Berman rm13 PPT 03-18032020-093853am

Retail Management: A Strategic
Approach
Thirteenth Edition
Chapter 3
Strategic Planning
In Retailing
Copyright @ 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved
Learning Objectives
3.1 To show the value of strategic planning for all types of retailers
3.2 To explain the steps in strategic planning for retailers: situation
analysis, objectives, identification of consumers, overall
strategy, specific activities, control, and feedback
3.3 To examine the individual elements of a retail strategy (both
controllable and uncontrollable), and to present strategic
planning as a series of integrated steps
3.4 To demonstrate how a strategic plan can be prepared
Retail Strategy
• 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
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
• Offers an analysis of the legal, economic, and competitive
environment
• Provides for the coordination of firm’s total efforts
• Encourages anticipation and avoidance of crises
Figure 3.1 Elements of a Retail Strategy
Organizational Mission
Retailer’s commitment to a type of business and to a distinctive role in
the marketplace.
Figure 3.2 Leadership Lessons from
Retail Executives
Lands’ End Mission Statement
• Lands’ End is a global multi-channel retailer designing and selling
classically styled apparel, swimwear and outerwear for Women, Men
and Kids, plus a complete line of home products, luggage and
seasonal gifts.
• We provide our customers with the highest levels of service in our
industry, unparalleled quality and value, and an unequivocal ironclad
guarantee.
Core Values Statement of L.L.Bean
• Outdoor heritage— The natural environment and the outdoors
experience
• Integrity— 100 percent guarantee of satisfaction
• Service— Treat customers like human beings
• Respect— Respect for all publics
• Perseverance— A long-term perspective
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
Figure 3.3 Checklist to Consider When
Starting a New Business
Figure 3.4 Checklist for Purchasing an
Existing Retail Business
Figure 3.5a Selected Kinds of Retail
Goods and Service Establishments (1 of 3)
• 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
Figure 3.5b Selected Kinds of Retail
• 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
Figure 3.5c Selected Kinds of Retail
• Service Establishments (Repair):
– Automobile repair
– Car washes Consumer electronics repair
– Appliance repairs
• Service Establishments (Hotel):
– Hotels
– Motels
– Trailer parks
– Camps
Table 3.1 Some Typical Financial
Investments for a New Retail Venture
Use of Funds Source of Funds
Land and building (lease or purchase) Personal savings, bank loan, commercial
finance company
Inventory Personal savings, manufacturer credit,
commercial finance company, sales revenues
Fixtures (display cases, storage facilities, Personal savings, manufacturer credit, bank
signs, lighting, carpeting, etc.) loan, commercial finance company
Equipment (cash register, marking machine, Personal savings, manufacturer credit, bank
office equipment, computers, etc.) loan, commercial finance company
Personnel (salespeople, cashiers, stockpeople, Personal savings, bank loan, sales revenues
etc.)
Promotion Personal savings, sales revenues
Personal drawing account Personal savings, life insurance loan
Miscellaneous (equipment repair, credit sales Personal savings, manufacturer and credit
[bad debts], professional wholesaler credit, plan, bank loan, commercial finance company
bank services, repayment of loans)
Note: Collateral for a bank loan may be a building, fixtures, land,

inventory, or a personal residence.
Table 3.2 Financial Requirements for a
Used-Car Dealer
Image and Positioning
An image represents how a given retailer is perceived by consumers

and others.
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.
Retail Strategy: American Girl Doll
Please click URL to view:
https://youtu.be/gnjqupNT--c
Figure 3.7 Selected Retail Positioning
Strategies
Target Market Selection
• Three techniques
– Mass marketing
– Concentrated marketing
– Differentiated marketing
Figure 3.8 La Boqueria
Strategic Implications of Target Market
Techniques
• Retailer’s location
• Goods and service mix
• Promotion efforts
• Price orientation
• Strategy
Table 3.3 Target Marketing Techniques
and Their Strategic Implications
Target Market Techniques
Strategic Implications Mass Marketing Concentrated Marketing Differentiated Marketing
Retailer’s location Near a large Near a small or medium Near a large population
population base population base base
Goods and service mix Wide selection of Selection geared to Distinct goods/services
medium-quality market segment—high- or aimed at each market
items low-quality items segment
Promotion efforts Mass advertising Direct mail, E-mail, and Different for each
subscription segmented social media segment
Price orientation Popular prices High or low High, medium, and low—
depending on market
segment
Strategy One general One specific strategy Multiple specific
strategy for a large directed at a specific, strategies, each
homogeneous limited group of directed at different
(similar) group of customers (heterogeneous)
consumers groups of consumers
Figure 3.9 Developing an Overall Retail
Strategy
Controllable Variables: Uncontrollable Variables:
• Store location • Consumers
• Managing business • Competition
• Merchandise management • Technology
and pricing
• Economic conditions
• Communicating with
• Seasonality
customer
• Legal restrictions
Retail Strategy–Cost Control (1 of 2)
• Removal of bad costs
• Use of private label products to reduce costs of national/manufacturer
brands
• Reduce product proliferation
• Obtain best net price instead of focus on promotional monies, trade
incentives and forward buying
Retail Strategy–Cost Control (2 of 2)
• Supply chain initiatives
• Low promotional expense (everyday low pricing)
• Proper employee utilization
Retail Strategy–Differentiation
• Well-thought out private labels (Trader Joe’s, Target, King Arthur flour,
etc.)
• Hiring right employees (value-profit chain)
• Empowering employees
• Use of a fun atmosphere
• “Little things that mean a lot”
• Money-back guarantees
Table 3.4a Legal Environment and
Retailing
Store Location Managing the Business
• zoning laws • licensing provisions
• blue laws • personnel laws
• environmental laws • antitrust laws
• direct selling laws • franchise agreements
• local ordinances • business taxes
• leases and mortgages • recycling laws
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
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
Table 3.6 Sample Strategic Plan
Sally’s is a small, independently owned, high-fashion ladies clothing
shop located in a suburban strip mall. It is a full-price, full-service store
for fashion-forward shoppers. Sally’s carries sportswear from popular
designers, has a personal shopper for busy executives, and has an on-
premises tailor. The store is updating its strategic plan as a means of
getting additional financing for an anticipated expansion.
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
Zara Masters the Art of Retail
Please click URL to view:
https://youtu.be/Ir1b-ez2x5g
https://youtu.be/qhCM0F81vEg
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
Figure A3.1 Factors to Consider When
Engaging in Global Retailing
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Retail Management: A Strategic

more persons, each with a financial interest

Note: Collateral for a bank loan may be a building, fixtures, land,

An image represents how a given retailer is perceived by consumers

Strategic Implications Mass Marketing Concentrated Marketing Differentiated Marketing

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