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 A. Self Assessment and Business
Starting a New Choice
Business B. Overall Retail Plan

Pg. 53 of text C. Financial Plan

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 Should you buy existing Retail
Business or Start from Scratch ?

Examine checklist on page

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:

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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):

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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):

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

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 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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