What companies and what assortment?