The word “Strategy” comes from the Greek word meaning “the art of the general”

Retailing Market Strategy is a statement identifying (1) the retailers target market , (2)the format
the retailer plans to use to satisfy the target markets needs, and (3) the bases upon which the retailer
plans to build a sustainable competitive advantage.

The target market is the market segments toward which the retailer plans to focus its resources
and retail mix.
A retail format is the retailers mix. (A nature of merchandise and services offered, pricing policy,
advertising and promotion programs, approach to store design and visual merchandising)
A sustainable competitive advantage is an advantage over competition that can be maintained
over along period of time.
 RETAIL MARKET STRATEGY

Growth Strategies
THE STRATEGIC RETAIL PLANNING PROCESS

A set of steps a retailer goes through to develop a strategic retail plan. Determines how retailers
select target market segments, determine the appropriate retail format and build sustainable
competitive advantage.

1. Define the business mission

2. Conduct a situation audit: Market attractiveness analysis – Competition Analysis-Self Analysis
3. Identify Strategic Opportunities
4. Evaluate Strategic alternatives
5. Establish specific objectives and allocate resources
6. Develop a retail mix to implement strategy
7. Evaluate performance and make adjustments`
Step-1 : Define the business Mission
The mission statement is a broad description of a retailers objectives and the scope of activities it plans to undertake. The
objective of a publicly held firm is to maximize its stockholders wealth by increasing the value of its stock and paying
dividends.
The mission statement should define the general nature of the target segments and retail formats that the firm will
consider.
“Serve Customer, build value for shareholders and create opportunities for associates “ is too broad. It does not provide a
sense of strategic direction.
In developing the mission statement, managers must answer five questions:
•What business are we in?
•What should be our business in the future?
•Who are our customers?
•What are our capabilities?
•What do we want to accomplish?
Step:2 Conduct a situation Audit:

Market Factors Competitive Factors Environmental Factors Analysis of Strength and

weaknesses
Size Barriers to entry Technology Management capabilities
Growth Bargaining power of Economic Financial resources
Seasonality vendors Regulatory Locations
Business Cycles Competitive rivalry Social Operations
Merchandise
Store management
Customer loyalty
Step: 3 Identify strategic Opportunities
Considering Market Penetration- Market Expansion- Retail formant Development- Diversification

Step: 4 Evaluate Strategic Opportunities

Step: 5 Establish specific objectives and allocate resources
Step: 6 Develop a Retail Mix to Implement Strategy

Elements of Retail Mix:

Location-
customer Service-
Store Design and Display-
Communication Mix-
Merchandise assortments-Pricing

Step: 7 Evaluate Performance and Make Adjustments

HUMAN RESOURCE STRATEGY

Important Strategic issues facing by HR Professionals

•The design of the organization structure for assigning responsibility and authority for doing
tasks to people and business unit,
•The approaches used to co ordinate the activities of the firm’s departments and employees and
to motivate employees to work toward achieving company goals;
•The programs used to build employee commitment and retail valuable human resources.
I: Designing the organization structure for a retail firm
The tasks are divided into four major categories:
•Strategic Management
•Administrative Management (Operations)
•Merchandise Management
•Store Management

STRATEGIC MANAGEMENT
Develop Retail strategy
Identify the target market
Determine the retail format
Design organizational structure
Select Locations
The tasks under strategic management taken primarily by
senior management: CEO, CFO, COO’s, Vice President,
Board of Directors and other top management representing
shareholders in publicly held firms.
MERCHADISE MANAGEMENT STORE MANAGEMENT
Buy Merchandise Recruit , hire , train store personnel
Locate vendors Plan work schedules
Evaluate Vendors Evaluate performance of store personnel
Negotiate with vendors Maintain store facilities
Place orders Locate and display merchandise
Control Merchandise Inventory Sell merchandise to customers
Develop Merchandise budget plans Repair and alter merchandise
Allocate merchandise to stores Provide services such as gift wrapping and delivery
Review open to buy and stock position Handle customer complaints
Price Merchandise Take physical inventory
Set Initials prices Prevent Inventory shrinkage
Adjust prices

Administrative tasks are performed by corporate staff employees who have

specialized skills in HRM, Finance, Accounting, real estate, distribution and MIS.
People in these administrative functions develop plan, procedures and information to
assist operating managers in implementing the retailer’s strategy.
In retail firms, primary operating and line managers are involved in merchandise
management and store management. These managers implement the strategic plans
with assistance of administrative personnel. They make the day to day decisions that
directly affect the retailer’s performance.
Once the tasks have been identified, the retailer groups them into jobs to be assigned
to specific individuals and determines the reporting relationships
ADMINISTRATIVE MANAGEMENT (OPERATIONS)
Promote the firm , its merchandise , and services
Plan communication programs
Develop communication budget
Select media
Plan special promotions
Design special displays
Manage public relations
Manage human Resources
Develop policies for managing store personnel, recruit, hire , train managers
Plan career paths
Keep employee records
Distribute Merchandise
Locate ware house
Receive merchandise
Mark and label
Store merchandise
Ship merchandise to store
Return merchandise to vendors
Establish financial control
Provide timely information of financial performance
Forecast sales , cash flow, profits
Raise capital from investors
Bill customers
Provide Credit
Specialization: Focusing employees on limited set of activities , enables employees to develop
expertise and increase productivity. Through specialization, employees work only on tasks for
which they were trained and have unique skills.

