Retail Market Strategy

Meeting 15,16

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Retail Market Strategy
(Meet 15 & 16)
Sub-CPMK:
Mahasiswa dapat menjelaskan strategi membangun
keunggulan kompetitif berkelanjutan, strategi
pertumbuhan, dan proses perencanaan ritel
(C2,A2)

Outline:
1. What is Retail Strategy.
2. Central Concepts in a Retail Market Strategy.
3. Growth Strategies.
4. The Strategic Retail Planning Process.

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 Outline 1:
What is Retail Strategy
 Retail Strategy
• The term strategy is frequently used in retailing.
For example, retailers talk about their
merchandise strategy, promotion strategy,
location strategy, channel strategy or branding
strategy.
• The term is used so commonly that it might
appear that all retailing decision are strategic
decisions, but retail strategy isn’t just another
expression for retail management
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 Definition of Retail Market
Strategy
Retail strategy is a statement identifying:
• Target market: market segment(s) toward which the
retailer plans to focus its resources and retail mix.
• Retail format: describes the nature of retailer
operations –its retail mix –that it will use to satisfy the
needs of its target market.
• The bases on which the retailer plans to build a
sustainable competitive advantage

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 Sustainable Competitive
Advantage
A sustainable competitive advantage is an
advantage the retailer has over its competition
that is not easily copied and can maintained over
a long period of time

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Sources of Competitive Advantage
More sustainable Less sustainable
• Location. • Better computers.
• Customer loyalty. • More employees.
• Customer service . • More merchandise.
• Exclusive merchandise . • Greater assortments.
• Low cost supply chain • Lower prices.
management. • More advertising.
• Information systems. • More promotions.
• Buying power with • Cleaner stores.
vendors.
• Committed employees. 8
 Why Does a Retailer Need
to Focus on a
Specific Target Market?

Why Not Sell to Everyone?

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 Outline 2:
Central Concept in Retail Market
Strategy
Central Concepts in A Retail Market
Strategy
• A retail market is a group of consumers with
similar needs and a group of retailers that
satisfying those needs using a similar retail
channels and format.

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Retail Market Opportunities for Women’s Apparel

Source : Michael Levy, Barton A Weitz, Dhruv Grewal. (2014). Retailing Management. 9 (Exhibit 5-1) 12
Central Concepts in A Retail Market
Strategy (Cont’d)
• In Exhibit 5-1, we divide the market into three
fashion-related segments :
• Conservative: consumers who place little
importance on fashion.
• Traditional: those who want classic styles.
• Fashion –foward: those who want the latest
fashion.

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Central Concepts in A Retail Market
Strategy (Cont’d)
• After selecting a target market and a retail mix,
the final element in a retail strategy is the
retailer’s approach to building a sustainable
competitive advantage
• Three approaches for developing a sustainable
competitive advantage are:
1. Building strong relationship with consumers.
2. Building strong relationship with suppliers.
3. Achieving efficient internal operations.
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Central Concepts in A Retail Market
Strategy (Cont’d)
1.Relationship with customers – customer loyalty
Customer Loyalty means that customers are committed to
buying merchandise and services from a particular retailer.
Loyalty is more than simply liking one retailer over another.
Loyalty means that customers will be reluctant to switch
and patronize a competitive retailer.

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 1.Relationship with customers –
customer loyalty
Approaches for developing loyalty in this section
are:
A. Building a strong brand image
B. Creating a unique positioning in the target
market
C. Offering unique merchandise
D. Providing excellent customer service
E. Implementing a customer relationship
management program
F. Building a retail community 16
 1.Relationship with customers –
customer loyalty
A.Building a Strong Brand Image
• Retailers build customer loyalty by developing
a well-known, attractive image of their brands
and of the name over their doors
• Strong brand images facilitate customer
loyalty because they reduce the customers’
risks associated with purchases. They assure
customers that they will receive a consistent
level of quality and satisfaction from the
retailers.
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 1.Relationship with customers –
customer loyalty (cont’d)
A.Building a Strong Brand Image
• For example, when most consumers think
about fast food or hamburgers or french fries,
they immediately think of McDonald’s. Their
image of McDonald’s includes many favorable
beliefs such as fast service, consistent quality,
and clean restrooms.

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 1.Relationship with customers –
customer loyalty (cont’d)
B.Creating a unique positioning in the target
market
• A retailer’s brand image reflects its positioning
strategy. Positioning is the design and
implementation of a retail mix to create an image
of the retailer in the customer’s mind relative to
its competitors.
• A perceptual map is frequently used to
represent the customer’s image and preferences
for retailers 19
 Hypothetical
Perceptual
Map of
Woman’s
Apparel
Market

Source5-20
: Michael Levy, Barton A Weitz, Dhruv Grewal. (2014). Retailing Management. 9 (Exhibit 5-3)
 1.Relationship with customers –
customer loyalty (cont’d)
B.Creating a unique positioning in the target
market
• Exhibit 5-3 offers a hypothetical perceptual map of
retailers selling woman’s clothing. The two dimentions in
this map, fashion and services, represent two important
characterictics that consumers in this example use in
forming their image of retailers.

