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Strategy Diversification

shoesStrategy diversification is more important than ever in a highly competitive marketplace where convenience is a commodity. I’ve noticed a couple recent examples of strategic diversification in well-established niche retailers. These companies happen to be in the same industry and may even share the same customer base.  They specialize in men’s clothing but their merchandising focused in two very distinct categories – Allen Edmonds being in the upscale shoe business, and Bill’s Khakis in men’s khaki slacks.  Both firms seem to have had a very successful run with their niche merchandising and marketing.

Recently they both appear to have changed their strategic direction by diversifying their product selection within the same niche. Allen Edmonds has always been in men’s shoe accessories but of late they have added men’s apparel; they now carry a very narrow assortment of sport coats and related product.  Bill’s Khakis has also expanded their product lines with the addition of shoes and extended apparel.

What might be the goal of this strategy diversification? Was the goal to increase revenues? Were they testing the waters to see how the expanded offering and convenience would appeal to their customer base? Or were they attempting to extend their appeal beyond their customers, to potential buyers?

The answer may lie in the fact that, this past week, Allen Edmonds has gained the attention of a few national publicly-held retailers of men’s apparel.  Perhaps both clothiers have leveraged their customer database to display their growth potential to big retailers and show the retail community that they can sell more than just their original product line. Strategically positioning themselves to attract a buying interest could provide a win-win for stakeholders and potential investors. Allen Edmonds now has a couple of “deep pocket” retailers showing interest in the possibility of purchasing them.

When you see companies making changes like this, they’re diversifying to reach a goal.

What is your goal? What are you doing to reach your goal? How are you increasing your viability and value, whether to customers or to potential buyers? Strategic diversification comes in all colors. Elanstrategic knows how to color! Call us today!