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RETAIL Excellence

Retail Strategy Retail Strategy

Nathalie RAMANANTSOA‐FRAT

2012

Agenda

 Introduction  Strategic approach to retail S Store l location decision making i d i i ki  Conclusions
ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  2

INTRODUCTION

A common definition

“The sale of commodities or goods in small quantities to ultimate consumers” consumers Websters Di ti W b t Dictionary

ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT 

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Retail is the final step in the Consumer Product Value Chain
Consumer Product, Distribution & Retail Value Chain
Supplier Consumer Products: Primary Production Consumer Products: Consumer Packaged Goods (CPG) Distribution

INTRODUCTION

Manufacturer

Transporter

Wholesaler/Distributor Retailer
ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT 

Retail

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INTRODUCTION

Why is excelling at Retail level so important?

ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT 

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What key trends shape today’s Retail business issues? INTRODUCTION Consumer Market Organization Technology ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  6 .

What are the Retailers’ key stay-awake stakes? INTRODUCTION ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  7 .

Agenda  Introduction  Strategic approach to retail S Store l location decision making i d i i ki  Conclusions ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  8 .

STRATEGIC APPROACH TO RETAIL Distribution is part of the Marketing-Mix MARKETING  MIX Product Pricing g Promotion Distribution Place Channel Strategy Channel Management ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  9 .

… and a key component of most Business Model KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION CUSTOMER SEGMENTS STRATEGIC APPROACH TO RETAIL KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  10 .

The Nespresso Success Story: a case about finetuning Retail strategy & Business Model STRATEGIC APPROACH TO RETAIL Searching a long and  winding route to riches …. i di t t i h ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  11 .

HR. IT. Legal ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  12 .Retail Companies Follow the Same Basic Process Model High Level Process Model STRATEGIC APPROACH TO RETAIL STRATEGY Plan Buy Move Sell & Service Infrastructure – Finance.

STRATEGIC APPROACH TO RETAIL Elements of a typical Retail Strategy • Market analysis : Goods / services category Competitive environment & trends Organisational missions Ownership & management alternatives • Positioning and ambitions g • Economics • Consumers profiles Situation analysis • • • Objectives Targeting • Segmentation • Relevant marketing‐mix • Value Chain Value Chain Business model • Levers (controllable & uncontrollable variables) • Daily & short term operations • Responses to environment Control • Evaluation • Adjustment Feedback ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  13 .

 low consumer involvement q y.Channel strategy is strongly shaped by intensity of distribution Intensive distribution:     Demand small lot sizes (and frequent purchases) ( q p ) Demand high spatial convenience Demand low delivery/waiting times Frequently. ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  14 . STRATEGIC APPROACH TO RETAIL Selective distribution:  Higher consumer involvement  Greater willingness to search  Demand for spatial convenience is lower Exclusive distribution:  Interaction with other marketing mix elements is high  Location plays a key role in defining the product  Brand tied to location Sales will always increase in the short term by moving to intensive distribution.

Target marketing techniques and their strategic implications Mass Marketing Mass Marketing Location Offerings mix (products & services) STRATEGIC APPROACH TO RETAIL Differentiated  Marketing M k i Near a large population base p p Distinct offerings aimed at each segment g Different media & messages for f each segment h t Depending on segment Multiple specific strategies. phoning. e-mail. subscription. directed at heterogeneous groups Concentrated  Marketing k i Near a small or medium p p population base Selection geared to market segment g Direct mail. t High or low One specific strategy directed at a limited groups of customers f Near a large popu a o bas population base Wide selection of medium quality items Strategic implications Promotion efforts Mass advertising Pricing Popular prices One general strategy for a large homogeneous group of consumers Strategy ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  15 . etc.

STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  16 .

Value Proposition building :  • Offer positioning  • Pricing and Promotion strategy 4. Merchandising strategy 5. Market & competition analysis 2. Strategy definition / Business Model Definition Strategy definition / Business Model Definition 3. Definition of quality management standards 7 Definition of quality management standards ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  17 . Product development strategy 5 Product development strategy 6. Sourcing and negotiation policy definition 7.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Define  Define Strategy Source &  Source & Develop  Products Manage  Logistics &  Warehouse g Manage Communication & Promotion Manage  Manage Business  Performance Manage Store  Orders Plan  Merchandise Build Collection Handle Store  H dl S Operations 1.

STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Plan  Plan Merchandise Source &  Source & Develop  Products Manage  Logistics &  Warehouse g Manage Communication & Promotion Manage  Manage Business  Performance Manage Store  Manage Store Orders Define  Strategy Build Collection Handle Store  H dl S Operations 1. Develop store assortment plan ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  18 . Develop Merchandising plan 2. Develop central assortment plan 3.

STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Build Collection Source &  Source & Develop  Products Manage  Manage Logistics &  Warehouse g Manage Communication & Promotion Manage  Manage Business  Performance Manage Store  Manage Store Orders Define  Strategy Plan  Merchandise Handle Store  H dl S Operations 1. Set up the collection 3. Prepare the collection 2. Define visual merchandising guidelines ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  19 .

Product specifications 4. Analysis of responses and selection 6. Evaluation and pre‐selection of vendors 3. Product set up finalization 8. Negotiation 7. Product development 5. Product testing 9. Product listing ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  20 .STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Develop  Products Manage  Logistics &  Warehouse Manage Communication & Promotion Manage  Manage Business  Performance Manage Store  g Orders Define  fi Strategy Plan  Merchandise Build ld Collection Handle Store  H dl St Operations 1. New vendors prospecting 2.

Outsourcing management 3.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Source & Develop  Products Define  Strategy Plan  Merchandise Build Collection Manage  Logistics &  Warehouse Manage Communication & Promotion Handle Store  H dl St Operations Manage  Manage Business  Performance Manage Store  Manage Store Orders 1. Shipping / Invoicing / Transportation  8. Physical preparation of merchandising 7. Allocation 6. Import management 4. Vendors order management 2. Return‐to‐vendor management ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  21 . Warehouse management (Central /Regional)  9. Reception 5.

Define Promotion plan  3.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Source & Develop  Products Manage  Manage Logistics &  Warehouse Define  Strategy Plan  Merchandise Build Collection Manage Communication & Promotion Handle  Handle Store  Operations Manage  Manage Business  Performance Manage Store  Orders 1. Manage Promotion and Communication ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  22 . Define Communication policy  2. Finalize promotion plan 4.

Receiving merchandise in store 2.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Source & Develop  Products Manage  Manage Logistics &  Warehouse Manage Communication & Promotion Define  Strategy Plan  Merchandise Build Collection Handle Store  Handle Store Operations Manage  Manage Business  Performance Manage Store  Orders 1. Sales Force management and training 4. Checkout management 6. Customer Service management 5. Shelf management ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  23 . Inventory management 3.

Analysis of data activity 2.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Source & Develop  Products Manage  Manage Logistics &  Warehouse Manage Define  Strategy Plan  Merchandise Build Collection Handle  Handle Communication Store  Operations & Promotion Manage  Business  Performance Manage Store  Orders 1. Markdown and price management 3. Intra stores transfers 4. Collection‐end management (residual stocks) ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  24 .

Order management 5.STRATEGIC APPROACH TO RETAIL Overview of a Retailer Value Chain Source &  Source & Develop  Products Manage  Manage Logistics &  Warehouse Manage Manage  Manage Business  Performance Define  Strategy Plan  Merchandise Build Collection Handle  Handle Communication Store  Operations & Promotion Manage Store Orders 1. Replenishment for seasonal product ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  25 . Forecasting 2. Budget management 4. Planning / OTB 3. Automatic Replenishment for permanent items 6.

3% Communication 6.8% Operating Margin 27% Source : Annual Report 2000 In the scope of the distribution stakes ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  26 .3% Selling 1.3% Gross Margin 68.7% Warehouse 1.2% 12 2% Store 20. 12.Gucci's Case study: distribution is a massive stake Analysis of Gucci Costs Structure $2 666 millions STRATEGIC APPROACH TO RETAIL COGS 31.2% R E V E N U E General & Admin.

STRATEGIC APPROACH TO RETAIL Gucci's Case study : in a higher competitive environment Luxury Sectors face two major retail issues Issue 1 Improve Products availability i stores il bilit in t While reducing costs of inventory i t Issue 2 Increase diffusion of products to increase revenue While maintaining store quality. ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  27 . quality brand image image. and client service The optimization of the distribution is a critical success factor for Gucci Group.

