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Beyond the core in retail

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PurposeThe analysis discovered three principles that could lift a retailer's success in doubling the industry's overall average. It found that those retailers who repeatedly attempted moves had a better track record than the rest. Design/methodology/approachBain & Company analyzed nearly 300 attempts by more than 60 US retailers to enter adjacent businesses during the period between 1989 and 2004. FindingsThe analysis discovered three principles that could lift a retailer's success in doubling the industry's overall average. It found that those retailers who repeatedly attempted moves had a better track record than the rest. Practical implicationsSuccess (growing profitably at more than 5 percent a year) was achieved by retailers that repeated a certain type of adjacency maneuver. They won 23 percent of the time, while novices managed only 5 percent. Originality/valueFinding that success rates for adjacency moves rise sharply for those that involve few variants in the company's current cost structures, target consumers or capabilities.
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Keywords: Business development; Consumers; Profit

Document Type: Research Article

Publication date: July 1, 2006

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