Retail Strategy Ric Anderson9.16.10

RETAIL STRATEGY
FIND THE BEST CUSTOMER FOR YOUR BUSINESS!
AND MAKE IT WORK!
by
RIC ANDERSON

RETAIL STRATEGY : FIND THE BEST CUSTOMER FOR YOUR
BUSINESS!
2
OBJECTIVES:OBJECTIVES:
Understand the processes to create a Retail StrategyUnderstand the processes to create a Retail Strategy
with a Customer Centric Focuswith a Customer Centric Focus
Learn to analyze your business and competition fromLearn to analyze your business and competition from
a multi-dimensional point of view.a multi-dimensional point of view.
Refine your “Customer Value Proposition”Refine your “Customer Value Proposition”
Use Innovation as a Competitive AdvantageUse Innovation as a Competitive Advantage
Understand the power of an “Engaged Culture”Understand the power of an “Engaged Culture”

BUSINESS!
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MURPHY'S LAW OF MANAGEMENT STRATEGYMURPHY'S LAW OF MANAGEMENT STRATEGY
Some people manage by the book,
even though they don't know
who wrote the book
or even what book.

BUSINESS!
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STRATEGYSTRATEGY
THE DEFINITION OF BUSINESS STRATEGY IS:
A LONG TERM PLAN OF ACTION DESIGNED TO
ACHIEVE A PARTICULAR GOAL OR SET OF
OBJECTIVES

BUSINESS!
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AGENDA:AGENDA:
Frame of ReferenceFrame of Reference
Goals and Point of ViewGoals and Point of View
Visit the “3 Stages” of Strategy Timeline & PathVisit the “3 Stages” of Strategy Timeline & Path
Breakdown “Stages” into ProcessesBreakdown “Stages” into Processes
Finalize and ExecuteFinalize and Execute

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WHAT IS THE PURPOSE OF A BUSINESS?WHAT IS THE PURPOSE OF A BUSINESS?

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EVERY BUSINESS HAS A “PURPOSE!EVERY BUSINESS HAS A “PURPOSE!
THAT PURPOSE IS TO PROVIDETHAT PURPOSE IS TO PROVIDE
A PRODUCT OR SERVICEA PRODUCT OR SERVICE
WHERE THE CUSTOMER HASWHERE THE CUSTOMER HAS
A PERCEIVED VALUE!A PERCEIVED VALUE!
KEY PIECEKEY PIECE
OF THEOF THE
PUZZLEPUZZLE

BUSINESS!
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WHAT IS YOUR PURPOSE?WHAT IS YOUR PURPOSE?
WHAT SANDBOX ARE YOU PLAYING IN?WHAT SANDBOX ARE YOU PLAYING IN?

BUSINESS!
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CURRENT STATE:CURRENT STATE:
Your system is perfectly designed to produceYour system is perfectly designed to produce
the results that you are getting today.the results that you are getting today.
LESSON:LESSON:
If you want fundamentally andIf you want fundamentally and
substantially different results, you havesubstantially different results, you have
to change the strategy and methodologyto change the strategy and methodology
of how you are doing business!of how you are doing business!
Insanity: Doing the same thing over and over again And expecting different results.
Albert Einstein

BUSINESS!10
THE “STRATEGY” FOR A RETAIL STORETHE “STRATEGY” FOR A RETAIL STORE
IS A LIVING ORGANISM!IS A LIVING ORGANISM!
INNOVATION KEEPS IT HEALTHY!INNOVATION KEEPS IT HEALTHY!

