Strategies in Retail

A business firm cannot travel in an unplanned way. To encounter the business challenges in a highly competitive environment and to find out a sustainable growth road map Retailers need to realize the importance of strategic planning. Strategic planning can be viewed as a stream of decisions and activities which lead to Effective business strategies which help the organization to fulfill its objectives.
Retail landscape is changing rapidly and in this changing economic environment Retailers need to find out the right strategy, which will help them to cope up with the environment and empowers them to take right decisions for the future. Adopting correct strategy will help the Retailers to optimize their resources and also it will give an edge over its competitors. Margin and Turnover are the two important Industry and the Retail operations can be classified into four groups/quadrants.

i) High Margin and High Turnover eg. a convenience food store
ii) Low Margin and High Turnover eg. a discount store
iii) Low Margin Low Turnover eg. a dying business
iv) High Margin Low Turnover eg. an up market specialty store.

Retail business needs to formulate the suitable strategy after considering its strengths and weaknesses. Hence SWOT analysis will be an effective tool in determining the correct strategy for the particular category of retail business.

Some of the strengths and weaknesses of the Retail industry are outlined below.

Strengths :
These are the areas on which success stories have been built and therefore retailers need to capitalize on that.
i) Supremacy of Discount store
ii) Advancement in the area of Information Technology
iii) New sales channels like E-commerce and direct marketing
iv) Availability of consumer credit. Explosion of financial institutions

Weakness:
i) Slow performance of Chain Stores
ii) Advent of Category Killers

Opportunities:
i) Brick and click: A combination of traditional store retailing along with non store retailing like Internet and E-commerce.
ii) Premium Priced Store: Premium priced stores are targeting the high income group customers and earning healthy profits . Tiffany and Co is an example of such premium priced store.
iii) Entertainment in Retail: Entertainment Industry and Retail Industry are working hand in hand to attract larger section of consumers. Sony Corporation has opened some huge entertainment complexes in USA and so many retail outlets are also housed in the same building. These two outlets competate each other and hence both are doing are doing well.

Threats:
i) Demise of Independent small stores
ii) Demographic Changes