Strategic Retail Management and Brand Management

Trends, Tactics, and Examples

Doris Berger-Grabner

• Publisher: De Gruyter Oldenbourg
• Year: 2021
• ISBN:
  9783110543957
• Edition: 1
• Topic: Business
• Subtopic: Vendite
• Index: Business

The retail industry and associated business models have gone through a significant phase of disruption. The rapid emergence of new technologies, digital business models and the evolution of social media platforms as a new sales channel continue to influence the sector. Key contextual or external trends will affect and shape the retail landscape in the years to come. Therefore, it seems important to prepare for this situation and be ready with a head start in terms of knowledge.

This textbook provides its readers basic knowledge about the national and international retail sector and gives important insights into trends and developments. It deals with key trends, in particular new patterns of personal consumption, evolving geopolitical dynamics, technological advancements and structural industry shifts. Moreover, it explains why it is so important that retailers use these trends, adapt their retail strategies and tactics, create strong brands and come up with innovative, new ways of doing business.

Today we are living in a challenging time for retail. This textbook tries to give insights and explanations to better understand these challenges and provide managerial implications.

Part One: Strategic retail management

An overview of strategic retail management

Alibaba Group Holding Limited is the leading online commerce provider in China, offering a broad spectrum of business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) e-commerce services as well as mobile payments. The stand-alone B2B e-commerce portal Alibaba.com was established in 1999 as a B2B portal connecting Chinese manufacturers to overseas buyers, essentially making it easy to do business anywhere. Now the group is the leading e-commerce provider in Asia as its C2C online marketplace Taobao (https://world.taobao.com/) and B2C online retail platform Tmall (http://about.tmall.com/) are also the market leaders in their respective business segments.

The Alibaba Group has since then grown to become the largest e-commerce company in the world with a gross merchandise volume of US$0.43 trillion in 2017 and US$454 million annual active buyers on its various marketplaces.

The vision is “to become a truly global company, providing solutions to real world problems and using e-commerce to help globalization by making retail more inclusive.”

The philosophy is “to build long-term strategic value and drive synergies for its global business through organic growth and strategic acquisitions.”

Technology has been the driving force behind the phenomenal growth of the Figure Alibaba group. Since its founding in 1999 the company has also moved into new business areas such as digital entertainment and local services. Core commerce still refers to a combination of retail and wholesale commerce business. There have been two notable shifts in Alibaba’s retail commerce platforms: first, from its origins as a marketplace to becoming a social commerce platform, allowing consumers to have fun exploring, and second, Alibaba’s move from online to offline, providing consumers with an omnichannel experience (Weinswig, August 2017).

Gather more useful information on the Alibaba Group Holding Limited by using the links:

https://www.alibaba.com/ and https://www.weforum.org/agenda/2017/01/factbox-alibaba/

• Chapter 1 Strategic Retail Management introduces retailing in general and shows why this field is so essential to be studied. Furthermore, the strategic planning process in retailing will be discussed. In detail, it will be explained how to develop an appropriate retail strategy and how to target different types of consumers. Retail branding and positioning and sustainable retailing, with a special focus on ethical performance in retailing, will also be discussed in Chapter 1.
• Chapter 2 Marketing Mix in Retailing explains the retail marketing mix and refers to the 7Ps in retailing: Product, Price, Place, Promotion, Presentation, People, and Process. There is an emphasis on essential strategic marketing management issues, especially merchandise management, category management, and customer relationship management (CRM).
• Chapter 3 E-Commerce, E-Tailing, and Digitalization looks at trends and developments within the retail sector and defines the most important terms in the digital age. Furthermore, this chapter illustrates innovative technologies and instruments in the retail sector and their challenges and opportunities for retailers and customers.

1 Strategic retail management

1.1 Introduction to retailing

Changing consumer behaviour in general and changing shopping tastes and expectations are quietly transforming the international retail landscape. Today’s consumers increasingly demand instant gratification, personalized goods and services and go further towards the direction of borrowing goods instead of buying them. As a result, the retail business model of the future is expected to look different than just a decade ago, and retailers that do not keep pace with changing consumer tastes will not survive in the long run. In an environment of heightened competition and saturated markets retail companies constantly must evaluate and rethink their business models and focus on what makes them different from competitors. The retail stores of the future will focus on selling experiences, lifestyles, and lifestyle products, instead of offering “just” physical products and therefore provide an added value in the customer’s daily life.

