Post on 06-Jul-2018
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Retail Marketing Strategy• Meaning
• Retail Market Strategy
• Target Market & Retail Format
– Building a sustainable competitive adv.• Customer Loyalty
• Location• HR Mgmt
• Distribution and Infn Systems.
• Unique Merchandise
• Vendor Relations
• Customer Service
• Multiple Sources of Adv.
• Strategic Retail Planning Process
• Role of IT in Retailing
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“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 forA Management Decision
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Retail Market Strategy
A statement identifying
1) Retailer’s Target Market
2) The Format to satisfy the target market’sneeds
3) Sustainable Competitive Advantage
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Elements in Retail Strategy
• Target Market
Customer Needs
• Retail Format
Method for Satisfying Needs
• Bases for Building Sustainable Competitive AdvantageDefending Position Against Competitors
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Analyzing McDonalds’ Retail Strategy
What Is McDonalds’: -Target market?
-Retail offering (format)?
-Bases for competitive
advantage?
What Threats Might McDonald’s Face in the Future?
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Retail format of Big Bazaar
• Hyper Market chain• More than 110 outlets
• Parent group - Future Group(Kishore Biyani)
• Target Audience
– Middle & Upper Middle Class Customers
– Working Women & Home Makers (Primary
Decision Members)
– Large & Growing young working Population.
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Examples of Retail Strategies
• D-Mart, Vishal Megamart
• Future Group – Pantaloons, BigBazaar,
HomeTown
•Tanishq, Gili, D’damas
• Shopper’s Stop
What is the target market, retail offering, and source
of competitive advantage for each retailer?
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BIBA’s Strategy
Target Market
Woman 25 to 55 Who Want Comfortable,Casual, But Stylish Apparel
Retail Format
Specialty Apparel Stores in Malls and StripCenters Selling Private Label, CoordinatedOutfits
Bases for Building Sustainable CompetitiveAdvantage
Unique Merchandise Sized - S,M,L,XL
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Strategy for Looking for a Job
Determine Your TargetMarket
– Area of Country
– Type of Company – Type of Position
Assess and Exploit Your
Competitive Advantage – Unique Skills,
Experience,
Knowledge
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Why Does a Retailer Need
to Focus on a
Specific Target Market?
Why Not Sell to Everyone?
R t il M k t O t iti f
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Retail Market Opportunities for
Women’s Apparel
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Criteria For Selecting A Target Market
• Attractiveness --
Large, Growing,
Little CompetitionMore Profits
Consistent with Your
Competitive Advantages
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Can A Retailer Develop a SustainableCompetitive Advantage by:
• Building a Store at the BestLocation?
• Deciding to Sell Some HotMerchandise?
• Increasing Your Level of Advertising?
• Attracting Better Sales Associates
by Paying Higher Wages?• Providing Better Customer
Service?
• Dropping the Price of YourMerchandise?
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Internal and External Bases for
Competitive Advantage
Retail Firm
•Low Cost
•Large Size
•Efficient
Distribution
Operations
• Unique
Knowledge
• Loyal Employees
Sources of
Capital
Vendors,
Suppliers
Customers
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Sources of Competitive Advantage
More Sustainable• Location
• Customer Loyalty
• Customer Service
• Exclusive Merchandise• Low Cost Supply Chain
Management
• Information Systems
• Buying Power withVendors
• Committed Employees
Less Sustainable
• Better Computers
• More Employees
• More Merchandise• Greater Assortments
• Lower Prices
• More Advertising
• More Promotions
• Cleaner Stores
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Sustainable Competitive Advantage
• Customer Loyalty• Location
• HR Mgmt
• Distribution and Infn Systems.
• Unique Merchandise
• Vendor Relations
• Customer Service
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What does loyalty mean?
Is It the same as liking a store?
…Going to the store frequently?
Loyalty
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How Retailers Build Loyalty
• Develop a strong brand for thestore or the store brands
• Develop clear precisepositioning strategies
• Create an emotional
attachment with customersthrough loyalty programs
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Approaches for BuildingCustomer Loyalty
Unique Positioning
Customer Service
Information About Customers (Database)
Unique Merchandise
Location
C S
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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 StrongAssociations
– Limited Brand Extensions
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What Are the Three Most Important
Things in Retailing?
Location! Location! Location!Eddie Tan/Life File/Getty Images
Retail Locations
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Why is Store Location Important for a Retailer?
• Location is typically primeconsideration in customer’s storechoice.
• Location decisions have strategicimportance because they can
help to develop sustainable
competitive advantage.
• Location decisions are risky:invest or lease?
