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Retail Management: A Strategic Approach

Thirteenth Edition

Chapter 3

Strategic Planning In Retailing

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Learning Objectives (1 of 2)

3.1 To show the value of strategic planning for all types of retailers

3.2 To explain the steps in strategic planning for retailers: situation analysis, objectives, identification of consumers, overall strategy, specific activities, control, and feedback

Learning Objectives (2 of 2)

3.3 To examine the individual elements of a retail strategy (both controllable and uncontrollable), and to present strategic planning as a series of integrated steps

3.4 To demonstrate how a strategic plan can be prepared

Retail Strategy

The overall plan or framework of action that guides a retailer

One year in duration

Outlines mission, goals, consumer market, overall and specific activities, and control mechanisms

A retail strategy is the overall plan or framework of action that guides a retailer. It should be at least one year long and contain a series of sequential steps. Without a defined and well-integrated strategy, a firm may be unable to cope with the marketplace.

Benefits of Strategic Retail Planning

Provides thorough analysis of the requirements for doing business for different types of retailers

Outlines retailer goals

Allows retailer to determine how to differentiate itself from competitors

Allows retailer to develop an offering that appeals to a group of customers

Offers an analysis of the legal, economic, and competitive environment

Provides for the coordination of firm’s total efforts

Encourages anticipation and avoidance of crises

A retail strategy should have the following features:

It provides a thorough analysis of the requirements for doing business for different types of retailers.

It outlines retailer goals.

It enables a firm to differentiate itself from competitors.

The legal, economic, and competitive environment is studied.

It coordinates a firm’s total efforts.

It helps to anticipate and avoid crises.

Strategic planning can be conducted by a firm’s owner, professional management, or a combination of the two.

The steps in a retail strategy are interdependent, and usually go from general to quite specific plans. See Figure 3.1 (next slide).

Figure 3.1 Elements of a Retail Strategy

The steps in a retail strategy are interdependent, and usually go from general to quite specific plans. See Figure 3.1.

SITUATION ANALYSIS

Situation analysis is a candid evaluation of the opportunities and threats facing a prospective or existing retailer. It seeks to answer two general questions:

What is the firm’s current status?

In which direction should it be heading?

Situation analysis means being guided by an organizational mission, evaluating ownership and management options, and outlining the goods/service category to be sold. Opportunities are marketplace openings that exist because other retailers have not yet capitalized on them, while threats are environmental and marketplace factors that can adversely affect retailers if they do not react to them (and, sometimes, even if they do). A firm needs to spot trends early enough to satisfy customers and stay ahead of competitors, yet not so early that shoppers are not ready for changes or that false trends are perceived. During situation analysis, an honest, in-depth self-assessment is vital.

Objectives are the long-run and short-run performance targets a retailer hopes to attain. Clear objectives mold strategy and translate the organizational mission into action. A firm can pursue one or more of these goals: sales, profit, satisfaction of publics, and image. The array of goals set by the Kroger Company is described. Sales objectives are concerned with reaching sales volume goals.

Under a sales growth objective, a firm is interested in expansion and increasing revenues.

Under a stable sales objective, a retailer seeks to maintain stability and avoid fluctuations in sales.

Under a market share objective, a retailer strives to maximize its percent of total retail-category sales.

Unit sales, as well as dollar sales objectives, should be specified.

With profitability objectives, retailers seek at least a minimum profit level during a designated period, usually a year.

Profit may be expressed in dollars or as a percentage of sales.

Retailers with large capital investments often set return on investment (ROI) as a goal.

Increased operating efficiency is sought by many retailers, who want to reduce operating expenses as a percent of company sales.

Satisfaction of publics means meeting the aims of stockholders, customers, suppliers, employees, and government—and maintaining good relations with them.

Organizational Mission

Retailer’s commitment to a type of business and to a distinctive role in the marketplace.

An organizational mission is a retailer’s commitment to a type of business and to a distinctive role in the marketplace. It is reflected in the firm’s attitude toward consumers, employees, suppliers, competitors, government, and others. A clear mission lets a firm gain a customer following and distinguish itself from competitors. See Figure 3.2 (next slide).

Organizational missions for retailers involve these decisions:

Whether to base a business around the goods and services sold or around consumer needs.

Whether a retailer wants a place in the market as a leader or follower.

Desired market scope. (Large chains often seek a broad customer base while smaller ones focus on a narrower customer base.)