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ANDERSON’s 10 PILLARS:ANDERSON’s 10 PILLARS: BUILDING A FOUNDATION
1.1. 10,000 FT POINT OF VIEW10,000 FT POINT OF VIEW
2.2. CUSTOMER CENTRIC FOCUSCUSTOMER CENTRIC FOCUS
3.3. INTEGRATED STRATEGYINTEGRATED STRATEGY
4.4. MULTI-DIMENSIONAL SOLUTIONSMULTI-DIMENSIONAL SOLUTIONS
5.5. COMPETITIVE & INTERNAL INTELLIGENCECOMPETITIVE & INTERNAL INTELLIGENCE
6.6. SUPREMACY THROUGH COMPETITIVE ADVANTAGESSUPREMACY THROUGH COMPETITIVE ADVANTAGES
7.7. ABILITY TO SYNTHESIZE HIGHLY QUANTITATIVE ANDABILITY TO SYNTHESIZE HIGHLY QUANTITATIVE AND
QUALITATIVE DATA INTO A LOGICAL CONCLUSION.QUALITATIVE DATA INTO A LOGICAL CONCLUSION.
8.8. CONTINUOUS INNOVATIONCONTINUOUS INNOVATION
9.9. ENGAGED CULTUREENGAGED CULTURE
10.10.COMMUNICATIONCOMMUNICATION

RETAIL STRATEGY : FIND THE BEST CUSTOMER FOR YOUR BUSINESS!12
GOALS:GOALS: HIGH LEVEL
Evaluate multiple “Solutions” to your Strategy.Evaluate multiple “Solutions” to your Strategy.
Build a Strategy that can create growth, is profitable,Build a Strategy that can create growth, is profitable,
sustainable, scalable, integrated, defendable andsustainable, scalable, integrated, defendable and
has competitive supremacy.has competitive supremacy.
Can easily be communicated.Can easily be communicated.

RETAIL STRATEGY : FIND THE BEST CUSTOMER FOR YOUR BUSINESS!
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GOALS :GOALS : POINT OF VIEW
 Profitable “Market Niches” GrowthProfitable “Market Niches” Growth
 High ROIHigh ROI
 ““Best in Class” and “Top of Mind”Best in Class” and “Top of Mind”
 Innovative Customer TouchpointsInnovative Customer Touchpoints
 High Productivity Revenues ChannelsHigh Productivity Revenues Channels
 FlexibleFlexible
 Smooth TransitionSmooth Transition
 Least RiskLeast Risk

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CRITICAL PATHCRITICAL PATH
Predetermined set of Processes and TimelinesPredetermined set of Processes and Timelines
SEEK OUT, SURFACE AND RESOLVESEEK OUT, SURFACE AND RESOLVE

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CRITICAL THOUGHT PROCESSCRITICAL THOUGHT PROCESS
THE “CRITICAL THOUGHT PROCESS”THE “CRITICAL THOUGHT PROCESS”
IS THE PATHWAY TO A SOLUTION!IS THE PATHWAY TO A SOLUTION!

BUSINESS!
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THREE STAGES OF BUILDING STRATEGY:THREE STAGES OF BUILDING STRATEGY:
1) Look, Listen and Learn
2) Evaluate, Collaborate and Test
3) Assemble and Execute

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STAGE ISTAGE I
LOOK, LISTEN AND LEARNLOOK, LISTEN AND LEARN
CHAMPIONCHAMPION
A Senior Executive has to be given Authority:A Senior Executive has to be given Authority:
 Gather Data & Collect InformationGather Data & Collect Information
 Ask difficult & hard questionsAsk difficult & hard questions
 Request other’s time & assetsRequest other’s time & assets
 Conclusion and ExecutionConclusion and Execution
RequirementsRequirements
 ListenListen
 Open MindOpen Mind
 Qualitative and Quantitative Skill SetsQualitative and Quantitative Skill Sets

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MARKETPLACEMARKETPLACE
Which Marketplace?Which Marketplace?
What Products?What Products?
Value?Value?
Channels of RevenueChannels of Revenue
WHERE AND WHAT IS YOUR SANDBOX?WHERE AND WHAT IS YOUR SANDBOX?

BUSINESS!
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BRAND POSITION,BRAND POSITION,
CUSTOMER VALUE PROPOSITIONCUSTOMER VALUE PROPOSITION
andand
BUSINESS MODELBUSINESS MODEL
BRAND POSITIONBRAND POSITION
CUSTOMER VALUECUSTOMER VALUE
PROPOSITIONPROPOSITION
(CVP)(CVP)
BUSINESS MODELBUSINESS MODEL

BUSINESS!
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FINANCIAL GOALS and DATAFINANCIAL GOALS and DATA
Plans vs. Current StatePlans vs. Current State
““Work Sessions” with Finance, Merchants Operations etc.Work Sessions” with Finance, Merchants Operations etc.
Competitive IntelligenceCompetitive Intelligence
Where are the opportunities?Where are the opportunities?

