Retailing Strategy
What is retail strategy statement
How does it differ from “mission” and
“tactics”
Career-search “strategy”
The building blocks of retail strategy
Process of developing retail strategy
The characteristics of a “window of
opportunity”
SWOT analysis
Strategy
Tactics
Planning, Direction
Broad
Unstructured
Problem solving
Creative
External focus
Irregular
Long-term
Difficult to evaluate
Success comes from having a good strategy
& executing it well
Controllable
What areVariables
the elements
of the retail mix?
Store Location
Store Format & Layout
Merchandise Management
and Pricing
Communicating with the
Customer
Uncontrollable
What are the
Variables
environmental
variables?
Consumers
Competition
Technology
Economic Conditions
Seasonality
Legal Restrictions
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Retailing Strategy
What is McDonald’s …
Target market?
Retail format?
Bases for competitive advantage
What threats might it face in the future?
$
$
!
" #
%
Determine your target market
Area of country
Type of company
Type of position
Assess & exploit your competitive advantage
Unique skills
Experience
Knowledge
What are recruiters looking
for in a job candidate?
Develop then present yourself as a desirable
“product”
&
! '
%
50
54
49
Specific Business
Concentration
40
33
30
20
10
0
&
31
21
17
16
8
Being a
Bus. Major
22
24
21
16
21
12
10
9
Relevant Work
Experience
16
GPA
!
" #
#
# $
14
10
1
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Retailing Strategy
&
! '
Attribute
&
% Critically
Important
Integrity
Strong work ethic
96.7
86.9
Professional demeanor
Initiative
85.2
83.6
Emotional maturity
Self confidence
80.3
79.0
Leadership ability
78.7
Personable
Creativity
62.9
55.0
%
(
Action
Skill Derived
Knocking on doors
Self-motivation, self-discipline,
handling rejection, creativity
Teaching Contacts
Training, interpersonal skills, selfconfidence, goal setting
Missionary Training
Leadership, time management,
planning, communications
Learning a 2nd Language
Learning skills, adaptability to
new concepts, perseverance
Living in a Foreign Culture
Ability to work with a new culture,
tolerance
Dedication & hard work
Working Long Hours
&
&
)
*
%
Tell me about yourself
Why are you interested in this position?
What are your geographical requirements?
What are your salary requirements?
Tell me a story!
Do you have any questions?
'
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Retailing Strategy
+
(
,
)
Cover Information
letter/
Resume Interviews
Practice
Network Interviews
!
SelfKnowledge
Employer
Knowledge
(
'
-
Should we tell the same story to every
interviewer?
Should we customize our presentation?
… our resume?
… our cover letter?
Why? (Or why not?)
For the same reasons, retailers must focus
their strategy on their target market
(
Your “Marketing Mix”:
Controllable Factors
Controllable
Variables
Your education
Job history
Skills
Interests
Commitment
Ability to distinguish
yourself
.
What’s
Yourthe
3rd element
Target
of retail
Strategy?
Jobs
Job
Strategy
" #
Competition & Environment:
Uncontrollable Factors
Uncontrollable
Variables
The economy
Job availability
The “competition”
Etc.
The main focus:
Bringing harmony between the controllable
variables and the uncontrollable ones.
Uncontrollable variables drive the controllable ones!
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Retailing Strategy
(
.
Retail Marketing Mix:
Controllable Factors
Controllable
Variables
Store Location
Store Format & Layout
Merchandise Management
and Pricing
Communicating with the
Customer
What’s the
3rdTarget
element
of retail
Market
Strategy?
Competition & Environment:
Uncontrollable Factors
Uncontrollable
Variables
Retail
Strategy
Consumers
Competition
Technology
Economic Conditions
Seasonality
Legal Restrictions
The main focus:
Bringing harmony between the controllable
variables and the uncontrollable ones.
Uncontrollable variables drive the controllable ones!
& '
!
&
/ '(
$
#
*
%
Dropping the price of your
merchandise?
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?
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Retailing Strategy
#
/ '(
More Sustainable
*
Less Sustainable
Better Computers
More Employees
More Merchandise
Greater Assortments
Lower Prices
More Advertising
More Promotions
Cleaner Stores
*
Organizational Mission Statement
Define the
Mission
Ownership & Management
Product Category
SWOT Analysis
%
!
'
'
A mission statement should include:
• The product/service to be delivered
• The store’s claim (USP)
• Other important claims
• Identification of the target segment
• What the segment will get
• What the segment must give up
&
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Retailing Strategy
'
Target
Segment
Customers are value-conscious men and
women between the ages of 25 and 54 with
middle to upper-middle income levels.
Customers define value both in terms of
brands and strong discounts compared to
full-price retailers.
Most
important
claims
Offer a wide selection of name-brand apparel
and apparel-related merchandise for the
entire family.
Achieve an appropriate level of brands and
labels at strong discounts throughout the
store.