Organizational mission should be continually reviewed and adjusted.

The text provides examples of well-conceived retail organizational missions for major retail firms in Figure 3-2 (next slide).

Figure 3.2 Leadership Lessons from Retail Executives

Lands’ End Mission Statement

Lands’ End is a global multi-channel retailer designing and selling classically styled apparel, swimwear and outerwear for Women, Men and Kids, plus a complete line of home products, luggage and seasonal gifts.

We provide our customers with the highest levels of service in our industry, unparalleled quality and value, and an unequivocal ironclad guarantee.

Core Values Statement of L.L.Bean

Outdoor heritage— The natural environment and the outdoors experience

Integrity— 100 percent guarantee of satisfaction

Service— Treat customers like human beings

Respect— Respect for all publics

Perseverance— A long-term perspective

Ownership and Management Alternatives

Sole proprietorship is an unincorporated retail firm owned by one person

A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest

A corporation is a retail firm that is formally incorporated under state law; it is a legal entity apart from its officers

An essential aspect of situation analysis is assessing ownership and management alternatives, including whether to form a sole proprietorship, partnership, or corporation—and whether to start a new business, buy an existing business, or become a franchisee. Management options include owner-manager versus professional manager and centralized versus decentralized structures.

There is no one best ownership type for a retailer; the type of legal structure impacts taxation, personal liability, record keeping, and the ability to raise money. The limitations of a particular form of ownership can often be overcome. For instance, a sole proprietor can buy insurance coverage to reduce liability exposure. Astute entrepreneurs re-evaluate their choice of entity as their business evolves.

These are the ownership alternatives:

Sole proprietorship—this is an unincorporated retail firm owned by one person. All benefits, profits, risks, and costs accrue to that individual. It is simple to form, fully controlled by the owner, operationally flexible, easy to dissolve, and subject to single taxation by the government. It makes the owner personally liable for legal claims from suppliers, creditors, and others; it can also lead to limited capital and expertise.

Partnership—this is an unincorporated retail firm owned by two or more persons, each with a financial interest. Partners share benefits, profits, risks, and costs. Advantages include the following: responsibility and expertise are divided among multiple principals, there is a greater capability for raising funds than with a proprietorship, the format is simpler to form than a corporation, and it is subject to single taxation by the government. Depending on the type of partnership, it can make owners personally liable for legal claims, can be dissolved due to a partner’s death or a disagreement, it binds all partners to actions made by any individual partner acting on behalf of the firm, and it usually has less ability to raise capital than a corporation.

Corporation—this is a retail firm that is formally incorporated under state law and is established as a legal entity apart from individual officers (or stockholders). Twenty percent of all U.S. retail firms are corporations but they account for 85 percent of total U.S. retail store sales. Funds can be raised through the sale of stock; legal claims against individuals are not usually allowed; ownership transfer is relatively easy; the firm is more assured of long-term existence (if a founder leaves, retires, or dies); the use of professional managers is encouraged; and unambiguous operating authority is outlined.

Figure 3.3 Checklist to Consider When Starting a New Business

A retailer also has these options:

Starting a new business. (See Figure 3.3)

Buying an existing business. (See Figure 3.4)

Starting a new business—being entrepreneurial—offers a retailer flexibility in location, operating style, product lines, customer markets, and other factors, and involves planning and implementing a strategy that is fully tailored to the owner’s desires and strengths. There may be high construction costs, a time lag until the business is opened and then until profits are earned, beginning with an unknown name, and having to form supplier relationships and amass an inventory of goods. Figure 3.3 presents a checklist to consider when starting a retail business.

Being a franchise.

From a strategic perspective, the management format chosen is very important. These are the options:

Owner-manager versus professional manager—The former tends to have less planning and is more intuitive; the latter is more formal and systematic.

Centralized versus decentralized structures—With the former, most planning is limited to top management or ownership; with the latter, managers in individual departments have major input.

Figure 3.4 Checklist for Purchasing an Existing Retail Business

Figure 3.5a Selected Kinds of Retail Goods and Service Establishments (1 of 3)

Durable Goods Stores:

Automotive group

Furniture and appliances group

Lumber, building, and hardware group

Jewelry stores

Nondurable Goods Stores:

Apparel group

Food group

General merchandise group

Gasoline service stations

Time demands on retailers differ significantly by goods or service category. Some stores require extended hours or must be open at unusual times. The ability to automate operations or delegate duties affects hours worked. Some businesses require less owner involvement (e.g., gas stations with no repair services). Others require active owner involvement (e.g., hair salons).

