Chapter 5 – Retail Marketing Strategy

What is a Retail Strategy?

Retail Strategy
a statement identifying target market, format and plan
Target Market
The market segment(s) towards which the retailer plans to focus its resource and retail mix
Retail Format
The nature of the retailer’s operations-its retail mix
Sustainable Competitive Advantage
An advantage over the competitor that is not easily duplicated and can be maintained over a
long time
Retail Strategies
Lululemon’s retail strategy is selling merchandise that appeals to consumers seeking spiritual
enrichment through yoga.
Central Concepts in a Retail Market Strategy
Retail Marketing Segment
A group of consumers with similar needs and a group of retailers that satisfy those needs
using a similar retail channel and format
Bebe is a specialty store that targets a fashion-forward customer.
Exhibit 5-1 Retail Market Segments for Apparel
Building a Sustainable competitive advantage
Some advantages sustainable
Others copied quickly by competitors
Three keys to sustainable advantage
Build string relationships with customers
Build strong relationships with suppliers
Achieve efficient internal operations
Exhibit 5-2 Approaches for Developing sustainable Competitive Advantage
Relationships with Customers-Customer Loyalty
More than simply liking one retailer over another
Customers will be reluctant to patronize competitive retailers.
Brand Image
 Facilitates store loyalty because it stands for a predictable level of quality
Positioning
Design and implementation of retail mix to create image
Perceptual Map
Unique Merchandise
Private Label brands
Store Brands
Own Brands
Customer Service
Ritz Carlton’s outstanding service builds customers loyalty
Relationship with Suppliers
Most Important is relationship with vendors
Develop mutually beneficial assets and programs to create competitive advantage
Efficiency of Internal Operations
Human Resource Management
Knowledgeable and skilled employees are a critical asset
Distribution and Information System
Offer Opportunity for retailers to reduce costs
Purchase data helps retailers tailor merchandise
Location
Most important factor determining which store customer patronizes
A sustainable competitive advantage as not easily duplicated
Starbucks creates a competitive advantage by saturating an area with stores, which
makes it difficult for competitors to find good locations.
Multiple Sources of advantage
Retailers use multiple approaches to build a high wall around their position
McDonald’s provides good value, efficient service, strong brand name, convenient
locations
Walmart has a size advantage, strong vendor relationships, clean positioning of
retailers with superior value.
Global Growth Opportunities
Expanding to international markets especially appealing to large retailers
 Increase Sales
Leverage knowledge and systems across greater sales base
Gain more bargaining power with vendors
Attractiveness of International Markets
Potential size of retail market
Degree to which country supports entry of foreign retailers
Risks or uncertainties in sales and profits
Exhibit 5-6 Country Attractiveness
Global Retailing
Chinas major cities have American stores and restaurants, including McDonalds.
The Strategic Retail Planning Process
The Strategic Retail planning process
Select target market
Determine Retail Format
Build sustainable competitive advantage
Barriers to Entry
It is difficult to enter the cosmetic industry because two suppliers, Estee Lauder and Loreal provide
most of the desirable premium brands.