retail marketing ch. 5 slides

target market
market segment toward which the retailer plans to focus its resources and retail mix
retail format
the nature of the retailers operations (its retail mix)
sustainable competitive advantage
a long term advantage over the competition
chico’s strategy: target market
women 35 to 55 who want comfortable, casual, but stylish apparel
chico’s strategy: retail format
Specialty Apparel Stores in Malls and Strip Centers Selling Private Label, Coordinated Outfits
chico’s strategy: bases for building SCA
unique merchandise sized 0,1,2,3 (extended sizes)
criteria for selecting a target market
– attractiveness (large or large enough. growing, little competition = more profits)
– consistant with your competitive advantages (walmart competing with nordstoms is not consistent)
– actionable, identifiable, substantial, reachable
sustainable competitive advantage
Customer Loyalty
Location (Prime Consideration)
Human Resource Management
Distribution/Information Systems (Price)
Unique Merchandise
Vendor Relations
Customer Service
more sustainable
– Location
– Customer Loyalty
– Customer Service
– Exclusive Merchandise
– Low Cost Supply Chain Management
– Information Systems
– Buying Power with Vendors
– Committed Employees
less sustainable
Better Computers
More Employees
More Merchandise
Greater Assortments
Lower Prices – someone can match those prices
More Advertising
More Promotions
Cleaner Stores
can a retailer develop a SCA by:
Dropping the Price of Your Merchandise? – no
Building a Store at the Best Location? – yes
Deciding to Sell Hot Merchandise? – no
Increasing Your Level of Advertising? – sometimes
Attracting Better Sales Associates by Paying Higher Wages? – usually not
Providing Better Customer Service? – can be over time
customer loyalty
More than simply liking one retailer over another
– will be reluctant to patronize competitive retailers
retailers build loyalty by:
– Developing a strong brand for the store or store brands (Nordstrom, Sears Craftsmen)
– Developing clear and precise positioning strategies (Target)
– Creating an emotional attachment with customers through loyalty programs (AA, Charity-ties)
retail branding
Stores use brand (store’s name and store brands – private label brands) to build customer loyalty
retail brand benefits
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
private labels EXAMPLES
Sears’ Kenmore — appliances
Kmart’s Martha Stewart — home
JCPenney’s Arizona – jeans
Wal Mart Great Value – food
Target Archer Farms – food
what are the three most important things in retailing?
location, location, location
Location competitive advantage EXAMPLE
A high density of Starbucks stores
– Creates a top-of-mind awareness
– Makes it very difficult for a competitor to enter a market and find good locations
human resources
– Strategies for Recruiting and Retaining Talented Employees
– Employee Branding
– Develop Positive Organizational Culture
flow of information
vendor>>distribution center>>store
by decreasing costs in the flow of information, there is more money available to invest in:
better services
increase in breadth and depth
decrease in prices
vendor relationships
low cost-efficiency through coordination
exclusive sale of desirable brands
special treatment
low cost-efficiency through coordination
– Electronic Data Interchange (EDI)
– Collaborative Planning and Forecasting to Reduce Inventory and Distribution Costs
special treatment
– Early Delivery of New Styles
– Shipment of Scarce Merchandise
high quality customer service
– difficult to achieve (people are not machines – inconsistent; retail sales associates often at bottom of labor pool)
– goes beyond hiring good people at high wages and training them – organizational culture
*4 growth opportunities
market penetration, market expansion, format development, diversification (unrelated/related)
*market penetration
existing traget market
existing retail format
– more stores, more hours, better execution
*market penetration EXAMPLES
starbucks, nordstroms rack, taco bell doing breakfast
*market expansion
new target markets
existing retail format
– dunkin donuts is huge in boston
*format development
existing target markets
new retail format
– multichannel, tesco, tesco express, tesco metro, nordstrom rack
*diversification
unrelated/related
new target markets
new retail fromat
who is successful globally
– Specialty store retailers with strong brand image and unique merchandise. (mcdonalds, starbucks, zara, h&m)
– Discount and food retailers with deep assortments, supply chain/logistics advantages, and low prices (walmart, carrefour, royal ahold, metro ag)
key to success in global retailing
– globally sustainable competitive advantage
– adaptability
– global culture
– financial resources
global sustainable competitive advantage
– Low cost, efficient operations – Wal-Mart, Carrefour
– Strong private label brands: Starbucks, KFC
– Fashion Reputation – The Gap, Zara, H&M
– Category dominance – Best Buy, IKEA, Toys R Us
Why Do Category Killers and Supercenters Succeed Globally?
Scale economies for buying merchandise globally
Unique systems and standardization formats which facilitate control over multiple stores
Understand that consumers are willing to forego service for lower prices
*7 strategic retail planning process stages
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 and make adjustments
*performing a self-analysis
– At what is our company good?
– In which of these areas is our company better than our competitors?
– In which of these areas does our company’s unique capabilities provide a sustainable advantage or a basis for developing one?
*elements in a situation audit
market factors
competitive factors
environmental factors
analysis of strengths and weaknesses
*market factors
size, growth, seasonality, business cycles
*competitive factors
barriers to entry, bargaining power of vendors, competitive rivalry
*environmental factors
technology, economy, regulatory, social
*analysis of strengths and weaknesses
management capabilities, financial resources, locations, operations, merchandise, store management, customer loyalty
*strengths and weaknesses analysis
– management capability
– financial resources
– operations
– merchandising capabilities
– store management capabilities
– locations
– customers