Chapter 3 Strategic Planning in Retailing RETAIL MANAGEMENT

Retail Strategy ¯The overall plan or framework of action that guides a retailer It

Retail Strategy A retail strategy has several attractive features. It provides a thorough analysis

Figure 3 -1: Elements of a Retail Strategy Retail Mgt. 11 e (c) 2010

Organizational Mission Retailer’s commitment to a type of business and to a distinctive role

Figure 3 -2: The Focused Organizational Mission of Frisch’s Restaurants Retail Mgt. 11 e

Ownership and Management Alternatives ¯Sole proprietorship is an unincorporated retail firm owned by one

Figure 3 -3: Checklist to Consider When Starting a New Business Retail Mgt. 11

Figure 3 -4: Checklist for Purchasing an Existing Retail Business Retail Mgt. 11 e

Figure 3 -5 a: Selected Kinds of Retail Goods and Service Establishments Durable Goods

Figure 3 -5 b: Selected Kinds of Retail Goods and Service Establishments (Personal): Laundry

Figure 3 -5 c: Selected Kinds of Retail Goods and Service Establishments (Repair): Automobile

Image and Positioning An image represents how a given retailer is perceived by consumers

Positioning Approaches ¯Mass merchandising is a positioning approach whereby retailers offer a discount or

Figure 3 -7: Selected Retail Positioning Strategies Retail Mgt. 11 e (c) 2010 Pearson

Target Market Selection § Three techniques ¯Mass marketing ¯Concentrated marketing ¯Differentiated marketing Retail Mgt.

Strategic Implications of Target Market Techniques (Table 3 -3) ¯ ¯ ¯ Retailer’s location

Figure 3 -9: Developing an Overall Retail Strategy Controllable Variables: • Store location •

Table 3 -4 a: Legal Environment and Retailing ØStore Location ØManaging the Business ¯

Table 3 -4 b: Legal Environment and Retailing ØMerchandise Management and Pricing ¯ trademarks

Table 3 -4 c: Legal Environment and Retailing ØCommunicating with the Customer ¯ truth-in-advertising

Additional Concerns for Global Retailing ¯In addition to the strategic planning process: ¯ assess

Factors Affecting the Success of a Global Retailing Strategy ¯Timing ¯A balanced international program

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Retail Strategy ¯The overall plan or framework of action that guides a retailer It should be at least one year long and contain a series of sequential steps. Without a defined and well-integrated strategy, a firm may be unable to cope with the marketplace. Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -22

Retail Strategy A retail strategy has several attractive features. It provides a thorough analysis of the requirements for doing business for different types of retailers. It outlines retailer goals. It enables a firm to differentiate itself from competitors. The legal, economic, and competitive environment is studied. It coordinates a firm’s total efforts. It helps to anticipate and avoid crises. . Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -33

Ownership and Management Alternatives ¯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 Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -77

Figure 3 -5 a: Selected Kinds of Retail Goods and Service Establishments Durable Goods Stores: Automotive group Furniture and appliances group Lumber, building, and hardware group Jewelry stores Nondurable Goods Stores: Apparel group Food group General merchandise group Gasoline service stations Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -10 10

Figure 3 -5 b: Selected Kinds of Retail Goods and Service Establishments (Personal): Laundry and dry cleaning Beauty/barber shops Funeral services Health-care services Service Establishments (Amusement): Movie theaters Bowling alleys Dance halls Golf courses Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -11 11

Figure 3 -5 c: Selected Kinds of Retail Goods and Service Establishments (Repair): Automobile repair Car washes Consumer electronics repair Appliance repairs Service Establishments (Hotel): Hotels Motels Trailer parks Camps Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -12 12

Positioning Approaches ¯Mass merchandising is a positioning approach whereby retailers offer a discount or valueoriented image, a wide or deep merchandise selection, and large store facilities. ¯Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market. Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -14 14

Strategic Implications of Target Market Techniques (Table 3 -3) ¯ ¯ ¯ Retailer’s location Goods and service mix Promotion efforts Price orientation Strategy Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -17 17

Figure 3 -9: Developing an Overall Retail Strategy Controllable Variables: • Store location • Managing business • Merchandise management and pricing • Communicating with customer Retail Strategy Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Uncontrollable Variables: • Consumers • Competition • Technology • Economic conditions • Seasonality • Legal restrictions 3 -18 18

Table 3 -4 a: Legal Environment and Retailing ØStore Location ØManaging the Business ¯ zoning laws ¯ licensing provisions ¯ blue laws ¯ personnel laws ¯ environmental ¯ antitrust laws ¯ direct selling laws ¯ local ordinances ¯ leases and mortgages Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall ¯ franchise agreements ¯ business taxes ¯ recycling laws 3 -19 19

Table 3 -4 b: Legal Environment and Retailing ØMerchandise Management and Pricing ¯ trademarks ¯ merchandise restrictions ¯ product liability laws and lemon laws ¯ sales taxes ¯ unit-pricing laws ¯ collusion laws ¯ sale prices ¯ price discrimination laws Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -20 20

Table 3 -4 c: Legal Environment and Retailing ØCommunicating 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 Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -21 21

Additional Concerns for 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 Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -22 22

Factors 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 Retail Mgt. 11 e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 3 -23 23