1. Define the Business Mission
How do we do it? (secret sauce)
What do we want to accomplish?
2. Conduct a Situation Audit (SWOT Analysis)
Market Attractiveness Analysis
Market Growth
Growing markets offer better margins & fluid customers(haven't yet developed loyalty to any brand).
Sales Cyclicality / Seasonality
Competitor Analysis
Barriers to Entry
Availability of Great Locations
Bargaining Power of Vendors
Unattractive when merch is controlled by an oligopoly that dictates prices & terms.
Degree of Competitive Rivalry
High rivalry usually occurs where there is...
Large number of similar-sized competitors
Lack of perceived differences btwn competitors
- Price wars- Expensive ads- Low profits
Macro-Environmental Analysis
Economic
Value-oriented retailers are less elastic than premium retailers.
Retailers w/ lower levels of service are less impacted by low unemployment levels (i.e., fewer employees to pay higher wages to)
Regulatory / Legal
Taxes & gov't red tape can make entering a market less appealing, if not impossible.
Self-Analysis (Strengths & Weaknesses)
Management Capabilities
Experience/Ability of top management
Depth of management - capabilities of middle managment.
Management's commitment to the firm
Financial Resources
Cash flow from existing business.
Ability to raise debt or equity financing.
Operations
Quality of operating systems.
Distribution capabilities.
Management information systems.
Inventory control systems.
Merchandise
Knowledge/skill of buyers
Capabilities in developing private brands.
Advertising & promotion capabilities
Store Management
Quality of sales associates
Commitment of sales associates to firm.
3. Identify Strategic Opportunities
Retail Format Development
May involve redefining the mission statement.
4. Evaluate Strategic Alternatives
Competitive Position
High if the strategic opportunity would use theretailer's strengths & area of competitive advantage.
Greatest investments should be made in opportunitieswhere the retailer has a strong competitive position.
5. Establish Specific Objectives and Allocate Resources
The retailer's overall objective is included in the mission statement.
Specific objectives are goals which progresstoward the overall objective can be measured.
Three components:
The performance sought (including a numericalindex against which progress may be measured)
A time frame within which the goal is to be achieved.
The level of investment needed to achieve the objective.
6. Develop a Retail Mix to Implement Strategy
7. Evaluate Performance and Make Adjustments
If the retailer fails to meet its objectives, re-analysis is needed.
Starts with re-viewing the implementation programs
May indicate the strategy (or mission statement) needs to be reconsidered.
Would require a new planning process, including a new situation audit.
Actual planning processes have interactions among the steps.
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