Lecture Retailing management (6/e): Chapter 5 - Levy Weitz

Chapter 5
Retail Marketing Strategy

McGraw­Hill/Irwin
Retailing Management, 6/e

Copyright © 2007 by The McGraw­Hill Companies, Inc. All rights reserved.


52

Retailing Strategy

Human Resource
Management
Chapter 9

Retail Locations
Chapters 7,8

Retail Market Strategy
Chapter 5
Financial Strategy
Chapter 6
Information and
Distribution
Systems
Chapter 10

Customer
Relationship

Management
Chapter 11


5-

“Strategy” Is Over Used

3

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


5-

Strategic vs. Tactical Decisions
Strategic

Tactical

Direction

Implementation

Strategy statement

Annual plan

Broad

Specific, detailed

Unstructured

Structured

Problem solving

Problem solving

Creativity

Analytical

External focus

Internal focus

Irregular

Regular

Long-term

Short-term

Difficult to evaluate

Easy to evaluate

Note:

4

Success Comes for Having a Good Strategy and Executing It Well


Elements in Retail Strategy

55

• Target Market
Customer Needs
• Retail Format
Method for Satisfying Needs

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ã Bases for Building Sustainable Competitive Advantage
Defending Position Against Competitors


5-

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 McDonald’s Face in the Future?

6


Examples of Retail Strategies
• Starbucks

• Kohls
• Restoration Hardware
• Ukrop’s
What is the target market, retail
offering, and source of competitive
advantage for each retailer?

57

5-

Chico’s Strategy
Target Market
Woman 35 to 55 Who Want Comfortable,
Casual, But Stylish Apparel
Retail Format
Specialty Apparel Stores in Malls and Strip
Centers Selling Private Label, Coordinated
Outfits
Bases for Building Sustainable Competitive
Advantage
Unique Merchandise Sized 0,1,2,3

8


5-

Strategy for Looking for a Job
Determine Your Target
Market
– Area of Country
– Type of Company
– Type of Position
Assess and Exploit Your
Competitive Advantage
– Unique Skills,
Experience,
Knowledge

Photodisc/Punchstock

9


510

Why Does a Retailer Need
to Focus on a
Specific Target Market?
Why Not Sell to Everyone?


Retail Market Opportunities for
Women’s Apparel

511


Criteria For Selecting
A Target Market
• Attractiveness -Large, Growing,
Little Competition
More Profits
Consistent with Your
Competitive
Advantages

512

Rim Light/PhotoLink/Getty Images


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?

513

PhotoLink/Getty Images


How to Develop a Sustainable
Competitive Advantage

514

Internal and External Bases for 15
Competitive Advantage

Vendors, 
Suppliers

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

Sources of
Capital

Customer
s

5-


5-

Sources of Competitive Advantage
More Sustainable

Less Sustainable

•
•
•
•
•

•
•
•
•
•
•
•
•

Location
Customer Loyalty
Customer Service
Exclusive Merchandise
Low Cost Supply Chain
Management
• Information Systems
• Buying Power with
Vendors
• Committed Employees

Better Computers

More Employees
More Merchandise
Greater Assortments
Lower Prices
More Advertising
More Promotions
Cleaner Stores

16


517

Loyalty

What does loyalty mean?
Is It the same as liking a store?
…Going to the store frequently?
Digital Vision / Getty Images


5-

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

18

Royalty-Free/CORBIS


Approaches for Building
Customer Loyalty
Unique Positioning
Customer Service
Information About Customers (Database)
Unique Merchandise
Location

519


5-

Example of Positioning

20


Creating Store Loyalty
21
Mental and Emotional Attachments
• Elements in a Strong Brand
– Top of the Mind Awareness

– Associations with Brand/Store Name
• Methods Used to Develop a Strong Brand
– Massive Exposure
– Symbols to Reinforce Image
– Consistent Positioning Creating Strong
Associations
– Limited Brand Extensions

5-


5-

Distribution and Info Systems

22

Flow of Information
Vendor
Distribution Center

By decreasing costs here, the
is more money available to
invest in:
-Better services
-Increase in breadth and depth
-Decrease in prices

Store

StockTrek/Getty Images


Rob Melnychuk/Getty Images

5-

Private Labels

23

Sears’ Kenmore -- appliances
Federated’s Inc. – fine apparel
Kmart’s Martha Stewart -- home
Jules Frazier/Getty Images

JCPenney’s Arizona -- jeans

Jacobs Stock Photography/Getty Images


5-

Vendor Relationships

24

• Low Cost - Efficiency Through
Coordination
– Electronic Data Interchange (EDI)

– Collaborative 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


5-

High Quality Customer Service

25

• Difficult to Achieve
– People Are Not Machines -- Inconsistent
– Retail Sales Associates At Bottom of
Labor Pool

• Goes Beyond Hiring Good People at High
Wages and Training Them -Organizational Culture