Page 83 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes Intangible Resources
(a) What are the present capabilities of the company’s management?
(b) How effective is the R&D cell?
(c) How good is the competitor’s intelligence system?

(d) How effective are the store’s loyalty programmes?
(e) What is the capability of a retail store manager?
(f) Are customers loyal towards the company’s products?
3. Retail Strategy: It is a clear and definite plan outlined by the retailer to tap the market. A
plan to build a long-term relationship with the consumers. Process of strategy formulation
in retail is the same as that for any other industry. It starts with the retailer defining or
stating the mission for the organization.
Mission
The mission is at the core of the existence of the retailer. Other aspects of the strategy may
change over a period of time or vary for different markets.
Functions of Retail Strategy
(a) Retail strategy define mission or purpose: A Mission statement is a long term purpose of
the organization. It describes what the retailer wishes to accomplish in the markets
in which he chooses to operate. Retailers mission statement would normally
highlight the following:
(i) The products and services that will be offered.
(ii) The customers who will be served.

(iii) The geographic areas that the organization chooses to operate in the manner
in which the firm intends to compete.
(b) Retail strategy conduct a situation analysis: Once the retail mission is defined, the retail
organization needs to look inwards; Understand what its strengths and weaknesses
are; Look outwards to analyze its opportunities and threats; Situation analysis helps
the retailer determine his position and his strengths and weaknesses; Helps formulate
a clear picture of the advantages and opportunities which can be exploited; The
weaknesses need to be worked upon. This forms the basis or the core element of any
strategy.

(c) Retail strategy identify options/strategic alternatives: After determining the strengths
and weaknesses vis-à-vis one environment retailer needs to consider various
alternatives available to tap a particular market. Igor Ansoff presented a matrix
which looked at growth opportunities. He focused on firm’s present and potential
products in the existing and new markets. Ansoff’s matrix also helps to understand
the options available to a retailer.
The alternatives available to a retailer are: Market Penetration, Market Development,
Retail Format Development and Diversification.
(i) Market penetration strategy may focus either on: Increasing the number of
customers; Increasing the quantity purchased by customers (basket size);
Increasing the frequency of purchase; Increasing the number of customers can
be achieved by adding new stores and by modifying the product mix. Another
approach is to encourage salespeople to cross sell. Market penetration strategy

78 LOVELY PROFESSIONAL UNIVERSITY