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• Economic Conditions
• Competition• Strategic Fit
• Operating Costs
Evaluating Specific Areas
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Types of Retail Locations
• Free Standing Sites
• City or Town Locations
– Inner City
– Main Street
• Shopping Centers
– Strip Shopping Centers
– Shopping Malls• Other Location Opportunities
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Unplanned Retail Locations
Freestanding Sites – location for individualstore unconnected to other retailer
Advantages:Convenience
High traffic and visibility
Modest occupancy cost
Separation from competition
Few restrictions
In Highways, near toll nakas - stand alone locations
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Unplanned Retail Locations
Merchandise Kiosks – small temporaryselling stations located in walkways of
enclosed malls, airports, train stations or
office building lobbies.
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Central Business District
• Draws people into areas during business hours• Hub for public transportation• Pedestrian traffic• Residents
• High security required• Shoplifting• Parking is poor• Evenings and weekends are slow
A d v a n t a g e s
D i s a d v a
n t a g e s
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Shopping Centers
Shopping Center Management Controls:
Parking
•Security
•Parking lot lighting•Outdoor signage• Advertising•Special events for customers
HR
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HR• Organisation Structure
• Strategic Management
• Merchandise Management – Buyers, Allocators, Planners, Buying in Super Markets,
Category Managers.
• Store Management
• Admn Mgmt. (Operations)
• Employees Play major role in Customerservice and building customer loyalty.
• Motivate & Train Employees• Provide Appropriate Incentives
• Fostering Strong & Positive Org. Culture
• Managing Diversity
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Distribution and Info Systems
Flow of Information
Vendor
Distribution Center
Store
-Better services
-Increase in breadth and depth
-Decrease in prices
By decreasing costs here,
there is more money available
to invest in:
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Unique Merchandise
• Developing Private Label Brands• Eg. Delhi Darbar – Briyani’s
• Rajdhani – Veg. Thali
• SubWay – Salads & Veg. Breads
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Vendor Relationships
• Low Cost - Efficiency ThroughCoordination
– Electronic Data Interchange (EDI)
– Collaborative Planning and Forecasting toReduce Inventory and Distribution Costs
• Exclusive Sale of Desirable Brands
• Special Treatment
– Early Delivery of New Styles
– Shipment of Scarce Merchandise
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High Quality Customer Service
• Difficult to Achieve
– People Are Not Machines -- Inconsistent
– Retail Sales Associates At Bottom ofLabor Pool
• Goes Beyond Hiring Good People at High
Wages and Training Them --Organizational Culture
Critical Tradeoff In Developing
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Critical Tradeoff In DevelopingStrategic Advantage
Focus Leads to Developing
A Competitive Advantage
But
Focus Reduces Flexibility
• Low Cost, Consistent Image, Vendor
Relationships Reduces Flexibility• Similar to Dating and Marriage –
Commitment to a Relationship (Vendor)
Reduces Flexibility
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Multiple Sources of Advantages
• McDonald's – Quick Service Restaurant Market
– Good Value for Money – Reasonable Pricing
– Hot, Fresh food at reasonable price – High quality service by committed employees.
– No friendly table service
– Extensive training for employees lead to Lesswaiting time for customers
– Strong Brand Name & Outstanding locations
St i th St t i
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Steps in the StrategicRetail Planning Process
1. Define the business mission
2. Conduct a situation audit:Market attractiveness analysisCompetitor analysisSelf-analysis
3. Identify strategic opportunities
5. Establish specific objectives and allocate resources
7. Evaluate performance and make adjustments
6. Develop a retail mix to implement strategy
4. Evaluate strategic alternatives
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Elements in a Market Analysis
0
50
10 0
1 s t Q t r 2 nd Q t r 3 r d Q t r 4 t h Q t r
MARKETFACTORS
COMPETITIVEFACTORS
ENVIRONMENTALFACTORS
ANALYSIS OFSTRENGTHS &
WEAKNESSES
Barri ers to entr y
Bargaining power of
vendors
Competi tive r ivalryThreat of super ior
new formats
Technology
Economic
Regulatory
Social
Size
Growth
Seasonality
Business cycles
Management
capabilities
F inancial r esources
Locations
Operations
Merchandise
Store Management
Customer loyalty
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Market Factors
• Market size – large markets attractive tolarge retail firms
• Growing markets – typically moreattractive than mature or declining
• Business cycles – retail markets can beaffected by economic conditions – militarybase towns
• Seasonality – can be an issue asresources are necessary during peakseason only
Q ti f
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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 marketfirm, competitors
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Competitive Factors
Competitive
Rivalry
Bargaining
Power of
Vendors
Barriers to Entry
Large
Customers
Threat of
Substitution
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Competitive Rivalry
• Large number of competitors all about thesame size
• Slow growth
• High fixed costs
• Lack of perceived differences betweencompeting retailers
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Performing a Self-Analysis
• At what is our company good?• In which of these areas is our company
better than our competitors?
• In which of theses areas does outcompany’s unique capabilities provide asustainable advantage or a basis for
developing one?
