Retailing StrategyRetailing Strategy Def:-Def:- Retail Strategy would mean clear and definite plan Retail Strategy would mean clear and definite plan that the retailer outlines to tap the market and build a that the retailer outlines to tap the market and build a long-term relationship with the consumers.long-term relationship with the consumers.

Statement Identifying / Elements 1. Target Market

2. Retail Format

3. Sustainable Competitive Advantage

Market segment towards which the retailer plans to focus its resources & retail mix.

Retailer mix:- nature of merchandise , services offered, pricing policy, advertising, Promotion program, store design , visual merchandising location

Advantage over competition that can be maintained over a long time .

Target Market & Retail FormatTarget Market & Retail Format Retail ConceptRetail Concept :- focuses a retailer on determining the needs of :- focuses a retailer on determining the needs of

its target market & satisfying those needs more effectively & its target market & satisfying those needs more effectively & efficiently than its competitors . efficiently than its competitors .

Retail MarketRetail Market :- a group of consumers with similar needs (a :- a group of consumers with similar needs (a market segment) & a group of retailers using a similar retail market segment) & a group of retailers using a similar retail format to satisfy those consumer needs. format to satisfy those consumer needs.

Example :- Retail Market for Women’s Apparel

Fashion Segment

Reta

il Fo

rmats

Conservative Traditional Fashion-Forward

Specialty Store Departmental Store

Discount Store

Catalog

This example /matrix, describes the battlefield on which This example /matrix, describes the battlefield on which women’s clothing retailers compete. The position in women’s clothing retailers compete. The position in this battlefield indicates the first 2 elements of a this battlefield indicates the first 2 elements of a retailers strategy retailers strategy

- Target marketTarget market- Retail FormatRetail Format

Example :- Retail Market for Women’s Apparel

Fashion Segment

Reta

il Fo

rmats

Conservative Traditional Fashion-Forward

Specialty Store Departmental Store

Discount Store

Catalog/ internet

W- Aso-palavRoopkala, Nali

Levis, Pepe Jeans

West-side

Pantaloons

Indiamart.com

Shoppers Stop

33rdrd element :- element :- Sustainable Competitive AdvantageSustainable Competitive Advantage

Opportunities for retailers to develop sustainable Opportunities for retailers to develop sustainable competitive advantage :- competitive advantage :-

- Customer Loyalty Customer Loyalty - Location Location - HRMHRM- Distribution & Information System Distribution & Information System - Unique MerchandiseUnique Merchandise- Vendor Relations Vendor Relations - Customer service Customer service

Growth StrategiesGrowth Strategies Growth opportunities or Alternatives are :- Growth opportunities or Alternatives are :- 1.1. Market Penetration Market Penetration 2.2. Market Development Market Development 3.3. Retail Format Development Retail Format Development 4.4. DiversificationDiversification

TARGET MARKET

RETA

IL F

OR

MA

TS

Existing New

Exis

ting

New

MARKET PENETRATION -Increase the basket size -Increase the customers -Increase the purchase frequency -Increase no. of stores -Long hours -Cross selling

MARKET DEVELOPMET/EXPANSION-New market segments with existing format -New customer base

RETAIL FORMAT DEVELOPMET -New format for existing customers

DIVERSIFICATION -New retail formats directed at new market segments

Examples :- Examples :- Market Penetration :-Market Penetration :- Freebies :- Buy 1 shirt get a tie free Freebies :- Buy 1 shirt get a tie free

Market Expansion/Development :-Market Expansion/Development :- McDonald’s :- introduced ice creams for RS 7 , which added to McDonald’s :- introduced ice creams for RS 7 , which added to

sales & also brought customers who has perception of sales & also brought customers who has perception of McDonald being an expensive fast food restaurantMcDonald being an expensive fast food restaurant

Retail Format Development :-Retail Format Development :- Crosswords :- opening smaller format stores by the name of Crosswords :- opening smaller format stores by the name of

crossword corner at Shopper’s Stopcrossword corner at Shopper’s Stop

Diversification :-Diversification :- Tobacco giant ITC – entering the business of apparel by its Wills Tobacco giant ITC – entering the business of apparel by its Wills

Lifestyle store & now plans the greeting cards business.Lifestyle store & now plans the greeting cards business.

