1. Growth Strategies
• Four types of growth opportunities:
– Market Penetration
– Market Expansion
– Retail Format Development
– Diversion
• Related vs. Unrelated

2. Growth Opportunities

3. Market Penetration
• Attract customers from target market
– Walgreens “on every corner”
• Get current customer to visit store more
often or buy on each visit
• Cross-selling – when a customers make a
purchase they try to get the customer to
purchase something else

4. Market Expansion
• Uses the existing retail format in new
market segment
– Dunkin’ Donuts
• Spread across the country
– Abercrombie and Fitch
• Opened another store to have a bigger target
market

5. Retail Format Development
• Opportunity in which a retailer develops a
new retail format-a format with a new retail
mix-for the same target market
– Multichannel
• Retailer offering an Internet channel as a new
format, in addition to the existing one.

6. Diversification
• A retailer operates a new retail format
directed towards a market segment that’s
not currently served by other retailers
– Related diversification-retailers present target
market or format shares something in
common with the new opportunity.
– Unrelated diversification-lacks any
commonality between the present business
and the new business
– Vertical Integration-diversification by retailers
into wholesaling or manufacturing

7. Global Growth Opportunities
• International expansion is a market
expansion growth opportunity that many
retailers
– Out of the 50 largest global retailers, 38
operate in more then one country

8. International Growth
Opportunities
• Europe
• China
• Mexico
• Latin America
• Japan

9. Why are they so successful?
• Developed operating expenses
• Scale economies for buying merchandise
globally
• Unique systems and standardization
formats that facilitate control over multiple
stores
• Understand that consumers are willing to
forego service for lower prices

10. Key to Success
• Globally Sustainable Competitive
Advantage
• Core Advantages
• Low cost - Wal-Mart
• Fashion Reputation - The Gap
• Category dominance – Best Buy
• Unique Image, Brand – Starbucks
• Adaptability
• Global Culture
• Financial Resources

11. Succeeding Internationally
• Adaptability
• Global culture
• Financial resources
• Global sustainable competitive advantage

12. Entry Strategies
• Direct Investment-when a retail firm
invests in and own a division that operates
in a foreign country
• Joint Venture-formed when retailer pools
its resources with a local retailer to form a
new company in which ownership, control
and profits are shared

13. Entry Strategies (con’t)
• Strategic Alliance-collaborative
relationship between independent firms
• Franchising-offers the lowest risk and
requires the least investment