Retail Strategy

What is Retail Strategy?

• It is a statement identifying:

– 1. The retailer’s target market

– 2. The format the retailer plans to use to

satisfy the target market’s needs

– 3. The base upon which the retailer plans to

build a sustainable competitive advantage.

Elements in Retail Strategy

• Target Market

– Market segment towards which the retailers

plan to focus its resources and retail mix

• Retail Format

– Describes the nature of the retailer’s

operation (retail mix)

• Sustainable Competitive Advantage

– Advantage over the competition that is not

easily copied and thus can be maintained

over a long period of time

Examples of Retail Strategy

• What is the target market, retail format and

competitive advantage of the following:

– Starbucks

– Cabelas

– Kohls

– Menards

Target Market and Retail

Format

Sources of Competitive

AdvantageMore 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

Developing a Sustainable

Competitive Advantage

Bases for Competitive

AdvantageRetail Firm

•Low Cost

•Large Size

•Efficient

Distribution,

Operations

• Unique Knowledge

• Loyal Employees

Sources ofCapital

Vendors,

Suppliers Customer

s

Positioning

Customer Loyalty

• Retailer can build loyalty through:

– 1. Developing a strong brand image for the

retailer or its private label brands

– 2. Develop a clear and precise positioning

strategies

– 3. Creating an attachment with customers

through a loyalty program

Private Labels

• Sears’ Kenmore – appliances

• Kmart’s Martha Stewart -- home

• JCPenney’s Arizona -- jeans

Vendor Relations

With a good vendor relationship you may

gain exclusive rights:

• 1. Sell merchandise in a specific region

• 2. Obtain special terms of purchase that

are not available to other competitors

• 3. Receive popular merchandise in short

supply

Customer Service

• Offering good service

– Polite service

– Service is efficient

– Store is neat and tidy

• Well trained employees