Retail Life Cycle and Stategies Put in Place Essay Example

organization still grows but competitive pressures are felt acutely from newer forms of retailing that tend to arise. Thus, the growth rate tends to decrease. Gradually as markets, become more competitive and direct competition increases, the rate of growth slows down and profits also start declining. This is the time when the retail organization needs to rethink its strategy and reposition itself in the market. A change may occur not only in the format but also in the merchandise mix offered.

Decline:

The retail organization looses its competitive edge and there is a decline. In this stage, the organization needs to decide if it is still going to continue in the market. The rate of growth is negative, profitability declines further and overheads are high. Strategies put in place

Retail Store Positioning and Competitive Strategy According to Porter’s competitive strategy theory; the least-defensible competitive strategy is being “stuck in the middle.” These retailers offer no long-term benefit in terms of offering consumers low prices or a highly differentiated retail strategy. This book is offered as a guide to these “stuck-in-the-middle” retailers. The first part of dealing with a “stuck-in-the-middle” strategy is a retailer’s recognizing its true positioning in the marketplace. Obviously, what is crucial is the customer’s positioning of the retailer, not the retailer’s idealized positioning. The second part of the change process is for the retailer to formulate short- and long-term plans to implement the recommended changes Michael Porter’s competitive strategy theory argues that there are two major long-term competitively defensible strategies that retailers can pursue: (1) low cost and

Low-cost retailers such as Aldi and Costco have succeeded by

reducing product choice (this translates into savings due to faster inventory turnover, lower rental costs, and greater bargaining power with individual suppliers), use of a self-service shopping environment, and an absence of services that their consumers view as secondary in importance (such as home delivery, custom cutting of meats, no try-on rooms, and an absence of in-store displays), as well as through low rental costs (due to their ability to generate store traffic). Amazom.com is also a low-cost retailer due to its ability to minimize its inventory investment through drop shipping, the absence of physical stores, and the use of consumer ratings by shoppers and excellent photographic images that can be used by consumers as a substitute for sales assistance.

At the other end of the positioning spectrum are retailers such as L.L.Bean, Nordstrom, Trader Joe’s, Wegmans, and Whole Foods. These retailers have succeeded through a differentiation strategy that combines high levels of sales assistance by a dedicated and trained staff, specialized merchandise (much of it being private label), and a shopping environment that is viewed by many consumers as exciting, entertaining, and fun.