Companies in the retail industry
differentiate themselves from one another in several categories. One of the
most obvious ones is price. Every consumer has their spending limits; and
depending on how much they are able or willing to spend, will decides which
kind of store they will shop in. This means some people are only able to shop
in inexpensive stores, such as target, while others can shop in high end stores
like Neiman Marus.
“While the free spending of the affluent
may not be of much comfort to people who are out of jobs or out of cash, the
rich may contribute disproportionately to the overall economic recovery.”
“This group is key because the top 5
percent of income earners accounts for about one-third of spending, and the top
20 percent accounts for close to 60 percent of spending,” said Mark Zandi,
chief economist of Moody’s Analytics. “That was key to why we suffered such a
bad recession — their spending fell very sharply.”-NY TIMES ARTICLE
Another way that retail stores can be
categorized is by looking at the apparel they sell. – Some stores carry
specific items such as summer wear, sports clothes, jewelry etc. While others
carry clothes specific for women, men, or children. This is true with retailers like Victoria’s Secret,
Men’s Warehouse and Gap Kids.
I like how David mentioned right away the point about price being the main differentiating factor. In the retail industry where products are so similar, price is one thing that is really going to set one product aside from another. I liked how he mentioned high end and low end stores as well. I thought the quote he included about the top 5% of income earners accounting for 1/3 of spending and the top 20% accounting for 60% of spending was really interesting and crucial to understanding why retail took such a hit in the recession. Also, I thought David made a great point by including apparel as another way to differentiate products. While much of the apparel is similar, more and more stores are targeting one very specific target market pertaining to age or gender as David mentioned. Many stores in the mall are catered to just females who tend to shop more. Examples include Victoria's Secret (as mentioned in the post), Delia's, and Forever 21.
ReplyDeleteDavid, your post reminded me of a group activity we had in class. When the professor asked us to talk about consumer trends for our industry, she asked us about companies that are doing well in the retail industry and one of the things she mentioned was that discount stores like Target are the leading companies. As you said, this is due to the fact that people are buying in stores were they are able and willing to spend in. These companies like Target are successful mainly because of their pricing. Target's brand promise: Expect More, Pay less.
ReplyDeleteDifferentiation is a big thing in retail because companies need to somehow make themselves better or at least different than everyone else to attract customers and gain consumer loyalty.
ReplyDeleteIt is very true that differentiation also shows up in other areas than just price. We can see that in styles and looks, companies change what they produce in comparison to other companies. This is a big way to make oneself different from others.