1.

Define the retail strategy planning process and the steps involved
Ans.

Retail strategic planning is a detailed process organizations go through in order to have the most successful operations possible. Steps in this strategic planning process include situational analysis, set objectives, and the identification of target markets. Once the initial set is complete, a second group of steps includes the use of specific tactics to meet objectives, controlled processes, and feedback. In some cases, the latter set of steps may not apply early on. Owners and executives are responsible for guiding the company through each step and ensuring success in the retail organization. Step 1: Define the Business Mission The mission statement should define the general nature of the target segments and retail formats that the firm will consider. For example, the mission. statement of an office supply category specialist, "Sense tl1e customer, build value for shareholders, and create opportunities for associates," is too broad. It doe~ not provide a sense of strategic direction. Step 2: Conduct a Situation Audit After developing a mission statement and setting objectives, the next step in the strategic planning process is to do a situation audit. A situation audit is an analysis of the opportunities a threats in the retail environment and the strengths and weaknesses of the re business relative to its competitors. Market Factors Some critical factors related to consumers and their buying patterns are market size and growth, sales cyclicality, and seasonality. Mark size, typically measured in retail sales dollars, is important because it indicates a retailer's opportunity for generating revenues to cover its investment. Large markets are attractive to large retail firms. But they are also attractive to small entrepreneurs because they offer more opportunities to focus a market segment. Growing markets are more attractive than mature or declining markets. For example, retail markets for specialty stores are growing faster than those for departmental stores. Typically, margins and prices are higher in grooving markets because competition is less intense than in mature markets. Since new customers are just beginning to patronize stores in growing markets, they may not have developed strong store loyalties and thus might be easier to attract to a new store. Firms are often interested in minimizing the business cycle's impact on their sales. Thus,

retail markets for merchandise affected by economic conditions (such as cars and major appliances) are less attractive than retail markets unaffected by economic conditions (such as food). In general, markets with highly seasonal sales are unattractive because a lot of resources are needed to accommodate the peak season, but then resources are underutilized the rest of the year. For example, to minimize these problems due to seasonality, ski resorts promote the summer vacations to generate sales during all four seasons.. Step 3: Evaluate Strategic Opportunities The fourth step in the strategic planning process is to evaluate Opportunities that have been identified in the situation audit. The evaluation determines the retailer's potential to establish a sustainable competitive advantage and reap long-term profits from the opportunities under evaluation. Thus, a retailer must focus on opportunities that utilize its strengths and its area of competitive advantage. For example, expertise in developing private-label apparel is one of The Gap's sources of competitive advantage. Thus, The Gap would positively evaluate opportunities that involve development of private-label merchandise. Both the market attractiveness and the strengths and weaknesses of the retailer need to be considered in evaluating strategic opportunities. The greatest investments should be made in market opportunities where the retailer has a strong competitive position. A formal method for performing such an analysis is described in the appendix to this chapter. Step 4: Establish Specific Objectives and Allocate Resources After evaluating the strategic investment opportunities, the next step in the strategic planning process is to establish a specific objective for each opportunity. The retailer's overall objective is included in the mission statement. The specific objectives are goals against which progress toward the overall objective can be measured. Thus, these specific objectives have three components: (1) the performance sought, including a numerical index against which progress may be measured, (2) a time frame within which the goal is to be achieved, and (3) the level of investment needed to achieve the objective. l) Typically, the performance levels are financial criteria such as return on investment, sales, or profits. Another commonly used objective, market share, is becoming more popular because it's easier to measure and often more objectively assessed than financial measures based on accounting information (which can be dramatically affected by accounting rules). Research indicates that market share is a good surrogate for longterm profitability in many businesses. 2. How has the Indian consumers changed? What are the challenges that the new consumers poses for the retailers? Ans. India is likely to be the world's largest consumer market by 2030, according to a report by global consultancy Deloitte. The countrys retail market is projected to touch US$ 1.3 trillion by 2020, as per Mr KV Thomas, Indias Consumer Affairs Minister. With the online medium of retail gaining more and more acceptance, there is a tremendous growth opportunity for

