Store Positioning and Compelling Merchandising Assortments

Store Positioning and Compelling Merchandising Assortments

Leo (Yi) Lu, Sec62

Summary: April 9, 2014, Target’s guest speaker, Jim Hoar came and talked about the strategy of store positioning and assortment planning in a customer-oriented way.

Also, all of us got the chance to practice the “Where to Play & How to Win” strategy introduced by Jim and got to know more about how to create a decision tree for a category based on understanding who we want to appeal to and on assessing how the guests would shop that category.

Many of the ideas in this presentation were super compelling. Some of my key learnings include:

Strategy is about making choices

When it comes to understanding business strategy, what I’ve got from Jim is to keep things simple: “The two most fundamental strategic choices are deciding where to play and how to win.” said Roger Martin, Former Dean of the Rotman School of Management University of Toronto. So how should we understand and apply these two directions?

Jim used Shorewood Market as an example and when it came to in-class practice, it is about finding whitespace in cellphone market. Here’s what we think:

The first step – Where to Play? – is essentially about who do we want to appeal to and in what areas/context will we compete. 

  • Target markets – there are many kinds of cellphones from full featured devices to basic phones.
  • Guest needs and wants – in this market, people can range from early adopters with enthusiasm to cellphones to someone who don’t own a phone.
  • Positioning – with all the competitors in the quadrants, our team decided to be a store that will appeal to young people (students) who are new or not very familiar with cellphones and our store will appeal to those young people who want diversified features and are more concerned about high cost-efficiency.

The second step – How to Win? – is all about how will we appeal to these target guests or in another way, what we need in terms of competitive advantage.  For example, in the cell phone case, value proposition for our simulation cell phone store is “High tech, trendy, first tier configuration with affordable price”. In that case, the $49.99 phone without smart operating system/big screen and friendly user interface will potentially dilute our store proposition. So we decide not to carry that item.

Most important of all, these two choices can’t be considered independently or sequentially, they must fit together, reinforce one another and form into a distinctive brand/store identity. There are many great ideas and attractive deals that will come to us, but are these ideas aligned with our strategy? We should ask this question to ourselves all the time.