Presentation on theme: "Retail Strategic Planning and Operations Management"— Presentation transcript:
1 Retail Strategic Planning and Operations Management Chapter 2Retail Strategic Planning and Operations Management
2 Learning ObjectivesExplain why strategic planning is important and describe the components of strategic planningDescribe the retail strategic planning and operations management model
3 Components of Strategic Planning Strategic planning: Adapting the resources of the firm to the opportunities and threats of an ever-changing retail environmentThrough the proper use of strategic planning, retailers hope to achieve and maintain a balance between resources available and opportunities aheadLO 1
4 Components of Strategic Planning Development of a mission statement for the firmDefinition of specific goals and objectives for the firmSWOT analysisDevelopment of strategies that will enable the firm to reach its objectives and fulfill its missionLO 1
5 Retailing Headlines…For a brand to have international success, on-line presence must speak more than 16 languages. 11 languages can only reach 80% of the world, and monolingual sites typically capture just 25% of the world's Net usersTesco owned Fresh & Easy chain offers only self-service checkoutsAmazon most trusted brand among consumers
6 Retailing Headlines… Target struggles in Canada Target security breach bigger (Neiman Marcus also hit)JC Penney expanding its kids and baby line-up with launch of exclusive new brandsEnough?
7 Mission StatementBasic description of the fundamental nature, rationale, and direction of the firmElements of a mission statementHow the retailer uses or intends to use its resourcesHow it expects to relate to the ever-changing environmentThe kinds of values it intends to provide in order to serve the needs and wants of the consumerLO 1
8 The mission of The ________ Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.To Bring Inspiration and innovation to every athlete in the world. (If you have a body you are an athlete)
9 “________ mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission we will conduct our business with the following Code of Ethics in mind:Obey the lawTake care of our membersTake care of our employeesRespect our vendorsIf we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders."
10 we work to help people and businesses throughout the world realize their full potential. This is our mission. Everything we do reflects this mission and the values that make it possibleThe guiding vision of The ________ Companies is "Bringing the best to everyone we touch". By "The best", we mean the best products, the best people and the best ideas. These three pillars have been the hallmarks of our Company since it was founded… in They remain the foundation upon which we continue to build our success today.
11 "Our mission is to make _____ the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less.® brand promise." "We save people money so they can live better.“ "We will provide customer-valued solutions with the best prices, products and services to make Lowe's the first choice for home improvement."
13 Statement of Goals and Objectives Provide:Specific direction and guidance to the firm in the formulation of its strategyA control mechanism by establishing a standard against which the firm can measure and evaluate its performanceLO 1
14 Statement of Goals and Objectives DimensionsMarket performanceFinancial performanceSocietal objectivesPersonal objectivesLO 1
15 Market Performance Objectives Establish the amount of dominance the retailer seeks in the marketplaceMarket share: Retailer’s total sales divided by total market salesHigh sales growth retailing is directly linked to expanding the size of the retail storesDisneyLO 1
16 Exhibit 2.1 - The Market Share-Profitability Relationship LO 1
17 Financial ObjectivesProfit-based objectives: Deal directly with the monetary return a retailer desires from its businessProfit - Aggregate total of net profit after taxesProfit can be expressed as a percentage of net salesIt can also be defined in terms of return on investment (ROI)Stockouts: Products that are out of stock and unavailable to customers when requiredLO 1
18 Exhibit 2.2 - Elements of Strategic Profit Model LO 1
19 Financial ObjectivesProductivity objectives: State the sales objectives that the retailer desires for each unit of resource inputSpace productivity - Net sales divided by the total square feet of retail floor space (Trader Joe)Labor productivity - Net sales divided by the number of full time-equivalent employeesMerchandise productivity - Net sales divided by the average dollar investment in inventoryLO 1
20 Societal ObjectivesReflect the retailer’s desire to help society fulfill some of its needsEmployment objectives - Provision of employment opportunities for the members of the retailer’s communityPayment of taxes - Helping finance societal needs that the government deems appropriateConsumer choice - Provide the consumer with choices that previously were not available in the trade areaLO 1
21 Societal ObjectivesEquity - Retailer’s desire to treat the consumer and suppliers fairlyBeing a benefactor - Retailer may desire to underwrite certain community activitiesLO 1
22 Personal ObjectivesReflect the retailers’ desire to help individuals employed in retailing fulfill some of their needsSelf-gratification - Focuses on the needs and desires of the owners, managers, or employees of the enterpriseStatus and respect - Recognizes that the owners, managers, and employees need status and respect in their communityPower and authority - Need of managers and other employees to be in positions of influenceLO 1
23 StrategiesCarefully designed plan for achieving the retailer’s goals and objectivesRetailers can operate with three strategiesGet shoppers into the storeConvert these shoppers into customers by having them purchase merchandiseImplement the above two strategies at the lowest operating cost possible that is consistent with the level of service that customers expect (Distribution company? Teens in the mall? Other unwanted customers?)LO 1
24 Strategies Forms of differentiation for a retailer Outstanding design of the market offering (Target and Torrid)The selling process (Nordstrom’s)After-purchase satisfactionLocationNever being out of stockLO 1
25 SWOT Analysis Strengths: What major competitive advantage(s) do we have?What are we good at?What do customers perceive as our strong points?LO 1
26 SWOT Analysis Weaknesses What major competitive advantage(s) do competitors have over us?What are competitors better at than we are?What are our major internal weaknesses?LO 1
27 SWOT Analysis Opportunities What favorable environmental trends may benefit our firm?What is the competition doing in our market?What areas of business that are closely related to ours are undeveloped?LO 1
28 SWOT AnalysisThreatsWhat unfortunate environmental trends may hurt our future performance?What technology is on the horizon that may soon have an impact on our firm?LO 1
29 StrategiesA fully developed marketing strategy should address the following considerationsTarget market: Groups of customers that the retailer is seeking to serveLocationRetail mix: Combination of merchandise, price, advertising and promotion, location, customer service and selling, and store layout and designValue proposition: Statement of the tangible and intangible results a customer receives from shoppingLO 1
30 Exhibit 2.8 - Retail Strategic Planning and Operations Management Model LO 2
31 The Retail Strategic Planning and Operations Management Model Operations management: Deals with activities directed at maximizing the efficiency of the retailer’s use of resourcesReferred to as day-to-day managementThe need to strive for a high profit is tied to the extremely competitive nature of retailingLO 2