Growth Strategies

Four types of growth opportunities

that retailers may pursue:
1. Market Penetration
2. Market Expansion
3. Retail Format Development
4. Diversification

1. Market Penetration
A market penetration growth

opportunity involves realizing

growth by directing efforts toward
existing customers using the
retailers present retailing format.
Market penetration approaches

include opening more stores in the

target market keeping existing
stores open for longer hours.

Market Penetration
Other approaches

involve displaying
merchandise to increase
impulse purchases and
training sales people.
Cross-selling means
that sale associates in
one department attempt
to sell complementary
merchandise from other
departments to their
customers.

Market Penetration

2. Market Expansion
A market

expansion
growth
opportunity
involves using
the existing
retail format
in new market
segments.

3. Retail Format Development

A retail format

development growth
opportunity is an
opportunity in which
a retailer develops a
new retail format-a
format with a
different retail mixfor the same target
market.

4. Diversification
A diversification growth opportunity

is one in which a retailer introduces

a new retail format directed toward a
market segment thats not currently
served by the retailer.
Diversification opportunities are
either related or unrelated

Related versus Unrelated

Diversification
In a related diversification growth

opportunity, retailers present target

market or retail format shares something
in common with the new opportunity.
Unrelated diversification lacks any
commonality between the present
business and the new business.

Vertical Integration
Is diversification by retailers into

wholesaling or manufacturing.
In addition, retailers and manufacturers
have different customers; the immediate
customers for a manufacturers
merchandise are retailers, whereas a
retailers customers are consumers.

Strategic Opportunities and

Competitive Advantage
Typically, retailers

have the greatest

competitive
advantage when
they engage in
opportunities that
are similar to their
present retail
strategy.

Global Growth Opportunities

International expansion is a

market expansion growth

opportunity that many retailers
find attractive. But international
expansion can be risky because
retailers must deal with different
government regulations, cultural
traditions, supply chain
considerations, and languages.

Key to success
4 characteristics of retailers that

have successfully exploited

international growth
opportunities:
a. A global sustainable competitive

advantage
b. Adaptability
c. Global culture
d. Financial resources