The thoughts here could apply to retail bankin or any form of retail consumer service business. Also visit my blog http://olusfile.blogspot.com for more insightful essaysg

1. Growing the Retail Business in
Nigeria- Opportunities, the
Challenges and Way Out
Jan 2009
Olu Akanmu
www.olusfile.blogspot.com
olu.akanmu@yahoo.com

2. Outline
 Retail Definition and Retail Business Model
 Retailing and Business Volatility
 Building the Retail Business
 Segmentation and Value Propositions
 Customer Segment View versus Product View
of a Retail Business
 Taking Products and Services to the Market
 Strong Brands and Communication
 Execution and Organization Structure of the
Retail Business

3. What is retailing?
 Direct Consumer Sales and Relationships
through little or no intermediary
 Not exactly what the fmcg companies are
doing? FMCG is not classic retailing
 Individual Product/ Brand Sales versus
Customer Shopping Basket View
 Hotel and theme park story
 Retailing is done at Shoprite, Airlines,
Banking, DSTV, Telecoms and fmcg with new
thinking

4. The Retail Business Model
 Revenue is a function of
 Customer Base
 Size and Quality
 How many people come to shop in my store daily? How do I make
more people to shop in our stores?
 Who are they and what is the size of their pocket/ wallet?
 Transaction Volume
 Product Purchase Volume and Frequency
 How full is their shopping basket when they come to my store?
How can I make it fuller?
 How many piun-piun sound do we hear when they are crossing
the till point? (Fees and Income)
 How often do they come to shop in my store?
 Customer Loyalty and Retention
 Do they shop somewhere else and why?
 How do I make them to shop with me and no other?
 How will I keep them for life

5. The Retail Business Model
 Key Drivers
 Customer Acquisition
 Product Usage
 Cross Selling or Upselling of new products
and services
 Share of Customer Wallet
 Customer Loyalty and Retention

6. The Retail Business Model
 How can you move your customers
from “transactions” to
“relationships”
 Data, Information and Analytics are
critical

7. Retailing and Business
Volatility
 A retail franchise is costly to build in the short term,
but tends to be a stable, less volatile business in the
medium to long term.
 Its cashflows when built are more predictable and
less risky..
 In corporate business (business to business), one
stakeholder can terminate a relationship and a strong
revenue in one day. In retail, 100,000 customers
cannot walk away at the same time !
 It is important to build a strong retail franchise to
reduce the risk of business volatility.

8. Building the Retail Business
 Segmentation, Needs and Market Gaps
 Segment your market and understand their needs
 Homogenous groups with distinctive behaviour or needs that can
be targeted cost-effectively for market action?
 What segmentation variable would you use to segment your
market?
 You need to use a relevant segmentation variable for your kind of
business
 The choice or combination of segmentation variable you use, could
reveal unique insights that your competitors have not seen.
 Slice your orange in a unique way
 Are there market gaps or poorly satisfied needs
 Do you have the resources and capabilities to fill the market
gap?
 Can you fill this market gap in a sustained way?

9. Segmentation and Industry
Commoditization
 Segmentation reveals unique customer
insights for product and service developments
 When you see, competitors do the same
things, compete in the same way, and
mutually destroy their industry value by
constant price wars, it is because someone
has not taken a leap to see something unique
that others have not seen, the basis of which
new differentiated products and services
could be designed.

10. Value Proposition
 Based on unique insights identified in the
segmentation process, a firm will develop
unique customer value proposition
 Wining Value Propositions is “I am New
Horizons. This is your need and this is how I
can meet it to your delight, and this is how
I meet your need differently and
uniquely than my competitors. This is
what I can do for you that you cannot
get somewhere else..”

11. Making the Value Propositions
Tangible
 Products and Brands
 Services
 Channels
 Customer Experience
 Pricing
 Price for value. If you are truly different, you can
charge a premium but ensure you share the value
you created with customers, so that even at you
price premium, the customer will always see value
in your product.