Intensive owner participation can be caused by the special skills of the owner, some services that are not easy to automate, underfunded businesses, and weak financial controls that necessitate close supervision of employees. For many retailers, off-hours activities (such as buying) are essential. A prospective retail owner also has to examine his or her time preferences regarding stability versus seasonality, ideal working hours, and personal involvement.

Figure 3.5b Selected Kinds of Retail Goods and Service Establishments (2 of 3)

Service Establishments (Personal):

Laundry and dry cleaning

Beauty/barber shops

Funeral services

Health-care services

Service Establishments (Amusement):

Movie theaters

Bowling alleys

Dance halls

Golf courses

Figure 3.5c Selected Kinds of Retail Goods and Service Establishments (3 of 3)

Service Establishments (Repair):

Automobile repair

Car washes Consumer electronics repair

Appliance repairs

Service Establishments (Hotel):

Hotels

Motels

Trailer parks

Camps

Financial resources are also a major consideration. Many retail enterprises fail because owners do not adequately project financial resource needs.

Table 3.1 (See slide 18) outlines some of the typical investments for a new retail venture. A drawing account is used for the personal needs of the retailer. Renovation costs should be planned so that adequate redecoration/renovation can be achieved. Merchandise assortment, as well as the types of goods and services sold, also affects financial outlay.

Table 3.2 (See slide 19) illustrates the financial requirements for a hypothetical used-car dealer. The U.S. Small Business Administration guarantees thousands of loans each year. Some private companies (e.g., Wells Fargo and American Express) also have financing programs.

Table 3.1 Some Typical Financial Investments for a New Retail Venture

Use of Funds	Source of Funds
Land and building (lease or purchase)	Personal savings, bank loan, commercial finance company
Inventory	Personal savings, manufacturer credit, commercial finance company, sales revenues
Fixtures (display cases, storage facilities, signs, lighting, carpeting, etc.)	Personal savings, manufacturer credit, bank loan, commercial finance company
Equipment (cash register, marking machine, office equipment, computers, etc.)	Personal savings, manufacturer credit, bank loan, commercial finance company
Personnel (salespeople, cashiers, stockpeople, etc.)	Personal savings, bank loan, sales revenues
Promotion	Personal savings, sales revenues
Personal drawing account	Personal savings, life insurance loan
Miscellaneous (equipment repair, credit sales [bad debts], professional wholesaler credit, bank services, repayment of loans)	Personal savings, manufacturer and credit plan, bank loan, commercial finance company

Note: Collateral for a bank loan may be a building, fixtures, land, inventory, or a personal residence.

Table 3.2 Financial Requirements for a Used-Car Dealer

Image and Positioning

An image represents how a given retailer is perceived by consumers and others.

An image (positioning) objective stresses that the proper image is created and maintained; and consumers and others view the retailer in the way it wants to be perceived. Positioning enables a retailer to determine how consumers perceive the company relative to its retail category and its competitors.

Positioning Approaches

Mass merchandising is a positioning approach whereby retailers offer a discount or value-oriented image, a wide or deep merchandise selection, and large store facilities.

Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market.

Mass merchandising is a positioning approach whereby retailers offer a discount or value-oriented image, a wide and/or deep merchandise selection, and large store facilities. The firms appeal to a broad customer market, attract a lot of customer traffic, and generate high stock turnover.

Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments. (Retail Repositioning video Kohl’s next slide.)

Because both mass merchandising and niche retailing are popular, some observers call this the era of bifurcated retailing. Retailers that are neither competitively priced nor particularly individualistic may have difficulty competing.

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Figure 3.7 Selected Retail Positioning Strategies

DISCUSSION: Identify national retailers for some of the retail positioning strategies in this map.

Tiffany seeks affluent, status-conscious consumers. It puts stores in prestigious shopping areas, offers high-quality products, uses elegant ads, has extensive customer services, and has rather high prices.

Kohl’s targets middle-class, value-conscious shoppers. It locates mostly in suburban shopping areas, offers national brands and Kohl’s brands of medium quality, features good values in ads, has some customer services, and charges below-average to average prices.

