Retail strategy

From CEOpedia | Management online

Retail strategy is an integrated marketing plan for a product or a service to reach and influence the consumers. The retail strategy covers everything from what retail channels a product or service will be available into what should be the price or sales incentive to be given and how to place the product in the shop. It is a marketing plan which shows how a business provides to offer the company's products or services to consumers and influence their acquisitions. Typical retail strategy is able to show how to place and display a company's products. The retail strategy also shows how to encourage a potential customer at locations with products as price discounts, placement, retailer incentives, and signs. A retail strategy is an overall plan guiding a retail firm. It influences the firm's business activities and its response to market forces, such as competition and the economy[1][2][3].

Controllable and uncontrollable variables of the strategy

Many factors affect the sale of the products. Factors which influenced on selling products or services in a retail outlet are: price and discounts of the product, motivation structure followed, plans of promotions or placement of the product. The retail strategy is made up of controllable variables and uncontrollable variables[4][5].

Controllable variables:

  • Store location - competitors, transportation access, population density, the type of neighborhood, nearness to suppliers, traffics, and store composition are considered in picking a location
  • Managing a business - including the retail organization and human resource management (duties, policies, resources, authority, responsibility, and rewards), and operations management (tasks that elate customer, employee, and management goals);
  • Merchandise management - the general quality of the goods and services offering;
  • Pricing and communicating with customers - including the physical attributes, or atmosphere, of a store; the first physical element seen by customers: layouts and displays, floor colors, lighting, scents, music

Uncontrollable variables:

  • Consumers - target market and forms a strategy consistent with a client; trends and desires; a company cannot sell goods or services that are beyond the price range of customers or that are not wanted
  • Competition - target market and merchandising focus, to ensure that it help a competitive edge
  • Technology - computer systems are available for inventory control and checkout operations
  • Economic conditions - unemployment, interest rates, inflation, tax levels, and the annual gross domestic product (GDP)
  • Legal restrictions - retailers that operate in more than one state are obtained to federal laws
  • Seasonality - they can diversify offerings to carry a goods or service mix with items that are popular, in different seasons

Considered the controllable and uncontrollable variables the retail strategy should be effective.

Creating the retail strategy

The steps in planning and enacting a retail strategy are interdependent. Regardless of the size and type of company, every enterprise should follow some rules in creating a retail strategy plan[6][7][8]:

  1. Delineate the type of business in terms of the goods or service category and the company's specific orientation
  2. Set long-run and short-run objectives for sales and profit or market share
  3. Regulate the customer market to target on the ground of its characteristics and demand
  4. Arrange a comprehensive, long-run plan that gives general direction to the firm
  5. Implement a unified strategy that incorporates such factors as store location, product assortment, pricing, and advertising and displays to achieve objectives.
  6. Routinely evaluate performance and correct weaknesses or problems when observed

The orientation of the retail strategy

The customer orientation, coordinated effort, value-oriented, goal orientation lead to creating the retailing concept and finally to create retail strategy[9].

  • Customer orientation - the retailer determines the attributes and needs of its customers and aim to satisfy these needs
  • Coordinated effort - the retailer unified all plans and activities to enlarge the capability
  • Value-oriented - the retailer offers good value to customers, whether it be upscale or discount; the prices applicable for the level of products and customer service
  • Goal orientation - the retailer sets goals and then uses a strategy to complete them

Advantages of retail strategy

The process of strategic retail planning has a lot of advantages[10]:

  • provides an analysis of the requirements for doing business for different types of retailers
  • outlines retailer targets and ambitions
  • The company is able to determine how to separate itself from competitors and develop an offering that appeals to a group of customers
  • The legal, economic, and competitive environment is studied
  • A company's total efforts are coordinated

Examples of Retail strategy

  • Location Strategy: When launching a new business, the location of the store is a key factor in determining its success. Choosing a store location in a high-traffic area, such as a shopping center, can help ensure more customers will come to the store. Additionally, retailers need to consider the competition in the area and how their store will stand out.
  • Pricing Strategy: One of the most important aspects of a retail strategy is setting the right price for a product. This should be done in a way that maximizes profits while also remaining competitive in the market. Pricing should also be flexible to account for seasonal changes in demand and changes in the competitive landscape.
  • Merchandising Strategy: Merchandising is an important part of a retail strategy and involves the presentation of products in the store. This includes the placement of products in the store, the way products are displayed, and the use of promotional materials such as signs and displays.
  • Promotion Strategy: Promotions are an effective way to attract customers and increase sales. Retailers can use a variety of promotional tactics such as discounts, coupons, and advertising campaigns to drive foot traffic to their store.
  • Customer Service Strategy: Customer service is an important part of any retail strategy and is essential for building customer loyalty and creating a positive shopping experience. Retailers should focus on providing excellent customer service, such as providing knowledgeable staff, quick response to customer inquiries, and helpful advice.

Limitations of Retail strategy

  • Retail strategies can be limited by the availability of resources, such as budget, staff, and materials.
  • Retail strategies may not be well-suited for certain markets or demographic groups, as different consumers may have different needs and preferences.
  • Retail strategies can be limited by competitive pressures, such as competitors offering similar products or services at lower prices.
  • Retail strategies may not be well-suited to changing economic conditions, as consumer spending patterns can vary significantly in different economic climates.
  • Retail strategies may not be able to keep up with new technological advancements, such as the introduction of online shopping, which can significantly alter customer buying habits.
  • Retail strategies may not be able to respond quickly enough to sudden changes in the market, such as changes to consumer tastes or preferences.

Other approaches related to Retail strategy

  • Location Strategy: This approach involves selecting stores, outlets and other retail channels based on consumer demand, competition, and other factors.
  • Pricing Strategy: This approach focuses on the setting of prices to ensure the best possible margin while still providing the perception of value to the customer.
  • Promotional Strategy: This approach involves implementing strategies to drive customer traffic, such as discounts, coupons, loyalty programs, and other incentives.
  • Product Assortment Strategy: This approach involves selecting a range of products to offer in stores and other retail channels.
  • Merchandising Strategy: This approach involves the presentation of products in retail channels to maximize customer appeal.

In summary, Retail strategy consists of various approaches, such as Location Strategy, Pricing Strategy, Promotional Strategy, Product Assortment Strategy and Merchandising Strategy, which are used to reach and influence the consumer. These approaches are designed to ensure the best possible margin and customer appeal, while still providing the perception of value to the customer.

Footnotes

  1. ↑ Cuthbertson Ch.,(2004), p.29
  2. ↑ Berkhout C., (2015), p.9
  3. ↑ RTU, (2019), p.11
  4. ↑ RTU, (2019), p.64-69
  5. ↑ Zentes J., (2007), p.142
  6. ↑ Cuthbertson Ch.,(2004), p.5
  7. ↑ Berkhout C., (2015), p.14
  8. ↑ RTU, (2019), p.11
  9. ↑ RTU, (2019), p.13-14
  10. ↑ RTU, (2019), p.52


Retail strategy — recommended articles
Strategic position — Marketing mix — Goals of marketing — Consumer orientation — Pricing strategy — Innovative marketing — Range of products — Selective distribution — Marketing

References

Author: Natalia Zajko

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