• Perceptual maps are developed in a way so that the

distance between two retailer’s positions on the map
indicates grow similar the stores appear for consumers.
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 1.Relationship with customers –
customer loyalty (cont’d)
C.Offering Unique Merchandise
• It is difficult for a retailer to develop customer loyalty
through its merchandise offering because most
competitors can purchase and sell the same popular
national brands. But many retailers build customer
loyalty by developing private-label brands (also called
store brands or own brands) products developed and
marketed by a retailer and available only from that
retailer.

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 1.Relationship with customers –
customer loyalty (cont’d)
D. Customer Service
• Retailers also can develop customer loyalty by offering
excellent customer service. Consistently offering good
service is difficult because customer service is provided
by retail employees who are less consistent than
machines.
• It takes considerable time and effort to build a tradition
and reputation for customer service. But once a retailer
has earned a service reputation, it can sustain this
advantage for a long time because it’s hard for a
competitor to develop a comparable reputation.
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 1.Relationship with customers –
customer loyalty (cont’d)
E. Customer Relationship Management Programs
• Customer relationship management (CRM)
programs, also called loyalty or frequent shopper
programs, are activities that focus on identifying and
building loyalty with a retailer’s most valued customers.
• These programs typically involve offering customers
rewards based on the amount of services or
merchandise they purchase. For example : airlines offer
free tickets to travelers who have flown a prescribed
number of miles, and Subway gives customer a free
sandwich for each 10 they purchase.
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 1.Relationship with customers –
customer loyalty (cont’d)
F. Building Community Using Socia Media
• Retailers are beginning to use their websites and social media
to develop retail communities. A retail community is a group
consumers who have a shared involvement with a retailer.
• The members of the community share information with
respect to the retailer’s activities.
• The involvement in the community can range from simply
becoming a fan of a retailer’s Facebook page to meeting face-
to-face with community members to share experiences.
• Increased involvement in the community by its members
leads to a greater emotional feeling and loyalty toward the
retailer.
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 2.Relationship with Suppliers.
A second approach for developing competitive advantage
is to develop strong relationship with companies that
provide merchandise and services to the retailer such as
real estate developers, advertising agencies, and
transportation companies. Of these relationship with
suppliers, the most important are relationship with vendors.

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 2.Relationship with Suppliers
(cont’d)
• For example, the relationship between Walmart and
Procter&Gamble initially focused on improving supply chain
efficiencies. Today, the partners in this relationship share
sensitive information with each other so that Walmart is better
able to plan for the introduction of new P&G products and
even develop some unique packaging for P&G national brand
exclusively available at Walmart.

• By strengthening relationships with each other, both retailers

and vendor can develop mutually benefical assets and
programs that give retailer. Vendor pair advantage over
competing pairs.
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 3.Efficiency of Internal Operations
• In addition to strong relationship with external parties,
customers, and suppliers, retailers can develop
competitive advantages by having more efficient internal
operations. Efficient internal operations enable retailers
to have a cost advantage over competitiors or offer
customers more benefit than competitors at the same
cost.
In addition to size, other approaches for improving internal
operating efficiencies are (A) human resource management
and (B) Distribution and information system.

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 3.Efficiency of Internal
Operations(Cont’d)
3A. Human resource management.
Retailing is a labor-intensive business, in which employees
play a major role providing services to customers and
building customer loyalty. Some retailers view employees
as an expense that needs to be reduced over the long run.

But research has found that highly successful retail chains

such as Costco invest heavily in store employees, but still
have low prices, solid financial performances, and better
customer service than their competitiors.

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 3.Efficiency of Internal
Operations(Cont’d)
3A. Human resource management.
They recognize that under-investing in their employees
makes their operations more inefficient and, therfore, much
less profitable. Knowledgeable and skilled employees
cimmitted to the retailer’s objectives are critical assets that
support the success of these retailers.

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 3.Efficiency of Internal
Operations(Cont’d)
3B. Distribution and Information Systems.
• The use of sophisticated distribution and information
systems offers an opportunity for retailers to reduce
operating costs -- the costs associated with running the
business-and make sure that the right merchandise is
available at the right time and place.
• In addition to using information systems to improve
supply chain efficiency. The customer’s purchase data
collected by information systems provide market served
by each of its stores and to tailor promotion to the
specific needs of individial customers.
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