Power to retailers!!!

Stamp a management type based on exploiting the market opportunity

I will not deny that I am especially fond of companies framed within the concept of retail. As with many other novel concepts, there are numerous interpretations of it; the Oxford Dictionary of Business reads: a retailer is a ‘distributor which sells goods and services to consumers. There are three categories of retailers: multiple shops, retail cooperatives and independent retailers.

Most of the business models that have called my attention are defined under the retailer model: Decathlon, Springfield, Zara, Abercrombie & Fitch, El Corte Inglés, Imaginarium, Woman´s Secret, etc. Success manufacturers are turning their model or part of it toward retail. Apple Stores become a mass phenomenon wherever they settle.

The academic definitions of the term do not go very deep as far as the application in the market is concerned. It is important to distinguish distribution (classical or modern) and retail; it is a differentiation on which people usually disagree: A distributor is that which has an operational structure to make the manufacturer’s products and brands reach a big mass of clients, its effort is focused on improving the economy of costs, the logistic chain, the proximity with the client, etc.

A retailer is that which has clearly identified its client: it understands his/her needs, it is ahead of changes, it creates structures that develop with the target, etc. We could say that a retailer does not only offer products and services to its clients but also (and more importantly) it offers a philosophical vision of life and it refuses it in its supply of products and services under the umbrella of a brand.

Tuning this definition, we must distinguish retailers from mega-retailers. A retailer is that which offers its business model to a perfectly defined target at one specific stage of it and has its success determined by the evolution and size of the target it works with.

A mega-retailer is that which is able to create infrastructures that develop in the retail model as the target it works with develops: age, purchasing power, cultural level, family mode, etc.

Thus, Benetton is a retailer and Inditex is a mega-retailer: Inditex is capable of attracting its clients at a very early age with Bershka, Pull & Bear, Oysho; then transferring them to Zara, Stradivarius or Massimo Dutti, or creating parallel supplies like Zara Home or Uterqüe. Benetton continues exploiting basically the same target and consequently, offers limited growth and opportunity; Inditex continues growing permanently.

The retail is a phenomenon which began in the textile industry and has developed toward food and is now expanding to most trading fields: toys, electronics, sports equipment, bookshops, leisure and tourism, banks, etc.

The most remarkable aspect of retailers is their mentality; this is exportable to other productive or service sectors, regardless of having direct access to distribution channels or not. Some of the most remarkable aspects of the concept ‘Retailer’s mentality’ are described below:

-Know and identify constantly the objective target: Provide the structure with market intelligence in order to identify the target at which we aim and to pay attention to change the business model on the basis of its evolution. Stamp a management type based on exploiting the market opportunity.

-Define clearly a philosophy that can depict the target’s worries and delimit it under a business model concept: The retailer sells and exports philosophy expressed through intangibles assets: Brand, aesthetics, fashion. All of them must be included in the business model conceived as an ecosystem of value in constant adaptation and movement; the three supports of the ecosystem are the product, the service and the consumable.

-Go for and expand a philosophy of the model instead of the products and services that make it up. The end over the means: The philosophy does not change but the product and service supply below it does. The philosophy is the same for everybody, it is global; we customize the product and price supply that operates below it. The philosophical model does not know about technologies, materials or productive benchmarks; it does know about social fashion, trends and sensitivity. Philosophies are perennial, product and service supplies are variable.

-Meet the target’s needs and advance toward them; surprise constantly, day after day: The main asset of a retailer is its capacity of advancing toward its target’s needs or habits; its survival will be closely connected with it. A retailer surprises its clients every day; its relation with them is based on ‘an arm-wrestle’ for the daily surprise. It is at the same time its main advantage and its competitive barrier.

-Discriminate between structure and opportunity. The brand; an asset to exploit, share, merge, etc: A retailer works eminently to exploit the opportunity of daily life. Everything is determined by opportunity, when it disappears, the structure is dismantled. A retailer is never static, it is always mutant.

The main asset of a retailer is the brand, this is a dynamic fixed asset that must be exploited, shared, merged, etc. with others.

-The world; the best industrial ‘cluster’: Retailers do not know about geographical barriers, they search for the opportunity to sell or produce wherever they are located in the world. Their productive ‘cluster’ is the world and they are exactly where the best industrial opportunity exists; when the latter disappears they also disappear.

-Manage the target’s budget instead of squeezing a part of it: A retailer never works thinking of obtaining the highest possible benefit from a specific product. The retailer works managing or maximizing the budget its client has to satisfy the need. Inditex does not maximize the value per piece of clothes sold, it tries to get the biggest possible part of the budget its client decides to spend on clothing.

Applying these concepts is not only the retailers’ patrimony; today they are global concepts that can provide classical productive organizations with a mentality of change and an important competitive edge.