Global Growth OpportunitiesGlobal Growth Opportunities Key to success :- 4 characteristics Key to success :- 4 characteristics

1.1. Globally sustainable competitive advantage Globally sustainable competitive advantage

2.2. Adaptability Adaptability

3.3. Global Culture Global Culture

4.4. Deep Pockets – staying power Deep Pockets – staying power

Some Core Competitive Advantages for Global Retailers

Core Advantage Global Retailer

Low Cost;efficient operations WalMart Strong private brands Starbucks Fashion reputation Zara, Tommy Hilfiger Category Dominance Home Depot Image Disney , Warner Brothers

Entry StrategiesEntry Strategies

1.1. Direct Investment Direct Investment

2.2. Joint Venture Joint Venture

3.3. Strategic Alliance :- Strategic Alliance :- enter an international enter an international market through direct investmetn but market through direct investmetn but develop an alliance with a local firm to develop an alliance with a local firm to perform logistical & warehousing perform logistical & warehousing activities .activities .

4.4. Franchising Franchising

Steps in the Strategic Retail Planning ProcessSteps 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 & make adjustments

Step :1 Define the Business MissionStep :1 Define the Business Mission

Mission StatementMission Statement :- is a broad description of a :- is a broad description of a retailers objectives & the scope of activities it plans retailers objectives & the scope of activities it plans to undertake . to undertake .

In developing the mission statement 5 ques :- In developing the mission statement 5 ques :- 1.1. What business are we in ?What business are we in ?2.2. What should be our business in the future ?What should be our business in the future ?3.3. Who are our customers ?Who are our customers ?4.4. What are our capabilities ?What are our capabilities ?5.5. What do we want to accomplish?What do we want to accomplish?

Step : 2 Conduct a Situation AuditStep : 2 Conduct a Situation Audit

Situation Audit :- is an analysis of the opportunities & Situation Audit :- is an analysis of the opportunities & threats in the retail environment & the strengths & threats in the retail environment & the strengths & weaknesses of the retail business relative to its weaknesses of the retail business relative to its

competitors .competitors . Elements in a Situation Analysis or Market Analysis

MARKET FACTORS COMPETITIVE FACTORS

ENVIRONMENTAL FACTORS

ANALYSIS OF STRENGHTS & WEAKNESS

SizeGrowth Seasonality Business Cycles

Barriers to entryBargaining power of Vendors Competitive rivalry

TechnologyEconomicRegulatorySocial

Management capabilitiesFinancial ResourcesLocationsOperationsMerchandiseStore Management Customer Loyalty

Step : 3 Identity Strategic OpportunitiesStep : 3 Identity Strategic Opportunities - For increasing retail sales For increasing retail sales Market Penetration Market Penetration Market Expansion Market Expansion Retail Format Development Retail Format Development Diversification Diversification

Step : 4 Evaluate Strategic Opportunities Step : 4 Evaluate Strategic Opportunities The evaluation determines the retailer’s potential to The evaluation determines the retailer’s potential to

establish a sustainable competitive advantage & reap establish a sustainable competitive advantage & reap long-term profits from the opportunities under long-term profits from the opportunities under evaluation. Ex:- developing private-labelevaluation. Ex:- developing private-label

Step : 5 Establish Specific Objectives & Allocate Step : 5 Establish Specific Objectives & Allocate Resources Resources

The specific objectives are goals against which progress The specific objectives are goals against which progress

toward the overall objective can be measured .toward the overall objective can be measured . 3- components :- 3- components :-

1.1. Numerical index of Performance Numerical index of Performance

2.2. Time frame to achieve goals Time frame to achieve goals

3.3. Level of investment needed Level of investment needed

Step : 6 Develop a Retail mix to implement Strategy Step : 6 Develop a Retail mix to implement Strategy

Merchandise & Format Merchandise & Format

Step : 7 Evaluate Performance & Make Adjustments Step : 7 Evaluate Performance & Make Adjustments