Retail Expansion Strategy (Summary)

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Retail Expansion Strategies


The article discusses the elements of retail expansion, the necessary components and analysis of each component to achieve a successful expansion.

The first step of retail expansion is an objective appraisal of the existing business. The author discusses that all elements must be taken into account, including but not limited to certain amount of luck. In other words, the successful retail concept in one area may not necessarily translate into another successful retail concept in another area. The owner must evaluate how much ¡°customer loyalty¡± is there in the original area and consider all financial aspect of the existing business including lease conditions and whether the success of a particular retail concept is a ¡°fortuitous synergy¡± between the concept and unusual demographic conditions.

The article continues to discuss the three components of expansion strategy: geographic strategy, ownership strategy and rate of expansion. In terms of geographic strategy, the owner must consider whether to open the second retail site close to the original retail site, focus on major metropolis or to use the ¡°jump back and fill¡± where the second flagship store is opened and backfilling it with additional retail stores. The strength of each concept is discussed where opening a second site in close geographical proximity will offer advantages of ease of management and training and establishing necessary supply infrastructure the major metropolis concept offers the advantages of greater economic stability of major metropolis (e.g. city of Georgia versus city of New York, New York may offer better stability). The third concept of ¡°jump back and fill¡± offers the flexibility of moving the flagship stores to major areas and filling it back with secondary retail sites along the way.

The rate of expansion must be considered as well. As discussed in the article, too slow of response will result in loss of opportunity and...
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