Chapter 3
Strategic Planning in Retailing
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
9th Edition
BERMAN
EVANS
Chapter Objectives
To show the value of strategic planning
for all types of retailers
To explain the steps in strategic
planning for retailers: situation analysis,
objectives, identification of consumers,
overall strategy, specific activities,
control, and feedback
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Chapter Objectives_2
To examine the individual controllable
and uncontrollable elements of a retail
strategy
To present strategic planning as a series
of integrated steps
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Retail Strategy
Retail Strategy is the overall plan or
framework of action that guides a retailer
One year in duration
Outlines mission, goals, consumer
market, overall and specific activities,
and control mechanisms
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Retail Strategy
• Without a well conceived strategy, a retailer
may not be as effective or unable to cope
with environmental changes
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Figure 3.1 Elements of a
Retail Strategy
Situation
Analysis
Objectives
Identification
of consumers
Overall
Strategy
Specific
activities
Control
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Benefits of Strategic Retail
Planning
Provides thorough analysis of the
requirements for doing business for different
types of retailers
Outlines retailer goals
Allows retailer to determine how to
differentiate itself from competitors
Allows retailer to develop an offering that
appeals to a group of customers
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Benefits of Strategic Retail
Planning_2
Offers an analysis of the legal, economic,
and competitive environment
Provides for the coordination of the firm’s
total efforts
Encourages the anticipation and avoidance
of crises
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Situation Analysis
• Situation Analysis – evaluation of opportunities and
threats facing a retailer
• Anticipates opportunities and threats in
environment
• Opportunities – a marketing opportunity that a
retailer has not capitalized ( unmet need)
• Threats – environmental or marketplace fadtors that
adversely affect the success of the retailer.
• Mission must be clearly defined
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Organizational Mission
Retailer’s commitment
to a type of business
and to a
distinctive role in the marketplace.
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Major Decisions Related
to Mission
• Base business around goods and services
or consumer needs
• Do you want to be a leader or a follower
• Market Scope - broad customer base or
small focused customer base
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Ownership and Management
Alternatives
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
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Name of
Business______________________
Figure 3.3
Checklist to
Consider When
Starting a New
Business
Pg. 53 of text
A. Self Assessment and Business
Choice
B. Overall Retail Plan
C. Financial Plan
D. Organizational Details of Plan
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Should you buy existing Retail
Business or Start from Scratch ?
Examine checklist on page
54
Figure 3.4
Checklist for
Purchasing an
Existing Retail
Business
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Ownership and Management
Alternatives are factors to consider
• An important part of situation analysis
• Type chosen may have tax consequences
• Different owner types
Sole proprietorship
Partnership
Corporation
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Other factors which are
related to mission selected
• Good/Service Category
• Personal Abilities – individual’s apitiude and
and preferences
• Financial resources
• Time Demands – some types of retail
categories may demand more time
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Figure 3.5 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
Gasoline service stations
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Figure 3.5 Selected Kinds of Retail
Goods and Service Establishments
Service Establishments (Personal):
Laundry and dry cleaning
Beauty/barber shops
Funeral services
Health-care services
Service Establishments (Amusement):
Movie theaters
Bowling alleys
Dance halls
Golf courses
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Figure 3.5 Selected Kinds of Retail
Goods and Service Establishments
Service Establishments (Repair):
Automobile repair
Car washes
Consumer electronics repair
Appliance repairs
Service Establishments (Hotel):
Hotels
Motels
Trailer parks
Camps
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Objectives
• Objectives are long –run and short-run
performance targets
• These help mold a firm’s strategy
• They include:
1. Sales objectives
2. Profit Objectives
3. Satisfaction level of publics
4. Image (positioning)
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Kroger’s Goals
 Increase its identical food store sales growth
target
 Reduce operating and administrative costs by
more than $500 million
 Further leverage its size to achieve even
greater economies of scale
 Reinvest in its core business to increase sales
and market share
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Image and Positioning
An image represents
how a given retailer is
perceived
by consumers and others.
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Positioning
• Positioning, a retailer devises its strategy
that projects an image relative to it retail
category and competitors and that elicits a
positive consumer response
• Two opposite positioning philosophies are
popular
Mass Merchandising and Niche retailing
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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
Bifurcated retailing – no in the middle
approach is becoming the norm
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Figure 3.7 Selected Retail
Positioning Strategies
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Identification of Target Market
• Target market – customer group that retailer
seeks to satisfy
• Retailing mix is target to selling products
and services wanted by this group
• Three different approaches
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Target Market Selection
• Three techniques
Mass marketing- selling to a broad
group of people
Concentrated marketingnarrowing to one specific group
Differentiated marketing- aiming
at 2 or more distinctive groups with
different retailing mixes
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Strategic Implications of Target
Market Techniques
Retailer’s location
Goods and service mix
Promotion efforts
Price orientation
Strategy
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Overall Strategy
• Must develop an in-depth overall strategy
• Involves the use of
Controllables – aspects retailer can control
Uncontrollables – aspects that retailer must
adapt to
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Figure 3.9 Developing an Overall
Retail Strategy
Controllable
Variables:
•Store location
•Managing business
•Merchandise
management
and pricing
•Communicating
with customer
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Retail
Strategy
Uncontrollable
Variables:
•Consumers
•Competition
•Technology
•Economic
conditions
•Seasonality
•Legal restrictions
Table 3.4a Legal Environment and
Retailing
• Store Location
• Managing the Business
zoning laws
licensing provisions
blue laws
personnel laws
environmental
antitrust laws
laws
franchise
direct selling laws
agreements
local ordinances
business taxes
leases and
recycling laws
mortgages
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Table 3.4b Legal Environment
and Retailing
• Merchandise Management and Pricing
trademarks
merchandise restrictions
product liability laws and lemon laws
sales taxes
unit-pricing laws
collusion laws
sale prices
price discrimination laws
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Table 3.4c Legal Environment and
Retailing
• Communicating with the Customer
truth-in-advertising and selling laws
truth-in-credit laws
telemarketing laws
bait-and-switch laws
inventory laws
labeling laws
cooling-off laws
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Additional Concerns for
Global Retailing
In addition to the strategic planning process:
assess your international potential
get expert advice and counseling
select your countries
develop, implement, and review an
international retailing strategy
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Factors Affecting the Success of a
Global Retailing Strategy
Timing
A balanced international program
A growing middle class
Matching concept to market
Solo or partnering
Store location and facilities
Product selection
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Integrating Overall Strategy
• Once all the steps including situation
analysis, mission, ownership, goods/service
category, objectives, selection of target
market , overall strategy, then these
elements must be coordinated to form a
consistent, integrated strategy and to
systematic account for uncontrollables.
• Next specific tasks to carry out this strategy
is devised
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Specific Activities
• Short run decisions are enacted for each
controllable part of the strategy
• Tactics are operations things which must be
done to operationalize strategy
• Examples where tactics can be employed:
- Store hours/location
- Merchandise management/markdowns
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Control
• Control focus on comparing the actual
performance of store to mission, objectives,
and target market
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Feedback
• Management assessment of situation and
decisions or changes are given to those
who are responsible for implementing the
strategey
• Feedback can be on various factors
• Feedback should be both positive and
negative (So don’t only provide the negative
but also give some positive)
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Questions
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