Retail strategy

 A retail strategy is the overall plan and or frame

work of action that guide a retailer.
 One year in duration
 Outlines mission, goals, consumer market, overall and
specific activities, and control mechanisms
 The process of strategic retail planning has several
attractive features:
a. It provides a thorough analysis of the requirements for doing
business for different type of retailers
b. It outlines retailer goals
c. The legal ,economic and competitive envt is studied
d. A firm’s total efforts are coordinated
e. Crises are anticipated and often avoided
Elements of a Retail Strategy
Situation Analysis
 Is a candid evaluation of opportunities and threats
facing a prospective or existing retailer.
 What is the firm’s current status?
 Which direction should it be heading?
 Situation analysis means being guided by an
organizational mission, evaluating ownership and
management options, and outlining the goods/
service category to be sold.
 Opportunities are the market place openings that
exist because other retailers have not yet capitalized
on them. IKEA does well because it is a pioneer firm
in offering a huge selection of furniture at discounted
price.
 Threats are environmental and marketplace
openings that exist because other retailers have not
capitalized on them. Eg: single screen movie theatres
getting hit as a result of multiplexes.
 A firm needs to spot trends early enough to satisfy
customers and stay ahead of competitors, yet not so
early that shoppers are not ready for changes or that
false trends are perceived.
 A new retailer can adapt to trends easier than
existing firms with established images, ongoing
leases and space limitations.
 During situation analyses especially for a new
retailer an honest in-depth self assessment is vital,
over estimating one’s abilities and prospects may be
harmful.
Organizational Mission
 Is a retailer’s commitment to a type of business and
to a distinctive role in the market place.
 It is reflected in the firm’s attitude towards
customers, employees, suppliers, competitors,
government and others. A clear mission lets a firm
gain a customer following and distinguish itself from
competitors.
 Whether to base a business around goods or services
sold or around consumer needs.
 Whether a retailer wants a place in the market as a
leader or a follower. It could seek to offer unique
strategy .
 Market scope, large chains often seek a broad
customer base(due to their resource and recognition)
it is often best for small retailers and start ups to
focus on a narrower customer base, so they can
compete with bigger firms that tend not to adapt
strategies as well to local market.
 McDonald's brand mission is to be our
customers' favorite place and way to eat and drink.
Our worldwide operations are aligned around a
global strategy called the Plan to Win, which center
on an exceptional customer experience – People,
Products, Place, Price and Promotion. We are
committed to continuously improving our operations
and enhancing our customers' experience.”
The focused org mission of Frisch’s
Ownership and Management Alternative
 Whether to form a sole proprietorship, partnership
or corporation- and whether to start a new
business, buy and existing business or become a
franchisee.
 A sole proprietorship is an unincorporated retail firm
owned by one person
 A partnership is an unincorporated retail firm owned by
two or more persons, each with a financial interest
 A corporation is a retail firm that is formally incorporated
under state law; it is a legal entity apart from its officers(or
stock holders) funds can be raised through the sale of stock.
 Starting a new business being entrepreneurial offers a
retailer flexibility in location, operating styles, product
lines, customer markets and other factors; and a strategy is
fully tailored to the owner’s desires and strengths.
 Buying a new business allows a retailer to acquire an
established company name, customer following, a good
location, trained personnel and facilities; to operate
immediately; to generate ongoing sales and profits etc
 By being a franchisee, a retailer can combine
independent ownership with franchisor support:
strategic planning assistance; a known company name
and loyal customer following; co-operative advertising
and buying; and a regional, national or global image.
 Rigid operating standards, limit the product line sold,
and restrict supplier choice
Selected Kinds of Retail Goods and Service
Establishments

Durable Goods Stores:

Automotive group
Furniture and appliances group
Lumber, building, and hardware group
Jewelry stores

Nondurable Goods Stores:

Apparel group
Food group
General merchandise group
 Service Establishments (Personal):
Laundry and dry cleaning
Beauty/barber shops
Funeral services
Health-care services

Service Establishments (Amusement):

Movie theaters
Amusement Park
Dance halls
Golf courses
Skating rinks
Service Establishments (Repair):
Automobile repair
Car washes
Consumer electronics repair
Appliance repairs

Service Establishments (Hotel):

Hotels
Motels
Trailer parks
Camps
Objectives
 After Situation Analysis a retailer sets objectives a
long run and short run performance targets it hopes
to attain. This helps mold a strategy and translates
the organizational mission into action. A firm can
pursue goals related to one or more of these areas:
Sales, Profit, Satisfaction of Publics and Image
 Sales: Sales objectives are related to the volume of
goods and services retailer sells. Growth, stability
and market share are the sales goals often sought.
 Profit: With profitability objective retailers seek at least a
minimum profit level during a designated period, usually
a year. Firms with large capital expenditure in land,
buildings and equipment often set Return on Investment
as a goal. ROI is the relationship between profit and the
investment in capital items.
 Satisfaction of Publics: Retailers typically strive to satisfy
their publics: stockholders, customers, suppliers,
employees and government. Stockholder satisfaction is
the goal for any publicly owned retailer.
 Image and Positioning

An image represents
how a given retailer is
perceived
by consumers and others
 The key to a successful image is that consumers view
the retailer in the manner the firm intends.
 Through positioning, a retailer devises its strategy in
a way that projects an image relative to its retail
category and its competitors and that elicits a
positive consumer response.
 Positioning Approaches

 Mass merchandising is a positioning approach

whereby retailers offer a discount or value-
oriented image, a wide or deep merchandise
selection, and large store facilities
 Niche retailing occurs when retailers identify
specific customer segments and deploy unique
strategies to address the desires of those
segments rather than the mass market
Niche Retailing by Hear Music
 Selected Retail
Positioning Strategies

Tanishq Life Style &

Landmark

Reymonds
Westside

Nalli
Sarees

Mega
Mart Wal-
Mart

Metro,
Cotsco
Identification of Consumer Characteristics and
Need

Three techniques
 Mass marketing: Selling goods and services to a broad
spectrum of consumers.
 Concentrated marketing: Zeroing in on one specific
group.
 Differentiated marketing: Aiming at two or more
distinct consumer groups with different retailing
approaches for each group.(Departmental stores)
 Strategic Implications of Target Market
Techniques

 Retailer’s location
 Goods and service mix
 Promotion efforts
 Price orientation
 Developing an Overall Retail Strategy

Controllable Uncontrollable
Variables: Variables:
•Store location •Consumers
•Managing business •Competition
•Merchandise •Technology
management Retail •Economic
and pricing Strategy conditions
•Communicating •Seasonality
with customer •Legal restrictions
 Control

 A review takes place as the strategy and tactics are

assessed against the business mission, objective and
target market. This process is called Retail Audit
 Retail
Strategy Alternatives
 Scrambled Merchandising

 Scrambled merchandising involves a retailer

increasing its width of assortments. Scrambled
merchandising occurs when a retailer adds goods
and services that may be unrelated to each other or
to the firm’s original business.
Scrambled Merchandising
by a Shoe Store