CHAPTER 5

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CHAPTER 05

Retail Market Strategy

Retailing Management 8e © The McGraw-Hill Companies, All rights reserved. 5-1

Questions

 What is a retailing strategy?

 How can a retailer build a sustainable
competitive advantage?
 What steps do retailers go through to develop a
strategy?
 What different strategic growth opportunities can
retailers pursue?
Elements in Retail Strategy

 Target Market
 the market segments retailer plans to focus its
resources and retail mix
 Retail Format
 Method for Satisfying Needs
 Type of retail mix (nature of merchandise, services
offered, pricing policy, A&P program, store design and
visual merchandising, location…)
 Sustainable Competitive Advantage
 An advantage the retailer has over its competition that
is not easily copied by competitors and thus can be
maintained over a long period of time.

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More attention to long-term strategic
planning than ever before

■ Due to the emergence of

 New competitors
 New formats
 New technologies
 Shifts in customer needs
Competitive Advantages may come
from..

Retail Firm

Vendors,
Suppliers Competitive
advantage Customers

Sources of
Capital
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 What are Competitive Advantages ?

■ Lower Prices ■ Better Computers

■ More Advertising ■ More Employees
■ More Promotions ■ More Merchandise
■ Cleaner Stores…. ■ Greater Assortments
■ Location ■ Low Cost Supply Chain
■ Customer Loyalty Management
■ Customer Service ■ Information Systems
■ Exclusive Merchandise ■ Buying Power with
Vendors
■ Committed Employees…

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 What are Competitive Advantages?
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
■ More Advertising
■ More Promotions
■ Cleaner Stores….
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Discuss by groups

Chọn một nhà bán lẻ bất kỳ:

1)Xác định khách hàng mục tiêu và đặc điểm
nhân khẩu học của KH mục tiêu.
2) Để đáp ứng nhu cầu khách hàng, các nhà
bán lẻ thực hiện hình thái bán lẻ (Retail
format) ntn? (chọn địa điểm, cơ cấu hàng hóa,
trưng bày, giá, dịch vụ khách hàng …)
3)Lợi thế cạnh tranh có thể có của nhà bán lẻ
này là gì?Giải thích lý do.(hoặc đề xuất xuất
định hướng để ta lợi thế cạnh tranh)

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7 important opportunities to develop
sustainable competitive advantages ?

1. Customer Loyalty
2. Location
3. Human Resource
Management
4. Distribution and Information
Systems
5. Unique Merchandise
6. Vendor Relations
7. Customer Service

PhotoLink/Getty Images

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 How Retailers Build Loyalty
 Develop a strong brand for the store or the
store brands
 Develop clear precise positioning strategies
 The GAP: moderately price, fashionable
women’s clothing and good services.
 Hermes: unique value, Luxury…
 Creating an emotional attachment with
customers through loyalty programs
 Unique Merchandise :
 Private brand
 Exclusive brand

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Retail Branding

Stores use brand (store’s name and store brands –

private label brands) to build customer loyalty

■ Retail brand
 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
Location

 What are the three most important things in

retailing?
 “location, location, location”

 Location is a competitive advantage

 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 a good locations
High Quality Customer Service

 Difficult to Achieve, take much time and effords.

 People Are Not Machines – Inconsistent
 Customer service becomes a part of retailer’
organization culture.
 Customer always require services better and
better.
 That are real sustanable competitive
advantage.

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Human Resources

 “Employees are key to build a sustainable

competitive advantage”

 Strategies for Recruiting and Retaining

Talented Employees
 Employee Branding
 Develop positive organizational culture

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Distribution and Info Systems

Flow of Information

Vendor By decreasing costs here, the

is more money available to
Distribution Center
invest in:
Store  Better services
 Increase in breadth and depth
 Decrease in prices

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Vendor Relationships

 Low Cost - Efficiency Through Coordination

 Electronic Data Interchange (EDI)
 Planning and Forecasting to reduce Inventory and
distribution costs
 Exclusive Sale of Desirable Brands
 Special Treatment
 Early Delivery of New Styles
 Shipment of Scare Merchandise

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Growth strategies

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 Growth strategies

Market Penetration Cross Selling – sales associates in one

department sell complimentary
merchandise from other departments
Attract customers from
target market Example: Manicurist sells services plus
hand lotion or nail polish
Get current customer
to visit store more often Example: Salesperson sells leaf blower
or buy on each visit directs customer to electrical
department to purchase a 100 foot
extension cord.
 Growth strategies

Market Expansion  Dunkin’ Donuts – new stores

(and at gas stations) outside
Using the existing
northeastern
retail format in new  Abercrombie & Fitch (for
market segments college students) opens
lower-priced chain Hollister
Co. for high school students
Growth strategies

Format Development  UK based TESCO:

Develops a new retail  Tesco Express: small stores
format with a different located close to where
retail mix for the same customers live and work
target market  Tesco Metro: bring
Multi-channel convenience to city center
location by specializing in
retailing
ready-to-eat meals
 Tesco Superstores: traditional
stores
 Tesco Extra: one-stop
destination with the widest
range of food and non-food
products
 Growth strategies

Diversification
Introduces a new retail
format toward a new
market segment
Vertical integration into
wholesaling or
manufacturing
International Market Entry Strategies
Discussion

1) What are differentiation characteristics between

target customers of Coopmart and BigC ?
2) Analyze advantages and disadvantages of
approaches that retailers can take when
entering foreign markets.
 Direct investment
 joint venture
 strategic alliance
 and franchising

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