BUSINESS!
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PRODUCT CATEGORY REVIEWPRODUCT CATEGORY REVIEW
MARKET SHAREMARKET SHARE
FINANCIAL ANALYSISFINANCIAL ANALYSIS
ANALYSIS BY PRODUCT FILTERSANALYSIS BY PRODUCT FILTERS
COMPETITIVE ADVANTAGESCOMPETITIVE ADVANTAGES

BUSINESS!
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MARKET SHAREMARKET SHARE
MARKET SHARE BY COMPETITOR JEANS
PRODUCTS Comp. 1 Comp. 2 Comp. 3 Comp. 4 Comp. 5
Women's 10.0% 8.0% 4.0% 7.0% 6.0%
Men's 4.0% 6.0% 8.0% 5.0% 4.0%
Kids 5.0% 8.0% 7.0% 5.0%
Footwear 8.0% 6.0% 7.0%
Accessories 8.0% 6.0% 5.0% 1.0% 3.0%
Intimate 6.0% 5.0% 4.0% 2.0%
Fine Jewelry 5.0%
Home 4.0% 7.0% 6.0%

BUSINESS!
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ADDITIONAL ELEMENTS:ADDITIONAL ELEMENTS:
 INVENTORY – TURN – ROIINVENTORY – TURN – ROI
 SALES SQ. FT. GM$ SQ. FT.,SALES SQ. FT. GM$ SQ. FT.,
 MARKETING SPENDMARKETING SPEND
 % OF EACH ELEMENT PER MONTH & YEAR% OF EACH ELEMENT PER MONTH & YEAR
BREAKDOWN: Women’s, Men’s, Kids, Athletic, WorkBREAKDOWN: Women’s, Men’s, Kids, Athletic, Work
FINANCIAL ANALYSIS SHOES 1,000,000s
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
SALES Reg 20$ 25$ 40$ 30$ 30$ 30$ 20$ 35$ 45$ 40$ 40$ 45$ 400$
Markdown 30$ 20$ 20$ 10$ 15$ 25$ 20$ 25$ 30$ 15$ 25$ 35$ 270$
TOTAL 50$ 45$ 60$ 40$ 45$ 55$ 40$ 60$ 75$ 55$ 65$ 80$ 670$
GM$ Regular 10$ 13$ 20$ 14$ 14$ 14$ 10$ 16$ 20$ 20$ 19$ 20$ 189$
Markdown 8$ 3$ 2$ 4$ 5$ 8$ 6$ 5$ 3$ 5$ 8$ 9$ 64$
TOTAL 17$ 16$ 22$ 18$ 19$ 21$ 16$ 21$ 23$ 25$ 27$ 29$ 253$
GM% Regular 48% 52% 50% 48% 45% 45% 48% 45% 45% 50% 48% 45% 47%
Markdown 25% 15% 10% 35% 35% 30% 30% 20% 10% 35% 30% 25% 23%
TOTAL 34% 36% 37% 45% 42% 38% 39% 35% 31% 46% 41% 36% 38%

BUSINESS!
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PRODUCT CATEGORIES FILTERSPRODUCT CATEGORIES FILTERS
ANALYSIS OF EACH CATEGORYANALYSIS OF EACH CATEGORY
Time PeriodTime Period
Product to Market Channel/PathProduct to Market Channel/Path
Marketing: Product & ChannelMarketing: Product & Channel
““Purple Cow” ViewpointPurple Cow” Viewpoint