In saturated markets where products and services are becoming increasingly indistinguishable it is essential for every retailer to redefine its key strategies and to focus on strong, mainly emotional, attributes but also on entering new markets and targeting new consumer groups. Retailers constantly experiment with various marketing techniques to make their products more appealing to consumers, to be in the customer’s relevant set (i.e., a group of products or brands in the mind of the customer that limit external search and alternative limitation) and to increase the purchase probability in their sales channels, online and offline. Studies have shown that most of the consumers still make their final purchase decisions directly in a store, at the so-called point of sale (POS). The importance of the POS is still undisputable as more than 70% of customers’ buying decisions are made directly in a store at the POS (POPAI, 2016). When analysing consumers’ buying behaviour and trying to find out which factors influence in-store buying decisions, several in-store attention-based factors can be identified – above all product presentation in general, the shelf position of the product, the number of facings (i.e., the number of products that are placed next to each other on a shelving unit) (Chandon, Hutchinson, Bradlow, & Young, 2007) and the packaging of the product (Clement, 2007). Nevertheless, most of the in-store purchase decisions are based on unconscious processes (Häusel, 2006). Therefore, for marketers and retailers it is very important to understand not only the visible and conscious processes, but also those unconscious processes, to make their products and brands more visual, to increase product sales and to generate customer satisfaction and long-term relationships with their customers.

Since the last few years, more and more retailers start experiencing with new, innovative technologies to make shopping more interactive and to achieve customer engagement. Customer engagement is especially important for every retailer as it is the emotional connection between a customer and a product. Highly engaged customers usually buy more, promote their favourite products through word of mouth, are less price-sensitive and demonstrate more loyalty. Creating holistic, high-quality shopping experiences is an important component in a retailer’s customer engagement strategy. The box below provides an illustrative example how a retailer can create a holistic shopping experience for the customers.

Alibaba, the market leader in China’s booming e-tailing business, experiences with innovative ways of shopping for creating holistic shopping experiences

Virtual reality (VR) shopping is no longer science fiction and is already very popular among certain consumer groups, especially Generation Y and Z. Alibaba, the Chinese internet conglomerate, is constantly experimenting with new ways of shopping. One way is the Buy+ VR experience. For engaging in this shopping experience, customers must use a VR headset or a cardboard VR headset, slip their smartphones into the headset, and then are able to walk virtually, for example, through the streets of New York City. There they can take a yellow cab to a department store, where they can stroll around the store and browse a broad range of products, examine them virtually, and purchase goods instantly. VR shopping gives online shoppers a more interactive and holistic shopping experience.

Another new shopping concept tested and used by Alibaba applies augmented reality (AR) technology and gamification elements. This particular technology, similar to the technology behind the popular game Pokemon Go, is provided to create holistic shopping experiences when shopping online. Like Pokemon Go, the so-called Tmall game (http://about.tmall.com/) has a virtual map that players can explore. Using a game within the Tmall app, shoppers “capture” Tmall’s cat mascot at participating shops and restaurants to unlock and win “red packets.” Users must tap on their phones to capture Tmall’s cat mascot. Gamifying shopping, where customers must make repeat visits to win rewards, can help to increase customer loyalty (BBC, November 2016) and customer engagement.

These examples of new ways of shopping create new opportunities for retailers to engage and communicate with their customers and improve customer relations. By using VR and AR retailers can fulfill the customers’ preferences for personalization and individualization. They can customize, for example, their storefronts, their product and service offerings, and also their marketing materials so that every consumer sees personalized search results, recommendations and offerings, when they accept and use these new technologies (BBC, 2016) and new ways of shopping.

The following chapters go into more detail and will point out essential issues and provide knowledge, which are important for making strategic retail decisions.

1.1.1 “Wheel of Retailing” and further developments

The literature contains various approaches to explaining the dynamic development of forms of business. The displacement theory approach is one of the most discussed theories by scientists, which assumes that the emergence and rise of forms of business are based on a uniform basic pattern.

McNair (1931), with his observation of the empirical phenomenon “Wheel of Retailing,” made the first attempts to legally formulate the development process of forms of business and, based on this, Nieschlag (1954) developed the “Law of the Dynamics of Forms of Business.”

Nieschlag (1954) coined the term “dynamics of the forms of trade.” In his explanations he tries to elaborate those regularities in the market-structural developments, according to which new forms of business arise in trade. In doing so, he takes up the basic idea of the closely related “Wheel of Retailing” by McNair (1931). During this period, Nieschlag (1954) attempted to divide the development of business forms into three phases, preferring to divide them into two:

• emergence and rise
• maturity and assimilation

Both approaches to displacement theory take the view that new, price-aggressive forms of business initially appear on the market and try to attract consumers’ attention and open the market through price. The attractiveness of these forms of business (innovators) decreases over time, partly...