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Retail Strategy - Introduction
Retail strategy is a clear and definite plan outlined by the retailer to tap the market. It is the basic plan to build a long-term relationship with the customers.
It is fundamental to the existence of the retail organization.
It helps define the organization, the purpose and how the retailer will face various challenges in the environment and marketplace.
Steps in developing Retail Strategy
ESTABLISH MISSION
ANALYZE SITUATION
IDENTIFY OPTIONS
SET OBJECTIVES
OBTAIN & ALLOCATE RESOURCES
DEVELOP IMPLEMENTATION PLAN
MONITOR PROGRESS & CONTROL
Step 1: Establish Mission
The mission statement is the statement of the long term purpose of the organization.
It decides what the retailer wishes to accomplish in the markets in which it chooses to compete.
A retailer's mission statement normally highlights the following elements: products and services that will be offered, the customer who will be served.
The geographic areas that the organization chooses to operate in.
The manner in which the firm intends to compete in its chosen markets.
Step 2: Conduct a Situation Analysis
1. PESTLE ANALYSIS
• Economic Environment
• Socio-cultural Environment
• Natural Environment
• Technological Environment
• Political & Legal Environment
A Political, Economic, Social, and Technology factor is a framework that strategy consultants use to scan the external macro-environment in which a firm operates.
Step 2: Conduct a Situation Analysis
To understand the area of strength in a business situation, organizations use Porter's Five Forces model.
This business strategy tool helps examine the appeal of an industry.
The model states that the competitive strength of an organization in a business circumstance is regulated by five factors or forces.
Step 3: Identifying Options | Strategic Alternatives
Igor Ansoff presented a matrix, which looked at growth opportunities by focusing on the firm's present and potential products in the existing and new markets. This matrix is popularly known as “Ansoff’s Matrix”
These four growth strategies were identified by Ansoff using a 2×2 matrix (known as the Ansoff Matrix) and was made up of new or existing products on one axis and new and existing markets on the other.
The Ansoff matrix is a tool for strategic planning which is commonly used.
Step 4: Set Objectives
The objectives are a translation of the mission statement into operational terms. They indicate the results to be achieved. Some of the objectives may be related to are
• Sales volume targets
• Market share targets
• Retail expansion targets
• Profitability to achieved
• Liquidity & Returns on investment
Step 5: Obtain and allocate the Resource
The resources that retailer needs are human as well as financial.
Financial resources take care of the monetary aspects of the business like shop rent, salaries and payments for merchandise.
Human resources are just as vital to the success of retail, operations as are financial resources and physical facilities.
Step 6: Develop the Strategic Plan
At this stage, the retailer determines the strategy by which he/she will achieve the objectives set forth.
The target market is defined and the retail mix that will serve the audience finalized.
Often, the retailer begins by looking at the entire market in terms of both the size and consumer segment to which it might appeal.
From these segments, the retailer identifies a smaller number of segments that looks promising. These are the possible targets.
Step 7: Implement the Strategy, Evaluate & Control
The key of the success of any strategy lies in its implementation.
Once a strategy is implemented, managers need feedback on the performance of the new strategy.
The effectiveness of the strategy of the firm must be evaluated periodically.
Management can also decide what changes if any, should be made in the future to ensure that actual performance is as per the expected performance.
Retail Strategy Example - Zara
Quick Turnaround Time - Production to Stores
The secret to Zara’s success can be largely attributed to its ability to keep up with rapidly changing fashion trends and its swift ability to release its collections with very little delay.
Infact, Zara brings in new styles to market in as little as 4-5 weeks.
To put things in perspective Zara produces over 450 million items and launches around 12,000 new designs annually.
Leveraging Customer Feedback
Zara’s designers incorporate feedback from several stores, analyze what customers are searching for on their website and pay attention to customer requests.
Infact, Zara trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants.
This video is on Retail Strategy and it has the following sub-topics.
Time Stamps
0:00 What is Retail Strategy?
1:03 Steps in developing Retail Strategy
5:32 Retail Strategy Example - Zara
Негізгі бет 7 Steps in Deciding your Retail Strategy in 2022 (Example of Zara)
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