Chapter 3: 3: Strategic Planning in Retailing

Chapter ObjectivesChapter Objectives

• To show the value of strategic planning for all types of retailers

• To explain the steps in strategic planning for retailers: situation analysis, objectives, identification of consumers, overall strategy, specific activities, control, and feedback

• To examine the individual controllable and uncontrollable elements of a retail strategy, and to present strategic planning as a series of integrated steps

• To demonstrate how a strategic plan can be prepared

• To show the value of strategic planning for all types of retailers

• To explain the steps in strategic planning for retailers: situation analysis, objectives, identification of consumers, overall strategy, specific activities, control, and feedback

• To examine the individual controllable and uncontrollable elements of a retail strategy, and to present strategic planning as a series of integrated steps

• To demonstrate how a strategic plan can be prepared

Ownership and Management Alternatives

Ownership and Management Alternatives

A sole proprietorship is an unincorporated retail firm owned by one person

A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest

A corporation is a retail firm that is formally incorporated under state law; it is a legal entity apart from its officers

A sole proprietorship is an unincorporated retail firm owned by one person

A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest

A corporation is a retail firm that is formally incorporated under state law; it is a legal entity apart from its officers

SBA Small Business Planner

Figure 3-4: Checklist for Purchasing an Existing Retail Business

Figure 3-4: Checklist for Purchasing an Existing Retail Business

Figure 3-3: Checklist to Consider When Starting a New Business

Figure 3-3: Checklist to Consider When Starting a New Business

Start-Up CapitalStart-Up Capital

Sources and Uses of FundsSources and Uses of Funds

How Start-Up Capital Works

Cash Flow Planning• Inventory

• Fixed Assets (buy/lease, “lease-hold” improvements)

• Accounts Receivable, Insurance, etc.

• Expected Negative Cash Flow

• Contingency Funds

Strategic Implications of Target Market Techniques

Strategic Implications of Target Market Techniques

Figure 3-7: Selected Retail

Positioning Strategies

Figure 3-7: Selected Retail

Positioning Strategies

• Retailer’s location• Goods and service mix• Promotion efforts• Price orientation• Strategy

Retail StrategyRetail Strategy

The overall plan or framework of action that guides a retailer

• One year in duration• Outlines mission, goals, consumer market, overall and specific activities, and control mechanisms

The overall plan or framework of action that guides a retailer

• One year in duration• Outlines mission, goals, consumer market, overall and specific activities, and control mechanisms

Figure 3-1: Elements of a Retail Strategy

Sample Business Plans

More Sample Business Plans

SBA Business Plan Advice

See Also Tables 3-5, 3-6

Organizational

Mission

Organizational

Mission

Figure 3-2: The Focused Organizational Mission of Frisch’s Restaurants

Figure 3-2: The Focused Organizational Mission of Frisch’s Restaurants

Retailer’s commitment to a type of businessand to a distinctive role in the marketplace

Table 3-4: Legal Environment and Retailing

Table 3-4: Legal Environment and Retailing

Figure 3-9: Developing an Overall Retail Strategy

Figure 3-9: Developing an Overall Retail Strategy

Uncontrollable Variables:•Consumers

•Competition•Technology•Economic conditions

•Seasonality•Legal restrictions

Controllable Variables:

•Store location•Managing business

•Merchandise management and pricing

•Communicating with customer

RetailStrategy

Store Location zoning laws blue laws environmental laws direct selling laws local ordinances leases and mortgages

Managing the Business licensing provisions personnel laws antitrust laws franchise agreements business taxes recycling laws

Merchandise Management and Pricing trademarks merchandise restrictions product liability laws and lemon laws sales taxes unit-pricing laws collusion laws sale prices price discrimination laws

Communicating with the Customer truth-in-advertising and selling laws truth-in-credit laws telemarketing laws bait-and-switch laws inventory laws labeling laws cooling-off laws

Additional Concerns for Global Retailing

Additional Concerns for Global Retailing

Figure A3-1: Factors to Consider When Engaging in Global Retailing

Figure A3-1: Factors to Consider When Engaging in Global Retailing

In addition to the strategic planning process:• assess your international potential

• get expert advice and counseling

• select your countries• develop, implement, and review an international retailing strategy

Factors Affecting the Success of a Global Retailing StrategyFactors Affecting the Success of a Global Retailing Strategy

• Timing• A balanced international program• A growing middle class• Matching concept to market• Solo or partnering• Store location and facilities• Product selection

Chapter 3 Discussion Questions: 1, 3, 6, 9