Successful Retail Marketing Strategies

By Allan Pulga

Consumer spending in the developed world is looking healthy these days, reports the International Herald Tribune. The trend has led retailers “who know their customers” to use their knowledge in devising marketing strategies that lead to higher sales and profits.

In the recent article “How to succeed in retailing – by really trying,” reporter Barbara Wall highlights the efforts of U.K.-based retailers Tesco and Marks & Spencer, and U.S. retail giants Wal-Mart and J.C. Penney.

Each of these companies identified specific ways to draw more customers to their stores and boost sales and profits. But most importantly, they used clever marketing to make those changes known to the public.

“For a marketing strategy to have any hope of succeeding, retailers need a unique selling point – be it price, product range, location or service,” said David Bush, head of retail research for Grant Thornton consulting firm, in the article. “Once that has been identified, it is up to the marketing department to do its job and demonstrate the effectiveness of its marketing spend.”

Here are a few of the successful retail marketing strategies described in the article:

• Improve the strength of your sales message

Tesco, the British-based superstore chain that is fast-expanding across Europe, lures customers with heavily advertised bargains – like $6 bottles of Chardonnay or two-for-one deals on Indian meals – knowing that customers will leave with much more than wine and tandoori chicken.

“Emphasizing popular products at attractive prices helps Tesco stand out in a saturated market and lift profit, despite tight margins and heightened competition for customers,” writes Barbara Wall.

• Spend more on advertising

Marks & Spencer, the embattled British food and fashion retailer bounced back from sagging profits with its latest advertising campaign featuring 1960s fashion model Twiggy. Profits have soared since the store raised its advertising budget 30 percent last year to $78 million and asked its suppliers to increase their discounts to 10 per cent from 5 per cent.

• Enhance the presentation of merchandise; emphasize quality

Wal-Mart decided to go upscale in order to compete with Target and Kmart, both of which have added posh designer-name product to complement their low-priced merchandise. Wal-Mart not only launched an advertising campaign in luxury publications like Vogue, it focused on improving the quality of its merchandise and presenting smaller sizes and brighter colours.

Wal-Mart also outdid Target in advertising spending – budgeting $1.4 billion for ads in 2005, versus $888 million at Target. February sales figures, up 8 per cent from January, suggest Wal-Mart’s strategy is paying off.

• Harvest customer information

Tesco employs a customer loyalty card (called the ‘Tesco Clubcard’) to fuel its burgeoning compound sales. “The loyalty card is used to drill down into Tesco’s customer base and work out the purchase patterns of every male and female shopper from Aberdeen to Cornwall,” said Bryan Roberts, head of research at London-based consulting firm Planet Retail, in the article. “The data is then used for targeted promotional purposes.”

A curious example of how this data proved worthwhile is that Tesco discovered the purchase of diapers frequently coincided with the purchase of beer. “Most of the purchases had been made my young men at around 6 in the evening,” Roberts said. “The most likely scenario is that the men had been asked” to pick up diapers on the way home from work. So Tesco sent beer vouchers to the appropriate diaper-buying loyalty card holders.

Tesco also noticed that shoppers buying wild birdseed also buy organic foods, so they sent birdseed vouchers to those customers, too.

• Seize the power of the Internet

“J.C. Penney is using its online business to attract younger customers, many of whom still see the store as a place where their mothers and grandmothers shopped,” writes Barbara Wall. Online catalogues, and email alerts for special promotions, abound.

To generate more youthful appeal, the company built a 15,000-square-foot “virtual store” in Times Square in New York as part of its spring advertising campaign. The three-level temporary showroom, closed at the end of March, allowed shoppers to buy merchandise at 22 interactive kiosks.