Retail_Mngt_Topic_3_(Strategic_Planning_in_Retailing)

Strategic Planning in Retailing:

Strategic Planning in Retailing Topic 3 By Mario C. Angeles – UST College of Commerce and BA

Features of strategic retail planning process:

Features of strategic retail planning process It provides a thorough analysis of the requirements for doing business for different types of retailers; It outlines retailer goals; A firm determines how to differentiate itself from competitors; Legal, economic, and competitive environment is studied; A firm’s total efforts are coordinated; and Crises are anticipated and often avoided. The steps in planning and enacting a retail strategy are interdependent. A firm often starts with a general plan that gets more specific. By Mario C. Angeles – UST College of Commerce and BA

Focus…:

Focus… Situation Analysis Objectives of Strategic Planning in Retailing Identification of Consumer Characteristics and Needs The Overall Strategy Specific Activities Control Feedback Strategic Planning Template for Retail Management Strategic Planning Process and Global Retailing, Opportunities and Threats in Global Retailing By Mario C. Angeles – UST College of Commerce and BA

Situation Analysis:

Situation Analysis It is a candid evaluation of the opportunities and threats facing a prospective or existing retailer. It seeks to answer two general questions: What is the firm’s current status? In which direction should it be heading? A good strategy anticipates and adapts to both the opportunities and threats in the changing business environment Opportunities (marketplace openings) Threats (environmental and marketplace factors) By Mario C. Angeles – UST College of Commerce and BA

Strategic Management Model:

Strategic Management Model Environmental Scanning External Societal Environment Task Environment Internal Structure Culture Resources Strategy Formulation Strategy Implementation Evaluation & Control Mission Objectives Strategies Policies Programs Budgets Procedures Performance Feedback/Learning: Make corrections as needed By Mario C. Angeles – UST College of Commerce and BA

Elements of a Retail Strategy (Process):

Elements of a Retail Strategy (Process) Situation analysis Objectives Identification of consumers Overall strategy Specific activities Control Organizational mission Ownership and management alternatives Goods/service category FEEDBACK Sales Profit Satisfaction of publics Image Mass marketing Concentrated marketing Differentiated marketing Controllable variables Uncontrollable variables Daily and short-term operations Responses to environment Evaluation Adjustment By Mario C. Angeles – UST College of Commerce and BA

Situation Analysis:

Situation Analysis A firm needs to spot trends early enough to satisfy customers and stay ahead of competitors. During situation analysis, an honest, in-depth self-assessment is vital. Organizational Mission The retailer’s commitment to a type of business and to a distinctive role in the marketplace. By Mario C. Angeles – UST College of Commerce and BA

Sample Mission Statement:

Sample Mission Statement By Mario C. Angeles – UST College of Commerce and BA

Situation Analysis:

Situation Analysis Organizational Mission The retailer’s commitment to a type of business and to a distinctive role in the marketplace. What’s your major decision? To base a business around the goods and services sold? To base a business around consumer needs? What’s your major decision? To get a place in the market as a leader? To get a place in the market as a follower? What’s your major decision? To get a large market share or base? To get a small market share or base? Company mission should be continually reviewed and adjusted! Ownership and Management Alternatives What form of business do you plan to operate? Sole-proprietorship? Partnership? Corporation? In what way will you acquire a business? Start a new business? Buy an existing business? Become a franchisee? What are your management options? Owner-manager or professional manager? Centralized or decentralized structures? There is no single best form of ownership! The limitations of a particular form of ownership can often be compensated for. You may need to re-evaluate your choice of entity as the business evolves. Goods / Service Category The retailer must select the line of business in which to operate. Goods establishments? Service establishments? Durable goods stores? Non-durable goods stores? Personal services? Amusement services? Repair services? Hotel services? A retail owner should select a type of business that will allow him or her to match personal abilities, financial resources and time availability with the requirements of that kind of business. Personal abilities —depend on an individual’s aptitude, education, and experience. But some skills can be learned, others are inborn. A MUST FOR RETAILERS: assess their skills and match them with the demands of a given business. Financial resources Anticipate other costs and expenses (renovation, product assortment, etc.) Financial resources Time demands Differs significantly by goods or service category. They are influenced both by consumer shopping patterns and the ability of the owner/manager to automate operations or delegate activities to others. Some businesses require less owner involvement, others intensive owner participation. Some requires off-hours activities! By Mario C. Angeles – UST College of Commerce and BA