companies (international and domestic) in the retail and fast-moving consumer goods (FMCG) segment. The Indian consumer sector can be broadly categorised into urban and rural markets. The bourgeoning sector is attracting global marketers like never before. The pace at which Indias consumer market is changing can be put down to dramatic shifts in consumer behaviour, increasing urbanisation, presence of a strong service sector, changing lifestyle, and most significantly, the expanding retail segment. Businesses that can cater to the requirements of India's ambitious middle class, keep prices reasonable, build brand loyalty in new consumers, and adapt to a rapidly changing environment will find tremendous rewards in Indias potentialfilled consumer market. Investments/ Developments : Companies across the world are tuning their strategies and offerings to cater to Indian tastes and preferences. The following are some of the efforts, investments and developments in the sector: Costume jewellery has clocked 2030 per cent growth in the current fiscal with women from well-to-do households increasingly preferring such jewellery for attending weddings and parties. While overseas demand for costume jewellery has witnessed a rise, demand from the rural market has also grown substantially over the years. HCL Infosystems plans to enter the European market with its range of computer tablets and phablets. The market is presently dominated by established high-end players and there is enough room for the value-for-money segment to grow, according to Mr Gautam Advani, Executive Vice President and Global Head (Mobility), HCL Infosystems. Mars International India, importer and marketer of its chocolate brands in India, is seeking out manufacturing sites in India. The company, which hitherto has focused on growing its Snickers brand, launched its tablet chocolate brand Galaxy in India on November 7, 2013. Tablet chocolates constitute nearly 50 per cent of the estimated Rs 5,000 crore (US$ 803.37 million) chocolate market in India, which is growing at a compounded annual growth rate (CAGR) of 20 per cent, said Mr Raghav Rekhi, Marketing Director, Mars International India. With present-day rural consumers seeking out better products and high-standard services, FMCG companies have intensified their efforts in the rural regions. Dabur India Ltd reported a 23 per cent rise in consolidated net profit during the quarter ended September 2013, on the back of a sharp improvement in rural sales. The company was clearly seeing demand from rural India outpacing the urban markets, said Mr Sunil Duggal, CEO, Dabur India. Catching-up Online Indias urban population has contributed majorly to the growth of the online market in the country. Around 3040 per cent of the total retail in Indias top 75 cities is expected to be carried out online in the next 710 years, said Mr Arvind Singhal, Chairman and Founder, Technopak Advisors. Amazon, the worlds biggest internet retail company, has seen potential in the Indian market. In June 2013, India became only the tenth market where Amazon has established a country-specific retail website. With rural India getting increasingly empowered with all forms of technology, online portals are going to be vital for companies trying to access these markets. Of the total online market products, consumer durables account for 34 per cent, apparel and accessories 30 per cent, books 15 per cent, beauty and personal care 10 per cent, and home and furnishing 6 per cent. Over 50 per cent of sales in these product categories take place in non-metro cities.

Some of the biggest deals in the online retail and retail space in the past three years materialised in the quarter ended September 2013. Flipkart.com raised US$ 200 million from existing investors private equity firms Tiger Global Management LLC, Accel Partners and Iconiq Capital, and MIH (a part of South Africas Naspers Group ). This investment is the largest in online retail in the country. Government Initiatives. Italian high-end accessories brand Furla plans to expand its presence in the Indian market, with the government clearing the companys joint venture with Gurgaon-based Genesis Luxury Fashion. The alliance is expected to invest about Rs 13 crore (US$ 2.08 million) in the first four years to open stores. The Cabinet Committee on Economic Affairs (CCEA) has given the go-ahead to Swedish furniture retailer IKEA's application to enter the Indian industry and establish a single brand retail venture in the country. The projected Rs 10,500 crore (US$ 1.68 billion) FDI would be the largest investment by a foreign brand in the Indian retail sector. The Indian government is also looking to simplify investment norms in multi-brand retail in order to attract more foreign investment. The government will be receptive to any issues that global investors have in mind and clarify the guidelines, according to Mr Anand Sharma, Indias Union Minister for Commerce and Industry. Road Ahead Economic reforms together with rapid urbanisation have brought about big opportunities for investment and growth prospects in India. "By 2030, India is likely to surpass both countries (China and the US) with an aggregated consumer spend of nearly US$ 13 trillion," according to a report titled 'India matters: Winning in growth markets' by Deloitte. E-tailing (electronic retailing) in India has the potential to grow more than hundred-fold to reach a value of US$ 76 billion by 2021 from US$ 0.6 billion in 2012, according to a study 'E-tailing in India: Unlocking the Potential by Technopak.