Posted in Branding, Marketing, Merchandising, Strategy

Retail Proposition – Part 1

It is probably a sign of the times, but I have recently done more work than usual with struggling retailers. In such cases we obviously seek to determine the cause of failure.

I am loathe to describe what follows as the key to success, because I am not one who believes in magic bullets. Neither success nor failure is ever simply one thing that went right or wrong.

But there is one essential thing that most failing businesses seem to share and this is the lack of (or the ambiguity of) the retail proposition.

This is the first in a 2-part series to explore what a retail proposition is (part 1) and how to develop a succinct proposition (part 2). This post is therefore more ‘conceptual’ and will be followed by the pragmatic ‘how to’ in the following post.

We have to address the conceptual and contextual issues first because marketers (and academics) have been clouding the issue with so much jargon and every wannabe expert has created so many models and frameworks that it is all but impossible to even get consensus about simple concepts such as “brand”.

Positioning. Proposition. Mix. Offer. Mission. Point of Difference. Core benefit. USP. Sustainable competitive advantage; and the list goes on. All of these are somewhat helpful when viewed in isolation, but when trying to make sense of all of them, and then actually to apply the concepts in your business, then your realise it is nothing but a semantic soup.

The toughest question in business is: What business am I in?

This was the question that gave birth to the science of marketing and was first asked by Prof. Ted Levitt. He said that if the Railroad companies truly understood that they were actually in the ‘transportation’ business, then the railroad companies would not have lost their dominance.

He argues that (I’m paraphrasing) people are not interested in buying a drill, but really wanted a hole. That is, we should articulate our business in terms of the ‘outcomes’ and not the product. This means (as a retailer) you are not in the retail business. Nor the food business or the shoe business. Or the hospitality business. Or the fashion business.

Having said that, I don’t think it is particularly helpful to think of yourself as being in the ‘transportation business’ either. Surely Qantas and your local Taxi are very different businesses?

So, what business are you in?

In an effort to answer this question, marketers have responded increasingly with esoteric responses. Your local video shop, Disneyland, the Brothel, the Paintball joint, the Bowling Alley are all now in the ‘entertainment’ business. I really don’t see how that description can be helpful, can you?

Surely, the purpose of articulating what business you are in must have some practical value or else it is complete waste of time?

I express the answer to this question (what business are you in) as your retail proposition. Specifically, I use the following definitions to make sense of all the jargon:

  • Product x Price = Offer.
  • Offer + Brand = Proposition.

I spare you all the gory detail, but I have also developed a full framework that pulls together all the pieces of the puzzle. (Positioning, retail mix, USP etc.) In fact, I have just finished a short multimedia presentation that will be uploaded at retailsmartresults.com and all members (it’s free!) will get a newsletter later this week when it is all done. (Only for those who are a real student of the science of retail…)

Next week I will walk though the ‘how to’ develop a proposition. I won’t go through the whole framework, but there are 3 simple questions to answer, which will truly give you the key to success. (Actually that is not completely true. The secret is EXECUTING it not articulating it – but that part is up to you.)

In the meantime, as a bit of homework, why don’t you try and articulate your proposition?
Here are the rules:

  1. You are not allowed to use the words convenience, service, community. (These apply to ALL specialty stores so they are not helpful descriptions.)
  2. You are not allowed to use specific products (menswear) or a description of your distribution channel (newsagency).
  3. It has to be specific enough to make clear what your business really is.

If you are really brave, you can jot it down in the comments section below and we can chat about it :-).
(Or if you want to do it behind ‘closed doors’ here.)

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3 thoughts on “Retail Proposition – Part 1

  1. hmmmm ok you’ve got me eager for the next installment. Using the rules I’m finding it fairly hard to articulate my proposition.

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