SETTING UP A RETAIL

ORGANIZATION
MODULE 4
MEANING AND DEFINITION
• Retail strategy is a holistic marketing plan for a product or a service to
reach and influence the consumers.
• It Covers retail channels, pricing, sales incentives, and product display.
• It Ensures the right product, right place, right price, and right
promotion.
• Retail strategy can be defined as “ a clear and definite plan that the
retailer outlines to tap the market and build a long-term relationship
with the consumers.
The definition of retail strategy enables other areas within
the organization to determine their strategy . Primary
among them are :

1. Store Location – Choosing the right place for maximum reach.

2. Merchandising – Deciding product assortment and display.
3. Pricing – Setting competitive and profitable prices.
4. Marketing – Promoting products to attract customers.
 STEPS INVOLVED IN
DEVELOPING A RETAIL
1. Establish Mission –STRATEGY
Define the purpose and goals of the retail
business.
2. Analyze Situation – Assess market conditions, competition, and
customer needs.
3. Identify Options – Explore different strategies and approaches.
4. Set Objectives – Define clear, measurable goals.
5. Obtain & Allocate Resources – Distribute budget, staff, and
inventory effectively.
6. Develop Implementation Plan – Create a step-by-step action plan.
7. Monitor Progress & Control – Track performance and make
necessary adjustments.
 1. DEFINE THE MISSION (OR)
THE PURPOSE OF THE
ORGANISATION
The mission statement is a statement of the long-term purpose of the
organisation. It describes what the retailer wishes to accomplish in the
market in which it chooses to complete.
A retailers mission statement includes:
The products and services that will be offered.
The customers who will be served.
The location of store to operate.
The manner in which the firm intends to complete in its chosen
markets.
 2. CONDUCT A SITUATION ANALYSIS
PEST Analysis :
POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL
Political stability Rate of economic growth Income distribution of Level of technology
the population usage in the sector

Government policy Monetary policy Size of population Penetration of internet

towards investment
sector

Labour laws Level of taxation Demographics of the Penetration of mobile

population technology
Consumer protection Consumer confidence Rate of population
growth

Restrictions and Age profile of the

regulations on the entry population
of foreign players in the
market.
 THE FIVE COMPETITIVE FORCES

Entry of competitors
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among the existing players
 3. IDENTIFY THE OPTION /
STRATEGY ALTERNATIVES
Four Retail Strategy Alternatives:
1) Market Penetration – Expanding sales in the existing market with
current products (e.g., promotions, loyalty programs).
2) Market Development – Entering new markets with existing products
(e.g., expanding to new locations or customer segments).
3) Retail Format Development – Introducing a new retail format while
targeting the same market (e.g., launching an online store alongside
physical stores).
4) Diversification – Expanding into new markets with new products (e.g., a
clothing retailer adding a home decor line).
 4. SET OBJECTIVES
Good objectives are measurable , are specific to time,
and indicate the priorities for the organisation.
Objectives may be set keeping these areas in mind:
Sales volume targets
market share targets
Retail expansion targets
Profitable to be achieved
 liquidity
Return on investment
 5. OBTAIN AND ALLOCATE THE
RESOURCES NEEDED TO
COMPLETE
To successfully implement a retail strategy, two key
resources are required:

1. Financial Resources – Budget allocation for operations,

marketing, inventory, and expansion.
2. Human Resources – Hiring, training, and managing
staff to ensure effective execution.
 6. DEVELOP THE STRATEGIC PLAN
 The target market is the specific consumer segment the retailer aims to
serve.
 The retail mix (product, price, place, promotion, people, and process) is
tailored to this audience.
 For successful market segmentation, the target market should be:
a) Measurable – Size and demand can be quantified.
b) Accessible – Easily reachable through marketing and distribution
channels.
c) Economically Viable – Profitable and worth investing in.
d) Stable – Consistent demand over time.

