Strategic planning in retailing is a complex process with many intertwined factors, both controllable and uncontrollable. Previously, retailers were focused on in-store marketing by trying to influence consumers’ buying decisions as they shopped – typically through flashy product displays, special promotions at the end of the aisle, and attention-grabbing packaging on the shelf.
Today, many consumers approach their shopping differently, and retailers need to plan and adapt their strategies accordingly. Consumers not only go online to shop; they also go online to begin the shopping process and sometimes just to hear what others have to say. The dominance of the online channel in some retail categories such as consumer electronics, travel, and entertainment has damaged, and in some cases obliterated, the business models of established retailers and led to the popularity of pure online firms. In other product categories, where the online channel has been less disruptive, the ongoing digitisation due to mobile and social-media technologies is forcing additional planning and investment in retailers’ omnichannel strategies as consumers use channels and devices (laptops, smartphones, and tablets) interchangeably and seamlessly during their search and purchase process. Retailers have no control over this usage. Developing long-term relationships with customers or brand intimacy is the key. Brand intimacy describes an essential relationship between a person and a brand (this can include retailers). Brand intimacy transcends usage, purchase, and loyalty. According to brand agency MBLM, the Brand Intimacy Agency (www.mblm.com), intimate brands create an enhanced business performance.
So, which brands succeed at developing intimate connections? That depends on gender. In the USA, women connect with a broad and more mature staple of brands that involve more aspects of their daily lives. Among female consumers, Apple is the most intimate brand followed by Disney, Amazon, Whole Foods, and Toyota, according to MBLM. The top five brands for men are Harley-Davidson, Apple, Toyota, Nintendo, and Lexus. Rina Plapler, an MLBM partner, insists that how people form bonds with brands transcends gender. “It’s important to see the types of brands that women tend to connect with and how age and income influence brand choices. It helps retailers to better promote goods and services and form deep brand attachments.”
Age and income play a large role in determining brand preferences. Among female Millennials ages 18 – 34, the top five brands are Apple, Amazon, Sephora, Target, and Whole Foods; 18- to 34-year-old men select Nintendo, Samsung, PlayStation, Xbox, and YouTube as their top five. Women earning $34 000 to $49 000 are most connected, with L’Oréal, Revlon, and Dove in their top five. Among those with incomes of $50 000 to $75 000, leaders include Apple, Starbucks, Olay, Coca-Cola, and Netflix. And for those earning $75 000 to $150 000, Apple, Sephora, Amazon, Target, and Clinique top the list.
Overview
A retail strategy is the overall plan or framework of action that guides a retailer. Ideally, it will cover at least 1 year and outline the retailer’s mission, goals, consumer market, overall and specific activities, and control mechanisms. Without a defined and well-integrated strategy, a firm may be unable to cope with the marketplace. The U.S. Small Business Administration recommends that every business, irrespective of whether it intends to seek financial support from lenders or investors, should have a comprehensive and thoughtful business plan. It serves as a roadmap for the next 3 – 5 years and helps thoughtful and objective decision-making on many key business elements, including:
- What you will need to do to get started and what resources (time, money, and so forth) you will need to expend.
- What it will take for your business to make a profit and how long that will take?
- What information potential customers, vendors, and investors will need to know for you to effectively market your business. Many other factors critical to business success depend on your plan: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives. The U.S. Small Business Association provides a step-by-step interactive guide Business Plan Tool to help entrepreneurs get started on their planning process.
The process of strategic retail planning has several attractive features:
- It provides a thorough analysis of the requirements for doing business with different types of retailers.
- It outlines retailer goals.
- A firm determines how to differentiate itself from competitors and develop an offering that appeals to a group of customers.
- The legal, economic, and competitive environment is studied.
- A firm’s total efforts are coordinated.
- Crises are anticipated and often minimised or avoided.
Strategic planning can be done by the owner of a firm, professional management, or a combination of the two. Even among family businesses, the majority of high-growth companies have strategic plans.
The steps in planning and enacting a retail strategy are interdependent; a firm often starts with a general plan that gets more specific as options and payoffs become clearer. In this sub-section, we cover each step in developing a retail strategy, as shown in the following Figure.
Elements of a retail strategy.