12. Unique versus better
 People tend to use unique and better as synonyms of
each other
 Better is not enough
 Better is easily matched
 Synonyms of better are improve, enhance
 Uniqueness is strategy
 Synonyms of uniqueness
 Sole, one of its kind, unmatched
 It is unique products and services that makes you to
win on a sustained basis in the market
 It is hard to find uniqueness given rapid technology
and knowledge diffusion in the modern world

13. Finding Differentiation in a
Product Commoditized Industry
Customer
Experience
Service
Core
Build augmented value
product
around your core product
Find uniqueness in
augmented product..service,
Channels
Experience, channels

14. Delivering the Value
Propositions
 Ensure your management systems,
processes, back office, technology,
people, capital are aligned with the
value proposition you want to deliver.
 The back office of Shoprite is a complex
logistic and inventory system that
delivers fresh meat and other products
in the right quantity daily over 365 days

15. Customer Segment View versus Product
View of the Retail Business

16. Customer Shopping Basket
View
 Products, yes but look at the total shopping basket
 Some products on their own may not look profitable but
when a customer is already acquired and you cross sell
them, they increase your profitability
 Hotel and Theme Park Story
 Customer Profitability is more important in retail than
product profitability
 Customer revenue (total shopping basket- acquisition
cost- cost of retention-cost of service delivery)

17. Customer LifeTime Value
 Was Glo stupid when it priced its sim card
five years ago at N1?
 In a retail business, sometimes the cost of
acquisition of customers are high, but taking
a long time view, if you keep those
customers, they can become extremely
profitable in the coming years because
acquisition cost for retained customers is
zero.
 This is why strong retailers are paranoid
about customer base..!

18. Customer Profitability
 Align cost to serve to customer value
 Do not treat all your customers the
same way
 Why airlines have first class and economy
 It does not mean you should deliver crap
to the economy class
 Use channel differentiation to align cost
to serve to customer value

19. Taking Products and Services to the
Market

20. Build a Strong Brand
 A brand is “bundle of promise that is unique”
about a product. Brand says I am more than the
“ordinary or the common”.
 It gives the customer a re-assured confidence to
choose you over others
 It is a stamp of quality
 Brands are critical in a commoditized world
 It will help you to charge a premium because you
have helped the customer to reduce the risk of bad
choice.
 Strong brands in banking.. PHB, Zenith, GTB..

21. Four Brand Equity Dimensions
(Aakers)
 Brand Awareness  Perceived Quality
 Recognition and recall  Most critical measure of
brand equity
 Familiarity and opinion
 Degree of price premium
 Brand Loyalty  Esteem and respect
 Satisfaction at recent usage
 Consistently exceed my
 Brand Associations
expectations  Different from others in
relevant ways
 Regular usage even when
alternatives are available  It is an interesting
personality. We do have a
 Will recommend it to others
relationship
 Will pay a premium for it over
 Perceived value-value for
alternatives
money relative to its price
 Market share
 I trust the firm behind the
brand

22. Building Strong Brands
 Ensure that your service delivery is in tandem with
your brand promise
 Branding is more than advertising
 Internal brand communications is as important as external
brand communications
 Your staff must understand the promise your brand has
made to customers and what they must do individually to
deliver it at every point of customer engagement
 Appoint a custodian for your brand or sub-brands
with the authority to compel internal alignment with
brand promise

23. Taking Product and Services
to the Market
 It is not enough to have a great product, it must be
supported by an excellent “go-to-market” strategy
 If your value proposition is right, you have done half
of the job, the rest is to ensure that the value
proposition is well communicated
 Advertising, Pubic Relations
 Sales Promotion
 Sponsorships
 Personal Selling.. Strong Sales Force
 Direct Marketing..
 In- Store Marketing and Sales

24. Precise Bombing
 The more targeted your communication, the
more effective it will be.. ( Precise bombing is
better than scatter bombing)
 Use the right media that your audience
consume
 Choose a good communication partner
 If your audience is small and not mass,
approach them directly. It is more effective
than advertising.

25. Execution
 Strategy is a mere statement of
intention unless it gets done..
 Translate product, channel, pricing and
customer experience strategy into clear
activity programs and a calendar of
action of what, who, how and when..
 Review at milestones, objectives and
performance gaps, program calendar

26. Organization Structures
 Product or Category Management
 Customer Segment Management
 Channel Management
 Different Combinations of the above

27. References and Further
Readings

 Visit www.olusfile.blogspot.com

28.  Thank you.