BUSINESS!
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PRODUCT CATEGORY FILTERS:PRODUCT CATEGORY FILTERS: MARKET BASKET
DEEP DIVE into multiple combinations of data
MARKET BASKET
WOMEN MEN SHOES
TOTAL Dresses Sport Denim JR TOTAL Suiting Sport Denim YM Work TOTAL Women Kids ATH Men's Work
WOMEN TOTAL 100% 30% 60% 40% 25% 40% 10% 30% 30% 15% 5% 60% 65% 40% 30% 30% 10%
Dresses 30% 100% 40% 30% 15% 10% 8% 15% 20% 5% 1% 30% 50% 10% 7% 12% 3%
Sport 60% 40% 100% 75% 40% 40% 5% 25% 30% 15% 2% 50% 60% 20% 10% 15% 4%
Denim 40% 30% 75% 100% 25% 25% 5% 3% 30% 25% 10% 60% 60% 25% 15% 10% 5%
JR 25% 15% 40% 25% 100% 20% 1% 15% 20% 20% 1% 40% 35% 30% 25% 5% 1%
MEN TOTAL 40% 10% 40% 25% 20% 100% 40% 80% 50% 35% 50% 40% 25% 40% 30% 40% 30%
Suiting 10% 8% 5% 5% 1% 40% 100% 60% 40% 20% 20% 30% 20% 20% 20% 30% 25%
Sport 30% 15% 25% 3% 15% 80% 60% 100% 50% 30% 25% 40% 25% 35% 25% 40% 30%
Denim 30% 20% 30% 30% 20% 50% 40% 50% 100% 45% 35% 40% 15% 30% 30% 40% 35%
YM 15% 5% 15% 25% 20% 35% 20% 30% 45% 100% 10% 25% 10% 10% 25% 25% 10%
Work 5% 1% 2% 10% 1% 50% 20% 25% 35% 10% 100% 30% 8% 15% 20% 30% 80%
SHOES TOTAL 60% 30% 50% 60% 40% 40% 30% 40% 40% 25% 30% 100% 65% 40% 30% 35% 25%
Women's 65% 50% 60% 60% 35% 25% 20% 25% 15% 10% 8% 65% 100% 60% 40% 30% 30%
Kids 40% 10% 20% 25% 30% 40% 20% 35% 30% 10% 15% 40% 60% 100% 30% 45% 40%
Athletic 30% 7% 10% 15% 25% 30% 20% 25% 30% 25% 20% 30% 40% 30% 100% 50% 40%
Men's 30% 12% 15% 10% 5% 40% 30% 40% 40% 25% 30% 35% 30% 45% 50% 100% 80%
Work 10% 3% 4% 5% 1% 30% 25% 30% 35% 10% 80% 25% 30% 40% 40% 80% 100%

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CUSTOMER PROFILECUSTOMER PROFILE
KNOW AND UNDERSTAND YOUR CUSTOMERKNOW AND UNDERSTAND YOUR CUSTOMER
Current Customer?Current Customer?
Analytics?Analytics?
Population of the Market?Population of the Market?
Filters and Segments?Filters and Segments?
Preferred Customer?Preferred Customer?
Alternative Customer?Alternative Customer?

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CUSTOMER PURCHASING DECISIONCUSTOMER PURCHASING DECISION
LASER FOCUS ON THE CUSTOMERLASER FOCUS ON THE CUSTOMER
CUSTOMER TOUCHPOINTSCUSTOMER TOUCHPOINTS
Visual, Physical or MentalVisual, Physical or Mental

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COMPETITIVE SUPREMACYCOMPETITIVE SUPREMACY
BUSINESS WITH THE MOST INNOVATIVEBUSINESS WITH THE MOST INNOVATIVE
COMPETITIVE ADVANTAGES WINS!COMPETITIVE ADVANTAGES WINS!
ProductProduct
Price, Value, Quality etc.Price, Value, Quality etc.
Business ModelBusiness Model
Customer Value PropositionCustomer Value Proposition
Most positive Customer TouchpointsMost positive Customer Touchpoints

BUSINESS!29
COMPETITIVE INTELLIGENCECOMPETITIVE INTELLIGENCE
WHO? UNDERLYING COMPETITORS?WHO? UNDERLYING COMPETITORS?
ANALYSISANALYSIS
““BEST IN CLASS”BEST IN CLASS”

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 PRODUCTPRODUCT
 QUALITYQUALITY
 BRANDSBRANDS
 ASSORTMENTASSORTMENT
 PRICE/VALUEPRICE/VALUE
 EXCLUSIVEEXCLUSIVE
 LOCATIONLOCATION
 ETC.ETC.

