Elements in Retail Strategy
■Target Marketnthe market segment(s) toward which the retailer plans to focus its resources and retail mix■ Retail Formatnthe nature of the retailer’s operations—its retail mix■Sustainable Competitive Advantagenan advantage over the competition
Criteria For Selecting A Target Market
■Attractiveness -- Large, Growing, Little Competition èMore Profits
■Consistent with Your Competitive Advantages
Opportunities for retailers to develop sustainable competitive advantages
■Customer Loyalty
■Location
■Human Resource Management
■Distribution and Information Systems
■Unique Merchandise
■Vendor Relations
■Customer Service
3 approaches for sustainable competitive advantage
- Build strong relationship with customers
- Build strong relationship with suppliers
- Efficient internal operations
Growth Strategies
Market Penetration
■Growth opportunity directed toward existing customers using the retailer’s present retailing format.
■Approaches including opening more stores in the target market area or open longer hours.
■Cross-selling: sales associates in one department attempt to sell complimentary merchandise from another department to their customers.
■Requires high product knowledge and selling skills.
Market Expansion
■Market expansion growth opportunity involves using the existing retail format in new market segments
Retail Format Development
■Develops a new retail format with a different retail mix for the same target market
■Multi-channel retailing
Diversification
■Introduces a new retail format toward a market segment that is not currently served by the retailer
■Related diversification: retailers’ target market and retail format shares something in common with the new opportunity.
■Unrelated diversification: Little commonality between the retailer’s present business with the new growth opportunity.
■Vertical integration into wholesaling or manufacturing: For example designing private label to owning factory
Stages in the Strategic Retail Planning Process
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