Etude

Growing beyond Your Core in Retail

US retailers looking to enter adjacent businesses should follow three principles to increase their chances of success.

Par Michael Collins, Marc André Kamel and Kristine Miller

First published on mars 28, 2006
min


US retailers looking to enter adjacent businesses should follow three principles to increase their chances of success: First, look for new businesses that are close to the retailer's core business; second, concentrate on markets with larger margins; and third, estimate the potential for growth in that market. About half of the companies studied by Bain didn't follow any of those principles, and their success rate at entering adjacent markets was a meager 6%. When one principle was followed, the success rate rose to 30%. Meeting two resulted in a 60% success average, and three a slightly higher rate. Download PDF Bain Book Beyond the Core Learn more about how how powerful, repeatable methods for moving into new adjacencies can dramatically increase the odds of success.

US retailers looking to enter adjacent businesses should follow three principles to increase their chances of success: First, look for new businesses that are close to the retailer's core business; second, concentrate on markets with larger margins; and third, estimate the potential for growth in that market. About half of the companies studied by Bain didn't follow any of those principles, and their success rate at entering adjacent markets was a meager 6%. When one principle was followed, the success rate rose to 30%. Meeting two resulted in a 60% success average, and three a slightly higher rate.

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