retail ii strategy

8/17/2019 Retail II Strategy

1/56

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


2/56

“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


3/56

Retail Market Strategy

A statement identifying

1) Retailer’s Target Market

2) The Format to satisfy the target market’sneeds

3) Sustainable Competitive Advantage


4/56

Elements in Retail Strategy

• Target Market

Customer Needs

• Retail Format

Method for Satisfying Needs

• Bases for Building Sustainable Competitive AdvantageDefending Position Against Competitors


5/56

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?


6/56

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.


7/56

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?


8/56

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


9/56

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


10/56

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


11/56

Retail Market Opportunities for

Women’s Apparel


12/56

Criteria For Selecting A Target Market

• Attractiveness --

Large, Growing,

Little CompetitionMore Profits

Consistent with Your

Competitive Advantages


13/56

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?


14/56

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


15/56

Sources of Competitive Advantage

More Sustainable• Location

• Customer Loyalty


• 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


16/56

Sustainable Competitive Advantage

• Customer Loyalty• Location

• HR Mgmt

• Distribution and Infn Systems.

• Unique Merchandise

• Vendor Relations



17/56

What does loyalty mean?

Is It the same as liking a store?

…Going to the store frequently?

Loyalty


18/56

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


19/56

Approaches for BuildingCustomer Loyalty

Unique Positioning

Customer Service

Information About Customers (Database)

Unique Merchandise

Location

C S


20/56

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


21/56

What Are the Three Most Important

Things in Retailing?

Location! Location! Location!Eddie Tan/Life File/Getty Images

Retail Locations


22/56

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?


23/56

• Economic Conditions

• Competition• Strategic Fit

• Operating Costs

Evaluating Specific Areas


24/56

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


25/56

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


26/56

Unplanned Retail Locations

Merchandise Kiosks – small temporaryselling stations located in walkways of

enclosed malls, airports, train stations or

office building lobbies.


27/56

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


28/56

Shopping Centers

Shopping Center Management Controls:

Parking

•Security

•Parking lot lighting•Outdoor signage• Advertising•Special events for customers

HR


29/56

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


30/56

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:


31/56

Unique Merchandise

• Developing Private Label Brands• Eg. Delhi Darbar – Briyani’s

• Rajdhani – Veg. Thali

• SubWay – Salads & Veg. Breads


32/56

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


33/56

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


34/56

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


35/56

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


36/56

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


37/56

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


38/56

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


39/56

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


40/56

Competitive Factors

Competitive

Rivalry

Bargaining

Power of

Vendors

Barriers to Entry

Large

Customers

Threat of

Substitution


41/56

Competitive Rivalry

• Large number of competitors all about thesame size

• Slow growth

• High fixed costs

• Lack of perceived differences betweencompeting retailers


42/56

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


43/56

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


44/56

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


45/56

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


46/56


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. (+)



47/56


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


48/56


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



49/56



• 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


50/56


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)



51/56



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)



52/56


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)



53/56



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 -


54/56

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


55/56

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


56/56

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.

retail ii strategy

Documents