The definition of a retail strategy enables other areas within the organizations to determine their strategies. Primary among these are:
1) Store Location
The primary areas that is influenced by the business strategy to be adopted by the retailer, is the decision on store location,. For years, experts have argued that the three most important aspects of any retail business were Location, Depending on the business model that is to be adopted by a retailer, the store location to be chosen. A strategy for tapping the up market consumer requires that the store be located in a place where such a consumer will shop. Similarly for building a model based in discounting may not really require prime locations in which case a lager place may be what is needed.
The second factor that is influenced by the strategy is the type of merchandise to be stocked. If the retailer chooses to dominate the market place based on product selection he needs to ensure that he has the largest and widest selection of a product category imaginable or merchandise that is so unique, people will seek out the store. The merchandising strategy has to draw from the overall business strategy to understand and determine the types of products that will be needed in the store and the kind of prices that will have to be determined. The merchandising strategy has to match the selling strategy. Very often, the merchandising strategy is based more on long term vendor relationships or competitive distribution issues than on well thought out business strategy that is written down and communicated throughout the organization. Merchandize strategies should be based on consumer research. Selling strategies should also be based on research, but not merchandise based research that indicates to the retailer what consumers want consumers to buy, but relationship based research which indicates to the retailer how they want to be treated when they buy.
Related to the concept of merchandising is the concept of pricing which again is influenced by the business model that the retailer has chosen to adopt. Very often, being the price leader is till a valid strategy. However, it is not necessary to be low price leader. The other and of the pricing spectrum also presents an opportunity. Lastly, the complete marketing strategy adopted by the retailer is a reflection of the overall strategy of the overall business strategy. It is a combination of the advertising, promotions communication, sales staff, the level of customer service and the complete shopping experience offered to the end consumer.
The process of strategy formulation in retail is the same as that for any other industry. It starts with retailer defining or stating the mission for the organization. The mission is at the core of the existence of the retailer. The other aspects of the strategy may change over a period of time or may vary for different markets. After defining the mission of the organization, an analysis of the internal strengths and weakness and external threats and opportunities is undertaken to help management decide on the best way to carry out the organization’s mission. The options that can be pursued are then examined and the objectives set.
Next, the management identifies the major strategic alternatives it could pursue. Markets in which the retail organization chooses to complete are then determined. Once this is determined the objectives to be achieved and resources are obtained and allocated to help achieve the objectives. The strategy must then be implemented. Finally results must be measured and evaluated to ensure that the strategy is working and any changes necessary must be affected.