Gucci Group distribution pattern is challenged by the number of products managed p g  G cci Gro p manages abo t 200 000 references (M d l / F b i / Gucci Group manages about 200 000 references (Model / Fabric /  STRATEGIC APPROACH TO RETAIL Color) per year: – Gucci : 160 000 references / year /y – YSL : 30 000 references / year  Gucci Group produces more than 6 millions pieces each year: Gucci Group produces more than 6 millions pieces each year: – Gucci : 6 000 000 pieces each year – YSL : 500 000 pieces each year  Gucci alone creates 6 collections per year: – 4 women collections per year – 2 men collections per year ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  28 .

Case study: Gucci Group has become a complex g group in which different store formats coexist p STRATEGIC APPROACH TO RETAIL  Control of image and concept Directly operated stores p LEV VEL OF CONTROL 100% Retail distribution  Clients fidelity  Higher profitability Shop in Shop  Higher growth and better geographical coverage Corners < 50% Multi Brands Stores Wholesale distribution  Recruitment of New Clients  Less sensitive to economic fluctuations ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  29 .

Gucci Corporate Website ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  30 .STRATEGIC APPROACH TO RETAIL Case study: Gucci’s distribution strategy consists of expanding its retail while consolidating its wholesale Retail  317 Directly Operated Stores – Gucci Brand (2012)  Openings : 5-10 per annum  Segment stores : – – Jewelry stores Accessories stores Wholesale  Department and specialty Stores (301 doors) d ) – – Europe : increase number of doors US : continue strong performance in best retailers  Franchises (30 stores) – Li it d b t strong i special markets i l k t Limited. but t in  Growth relay : Latin America. Asia Royalties  4% Wholesale  29%  Duty-Free (54 stores) – Continue strong performances in select doors Revenue R by Channel Retail 67% Retail 67% Source : Annual Report.

Why have channel strategy issues become so important? Executives today recognize the pressing need to: STRATEGIC APPROACH TO RETAIL    Implement new ways to go to market Implement new ways to go to market Aggressively expand channel mix to drive revenue growth.  Decide which products/markets should be served through which  channels. 31 ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  . Make highly informed. strategic decisions about which channels to  p pursue.  Pre‐empt competitors from locking‐up channels.

Radio and Print Ads Sell Sell. Drive Traffic to Store Drive Traffic to Store. etc…) (DOS. Communicate Offers/Rewards (Mass. Corners etc ) Catalogue Website Telephone p Direct Mail. Sell Service. Personalized) Main Goal Service.STRATEGIC APPROACH TO RETAIL Determining the right channels is becoming more critical as companies develop a multi-channel approach to sales Channel Brick and Mortar (DOS Corners. eMail In Home Print Ad Inserts/Circulars TV. Sell S S Communicate Mass Offers Drive Brand Awareness. sell Increased consumer needs. Segment. Drive Traffic to Store . market fragmentation and harsher needs competition calls for a diversification of access to consumers ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  32 .

STRATEGIC APPROACH TO RETAIL Two issues/questions shape channels strategy: Structure and Management How to structure How to structure alternative channels  to capture  to capture the marketing opportunity  • • • • • • Make vs Buy Types of channel members used Activities and functions performed Roles and responsibilities Customer segment served Customer service and maintenance How to manage How to manage alternative channels  to ensure best results • • • • • • • Channel member selection Overall compensation Measurement/reward systems Relative channel influence Referrals and sales programs Conflict management and resolution: when to partner or compete Operational implications ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  33 .

competing channel • Brand awareness • Level of specialisation p required in that channel • Channel functions • Mastery of port-folio balance • Generic strategies • Performance management tools • O Organisational i ti l choices • Consumer behaviour in that channel ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  34 .Channel-mix definition requires qualifying each channel 1 2 3 4 STRATEGIC APPROACH TO RETAIL Understand each channel dynamics Build a balanced distribution mix distribution-mix Set up a network diversification strategy Adapt organisation and management schemes • Value add • Mapping vs.