Meet customer needs on a regional basis.
http://www.rossstores.com/
'
0
'
1
'
“We’ve grown from a small Texas
store to a fashion icon
specializing in exclusive apparel
for men, women, and children …
our image has become global, but
one Neiman-Marcus factor
remains unchanged – a
commitment to providing our
customers with unequaled
service.”
http://www.neimanmarcus.com/toc_fr.html
(
'
2334
'
“Kmart will become the discount
store of choice for middle-income
families with children by satisfying
their routine and seasonal shopping
needs as well as or better than the
competition.”
http://www.kmart.com/d_about/index.htm
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Retailing Strategy
'
/
'
Source: Kmart 2004 Annual Report
/
)
/
/
“All of us in the Coca-Cola family wake up each morning knowing that
every single one of the world’s 5.6 billion people will get thirsty that day
… and that we are the ones with the best opportunity to refresh them.
Our task is simple: make Coca Cola and our other products
available, affordable, and acceptable to them, quenching their
thirst and providing them a perfect moment of relaxation.
If we do this … if we make it impossible for these 5.6 billion people to
escape Coca Cola … then we assure our future success for many
years to come. Doing anything else is not an option.”
Note the 3 characteristics of all good mission
statements contained here
The statement includes a vision statement,
The statement is motivational, for both employees and for
stockholders,
The statement refers to certain philosophies or guide-lines.
...
Source: Target 2004 Annual Report
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Retailing Strategy
4
2
5
%
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Retailing Strategy
6
&
*
Organizational Mission Statement
Define the
Mission
Ownership & Management
Product Category
SWOT Analysis
'
&
Weak
)
.((
Strong
Competitive Position
High
Market
Attractiveness
Window
of
Opportunity
Low
High
Firm's Ability in the Market
Low
(
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Retailing Strategy
&.
SWOT Analysis is a
systematic approach
to optimizing the fit
between external &
internal var’s
Strengths
*
Weaknesses
Retail Mix … plus
Management capabilities
Financial Resources
Overhead Cost Structure
Merchandising Capabilities
Store Management Capabilities
Store Locations
Loyalty of Customers
Retail Mix … plus
Management capabilities
Financial Resources
Overhead Cost Structure
Merchandising Capabilities
Store Management Capabilities
Store Locations
Loyalty of Customers
Opportunities
Consumer Trends
Competitiion
Economic Conditions
Seasonality
Legal Restrictions
Identify the
Strategies
here
Threats
Consumer Trends
Competition
Economic Conditions
Seasonality
Legal Restrictions
7
SWOT Analysis is a
systematic approach
to optimizing the fit
between external &
internal var’s
Strengths
Retail Mix … plus
Management capabilities
Financial Resources
Overhead Cost Structure
Merchandising Capabilities
Store Management Capabilities
Store Locations
Loyalty of Customers
%
Weaknesses
Retail Mix … plus
Management capabilities
Financial Resources
Overhead Cost Structure
Merchandising Capabilities
Store Management Capabilities
Store Locations
Loyalty of Customers
Opportunities
Consumer Trends
Competitiion
Economic Conditions
Seasonality
Legal Restrictions
Threats
Consumer Trends
Competition
Economic Conditions
Seasonality
Legal Restrictions
+
Situation
Analysis
Sales & Profit
Corporate
Objectives
Identify
Consumers
Satisfaction of Publics
Image & Positioning
As a result of the
Situation Analysis
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Retailing Strategy
.#8
'
Any objective must be clear, concise, and realistic.
Objectives are often based on profit, market share,
growth, etc.
E.g., “…to get a 15% market share and maintain a
profit margin of 25% by the end of the fiscal year” for a
particular store. Or, “to increase comp store sales by
15% by end of the year.”
Note that each objective must have a time frame.
15%
.#8
9
Krispy Kreem
Wal-Mart
Burger King
!
:
Situation
Analysis
Sales & Profit
Satisfaction of Publics
Corporate
Objectives
Image & Positioning
Identify
Consumers
Overall
Strategy
Image = how a retailer
wants to be perceived by
consumers
Positioning = the strategy
to project this image
Positioning:
MDS
Stores
Page 5 - 12
Retailing Strategy
!
:
Situation
Analysis
Corporate
Objectives
Identify
Consumers
Retail Mix Variables
Overall
Strategy
Uncontrollable Variables
Specific
Activities
(Tactics)
Short-term operations
Response to the
environment
%
/
/
'
Public
Favorability
Delighted
Customers
Committed
Team
Metrics:
•Worldwide
Employee
Survey Results
•Safety
Performance
Metric:
•Public Favorability
Index
Metric:
•Customer
Satisfaction
Superior
Financial
Performance
Competitive
Operating
Advantage
Metric:
•Operating
Expense per
Barrel
Metrics:
•Return on
Capital
Employed
•Earnings
Growth
Superior
Stock
Returns
Metric:
•Total
Stockholder
Return
&
Page 5 - 13