Strategic Retail Planning

Session: 6 Prof:Yasmin

Strategic Planning
Is the process by which a retailer plans the future actions of a firm by anticipating the environment changes and business patterns Is futuristic in nature and tends to prepare the firm for future challenges

Window driven planning: involves predicting the

customers demands, tastes and preferences so that the merchandise can be made available in the stores right in time. Strategic planning requires a coordinated approach and therefore all departments of the retail organization should be well coordinated #
Yasmin

Strategic Planning
A retailer who focuses on specific targets can provide a superior offering to a specific group of customers. Saify and Metro are two shoe stores situated side by side in a plush market area. Both provide footwear of leading Indian and international brands. In early summer just as the end of examinations, Saify advertised clearance sale of international brand shoes with 50% discount, put a big banner with balloons near an ice cream parlor and distributed newspaper inserts on Thursday. The following weekend there was heavy rush in the store. Encouraged by the Saify sale metro too put a banner and announced a sale with 50% discount but there was no crowd. Can you think of the reasons? Did Metro strategically plan its activities? #
Yasmin

Strategic planning helps in:

Anticipating the consequences of the decision Predicting events that may affect a business Directing the efforts and resources of a firm towards common objectives.

Elements of strategic planning are:

Objectives and mission statement Type of the organization

Store image and target customers

Sustainable competitive advantage
4 Yasmin #

Retail Strategic Planning Process

The success depends on the implementation and on how well it is designed to meet the needs of the customers. The stages of Retail Strategic Planning are
1. 2. 3. 4. 5. 6. 7. 8. 9.
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Develop a Mission Establish objectives Conduct situational analysis Identify strategic alternatives Select markets to compete in Obtain resources needed to compete Develop positioning strategy Implement strategy Evaluate results
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Develop a Mission
Reflects the basic purpose for its existence Would include details of the product and services to be offered, scope of business, target customers, growth plans, the kind of customer service to be provided and the attributes for competitive advantage The mission statement distinguishes one firm from the other Reflects the philosophy of the top management and also guides the corporate culture Its the basic foundation of the whole planning process
6 Yasmin #

Some retail mission statements

Wal-Mart: To give ordinary folks the chance to buy the same thing as rich people McDonalds: QSCV Quality, Service, Convenience and Value Caf Coffee Day: to be the best caf chains in the country by offering world class coffee experience at affordable prices Shoppers Stop: to be a global retailer in India, and maintain the No.1 position in the Indian market in the departmental store category
7 Yasmin #

Assignment for next week 5 marks 10

Collect samples of vision and mission
statements of a few companies. Make a

report on their strategies of marketing

as perceived by you from the vision and

mission statements. Present your report

in the group discussion
8 Yasmin #

Establishing Objectives
Statement of what the firm seeks to achieve in terms of sales volume, profitability, market share, quality levels, etc. Profit is the main objective still firms incorporate social objectives as well Short term objectives are specific and set for a year or two Long term objectives do not stretch beyond five years owing to highly fluid market dynamics Objectives should be SMART
9 Yasmin #

Situational Analysis
A retailer should have a clear understanding of the internal and external environment SWOT- can make the use of information collected from employee surveys, customer complaints, accounting reports, focus groups, customer surveys, supplier surveys etc.
Special attention should be paid to financial aspect while assessing strengths

PEST
Economic condition- the economic condition of the country determines the purchase that consumers make and the amount of money they are ready to spend. Stagnant economy (no chance for the growth of sales)
10 Yasmin #

Situational Analysis
Technological developmentstelemarketing, e-marketing, EFT, minimum inventory, smart carts- are shopping carts equipped with technology which helps them track the contents added to the cart and total the amount of the purchase automatically with every element being added to the cart

Competitive environment the number of stores is constantly increasing while the sales per store is decreasing
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Identifying Strategic Alternatives

Mkt Segment Current Current Market Penetration New Market development

Retail Format

New

Retail Format Development

Diversification

Identifying Strategic Alternatives

Market Penetration
Helps firms compete in existing market segments with existing format by a string market presence A) Increase the number of customers: make the existing store more attractive, adding more brands, modifying, allocating more space to certain merchandise, offer the lowest price in the market, offer a wide variety of consumer goods, providing better service and facilities B) Increasing the quantity purchased: improve the layout of the store, coffee shop, ice cream shop can be added, adopt cross selling C) Increasing purchasing frequency: offer wide variety of goods, offer discounts on selected products
13 Yasmin #

Identifying Strategic Alternatives

Market Development: is a bold strategic shift that involves more capital and is more risky
A) Reaching new market segment: offer something more; McDonald introducing low calorie fat free food, coffee chains offering sandwich, retailers can also open new outlets in non traditional areas like near hospitals and railway stations B) Market expansion: geographically spreading, cross border expansion when home market gets saturated, can also expand by introducing low priced merchandise in their stores
14 Yasmin #

Identifying Strategic Alternatives

Retail Format Development: either by introducing a new retail format or by polishing the existing one, introduce new form of selling like electronic or catalog retailing to improve the convenience to the customer and to attract more customers Diversification: retailers can enter into new markets with an entirely new retail format, it serves new group by offering services it has never offered before
15 Yasmin #

Selecting the Target Market

After evaluating all the strategic alternatives the retailer selects a market that promises the maximum profit and offers the best scope for growth Segmentation of the market- refers to a group of customers whose needs will be satisfied by the same retail offering because they have similar needs and go through the similar buying process Target markets- are the market segments that the retailer wishes to serve Target market selection: the segments that the retailer could best appeal to and serve most effectively are chosen as the possible target market
16 Yasmin #

Obtaining Resources Needed to Compete

A retailer can chose to enter the retail business either by starting a new firm, by acquiring an existing business Therefore the resource requirement will depend on the mode entry of the retailer into the business Physical resources may not be required in case if the retailer takes over an existing business

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Developing a Positioning Strategy

Retailers use Positioning Map A map drawn on two variables on basis of some selected attributes : assortment v/s fashion or quality v/s price Gives a clear picture to the retailer of the relative position of the firm with regards to its competitors The variables that affect the market positioning of a retail firm are
Core variables: customers, competitors and key appeals Retail mix variables: product price, merchandising, position, personal selling and customer service
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Positioning Map

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Market Positioning Strategy

Core Variables

Retail mix variables

Customers Competitors Key Appeals

Market Positioning Strategy

Product Price Merchandising Position Personal selling Customer service

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Strategy Implementation
The implementation process involves developing action plans and assigning the ownership, establishing critical paths and linking the action plans to operating plans The main objective of all these strategies is to create value for customers The practices of the firm should be customer oriented The merchandise sold should be attractive Advertising and promotion appealing Salesperson and other stores personnel should be knowledgeable and friendly
21 Yasmin #

Evaluating Results and Controlling Operations

The effectiveness of a strategy can be known only by measuring the performance of the implemented strategy If the objectives are not achieved as targeted, a re-analysis needs to be done either by revamping the strategy or by re implementing the plan.

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Assignments
What is the best possible retail formats you propose for the following product categories on account of type of location and merchandise variety for a semi urban township and a metro city?
Books Cosmetics Personal computers

Design the retail marketing strategy for launching an e-retail store for traditional gold jewellery to tap the NRI customers
23 Yasmin #