MKTG327:

Lesson 2: Retail Strategic Planning

What Is Retail Strategy?

As described in your textbook, "The term strategy is used frequently in retailing. For example, retailers talk about merchandise strategy, promotion strategy, location strategy, and private brand strategy" (p. 121). 

Think about some of the successful and unsuccessful retail strategies you have witnessed. Consider JCPenney's transition to JCP or Kentucky Fried Chicken's transition to KFC.

A retail strategy identifies the following things:

• The retailer's target market: This refers to "the market segment(s) toward which the retailer plans to focus its resources and retail mix" (Levy, Weitz, & Grewal, 2019, p. 121).
• The retailer's format: This refers to the retail mix the retailer plans to use to satisfy target market needs. Similar to a marketing mix, a retail mix outlines the way a retailer intends to appeal to its target market and meet its financial objectives. A retail mix includes
  • merchandise management,
  • price,
  • location,
  • customer service,
  • store layout and design, and
  • the communication mix.
• The retailer's sustainable competitive advantage: This concept refers to the basis upon which the retailer plans to build its niche among a market of competitors. True competitive advantages are sustainable over several years (or even decades). While other competitive differences are not sustainable because they are easily replicated by competitors almost immediately (e.g., lower prices can be easily matched by a competitor). By establishing a competitive advantage, retailers are giving customers a reason to choose their retail establishment over other options that are available to them in the marketplace. Think about a the "miracle mile" in your hometown with lots of restaurant choices. Why does a customer choose to frequent one restaurant over another? Is it price? Customer service? Food quality? Ambience in the restaurant? These features are competitive differences and some of them may become sustainable advantages to create long-term customer loyalty

Strategic planning and corporate social responsibility are often woven together to create a manangement focus in which companies take the ethical aspects of their business operations into consideration. These social concerns become a part of the firm's business strategies.  As a result, the firm is more conscious of its role in society and the communities in which they operate. In the retailing industry, corporate social responsibility addresses how retailers incorporate social and environmental concerns into their strategies and try to have a more responsible role in the marketplace and the world.

Examples of retailers acting as good corporate citizens are everywhere. Later in this lesson, we discuss Dunkin's move to be more sustainable by changing the beverage containers that hold their coffee. Sustainability is a major concern of corporate social responsibility. Another concern of corporate social responsibility was all over the news during spring 2020 with coverage of the racial injustice and racial inequality of the day. The news media aired the racial tragedies of George Floyd, Rayshard Brooks, and others. Consumer began to demand a response from not only their local authorities, but also from their local retailers. Can retailers play a significant role in healing these divides on race?  Read the statement by Matthew Shay, President and CEO of the National Retail Federation (NRF) from June 16, 2020.

Do some digging.  Find examples of what retailers are doing. Describe and critique.

See the example below about some of Walmart's efforts.

"Walmart said it’s made the decision to discontinue placing multiracial hair care and beauty products in locked cases, a practice that was in place in about a dozen of its 4,700 U.S. stores.  As a retailer serving millions of customers every day from diverse backgrounds, Walmart doesn’t tolerate discrimination of any kind. Like other retailers, the cases were to deter shoplifting of electronics, automotive, cosmetics and other personal care items,” the company said. “We’re sensitive to the issue and understand the concerns raised by our customers and members of the community" (Edelson 2020, para. 4-5).

References

Edelson, S. (2020, June 16). Retailers address racial inequality as consumers demand action. Forbes. Retrieved from https://www.forbes.com/sites/sharonedelson/2020/06/16/racial-equality-prompts-retail-soul-searching/#1a0c2e7c35e4