It is hard to resist the temptation to be all things to all customers. More than once I have seen retailers try to add luxury items to their stores built on value-priced merchandise. This strategy rarely works: the high-end shoppers will not step foot into a store whose reputation has been built by offering cheaper products and the loyal clientele can rarely afford the more expensive merchandise, and may even feel alienated.

The solution is usually to open a new chain of stores entirely with a different brand that is in not associated with the old brand. This way each chain has a clear strategic focus. This story about Samsonite opening a new chain of high-end luggage boutiques under a different brand (Point A) illustrates the point:

At Point A, Samsonite will for the first time market its products alongside such tony brands as Andiamo, Hugo Bosca and Kenneth Cole.

Shoppers from various budget brackets can spend $12.95 on a Samsonite seven-day pill case or splurge on a $550 Zero Halliburton aluminum-encased, leather-lined briefcase. This is not the place to find non-designer, discount items, Zucker said.

"There's nothing in this store that you would find in a Target, Wal-Mart or Kohl's," Zucker said.