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COMPETITIVE SUPREMACYCOMPETITIVE SUPREMACY
BUILDING COMPETITIVE SUPREMACY
COMP. 1 COMP. 2 COMP. 3 COMP. 4 COMP. 5
FINANCIAL
ROI
MARGIN
SALES
PRODUCT
ASSORTMENT
QUALITY
UNIQUE
BRAND POSITION
HIGH
MIDDLE
LOW
PRODUCT CHANNEL
SPEED TO MARKET
GEOGRAPHY
CUSTOMER
SERVICE
VALUE
ENGAGEMENT

BUSINESS!
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COMPANY HISTORYCOMPANY HISTORY
History: PAST vs. CURRENTHistory: PAST vs. CURRENT
What is driving the Business?What is driving the Business?
Revenue ChannelsRevenue Channels
Competition: old and newCompetition: old and new
Economic StatusEconomic Status
Changes in Population DemographicsChanges in Population Demographics
Technology – Innovation?Technology – Innovation?
Other Elements?Other Elements?

BUSINESS!33
POWER OF CULTUREPOWER OF CULTURE
ASSETS:ASSETS: PEOPLE AND CULTUREPEOPLE AND CULTURE
ENVIRONMENTENVIRONMENT is one of trust, engagement, learning,is one of trust, engagement, learning,
communication, listening and cooperation!communication, listening and cooperation!
LEADERSHIPLEADERSHIP is at all levels!is at all levels!
RESPONSIBILITYRESPONSIBILITY for own role!for own role!
ALL SECTORSALL SECTORS to be utilizedto be utilized
ENGAGEMENTENGAGEMENT has to be total!has to be total!
CONTINOUS INNOVATIONCONTINOUS INNOVATION is top of mind in all sectors!is top of mind in all sectors!

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INTERNAL INTELLIGENCEINTERNAL INTELLIGENCE
ANSWERSANSWERS ARE WITHIN THE ORGANIZATIONARE WITHIN THE ORGANIZATION
SOLUTIONSSOLUTIONS TO SURFACE IS THE ISSUE.TO SURFACE IS THE ISSUE.
CROSS FUNCTIONAL SUPPORT GROUPSCROSS FUNCTIONAL SUPPORT GROUPS
INTERVIEWS:INTERVIEWS: INDIVIDUAL AND GROUPINDIVIDUAL AND GROUP

BUSINESS!35
REVENUE CHANNELS:REVENUE CHANNELS:
WHICH ONES FIT YOUR STRATEGY?WHICH ONES FIT YOUR STRATEGY?
STORESSTORES CATALOGCATALOG INTERNETINTERNET
B2BB2B WHOLESALE TVWHOLESALE TV

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MARKETINGMARKETING
CUSTOMER REACHED?CUSTOMER REACHED?
MARKETING CHANNELS?MARKETING CHANNELS?
CHANNELS BEST REFLECTCHANNELS BEST REFLECT
THE BRAND?THE BRAND?
EFFECTIVENESS BY CHANNEL?EFFECTIVENESS BY CHANNEL?
REACH NEW CUSTOMERS?REACH NEW CUSTOMERS?
INNOVATIVE TESTSINNOVATIVE TESTS
SOCIAL MEDIASOCIAL MEDIA

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VENDOR COMMUNITYVENDOR COMMUNITY
MOST UNDERUTILIZED ASSETMOST UNDERUTILIZED ASSET
Vendor ConferenceVendor Conference
 Products
 Marketing
 Logistics
 Customer Experience
 Competition
 Innovative Solutions
 Invite Cross-Functional Support members

