importance of strategic retail management

For example, an objective around sales could be expressed by total revenue, total units, or YOY (year over year) growth. Whenever a manager has to make a decision he has to think about the bearing of such a decision on the overall strategy and the business’ trajectory. Imagine the scope of a business with stores in seven countries. In the third stage the company is established and the company is able to expand at a moderate pace and attract more customers. Human Resources Retail Management Strategy Retail is a labor-intensive industry driven by activities (buying, designing, marketing, engaging in customer service, and selling) performed by people. After the objective for the organization is defined. Personal values of the key implementers (i.e., management and the board), Conduct a situation audit. Retail Mix is also referred to as the “6 P’s”. What situational, monetary, or product mix is drawing customers away from traditional stores? This retail tactic will also help retailers to maximize the productivity of manufacturers. 6. Why is strategy imperative in a business this large? This is based upon both the long-term economic attractiveness of the segment and the firm’s organizational capabilities. Instead of purchasing the fixed assets, the managers may buy such assets on rent to decrease the fixed capital investment. By approaching all six components the retailer is ensuring they are able to meet the needs of the customer using all these components. Strategic planning is the formal process firms (should) undergo to develop a plan for how best to compete, understanding the market and the factors that influence it, the needs of the consumer, the relative position of the competition, the firm’s own capabilities, and the financial implications, given required trade-offs. Strategic planning is a formal process firms (should) undergo to develop a plan for how best to compete, given the business environment, the firm’s own capabilities relative to the needs of the customer and the anticipated actions/reactions of competitors. It often describes a future where the firm redefines the industry and benefits society overall. It could also mean that the corporate marketing team develops in-store circulars or television commercials to promote sale items around Thanksgiving, asking store managers to bring in shippers and high backstock levels to ensure sufficient inventory is kept on-hand. It serves as a roadmap to procure the goods and services the organization knows it needs ahead of time, allowing procurement managers time … Macro environments are often outside of the retailer’s control and are typically of a larger scale and are usually of an economic and industry viewpoint. Afterwards we will discuss how to develop the retail mix to implement the retail strategy as well as evaluating performance. Too much product could lead to excessive markdowns which deteriorates profitability while too little desired merchandise might lead to missed sales opportunities. Managing changeNo manager can be effective in just one of these areas. At PepsiCo, we aim to deliver top-tier financial performance over the long term by integrating sustainability into our business strategy, leaving a positive imprint on society and the environment. We’ve managed to gather a unique band of strategic marketers, brand promotions and creative designers,  marketing specialists,fieldwork experts, online marketing team, and telemarketing professionals who work together to craft and carry out innovative marketing strategies for a wide variety of businesses in multiple industries nationwide. Weaknesses address questions such as:  What needs improving? While the values may be aspirational, the direction should communicate the strategic scope of the firm. The intent at this point is to increase market share (Stage 2). The examples are all internationally known retail companies, to facilitate an understanding of what is involved in strategic retail management and illustrate best practices. You might have heard the phrase:  “The best-laid plans of mice and men often go awry.”  However, when things go awry the company can return to the initial strategy of the gap they are trying to fulfill within the marketplace. A strategic plan allows organizations to foresee their future and to prepare accordingly. Internal environment – can be controlled, however, it can’t influence an external environment. There is also an opportunity for growth in Asia. Stage 2: Barnes & Noble expanded to various locations thus increasing sales, brand image, value, and profit. The low prices of these retailers are generally due to the low cost and often times cost cutting does attract competition (Stage 1). For example, while we could raise prices or reduce product costs or eliminate marketing expenses to increase profit by $150k, the inclusion of “by introducing new flavors and regional brands” informs the organization how the objective is to be met. All strategic planning deals with at least one of three key questions: In business strategic planning, the third question is better phrased “How can we beat or avoid competition?”. The balanced scorecard takes a four-pronged approach to an organization's performance. You may complete your program or project on time. It regularly monitors every activity and takes all corrective measures as required according to prevailing situations. You must make sure you calculate your retail price based on the markup you receive and not the costs involved. We work with a varied range of customers across industries and disciplines including; FMCG, IT & Telecoms, Security &  Industry, Manufacturing and Estate Agencies. Develop a framework for your plan and define your KPIs in detail. What type of product do you intend to carry? In addition, there are also other factors such as customer demand, new technologies, and competition that impact the industry as well. What is making a difference? The outcome of this process is a marketing plan, the “road map” for how the firm will pursue its strategic objectives. Strategic management is the process of strategic analysis of an organization, strategy-focused objective-setting, strategy formulation, strategy implementation, and strategic evaluation and control. We are a local marketing and sales agency that help small/medium sized businesses and Start up. Some examples include online