7. IMPLEMENT THE STRATEGY,

EVALUATE AND CONTROL
 RETAIL LOCATION
• Location of a retail store in a place convenient to the
customers will add to the success of the retail
business. Location should be destination of the
customers choice .
• Location of the stores facilitate the consumer to get
right product at right time, at right place, at right price
and at right quality.
Factors Influencing Retail Location Decision
1.Consumer Choice & Preference 4. High Investments & Long-Term Financial
1. Proximity to target customers. Implications
•Cost of land, rent, or lease.
2. Accessibility and convenience. •Return on investment (ROI) potential.
3. Demographic and psychographic •Future scalability and expansion possibilities.
factors.
2.Competitive Advantage 5. Selection of Final Property Assets
1. Presence of direct competitors. •Suitability of space for store layout.
•Parking facilities and accessibility.
2. Unique positioning in the market.
•Legal clearances and ownership history.
3. Potential for high foot traffic.
3.Social & Structural Trends 6. Government Formalities & Regulations
1. Urbanization and lifestyle changes. •Zoning laws and building codes.
2. Infrastructure development. •Licensing, taxation, and compliance.
•Environmental and safety regulations.
3. Population density and income levels.
 TYPES OF RETAIL LOCATION
Various options are available to the retailer for choosing the location of the store. It
depends upon the target audience and kind of product to be sold.
A store location may be classified as:
 Freestanding/Isolated Stores – Standalone stores with independent access.
 Part of a Business District – Located in commercial areas:
Central Business District (CBD) – Prime city area with high foot traffic.
Secondary Business District (SBD) – Smaller commercial hubs outside
the main city center.
 Part of a Shopping Centre – Stores within malls or retail complexes, benefiting
from shared foot traffic.
 STEPS INVOLVED IN CHOOSING
A RETAIL LOCATION
1. Market Identification – Define the target market and customer base.
2. Determination of Market Potential – Analyze key factors such as:
 Demographic Features – Population size, income levels, and customer profiles.
 Household Characteristics – Lifestyle, spending habits, and preferences.
 Competition & Compatibility – Presence of competitors and complementary
businesses.
 Laws & Regulations – Compliance with zoning laws and business policies.
 Trade Area Analysis – Evaluating the geographic reach and potential customer traffic.
3. Identification of Alternative Sites – Explore multiple location options based on feasibility.
 STEPS INVOLVED IN CHOOSING
A RETAIL LOCATION
4. Selection of the Best Site – Choose the most suitable site by considering:
Traffic Flow – Volume of potential customers passing by.
Accessibility – Ease of entry and exit for customers.
Available Amenities – Parking, public transport, and nearby services.
Buy or Lease Decision – Evaluating long-term financial benefits.
Product Mix Alignment – Ensuring the location supports the business
model.
 CONCEPT OF STORE DESIGN
The term design has been variously defined as a plan or scheme used to denote the end result,
particularly the appearance of a design process, dimensions, physical arrangements of objects
etc.
The concept of retail store design covers all aspects of the design of a store like;
 Ranging from store frontage to back end process
 Internal elements of furniture
 Merchandising
 Display
 Lighting graphics
 Point of sale and decoration.
 THE PRINCIPLES OF STORE
DESIGN
1)Totality – The store layout, decor, and ambiance should provide
a cohesive shopping experience.
2)Focus – Design should highlight key products and promotions to
attract customer attention.
3)Ease of Shopping – Layout should ensure smooth navigation
and convenience for customers.
4)Change & Flexibility – Adaptable design to accommodate new
trends, seasonal changes, and evolving customer preferences.
 ELEMENTS OF EXTERIOR STORE DESIGN
The exterior store design plays a crucial role in attracting customers and establishing a
store’s brand identity. It is influenced by the store’s location and various design elements
that enhance accessibility, aesthetics, and functionality.

Key Elements of Exterior Store Design:

1) Store Design – The overall layout and structure of the store that influences customer
perception and shopping experience.
2) Store Theme – The visual and conceptual theme that aligns with the brand identity and
appeals to target customers.
3) Target Customers – The design should cater to the preferences and expectations of the
intended customer base.
4) Merchandise Mix – The type and variety of products offered, influencing how the store
is presented externally.
5) Location – The geographical setting of the store, including its accessibility, foot traffic,
and surrounding environment.
6. Parking – Availability of parking spaces for customers, which impacts convenience and
footfall.
7. Access – Ease of entry and exit for pedestrians and vehicles, ensuring smooth customer
flow.
8. Building Architecture – The physical structure, design, and aesthetic appeal that
enhance the store’s presence.
9. Health and Safety – Compliance with safety regulations, ensuring a secure and
comfortable shopping environment.
10. Frontage and Entrance – The storefront’s visibility, signage, and welcoming entrance to
attract customers.
11. Display Space – External display areas such as window displays and outdoor
promotions that entice customers to enter.

A well-designed store exterior creates a strong first impression, enhances customer

engagement, and drives sales by making the shopping experience inviting and accessible.
 ELEMENTS OF INTERIOR STORE DESIGN
A well-designed interior store layout enhances the customer experience, encourages
exploration, and maximizes sales potential. The key elements of interior store design
include:

1) Space Planning – Efficient use of space to ensure smooth customer movement, proper
product placement, and an organized shopping experience.
2) Atmospherics – The overall sensory experience, including lighting, music, scent, and
temperature, which influences customer mood and behavior.
3) Layout – The arrangement of aisles, product sections, and checkout counters to
optimize traffic flow and product visibility. Common layouts include grid, free-flow,
racetrack, and boutique layouts.
4) Aesthetics – The visual appeal of the store, including color schemes, textures, furniture,
fixtures, and branding elements that create an inviting ambiance.
LAYOUT : 1. GRID LAYOUT
Grid Layout
A structured, straight-aisle layout where shelves are
arranged in a grid-like pattern.

