Retail Market Strategy

Click icon to add picture RETAIL MARKET Retail Market Strategy STRATEGY What is a retail strategy? RETAIL STRATEGY It is also known as retail management. It is a statement identifying: 1. retailer’s target market,...

Click icon to add picture RETAIL MARKET Retail Market Strategy STRATEGY What is a retail strategy? RETAIL STRATEGY It is also known as retail management. It is a statement identifying: 1. retailer’s target market, 2. the format and resources the retailer plan to use to satisfy the target market’s needs, and 3. The basis on which the retailer plans to build a sustainable competitive advantage. A holistic marketing plan for a product or service to reach the final channel and influence the consumers. This strategy covers everything from what retail channel product or service will be available into what should be the price or sales incentive to be given and how to display the product in the shelf. It is developed for product to be distributed through retail outlets  TARGET MARKET The market segment(s) toward which the retailer plans to focus its resources and retail mix.  Retail Format It describes the nature of the retailer’s operations (retail mix) that it will use to satisfy the needs of its target market. Retail mix: type of merchandise/services offered, pricing policy, advertising and promotion programs, store design and visual merchandising, typical locations, and customer services. customer, how do you perceived retail market strategies?  Sustainable Competitive Advantage One of the retailer maintains over its competition that is not easily copied by competitors and thus can last over a long period of time. Examples of Retail Strategies  SEPHORA Customer shopping at Sephora encounter fun in-store environment that encourage them to play with the products, which include both store brands and famous names.  Lululemon Lululemon’s retail strategy is selling merchandise that appeal to consumers seeking spiritual enrichment through yoga. It sells apparels and accessories that supports yoga. Save-A-Lot It offers only most popular items in each category, most of which are private label merchandise. Its price is 40% lower that prices at conventional supermarkets. Stores generally do not feature grocery store style shelving, items instead are available in specially printed, cut out shipping containers.  What retail strategies you mostly perceive in a retail store? TARGET MARKET AND RETAIL FORMAT Retail Market Segment A group of consumers with similar needs and a group of retailers that satisfy those needs using similar retail channels and format.  Building a Sustainable Competitive Advantage The final element of retail strategy. It means that the retailer builds a wall around its battle position, around its present and potential customers and competitors to scale the wall and enter the market to compete for the retailer’s target customers.  SUSTAINABILTY OF ADVANTAGE Sources of Advantage Less Sustainable More Sustainable Customer Loyalty Habitual repeat purchasing Building of a brand image with an because of limited competition in emotional connection with the local area customers; use of databases to develop and utilize a deeper understanding of customers Location Convenient locations Human Resource Management More employees Committed, knowledgeable and managing the store employees Distribution information system Bigger warehouses, automated Shared system with vendors warehouse Unique merchandise More merchandise, greater Exclusive merchandise assortment, lower price, higher advertising budgets, more sales promotions Vendor relation Repeat purchases from vendor Coordination of procurement due to limited alternatives efforts, ability to get scarce merchandise Customer Service Hours operation Knowledgeable and helpful  Three approaches for developing a sustainable advantage 1.Building strong relationships with customers 2.Building strong relationships with suppliers 3.Achieving efficient internal factors.  Relationship with customers Customer loyalty means that customers are committed to buying merchandise and services from a particular retailer. It is more than simply liking one retailer over another, it means that customers will be reluctant to switch and patronize a competitive retailer.  Approaches to developing loyalty Brand Image – strong brand images facilitate customer loyalty because they reduce risk associated with purchases. They assure customers that they will receive a consistent level quality and satisfaction from the retailer. Positioning – It 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.  Approaches to developing loyalty Unique merchandise- Specialty store such as Victoria’s Secret create loyalty by offering specific items that customers cannot find anywhere else. Customer service- It takes considerable time and effort to build tradition and reputation for customer service but once it will be earned it can sustain this advantage for a long time because it’s hard for a competitor to develop a comparable reputation.  Approaches to developing loyalty Customer relationship management programs – also called as loyalty or frequent-shopper program are activities focus on identifying and building loyalty with a retailer’s most valued customers. Building a retail community using social media – A retail community is a group of consumers who have shared involvement with a retailer. The members of the community share information with respect to the retailer’s activities. Increased involvement in the community by its members leads to greater emotional feeling and loyalty toward the retailer. Relationship with suppliers An approach for gaining competitive advantage to develop strong relationship with companies that provide merchandise and services to the retailer such retail estate developers, advertising agencies, and transportation companies. The most important relationship is the relationship with vendors. By strengthening relationship with each other, it can develop mutually beneficial assets and programs that retailer and vendor pair an advantage over competing pirs.  Efficiency of Internal Operations It enable retailers to have a cost advantage over competitors or offer more customers benefits than competitor at thee same cost. Larger retailers can invest in sophisticated systems and spread the fixed cost of these systems over more sales.  Approaches for Improving Internal Operating Efficiencies Human Resource Management – Successful retail chains invest heavily in their retail store employees while still achieving low prices, solid financial performance and better customer service than competitors. Knowledgeable and skilled employees committed to retailer’s objectives are critical assets that support the success of the retailer.  Approaches for Improving Internal Operating Efficiencies Distribution and Information Systems – The use of sophisticated distribution and information systems offers an opportunity to retailers to reduce operating cost an make sure that the right merchandise is available at the right time and place.  Location The most pervasive form of advantage in retailing. It is the critical opportunity for developing competitive advantage for two reasons: 1. It is the most important factor determining which store consumer prioritizes. 2. It is sustainable competitive advantage because it is not easily duplicated. Reference Levy, M. et al (2019), Retail Management  End of discussion