Chapter 5
Retail Marketing
Strategy
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e
Copyright 2004 by The McGraw-Hill Companies, Inc. All rights
Strategic vs. Tactical Decisions
Strategic
Direction
Implementation
Strategy statement
Annual plan
Broad
Specific, detailed
Unstructured
Structured
Problem solving
Problem solving
Creativity
Analytical
External focus
Internal focus
Irregular
Regular
Long-term
Short-term
Difficult to evaluate
Easy to evaluate
Note:
PPT 5-2
Tactical
Success Comes for Having a Good Strategy and Executing It Well
Elements in Retail Strategy
1. ______ ______
Customer Needs
2. _____ ______
Method for Satisfying Needs
3. Bases for Building ___________ __________ _________
Defending Position Against Competitors
PPT 5-3
(1) Target
Market
Why Does a Retailer Need to
Focus on a
Specific Target Market?
Why Not Sell to Everyone?
PPT 5-4
(1) Target
Market
Comparison of
Clothing Retailers
Fashion Forward ---------------------------Traditional
Extensive Service---------------------Limited Service
Wal-Mart
Sears
Target
KMart
Wet Seal
Bloomingdales
The Gap
PPT 5-5
(1) Target
Market
Traditional
Fashion
Limited
Extensive
Service
PPT 5-6
Forward
(3) Sustainable
Competitive Advantage
Examples of a clothing retailers potential competitive
advantages
1.
2.
3.
4.
PPT 5-7
(3) Sustainable
Competitive Advantage
Sources of Competitive Advantage
More Sustainable
PPT 5-8
Less Sustainable
Retail Growth Opportunities
PPT 5-9
McDonalds
Ever-Changing Growth Strategy
1. Serving breakfast
2. Going global
3. Opening locations in office buildings/school
campuses
4. Adding salads to the menu
5. Biggie sizing meals
6. Opening up seafood restaurants
7. Accepting credit cards
PPT 5-10
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
PPT 5-11
Mission Statements
PPT 5-12
Situation Audit
The analysis of opportunities and threats in the
retail environment and the strengths and
weaknesses of the retail business relative to its
competitors.
Wal-Mart
To give ordinary folk the same chance to buy things as
rich people.
PPT 5-13
SWOT
Strengths:
Weaknesses:
Opportunities:
Threats:
Internal
External
PPT 5-14
Elements in a Situation Analysis
MARKET
FACTORS
COMPETITIVE
FACTORS
Barriers to entry
Size
Bargaining power of
Growth
vendors
Seasonality
Competitive rivalry
Business cycles
Threat of superior
new formats
PPT 5-15
ENVIRONMENTAL
FACTORS
ANALYSIS OF
STRENGTHS &
WEAKNESSES
Technology
Economic
Regulatory
Social
Management
capabilities
Financial resources
Locations
Operations
Merchandise
Store Management
Customer loyalty
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:
Store Management Capabilities
Overhead cost structure
Quality of operating systems
Distribution capabilities
Management information systems
Loss prevention systems
Inventory control system
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
PPT 5-16
Customers
Loyalty of customers
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
PPT 5-17