Eight Ways of Winning In Retail

Every store has a front end and a back end …. Retailers make money more through buying efficiently

and in bulk rather than charging higher price compared to competition.

Players playing a Differentiation strategy use the Pentagon parameters more to create differentiation and those playing a Cost leadership strategy use the Triangle parameters to reduce cost and increase efficiency.

Front end has five major parameters (Pentagon) and Back-end has three main parameters (Triangle)

PLACE

PRODUCT

VALUE

COMMUNICATION

PEOPLE

Systems

Logistics Suppliers

The Pentagon and Triangle Model

Size Location Layout & Design

Place

Style & Fashion Intensity Assortment

Product

Price Quality

Value

Positional Promotional

ServiceKnowledge Climate

Communication

People

Systems

SuppliersLogistics

Layout & design

Location

Size

PLACE

Place

Size :

• Size the store right to

- cater to market potential

- maximize Gross Margin

Place

Location :

• Number of locations depends on city potential

• Shrinking catchments

• Therefore multiple stores in metros are essential.

Place

Place

Layout and Design:

• Ambience

• Fixtures

• Store Lay-out

Assortment

PRODUCTIntensity

Style & Fashion

Product

Style & Fashion:

• Emphasis on current trends

Product Intensity:

• Quantum of merchandise per square foot.

Assortment :

• Range of choices offered to the customer

Product

Price

Quality

VALUE

Value

Value

Quality:

• Standard of products

• Exchange policy

Price:

• Used as tactical weapon

Climate

Service

Knowledge

PEOPLE

People

Service :

• Type of service levels to focus on

• Product knowledge and Retail Selling Skills

People

People

Climate

• Friendly, stimulating & rewarding

• Employee Satisfaction Index

Knowledge:

• Job rotation

• Training

COMMUNICATION

Promotional

Positional

Communication

Positional Communication :

• Current positioning

Promotional Communication :

• Category wise promotions to build sales

Communication

Systems

Logistics Suppliers

The Triangle

Systems:

Provide the mechanisms for controlling flows and

operations.

Suppliers:

Partners in marketing and distribution.

Logistics:

Physical movement of goods from vendors to stores.

The Triangle

Five Key Questions for Each Pentagon Corner

• Do we win? Are we really much better than competitors

• By how much? Qualitative judgment – is the gap between us and competitors significant

• Is it getting better or worse? • Does anybody care?

Is it a parameter which the target customers consider important

• Is it sustainable? this is possible only if there is seamless coupling of the front and the back end factors of a store