Retail Strategic Planning

 Retail strategy is the overall plan or framework of action that guides

a retailer

 Process of Strategic planning;

• Provides a thorough analysis of the requirements for different types
of retailing
• It outline the goal of retailer
• Helps the firm to differentiate from the competitors and develop an
offering that appeals to group of customer
• Helps in understanding the legal, economic and competitive
environment
• Helps in coordinating the efforts of the retailer
• Assists in anticipating the crisis and to avoid it
 Steps in Retail Strategic Planning

Control

Specific activities

Overall strategy

Identification of consumers

Objectives

Situation Analysis
 Retail Strategic Planning
 Situation Analysis
• Organizational Mission
• Ownership and management control
• Goods / Service Category

 Objectives
• Sales
• Profits
• Satisfaction
• Image
 Retail Strategic Planning
 Identification of Consumers
• Mass Marketing
• Concentrated Marketing
• Differentiated Marketing

 Overall Strategy
• Controllable
• Uncontrollable

 Specific Activities
• Daily and Short term operations
• Responses to environment
 Retail Strategic Planning
 Control
• Evaluation
• Adjustment

Opportunities and Threats in Global Retailing

 Opportunities
o Higher growth prospects due to population, high disposable income
o Saturation in domestic market
o Retailer may be able to offer goods/ service / technology not
available in foreign market
o Competition may be less
o Tax or investment advantage in foreign market
o Favourable legal or political environment
 Retail Strategic Planning
Threats

o Social and cultural differences

o Management style may not be adaptable
o Restriction by foreign government on some operations
o Income distribution among consumers may be un even in foreign
markets
o Poor infrastructure and communication network
o Institutional formats may vary among countries
 Retail Operations Management
 Operations Blueprint
• It lists all operation functions to be performed, their characteristics
and timings
• If a retailer is large or diversified, he may use multiple operation
blue prints
• When a retailer modifies its store formats or operation procedure, it
must also adjust the blue print

 Store Format, Size and Space Allocation

 Personnel Allocation

 Store maintenance, Energy Management and Renovation

 Retail Operations Management
 Inventory Management

 Store Security

 Insurance

 Credit Management

 Computerization

 Outsourcing

 Crisis Management
 Retail Financial Strategy
 Net Sales : Revenues received by the retailer during a given period
after deducting customer returns, markdown and employee discounts

 Cost of Goods sold: Amount the retailer pay to acquire the

merchandize sold during a given period

 Gross Profit margin: Net Sales – Cost of goods sold

 Operating Expense: Cost of running a retails business

 Net Profit before taxes: The profits earned after all costs have been
deducted
 Retail Financial Strategy
 Asset Management
• Assets are any item a retailer owns with a monetary value.
• Liabilities are financial obligations a retailer incurs in operating a
business
• Net Profit Margin = Net Profit / Net Sales

• Asset Turnover = Net Sales / Total assets

• Return on Assets = Net Profit / Net Sales x Net Sales / Total Assets
= Net Profit margin x Asset turnover

•Financial Leverage = Total Assets / Net Worth

 Retail Financial Strategy
 Budgeting
• It outlines a planned expenditures for a given time based on expected
performance. Budget is prepared;
• Expenditures are related to performance. It enhances productivity
• Resources are allocated and spending of each department is
coordinated
• Cost standards are set and firm prepares for the future
• Expenditure are monitored during budget cycle

Preliminary budgeting decisions:

• Who shall prepare
• What is the time frame, How often are budgets prepared
• What cost categories are used
• How flexible are budgets
 Financial Merchandize Management
Merchandize forecasting and Budgeting

Designating Control units

Sales forecasting

Inventory level planning

Reduction Planning

Planning Purchases

Planning profit margins

 Retail Financial Strategy
 Unit Control System
• It deals with the quantity of merchandize in units rather than
currency

• Information contained includes;

 The identification of fast and slow moving items
 Focus on opportunity and problem areas in terms of price, colour,
style, size, etc.
 The computation of the quantity of goods on hand
 Indication of inventory age and determination of time to reorder
 Level of inventory and sales for each item in every store branch
 Pricing in Retailing
 Retailer must price goods and services so as to achieve the
profitability for the firm and satisfies the customers

 Pricing strategy must be consistent with the retailers overall image,

sales and profits plans

 Factors affecting the Retail Pricing

• Consumers
• Government
• Manufacturers
• Current and potential competitors
 Retail Objective and Pricing
 Overall Objective and pricing
• Market Penetration
• Market Skimming

 Demand oriented pricing

 Cost oriented pricing
 Competition oriented pricing
 One price and flexible pricing
 Leader pricing
 Multiple unit pricing

 Price Adjustments