STRATEGIC APPROACH TO RETAIL Focus on channel functions Distribution concept function Discovery y Creativity Complementarities Renewal Market share at retailer 35 zero ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  Low Medium Strong .

thus.Successful channel integration efforts can deliver tangible improvements to retailers’ operations g p p STRATEGIC APPROACH TO RETAIL  Improved demand planning  Established. secure e-commerce channel for e-content delivery  Increased customer satisfaction and. referrals  Increased order volume and conversion rates  Improved returns processing ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  36 .

Agenda  Introduction  Strategic approach to retail S Store l location decision making i d i i ki  Conclusions ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  37 .

luxury retail gave little room to geogeomarketing ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  38 .GEOMARKETING Why is spotting the right location so important?  Location decisions are complex L ti d i i l – Multiple variables    Costs can be quite high There is little flexibility once a location is chosen It is a major factor leading to a retailer’s success or failure Traditionally.

GEOMARKETING Objectives of geo-marketing analyses  Allows to quantify potential target market for distribution network  Allo s to q antif potential target market for distrib tion net ork and assess ‘ideal’ number of stores Helps decision making concerning: – Location of area of influence Location of area of influence – Hierarchy of commercial areas   Frames performance forecasts depending on: – Potential of influence trade area Potential of influence trade area – Quality of store location – (Store management efficiency) ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  39 .

shops. competitors.Geo-marketing allows to display and analyse data on maps Identify density of population Determine isochronal curves around a POS Check location of addresses (clients. …) GEOMARKETING GIS (Geographical Information Systems) allow GeoGeo G -marketing analyses k ti l ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  40 .

com) GDT Geographic Data Technology (www.geographic.mpsisys.com) Caliper Corporation (www.com) SRC (www.com) ft ( i f ) Claritas (www.mapinfo.com) ( g p ) ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  41 .demographicsow.GEOMARKETING Some GIS softwares :       Mapinfo / Pitney B M i f / Pit Bowes software (www.claritas.com) MPSI Systems (www.caliper.

GEOMARKETING Geomarketing consists in linking a geographical table (or “map”) to a relevant data table using a “joint field” MapInfo Geographical Table (or map) CODE 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 NOM AIN AISNE ALLIER ALPES-DE-HAUTE-PROVENCE HAUTES-ALPES ALPES-MARITIMES ARDECHE ARDENNES ARIEGE AUBE AUDE AVEYRON BOUCHES-DU-RHONE CALVADOS CANTAL CHARENTE CHARENTE-MARITIME CHER CORREZE Your “business” data CODE POPULATION 01 471 170 02 537 291 37 03 357 793 04 130 972 05 113 334 06 972 482 07 277 724 08 296 435 09 136 598 10 289 297 11 298 898 12 270 321 13 1 759 512 14 618 729 15 158 791 16 342 123 17 527 232 18 321 556 19 237 920 Joint Field = Department Code Data can then be plotted ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  42 .

ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  43 . • Target network multiple simulations. • Dynamic analysis (pedestrians.. enterprises). • Locations competition analysis. • Diverse characteristics . • Static population analysis (residential.Store location decision making implies a 3steps process 1 2 3 GEOMARKETING Definition of the target Geographical Analysis of target population Conception of target network • Age. • Space allocation and characterisation. h i i • Choice of best location. • Determine potential “traffic”. • Consumption trends. mobile ( passers-by ).. • SPC.

The whole approach for geographical analysis relies on building 3 complementary data models g p y Model 1 Assess potential of “catchment area” GEOMARKETING Model 3 Estimate POS ramp up Accessible sales Model 2 Identify accessible market share and turnover ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  44 .

What it takes to reconstruct the potential for a area of influence? GEOMARKETING Model 1 OBJECTIVES Identify attractive y trading areas in terms of apparel purchase Calculate C l l t € potential t ti l for each area Prioritise each area ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  45 .