St th d W k A l i
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Strengths and Weaknesses Analysis
Management Capability:
Capabilities and experience of top managementDepth of Management--capabilities of middle management
Management’s 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
Merchandising Capabilities: Knowledge and skills of buyers
Relationships with vendors
Capabilities in developing private
capabilities
Store Management Capabilities Management capabilities
Quality of sales associates
Commitment of sales associates to firm
Locations
Customers Loyalty of customers
Illustration of the
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Illustration of the
Strategic Retail Planning Process
Kelly Bradford – Owner of Gifts To Go – Two Store Chain in Chicago
– Target Market – Upper Income Men andWomen Looking for Gifts between $50 and$500
– Strong Customer Loyalty Based onKnowing What Customers Want,Providing Good Customer Service
– Low Turnover Among Associates
Mission Statement for
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Mission Statement for
Gifts To Go
“The mission of Gifts to Go is to be theleading retailers of higher-priced gifts in
the Chicago and provide a stable incomeof $100,000 per year for the owner.”
Define growth opportunities will and won’tconsider
Indicates objective of company
Situation Analysis of
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Situation Analysis of
Gifts to Go
• Market Factors – Chicago is an attractive market. (+)
– Relatively expensive gifts are not affectedmuch by the economy. (+)
– Gifts are highly seasonal. (-)• Competitive Factors
– Many in area. Primary department stores,craft galleries, catalogs, and Internetretailers (-)
– Lack of large suppliers, customer (+)
– Opportunities for differentiation (+)
– Limited competitive rivalry. (+)
Situation Analysis of
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Situation Analysis of
Gifts to Go (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
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Growth Opportunities for
Gifts to Go
• Market Penetration – Increase size of present
stores
– Open additional gifts stores inChicago area
• Market Expansion
– Open gift stores outside
Chicago area
– Sell lower priced gifts inpresent stores
Growth Opportunities for
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Growth Opportunities for
Gifts to Go (continued)
• Retail Format Development
– Sell non-gift merchandise to same customers inpresent or new stores
– Sell similar gifts to same customers through anelectronic channel
• Diversification
– Manufacture craft gifts
– Open an apparel store targeting teenagers
– Open a category killer store selling a broaderassortment of gifts
Evaluating Growth Opportunities for
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Evaluating Growth Opportunities for
Gifts to Go
Market Attractiveness
• Market Penetration
– Increase size of present stores (low) – Open additional gifts stores in Chicago area (medium)
• Market Expansion – Open gift stores outside Chicago area – new
geographic segment (medium) – Sell lower priced gifts in present stores – new
benefit segment (medium)
Evaluating Growth Opportunities for
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Evaluating Growth Opportunities for
Gifts to Go (continued)
Market Attractiveness• Retail Format Development
– Sell non-gift merchandise to same customers inpresent or new stores (High)
– Sell similar gifts to same customers through anelectronic channel (High)
• Diversification – Manufacture craft gifts (High)
– Open an apparel store targeting teenagers (High)
– Open a category killer store selling a broaderassortment of gifts (High)
Evaluating Growth Opportunities for
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Evaluating Growth Opportunities for
Gifts to Go
Competitive Position
• Market Penetration
– Increase size of present stores (High)
– Open additional gifts stores in Chicagoarea (Medium)
• Market Expansion
– Open gift stores outside Chicago area (Low)
– Sell lower priced gifts in present stores
(low)
Evaluating Growth Opportunities for
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Evaluating Growth Opportunities for
Gifts to Go (continued)
Competitive Position• Retail Format Development
– Sell non-gift merchandise to same customers inpresent or new stores (Low)
– Sell similar gifts to same customers through anelectronic channel (Medium)
• Diversification – Manufacture craft gifts (Low)
– Open an apparel store targeting teenagers (Low)
– Open a category killer store selling a broaderassortment of gifts (Low)
Steps in Using Market Attractiveness -
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Steps in Using Market Attractiveness Competitive Position Matrix
• Define strategic opportunities
• Identify market attractiveness and competitiveposition factors
• Assign weight based on importance of factors
• Rate opportunities on market attractiveness
and competitive position• Calculate scores and evaluate opportunities
f
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Role of IT in Retailing
• Invest in IT helps a retailing unit in – Improved Retail Logistics, Reduction in Leadtimes lead to reduction in Inventory.
– Using Infn abt consumer demand to reframe
retail policies& self products & own brands.
– Measure Staff performance & reduce costsrelating to transactions and performance
levels.
Benefits of using IT
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Benefits of using IT
Cost & Productivity
• Efficiency in time withincrease in transactionspeed.
• Queuing time
• Operation Costs
• Shorter Lead times
• Efficient Stock Holding
• Price modificationsbecomes easy.
Marketing
• Improved Data Handling• Faster Distribution
systems cycle.
• Trading Partnerrelationship
• Database on customerloyalty
• More selling price withreduced stockholding.