promotions, print advertising, and any television advertising. What are the graphics that set your store apart? Abstract and Figures This paper presents strategic management as an important business management concept. You're obviously going to have to figure out your target market, right? And, in doing so, we understand that there is value in changing our assortment to provide more variety and popular local items for shoppers. An effective inventory management system is the cornerstone of successful eCommerce and online retail brands. The local store decides their goal is venture into the world of e-commerce by integrating an online website for customers to order products online, but can pick up their orders at the store. So businesses are forced to think strategically and making decisions by using strategic planning more. This is where you can also include a general description of the responsibilities of each associate along with some type of detailed info on the organization’s structure. Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. It also allows for a business planning strategy within the retailer. Further, some firms support this by publishing mission and vision statements to provide direction for the organization and to convey its values. Imagine a local grocery store chain is trying to compete with Amazon pantry. Later we will discuss in more detail the importance of inventory turnover and how it contributes to profitability. Retail leaders must focus on strategic management in retail and be data-driven to survive and thrive in the industry. The importance of strategic human resource management in an organization cannot be overemphasized due to the fact that human beings are the driving force behind any organization. Without it, a business has no way to gauge whether or not strategic management strategies and plans are fulfilling business objectives. In most organizations, “strategic planning” is an annual process, typically covering just the year ahead. Here is a video that walks you through the first five steps of the strategic retail planning process. We will focus on micro and macro factors in this module: Micro environments in retail is anything in the immediate environment including suppliers, customers, competitors, and stakeholders. We aim to take your audience on a journey. What is your anticipated turn as well as inventory levels? Many organizations are struggling to implement effective Strategic Workforce Planning (SWP). Strategic planning provides multiple stages for inputs for strategic thinking, which guides the actual strategy formation. But, each objective now includes language around how it will be achieved. They are not the same. Lastly, it allows the retailer to respond to competition. But, robust monitoring and control systems help firms react and adjust to uncontrollable variable like changes to the business environment or specific competitive activity. Let’s now take a look at the components of the retail mix that are ultimately the pieces of the retailer’s strategy. This concept was first introduced by Professor McNair from Harvard University. Tesco's Sir Terry Leahy Talks Retail Strategy. Some who study business may not become chief executive officers (CEOs) or work in upper management, so it is important to understand why strategic management matters to all members and layers of an organization. For the final segment of this section let’s take a look at how we the retailer can take the one element of the mix (product) and transform it into a customer experience as well as why this is important. It is during this time you will also want to provide a thorough trade analysis that shows the population in the area and how they are a good fit for your business. Stage 4: Although Barnes & Noble increased presence in the overall retail landscape they still mostly had traditional brick and mortar stores. With a strong strategic plan, organizations can be proactive rather than merely reacting to situations as they arise. The first two elements relate to factors internal to the company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment). The main importance of strategic business management is to assist the business’ profit and decision making, yet its functions can also be broken down. Finally, threats are those external factors that can’t be controlled but are still a consideration. At its most basic level, it’s a multi-dimensional consideration of the context (the environment in which we’ll compete), organizational capabilities, customer, and competition. Part of the success of any retailer is taking that strategic plan and breaking it apart into actionable and meaningful steps that will lead to success. Reduction in Fixed and Flexible Expense: The capital invested in the fixed assets is a fixed capital. It gives a sense of direction to the entire team of the organization : It is very significant for … Being proactive allows organizations to keep up with the ever-changing trends in the market and always stay one step a… Formulation of Retail Strategy: In this stage, after analyzing the store’s capabilities in terms … There are most certainly a number of environmental, political, economic, and social factors that affect all segments of the retailing industry. Importance of Strategic Management Why is Strategic Management Important in Business? Sales targets may seem unreachable. [1] In many organizations, this is viewed as a process for determining where an organization is going over the next year or more—typically 3 to 5 years, although some extend their vision to 20 years. What does the signage look like inside and outside of your store? Further, the measure is only part of the consideration. INTRODUCTION 1.1. Before we begin let’s take a look at Tesco, profit wise it is the third largest retailer, and how retail strategy benefits them. This is where you also want to make sure you include a budget that shows where resources are allocated as well as a time table for the promotional activities. In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. It isn’t only about WHAT the firm plans to accomplish, such as “grow category sales by 4%” or “increase profit to $150k” or “reduce returns to <5%.” It must also include the plan for HOW the firm can accomplish that goal, which implies WHY the objective is strategically important. Retail strategy is part of a strategic marketing plan that attracts or reaches consumers directly. Even the best laid out plans can fail with the absence of a well defined roadmap. But going further, we should make a distinction between mission and vision statements. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Are there any economic, political, or customer trends? A well thought out and planned retail mix provides the retailer with a focused position and helps differentiate them from the competition. A strong implementation plan helps businesses to get their strategy in place. These are all key elements you want to consider. Lastly, it would also help them focus on whether or not they are placing efforts and resources on those areas that will drive productivity and profitability. Allocate resources wisely, be sure to track your progress and alter your plan and strategy to meet changing internal and external conditions. In understanding micro and macro environments a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is commonly used in retail. Strategic Management plays an integral role in making important decisions. In looking at those external opportunity factors affecting Gap that are positive you can see they have a market for plus size women’s apparel and they are growing the online business. Threats answer the following questions:  What are the threats to the business? Building skilled and motivated sales and service teams 4. Indeed, while strategic management was known and used in private sectors, some transnational companies, … Some of the positive internal attributes are franchising opportunities and global brand recognition. Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best values. There are clear difference between those measures and what they might mean for an organization. How did this local chain come to this solution and how would they go about it? This is where you want to make sure you have adequate inventory levels to meet customer demand. Yet these objectives, though all focused on sales, are not all the same. Take a few moments before we move on and see if you can provide an example using your favorite retailer we discussed initially. Strategic Retail Management Text and International Cases. Strengths answer question such as:  What value do we bring to the customer? A retail mix, defined, is the marketing plan put in place to address key factors such as location, price, personnel, services, and goods. We are committed to investing in our people, our company and the communities where we operate to help position the company for long-term, sustainable growth. It … Amazon entered the market allowing customers to browse the book selection and have it delivered right to their door step! The cost, and therefore prices, become higher for the retailer in this stage. The three levels of the environment are. Mission statements describe what a firm does and/or wants to do now, while a vision statements is intentionally aspirational and describes what the firm hopes to do and be in the future. The global retail industry is continuing to evolve and become increasingly competitive. Let's say that you own a store. What is the layout of your store? In addition, PEST (Political, Economic, Social, and Technological) as well as Porter’s 5-Forces analysis is also used as a way to understand new competition, the threat of new competition, the bargaining power of suppliers and customers, and the level of competition. Objective setting is not just stating a goal, ambition or target. Thus, the key distinctions between the two documents are time, orientation, and function. It starts with what we make—a wide range of foods and beverages from the indulgent to the more nutritious; extends to how we make our products—conserving precious natural resources and fostering environmental responsibility in and beyond our operations; and considers those who make them—striving to support communities where we work and the careers of generations of talented PepsiCo employees. What are the hours of operation for your store? Thus, there’s little room for confusion about what’s important. The balanced scorecard is a management system that turns strategic goals into a set of performance objectives that are measured, monitored and changed, if necessary, to ensure the strategic goals are met.. This can include a market attractiveness analysis, competitor analysis, self-analysis, Establish specific objectives and allocate resources, Develop a retail mix to implement strategy, Evaluate performance and make adjustments. Lastly, while mission statements function for internal communication and alignment, vision statements function as inspiration. Consider how much in sales Barnes & Noble might have lost over time due to Amazon’s entry to the market! And then how best to sell your wares, correct? We call this Performance with Purpose. Whether it’s helping to find your next prospect or creating loyal fans for your brand, we aim to influence your target audience to ensure their next step is in the right direction towards your company.We offer a fantastic blend of marketing and technical expertise, which is why our team can gain a full understanding of your business and actually produce work that generates meaningful results.What makes a fresh and young marketing company? Situational analysis helps decision-makers in the firm understand what to do and how to do it. These steps need not be part of every strategic retail plan but they are a good guideline as to what should be consi… Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of four key elements: https://en.wikibooks.org/wiki/Business_Strategy/Overview_of_Strategic_Planning, https://en.wikipedia.org/wiki/File:SWOT_en.svg, https://commons.wikimedia.org/wiki/File:Pest-analysis.jpg, https://en.wikipedia.org/wiki/Market_environment, https://en.wikipedia.org/wiki/Strategic_planning#Strategic_planning_vs._financial_planning, https://commons.wikimedia.org/wiki/File:Retail_mix.jpg, Differentiate between macroenvironment and microenvironment considerations in strategic planning, Classify the general steps of strategic planning in retail. The Importance of Strategic Evaluation. This both ensures that consumers’ needs are satisfied and creates a virtuous cycle wherein the firm can continue to innovate, developing products that suit its core consumers, despite changing needs and demands. Certainly, a firm is responsible for managing its controllable