Retail Strategy

The term strategy has become commonplace in corporate parlance today. There is a product strategy, a marketing strategy, branding strategy – the list endless. Success in any business is a combination of well thought out plans, processes and their implementation.

Competitive strategy is about being different. The essence of strategy is choosing to perform activities differently than rivals do. As the retailer expands his operations from a single store to a multiple number, the need for good planning and analysis increases increased competition, changing consumer expectations and shifting economies increase the risk of failure. To be successful, a retailer needs to plan his moves very carefully. The retail marketplace has fast become the domain of those who know how to use core strengths to dominate. Strategy thus has become important to the retailer than ever before.

We examine the process of strategy formulation from the perspective of the retailer. The steps involved in creating this strategic plan are discussed. International expansion as a growth strategy is explored. The value chain is then discussed and finally, the practice of ethical retailing is studied.

What is strategy?

The word strategy comes from ancient Greece. A strategos was an army general and his post was a startegia. Over time, staretgia made to man the craft of generalship instead of just the job. The word spread to French as strategic and then to English as strategy in 1810. The term had to do with stratagems by which a general sought to deceive an enemy, the plans he made for a campaign and with the way he moved and disposed his forces in war. In today’s world the war has world from the battlefield to the consumer marketplace where companies face similar wars. If one replaces the concept of troops in the military with the concept of resources within the organizations the concept of strategy begins to take shape. In business, as in the military strategy bridges the gap between policy and tactics. Together, strategy and tactics bridge the gap between ends and means.

In this article, we examine a few definitions of the terms strategy. The primary definition examined is that by Carl von Clausewitz, which defines strategy as the art of the employment of battles as a means to gain the object of war. This definition views strategy as a policy and believes that battle is the only means of achieving strategic ends.

If the concept of military and war is taken away from the definitions, it becomes easy to relate the concept of strategy to the business world. That brings us to one of the people considered by many to be the father of strategic planning in the business world: George Steiner, a professor of management and one of the founders of The California Management Review, is generally considered a key figure in the origins and development of strategic planning. Strategy entered the management literature as a way of referring to what one did to counter a competitor’s actual or predicted moves. Steiner also points out in his notes that there is very little agreement as to the meaning of strategy in the business world. Some of the definitions in use which Steiner pointed to include the following:

1) Strategy is that which top management does that is of great importance to the organizations.
2) Strategy refers to basic directional decisions, that is, to purposes and missions.
3) Strategy consists of the important actions necessary to realize these directions.
4) Strategy answers the question: What the organization will be doing?
5) Strategy answers the questions: What are the ends we seek and how should we achieve them.

The rise and subsequent fall of strategic planning brings us to the definition of strategy put forth by Henry Mintzberg. According to Henry Mintzberg, people use strategy in several different ways, the most common being these four:

1) Strategy is a plan a how means of getting from here to there.
2) Strategy is a pattern in actions over time; for example a company that regularly markets very expensive products is using a high end strategy.
3) Strategy is position; that is, it reflects decisions to offer products or services in particular markets.
4) Strategy is perspective, that is, vision and direction.