The most attractive ‘commune’ Bordeaux Montpellier . a potential market (€) has been estimated Strasbourg Rennes ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  46 .ABCD ) • 5 000 zones have been identified around .Petit Bateau Case Study: How to Identify Attractive Areas? GEOMARKETING • Analysis conducted on 36 000 French ‘communes’ • Focus on the most attractive ‘communes’ in terms of apparel trade (source : INSEE .Its zone of influence • For each zone.

 leasing opportunities Costs Zoning restrictions Population size and characteristics P l i i d h i i – – – – – – – Total size and density Total disposable income /Per capita disposable income Age distribution Age distribution Occupation distribution Average educational level  Percentage of resident owning homes Trends Number and size of existing  competitors SWOT analysis SWOT analysis Level of saturation Short‐run and long‐run outlook   Availability of labour — Management —M Management trainees tt i  Competitive situation – – – –  Promotion facilities — Costs — Availability and frequency of media Availability and frequency of media  Closeness to source of supply — Delivery costs — Timeliness    Economic base – – – – Dominant industry Extent of diversification Growth projections Seasonal fluctuations Seasonal fluctuations  Regulations — Operations — Zoning —T Taxes — licensing ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  47 .GEOMARKETING Chief factors to consider in evaluating Retail trading areas   Availability of store locations — — — — — Number and type of locations Access to transportations Owning vs.

the GIS helps visualise the mapping of sales potential CLASSEMENT POTENTIEL DES ZONES ET CHIFFRES D'AFFAIRES RÉALISÉS Cergy Sarcelles Saint-Germainen-Laye Sartrouville Aulnay-sous-Bois Colombes Poissy Courbevoie Chelles Neuilly-sur-Seine Rueil-Malmaison Fontenay-sous-Bois BoulogneNoisy-le-Grand Le Chesnay Billancourt Maisons-Alfort Créteil Versailles Antony Les Ulis 10 km GEOMARKETING Dunkerque Calais Boulogne-sur-Mer Saint-Omer Lille Bethune Lens Arras Dieppe Cherbourg Le Havre Caen Rouen Evreux Lisieux Saint-Malo Brest Saint-Brieuc Quimper Lorient Vannes Orléans Angers Blois Saint-Nazaire Nantes Cholet La Rochesur-Yon Fontenay-le-Comte Niort La Rochelle Vichy y Saintes Angoulême Périgueux Brive-la-Gaillarde Bordeaux Mérignac Pessac Agen Rodez Alès Albi Dax Bayonne Pau Tarbes Saint-Gaudens Carcassonne Narbonne Castres Nîmes Libourne Bergerac Aurillac Limoges Clermont-Ferrand Roanne Chatellerault Poitiers Montluçon Moulins Saumur Tours Vierzon Bourges Nevers Chateauroux Dinan Rennes Laval Dreux Alençon Chartres Meaux Evry Melun Troyes MontereauFaut-Yonne Sens Auxerre Beauvais Compiègne B i Creil Soissons Reims Epernay Abbeville Amiens Roubaix Villeneuve-d'Ascq DouaiValenciennes Maubeuge Cambrai Saint-Quentin Thionville Verdun Metz Sarreguemines Haguenau Nancy Sarrebourg Châlons-sur-Marne Saint-Dizier Strasbourg Chaumont Epinal Colmar Vesoul Dijon Belfort Montbéliard Besançon Dole Lons-le-Saunier Chalon-sur-Saône Thonon-les-Bains Macon Bourg-en-Bresse Annemasse Villefranche-sur-Saône Annecy © PETIT BATEAU .Eventually.BOSSARD Consultants .juillet 1997 Villeurbanne Vénissieux Chambéry Saint-Etienne Bourgoin-Jallieu Vienne Romans-sur-Isère Valence Gap Le Puy-en-Velay Montélimar Mont-de-Marsan Avignon Cavaillon Grasse Arles Aix-en-Provence Cannes Toulon Hyères Nice Antibes Béziers Montpellier La Seyne-sur-Mer Perpignan Potentiel et millions de d'affaires réalisé chiffre francs en 101.6 10.AEBK .3 Bastia 50.1 Classement potentiel des zones de 1 à 41 de 42 à 79 Ajaccio Potentiel estimé Succursale de 80 à 125 de 126 à 172 ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  Franchise 100 km 48 .

