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Retail Diversification


Retail diversification – the benefits and pitfalls


Kathy Salisbury of The Salisbury Consultancy discusses with A1 Retail the benefits of diversification for retailers.


The difficulties facing retailers during the economic downturn have been well documented. However, some have thrived by using the recession as an opportunity to take stock and review their business; shedding non‐profitable areas and adopting a more ambitious strategy.


One of the most successful strategies has proved to be diversification, which enables retailers to increase brand awareness, attract new customers and move into fresh markets. However, in order to make this work, it’s important to get the key factors right. If a company or brand is not at the right stage to diversify it can be highly damaging to the core business.


Why diversify?


Most companies start out specialising in a specific market. They may grow and acquire new customers across an increasing geographical area, but eventually growth slows and sales become flat. Updating and increasing existing product offerings may help, but after a while it becomes harder and harder to come up with refreshes or product extension. If your company has run out of opportunities in its core business, it may be a


good time to consider diversification. Ultimately, ask yourself will the company be better off, and will this product add to the brand and give you an advantage over your competitors?


The Ansoff Growth Matrix (below) can help a business determine the right product and growth strategy i.e. whether to market new or existing products in new or existing markets.


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