1. Retail Market Strategy

2.  An effective strategy enables the retailer not only to stay in the market but also to grow and prosper.  Any Strategy formulated is done by assessing two factors: ◦ External environment affecting ◦ Capitalization of these opportunities with that of their strengths and weaknesses.  Still no strategy works until they are checked time to time.

3.  Is a statement that defines the direction of the firms in terms of ◦ The target market which it wishes to cater ◦ Retail format that it proposes to build ◦ Retail Mix variables that it chooses to gain ◦ Nature of the merchandise ◦ Assortment ◦ Services offered ◦ Objectives of Promotional campaigns ◦ Visual Merchandising ◦ Location ◦ Number of stores

5.  Earlier market - a place where buyers and sellers met to bargain exchange  In modern market concept - meeting eliminated. Place orders and make payments online  Thus retail market tries to patronage their activities ◦ to cater particular group of people having similar needs  Targeting them and purely serving them

6.  A retail format is thus chosen on the basis of target group.  Thus each of the format is with a purpose to fulfill its pre-specified targets  A retailer can even go for different targets ◦ Example: Pantaloons & Factory outlet

7.  Doing something unique to make it differentiable from its competitor  This could be attained by getting edge on influential dimensions like ◦ Price ◦ Location ◦ Merchandise ◦ Service ◦ Communication

8.  That could be possible only when retailer is internally strong enough with better stores functions like ◦ Procurement ◦ Logistics ◦ Operations ◦ Finance ◦ Technology ◦ Regular Market Research.

10.  Wal-Mart derives it Competitive advantage from its influential & stores dimensions like ◦ Geographic dimensions ◦ Inventory selection strategy ◦ Flexible pricing ◦ Operations Strategy ◦ Hub & spoke distribution network ◦ Better vendor relations ◦ Its organizational culture

11.  In rural areas and small towns where there were no international retails like them  Wal-Mart took the first mover advantage  As a sole discount retailer it could easily attract customers and till date retains them.

12.  The company did not follow any common corporate policy on merchandising  Instead it gives local stores manager s the autonomy to choose products and allocate shelf space  Because they are the one who are familiar with customer preference and local needs

13.  Again the pricing of the products is left to the stores manager  Prices are thus set according to local demand and the number of competitors ◦ Demand and price directly related ◦ Competitors and price inversely related

14.  This local control ◦ maximizes its sales turnover ◦ while minimizing expenses (as don’t even need to augment its customers more)  This type of pricing gives Wal-Mart flexibility ◦ To price competitively in the areas with close competitors ◦ And price reasonably in areas where it is the only retailer operating

15.  Its operational strategy enables it to achieve maximum efficiency at lower costs.  Because of Multiple distribution centre the inventory occupied only 10 % of the store space  whereas for its competitors it is 25 % of the space.  Thus could make use of the increased store space for displaying more goods

16.  Instead of individual product labeling  Wal-Mart practices Shelf-labeling which minimizes handling and thereby reduces cost  Investments in technology like electronic scanning devices and satellite systems for collection of sales data enabled them for better inventory management  Through which they could to avoid deep discounting due to overstocking of goods

17.  Has a highly sophisticated distribution network  The merchandise reaching at distribution centers is sorted within 1-2 days and made ready for delivery to the stores  This merchandize is delivered through cross- docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or rail car and loading these materials in outbound trailers or rail cars, with little or no storage in betweenlogisticssemi-trailer truckrail car  Thus minimizing inventory storing cost and allowing Just-in-time delivery

18.  Company ships 80 % of its merchandize from its own distribution centers so as to have control over inventory and to avoid dependence on its vendors

19.  Company reduced the bargaining power of its supplier buy not purchasing more than 2.4 % of its requirements from a single supplier  It further gained a cost saving by keeping a manufacturers representatives  It even started communicating to its 3600 vendors regarding the ◦ purchase orders, forecasting, planning all through electronic data interchange

20.  Wal-Mart was even successful in transferring its key vendors like P&G in to partners and began sharing its static plans with them.  They in turn appointed teams specifically to manage products for Wal-Mart.

22.  Indian retail market is witnessing striking presence of store brands in recent times  FoodWorld( RPG & Dairy farm international) having their own brands in more than 15 categories like rice, sugar, jam, socks floor cleaner etc.  Shoppers stop’s Private labels like stop, kashish, life and karrot spread across different categories of product--- resulting to 20 % of its turnover  Ebony realizes 2 % of its sales from its own brand EbonyETC.

23.  Store brands benefits retailers with ◦ Better margins ◦ Greater bargaining power ◦ And ability to offer greater value at lower prices ◦ It even enables them to reduce value gaps (as for customers store brands means reasonable quality at lower prices)

24. Each retailer has its own reasons for storing store brands  Some store it only in those categories where no much of the national brands exist ◦ Say for Subhiksha stored its own brands in basmati rice and atta  Developing own brands do require considerable investments in ◦ Designing resources ◦ Hiring the buying and merchandizing ◦ Sampling activities ◦ Brand development( take the entire cost of promotion)

25.  There is large debate prevailing that retailers are promoting their store brands at the expense of other national brands they keep  But still there are huge upcoming in this area ◦ FoodWorld planning to extend store brands to 30 more categories in the next year

26.  When we talk of merchandising ◦ Retailers like Wal-Mart thinks of going for the strategy of Large varieties of product with shallow assortments ◦ Some prefer to go for Shallow varieties with deep assortment ◦ Retailers need to make a choice between 2 strategy ◦ As keeping both of the above may create handling difficult, leading them to uncompetitive ◦ But still we have Retailers like JC Penny & Sears managing to equip their stores with both Wide variety and deeper assortments

27.  Many customers and Retailers have realized the benefits of healthy competition  Healthy competition encourages them to perform better and even provides customer a better bargaining power  Like Iscon Mega Mall having Westside, koutons, Arrow, Petter Englang, wills lifestyle, Van heusens, Lee, Levis, Pepe, Lee cooper.

