Sample Strategic Plan – A High Fashion Ladies’ Clothing Shop

Sally’s is a small, independently owned, high-fashion ladies’ clothing shop in a suburban strip mall. It is a full-service retailer for fashion-forward shoppers. It carries sportswear from popular designers, has a personal shopper for good customers, and has an on-premises tailor. Sally’s is updating its strategic plan to secure more funding for an expected expansion.

  1. SITUATION ANALYSIS

    • Current organisational mission: A high-fashion clothing retailer selling high-quality and designer-label clothing and accessories in an attractive full-service store environment.
    • Current ownership and management alternatives: Sole proprietor, independent tore.
    • Current goods or service category: Ladies’ coats, jackets, blouses, and suits from major designers, as well as a full line of fashion accessories (such as scarves, belts, and hats).

 

  1. SWOT ANALYSIS

    • Strengths
      • Current
        • Local customer base.
        • Excellent reputation for high-fashion clothing and accessories within the community.
        • Little competition within a target market concerned with high fashion.
        • Acceptance by a target market is more concerned with fashion, quality, and customer service than with price.
        • Unlike consumers who favour classic clothing, Sally’s fashion-forward customers spend a considerable amount of money on clothing and accessories per year.
        • Sally’s is a highly regarded personal shopper (who assembles clothing based on customer preferences, visits customers, and arranges for a tailor to visit customers).
      • Long term
        • Fashion-forward image with the store’s target market
        • Exclusive relationships with some well-known and emerging designers
        • Low-rent location in comparison to a regional shopping centre
        • Excellent supplier relationships
        • Loyal employees
        • Excellent relationships within the community
    • Weaknesses
      • Current
        • Difficulty in recruiting appropriate part-time personnel for peak seasonal periods.
        • Small store space limits selection. Too often, the tailor does major alterations.
        • Long delivery times for certain French and Italian designers.
        • Lack of a computer-based information system that would better enable it to access key information concerning inventory, sales, customer preferences, and purchase histories.
        • Limited expertise in social media.
      • Long term
        • Limited bargaining power with vendors due to small orders. This affects prices paid, as well as access to ‘hot-selling’ clothing.
        • Suburban strip mall location reduces its trading area. There is little tourist trade.
        • Over-reliance on the owner-manager, and several key employees.
        • No long-term management succession plan.
    • Opportunities
      • Current
        • Hire another experienced tailor to create a custom-made clothing department.
        • Hire an assistant to better coordinate trunk and fashion shows. This would solidify Sally’s reputation among fashion-forward shoppers and in the community.
        • Take over an empty adjacent store to increase the size by 50%.
        • Enhance the Website. This would enable it to appeal to a larger trading area, promote more events (such as fashion shows), and provide links to designers.
      • Long-term
        • A larger store increases the ability to expand the number of designers, as well as the product lines carried. This would improve Sally-s bargaining power with suppliers.
        • Custom-made clothing department to appeal to customers who dislike ‘ready-to-wear apparel’ and to customers with highly individualised tastes.
        • Expanded market due to enhanced Website. 
    • Threats
      • Current
        • Rumours that Bloomingdale’s, a fashion-based department store, may soon locate a new store within 15 kilometres of Sally’s. This could affect relationships with suppliers as well as customers. Bloomingdale offers one-stop shopping and has a flexible return policy for unaltered merchandise with its labels intact.
        • Local recession’s impact on revenues.
      • Long-term
        • Many customers are in their 50s and 60s. Some are close to retirement; others intend to spend more time in Florida and Arizona during the winter. The retailer needs to attract and retain younger shoppers.

 

  1. OBJECTIVES

    • Sales: Achieve sales volume of $4 million per year
    • Profit:
      1. Achieve net profit before tax of $300 000.
      2. Increase inventory turnover from 4 times per year to 6 times per year.
      3. Increase gross margin return on inventory (GMROI) by 50% through more effective inventory management.
    • Positioning:
      1. Reposition the store to appeal to younger shoppers without losing current clientele.
      2. Increase acceptance by younger shoppers.
      3. Establish more of a Web presence.
    • Satisfaction of publics:
        • Maintain store loyalty among current customers.
        • Increase relationships with younger designers selling less costly, younger apparel.
        • Maintain excellent relationships with employees.

 

      1. IDENTIFICATION OF CONSUMERS

        • Choice of target market approach
          • Mass marketing: This is not a mass-market retailer.
          • Concentrated marketing: This is Sally’s current target market strategy.
          • Differentiated marketing: Sally’s might consider attracting multiple target markets: its current fashion-forward customers seeking designer apparel and accessories in a full-service environment; younger, professional customers who desire more trendy clothing; and fashion-forward customers who desire custom-made clothing.

 

      1. OVERALL STRATEGY

        • Controllable variables
          • Good or service strategy: Merchandise is fashion-forward from established and emerging designers. Fashion accessories include such items as scarves, belts, and hats. The retailer has no plans to sell ladies’ shoes or handbags. Most of the designer merchandise is selectively distributed. A planned custom-made clothing department would enable Sally’s to attract hard-to-fit and hard-to-please shoppers. Custom-made clothing shoppers would have a wide variety of swatches and fashion books from which to choose.
          • Location strategy: Sally’s currently occupies a single location in a suburban strip mall. This site has comparatively low rent, is within 15 km of 80% of the store’s customers, has adequate parking, and has good visibility from the road.
          • Pricing strategy: Sally’s charges list price for all goods. Included in the price are full-tailoring services, as well as a personal shopper for major customers. Twice a year, the store has a 50% off sale on seasonal goods. This is followed by 70% off sales to clear the store of remaining off-season inventory.
          • Promotion strategy: Sally’s sales personnel are well-trained and highly motivated. They know key customers by name and by their style, colour, and designer preferences. Sally’s plan is to upgrade its regular fashion and trunk shows where new styles are exhibited to current customers and potential customers. Sally’s also maintains a customer database. The best customers are called when suitable merchandise arrives and are allowed to preview it. Some other customers are contacted by mail. The improved Website will feature the latest styles, the Web address of major designers, colour availability, and more. Sally’s has a display listing in the Yellow Pages.
        • Uncontrollable variables
          • Consumer environment: business is subject to the uncertainty of the acceptance of new fashions by the target market. Although Sally’s wants to attract two additional segments (custom-made clothing buyers and younger buyers), there is no assurance that it will be successful with these target markets. The store needs to be careful that in seeking these new segments, it does not alienate its current shoppers.
          • Competitive environment: The rumoured opening of a fashion-oriented department store in the area would significantly affect sales.
          • Legal environment: Sally’s is careful in fully complying with all laws. Unlike some competitors, it does not eliminate sales taxes for cash purchases or ship empty boxes out-of-state to avoid sales tax.
          • Economic environment: Local recessions can reduce sales substantially.
          • Technological environment: Sally’s is in the process of investigating a new retail information system to track purchases, inventories, credit card transactions, and more.

 

      1. SPECIFIC ACTIVITIES

        • Daily and short-term operations: Sally’s matches competitors’ prices, promptly corrects alteration issues, has longer store hours in busy periods and offers exclusive merchandise.
        • Responses to the environment: Sally’s acts appropriately with regard to trends in the economy, competitor actions, and so forth.

 

    1. CONTROL

      • Evaluation: A new retail information system will better enable Sally’s to ascertain fashion trends, adjust inventories to reduce mark-downs, and contact customers with specific offerings. Sales by colour, size, style and designer will be more carefully monitored.
      • Adjustment: The retail information system will enable Sally’s store to reduce excess inventories, maximise sales opportunities, and better target individual customers
Strategic Planning In Retail