T. J. Maxx, an off-price store chain, aims at extremely price-conscious consumers. It locates in low-rent strip shopping centers or districts, offers national brands (sometimes overruns and seconds) of average to below-average quality, emphasizes low prices, offers few customer services, and sets very low prices.

Target Market Selection

Three techniques

Mass marketing

Concentrated marketing

Differentiated marketing

Identification Of Consumer Characteristics And Needs

The customer group sought by a retailer is called the target market. In selecting its target market, a retailer may use one of these three techniques:

Mass marketing—this is selling goods and services to a broad spectrum of consumers. Conventional supermarkets and drugstores are retailers that employ mass marketing.

Concentrated marketing—this approach zeroes in on one specific group. A small upscale men’s shoe store might use this technique.

Differentiated marketing—this entails aiming at two or more distinct consumer groups, with different retailing approaches for each group.

Department stores seek multiple segments.

Figure 3.8 La Boqueria

FIGURE 3-8

La Boqueria Market: A Shopper’s Delight

La Boqueria Market in Barcelona is Spain’s most famous indoor marketplace. It is especially popular with tourists and local residents who are attracted by the fresh foods and wide variety: “It’s been here since medieval times and is the largest market in Spain. The iconic Modernist stained glass entrance attracts millions of visitors every year to this Aladdin’s cave of tantalizing food, exotic fruits, and spices.” People eat, shop, and gossip together doing what the Spanish excel at—living life and enjoying a sense of community” (www.barcelona-touristtravelguide.com/la-boqueria.html).

Strategic Implications of Target Market Techniques

Retailer’s location

Goods and service mix

Promotion efforts

Price orientation

Strategy

The choice of target market and the approach for attracting it give direction to a retailer’s strategic decisions. See Table 3.3 in text (Slide 27).

Competitive advantages (the distinct competencies of a retailer relative to competitors) must not be overlooked.

Examples of Tiffany, Kohl’s, and T.J. Maxx are provided.

The key to success is a retailer’s ability to define customers and cater to their needs in a distinctive manner. See Figure 3.8.

A retailer is better able to select a target market and satisfy customer needs if it has a good understanding of consumer behavior.

Target Market Techniques

Strategic Implications for

Mass Marketing

Concentrated Marketing

Differentiated Marketing

Retailer’s location

Near a large population base

Near a small or medium population base

Near a large population base

Goods and service mix

Wide selection of medium-quality items

Selection geared to market segment—high- or low-quality items

Distinct goods/services aimed at each market segment

Promotion efforts

Mass advertising subscription

Direct mail, E-mail, media and messages

Different for each segment

Price orientation

Popular prices

High or low

High, medium, and low—depending on market segment

Strategy

One general strategy for a large homogeneous (similar) group of consumers

One specific strategy directed at a specific, limited group of customers

Multiple specific strategies, each directed at different (heterogeneous) groups of consumers

Table 3.3 Target Marketing Techniques and Their Strategic Implications

Target Market Techniques

Strategic Implications	Mass Marketing	Concentrated Marketing	Differentiated Marketing
Retailer’s location	Near a large population base	Near a small or medium population base	Near a large population base
Goods and service mix	Wide selection of medium-quality items	Selection geared to market segment—high- or low-quality items	Distinct goods/services aimed at each market segment
Promotion efforts	Mass advertising subscription	Direct mail, E-mail, and segmented social media	Different for each segment
Price orientation	Popular prices	High or low	High, medium, and low—depending on market segment
Strategy	One general strategy for a large homogeneous (similar) group of consumers	One specific strategy directed at a specific, limited group of customers	Multiple specific strategies, each directed at different (heterogeneous) groups of consumers

Figure 3.9 Developing an Overall Retail Strategy

Controllable Variables:

Store location

Managing business

Merchandise management and pricing

Communicating with customer

Uncontrollable Variables:

Consumers

Competition

Technology

Economic conditions

Seasonality

Legal restrictions

The development of an in-depth overall strategy involves those aspects of business that the retailer can directly affect (controllable variables) and those to which the retailer must adapt (uncontrollable variables). Figure 3.9. The controllable parts of a retail strategy are broken down into these categories of decision making:

Store location

Store or nonstore format

For store-based retailers, a general location and a specific site are determined.

Competitors, transportation access, population density, etc. are among the factors to be considered in choosing a site. See Figure 3.10.

Terms of tenancy

Build, buy, or rent

Managing a business

Retail organization and human resource management

Tasks, policies, resources, authority, responsibility, and rewards are outlined via a retail organization structure.

