Major Elements in Retail Strategy (Retail Strategy 10.04.2021)

Retail – 3 Major Elements in Retail Strategy

Retail Strategy outlines the mission and vision of a retail organization. It sets the tone for creating sustainable competitive advantage for a retailer through the optimization of available resources. Due to the emergence of new competitors, new store formats coupled with new technologies and change in customer needs and behaviours forces the retailers to give more attention to the long-term strategic planning.

 

Element # 1. Target Market:

Retailers first identify the target market they are going to cater to. These are the set of customers whom the retailer plans to focus its resources and retail mix. There are few important factors which retailers consider while selecting the target market. First, retailer checks whether the target market is lucrative enough or not.

If the target market is large and expected to grow in the future, coupled with fewer competitors in the segment it will lead to higher profits, then It Is the deemed attractive target market for retailers. One more important factor to be considered while selecting a target market is that it needs to be consistent with retailer’s competitive advantages.

 

Element # 2. Retail Format:

Deciding on retail format is important aspect of retail strategy as it defines the nature of the retailer’s operation or its retail mix. Retail form is the store format which retailer uses to showcase the merchandise to customer. They use location, price and merchandise mix to define the retail format. Retail formats are also used to differentiate themselves from competitors.

 

Element # 3. Sustainable Competitive Advantage:

Sustainable competitive advantage is what prompts the customers to choose a retailer store over its competitors. It is an advantage which competitors cannot copy and more importantly it translates in to more sales, and subsequently profits, for the retailers.

Retailers use various sources to obtain competitive advantage; they can be customer loyalty, store locations, distribution channels, Information Systems, differentiated merchandise, supply chain management, employees, supplier relations, customer service and human resource management.