Strategic Retail Management (PDF)

Chapter 4 (p.77-78)

Growth Strategies

The aim of this Chapter is to introduce the alternative routes to company growth for retailers. Ansoff’s matrix, as a strategy tool, branch multiplication, cooperation and mergers &, acquisitions are considered as basic alternatives for expanding the retail store network.

Growth Options

Almost all retailing activities start as independent, single outlet operations. Compared to other business sectors, such as manufacturing, entering into retailing by opening a retail store is relatively easy and does not require high capital resources. The desire to grow business and increase its value is often a fundamental objective from the very beginning. For retailers, among other benefits, sales growth provides benefits through purchasing from suppliers in large quantities and from economies of scale in operations (e.g. IT, logis tics, and administration) (Ogden/Ogden 2005, p. 92).

For decades, strategic management has analysed the alternative routes to company growth. Ansoff’s matrix (or product market matrix) is a well known categorisation of growth strategies (see Figure 4.1). It consists of four sepa rate strategies (Ansoff 1988):

With present products and in present markets, growth can be achieved by market penetration. Higher sales from existing markets can either be obtained by attracting current non customers, who either do not buy products in the offered categories at all or who buy them from competi tors. Alternatively, the loyalty of existing customers of the retailer can be improved and the value of their shopping baskets increased.

Product development is characterised by offering new products to existing markets. This can be done by providing the existing customer base with new product categories in the existing stores (see Chapter 8). Apparel stores expanding into selling shoes would be a good example. Consider ing the fact that the retailer’s

Joachim Zentes is Professor of Marketing and Management at the Saarland University, Saarbrücken, Germany. He is Director of the Institute for Commerce & International Marketing (H.I.MA.) and Director of the Europa-Institut at Saarland University. He holds a chair in Business Adminstration, with a focus on Foreign Trade and International Management. Joachim Zentes is also a member of various boards of directors and advisory boards in Germany and abroad.



Prof. Dr. Dirk Morschett holds the Chair for International Management - Liebherr/Richemont Endowed Chair - at the University of Fribourg, Switzerland.



Hanna Schramm-Klein is Assistant Professor of Marketing and Management at the Institute for Commerce & International Marketing (H.I.MA.), Saarland University, Saarbrücken.