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Complementarities and strategic fit

By: enjoyrui

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Distribution and retail
Geox distributes its products worldwide through two different channels: a wide international circuit of about 8000 independent multi-brand shops and a network of single-brand Geox Stores. This second type of distribution allows Geox to leverage its brand and to keep a more direct relationship with customers, systematically monitoring their tastes and preferences.
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Currently, Geox has some 250 stores, 80% of which are run under franchising agreements, while 20% are directly run and owned flagship stores, strategically located in the heart of the most important cities in the world. Geox’s commercial strategy has been incremental and somewhat prudent. Firstly, it penetrated and saturated the domestic market. Then, it attacked the adjacent European markets, consolidating significant shares in Germany, Spain, France and, lately, the UK and Poland.

In each country, it has first gained a significant market share through third party distribution and then built its own retail network. Only when its market share was large enough, Geox dared attack the relevant market leader (e.g. Mephisto in France). After consolidating its presence in Europe, Geox has recently turned its attention to the US and China. As regards the US market, Geox has signed a major distribution agreement with Nordstrom and, at the same time, opened flagship stores in key locations, starting with Madison Avenue in New York. In China, Geox has opened 10 stores in the Shanghai area, but also sells its shoes through the Aokang retail network, which consists of 2,000 outlets.

To keep the application of the theoretical framework simple, we start by contrasting Geox’s strategic position with those of its competitors in the footwear industry (Figure 4). Initially, we limit the analysis of the complementarities among the different sets of activities to two of them: the focus of product innovation efforts (and R&D investment) and product range (number and variety of styles, types of functional uses, target customer base). Similarly, we will then expand the discussion to the other activities of Geox’s configuration.

The "red" strategic position: where competitors crowd
Most of Geox’s direct competitors 8 tend to have a strategic position distinguished by two characteristics: a) they tend to be specialists (produce within a narrow product range) and compete in one or few market segments (by customer group -e.g. men’s, women’s, kids’, or product type – e.g. sport, casual, classic or dressy footwear, sandals, boots, sneakers, etc.); b) they innovate the product in terms of design, style (fashion) and materials, mainly focusing on the upper of the shoe. These two choices are complementary. They reinforce each other because they leverage knowledge of specific customers (the style of the upper varies greatly depending on the segment; for example dressy shoes for women versus men; sandals versus boots; brown shoes versus sneakers), and because they allow focusing R&D investment on new design and materials.

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Here players race (and invest) to design and produce the most fashionable shoes of a certain kind, or, at least, those that, during a given season, will likely meet the tastes of the target customer groups. Investment in style (brand included) is also intended to strengthen the specificity and originality of the company product, increasing its differentiation in the chosen segment.

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In each country, it has first gained a significant market share Replica Christian Louboutin through third party distribution and then built its own retail network. Only when its market share was large enough, Geox dared attack the relevant market leader. After consolidating its presence in Europe, Geox has MBT Tataga Shoes recently turned its attention to the US an

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