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Module 5: Strategic Retail Planning and Management
Retail Management Module 5: Strategic Retail Planning and Management
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Strategic Planning in Retail
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Steps of Retail Strategy Planning
Strategic planning is formal process, and is marked by specific activities where firms engage to build marketing plan Objective Setting Clear difference between measures and what they might mean for an organization Situational Analysis Helps decision makers understand what to do and how to do it (multi-dimensional consideration) Customer Analysis Activity that ultimately helps focus marketing and sales resources more efficiently (research into and analysis of consumer behavior)
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Steps of Retail Strategy Planning (cont.)
4. Tactical Planning Short term actions taken to affect controllable elements of strategy: if a firm has the objective to “grow category sales by 4% by increasing merchandising and promotional activity,” a relevant tactic might be to plan robust promotional activity in key seasons. 5. Implementation and Control How firm puts strategic plan into place, including how it organizes and communicates Includes how firm tracks progress towards objectives Strategic planning is a formal process that firms should do to develop plan for how to best compete
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Visions and Missions Keeping members focused, takes consistent communication, effective management, & efficient resourcing Mission statements: what firm does or wants to do critical process/performance to satisfy customer Vision statement: what company hopes to do and be in future future oriented, meant to inspire
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Decisions and Strategy
Strategic planning evaluates market and factors that influence it, consumer needs, competition, capabilities,& implications Strategic planning is internally and externally oriented Situational and customer analysis captures factors that will support and those that will challenge Helps retailers make decisions around growth opportunities, consumer targeting, and performance
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Creating a Strategic Plan
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Situation Analysis Helps decision makers understand what to do and when to do it: consideration of context, organizational capabilities, customer needs, and competition Describe environment, how our abilities can deliver value to consumer needs, and our actions/reactions Context refers to business environment as influenced by technology, government regulation, social movements, & economic forces Government regulation & social movements converge Organizational capabilities considers strengths and weaknesses of organization
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Situation Analysis (cont.)
Customer analysis includes consideration of needs of current and future consumers as well as characteristics Assessment of customer within analysis does not require much rigor Important to consider which specific targets will be targeted and how firm will position themselves Competition includes assessment of strengths and weaknesses of competitive set Decision-makers can assess their direct influencers on strategic opportunities and threats
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Short and Long-Run Objectives
Some firms might expect to achieve objectives quickly, while others are expected to require more time Important to identify leading indicators: meaningful factors whose change indicates/predicts future change Example: local grocer having objective to grow revenue by x% might consider number of options that will benefit company on broader level By tracking shoppers, data might show that they are on track to grow revenue by the x%
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Target Market Techniques
Effective customer analysis includes work around how firm will position itself as unique Physical differences (layout, assortment, service levels, pricing) or perceptual (focus on what the use of product means to a customer) Slogan does not create differentiation Effective positioning follows defined process, the first step being identify relevant competitive set Identification of determinants of demand is important because it shows variables that influence consumer choice
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Target Market Techniques (cont.)
Next step is for firm to analyze position relative to competition using positioning grid or value curve Positioning grid helps marketers identify white space: areas for competitive entry that aren’t currently occupied Value curves reflect performance on each factor With results of grid and curves in mind, retailer should consider what positioning best fits them given their capabilities, resources, priorities, and investments Positioning process helps describe how firm is uniquely different from others
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Key Variables in Planning
Firms use strategic planning to develop plans for how to best compete Not all variables are controllable: economic trends, government regulation, volatility of supply, cultural changes, etc. Consumers are using digital interfaces and low-cost fulfillment to order products online and in apps Demographic changes have elevated interest in health: consider what this means and what the implications are Cultural values evolved around economic disparity, and pressuring governments to increase minimum wage Uncontrollable variables include economic trends, government regulation, volatility of supply, demographic shifts, changes in cultural values, and technology
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Tactical Decisions Short-term actions firms take to affect controllable elements of strategy The initiatives and activities that when combined successfully, deliver strategic objective Within firm, decision-makers and managers outline specific initiatives that will be undertaken and delegate roles to support them Within smaller tactical decisions, a firm can ultimately deliver strategic goal or prevent its accomplishment
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Retail Audits Audits are reviews to assess how well store operators meet organizational standards, provide satisfactory experiences, and implement priority initiatives Health and safety, loss prevention, & merchandising audits Health and safety (how well store is meeting guidelines) Loss prevention (how well store’s process, protocol, and training minimize theft & fraud) Merchandising (evaluate assortment, display, pricing, promotional activity) Review on-shelf products and ensure pricing compliance
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Strategic Planning Opportunities
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The Feedback Process Feedback can make process iterative and roundabout rather than sequential Feedback is fundamental to effective control Quantitative (change in store traffic, sales revenue, satisfaction scores, operating profit) or Qualitative (positive comments) Sales revenue and operating profit are lagging indicators Purchase intent is good complement because it builds on satisfaction
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Building a Competitive Analysis
Goal is to create sustainable competitive advantage Firm has edge over competition which they cannot easily overcome Advantages can be in intellectual property, technology leadership, assets, scales, or barriers Supports how firm competes, not what it does to compete Wal-Mart and Amazon have strong competitive advantage Firms can possess powerful internal strengths or can compete with system that is so expansive it cannot be matched Wal-Mart has advantage due to unmatched supply chain focused on reducing costs Amazon has advantage of at-home delivery, a huge selection of product, and their relationships with carriers
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Retail Growth Opportunities
Growth has two benefits Firms access capital through loans Reflection that firm is meeting customer needs Growth is positive and reflects that the firm is delivering customer value Firms grow customer target and business by increasing penetration levels Firms may choose to grow through development, such as servicing current target with new business Last way is through diversification: targeting new customers with new business The first [benefit] is that firms often access capital through loans or other financial instruments. Thus, growth is required to repay lenders and investors with interest. In doing this, firms maintain access to capital, which funds new initiatives that drive innovation. Second, growth is a reflection that the firm is meeting customer needs. Thus, there’s a virtuous cycle: Firms access to innovate Innovation attracts customers, who increase their spend with the firm The firm repays its investors with interest before accessing new lines of capital to invest in innovative strategic initiatives to service customers better
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Quick Review Decision-makers within firm must look inward and outward, assessing the market and factors that influence it Firms must evaluate the needs of the consumer, their capabilities, and position of competition Strategic decisions firms make impact markets they enter, products they make, etc. Five steps of strategic planning: objective setting, situational analysis, customer analysis, tactical planning, implementation and control Outcome of strategic planning is marketing plan, or the “road map” for how the firm will pursue strategic objectives
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