Chapter 2

Chapter 2
Retail Strategic Planning

and Operations Management
Learning Objectives
Explain why strategic planning is so important

and be able to describe the components of
strategic planning: statement of mission; goals and
objectives; an analysis of strengths, weaknesses,
opportunities, and threats; and strategy.
Describe the retail strategic planning and
operations management model, which explains the
two tasks that a retailer must perform and how
they lead to high profit.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Components of Strategic Planning
 Strategic planning - Adapting the resources of

the firm to the opportunities and threats of an
ever-changing retail environment.
 Through the proper use of strategic planning,
retailers hope to achieve and maintain a balance
between resources available and opportunities
ahead.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LO 1
Components of Strategic Planning
 Strategic planning consists of four components:

Development of a mission (or purpose) statement for
the firm.
Definition of specific goals and objectives for the firm.
S(strengths)W(weaknesses)O(opportunities)T(threats)
analysis.
Development of basic strategies that will enable the
firm to reach its objectives and fulfill its mission.
Mission Statement
 It is a basic description of the fundamental nature,

rationale, and direction of the firm.
 Elements of a mission statement are:
How the retailer uses or intends to use its resources.
How it expects to relate to the ever-changing
environment.
The kinds of values it intends to provide in order to
serve the needs and wants of the consumer.
Statement of Goals and Objectives
 Provide:
Specific direction and guidance to the firm in the
formulation of its strategy.
A control mechanism by establishing a standard
against which the firm can measure and evaluate its
performance.
Exhibit 2.2 - Retail Objectives
 Market performance objectives

Establish the amount of dominance the retailer seeks
in the marketplace.
Market share - The retailer’s total sales divided by
total market sales.
 Financial objectives
Profit-based objectives - Deal directly with the
monetary return a retailer desires from its business.
Profit is the aggregate total of net profit after taxes—
that is, the bottom line of the income statement.
Profit can be expressed as a percentage of net sales.
It can also be defined in terms of return on investment
(ROI), which can be defined by—Return on assets
(ROA) and Return on net worth (RONW).
Exhibit 2.1 - Strategic Profit Model
Stockouts - Products that are out of stock and
therefore unavailable to customers when they want
them.
Productivity objectives - State the sales objectives
that the retailer desires for each unit of resource input.
Space productivity - Net sales divided by the total square
feet of retail floor space.
Labor productivity - Net sales divided by the number of
full-time–equivalent employees.
Merchandise productivity - Net sales divided by the average
dollar investment in inventory.
Productivity objectives are vehicles by which a retailer
can program its business for high-profit results.
Strategies
 Are a carefully designed plan for achieving the

retailer’s goals and objectives.
 Retailers can operate with three strategies:
Get shoppers into your store.
Convert these shoppers into customers by having them
purchase merchandise.
Implement the above two strategies at the lowest
operating cost possible that is consistent with the level
of service that your customers expect.
SWOT Analysis
 Strengths:
What major competitive advantage(s) do we have?
What are we good at?
What do customers perceive as our strong points?
SWOT Analysis
Weaknesses
What major competitive advantage(s) do competitors
have over us?
What are competitors better at than we are?
What are our major internal weaknesses?
SWOT Analysis
 Opportunities
What favorable environmental trends may benefit our
firm?
What is the competition doing in our market?
What areas of business that are closely related to ours
are undeveloped?
SWOT Analysis
 Threats
What unfortunate environmental trends may hurt our
future performance?
What technology is on the horizon that may soon have
an impact on our firm?
Strategies
 Some better forms of differentiation for a retailer

are:
Physical differentiation of the product
 The selling process
 After-purchase satisfaction
 Location
 Never being out of stock
Strategies
 The retailer must develop a retail marketing

strategy with strong financial elements.
 A fully developed marketing strategy should
address the following considerations: the specific
target market, location, the specific retail mix that
the retailer intends to use, and the retailer’s value
proposition.
Strategies
 Target market - Group of customers that the

retailer is seeking to serve.
 Location - Geographic space or cyberspace
where the retailer conducts business.
 Retail mix - Combination of merchandise, price,
advertising and promotion, location, customer
service and selling, and store layout and design.
Strategies
 Value proposition - A clear statement of the

tangible and/or intangible results a receives from
shopping at and using the retailer’s products or
services.
Exhibit 2.6 - Retail Strategic Planning and
Operations Management Model
The Retail Strategic Planning and Operations
Management Model
 Operations management - Deals with activities
directed at maximizing the efficiency of the
retailer’s use of resources. It is frequently referred
to as day-to-day management.
 The need to strive for a high profit is tied to the
extremely competitive nature of retailing.

Chapter 2 - Retail Strategic Planning and Operations Management

Uploaded by

Copyright:

Available Formats

Chapter 2 - Retail Strategic Planning and Operations Management

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 2 - Retail Strategic Planning and Operations Management

Uploaded by

Copyright:

Available Formats

Retail Strategic Planning

Explain why strategic planning is so important

 Strategic planning - Adapting the resources of

 Strategic planning consists of four components:

 It is a basic description of the fundamental nature,

 Market performance objectives

 Are a carefully designed plan for achieving the

 Some better forms of differentiation for a retailer

 The retailer must develop a retail marketing

 Target market - Group of customers that the

 Value proposition - A clear statement of the

You might also like