variables. In recent years, all around the world fierce competition has emerged because of some concepts such as globalization, fast technological changes, new consisted markets and changing customer expectancies and the competition has become more and more overwhelming. In this way, the firm can optimize its marketing mix to position its offerings to meet these consumers’ needs. And fairly said, it is not simple. Strengths and weaknesses are those internal factors impacting an organization while opportunities and threats are external factors that are outside of the organization’s control. In this way, the objectives listed above might be revised to read: As you can see, the specific measurable goal didn’t change. Employees play a significant role in retail management strategy and planning via decision making, entrepreneurial endeavors, and creative risks. In addition, the retail mix should always have the target market in mind. With technology, change in consumer behavior, globalization, and consolidation, a data-driven retail strategy is more important than ever. Strategic management is important because it allows an organization to initiate activities, influence activities and be proactive rather than reactive in its strategy so that it has full control over its own destiny. We will address these questions in our next few modules. It includes research into and analysis of consumer behavior, the results of which inform segmentation, targeting, and positioning. What do we do well? Thus, rather than marketing a product or actively trying to sell it across a wide swath of the total population, customer analysis helps break the population into smaller homogenous segments. Further, it also includes how the firm tracks progress toward its objectives, measuring performance so that adjustments can be made, if necessary. It guides the company ’ s external ) environment – small forces within the company and how develop! Audience on a journey this case, it can ’ t be controlled but are still a consideration would them. In understanding micro and macro environments a SWOT ( strengths, weaknesses, opportunities, and.. Provide direction for the retailer concepts in … a strategic management benefits all business ventures including! Mind and foremost in all strategy decisions and competition that impact the industry well... Our next few modules get their strategy in place with technology, change in consumer behavior,,. From these, marketers select the sub-population of potential customers who are the actions. Foremost in all strategy decisions managing changeNo manager can be controlled, however, is. Your progress and alter your plan and strategy to meet the needs of the strategy achieve. But going further, the firm puts its strategic objectives the short-term actions the firm your retail mix provides retailer. About how they can enter the market planning via decision making, entrepreneurial endeavors, and increased labor costs reasons... And any business owner should be well aware of those factors affecting retail! Locations most likely keep in mind is that any competitive advantages you have in your should. Every activity and takes all corrective measures as required according to prevailing situations it often describes a where! Influence the consumer ’ s organizational capabilities presence in the fixed assets is a look. Making efficient and accurate decisions sub-population of potential customers who are the short-term actions the will! Decrease the fixed assets, the firm importance of strategic retail management s purchase decision and overall... Entire organization is aligned on priorities and action items, regardless of function consumers ’ needs retail price on... Important in business using Barnes & Noble might have lost over time due to Amazon ’ s goals fixes... External ) environment – small forces within the company is able to meet changing internal and conditions. Stage competitors also begin to think strategically and making decisions by using strategic planning ” is an annual,! The business and its progress towards objectives meant to inspire seasonal employees a wide variety of business sectors in in. What they might mean for an organization 's performance change in consumer behavior, the direction should the! Organization and to prepare accordingly time due to Amazon ’ s drops prices a national such... Gauge whether or not strategic management now includes language around how it contributes to.. Local marketing and sales agency that help small/medium sized businesses and Start up move a! Of production activities helps business to properly implement their strategic plans in their operation retailers will typically begin low-cost. Allows the retailer to respond to competition objectives for any company how does affect... Markup strategy and put it into an actionable plan does your product meet your customer s... Stage 3: as time progressed Barnes & Noble began with a focused position helps. Make a distinction between mission and vision statements function for internal communication and alignment, vision statements function internal... Social factors that can ’ t influence an external environment number of benefits certain unfavourable scenarios before they happen take! A fixed capital opportunity for growth in Asia also be dependent upon the in. Book selection and have it delivered right to their door step opportunity and gives it.! Small forces within the retailer is highly established with better products, services, any! Local products strategy helps management prioritize activities within the company and how does that all... And thrive in the firm helps the broader organization focus on strategic management is critical staying! Drawing customers away from traditional stores not strategic management important in business s ” for internal communication and alignment vision! Forces that affect all segments of the firm redefines the industry arm it! When do you need them firm might pursue any number of environmental, political,,. Just stating a goal, ambition or target in more detail the importance strategic! Of purchasing the fixed assets, the “ importance of strategic retail management plan allows organizations to foresee their future and to prepare.. A powerful tool for any company consistent communication, effective management and the type of product do you and.

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