Retail Market Strategy

Class 3

Strategy- The Retail Perspective

A retail strategy can be defined as ‘a clear and definite plan that the retailer outlines to tap the market and build a long-term relationship with the customers.’

2

“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 for A Management Decision

Steps Involved In Strategy Development4

Step I- Define Organisation’s mission

The mission statement is a statement of the long-term purpose of the organisation.

Retailer’s mission statement normally highlight-

- The products and services that will be offered

- The customers who will be served

- The geographic areas that the organisation chooses to operate in

- The manner in which the firm intends to compete in its chosen markets

5

Step II- Conduct A Situational Analysis

PEST analysis

- Political, Economic, Social and Technological factors

q Porter’s Five Forces

- Entry barriers, suppliers, customers, substitute products and industry rivalry

6

Step III- Identifying Options/ Strategic Alternatives

7

Step IV- Set Objectives8

Good objectives are measurable, are specific to time and indicate the priorities for the organisation

Step V- Obtain And Allocate The Resources Needed To Compete

9

Step VI- Develop The Strategic Plan

Target Market

Determine the Retail Mix

Positioning Strategy

10

Step VII- Implement the Strategy, Evaluate and Control

For implementation

- Focus on target market

- Single minded merchandising

- Appealing displays

- Advertising in sync

- Personnel empathy

- Customer service as per target customer

To evaluate

- Periodic evaluation

- Decision about future changes

All this helps in maintaining control

11

Elements in Retail Strategy

• Target Market

Customer Needs

• Retail Format

Method for Satisfying Needs

• Bases for Building Sustainable Competitive Advantage

Defending Position Against Competitors

© image100 Ltd

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?

The

McG

raw

-Hill

Com

pani

es, I

nc./J

ohn

Flou

rnoy

, pho

togr

aphe

r

Store-Based Retail Strategy Mixes

Food-OrientedùConvenience storeùConventional

supermarketùFood-based

superstoreùCombination storeùBox (limited-line)

storeùWarehouse store

General MerchandiseùSpecialty store

ùTraditional department

ùFull-line discount store

ùVariety store

ùOff-price chain

ùFactory outlet

ùMembership club

ùFlea market

Convenience Store Strategy Mix

Location:Neighborhood

Merchandise:Medium width and low depth of assortment; average quality

Prices:Average to

Above average

Atmosphere andServices:Average

Promotion:Moderate

Conventional Supermarket Strategy Mix

Location:Neighborhood

Merchandise:Extensive width and depth of assortment;

average quality; manufacturer, private,

and generic brands

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers, and coupons

Food-Based Superstore Strategy Mix

Location:Community shopping center or isolated site

Merchandise:Full assortment plus

health and beauty aids and general merchandise

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers

Supermarkets Have Come a Long Way

Combination Store Strategy Mix

Location:Community shoppingcenter or isolated site

Merchandise:Full assortment plus

health and beauty aids and general merchandise

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers

Box Store Strategy Mix

Location:Neighborhood

Merchandise:Low width and depth of

assortment; fewperishables; few national

brands

Prices:Very low

Atmosphere andServices:

Low

Promotion:Little or none

Warehouse Store Strategy MixLocation:

Secondary site, often inindustrial area

Merchandise:Moderate width and

low depth of assortment; emphasis on

manufacturer brandsbought at discount

Prices:Very low

Atmosphere andServices:

Low

Promotion:Little or none

Specialty Store Strategy MixLocation:

Business district or shopping center

Merchandise:Very narrow width and

extensive depth of assortment; average to

good quality

Prices:Competitive to Above average

Atmosphere andServices:

Average to excellent

Promotion:Heavy use of displaysExtensive sales force

Old Navy – A Discount Power

Traditional Department Store Strategy Mix

Location:Business district, shopping

center or isolated store

Merchandise:Extensive width and

depth of assortment; average to

good quality

Prices:Average to

Above average

Atmosphere andServices:

Good to excellent

Promotion:Heavy ad and catalog

use; direct mail; personal selling

Full-Line Discount Store Strategy Mix

Location:Business district, shopping

center or isolated store

Merchandise:Extensive width and

depth of assortment; average to

good quality

Prices:Competitive

Atmosphere/Services:Slightly below

average to average

Promotion:Heavy on newspapers;price-oriented; selling

Variety Store Strategy MixLocation:

Business district, shopping center or isolated store

Merchandise:Good width and some depth of assortment;

below-average to average quality

Prices:Average

Atmosphere/Services:Below average

Promotion:Use of newspapers

Off-Price Chain Strategy MixLocation:

Business district, shopping center or isolated store

Merchandise:Moderate width and

poor depth of assortment;

average to good quality;low continuity

Prices:Low

Atmosphere/Services:Below average

Promotion:Use of newspapers;

brands not advertised;limited selling

Factory Outlet Strategy MixLocation:

Out of the way site or discount mall

Merchandise:Moderate width and

poor depth of assortment;

low continuity

Prices:Very Low

Atmosphere/Services:Very low

Promotion:Little

Membership Club Strategy MixLocation:

Isolated store or secondary site

Merchandise:Moderate width and

poor depth of assortment;

low continuity

Prices:Very Low

Atmosphere/Services:Very low

Promotion:Little;

some direct mail

Flea Market Strategy Mix

Location:Isolated store

Merchandise:Extensive width and

poor depth of assortment;

low continuity; variable quality

Prices:Very Low

Atmosphere/Services:Very low

Promotion:Limited

Why Does a Retailer Need to Focus on a

Specific Target Market?

Why Not Sell to Everyone?

Can A Retailer Develop a Sustainable Competitive Advantage by:

Building a Store at the Best Location?

Deciding to Sell Some Hot Merchandise?

Increasing Your Level of Advertising?

Attracting Better Sales Associates by Paying Higher Wages?

Providing Better Customer Service?

Dropping the Price of Your Merchandise?

PhotoLink/Getty Images

How to Develop a Sustainable Competitive Advantage

Internal and External Bases for Competitive Advantage

Retail Firm嗗Low Cost

嗗Large Size嗗Efficient Distribution, Operations

嗗 Unique Knowledge嗗 Loyal Employees

Sources ofCapital

Vendors, Suppliers Customers

What does loyalty mean?

Is It the same as liking a store?

…Going to the store frequently?

Loyalty

Digital Vision / Getty Images

How Retailers Build Loyalty

Develop a strong brand for the store or the store brands

Develop clear precise positioning strategies

Create an emotional attachment with customers through loyalty programs

Royalty-Free/CORBIS

International Expansion- A Growth Strategy

Export

Franchising/ Licensing

Acquisitions and Mergers

Joint Venture

Organic Growth

37

The Retail Value Chain

Pentagon Player

ΠProduct

ΠPlace

ΠValue

ΠPeople and

ΠCommunications

Triangle Player

ΠSystems

ΠLogistics

ΠSuppliers

38

The Retail Value Chain In India