Strategic Planning in Retailing
1. To show the value of strategic planning for all types of retailers
A retail
strategy is the overall plan that guides a firm. It consists of situation
analysis, objectives, identification of a customer market, broad strategy,
specific activities, control, and feedback. Without a well-conceived strategy,
a retailer may be unable to cope with environmental factors.
2. To explain the steps in strategic planning for retailers
Situation analysis is the evaluation of opportunities and threats. It
looks at the firm’s marketplace current position and where it should be
heading. This analysis consists of defining an organizational mission,
evaluating ownership and management options, and outlining the goods / service
category.
An organizational mission is a commitment to a type of business and a place
in the market. Ownership / management options include sole proprietorship,
partnership, or corporation; starting a business, buying an existing one, or
being a franchisee; owner management or professional management; and being
centralized or decentralized. The goods/service category depends on personal
abilities, finances, and time resources.
A firm may
pursue one or more of these objectives: sales (growth, stability, and market
share), profit (level, return on investment, and efficiency), satisfaction of
publics (stockholders, consumers, and others), and image / positioning
(customer and industry perceptions).
Next, consumer
characteristics and needs are determined, and a target market is selected. A
firm can sell to a broad spectrum of consumers (mass marketing); zero in on one
customer group (concentrated marketing); or aim at two or more distinct groups
of consumers (differentiated marketing), with separate retailing approaches for
each.
A broad
strategy is then formed. It involves controllable variables (aspects of
business a firm can directly affect) and uncontrollable variables (factors a
firm cannot control and to which it must adapt).
After a
general strategy is set, a firm makes and implements short-run decisions
(tactics) for each controllable part of that strategy. Tactics must be
forward-looking and respond to the environment.
Through a
control process, strategy and tactics are evaluated and revised continuously. A
retail audit systematically reviews a strategy and its execution on a regular
basis. Strengths are emphasized and weaknesses minimized or eliminated.
An alert firm
seeks out signals or cues, known as feedback, that indicate the level of performance
at each step in the strategy.
3. To examine the individual controllable and uncontrollable elements
of a retail strategy, and to present strategic planning as a series of
integrated steps
There are four
major controllable factors in retail planning:
1. store
location,
2. managing
the business,
3. merchandise
management and pricing, and
4. communicating
with the customer.
The principal
uncontrollable factors affecting retail planning are
1. consumers,
2. competition,
3. technology,
4. economic
conditions,
5. seasonality,
and
6. legal
restrictions.
Each stage in
the strategic planning process needs to be performed, undertaken sequentially,
and coordinated in order to have a consistent, integrated, unified strategy.
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