Retail Planning and

Management
Chapter 2
Goals for Chapter 2
 Goals for Chapter 2

• Discuss need for Retail Strategic Management

 Goals for Chapter 2

• Discuss need for Retail Strategic Management

• Identify Organization Mission Considerations
 Goals for Chapter 2

• Discuss need for Retail Strategic Management

• Identify Organization Mission Considerations
• Identify Organizational Objectives
 Goals for Chapter 2

• Discuss need for Retail Strategic Management

• Identify Organization Mission Considerations
• Identify Organizational Objectives
• Discuss two Strategic Profit Models
 Goals for Chapter 2

• Discuss need for Retail Strategic Management

• Identify Organization Mission Considerations
• Identify Organizational Objectives
• Discuss two Strategic Profit Models
• Discuss SWOT Approach
 Goals for Chapter 2

• Discuss need for Retail Strategic Management

• Identify Organization Mission Considerations
• Identify Organizational Objectives
• Discuss two Strategic Profit Models
• Discuss SWOT Approach
• Note: Most of discussion in this chapter relates to large
retailers (especially those with multiple chains with
different approaches)
Retail Strategic Management
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions.
An outline of what the retail firm hopes to accomplish
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions.
An outline of what the retail firm hopes to accomplish
 Develop a mission statement for the firm
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions.
An outline of what the retail firm hopes to accomplish
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions.
An outline of what the retail firm hopes to accomplish
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill
mission
 Retail Strategic Management
• “the process of planning the organization,
implementation, and control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions.
An outline of what the retail firm hopes to accomplish
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill
mission
 Identify Strengths, Weaknesses, Opportunities and Threats
 Retail Strategic Management
• “the process of planning the organization, implementation, and
control of all the firm’s activity.”
• Strategic Planning - long-term, broad based intentions. An
outline of what the retail firm hopes to accomplish
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill mission
 Identify Strengths, Weaknesses, Opportunities and Threats
• Plans are usually different for each strategic business unit
( often a chain with a separate name) within the overall retail
organization
Organization Mission
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission
statement
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission
statement
• The mission statement must consider:
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission
statement
• The mission statement must consider:
the Retail Environment
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission
statement
• The mission statement must consider:
the Retail Environment
the Organization’s Resources
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission statement
• The mission statement must consider:
the Retail Environment
the Organization’s Resources
any Distinctive Competencies
 Organization Mission
• All employees of a retailer (from top to
bottom) need to know the organizations
future direction, its core business, its core
customers, its philosophy of operation.
• These should be able to be concisely
summarized in a short mission statement
• The mission statement must consider:
the Retail Environment
the Organization’s Resources
any Distinctive Competencies
and Management Preferences
Organizational Objectives
Organizational Objectives
• If a mission statement states what a
retailer wants to be, its objectives state
its measurable goals
Organizational Objectives
• If a mission statement states what a
retailer wants to be, its objectives state
its measurable goals
• Objectives can be categorized as
Market Objectives
Financial Objectives
Societal Objectives
Personal objectives
Organizational Objectives
• If a mission statement states what a retailer
wants to be, its objectives state its
measurable goals
• Objectives can be categorized as
Market Objectives
Financial Objectives
Societal Objectives
Personal objectives
• It should be noted that the above categories
of objectives are often in conflict with each
other -- e.g. A goal of high sales volume is
difficult to achieve with high sales margins
Exhibit 2.2
Retail Objectives

Sales Profitability
Volume

Market Financial
Market Share Performance Productivity
Performance
Objectives Objectives

Retail
Mission
Employment
Self-Gratification Personal Societal
Objectives Objectives
Taxes

