Winning at Retail: Developing a Sustained Model for Retail Success - Willard N. Ander and Neil Z. Stern: A book review

chillibreeze writer — Shalini Bahadur

Retail management can be made as complicated as one wants to but its success is in its simplicity. It is important to study all the variables that go into making a retail store successful but the ultimate test of success is the consumer’s reaction to it.

Ander and Stern’s book Winning at Retail puts forward a model designed by Norm McMillan and Sid Doolittle, that can steer a retailer towards success. It is a simple and straightforward model that has been designed from the consumer’s point of view. The cornerstone of this new model is the Est model of retail success. The Est model guides retailers towards making their firms the best in one of five essential areas:

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1. Cheap-Est: Winning with Price
2. Big-Est: Winning with Dominant Assortments
3. Hot-Est: Winning with Fashion
4. Easy-Est: Winning with Solution –Oriented Service
5. Quick-Est: Winning with Fast Service

The essence of this theory is that retailers must strive to be the best in their segment of specialization, whether it is low prices they are offering or superior service or the most fashionable clothes. A retailer has to decide on how to differentiate themselves from all the other stores who provide a similar or same service and/or product. Location is often used as a segment specialization but in recent times that has been proven to not be a strong enough reason. It might work in tandem with one of the Est factors but unlikely to do so alone in the long term.

Consumers are short of time and they value being able to purchase products that fit the parameters they have set for themselves. Customers could be looking to be in and out of a store within 10 minutes, or for specialized sales help before deciding on a product, and these are the factors that determine their decision to shop at a particular store.

To be successful at holding an Est position, a retailer must ensure that the entire company has the same focus. To sell products keeping a low margin, a company must have low operating costs. Wal-Mart is the perfect example of a retailer in the Cheap-Est position. The company focuses on its products being the cheapest and this position translates into every decision that the company makes.

1. Cheap-Est: Winning with Price

Wal-Mart’s key to success has been that its founder Sam Walton viewed operations from the supply chain and distribution position instead of from a store position. The company established right from the start that they stood for low prices and that price would be the criteria used for all store operations and purchasing.

Other retailers that occupy this position are Costco, Dollar General, Fred’s, Trader Joe’s and Family Dollar.

2. Big-Est: Winning with Dominant Assortments

Big-Est stores differentiate from large stores in terms of square footage on account of the number of item they have on offer. Toys “R” Us was the first retailer to occupy this position by creating a store that dominated in one single product category: Toys. Until the 1970’s in the US, stores offered a bit of everything and Toys “R” Us’ strategy was radically different from this.

A key point to note, in this category having more merchandise does not make a retailer Big-Est. What is important is to have the right mix of merchandise; products that consumers want to buy not just more products to confuse the customer with. Larger stores are more expensive to operate so productivity must also increase.

Other retailers that occupy this position are Home Depot, Barnes & Noble, Best Buy and Bed Bath & Beyond.

3. Hot-Est: Winning with Fashion

Hot-Est retailers are those who have the latest products just at the right time when customers begin buy them. Hot-Est retailers are not confined only to clothing and fashion, but rather to the latest trends, whether they are music, home décor, coffee or ice cream. This is the opposite end from the Cheap-Est position and the margins can be high as the customer thinks of price last of all.

Being Hot-Est is a cyclical business and so are the profit margins. European retailers Zara and H&M are 2 new entrants to the US market and have drastically altered the way fashion forward retailers do business in the past few years.

Other retailers that occupy this position are Chico’s, Starbucks and Target.

4. Easy-Est: Winning with Solution-Oriented Service

Easy-Est retailers differentiate themselves by offering superior service in terms of making the shopping experience hassle-free and solving customer problems. These retailers offer options, innovative ideas and product information to facilitate customers making correct choices. Retailers at this position of Est must be able to juggle price, product and service to come up with the right mix to keep customers happy.

Nordstrom exemplifies an Easy-Est retailer in the manner that it has trained its sales people from the customer’s perspective.

Other retailers that occupy this position are Container Store, Publix and Kohl’s.

5. Quick-Est: Winning with Fast Service

Quick-Est retailers are those who capitalize on the new currency of time. Now, more than ever before, consumers are running short on time and are willing to forego the benefits of low price, good service or a large variety of products on offer. Quick-Est retailers offer multiple and convenient locations, easy access to parking, efficient and quick checkout counters and knowledge of what the customer wants. Customers come to these stores with specific items to purchase and having these items on the shelves is supremely important.

Gas Stations have been the most innovative retailers in this position. Mobil offers a service called SpeedPass, which consists of a card that stores the customers credit information and allows payment directly from the pump by waving it in front of an infrared scanner at the pump.

Other retailers that occupy this position are McDonald’s, Walgreens and Kinko’s.

The Black Hole

According to Ander and Stern, a retailer trying to be everything for everybody is destined for the Black Hole. The intersection of all the Est positions ends in the Black Hole. A retailer must segregate between its customers and listen selectively to only its core customers, as they are the ones who will be able to decipher the path of success for them. To succeed at the Est model and avoid the Black Hole, retailers must understand their customers first and then position themselves accordingly.

Putting Est to Work

To evaluate a retailer’s success, they have devised three performance levels within each Est position. These are Green Fees, Par and Est.
• Green Fees is the price of admission to play a round of golf, which allows you on the premises but cannot ensure that you score. Ander and Stern translate this as an economic decision of retailers to offer just enough to be acceptable to its core customers.
• Par in golfing terms means meeting the target. Retailers who choose to be at Par mean that they are performing beyond the bare minimum and meeting their expectations and targets.
• Est position is when the retailer focuses on being the best in one area, an area that is critical in regards to their customers.

The retail life cycle is ever changing and the Est Model will adapt along with trends in consumer’s preferences and lifestyles. The cycle is also being shortened at a faster pace then ever before. That means that retailers have less time to adapt and put things back on track than before. Consumers and their needs are also changing due to the advances in technology and telecommunications. A retailer occupying an Est position is not guaranteed to maintain it forever. It has to feel the pulse of the consumer and move along with their needs to hold on to their Est position.

The Hot Zone

The retailers that have the right mix of understanding Consumer Trends, their company’s Internal Strengths and the Competition are the ones that will survive and take Est to the next level. Winning ideas are the ones that solve consumer’s problems.

Enhancing the Customer Experience

The crux of Winning at Retail is that it is essential to keep customers at the forefront of retailer’s decision making. Retail firms that know their customers realize that efficiency is one of the most important factors today. Operational efficiency has always been important to a retailer’s bottom line but now customer’s efficiency will be the deciding factor to success.

Closure

The business of Retail is not as simple as it used to be. Customers are redefining their methods of selecting stores and products in ways that retailers are not always able to predict. Trend reporting is becoming big business in an effort to stay ahead of the curve.

Retailers must be able to be the best at something instead of being good at many things. They have to go from being good to being great in the eyes of their customers.

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—About our writer:

Shalini says, "An eternal student, I love learning anything new. I'm addicted to reading, word games, puzzles, traveling and researching trends. Bliss to me is to curl up on the couch with a good book/good site and a cup of cocoa. Currently working as an assistant manager in Retail Operations with a Children's wear retail chain called Gini and Jony. She is an NRI with a BSc degree in Clothing and Textiles from Kansas State University and worked with JCPenney and K-Mart before deciding to return to India."