Chapter 5

Retail Marketing
Strategy
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights

Strategic vs. Tactical Decisions

Strategic
Direction

Implementation

Strategy statement

Annual plan

Broad

Specific, detailed

Unstructured

Structured

Problem solving

Problem solving

Creativity

Analytical

External focus

Internal focus

Irregular

Regular

Long-term

Short-term

Difficult to evaluate

Easy to evaluate

Note:
PPT 5-2

Tactical

Success Comes for Having a Good Strategy and Executing It Well

Elements in Retail Strategy

1. ______ ______
Customer Needs
2. _____ ______
Method for Satisfying Needs
3. Bases for Building ___________ __________ _________
Defending Position Against Competitors

PPT 5-3

(1) Target
Market

Why Does a Retailer Need to

Focus on a
Specific Target Market?
Why Not Sell to Everyone?
PPT 5-4

(1) Target
Market

Comparison of
Clothing Retailers

Fashion Forward ---------------------------Traditional

Extensive Service---------------------Limited Service

Wal-Mart

Sears

Target

KMart

Wet Seal

Bloomingdales
The Gap

PPT 5-5

(1) Target
Market

Traditional

Fashion

Limited

Extensive

Service
PPT 5-6

Forward

(3) Sustainable
Competitive Advantage
Examples of a clothing retailers potential competitive
advantages
1.
2.
3.
4.

PPT 5-7

(3) Sustainable
Competitive Advantage

Sources of Competitive Advantage

More Sustainable

PPT 5-8

Less Sustainable

Retail Growth Opportunities

PPT 5-9

McDonalds
Ever-Changing Growth Strategy
1. Serving breakfast
2. Going global
3. Opening locations in office buildings/school
campuses
4. Adding salads to the menu
5. Biggie sizing meals
6. Opening up seafood restaurants
7. Accepting credit cards
PPT 5-10

Steps in the Strategic

Retail Planning Process
1. Define the business mission
2. Conduct a situation audit:
Market attractiveness analysis
Competitor analysis
Self-analysis
3. Identify strategic opportunities
4. Evaluate strategic alternatives
5. Establish specific objectives and allocate resources
6. Develop a retail mix to implement strategy
7. Evaluate performance and make adjustments
PPT 5-11

Mission Statements

PPT 5-12

Situation Audit
The analysis of opportunities and threats in the
retail environment and the strengths and
weaknesses of the retail business relative to its
competitors.
Wal-Mart
To give ordinary folk the same chance to buy things as
rich people.
PPT 5-13

SWOT
Strengths:

Weaknesses:

Opportunities:

Threats:

Internal

External

PPT 5-14

Elements in a Situation Analysis

MARKET
FACTORS

COMPETITIVE
FACTORS

Barriers to entry
Size
Bargaining power of
Growth
vendors
Seasonality
Competitive rivalry
Business cycles
Threat of superior
new formats

PPT 5-15

ENVIRONMENTAL
FACTORS

ANALYSIS OF
STRENGTHS &
WEAKNESSES

Technology
Economic
Regulatory
Social

Management
capabilities
Financial resources
Locations
Operations
Merchandise
Store Management
Customer loyalty

Strengths and Weaknesses Analysis

Management Capability:
Capabilities and experience of top management
Depth of Management--capabilities of middle management
Managements commitment to firm

Financial Resources:
Cash flow from existing business
Ability to raise debt or equity financing

Operations:

Store Management Capabilities

Overhead cost structure

Quality of operating systems
Distribution capabilities
Management information systems
Loss prevention systems
Inventory control system

Management capabilities
Quality of sales associates
Commitment of sales associates to firm

Locations

Merchandising Capabilities:
Knowledge and skills of buyers
Relationships with vendors
Capabilities in developing private
capabilities
PPT 5-16

Customers
Loyalty of customers

Steps in the Strategic

Retail Planning Process
1. Define the business mission
2. Conduct a situation audit:
Market attractiveness analysis
Competitor analysis
Self-analysis
3. Identify strategic opportunities
4. Evaluate strategic alternatives
5. Establish specific objectives and allocate resources
6. Develop a retail mix to implement strategy
7. Evaluate performance and make adjustments
PPT 5-17