CHAPTER 2

• Strategic Planning

  Involves adapting the resources of the firm to the opportunities and threats of an everchanging retail environment.
• Mission Statement

  ● Is a description of the fundamental nature, rationale, and direction of the enterprise. It provides the employees and customer with an understanding of where future growth for the enterprise will come from.

  ● A mission statement can be short or long as it provides the retail enterprise with its future.
• Statement of Goals and Objectives

  It should be derived from and give precision and direction to the retailer’s mission statement.

  It should identify the performance results that the retailers intend to bring about through the execution of its major strategies
• Market Performance Objectives

  establish the amount of dominance the retailer seeks in the marketplace.
• Sales volume

  is the number of units sold within a reporting period.
• Market Share

  retailer’s total sales divided by total market sales or the proportion of total sales in a particular geographic or product market that the retailer has been able to capture
• Profitability Objectives

  Deal directly with the monetary return a retailer’s desires from its business.
• Strategic Profit Model

  a tool used to assess a firm's profitability
• Net profit margin

  is the ratio of net profit (after taxes) to net sales.it shows how much profit a retailer makes on each dollar of sales after all expenses and taxes have been met.
• Assets turnover

  is computed by taking the retailer’s annual net sales and dividing by total assets. This ratio tells the retail analyst and retail management how productively the retailer’s assets are being used.
• Return on assets (ROA)

  annual net profit divided by total assets, depicts the net profit return the retailer achieved on all assets were financed by creditors or by the firm’s owners.
• Financial leverage

  Total assets divided by net worth or owner’s equity. This ratio shows the extent to which a retailer is using debt in its total capital structure. The low end of this ratio is 1.0 times and depicts a situation in which the retailer is using no debt in its capital structure. As the ratio moves beyond 1.0, the retailer is using a heavier mix of debt versus owner’s equity
• Return on net worth (RONW)

  net profit divided by net worth or owner’s equity. Is usually used to measure performance from the owner’s or shareholders perspective.
• Productivity Objectives

  state how much output the retailer’s desires for each unit of resource input
• Space productivity

  is defined as net sales divided by the total square feet of retail floor space.
• Labor productivity

  defined as net sales divided by the number of full-time-equivalent employees.
• Merchandise productivity

  is net sales divided by the average dollar investment in inventory.
• Societal Objectives

  highlight the retailer’s concern with broader issues in out society
• Employment Objectives

  which were especially significant during the recent recession, relate to the provision of employment opportunities for the members of the retailer’s community.
• Payment of taxes

  retailer’s role in helping finance societal needs that the government deems appropriate, from welfare programs o national parks.
• Consumer choice

  a retailer may have an objective of competing in a way that gives consumers a real alternative.
• Equity

  reflects the retailer’s desire to treat the consumer and suppliers fairly and not endanger their living condition.
• Being a benefactor

  the retailer may desire to underwrite certain community activities.
• Personal Objectives

  can relate to the personal goals of any employees, managers, or owners of the retail establishment.
• Self-gratification

  focuses on the needs and desires of the owners, managers, or employees of the enterprise and the pursuit of what they truly want out of life.
• Status and respect

  \all people strive for status and respect. In stating this objective, one recognizes that the owners, managers, and employees need status and respect in their community or within their circle of friends.
• Power and authority

  objectives based on power and authority reflect the need of managers and other employees to be in positions of influence.
• Strategies

  Is a carefully designed plan for achieving the retailer’s goal and objective. It is a course of action that when executed will produced the desired levels of performance.
• Get shoppers into your store

  often refers to as a retailer’s traffic strategy.
• Convert these shoppers into customers by having them purchase

  often referred to as a ‘’retailers’ conversion” or “closure” strategy, this means having the right merchandise and services, using the right layout and display, having the right price, and having the right type and quality of employees
• Do this (get shoppers in your store and convert them into customer) at the lowest operating cost possible that is consistent with the level of service that your customers expect

  this often referred to as a “retailer’s cost management” strategy.
• How does a retailer develop a strategy to differentiate itself?

  this starts with an analysis of the retailer’s strengths, weaknesses as well as the threats and opportunities that exist in the environment.
• Strengths

  What major competitive advantage(s) do we have?

  What are we good at?

  What do customers perceive as our strong points?
• Weaknesses

  What major competitive advantage(s) do competitors have over us?

  What are competitors better at than we are?

  What are the major internal weaknesses?
• Opportunities

  What favorable environmental trends may benefit our firm?

  What is the competition doing in our market?

  What areas of business that are closely related to ours are undeveloped?
• Threats

  What unfortunate environmental trends may hurt our future performance?

  What technology is on the horizon that may soon have an impact on our firm?
• The specific target market

  is the group or groups of customers that the retailer is seeking to serve.
• A location

  whether a traditional store in a geographic space, a person’s home in relation to a print catalog or television shopping, or a virtual store in cyber space – should be consistent with the needs and wants of the desired target market.
• The specific retail mix

  a retailer intends to use to appeal to its target market and thereby meet its financial objectives is the combination of merchandise, price, advertising and promotions, location, customer service and selling, and store layout and design that the retailer uses to satisfy the target market
• The retailers value proposition

  is a clear statement of the tangible and intangible results a customer receives from using the retailer’s products or services. It is the difference between the benefits offered by one retailer versus those of the competition. A good value propositions answers the question of “Why should I buy this product or service from this retailer?”