CHAPTER

3:STRATEGIC
PLANNING IN
RETAILING
Presented by
Dr. Alphonse Aklamanu
GIMPA BUSINESS SCHOOL
Email : [email protected]
Office : D Block 24
 Chapter Objectives
• To show the value of strategic
planning for all types of retailers
• To explain the steps in strategic
planning for retailers: situation
analysis, objectives, identification
of consumers, overall strategy,
specific activities, control, and
feedback
©2013 Pearson Education 3-2
 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

©2013 Pearson Education 3-3

 Retail Strategy

• The overall plan or framework of

action that guides a retailer
• One year in duration
• Outlines mission, goals, consumer
market, overall and specific activities,
and control mechanisms

©2013 Pearson Education 3-4

 Figure 3-1: Elements of a
Retail Strategy

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 Benefits of Strategic Retail Planning
• Provides thorough analysis of the requirements for
doing business for different types of retailers
• Outlines retailer goals
• Allows retailer to determine how to differentiate
itself from competitors
• Allows retailer to develop an offering that appeals to
a group of customers
• Offers an analysis of the legal, economic, and
competitive environment
• Provides for the coordination of firm’s total efforts
• Encourages anticipation and avoidance of crises

©2013 Pearson Education 3-6

 Organizational Mission

Retailer’s commitment
to a type of business and to a
distinctive role in the marketplace.

©2013 Pearson Education 3-7

 Lands’ End Mission Statement
• Lands’ End is a global multi-channel retailer
designing and selling classically styled
apparel, swimwear and outerwear for
Women, Men and Kids, plus a complete line
of home products, luggage and seasonal
gifts.
• We provide our customers with the highest
levels of service in our industry,
unparalleled quality and value, and an
unequivocal ironclad guarantee.
©2013 Pearson Education 3-8
 Sears Holdings Mission Statement
Sears Holdings is committed to
improving the lives of our
customers by providing quality
services, products and solutions
that earn them trust and build
lifetime relationships.

©2013 Pearson Education 3-9

 Questions About Sears Holdings’
Mission Statement
• Role of private labels (Craftsman, Kenmore
and DieHard) vs. national brands
• Integration of Lands’ End and Kmart into
Sears
• Strength in hardware, appliances where profit
margins are low; low in clothing where
margins are high
• Also strength as nation’s largest provider of
home services (12 million service calls per
year)
©2013 Pearson Education 3-10
 Core Values Statement of L.L.Bean
• Outdoor heritage— The natural
environment and the outdoors experience
• Integrity— 100 percent guarantee of
satisfaction
• Service— Treat customers like human
beings
• Respect— Respect for all publics
• Perseverance— A long-term perspective

©2013 Pearson Education 3-11

 Need to Revise Sears Holdings
Mission Statement
• Emphasizing online shopping, mobile apps,
and an Amazon.com marketplace; yet Sears is
primarily a bricks and mortar retailer
• Kmart one-quarter the sales productivity of
Wal-Mart
• Much of locations in older decrepit malls. Also
stores have not been refreshed
• Home Depot and Lowes as formidable
competitors
• Subleasing space in selective stores to
Forever 21 and French Connection???

©2013 Pearson Education 3-12

 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

©2013 Pearson Education 3-13

 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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 Figure 3-5a: Selected Kinds of Retail Goods
and Service Establishments

Durable Goods Stores:

Automotive group
Furniture and appliances group
Lumber, building, and hardware group
Jewelry stores

Nondurable Goods Stores:

Apparel group
Food group
General merchandise group
Gasoline service stations

©2013 Pearson Education 3-16

 Figure 3-5b: Selected Kinds of Retail Goods
and Service Establishments

Service Establishments (Personal):

Laundry and dry cleaning
Beauty/barber shops
Funeral services
Health-care services

Service Establishments (Amusement):

Movie theaters
Bowling alleys
Dance halls
Golf courses

©2013 Pearson Education 3-17

 Figure 3-5c: Selected Kinds of Retail Goods
and Service Establishments

Service Establishments (Repair):

Automobile repair
Car washes
Consumer electronics repair
Appliance repairs

Service Establishments (Hotel):

Hotels
Motels
Trailer parks
Camps

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 Image and Positioning

An image represents
how a given retailer is
perceived
by consumers and others.

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 Positioning Approaches

• Mass 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 techniques
• Mass marketing
• Concentrated marketing
• Differentiated marketing

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 Figure 3-8: La Boqueria

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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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 Figure 3-9: Developing an Overall Retail
Strategy

Controllable Uncontrollable
Variables: Variables:
• Store location • Consumers
• Managing business • Competition
• Merchandise • Technology
management Retail • Economic
and pricing Strategy conditions
• Communicating • Seasonality
with customer • Legal restrictions

©2013 Pearson Education 3-26

 Retail Strategy– Low Costs
• Removal of bad costs
• Use of private label products to
reduce costs of national/manufacturer
brands
• Reduce product proliferation
• Obtain best net price instead of focus
on promotional monies, trade
incentives and forward buying

©2013 Pearson Education 3-27

 Retail Strategy– Low Costs (cont.)
• Supply chain initiatives
• Low promotional expense (everyday
low pricing)
• Proper employee utilization

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 Retail Strategy--Differentiation

• Well-thought out private labels (Trader

Joe’s, Target, King Arthur flour, etc.)
• Hiring right employees (value-profit chain)
• Empowering employees
• Use of a fun atmosphere
• “Little things that mean a lot”
• Money-back guarantees

©2013 Pearson Education 3-29

 Table 3-4a: Legal Environment
and Retailing
Store Location Managing the
• zoning laws Business
• blue laws • licensing provisions
• environmental laws • personnel laws
• direct selling laws • antitrust laws
• local ordinances • franchise
• leases and agreements
mortgages • business taxes
• recycling laws

©2013 Pearson Education 3-30

 Table 3-4b: Legal Environment
and Retailing
Merchandise Management and Pricing
• trademarks
• merchandise restrictions
• product liability laws and lemon laws
• sales taxes
• unit-pricing laws
• collusion laws
• sale prices
• price discrimination laws

©2013 Pearson Education 3-31

 Table 3-4c: Legal Environment
and Retailing
Communicating with the Customer
• truth-in-advertising and selling laws
• truth-in-credit laws
• telemarketing laws
• bait-and-switch laws
• inventory laws
• labeling laws
• cooling-off laws

©2013 Pearson Education 3-32

 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.
©2013 Pearson Education 3-33
 Additional Concerns for
Global Retailing

• In addition to the strategic planning

process:
• assess your international potential
• get expert advice and counseling
• select your countries
• develop, implement, and review an
international retailing strategy

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 Factors Affecting the Success of a
Global Retailing Strategy
• Timing
• A balanced international program
• A growing middle class
• Matching concept to market
• Solo or partnering
• Store location and facilities
• Product selection
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 Figure A3-1: Factors to Consider When
Engaging in Global Retailing

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 Questions for Discussion

a) What are the pros and cons of starting a new apparel

store versus buying an existing one?

a) A competing bicycle store has a better location than

yours. It is in a modern shopping center with a lot of
customer traffic. Your store is in an older neighborhood
and requires customers to travel further to reach you.
How could you use a merchandising, pricing, and
communications strategy to overcome your
disadvantageous location?

©2013 Pearson Education 3-37