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Canada (161,877)
RMG 200 (57)
Brent Barr (19)
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ch 4 part 1

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Department
Retail Management
Course
RMG 200
Professor
Brent Barr
Semester
Winter

Description
Ch 4: Retail Market Strategy WHAT IS RETAIL STRATEGY? Definition of Retail Market Strategy  A retail strategy is a statement identifying the retailer’s: o Target market o The format the retailer plans to use to satisfy the target market’s needs o The bases upon which the retailer plans to build a sustainable competitive advantage  Target market: the market segment(s) toward which the retailer plans to focus its resources and retail mi  Retail format: the retailers’ type of retail mix (nature of merchandise and services offered, pricing policy, advertising and promotion program, approach to store design and visual merchandising, and typical location)  Sustainable competitive advantage: a distinct competency of a retailer relative to its competitors that can be maintained over a considerable time period Target Market and Retail Formats  Retailing concept: a management orientation that holds that the key task of a retailer is to determine the needs and wants of its target markets and to direct the firm toward satisfying those needs and wants more effectively and efficiently than competitors do  Retail market: a group of consumers with similar needs (a market segment) and a group of retailers using a similar retail format to satisfy those consumer needs BUILDING A SUSTAINABLE COMPETITVE ADVANTAGE When developing a retail strategy, two sets of variables that will impact your retail business must be assessed: Micro-environment Macro-environment  All of the things within the retailer’s control,  The external environment that the retailer cannot including the retail product that will be sold, the control, including competition, economic stability of price for the product, the store location, the the trade area, the technology that will make promotion and visual image of the store, and the retailing more efficient, the regulatory and ethical store management decisions environment in which the business operates, and the social trends including consumer behaviour and lifestyle and demographic trends  SWOT analysis: an analysis of strengths, weaknesses, opportunities, and threats designed to assess both the micro and macro environments and their relation to the retailer Methods for Developing Competitive Advantage A. Customer loyalty: customers’ commitment to shopping at a store  Some ways that retailers build loyalty are by: o Developing clear and precise position strategies o Developing a strong brand for the store or store brands o Creating an emotional attachment with customers through loyalty programs  Retail branding – eg. Kenmore only sold at Sears  Positioning: (aka brand building) the design and implementation of a retail mix to create in the customer’s mind an image of the retailer relative to its competitors  Loyalty programs – part of an overall customer relationship management (CRM) program o Data warehouse: the coordinated and periodic copying of data from various sources, both inside and outside the enterprise, in an environment ready for analytical and informational processing. It contains all of the data the firm has collected about its customers and is the foundation for subsequent CRM activities B. Location – Not easily duplicated C. Human Resource Management – Knowledgable and skilled employees committed to the retailer’s objectives are critical assets that support success, recruiting and training great employees is not easy D. Distribution and Information Systems – goal is to get their customers the merchandise they want, when they want it, in the wuantities that are required, at a lower delivered cost than their competitors E. Unique Merchandise – private-label brands: (aka store brands) products developed and marketed by a retailer and only available for sale by that retailer F. Vendor Relations  By developing strong relations with vendors, retailers may gain exclusive rights to: o Sell merchandise in a specific region o Obtain special terms of purchase that are not available to competitors who lack such relations o Receive popular merchandise in short supply G. Customer Service – offering good service consistently is difficult because humans are less consistent than machines GROWTH STRATEGIES Target Markets Existing New g Market Penetration Market Expansion Existin Retail Format New Format Development Diversification A. Market Penetration  Market penetration opportunity: an investment opportunity strategy that focuses on increasing sales to present customers using the present retailing format Approaches  Attracting new customers by opening more stores in the target market and keeping existing store open for longer hours  Displaying merchandise to increase impulse purchases and training salespeople to cross sell  Cross sell: when sales associates in one department attempt to sell complementary merchandise from other department to their customers B. Market Expansion  Market expansion opportunity: a strategy investment opportunity that employs the existing retailing format in new market segments  Eg. Abercrombie and Fitch’s target market is university students rolled out lower-priced Hollister for high schoolers C. Retail Format Development  Retail format development opportunity: an investment opportunity strategy in which a retailer offers a new retail format – a format involving a different retail mix – to the same target market  Eg. Chapters is a store based retailer began selling books to its present target market over the Internet  Retailer adds merchandise categories (eg. Amazon began selling DVDs and electronics) D. Diversification  Diversification opportunity: a strategic investment opportunity that involves an entirely new retail format directed toward a market segment not presently being served (eg. La Senza opened La Senza Girl to attract tween market)  Vertical integration is diversification by retailers into
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