1
What is Retail Strategy ?
Definition of Retail strategy
A retail strategy is a statement identifying:-
The retailers target market
build a SCA
2
What is a Retail Strategy
?
The retailers target market is the market
segments towards which the retailer plans to
focus its resources & retail mix
A retail format is the retailers mix
Nature of merchandise & services offered
Pricing policy
merchandising
Typical location
3
Retail Strategies
Each retail strategy involves :-
1. Selecting a target market segment and retail
format and
2. Developing a SCA that enables the retailer to
reduce the level of competition it faces
4
1.Selecting a target market segment and retail
format
Starbucks
SCA : A Unique Service and atmosphere
A chain of gourmet coffee cafes
5
Selecting a target market segment and retail
format
Fingerhut
SCA : A catalog selling retailer
Sells wide ranging products from flowers to Home
entertainment centers
Each year it mails out 500 million catalogs to its
prime customers comprising of HHs with $15000
to $35000 annual income
Also provides credit facilities to lower income
customers..
Company also maintains database of 11 million
customers who failed to pay for the
merchandise !!!
6
Selecting a target market segment and retail
format
Autozone
SCA :Target market : Low income customers who
repair their car themselves
A Memphis based auto parts retailer
7
2.Building a SCA
Location
Vendor relations
8
Building a SCA
Customer loyalty
Some ways that retailers build loyalty are
1. Positioning
2. Customer service
3. Database retailing
4. Unique merchandise
9
Building a SCA
1.Positioning
Positioning is the design and implementation
asset
10
Building a SCA
3.Database retailing
Database retailing is the development and
11
Building a SCA
Location
What are the three most important things in
retailing?
The classic response to this important question
on retailing is .
Location,
location,
location
12
Building a SCA
Vendor relations
By developing strong relations with vendors,
retailers may get exclusive rights to
Sell merchandise in a region
short supply
13
Building a SCA
Effective committed employees
Retailing is labor intensive
14
Building a SCA
15
Growth Strategies
Market expansion
Diversification
16
Growth Strategies
Market Penetration
Market penetration / opportunity involves
17
Growth Strategies
Market Expansion
Market expansion opportunity employs the
18
Growth Strategies
Retail format development
A retail format development opportunity involves
19
Growth Strategies
Diversification
A retail format diversification opportunity involves a new
Related diversification
The present target market and retail format shares
20
Growth Strategies
Diversification
Unrelated diversification
Here, by contrast, an unrelated diversification
wholesaling merchandise
21
Developing Growth
Strategies
Existing New
Market Market
EXISTING
Penetration expansion
T
22
International Growth Opportunities
23
International Growth Opportunities
Strategic consistency
Entry in international markets is most successful when
expansion opportunity is consistent with the retailers
overall strategy and core competencies
Core competency Global retailer
Low cost, efficient distn Wal-Mart
Strong Pvt Brands Marks & Spencers,GAP,IKEA
Fashion reputation Gap, Zara, Hennes & Mauritz
Category dominance Toys RUs, Home Depot..
Image Disney, Warner Brothers
24
International Growth Opportunities
Adaptability- McDonalds
Global systems
Micro marketing
25
International Growth Opportunities
26
Deciding how to enter the
market
1. Joint venturing
(a) Franchising
Agreement with a licensee in a foreign market
For a fee or royalty
Licensee buys right to use companys
manufacturing process , trade mark, patent,
trade secret, or other item of value..
Company gains entry at little risk
Coca Cola markets by licensing bottlers
world wide
27
Deciding how to enter the
market
2. Direct Investment
Advantages could be
Cheaper labor, & raw material
Foreign govt. investment incentives
Freight savings
Company can improve its image by providing
employment opportunities
Helps developing deeper relationships with
govt., customers, local suppliers, & distributors..
Allows it to adapt its products to the local
market better
28
Deciding how to enter the
market
Disadvantages of the Direct investment option
could be
Higher risk of devalued currency,
falling markets..
government changes.
29
The strategic retail planning process
30
The strategic retail planning process
31