CHAPTER 5: RETAIL MARKET STRATEGY

1. What is retail strategy?

The retailer’s target market
The format and resources the retailer plans to use to satisfy the market’s needs
The bases on which the retailer plans to build a sustainable competitive
advantage
- The target market: is the market segments toward which the retailer plans to
focus its resources and retail mix
- Retail format: describes the nature of retailer’s operations - its retail mix
(types of merchandise and services offered, pricing policy, advertising,
promotion programs, store design and visual merchandising, typical
advertising, typical locations, and customer services) that it will use to satisfy
target customers’ needs
- Sustainable competitive advantage: is 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
2. Central concepts in retail market strategy
2.1. Target market and retail format (exhibit 5.1)
2.2. Building a sustainable competitive advantage
- Relationship with customers - customer loyalty
● Customer loyalty: clear strong brand, positioning, emotional attachment
with customers (loyalty programs)
● Brand image (brand awareness, T.O.M = Top of mind)

● Positioning (perceptual map = radar chart or spider web)

● Unique merchandise (private label brands - store brands, own brands)

● Customer service (payment, delivery, store display, parking,…)

● Customer relationship management programs (CRM)/ loyalty/ frequent

shopper programs
● Building a retail community using social media (Zalo group, FB group,
…)
- Relationship with suppliers
- Efficient internal operations
● Human resource management

● Distribution and information systems

2.3. Location
2.4. Multiple sources of advantage
3. Growth strategies
- Growth opportunities
 ● Market penetration

● Market expansion

● Retail format development

● Diversification
+ related versus unrelated diversification
+ vertical integration
- Growth opportunities and competitive advantage
4. Global growth opportunities
- Attractiveness of international market
- Key to success in global retailing
● Globally sustainable competitive advantage

● Adaptability

● Global culture

● Financial resources

● Entry strategies
+ Direct investment
+ Joint venture
+ Strategic alliance
+ Franchising
5. The strategic retail planning process
S1: Define the business mission
S2: Conduct a SWOT analysis
- internal environment (strength and weakness)
- external environment (opportunities and threats)
- market factors
- competitive factors
● Barriers to entry

● Scale economies

● Bargaining power of vendors

● Competitive rivalry
- environmental dynamics
S3: Identify strategic opportunities
S4: Evaluate strategic opportunities
S5: Establish specific objectives and allocate resources
S6: Develop a retail mix to implement the strategy
S7: Evaluate performance and make adjustments
6. Strategic planning in real world

Market

Target
market

Market segmentation