Page 84 - DMGT550_RETAIL_MANAGEMENT

Unit 5: Retailing Strategy

is the least risky one, since it controls many of the firm’s resources and Notes
capabilities. However, market penetration has limits. Once the market
approaches saturation, a new strategy needs to be pursued if the firm is to
continue growth.
(ii) In Market expansion/development: When a retailer is said to reach out to new
market segments or completely changes his customer base. This strategy
involves: Tapping new geographical markets; Introducing new products to
the existing range that appeal to a wider audience; Expansion by adding new
retail stores to existing network is an example of geographical expansion;
Introducing a pharmacy in a supermarket (e.g. the medicine Shoppe at the
Haiko Supermarket in Mumbai) is an example of a retailer introducing new
products, appealing to a different audience.
Another example is McDonald’s who introduced ice creams for ` 7. This not
only created add on sales, but also brought in customers who had the perception
that McDonald’s is an expensive fast food restaurant.
(iii) Retail format development and diversification: When a retailer is said to
introduce new retail format to customers. Example: Fast food retailers like
McDonald’s and Subway offer limited menus inside large department stores.
Another example is bookstore chain Crosswords, opening smaller format
stores by the name Crossword Corner at Shopper’s Stop Strategy may be
appropriate if the retailer’s strengths are related to specific customers, rather
than to specific products. In this situation, retailer can leverage its strengths
by developing a new product targeted to his existing customers.
(d) Retail strategy set objectives: Translation of mission statement into operational terms
Indicate Results to be achieved. Give direction to and set standards for the
measurement of performance. Management sets both long term and short-term
objectives. One or two year time frames for achieving specific targets are short-term
objectives. Long term objectives are less specific and reflect the strategic dimension
of the firm. Two important focus areas of retailers are Market Performance and
Financial Performance. Objectives are set keeping these focus areas in mind Sales
volume targets. Market hare targets Profitability targets Liquidity targets Returns
on investment targets.
(e) Retail strategy obtain and allocate resources needed to compete Resources needed by a retailer:
First, Human Resource (HR) plan must be consistent with overall strategy of the
organization. HR management focuses on issues such as recruiting, selecting,
training, compensating, and motivating personnel. These activities must be managed
effectively and efficiently. Second, Financial Resources takes care of the monetary
aspects of business shop rent, salaries and payments for merchandise.
(f) Retail strategy develop the strategic plan: At this stage, strategy is determined through
which retailer will achieve objectives. The retailer determines and defines his target
market. The retailer finalizes the retail mix that will serve the audience. Target
Market – that segment of consumer market that the retail organization decides to
serve. No definite process of deciding and selecting the target market. Most retailers
look at the entire market in terms of both size and consumer segments to which it
might appeal. From these segments, he identifies smaller number of segments that
appear promising. These become possible targets. Variables like growth potential,
investment needed to compete, the strength of competition, etc. are evaluated. This
enables the retailer to arrive at the best alternative that is most compatible with the
organizations resources and skills.

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