Professional Documents
Culture Documents
Strategic Tactical
Direction Implementation
Strategy statement Annual plan
Broad Specific, detailed
Unstructured Structured
Problem solving Problem solving
Creativity Analytical
External focus Internal focus
Irregular Regular
Long-term Short-term
Difficult to evaluate Easy to evaluate
Note: Success Comes for Having a Good Strategy and Executing It Well
Elements in Retail Strategy
1. Target Market
• Retail Format
• Bases for Building
Sustainable
Competitive
Advantage
Elements in Retail Strategy
1. Target Market
• the market segment(s) toward which the retailer
plans to build a sustainable competitive
advantage.
1. Retail Format
• is the retailer’s mix
1. Target Market
• Customer Needs
1. Retail Format
• Method for Satisfying Needs
What Is Traderjoe’s’:
-Target market?
Lifestyle, Psychographics
Demographics
Criteria For Selecting
A Target Market
• Attractiveness -- Large, Growing, Little
Competition More Profits
• Consistent with Your Competitive Advantages
Can A Retailer Develop a
Sustainable
Competitive Advantage by:
• Dropping the Price of his Merchandise?
• Building a Store at the Best Location?
• Deciding to Sell Some Hot Merchandise?
• Increasing his Level of Advertising?
• Attracting Better Sales Associates by
Paying Higher Wages?
• Providing Better Customer Service?
Internal and External Bases for
Competitive Advantage
Retail Firm
•Low Cost
•Large Size
•Efficient
Distribution,
Operations
Vendors,
• Unique Customers
Suppliers
Knowledge
• Loyal Employees
Sources of
Capital
Sources of Competitive
Advantage
More Sustainable Less Sustainable
• Location • Better Computers
• Customer Loyalty • More Employees
• Customer Service • More Merchandise
• Exclusive Merchandise
• Greater Assortments
• Low Cost Supply Chain
Management • Lower Prices
• Information Systems • More Advertising
• Buying Power with • More Promotions
Vendors • Cleaner Stores
• Committed Employees
Loyalty
• Costs
– Location
– Frequent Shopper Programs
– Unique Merchandise
• Mental, Emotional Attachment
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
Strong Associations
– Limited Brand Extensions
Vendor Relationships
• Low Cost - Efficiency Through Coordination
– Electronic Data Interchange (EDI)
– Collaborative Planning and Forecasting to
Reduce Inventory and Distribution Costs
• Exclusive Sale of Desirable Brands
• Special Treatment
– Early Delivery of New Styles
– Shipment of Scare Merchandise
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
Critical Tradeoff In Developing
Strategic Advantage
Focus Leads to Developing
A Competitive Advantage
But
Focus Reduces Flexibility
•Market Penetration
•Market Expansion
•Diversification
100
0
1 st 2 n d 3 rd 4 th
Q tr Q tr Q tr Q tr
MARKET COMPETITIVE ENVIRONMENTAL ANALYSIS OF
FACTORS FACTORS FACTORS STRENGTHS &
WEAKNESSES
Size Barriers to entry Technology Management
Bargaining power of Economic capabilities
Growth
vendors Regulatory Financial resources
Seasonality Locations
Business cycles Competitive rivalry Social
Operations
Threat of superior Merchandise
new formats Store Management
Customer loyalty
Questions for
Analyzing the Environment
Barriers to
Entry
Bargaining
Power of Competitiv Large
Vendors e Customers
Rivalry
Threat of
Substitution
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
Market Attractiveness/Competitive
Position Matrix
High Medium Low
Maximum Invest to Opportunities
investment challenge leader investment
Aggressive
Market Attractiveness
Competitive Position
Evaluation of Merchandise
Category Opportunities
1,000
High Medium Low
Soft home
High
Market Attractiveness
Men’s clothing
667
Women’s Children’s
Medium
clothing clothing
Consumer
Junior’s Furniture electronics
clothing
333
Low