Practices regarding employee hiring, training, compensation, and supervision are instituted through human resource management.

Job descriptions and functions are communicated, along with the responsibility of all personnel and the chain of command.

Operations management

The financial aspects involve asset management, budgeting, and resource allocation. Other elements include store format and size, personnel use, store maintenance, energy management, store security, insurance, credit management, computerization, and crisis management.

Merchandise management and pricing

General quality of goods/services

Width and depth of assortment

Innovation in introducing new items

Forecasting, budgeting, and accounting procedures

Choice of several pricing techniques

Communicating with the customer

Physical attributes (atmosphere) of the store and its surrounding area

This greatly influences consumer perceptions of a retailer.

The impact of the storefront should not be undervalued.

Layouts and displays, floor colors, lighting, etc. also contribute to image.

Customer services and community relations

Promotion techniques

The proper use enhances a firm’s sales performance.

They can be inexpensive (or even free, such as publicity) or costly.

The uncontrollable parts of a retail strategy are composed of these categories:

Consumers

Competition

Technology

Economic conditions

Seasonality

Legal restrictions (See Table 3.4.)

At this point, the retail strategy must be integrated.

Retail Strategy–Cost Control (1 of 2)

Removal of bad costs

Use of private label products to reduce costs of national/manufacturer brands

Reduce product proliferation

Obtain best net price instead of focus on promotional monies, trade incentives and forward buying

Control

In the control phase, a semiannual or annual review of the company takes place. This procedure is called a retail audit, which is a systematic process for analyzing the performance of a retailer. As a retailer’s performance is assessed, its strengths and weaknesses are revealed. Adjustments are made if necessary and are reviewed in the firm’s next retail audit.

Specific Activities

Short-run decisions are now made and enacted for each controllable part of the retail strategy – like controlling costs. These actions, known as tactics, encompass a retailer’s daily and short-term operations. Retailers must be responsive to the uncontrollable environment. Four examples of tactical decisions that a retailer may make are provided. Excellence in retailing entails building a sound strategy and fine-tuning it as the environment changes.

Retail Strategy–Cost Control (2 of 2)

Supply chain initiatives

Low promotional expense (everyday low pricing)

Proper employee utilization

Feedback

Signals or cues about the success of a retail strategy represent feedback. Forms of positive feedback are high sales revenue, no problems with the government, and low employee turnover. Negative feedback includes falling sales revenue, government sanctions (e.g., fines), and high employee turnover. Retail executives look for positive and negative feedback so they can determine the causes and then capitalize on opportunities or rectify problems.

Retail Strategy–Differentiation

Well-thought out private labels (Trader Joe’s, Target, King Arthur flour, etc.)

Hiring right employees (value-profit chain)

Empowering employees

Use of a fun atmosphere

“Little things that mean a lot”

Money-back guarantees

Table 3.4a Legal Environment and Retailing

Store Location

zoning laws

blue laws

environmental laws

direct selling laws

local ordinances

leases and mortgages

Managing the Business

licensing provisions

personnel laws

antitrust laws

franchise agreements

business taxes

recycling laws

Store location

Zoning laws restrict the potential choices for a location and the type of facilities constructed.

Blue laws restrict the days and hours during which retailers may operate.

Environmental laws limit the retail uses of certain sites.

Door-to-door (direct) selling laws protect consumer privacy.

Local ordinances involve fire, smoking, outside lighting, capacity, and other rules.

Leases and mortgages require parties to abide by stipulations in tenancy documents.

Managing the business

Licensing provisions mandate minimum education and/or experience for certain personnel.

Personnel laws involve nondiscriminatory hiring, promoting, and firing of employees.

Antitrust laws limit large firm mergers and expansion.

Franchise agreements require parties to abide by various legal provisions.

Business taxes include real-estate and income taxes.

Recycling laws mandate that retailers participate in recycling for various materials.

Table 3.4b Legal Environment and Retailing

Merchandise Management and Pricing

trademarks

merchandise restrictions

product liability laws and lemon laws

sales taxes

unit-pricing laws

collusion laws

sale prices

price discrimination laws

Merchandise Management and Pricing

Trademarks provide retailers with exclusive rights to the brand names they develop.

Merchandise restrictions forbid some retailers from selling specified goods or services.

Product liability laws allow retailers to be sued if they sell defective products.