Best for: Supermarkets, grocery stores, pharmacies.

Advantages:
• Maximizes product display space.
• Efficient and easy for customers to navigate.
• Encourages systematic shopping.
Disadvantages:
• Can feel rigid and uninspiring.
• Customers may miss impulse purchase
opportunities.
2. RACETRACK/ LOOP LAYOUT
Racetrack or Loop Layout
A layout that guides customers through a single loop
around the store before reaching the exit.
Best for: Department stores, large retail outlets.

Advantages:
• Ensures exposure to most products.
• Encourages browsing and impulse buying.
Disadvantages:
• Can feel forced for customers in a hurry.
• Might create congestion in peak hours.
3. FREE FORM LAYOUT
Free-Form Layout
An open, less structured layout that encourages
customers to explore freely.
Best for: Boutiques, high-end retail stores, specialty
shops.

Advantages:
• Creates a relaxed and luxurious shopping
experience.
• Enhances brand storytelling and product
engagement.
Disadvantages:
• Requires more space.
• Less efficient for high-traffic stores.
 VISUAL MERCHANDISING
Visual merchandising is the practice in the retail industry of
optimizing the presentation of products and services to better
highlight their features and benefits. The purpose of
such visual merchandising is to attract, engage, and motivate
the customer towards making a purchase. It is called as silent
salesman.
 ROLE OF VISUAL
MERCHANDISING
I. Enable sale of the product / services sold by the retailer.
II. Inform / educate the customer
III. Ease of shopping
IV. Creating and enhancing the store’s image.
Importance of Visual Merchandising
Visual merchandising plays a crucial role in influencing customer behavior and
increasing sales. Here’s why it matters:
1) Attracts Customers – Eye-catching displays draw people into the store.
2) Enhances Brand Identity – Strengthens the store’s image and positioning.
3) Improves Shopping Experience – Creates an engaging and convenient
shopping environment.
4) Encourages Impulse Buying – Well-placed products can lead to unplanned
purchases.
5) Maximizes Product Visibility – Ensures that high-margin and seasonal
items get noticed.
6) Communicates Information – Educates customers about products,
promotions, and offers.
7) Boosts Sales and Profits – A well-designed store layout and display strategy
can directly impact revenue.
Common Errors in Visual Merchandising
Despite its benefits, mistakes in visual merchandising can negatively affect customer
experience and sales. Here are some common errors:
1) Cluttered Displays – Overcrowding products can overwhelm customers and make
selection difficult.
2) Poor Lighting – Insufficient or harsh lighting can make products look unappealing.
3) Lack of Theme Consistency – Mismatched colors, styles, or branding can confuse
shoppers.
4) Frequent or Infrequent Changes – Changing displays too often or not updating them at all
can reduce effectiveness.
5) Ineffective Signage – Small, unclear, or excessive signage can fail to communicate
important information.
6) Neglecting Customer Flow – Poor store layout can disrupt the natural movement of
customers.
7) Ignoring Seasonal Trends – Not adapting to trends and seasonal themes can result in
missed sales opportunities.
Tools & Techniques of Visual Merchandising
Colour & Texture
• Enhances visual appeal and influences customer perception.
• Creates contrast, highlights key products, and sets the store’s mood.
Props & Fixtures
• Includes racks, shelves, tables, and decorative elements.
• Helps in organizing products and creating themed displays.
Windows
• First point of interaction with potential customers.
• Seasonal and thematic window displays attract attention.
Lighting
• Highlights featured products and creates ambiance.
• Includes accent, task, and ambient lighting for different effects.
Mannequins
•Showcases apparel and accessories
in a lifelike manner.
•Helps in styling and cross- Product Display Techniques
•Includes vertical and horizontal
merchandising.
merchandising for better visibility.
•Cross-merchandising helps increase
Signage & Graphics
•Includes posters, banners, and digital impulse purchases.
displays.
•Provides product information, Digital & Interactive Displays
•Enhances engagement through
promotions, and directions.
touchscreens and virtual try-ons.
•Digital billboards provide dynamic
Store Layout & Space Planning
•Ensures smooth customer movement promotional content.
and maximizes product exposure.
•Includes zoning strategies for
different product categories.