Retailing Management Study Set 4
Quiz 5 :
Retail Market Strategy
Chico's specializes in comfortable, easy-to-wear apparel designed for women in the age group of 35-55 years old. The company sells only its own brand and has complete control over its supply chain. The emphasis on private labels, a strong customer loyalty program, and high-quality customer service with emphasis on a person-to-person relationship with each customer, differentiate the retailer from other competitors, and ensure not only repeat sales, but also a higher transaction size among its loyal patrons. Curves targets those consumers who have not considered gym membership before, focusing on the women of the Baby Boomer market who live in small towns. Curves franchises offer a very different service from the traditional gym, at a much lower price. The Curves service is built around a 30-minute circuit of 8 to 12 hydraulic resistance machines. Magazine Luiza, a Brazilian consumer electronics and appliance store, targets low income consumers with installment payment plans and affordable credit rates. The retailer also provides services like personal loans and insurance policies that would be out of range for many of its target consumers. Through its nearly 200 store, Steve Barry's offers a merchandise mix including university logoed sportswear, humorous t-shirts, and basic clothing for men, women and children. Key success strategies for Steve Barry's include: gaining aggressive incentives from mall owners, applying creative strategies to working with vendors, and paying for virtually no advertising. These strategies allow the retailer to offer surprisingly high quality merchandise at prices below $15. Save-A-Lot, a wholly owned subsidiary of SuperValu, operates at highest levels of efficiency. By offering only the most popular items in its stores, Save-A-Lot has been able to reduce its costs dramatically and reduce its prices to as much as 40 percent below typical conventional supermarket prices. Much of the success of this strategy is due to the buying power Save-A-Lot has been able to achieve allowing the chain to offer high-quality private label merchandise at low prices.
Customer Loyalty: In order to keep customers committed to shopping at their store(s) and/or Web sites, retailers can build customer loyalty by (1) emphasizing a unique positioning, and (2) developing loyalty programs. For example, retailers can try to design a retail mix that creates an image in the customer's mind, which will keep them committed to the retailer. Or, by implementing customer loyalty programs, as part of a broader customer relationship management (CRM) program, and maintaining and analyzing customer purchasing data, retailers can develop strategies to create and maintain a loyal customer base. Location : Location is one of the most important factors in retailing. For example, if a retailer is the only one of its kind in a certain area, or is set in a high traffic area with a visible store front, the retailer has a competitive advantage. Human Resource Management : Since retailing is a labor-intensive business and also has high levels of contact between employees and customers, retailers need to develop programs to motivate and coordinate employee efforts. These are usually done by providing appropriate incentives for employees, fostering a strong and positive organizational culture, and managing diversity. Distribution and Information Systems : Retailers can achieve significant operational efficiencies through developing sophisticated distribution and information systems. Efficient operations reduce retailer costs, and thus, enable retailers to provide the same or similar merchandise at lower prices than their competitors. Unique Merchandise : Retailers can develop sustainable competitive advantage by offering private-label brands. Vendor Relations : Retailers may gain exclusive rights to sell merchandise in a region, to buy merchandise at lower prices, or to receive popular merchandise in short supply through strong vendor relationships. Customer Service : Retailers can build competitive advantage by offering excellent customer service. This involves instilling the importance of good customer service in employee training and performance and consciously developing a reputation for good service. Retailers should not rely on a single approach to gain a sustainable competitive advantage, but instead, should use multiple approaches.
Market Penetration: Best Buy could offer coupons, frequent purchase promotions, etc. to increase sales among existing customers using its present format. Retail Format Development: Best Buy already offers a new format to the same target market in their online retailing at www.bestbuy.com. However, they could offer additional merchandise categories such as more types of accessories including computer desks, chairs, television stands etc. Market Expansion: Best Buy with its existing retail format could geographically expand (international) and or target promotions to specific market segments that it may not currently be targeting (senior citizen and/or student discounts). Diversification : Backward integration into electronics manufacturing would represent a related diversification strategy for Best Buy, while opening retail stores for automobile service and repair would represent an unrelated diversification strategy.