Topics
Weeks 1-‐2: Introduction to the World of Retailing Weeks 3-‐4: Retail Strategy Week 5: Retail Branding and Positioning Weeks 6-‐8: Retail Marketing Strategy into Action Week 9: Controlling Relationship Management Week 10: Retail Supply Chain Management Week 11: Corporate Social Responsibility
VALs framework: Values, attitude, lifestyle. Risk taker/adverse,
gratification seeker immediately.
Criteria for evaluating market segment attractiveness:
1. Actionable-‐ see what needs to be done to meet their needs.
2. Identifiable-‐ determinable who is the segment, size, growth and composition.
3. Substantial-‐ will it provide a sustainable profit to support business objectives.
4. Reachable-‐ can I reach out to the customer? Ethics comes into play.
Analyze the segments: For each segment need to determine metrics:
• Size
• Growth rate
• Market share
• Profitability
• Life cycle status
• Long-‐term value
Competitive landscape Types of competitors
Direct/intertype-‐ similar store format, intense competition Intertype-‐ different channel, selling same merchandise Vertical-‐ within the distribution channel
Systems-‐ retailer own brands
Porters 5 forces driving retail competition 1. Threats of new entrants
• Aware of what’s going on and players that might come in depends on market profitability
• Barriers to entry
o Capital requirement-‐ invest in production capability o Economies of scale-‐ can I build on what I currently have.
o Access the customers or availability to sites: right location o Differentiation, brand identity and store loyalty
o Expected retaliation
o Access to supply and distribution-‐ contracts to block supply to other people.
2. Bargaining power of suppliers
• Influence of a supplier depends on relative size to the retailer.
• Retailer size can make them more vulnerable 3. Bargaining power of shoppers
• Easy for shoppers to switch.
• Internet reducing shopper immobility and information asymmetry
• Legislation and formal regulation always a threat e.g. ACCC.
4. Threat of substitutes
• Substitute forms of retail, not in our market but outside. E.g. UBEREATS COMPETITOR TO DAVID JONES.
• Rise of multi-‐channel retailing and online/mobile commerce has
increased the threat of substitutes. 12
MAIN STRATEGIES AVAILABLE:
Consolidation/Maintenance strategy:
• Maintaining market share so that in the long run it will benefit you for future harvesting.
• Tightening around core market. Efficiency strategy not a do nothing one.
• Merchandise assortment and the customers remain the same.
• E.g. Myer MegaMart, brought back all furniture in this store to just in Myer.
Harvest strategy:
• Improve profit and efficiency: cost reductions and efficiency
improvements, manipulating assortments/ranges to improve profit return.
• Often employed in mature markets.
• Harvested growth can be used to fuel growth strategies.
• E.g. Smiggle, only harvesting in Australia and in UK they are very popular and earning a lot of profit and growth.
Growth strategies:
For intensive growth only is Ansoff’s 2x2 matrix
Examples
Penetration: Woolies Milk
Merchandise development: Food halls Market development: Korea and Tesco.
Diversification: Coles and MIX line.
Market penetration-‐ appropriate when your target market is still growing.
Based on the retailer’s strengths that its competitors cannot match. E.g. price reductions can be easily copied and won’t succeed in the long run.
17
Weeks 6-‐8: RETAIL MARKETING STRATEGY INTO ACTION
Topics:
• Managing and buying merchandise
• Retail pricing
• Retail locations and Customer experience
LECTURE 6: Retail buying and merchandising Two pivotal functions that will make or break a retailer include buying/merchandising management and store management. WHY?
Buying is the translation of a retailer’s strategic positioning statement into the overall assortment and the specific products to support this statement.
Merchandisers are responsible for managing processes that enable the products selected by the buying team, to arrive on time, in the right quantities and in the right locations.
Merchandising manager: internal focus, looking to historical data and patterns, current sales volume and value and understand how weather affects sales.
Buyer: external focus, understand target customer to choose brands, products to translate trends into something that works for the customer. Must be on top of the competitor dynamic, new advantages. Negotiate with suppliers.
Objectives
Buyer’s decisions:
Right product-‐ driven by target customer needs and aligned with retail brand strategy.
Right time-‐ key factors include shelf life, season and fashion.
Right price-‐ negotiating purchase price from suppliers to create a retail price.
Merchandise manager’s responsibility:
Right quantity-‐ Ensure stock availability and minimize excess stock.
Right place-‐ Store size, location and customer profile, aligned with channel strategy (online store, pop-‐up store etc).
Objectives all fit into Gross Margin Return on Investment (GMROI):
• How many gross margin dollars are earned on every dollar of inventory investment made by the buyer?
= Gross margin / average inventory cost.
• Gross because don’t include things that business has no control over e.g.
overheads.
• How to improve this: increase volume sales (turnover by paying less to suppliers) and increase gross margin (customers pay more).
Merchandise types
Staple/basic-‐ commodity base, demand doesn’t change over time, steady, continuous replenishment. Predictable peaks and troughs. E.g. toilet paper.
Fashion-‐ Demand for short period of time, none to few reordering in stock, no replenishment. E.g. shoes.
Seasonal-‐ easy to predict fluctuating demand e.g. Christmas trees
Fads-‐ intense fashion, high sales for a short period e.g. fashion accessories. 19