Objectives of Strategic Planning in Retailing:

Objectives of Strategic Planning in Retailing This is the long-run and short-run performance targets it hopes to attain. Helps mold a strategy and translates the organizational mission into action. A firm can pursue goals related to one or more areas… Sales Profit Satisfaction of publics Image (Positioning) Related to the volume of goods and services a retailer sells. Growth (for expansion) Stability (to maintain in the position) Market share Can be expressed in peso or in units. Performance based in unit sales versus peso is another matter. Maintain or exceed the minimum profit level in some period of time. Can be expressed in peso or in percentage of sales. Who are these publics? Stockholders Customers Suppliers Employees Government Represents how a given retailer is perceived by consumers and others. Devising a strategy that obtains a positive consumer response. There are two opposite positioning philosophies which gained popularity: Mass merchandising—retailers offer a discount or value-oriented image, a wide and/or deep merchandise selection, and large store facilities. This appeals to a broad customer market, attract a lot of customer traffic, and generate high stock turnover. Niche retailing—retailers identify specific customer segments and deploy unique strategies to address the desires of those segments. Niching creates a high level of loyalty and shields retailers from more conventional competitors. By Mario C. Angeles – UST College of Commerce and BA

Identification of Consumer Characteristics and Needs:

Identification of Consumer Characteristics and Needs In selecting the target market, a firm may use one of three techniques: Mass marketing (selling to a broad spectrum of consumers) Concentrated marketing (zeroing in one specific group) Differentiated marketing (aiming at two or more distinct consumer groups with different retailing approaches for each group) Strategic Implications Mass Marketing Concentrated Marketing Differentiated Marketing Retailer’s location Near a large population base Near a small or medium population base Near a large population base Goods and service mix Wide selection of medium-quality items Selection geared to market segment—high- or low-quality items Distinct goods / services aimed at each market segment Promotion efforts Mass advertising Direct mail, e-mail, subscription Different media and messages for each segment Price orientation Popular prices High or low High, medium, and low—depending on market segment Strategy One general strategy for a large homogeneous group of consumers One specific strategy directed at a specific, limited group of customers Multiple specific strategies, each directed at different groups of consumers Target Market Techniques A firm must determine its best competitive advantages and devise a strategy mix! By Mario C. Angeles – UST College of Commerce and BA

The Overall Strategy:

