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.

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 Development

4

Step I- Define Organisations mission

5

The mission statement is a statement of the long-term

purpose of the organisation.
Retailers 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

Step II- Conduct A Situational

Analysis
PEST analysis
- Political, Economic, Social and
Technological factors
q Porters Five Forces

- Entry barriers, suppliers, customers,

substitute products and industry rivalry

Step III- Identifying Options/ Strategic

Alternatives
7

Step IV- Set Objectives

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

10

Target Market
Determine the Retail Mix
Positioning Strategy

Step VII- Implement the Strategy, Evaluate

and Control
11

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

Elements in Retail Strategy

Target Market

Customer Needs
Retail Format
Method for Satisfying Needs

image100 Ltd

Bases for Building Sustainable Competitive Advantage

Defending Position Against Competitors

What Is McDonalds:
-Target market?
-Retail offering (format)?

-Bases for competitive

advantage?

The McGraw-Hill Companies, Inc./John Flournoy, photographer

Analyzing McDonalds Retail Strategy

What Threats Might McDonalds Face in the Future?

Store-Based
Retail Strategy Mixes
Food-Oriented

General Merchandise

Convenience store
Conventional

Specialty store

supermarket
Food-based
superstore
Combination store
Box (limited-line)
store
Warehouse store

Traditional department
Full-line discount store
Variety store
Off-price chain
Factory outlet
Membership club
Flea market

Convenience Store Strategy Mix

Location:
Neighborhood

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

Prices:
Average to
Above average
Atmosphere and
Services:
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 and
Services:
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 and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers

Supermarkets Have
Come a Long Way

Combination Store
Strategy Mix
Location:
Community shopping
center or isolated site

Merchandise:
Full assortment plus
health and beauty aids
and general merchandise

Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers

Box Store Strategy Mix

Location:
Neighborhood

Merchandise:
Low width and depth of
assortment; few
perishables; few national
brands

Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none

Warehouse Store Strategy Mix

Location:
Secondary site, often in
industrial area
Merchandise:
Moderate width and
low depth of
assortment; emphasis on
manufacturer brands
bought at discount

Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none

Specialty Store Strategy Mix

Location:
Business district or
shopping center

Merchandise:
Very narrow width and
extensive depth of
assortment; average to
good quality

Prices:
Competitive to
Above average
Atmosphere and
Services:
Average to excellent
Promotion:
Heavy use of displays
Extensive 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 and
Services:
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 Mix

Location:
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 Mix

Location:
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 Mix

Location:
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 Mix

Location:
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

Prices:
Very Low

Merchandise:
Extensive width and
poor depth of
assortment;
low continuity;
variable quality

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

Vendors,
Suppliers

Retail Firm
Low Cost
Large Size
Efficient
Distribution,
Operations
Unique Knowledge
Loyal Employees

Sources of
Capital

Customers

Loyalty

What does loyalty mean?

Is It the same as liking a store?
Going to the store frequently?
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

37

Export
Franchising/ Licensing
Acquisitions and Mergers
Joint Venture
Organic Growth

The Retail Value Chain

38

Pentagon Player
Product
Place
Value
People and
Communications
Triangle Player
Systems
Logistics
Suppliers

The Retail Value Chain In India