3-1 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 1

Strategic Planning in Retailing

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RETAIL MANAGEMENT:A STRATEGICAPPROACH11th Edition11th Edition

BERMAN EVANS

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Chapter ObjectivesTo show the value of strategic

planning for all types of retailersTo 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 (cont.)To examine the individual elements of a

retail strategy (both controllable and uncontrollable), and to present strategic planning as a series of integrated steps

To demonstrate how a strategic plan can be prepared

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Retail StrategyThe overall plan or framework of action

that guides a retailerOne year in durationOutlines mission, goals, consumer market,

overall and specific activities, and control mechanisms

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Figure 3-1: Elements of a Retail Strategy

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Benefits of Strategic Retail PlanningBenefits of Strategic Retail Planning

Provides thorough analysis of the requirements for doing business for different types of retailers

Outlines retailer goalsAllows retailer to determine how to differentiate

itself from competitorsAllows retailer to develop an offering that

appeals to a group of customersOffers an analysis of the legal, economic, and

competitive environmentProvides for the coordination of firm’s total

effortsEncourages anticipation and avoidance of crises

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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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Figure 3-2: The Focused Organizational Mission of Frisch’s Restaurants

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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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Figure 3-3: Checklist to

Consider When Starting a New

Business

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Figure 3-4: Checklist for

Purchasing an Existing Retail

Business

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Durable Goods Stores:Automotive group

Furniture and appliances groupLumber, building, and hardware group

Jewelry stores

Nondurable Goods Stores:Apparel group

Food groupGeneral merchandise group

Gasoline service stations

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Service Establishments (Personal):Laundry and dry cleaning

Beauty/barber shopsFuneral services

Health-care services

Service Establishments (Amusement):Movie theatersBowling alleys

Dance hallsGolf courses

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Service Establishments (Repair):Automobile repair

Car washesConsumer electronics repair

Appliance repairs

Service Establishments (Hotel):HotelsMotels

Trailer parksCamps

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Image and Positioning

An image represents how a given retailer is

perceivedby consumers and others.

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Positioning ApproachesMass 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.

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Figure 3-6: Niche Retailing by Babies “R” Us

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Figure 3-7: Selected Retail Positioning Strategies

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Target Market Selection

Three techniquesThree techniquesMass marketingConcentrated marketingDifferentiated marketing

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Figure 3-8: Jean-Philippe Patisserie: A Shop of Distinction

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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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RetailStrategy

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Uncontrollable Variables:

• Consumers• Competition• Technology• Economic conditions

• Seasonality• Legal restrictions

Controllable Variables:

• Store location• Managing business

• Merchandise management and pricing

• Communicating with customer

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Table 3-4a: Legal Environment and Retailing

Store Locationzoning lawsblue lawsenvironmental

lawsdirect selling

lawslocal ordinancesleases and

mortgages

Managing the Businesslicensing

provisionspersonnel lawsantitrust lawsfranchise

agreementsbusiness taxesrecycling laws

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Table 3-4b: Legal Environment and Retailing Merchandise Management and Pricing

trademarksmerchandise restrictionsproduct liability laws and lemon lawssales taxesunit-pricing lawscollusion lawssale pricesprice discrimination laws

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Table 3-4c: Legal Environment and Retailing Communicating with the Customer

truth-in-advertising and selling lawstruth-in-credit lawstelemarketing lawsbait-and-switch lawsinventory lawslabeling lawscooling-off laws

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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.

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Additional Concerns for Additional Concerns for Global RetailingGlobal Retailing

In addition to the strategic planning process:assess your international potentialget expert advice and counselingselect your countriesdevelop, implement, and review an

international retailing strategy

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Factors Affecting the Success of a Global Factors Affecting the Success of a Global Retailing StrategyRetailing Strategy

TimingA balanced international programA growing middle classMatching concept to marketSolo or partneringStore location and facilitiesProduct selection

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Figure A3-1: Factors to Consider When Engaging in Global Retailing

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