Retail strategy is a clear and definite plan that the retailer outlines to tap the market and build

a long-term relationship with the consumers.

The definition of a retail strategy enables other areas within the organisation to determine their strategies. Primary of these are: Store location
Merchandising Pricing Marketing

Steps involved in developing a retail strategy

Establish Mission

Analysis Situation

Identify options F E E D B A C K

Set objectives Obtain & allocate resources Develop implementation plan Monitor progress And control

Define the mission or the purpose of the organisation:

A mission statement describes what the retailer wishes to accomplish in the markets in which it chooses to compete. The mission statement highlights the following elements: The products and services that will be offered The customers who will be served The geographic areas that the organisation choose to operate in. The manner in which the firm intends to compete in its chosen markets Examples: Wal-Mart:to give ordinary folk the chance to buy the same thing as rich people. Shoppers stop:to be a global retailer in India, and to maintain the No.1 position in the Indian market in the department store category.

Identifying Options/Strategic Alternatives Identify the alternatives available with the retailer to tap the market. Market penetration Market development Retail format development Diversification

existing
E X I S T I N G

new
Market dev/expansion New market segments with existing formats New customer base Retail Formats

Market penetration Increase basket size Increase customers Increase purchase frequency

N E W

Retail format dev. New format to existing customers

Diversification New retail formats directed at new market segments

Market segments

Market penetration
This strategy is adopted by a firm when it seeks to achieve growth with the existing products, in the market segments that it operates. This strategy may focus either on:
Increasing the number of customer Increasing the quantity purchased by the customers i:e the basket, or on increasing the frequency of purchase. Keeping existing stores open for longer hours Cross selling effort:
The practice of selling or suggesting related or complimentary products to a prospect or customer.

Market dev/expansion
A retailer is said to follow a strategy of market development if he reaches new market segments or completely changes the customer base. Thus, this strategy involves:
Tapping new geographical markets or Introducing products to the existing range that appeal to a wider audience. e.g. introducing a pharmacy in a super market.

Retail format development

Developing a retail format is introducing a new retail format to the customers Fast food retailers like McDonalds and subway, who offer limited menus in smaller locations many a time inside large department stores

Diversification
The retailer grows by diversifying into new businesses by developing new products for new markets. Tobacco giant ITC, who has entered the business of apparel retail through its Wills Lifestyle.

Translation of mission statement into operational terms. Give direction and set standards for the measurement of performance. Good objectives are measurable ,are specific to time, and indicate the priorities of the Organisation. Two important areas for retailers are market performance financial performance Ex: Sales volume targets Market share targets Retail expansion targets Profitability to be achieved Liquidity Return on investments Etc.

Set objectives

Obtain and allocate resources needed to compete

Resource involve: Human Financial Physical facilities Recruiting, selecting, training, motivating personnel

Develop the strategic plan

Retailer determines the strategy by which he will achieve the objectives set forth. Choose the target market Determine the retail mix. Positioning strategy. In order to be successful in segmenting the market, the retailer must ensure that it is: Measurable: is the segment measurable and identifiable? Accessible: will focusing marketing efforts on a particular market segment have a positive impact on eliciting the desired responses?

Economically viable
Stable: are the consumer characteristics stable indicators of the market potential

Implement the Strategy, Evaluate and Control

Effective positioning Every aspect of the store must be focused on target market

Displays must appeal the target market

Advertising must talk to it Etc.