1 Department stores 2. non working woman + > 3 children 10. Family headed by a retired person 6. Family with working man. Number of main residence (x10) 14.0. 4 Total families (x10) FAMILIES COEFF. Family with working man. Number of fiscal household in 1996 (x10) 12. Male population aged 11 to 15 Source : INSEE ABCD “Chiffres clés” ABCD “pyramide des âges” Source : INSEE ABCD “Chiffres clés” ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  49 .463 .404 11. Female population aged 11 to 15 21. Active population (x10) 18.405 .615 0. 833 . Female population aged 0 to 4 19.602 4.0.392 0. .020 0 020 .0. Number of secondary residence 15.GEOMARKETING The explanatory data for that statistical model can be broken down in 4 categories 1 COMMERCE VARIABLE 1.008 0. Multi-brands apparel stores 3. Female population (x10) 17.0.837 . Couples 7.725 0.018 . 8 900 4. Female population aged 16 to 18 p p g 22.0 142 0.136 VARIABLE 5. .Number of children aged 7 to 16 Source : INSEE ABCD “Familles” Source : INSEE ABCD Commerces 1996 4 Tax data and Housing characteristics VARIABLE COEFF. 8.0. non working woman + a child 8. 15 Overall population (x10) 16.119 0.0.232 .142 0.737 0.072 . non working woman + 2 children 9. Retail shoes stores Case study — Retail ready-to-wear: 2 COEFF.0.020 3 POPULATION (male & female) VARIABLE COEFF. 0.9 .0. Overall net income in 1996 (10000) 13.035 . Family with working man. Female population aged 5 to 10 20.0.191 .0.

Model 2: assess the sales potential for a given shop GEOMARKETING Model 2 OBJECTIVES Identify the local accessible l l ibl “market share” Infer accessible sales in each of the 5000 attraction zones Build a model allowing to manage store performances against area potential ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  50 .

Petit Bateau Case Study: The market share variable 1. • Hypotheses generation fro assessment of target market share 4.. Identification of a target market share ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  51 . Selection of a sample of target point-of-sales i f l GEOMARKETING • Selection of 23 points-of-sales points of sales • Identification and quantification of evolutions in terms of: 2.. Construction of a statistical model • Identification of explanatory variables for market share and associated weighting factors. Definition of sales histories for each shop Management quality / Local competition Merchandising concept / Shop lay out Quality of location / Outside signs Advertising Etc. . 3.

10 12 14 0 Aix en Provence Aix en Provence Aix en Provence Aix en Provence Aix en Provence Aix en Provence Aix en Provence Bourges Bourges Bourges Bourges Bourges Bourges Brest Brest Brest Brest Brest Compiègne Compiègne Compiègne Compiègne Compiègne Compiègne Dijon Dijon Dijon Dijon Dijon Dijon La Rochelle La Rochelle La Rochelle La Rochelle Le Havre Le Havre Le Havre Le Havre Montluçon Montluçon Montluçon Montluçon Montluçon Neuilly Neuilly Neuilly Neuilly Neuilly Neuilly Neuilly Orléans Orléans St Etienne St Etienne St Etienne St Etienne St Etienne St Etienne St Nazaire St Nazaire St Nazaire St Nazaire 8 10 12 14 0 2 4 6 Villes TOWNS Part de marché estimée Estimated GEOMARKETING 2 4 6 8 ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  Part de marché accessible. Comparaison PDM Accessible market share"réelle" / PDM estimée vs. Actual : Estimated vs Data analysis often shows discrepancies estimated and actual market shares Actual Part de marché "réelle" 52 .

GEOMARKETING Model 3: sales ramp up in a store Model 3 OBJECTIVES Accessible sales Define how long a shop can take to reach its accessible potential ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  53 .

The shape of the various curves has helped determine the typical trajectory for a shop time t ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  54 . Term base. Histories tables over a decade have been set up h b t Sales evolution have been a a ysed analysed :    Year base. Month base. 2. 3.GEOMARKETING Model 3: sales ramp up – the approach Sales 100% of Accessible potential 1.

GEOMARKETING Between 70 to 90% of the sales potential was reach in the 1st year in most of the Petit Bateau POS Shops ramp up Montée en régime des boutiques 100 90 80 70 60 50 40 30 20 10 0 T1 / N0 T2 / N0 T3 / N0 T4 / N0 T1 / N1 T2 / N1 T3 / N1 T4 / N1 T1 / N2 T3 / N2 T4 / N2 T1 / N3 T2 / N3 T3 / N3 T1 / N4 T3 / N4 T4 / N4 T1 / N5 T2 / N5 T3 / N5 T2 / N2 T4 / N3 T2 / N4 T4 / N5 Terms since shop opening Trimestres depuis l'ouverture Dijon St Nazaire Compiègne Le Havre St Etienne Marseille Orléans La Rochelle Bourges Brest Montluçon ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  55 .