Lemon laws specify consumer rights if products, such as autos, require continuing repairs.

Sales taxes are required in most states, although tax-free days have been introduced in some locales to encourage consumer shopping.

Unit-pricing laws require price per unit to be displayed (most often applied to supermarkets).

Collusion laws prohibit retailers from discussing selling prices with competitors.

Sale prices must be a reduction from the retailer’s normal selling prices.

Price discrimination laws prohibit suppliers from offering unjustified discounts to large retailers that are unavailable to smaller ones.

Table 3.4c Legal Environment and Retailing

Communicating with the Customer

truth-in-advertising and selling laws

truth-in-credit laws

telemarketing laws

bait-and-switch laws

inventory laws

labeling laws

cooling-off laws

Communicating with the customer

Truth-in-advertising and truth-in-selling laws require retailers to be honest and not omit key facts.

Truth-in-credit laws require that shoppers be informed of all terms when buying on credit.

Telemarketing laws protect the privacy and rights of consumers regarding telephone sales.

Bait-and-switch laws make it illegal to lure shoppers into a store to buy low-priced items and then to aggressively try to switch them to higher priced ones.

Inventory laws mandate that retailers must have sufficient stock when running sales.

Labeling laws require merchandise to be correctly labeled and displayed.

Cooling-off laws let customers cancel completed orders, often made by in-home sales, within three days of a contract.

Table 3.6 Sample Strategic Plan

Sally’s is a small, independently owned, high-fashion ladies clothing shop located in a suburban strip mall. It is a full-price, full-service store for fashion-forward shoppers. Sally’s carries sportswear from popular designers, has a personal shopper for busy executives, and has an on-premises tailor. The store is updating its strategic plan as a means of getting additional financing for an anticipated expansion.

Additional Concerns for Global Retailing

In addition to the strategic planning process:

assess your international potential

get expert advice and counseling

select your countries

develop, implement, and review an international retailing strategy

The Strategic Planning Process and Global Retailing

Retailers looking to operate globally should follow these seven steps:

Choose a strategy—then execute it.

Find a competitive advantage. Learn much about local tastes and customs. Use mostly local talent. Develop local relationships. Be prepared to make big mistakes. Be prepared to invest on a large scale.

Opportunities and Threats in Global Retailing

There are wide-ranging opportunities and threats in global retailing.

Opportunities may exist for several reasons.

Foreign markets may be used to complement domestic sales.

Foreign markets may represent growth opportunities if domestic markets are saturated or stagnant.

A retailer may be able to offer goods, services, or technology not yet available in foreign markets.

Competition may be less in foreign markets. There may be tax or investment advantages in foreign markets. Due to government and economic shifts, many countries are more open to the entry of foreign firms. Communications are easier; the Internet enables retailers to reach customers and suppliers well outside their domestic markets.

Threats may also exist for several reasons.

There may be cultural differences between domestic and foreign markets.

Management styles may not be easily adaptable.

Foreign governments may place restrictions on some operations. Personal income may be poorly distributed among consumers in foreign markets.

Distribution systems and technology may be inadequate, which may minimize the effectiveness of the Web as a selling tool. Institutional formats may vary greatly among countries. Currencies are different; however, the countries in the European Union have sought to alleviate this problem through the euro.

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The Strategic Planning Process and Global Retailing

Retailers looking to operate globally should follow these seven steps:

Choose a strategy—then execute it.

Opportunities and Threats in Global Retailing

There are wide-ranging opportunities and threats in global retailing.

Opportunities may exist for several reasons.

Foreign markets may be used to complement domestic sales.

Foreign markets may represent growth opportunities if domestic markets are saturated or stagnant.

A retailer may be able to offer goods, services, or technology not yet available in foreign markets.

Threats may also exist for several reasons.

There may be cultural differences between domestic and foreign markets.

Management styles may not be easily adaptable.

Foreign governments may place restrictions on some operations. Personal income may be poorly distributed among consumers in foreign markets.

Factors Affecting the Success of a Global Retailing Strategy

Timing

A balanced international program

A growing middle class

Matching concept to market

Solo or partnering

Store location and facilities

Product selection

Retailers must pay particular attention to the concept of standardization.

Can the home market strategy be standardized and directly applied to foreign markets?

Do personnel, physical facilities, operations, advertising messages, product lines, and other factors have to be adapted to local conditions and needs?

Retail 1

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