Responsibility and authority: Productivity increases when employees have the proper amount
of authority to effectively undertake the responsibilities assigned them.
Reporting relationships: After assigning tasks to employees, the final step in designing the
organization structure is determining the reporting relationships. Productivity can decreases
when too many or too few employees report to a supervisor. The effectiveness of supervisors
decreases when they have too many employees reporting to them. On the other hand , if
managers are supervising very few employees the number of managers increase and cost go up.
II: MOTIVATING RETAIL EMPLOYEES

Retailer generally use three methods to motivate employees

•Written policies and supervision
•Incentives
•Organization culture.

III: BUILDING EMPLOYEE COMMITTEMENT

1. Developing employee skills through selection and training

2. Empowering Employees
3. Creating a partnering relationship with employees
3. a Reducing Status differences
3. b Promoting from within
3. c Enabling employees to balance their career and families
PRICING AND PROMOTION STRATEGY
Pricing Strategies:
In today’s retail market, two opposing pricing strategies prevail: Everyday low pricing and
High/Low pricing.

Everyday low pricing (EDLP) strategy: Low doesn’t mean lowest price, comparatively low
priced at the given store than any other

High/Low pricing strategies, where retailers offer that are sometimes above their
competitions’ EDLP, but they use advertising to promote frequent sales.

EDLP
High/Low strategy

Reduced Price wars The same merchandise appeals in multiple

Reduced Advertising markets
Reduced Stock outs and Sales create excitement
Improved Inventory Management Sales move merchandise
Emphasis on quality
 PRICE ADJUSTMENTS:

Price Discriminations

a. First Degree Price Discrimination

b. Second Degree Discrimination
1.Leader Pricing
1.Markdown
2.Price Lining
1.a Clearance
3.Odd Pricing
1.b Promotion

Other ways to get rid of the unsold markdown merchandise:

•“Job Out” the remaining merchandise to another retailer
•Place the remaining merchandise on an internet auction like snap deal, quick.com..etc.
•Give the merchandise to charity
•Carry the merchandise to next season

Approaches of Setting Prices

•Cost oriented method

•Demand oriented method
•Competition oriented method
RETAIL PROMOTIONAL STRATEGY
Planning a Retail Promotional Strategy
Advertising Media Comparison Chart

Medium Market Coverage Particular Suitability

Daily Single community or entire metro All larger retailers
Papers area; local editions may be available
Weekly Single community usually; may be a Retailers with a strictly local market
Papers metro area
Shopper Most households in one community; Neighborhood retailers and service businesses
Papers chain shoppers can cover a metro area

Phone Geographic area or occupational field All types of goods and service-oriented retailers
Directories served by the directory
Direct Mail Controlled by the retailer New and expanding firms, those using coupons or
special offers, mail order
Medium Market Coverage Particular Suitability
Radio Definable market area Retailers focusing on identifiable segments
surrounding the station
TV Definable market area Retailers of goods and services with wide appeal
surrounding the station
World Wide Global All types of goods and service-oriented retailers
Web
Transit Urban or metro community Retailers near transit routes, especially those
served by transit system appealing to commuters
Outdoor Entire metro area or single Amusement and tourist-oriented retailers, well-
neighborhood known firms
Medium Market Coverage Particular Suitability
National Nationwide National chains
Magazines

Local Entire metro area or Restaurants, entertainment-oriented firms, specialty shops,

Magazines region, zoned editions mail-order firms
sometimes available
Flyers/ Single neighborhood Restaurants, dry cleaners, service stations, and other
Circulars neighborhood firms
VENDOR RELATION AND DISTRIBUTION STRATEGY

VENDOR RELATION

Maintaining Strategic Relationships:

Mutual trust
Open Communication
Common goals
Credible commitments

Building Partnering Relationships:

Phases in buildings relationship are by increasing levels of commitment:
Awareness
Exploration
Expansion
Commitment
NEGOTIATION WITH VENDORS
Consider History
Asses where things are today
Set goals
Additional mark up opportunities
Terms of purchase
Transportation
Delivery and Exclusivity
Communications
Know vendor’s goals and constraints
Facilitate good understanding in negotiating session (like legal, financial and managerial issues)
Plan to have at least as many negotiators as the vendor
Choose a good place to negotiate
Be aware of real dead lines
DISTRIBUTION STRATEGY

•Ownership
•Pricing philosophy
•Product assortment
•Service level.

TYPES OF CHANNELS

•Direct channel
•Retailer channel
•Wholesaler channel
•Agent or broker channel
•Dual channel or multiple channel
How Channels Are Chosen

•The products themselves

•The type of customer
•Market size
•The producer’s level of control
•The size of the producing company
•The size of the retailers

Types of Distribution within Channels

•Exclusive distribution
•Selective distribution
•Intensive distribution