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McGraw-Hill/Irwin
Retailing Management, 7/e © 2008 by The McGraw-Hill Companies, All rights reserved.
Retailing Strategy
Human Resource
Retail Locations Management
Chapters 7,8 Chapter 9
5-3
More attention to long-term strategic
planning than ever before
5-4
Elements in Retail Strategy
■ Target Market
the market segment(s) toward which the retailer plans
to focus its resources and retail mix
■ Retail Format
the nature of the retailer’s operations—its retail mix
■ Sustainable Competitive Advantage
an advantage over the competition
5-5
© image100 Ltd
Analyzing McDonalds’ Retail Strategy
Target market?
5-6
Examples of Retail Strategies
Chico’s
Curves
Magazine Luiza
Starbucks
5-7
Steven & Barry’s
■ Target Market
Value and quality conscious consumers for university
sportswear
■ Retail Format
stores are in middle-market malls
5-8
Chico’s Strategy
■ Target Market
Woman 35 to 55 Who Want Comfortable, Casual,
But Stylish Apparel
■ Retail Format
Specialty Apparel Stores in Malls and Strip Centers
Selling Private Label, Coordinated Outfits
■ Bases for Building Sustainable Competitive Advantage
Unique Merchandise Sized 0,1,2,3
5-9
Target Market
5-10
Target market and retail format:
Retail Market Opportunities for Women’s Apparel
5-11
■ If TARGET decides to focus on a limited set of
markets for women’s apparel, which should it
pursue?
■ What should be the retail strategy for that target
market?
5-12
Criteria For Selecting A Target Market
■ Attractiveness -- Large,
Growing, Little
Competition More
Profits
■ Consistent with Your
Competitive Advantages
Rim Light/PhotoLink/Getty Images
5-13
Opportunities for retailers to develop sustainable
competitive advantages
■ Customer Loyalty
■ Location
■ Human Resource Management
■ Distribution and Information Systems
■ Unique Merchandise
■ Vendor Relations
■ Customer Service
5-14
PhotoLink/Getty Images
Can A Retailer Develop a Sustainable
Competitive Advantage by:
5-15
Sources of Competitive Advantage
5-16
Internal and External Bases for
Competitive Advantage
Retail Firm
•Low Cost
•Large Size
•Efficient
Distribution,
Operations
Vendors,
• Unique Customer
Suppliers
Knowledge s
• Loyal
Employees
Sources of
Capital
5-17
Loyalty
5-18
Customer Loyalty
5-19
Retail Branding
Retail brand
■ Can create an emotional
tie with customers that
build their trust and loyalty
■ Facilitates store loyalty
because it stands for a
predictable level of quality
5-20
Loyalty Programs
5-21
Approaches for Building
Customer Loyalty
■ Unique Positioning
■ Location
■ Customer Service
■ Information About Customers (Database)
■ Unique Merchandise
5-22
Example of Positioning
5-23
Location
5-24
Human Resources
5-25
Distribution and Info Systems
Flow of Information
Vendor By decreasing costs here, the
is more money available to
Distribution Center
invest in:
Store -Better services
-Increase in breadth and depth
-Decrease in prices
5-26
Unique Merchandise: Private Labels
Rob Melnychuk/Getty Images
5-27
Jacobs Stock Photography/Getty Images
Vendor Relationships
5-28
High Quality Customer Service
■ Difficult to Achieve
People Are Not Machines -- Inconsistent
Retail Sales Associates At Bottom of Labor Pool
■ Goes Beyond Hiring Good People at High
Wages and Training Them -- Organizational
Culture
5-29
Critical Tradeoff In Developing
Strategic Advantage
5-30
Growth Strategies
■ Market Penetration
■ Market Expansion
■ Retail Format Development
■ Diversification
Related vs. Unrelated
5-31
Growth Opportunities
5-32
Market Penetration
5-33
Market Expansion
5-34
Retail Format Development
5-35
Diversification
5-36
Global Growth Opportunities
Starbucks
Zara
H & M
Carrefour
Royal Ahold
Metro AG 5-37
Steve Cole/Getty Images
IKEA
5-38
Why Do Category Killers and Supercenters
Succeed Globally?
5-39
Key to Success in Global Retailing
5-40
Evaluating Global Growth Opportunities
5-41
5-42
Evaluating Global Growth Opportunities
■ China
Increasing operating costs
Lack of managerial talent
Underdeveloped and
inefficient supply chain
■ India
Prefers small family-owned
stores
Restricts foreign investment
5-43
International Market
Entry Strategies
Direct Investment
Joint Ventures
Strategic Alliances Profit and Risk
Franchising
5-44
Stages in the Strategic
Retail Planning Process
5-46
Market Factors
5-47
Competitive Factors
■ Barriers to entry
Scale economies of big box retailers
Service and unique, high-end products of small retailers
■ Bargaining power of vendors
Markets are less attractive when only a few vendors control the
merchandise sold in it
■ Competitive rivalry
Defines the frequency and intensity of reactions to actions
undertaken by competitors
Conditions leading to intense rivalry: a large number of same
size retailers, slow growth, high fixed costs, a lack of perceived
differences between competing retailers
5-48
Questions for
Analyzing the Environment
5-49
Strengths and Weaknesses Analysis
Management Capability:
Capabilities and experience of top management
Depth 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: Store Management Capabilities
Overhead cost structure Management capabilities
Quality of operating systems Quality of sales associates
Distribution capabilities Commitment of sales associates to firm
Management information systems
Loss prevention systems Locations
Inventory control system
Merchandising Capabilities:
Knowledge and skills of buyers Customers
Relationships with vendors Loyalty of customers
Capabilities in developing private
capabilities
5-50
Performing a Self-Analysis
5-51
Stockbyte/Punchstock Images
Illustration of the
Strategic Retail Planning Process
5-52
Mission Statement for Gifts To Go
5-53
Situation Analysis of Gifts to Go
■ Market Factors
Chicago is an attractive market. (+)
■ Competitive Factors
Many in area. Primary department stores, craft
5-54
Situation Analysis of Gifts to Go
■ Environmental Factors
Potential Threat - Development of electronic channel by
traditional bricks and mortar retailers (-)
5-55
Growth Opportunities for Gifts to Go
■ Market Penetration
Increase size of present stores
Open additional gifts stores in
Chicago area
■ Market Expansion
Open gift stores outside Chicago
area
Sell lower priced gifts in present
stores
Ryan McVay/Getty Images
5-56
Growth Opportunities for Gifts to Go
5-57
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)
5-58
Evaluating Growth Opportunities for
Gifts to Go (continued)
Market Attractiveness
5-59
Evaluating Growth Opportunities for
Gifts to Go
Competitive Position
■ Market Penetration
Increase size of present stores (High)
Open additional gifts stores in Chicago area (Medium)
■ Market Expansion
Open gift stores outside Chicago area (Low)
Sell lower priced gifts in present stores (low)
5-60
Evaluating Growth Opportunities for
Gifts to Go (continued)
Competitive Position
5-61
Market Attractiveness/Competitive
Position Matrix
5-62
Steps in Using Market Attractiveness -
Competitive Position Matrix
5-63
Attractiveness Ratings for
International Growth Opportunities
5-64
Competitive Position in International
Growth Opportunities
5-65