Specialty Retail

Overview

Just like the overall retail market the specialty retail segment has large retailers (The Gap, Best Buy, Barnes & Noble), but is predominately composed of small business that are focused on a niche audience.

Competitive Landscape

Despite the presence of large retail chains, the specialty retail market is highly fragmented. This is driven by the definition of the segment; individual retailers focus on a niche product or cater to a specific audience. If one has an aggregated model then they are a mass merchant. Additionally, with thousands of individual product units it is especially difficult for one specialty retailer to dominate a product area. For example, Barnes & Noble has over 800 stores but only has a market share of 15%.

Specialty retailers compete on the differentiation of merchandise and shopping experience. By and far the number one differentiator is experience, providing products that have a strong local demand.

Operations

Like other retailers, operators in this segment:

  • acquire selling locations
  • supervise staff
  • manage inventory, and
  • market products

Unlike mass merchandisers, whose business model is the convenience of having different product in one location, specialty retailers offer a much larger selection of items within a product category. Ladies Footlocker, for example, provides a much larger and deeper selection of women’s sports apparel than any department store.

Merchandising is the store manager’s main preoccupation. This is especially true in both trend-driven areas (e.g. clothing) and convenience stores. It is key for the owner, buyer, and site manager stay very connected to the population they serve so that they can make purchasing decisions that anticipate trends.

If you are able to demonstrate this learned skill your services will be demand. It is a task that should not be taken for granted because specialty stores need to stock a wide range of items. Even small retailers may stock 10,000 items.

Specialty Retailer Sample List:

  • Jo-Ann Stores
  • Midas
  • 7-Eleven
  • Office Depot
  • PETsMART
  • Red Envelope
  • Circle-K