38
STAGE II:STAGE II:
EVALUATE, COLLABORATE ANDEVALUATE, COLLABORATE AND
TESTTEST
USE OF MULTIPLE SOURCESUSE OF MULTIPLE SOURCES
UNDERSTAND OPTIONSUNDERSTAND OPTIONS
ALTERNATIVE SOLUTIONSALTERNATIVE SOLUTIONS
QUANTIFIABLE TESTSQUANTIFIABLE TESTS
INTEGRATED STRATEGYINTEGRATED STRATEGY

39
COLLABORATECOLLABORATE
TEAM PROJECTTEAM PROJECT
MERCHANDISINGMERCHANDISING
STORESSTORES
MARKETING CHANNELSMARKETING CHANNELS
CROSS FUNCTIONALCROSS FUNCTIONAL
SENIOR TEAM MEMBERSSENIOR TEAM MEMBERS
TRUSTED VENDORSTRUSTED VENDORS

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STAGE III:STAGE III:
ASSEMBLE AND EXECUTEASSEMBLE AND EXECUTE
REQUIRES THE SKILL OF SYNTHESISREQUIRES THE SKILL OF SYNTHESIS
CREATE STRATEGYCREATE STRATEGY
GATHER DATAGATHER DATA
ALIGN SOLUTIONSALIGN SOLUTIONS
INTEGRATE ALL ELEMENTSINTEGRATE ALL ELEMENTS
CROSS FUNCTIONAL SENIOR TEAMCROSS FUNCTIONAL SENIOR TEAM
SUMMARIZESUMMARIZE
DISCUSSIONDISCUSSION
HOT BUTTONSHOT BUTTONS
COLLABORATIONCOLLABORATION

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LITMUS TESTLITMUS TEST
BRAND, CVP, BUSINESS MODEL IN SYNCBRAND, CVP, BUSINESS MODEL IN SYNC
PURPLE COWPURPLE COW
INNOVATIVE COMPETITIVE ADVANTAGESINNOVATIVE COMPETITIVE ADVANTAGES
PROFITABLEPROFITABLE
SUSTAINABLESUSTAINABLE
DEFENDABLEDEFENDABLE
SCALABLESCALABLE
INTERNAL ALIGNMENTINTERNAL ALIGNMENT
SUPPORT FROM INDUSTRYSUPPORT FROM INDUSTRY

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PHASE III: Assemble and ExecutePHASE III: Assemble and Execute
FINAL STRATEGY:FINAL STRATEGY:
TASK: INCORPORATE AS MANY OF THE GOALS
FROM THE REVIEW AS POSSIBLE INTO A SEAMLESS
COMPREHENSIVE AND A COLLABORATIVE STRATEGY.
THE CORE SENIOR TEAM MAKES THE FINAL DECISION.
CONGRATULATIONS!
YOU HAVE COMPLETED 90% OF THE GOAL.

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COMMUNICATIONCOMMUNICATION
SUCCESS TIED DIRECTLY TO COMMUNICATIONSUCCESS TIED DIRECTLY TO COMMUNICATION
DISSEMINATEDISSEMINATE
ACKNOWLEDGEMENTACKNOWLEDGEMENT
ANTICIPATE ISSUESANTICIPATE ISSUES
CHANGE MANAGEMENTCHANGE MANAGEMENT

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SUMMARYSUMMARY
A STRATEGIC PROCESS THAT CAN BE USED BY THEA STRATEGIC PROCESS THAT CAN BE USED BY THE
ENTIRE ORGANIZATION. EVERYONE HAS CONTRIBUTED,ENTIRE ORGANIZATION. EVERYONE HAS CONTRIBUTED,
TAKES OWNERSHIP, UNDERSTANDS AND CAN EASILYTAKES OWNERSHIP, UNDERSTANDS AND CAN EASILY
ARTICULATE TO OTHERS.ARTICULATE TO OTHERS.

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Do not repeat the tactics which haveDo not repeat the tactics which have
gained you one victory, but let yourgained you one victory, but let your
methods be regulated by the infinitemethods be regulated by the infinite
variety of circumstances.variety of circumstances.
Sun Tzu c. 490 BC, Chinese military strategist

Retail Strategy Ric Anderson9.16.10

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Retail Strategy Ric Anderson9.16.10