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Strategic Retail Planning Process (4

Steps)
For the purpose of developing retail
strategies, retailers are required to follow a
step by step procedure or planning process.
The planning process discusses/involves the
present stage of business, the formulation, list
of available strategic options, and the
implementation of the selected strategies.
Considering the importance of strategic
decisions for the future success of the
business, a systematic approach is essential.

The strategic planning process,


which after considering the HR
potential and USP of a particular
store takes proper shape, is
normally divided into following
steps:
1. Deciding the stores philosophy,
mission and objectives,
2. Situation analysis,
3. Formulation of retail strategy
4. Strategy implementation and
control.

1. Deciding the stores philosophy,


mission and objectives:
The retail strategic planning process starts
with the identification of stores mission for its
existence and hence the scope of the retail
store. The mission of a store entails
identifying the goods and services that will be
offered to customers. It also deals with the
issue that how the resources and capabilities
of a store will be used to provide satisfaction
to customers and how the store can compete
in the target market vis-a-vis its competitors.

The mission also involves the way


of stores functioning. How a store
will work and accomplish its day to
day operations? What is the
emergency planning? All are
answered in the stores mission
statement. For example, Vishal
Mega Marts, they have philosophy
of customer satisfaction through
manufacturing to retailing.

This reflects not only the way


it tends to treat its customers,
but discusses the secret of its
competitive advantage, i.e.
the profit saved from absence
of intermediaries like agents
and brokers, commission
saved is distributed to
customers by way of low
priced items.

Once the organization


mission has been
determined, its objectives,
desired future positions that
it wishes to reach, should be
identified. Stores objectives
are defined as ends which
the store seeks to achieve
by its USP (Unique Selling
Preposition) and operations.

The stores objectives may be


classified into two parts:
(i) External store objectives, and
(ii) Internal Store Objectives.

External store objectives are those


that define the impact of store on its
environment, e.g., to develop high
degree of customer confidence by
providing quality goods at lowers
prices. Internal store objectives, on
the other hand, are those that define
how much is expected to be achieved
with the available resources, e.g. to
raise the store turnover by 15% in
the coming year.

2. Situational Analysis (SWOT


Analysis):
The objective of doing stores
situation analysis is to determine
where the store is at present and to
forecast where it will be if formulated
strategies are implemented. The
difference between current and future
position (forecasted) is known as
planning or strategic gap. Under
organisational analysis, normally
stores study their external
(environmental) and internal

External Analysis:
The purpose of examining the stores
external environment is to study the
opportunities and threats in the retailing
environment. The external analysis studies
factors that affect the macro-environment
of retailing industry and the task
environment.

Under external analysis, retailer


studies these parameters:
(i) Economic environment of retailing,
(ii) Political environment of retailing,
(iii) Legal environment of retailing,
(iv) Socio-cultural environment of retailing,
(v) Technological environment of retailing,
and
(vi) International environment of retailing.
The stores task environment can be
influenced directly by retailers own policies
and includes competitors, suppliers and
customers.

Internal Analysis:
The objective of studying internal
environment of its own store is to identify
the stores strengths and weaknesses. The
store will try to increase its capabilities,
and overcome the weaknesses that deter
the business profit. While doing the internal
analysis, store examines the quality and
quantity of its available resources and
critically analyzes how effective these
resources are used.

These resources for the


purpose of examining are
normally grouped into human
resources, financial resources,
physical resources (assets)
and intangible resources
(goodwill, image etc).

The types of questions that are


enquired under different resources
are:
Human resource:
(a) Is present strength of employees at
various levels is sufficient for future action?
(b) Are the employees trained and capable
to perform the tasks assigned to them?
(c) Are the employees loyal to store?
(d) Are the employees punctual and
regular?
(e) Are the employees skilled in their
assigned tasks?

Financial resource:
(a) What is the total cash flow from stores
present activities?
(b) What is the ability of retail store to
collect money at the time of requirement/
emergency?
(c) How much effective and stable
financial policies are?
(d) What is the ratio between fixed and
current assets?
(e) What are the contingency plans in
case of negative cash flow?

Physical resources:
(a) What is the contribution of fixed
assets?
(b) What is the position of
abandoned/unused assets?
(c) How effective and update are the
stores information systems?

Intangible resources:
(a) What is the present capability of the
companys management?
(b) How effective is the R & D cell?
(c) How good is the competitors intelligence
system?
(d) How effective stores loyalty programmes
are?
(e) What is the capability of retail store
manager?
(f) Are customers loyal towards companys
products?

3. Formulation of Retail Strategy:


In this stage, after analyzing the stores
capabilities in terms of HR, finance,
physical and intangible resources, a store
manager formulates retail strategy with
regard to marketing, retail positioning and
retail mix. Marketing is the way to achieve
the set objectives. Therefore, marketing
strategy should be devised according to
stores primary and secondary objectives.
Generally, marketing strategy is developed
on the basis of product and/or market
segmentation instead of the market as a
whole.

Retail Positioning is a plan of


stores action for how the
retailer will enter the target
market and will compete with its
main competitors. Retail
positioning from a retail stores
point of view, is a step by step
plan to create and maintain a
unique and everlasting image of
the store in the consumers
mind.

This process reveals the fact that


understanding what customer wants?
is the success key to retail positioning
in the market. Under retail positioning,
a retailer conveys the message that its
products are totally different and as per
customers requirement. The reason
here is that customers are attracted
towards items that are new for them
with the perception that if it is new, it
will have some extra/added features.

Retail positioning is made


possible under these
circumstances:
(i) By differentiating the stores
merchandise from its competitors,
(ii) By offering high level of after sales
services at nominal/no cost, and
(iii) By adopting low pricing policies.

Retail Mix is the blend of various retail


activities which in total present the whole
concept of retailing. The retail marketing
and retail positioning strategies are put into
effect by this retail mix the set of
controllable elements that a retailer can use
to satisfy customers needs and to influence
their buying behavior and compete
effectively in the target market. Utmost care
is required on the part of retail manager to
select the various elements for a perfect
retail mix.

The main elements a retail store manager h


i. Stores location
ii. Merchandise assortment
iii. Pricing policy
iv. Customer service mechanism
v. Visual merchandising
vi. Personal selling efforts
vii. Advertising efforts and
viii. Stores internal and external environments.

4. Strategy Implementation and


Control:
It is concerned with the designing and
management of retail systems to achieve
the best possible combination of human,
financial, physical and intangible
resources of a retail store to achieve the
formulated objectives, without timely and
effective implementation also requires
scheduling and coordination of various
retail activities. For example, the
coordination between the marketing and
sales promotion department is a must for
sales promotion to make success.

Further, the spirit of team work is


an essential part for the success of
strategy implementation. If the
retail stores strategies are
competitive, marketing efforts are
as per demand but the sales
promotion employees are not
taking it seriously or are ineffective,
result will not be up to the mark.

The implementation of new retailing


strategies sometimes require changes
in the way of functioning and duties
that can lead to resistance from
employees. Therefore, stores should
take positive steps to reduce this
resistance to change and to convince
the employees that it in a long term
will be beneficial for both the store
and employees.

The positive steps include the follow


(i) Inspection,
(ii) Detection, and
(iii) Correction.

It means after implementing the retail


strategies, retailer should assess how
effectively strategies are being
implemented, how far the strategic
objectives are being achieved and what
has been left to be achieved in the
stores objectives list. Therefore,
retailers inspect the implemented
strategies from time to time and detect
the fault (if any) in the implementation
of various retail elements. If any
deficiency is found during inspection
process, that has to be corrected with
immediate effect without any further
loss to store.