28.  With so many players aspiring for a small market share each would eat in to others sales volume.  Very few have the drawing power that would make customers travel a mile only 2 visit them Like Bikaner Sweets, Rasranjan, all Auto-dealers.  Unless retailer has a high drawing power it is the location of the area that drives customers towards it.  If going for a peek location ◦ retailers can go for keeping complementary product range where in customer can feel it to be a complete shopping space.

29.  No retailer can afford providing all the services expected by customers  Neither it would be feasible for them thus need to carefully choose the service they would like to offer.  Should not go for services of high costs to a low priced merchandise (keep them happy both price and service wise)  Neither should not opt low services to a high priced merchandise.

30.  Retailers can broadly classify the services in to three categories Service that Provide Convenience Service that facilitate sales Auxiliary services

31.  Convenient shopping hour  Proper layout  Friendly personnel  Parking facility  Convenient location  With Advent technology Electronic Shopping carts. (displays special offers/discounts when a customer passes to the merchandise row).

32.  We can find certain services offered only if a minimum amount of purchase is made  Credit facilities, free delivery and installation do facilitate sales of a retailer  In high cost luxury merchandise if free delivery not offered then customer do hesitate to buy  Offering Installment payment facilities  Credit card acceptance has also promoted purchase of more product

33.  Services like Baby sitting gift wrapping Gaming Zone Art Gallery Cheque acceptance of few bank( that helps them to scan it to avoid risk) Thus selection of services to be offered free of cost and that too be offered at a minimal cost should be according to the type of customer Some people shop for leisure Some shop when needed.

34. Select Markets to compete in Identify Strategic Alternatives Establish Objectives Conduct situational analysis Develop Positioning strategy Evaluate results Obtaining Resource needed to compete Implement strategy Develop a mission

35. Reflects the basic purpose of existence MC Donald’s mission statement “ Quality, service, convenience and value” It emphasis on delivering value to its customers by providing quality services and convinience

36.  What firm seek to achieve  In terms of Profit Sales volume Market share Quality levels etc Prime a force talks about Pricing Merchandizing & Location

38.  In SWOT, strengths and weaknesses are internal factors.  strength could be: ◦ Your specialist marketing expertise. ◦ A new, innovative product or service. ◦ Location of your business. ◦ Quality processes and procedures. ◦ Any other aspect of your business that adds value to your product or service.

39.  A weakness could be: ◦ Lack of marketing expertise. ◦ Undifferentiated products or services (i.e. in relation to your competitors). ◦ Location of your business. ◦ Poor quality goods or services. ◦ Damaged reputation.

40.  In SWOT, opportunities and threats are external factors.  An opportunity could be: ◦ A developing market such as the Internet era. ◦ Mergers, joint ventures or strategic alliances. ◦ Moving into new market segments that offer improved profits. ◦ A new international market. ◦ A market vacated by an ineffective competitor.

41. A threat could be: ◦ A new competitor in your home market. ◦ Price wars with competitors. ◦ A competitor has a new, innovative product or service. ◦ Competitors have superior access to channels of distribution. ◦ Taxation is introduced on your product or service.

43.  Starbucks Corporation is a very profitable organization, earning in excess of $600 million  It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.  Starbucks was one of the Fortune Top 100 Companies to Work For  The company is a respected employer that values its workforce.  The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of our business.'

44.  Starbucks has a reputation for new product development and creativity. But this creativity has a limited scope  The organization has a strong presence in USA with more than three quarters of their cafes located in the home market.  But has not looked upon for a portfolio of countries, in order to spread business risk.  The company has only concentrated on retailing of coffee and has not diversified this will limit their further growth.

45.  Starbucks are very good at taking advantage of opportunties.  In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.  New products and services that can be retailed in their cafes  Has the opportunity to expand its global operations. New markets for coffee such as India  Have great potential of Co-branding with other manufacturers of food and drink, and also can opt for franchising

46.  Who knows if the market for coffee will grow and stay in favour with customers,  Or whether another type of beverage or leisure activity will replace coffee in the future?  Starbucks are exposed to rises in the cost of coffee and dairy products.  Its success has brought in entry of many competitors like. MC-D, Dunkin ’Dunuts, P&G (selling pre-packaged coffee to Target & Costco

48. Strengths.  Wal-Mart is a powerful retail brand.  It has a reputation for value for money  Convenience and a wide range of products all in one store.  Wal-Mart has good capability of global expansion through joint ventures with big giants ◦ (purchase of the United Kingdom based retailer ASDA, ◦ collaboration with Bharti).

49.  Has Core competence due to its use of IT to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement.  A focused strategy for human resource management and development.  invests time and money in training people, and retaining a developing them.

50. Weaknesses.  Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.  Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not be able to focus each competitor.

51. Opportunities.  Global retailers always ready to merge.  Still has currently only trade in a relatively small number of countries. Therefore tremendous opportunities for future business in expanding consumer markets  New locations and store types offer Wal-Mart opportunities to exploit market development.  They diversified from large super centres, to local and mall-based sites.  Highly flexible organization

52. Threats.  Being number one they are the target of competition, locally and globally.  Being a global retailer exposed to political problems in the countries that they operate in.  Intense price competition is again a threat. As other also strated adopting the strategy so need to even pioneer in some other strategy too.