7 Classement potentiel des zones de 1 à 41 de 42 à 79 de 80 à 126 Chiffre d'affaires accessible en millions de francs plus de 3.5 Localisation Succursales Franchises 100 km de 2.BOSSARD Consultants .AEBK .juillet 1997 Auxerre Nevers Lons-leSaunier Thonon-les-Bains La Roche-sur-Yon Lons-leSaunier Vichy Saintes Angoulême Limoges Villefranche-sur-Saône Annemasse Villeurbanne Bourgoin-Jallieu Vienne Le Puy-en-Velay Vichy Saintes Angoulême Villefranche-sur-Saône Limoges Bourgoin-Jallieu Vienne Périgueux Brive-laGaillarde Aurillac Le Puy-en-Velay Annemasse Périgueux Mérignac Libourne Pessac Agen g Bergerac Brive-laGaillarde Aurillac Mérignac Pessac Libourne Gap Rodez Gap Rodez Agen Alès Mont-de-Marsan Albi Dax Bayonne Pau Tarbes SaintGaudens Narbonne Alès Avignon Cavaillon Albi Grasse Cannes Montpellier Toulon Hyères Saint-Gaudens La Seyne-sur-Mer Perpignan Perpignan Narbonne La Seyne-sur-Mer Nice Antibes Dax Bayonne Pau Toulon Montpellier Avignon Grasse Nice Antibes Cannes Bastia Bastia Potentiel estimé en millions de francs 101.84 locations where the brand was not yet implanted showed interesting potential CLASSEMENT DES 100 PREMIERES ZONES Où PETIT BATEAU N'EST PAS IMPLANTÉ ET POTENTIEL ESTIMÉ Courbevoie Le Chesnay BoulogneBillancourt Saint-Omer Boulogne-sur-Mer Bethune Lens Arras Dieppe Tourcoing Villeneuve-d'Ascq Douai Cambrai Dieppe Maubeuge Arras Les Ulis 15 km GEOMARKETING Cergy Sarcelles Colombes Aulnay-sous-Bois Fontenaysous-Bois CHIFFRE D'AFFAIRES ACCESSIBLE DES 84 PREMIERES ZONES Où PETIT BATEAU N'EST PAS IMPLANTÉ Cergy Aulnay-sous-Bois Courbevoie Fontenaysous-Bois Le Chesnay Saint-Omer Tourcoing Villeneuve-d'Ascq Bethune Lens Douai Cambrai Maubeuge Les Ulis 15 km Chelles Noisy-leGrand Chelles Noisy-leGrand Créteil BoulogneBillancourt Créteil Lisieux Saint-Malo Saint-Brieuc Dinan Alençon Reims Evreux Epernay Evry Dreux MontereauFaut-Yonne Melun Chaumont Sens Saint-Dizier Verdun Thionville Lisieux Haguenau Saint-Brieuc Dinan Epinal Quimper Saint-Malo Alençon Dreux Evry MontereauFaut-Yonne Melun Sens Saint-Dizier Evreux Verdun Thionville Epinal Quimper Vannes Blois Saumur Cholet La Roche-sur-Yon Chateauroux Poitiers Moulins Niort Tours Vierzon Auxerre Vesoul Vannes Tours Saumur Cholet Blois Vierzon Nevers Chateauroux Poitiers Moulins © PETIT BATEAU .5 à 3 de 2 à 2.juillet 1997 56 .BOSSARD Consultants .5 23.5 de 3 à 3.5 100 km ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  © PETIT BATEAU .AEBK .3 50.

Who in upmarket environments has recently implemented a geomarketing approach? ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  57 .

Agenda  Introduction  Strategic approach to retail S Store l location decision making i d i i ki  Conclusions ESSEC MBA Luxury Brand Management Retail Excellence  ‐ Nathalie RAMANANTSOA‐FRAT  58 .