BUILDING COMPETITIVE ADVANTAGE IN RETAILING The Eight Ways

BUILDING COMPETITIVE ADVANTAGE IN RETAILING The Eight Ways to Win! Lawrence J. Ring, Chancellor Professor & John S. Strong, CSX Professor of Finance & Economics Mason School of Business The College of William and Mary, Williamsburg, Virginia USA john. strong@mason. wm. edu (1)757 -221 -2864 John S. Strong CSX Professor 1 The Eight Ways To Win In Retailing

The Eight Ways To Win In Retailing The Pentagon & The Triangle PLACE SYSTEMS COMMUNICATION PRODUCT LOGISTICS PEOPLE SUPPLIERS VALUE John S. Strong CSX Professor 2 The Eight Ways To Win In Retailing

Five Key Questions for Each Pentagon Corner • • • Do we win? By how much? (a little or a lot? ) Is it getting better or worse? (direction) Does anybody care? Is it sustainable? John S. Strong CSX Professor 3 The Eight Ways To Win In Retailing

Pentagon Concepts 8 Ways 2 Win Size PLACE Location John S. Strong CSX Professor 4 The Eight Ways To Win In Retailing

Notion of Inside Vs. Outside Draw 9 miles 6 miles 3 miles UPD = 1, 000 persons/sq. m. John S. Strong CSX Professor 5 The Eight Ways To Win In Retailing

Pentagon Concepts 8 Ways 2 Win Size PLACE Location Layout & Design John S. Strong CSX Professor 6 The Eight Ways To Win In Retailing

Pentagon Concepts PLACE 8 Ways 2 Win PRODUCT Intensity Assortment John S. Strong CSX Professor 7 The Eight Ways To Win In Retailing

Merchandise Intensity and Sales/Sq Ft Inventory/Sq Ft John S. Strong CSX Professor 8 The Eight Ways To Win In Retailing

A Strategic Approach to Inventory Management Old Game Convenience Assortments Competitive Assortments Velocity Assortments Opportunistic Assortments Differentiated (Focused) Assortments Dominant (Power) Assortments New Games John S. Strong CSX Professor 9 The Eight Ways To Win In Retailing

Pentagon Concepts PLACE 8 Ways 2 Win PRODUCT Intensity Assortment Style & Fashion John S. Strong CSX Professor 10 The Eight Ways To Win In Retailing

Fashion versus Value John S. Strong CSX Professor 11 The Eight Ways To Win In Retailing

Pentagon Concepts PLACE 8 Ways 2 Win PRODUCT Price EDLP v Hi Lo VALUE Quality John S. Strong CSX Professor 12 The Eight Ways To Win In Retailing

Price x Quality = Value John S. Strong CSX Professor 13 The Eight Ways To Win In Retailing

Pentagon Concepts PLACE 8 Ways 2 Win PRODUCT Service Knowledge Climate PEOPLE VALUE John S. Strong CSX Professor 14 The Eight Ways To Win In Retailing

Pentagon Concepts PLACE 8 Ways 2 Win Brand COMMUNICATION PRODUCT Positional Promotional PEOPLE VALUE John S. Strong CSX Professor 15 The Eight Ways To Win In Retailing

SYSTEMS Triangle Concepts 8 Ways 2 Win Provide the mechanisms for controlling flows and operations. . . Essential for managing categories item by item, store by store, market by market. LOGISTICS SUPPLIERS Physical movement of goods from vendors to stores. . . A major frontier for improving asset management and reducing costs throughout the channels of distribution. Partners in marketing and distribution. . . Effectiveness of the relationships determine both the rate and cost of sale, and the ability to implement some of the key triangle activities. John S. Strong CSX Professor 16 The Eight Ways To Win In Retailing

Triangle Activities Replacement of Labor by Technology s Front-End Scanning s Labor Scheduling Systems s Workforce Optimization s Electronic Shelf Stickers s Automated Warehouse/DC s Self-Scanning and Checkout s Automated Picking Lines s Store Security Systems s Environmental Controls Merchandising and Space Management s SKU Data Capture s DPP [Direct Product Profitability] s Rapid Intensification and Delisting s Modularization in Store Design s Price Optimization Software Quick Response and Automatic Replenishment s EDI Software [Electronic Data Interchange] s UPC/Barcode [Universal Product Code] s CL [Carton Labelling] s PSS [Planogram Software System] s Programmed Supply Relationships s Information Sharing s Perpetual Inventory and VMI s. ECR [Efficient Consumer Response] s. CPFR [Collaborative Planning, Forecasting, and Replenishment] s. RFID s. JIT and LTO Supply Chain and Logistics • Greening of the Supply Chain • Global is here to stay • RFID Continues to Grow • Focus on Risk Management • Supply Chain Vendor Consolidation • Voice Technology in Distribution Grows John S. Strong CSX Professor 17 The Eight Ways To Win In Retailing

New Triangle Technologies Open Systems s Rapid Technological Advances s Niche Vendors s Mergers & Acquisitions s Outside Data Client Server s End User Empowerment GUI [Graphical User Interfaces] s Walk Up & Use s Touch Screen Multimedia s Interactive Training [scheduled &JIT] s Customer Self-Service Sales/Marketing Kiosks s Services Delivered To The Home Data Manipulation Technology s Data Base Management Systems s On-Line Transaction Processing s Decision Support Systems [Inventory Flow] s Knowledge Processing [Promotions] Object Oriented Technologies s. Wireless Technologies s RF ID [EAS & Multi-Bit] s. Produce Identification John S. Strong CSX Professor 18 The Eight Ways To Win In Retailing

The Eight Ways To Win In Retailing The Pentagon & The Triangle Size PLACE Location Layout & Design SYSTEMS PRODUCT COMMUNICATION Style & Fashion Intensity Positional Assortment Promotional Service LOGISTICS Knowledge Climate PEOPLE SUPPLIERS Price VALUE Quality John S. Strong CSX Professor 19 The Eight Ways To Win In Retailing