The Overall Strategy This involves two components: The aspects of business the firm can directly affect (controllable variables) Those to which the retailer must adapt (uncontrollable variables). The ability of retailers to grasp and predict the effects of controllable and uncontrollable variables is greatly aided by the use of suitable data. Store location Managing a business Merchandise management and pricing Communicating with the customer. The initial decision: brick-and-mortar, non-store, or hybrid store? Things to consider in picking a location: competitors transportation access population density type of neighborhood nearness to suppliers foot traffic store composition zoning laws blue laws environmental laws direct selling laws local ordinances leases and mortgages Two major elements are involved in managing a business: Retail organization and human resource management Operations management Tasks Policies Resources Authority Responsibility Rewards Hiring Training Compensation Supervision Satisfying customer, employee and management goals Asset management Budgeting Resource allocation Store format and size Personnel use Store maintenance Energy management Store security Insurance Credit management Computerization Crisis management General quality of the goods and services offering is set. Assortment Policies in introducing new items Criteria for buying decisions Forecasting, budgeting and accounting procedures Success or failure of item sold Techniques Range of prices Number of prices Markdowns. Applying various techniques… Physical attributes or atmosphere Homepage (for Web retailer) Layouts Displays Floor colors Lighting Scents Music Sales personnel Customer services Community relations Promotional tools (advertising, personal selling, sales promotion) Publicity (newspaper, magazines, or television) Consumers Competition Technology Economic Conditions Seasonality Legal Restrictions Note: You cannot alter demographic trends or lifestyle patterns, impose tastes, or “force” goods and services on people. Note: You cannot limit the entry of competitors. Note: a major increase in competition should lead a company to re-examine its strategy and other factors. Unemployment Interest rates Inflation Tax levels GDP Other local, national and international economies Consumer Act of the Philippines Price Tag Law Trademarks and copyrights Tax laws Building Code of the Philippines Clean Air Act Prohibition of “No Return, No Exchange” Policy Proper labeling of products Proper requirement s on packaging Requisites on sales promotions Free trade agreements or other Import and Export requisites Anti-dumping Law On Deceptive, Unfair, and Unconscionable Sales Acts or Practices Other unfair trade practices MANILA, Oct 26, 2006 Asia Pulse - The Philippine Department of Trade and Industry (DTI) has recently issued an order prohibiting the imposition of surcharge by retailers honoring credit, automated teller machine (ATM) or debit cards for payment… DTI-BPS Director-In-Charge Victorio Mario Dimagiba explains, “Starting 01 April 2009, all manufacturers and importers of protective helmets and their visors are required to secure a Philippine Standard (PS) License or Import Commodity Clearance (ICC) certificate, from the Bureau prior to the sale and distribution of their products.” The EU's new regulation on chemicals and their safe use called REACH (Registration, Evaluation and Restriction of Chemicals) entered into force on 1 June 2007.  REACH has implications for all chemical substances, manufactured in or exported to the EU, including those contained in articles/products.  In principle REACH applies to all chemicals: not only chemicals used in industrial processes but also in our day-to-day life, for example in cleaning products, paints as well as in articles such as clothes, furniture and electrical appliances. By Mario C. Angeles – UST College of Commerce and BA

Specific Activities:

Specific Activities Short-run decisions are now made and enacted for each controllable part of the strategy. These actions are known as tactics and encompass a retailer’s daily and short-term operations. Tactics must be responsive to the uncontrollable environment. Store location Managing a business Merchandise management and pricing Communicating with the customer. By Mario C. Angeles – UST College of Commerce and BA

Control and Feedback:

Control and Feedback A systematic process for analyzing the performance of a retailer ( retail audit ). Performance is reviewed. Adjustments are made. Management receives cues. High or low sales Government sanctions Low or high employee turnover By Mario C. Angeles – UST College of Commerce and BA

Strategic Planning Template for Retail Management:

Strategic Planning Template for Retail Management Situation Analysis Current organizational mission Current ownership and management alternatives Current goods/service category SWOT Analysis Strengths: current and long term Weaknesses: current and long term Opportunities: current and long term Threats: Current and long term Objectives Sales Profit Positioning Satisfaction of publics Identification of Consumers Choice of target market Mass marketing Concentrated marketing Differentiated marketing Overall Strategy Controllable variables Goods/services strategy Location strategy Pricing strategy Promotion strategy Uncontrollable variables Consumer environment Competitive environment Legal environment Economic environment Technological environment Specific Activities Daily and short-term operations Responses to environment Control Evaluation (retail audit) Feedback By Mario C. Angeles – UST College of Commerce and BA

Strategic Planning Process and Global Retailing:

Strategic Planning Process and Global Retailing assess your international potential get expert advice and counseling select your countries develop, implement, and review an international retailing strategy By Mario C. Angeles – UST College of Commerce and BA

Opportunities and Threats in Global Retailing:

Opportunities and Threats in Global Retailing Opportunities A retailer may be able to offer goods, services, or technology not yet available in foreign markets Competition may be less in foreign markets There may be tax or investment advantages in foreign markets Some countries may be open to the entry of foreign firms Threats Cultural differences between domestic and foreign markets Management styles unadaptable Foreign governments restrictions Personal income varies Distribution systems and technology may be inadequate Currencies are different By Mario C. Angeles – UST College of Commerce and BA

Slide 18:

Factors to Consider When Engaging in Global Retailing By Mario C. Angeles – UST College of Commerce and BA

Next: Retail Institutions by ownership:

Next: Retail Institutions by ownership End of Topic By Mario C. Angeles – UST College of Commerce and BA