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Chapter 4

RMG 200 Chapter Notes - Chapter 4: Online Shopping, Human Resource Management, Competitor Analysis

Retail Management
Course Code
RMG 200
Ken Wong

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Chapter 4
Building a Sustainable Competitive Advantage
- The micro-environment (internal)
All of the things that are within your control and can be changed
- The macro-environment (external)
All of the things that retailers cannot control
Economic stability of a trade area
Technology that will make retailing more efficient
Regulatory and ethical environment
Social trends (consumer behaviour, demographic and lifestyle trends)
Seven important opportunities for retailers to develop sustainable competitive advantages are:
- Customer loyalty
- Location
Critical factor in consumer selection of a store Competitive advantage
- Human resource management
Knowledgeable and skilled employees committed to the retailer’s objectives are
critical assets
- Distribution and information systems
Controlling inventory
- Unique merchandise
Competitive advantage by developing private-label brands (store brands)
- Vendor relations (develop strong relationship with vendor)
Sell merchandise in a specific region
Obtain special terms of purchase that are not available to competitors who lack
such relations
Receive popular merchandise in short supply
- Customer service (excellent customer service)
Customer Loyalty: Customers are committed to shopping at a particular retailer
Ways to build loyalty
- Developing clear and precise positioning strategies
- Developing a strong brand for the store or store brands
- Creating an emotional attachment with customers through loyalty programs
- is the design and implementation of a retail mix to create an image of the retailer in the
customer’s mind relative to its competitors

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- Emphasizes that the image in the customer’s mind is critical
Growth Strategies
1. Market Penetration
Involves directing efforts toward existing customers by using the present retailing
Either by attracting consumers in its current target market who don’t shop at its
outlets or by devising strategies to make consumer shop more at a store
Cross-selling: sales associates in one department attempt to sell complementary
merchandise from other departments to their customers
2. Market Expansion
Employs the existing retail format in new market segments
Eg. Abercrombie&Finch-University students, Hollister- High schoolers
3. Retail Format Development
Involves offering a new retail format- a format with a different retail mix- to the
same target market
4. Diversification
The present target market or retail format shares something in common with new
Strategic Retail Planning Process
1. Define the business mission
Mission statement
o What business are we in?
o What should be our business in the future?
o Who are our customers?
o What are our capabilities?
o What do we want to accomplish?
2. Conduct a situation audit: (SWOT Analysis)
a. Market attractiveness analysis
b. Competitor analysis (Competitive Factors)
i. Barriers to entry difficult for firms to enter the market
Such as scale economies, customer loyalty and availability of great
ii. Scale economies- cost of advantages due to the size of a retailer
iii. Bargaining power of vendors selling at low prices reducing retailer’s
iv. Competitive rivalry
A large number of competitors that are all about the same size
Slow growth
High fixed costs
Lack of perceived differences between competing retailers
c. Self-analysis
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