Power and Consumer Choice

Authority

Status and
Respect Equity

Benefactor
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Market Objectives ( 1 of 2)
Market Objectives ( 1 of 2)
• Sales Objectives - Volume or
growth goals are often seen
Market Objectives ( 1 of 2)
• Sales Objectives - Volume or
growth goals are often seen
• Customer Traffic Objectives
- Get new people into the
store through promotions,
sales, special services
Market Objectives ( 1 of 2)
• Sales Objectives - Volume or
growth goals are often seen
• Customer Traffic Objectives
- Get new people into the
store through promotions,
sales, special services
• Customer Loyalty - Get
customers for life. The sale is
the beginning of customer
contact not the end
Market Objectives (2 of 2)
 Market Objectives (2 of 2)
• Market Share - sales goals
stated in terms of share of
market in comparison to local
competitors
 Market Objectives (2 of 2)
• Market Share - sales goals
stated in terms of share of
market in comparison to local
competitors
• Retail Image - Re-identifying
the target market and the
future growth potential (e.g.
Sears)
 Market Objectives (2 of 2)
• Market Share - sales goals
stated in terms of share of
market in comparison to local
competitors
• Retail Image - Re-identifying
the target market and the future
growth potential (e.g. Sears)
• Vendor relations - increase
sales through better
coordination with vendors
Financial Objectives (1 of 2)
Financial Objectives (1 of 2)
• Targeted Returns - Ratio
of calculated net income
to sales (ROS) or to total
assets (ROA) or to equity
(ROE)
Financial Objectives (1 of 2)
• Targeted Returns - Ratio
of calculated net income
to sales (ROS) or to total
assets (ROA) or to equity
(ROE)
• Earnings per share -
Important consideration
for publicly traded retail
firms
Financial Objectives (1 of 2)
• Targeted Returns - Ratio
of calculated net income
to sales (ROS) or to total
assets (ROA) or to equity
(ROE)
• Earnings per share -
Important consideration
for publicly traded retail
firms
• Stockholder dividends
Financial Objectives (2 of 2)
Financial Objectives (2 of 2)
• Labor productivity - Sales
per employee is a
common retail
measurement
Financial Objectives (2 of 2)
• Labor productivity - Sales
per employee is a
common retail
measurement
• Space productivity - Sales
per square foot of space
(or per square foot of
selling space) is another
common measurement
Financial Objectives (2 of 2)
• Labor productivity - Sales
per employee is a common
retail measurement
• Space productivity - Sales
per square foot of space (or
per square foot of selling
space) is another common
measurement
• Merchandise productivity -
Inventory turnover goals
Strategic Profit Model
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
achieving high current return on net worth
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
achieving high current return on net worth
• Components of return on net worth are outlined
in Strategic Profit Model
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
S
P
achieving high current return on net worth
• Components of return on net worth are outlined
in Strategic Profit Model

M
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
S
P
achieving high current return on net worth
• Components of return on net worth are outlined
in Strategic Profit Model
 Net profit Margin
M
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
S
P
achieving high current return on net worth
• Components of return on net worth are outlined
in Strategic Profit Model
 Net profit Margin
 Asset Turnover
M
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
S
P
achieving high current return on net worth
• Components of return on net worth are outlined
in Strategic Profit Model
 Net profit Margin
 Asset Turnover
M
 Return on Assets
 Strategic Profit Model
• Primary financial goal of a corporation is to
maximize shareholders’ wealth
• Achieved by planning for the future and
S
achieving high current return on net worth
• Components of return on net worth are outlined in
Strategic Profit Model
P
 Net profit Margin
 Asset Turnover M
 Return on Assets
 Financial Leverage
Exhibit 2.1

Strategic Profit Model

Net Profit
Margin
Net Profit*

Total Sales
Return on Financial Return on
Assets Leverage Net Worth
x = x =
Net Profit* Total Assets Net Profit*
Asset   
Turnover Total Assets Net Worth Net Worth
Total Sales

Total Assets

*Net profit after taxes

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Exhibit 2.4
The SPM for Some of the Country’s Top
Retailers
Retailer Net Profit*/ Total Sales/ Net Profit*/ Total Assets/ Net Profit*/
Net Sales Total Assets Total Assets Net Worth Net Worth
Comp USA,
Inc. 2.0% 4.2 8.3% 3.2 26.2%
Home Depot,,
Inc. 5.0% 2.3 11.4% 1.6 18.5%
LIMITED, Inc. 4.8% 2.2 10.5% 2.2 23.4%
May Department
Stores 5.9% 1.3 7.6% 2.7 20.2%
McDonalds
Corp. 15.0% 0.6 9.6% 2.0 19.5%
Safeway Inc. 2.7% 3.2 8.7% 4.6 39.8%
Walgreen
Company 3.2% 3.5 11.1% 1.8 19.9%
Wal-Mart
Stores, Inc. 2.9% 2.8 8.0% 2.4 19.3%
*Net Profit After Taxes
Based on corporate annual reports to stockholders of the respective firms and on computations by authors.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Societal Objectives
 Societal Objectives
• Social responsibilities are
becoming more important
 Societal Objectives
• Social responsibilities are
becoming more important
• The amount of social responsibility
that comes from a true concern for
society (e.g. Ben & Jerry’s) versus
the amount that is triggered by the
desire for positive publicity and
promotion (Drug store health fairs)
is unknown
 Societal Objectives
• Social responsibilities are becoming
more important
• The amount of social responsibility
that comes from a true concern for
society (e.g. Ben & Jerry’s) versus
the amount that is triggered by the
desire for positive publicity and
promotion (Drug store health fairs)
is unknown
• Societal concerns often are at the
expense of financial objectives
Personal Objectives
Personal Objectives
• Self-Gratification - Owners,
managers, and employees will
probably choose working in a
retail environment they enjoy
Personal Objectives
• Self-Gratification - Owners,
managers, and employees will
probably choose working in a
retail environment they enjoy
• Status and Respect - Managing
a store or being an employee of
the month adds to individuals
status and self-respect
Personal Objectives
• Self-Gratification - Owners,
managers, and employees will
probably choose working in a
retail environment they enjoy
• Status and Respect - Managing a
store or being an employee of the
month adds to individuals status
and self-respect
• Power and authority - Retail
employment usually provides for
more responsibility than factory
employment
SWOT Analysis
 SWOT Analysis

• Strengths
• Weaknesses
• Opportunities
• Threats
 SWOT Analysis

• Strengths • S - What competitive advantages do

we have over the competition?
• Weaknesses
• Opportunities
• Threats
 SWOT Analysis

• Strengths • S - What competitive advantages do

we have over the competition?
• Weaknesses • W - What competitive advantages
• Opportunities do our competitors have over us?
• Threats
 SWOT Analysis

• Strengths • S - What competitive advantages do

we have over the competition?
• Weaknesses • W - What competitive advantages
• Opportunities do our competitors have over us?
• Threats • O - What favorable environmental
trends exist that may benefit our firm?
 SWOT Analysis
• S - What competitive advantages do we
• Strengths have over the competition?

• Weaknesses • W - What competitive advantages do our

competitors have over us?
• Opportunities • O - What favorable environmental trends
• Threats exist that may benefit our firm?

• T - What unfortunate environmental

trends exist that may hurt our future
performance?
Retail Strategies ( 1 of 2)
 Retail Strategies ( 1 of 2)
• Get consumers into
Store
 Retail Strategies ( 1 of 2)
• Get consumers into
Store
• Convert consumers
into Customers
 Retail Strategies ( 1 of 2)
• Get consumers into
Store
• Convert consumers
into Customers
• Keep operating costs
low while maintaining
appropriate level of
customer service
Retail Strategies ( 2 of 2)
Retail Strategies ( 2 of 2)
• Differentiate
Retail Strategies ( 2 of 2)
• Differentiate
Physical difference of
product
Retail Strategies ( 2 of 2)
• Differentiate
Physical difference of
product
Different selling
process
Retail Strategies ( 2 of 2)
• Differentiate
Physical difference of
product
Different selling
process
Post-purchase
satisfaction
Retail Strategies ( 2 of 2)
• Differentiate
Physical difference of
product
Different selling
process
Post-purchase
satisfaction
specialized location
Retail Strategies ( 2 of 2)
• Differentiate
Physical difference of
product
Different selling process
Post-purchase
satisfaction
specialized location
never out of stock
Exhibit 2.3
Retail Planning and Management
Model
Competitive Environment:
Behavior of Consumers, Competition and Channel Members
Strategic Planning

SWOT

Strengths
Goals and Weaknesses
Mission
Objectives Opportunities
Threats

Social and Legal Environment:

Socioeconomic Environment, State of Technology, Legal System, Ethical Behavior
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Exhibit 2.3
Retail Planning and Management
Model
Competitive Environment:
Behavior of Consumers, Competition and Channel Members
Management Profit
Retail Marketing Operations Administration of High
Strategy Management Resources Performance
Retailing
Target Market(s) Buying & Handling People
Location(s) Retail Merchandise Information
Mix Pricing
Merchandise Advertising &
Pricing Promotion
Advertising & Customer Services
Promotion & Selling
Customer Service Facilities
& Selling
Store Layout &
Design

Social and Legal Environment:

Socioeconomic Environment, State of Technology, Legal System, Ethical Behavior
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Summary
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Develop a mission statement for the firm
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill
mission
 Summary
• Success of Retail Store is not just a process of
having the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill
mission
 Identify Strengths, Weaknesses, Opportunities and
Threats
 Summary
• Success of Retail Store is not just a process of having
the 4 P’s. It requires strategic planning.
• Strategic Planning Includes
 Develop a mission statement for the firm
 Define specific goals and objectives of the firm
 Develop basic strategies to reach objectives and fulfill mission
 Identify Strengths, Weaknesses, Opportunities and Threats

SPM model helps calculate how a retail firm
brings profitability to its stockholders