Retail strategy is usually defined as a process that retailers use to make and sell goods and services to consumers. Or, more simply, it’s how companies sell products to people. To be successful in today’s competitive market, retailers need to plan every aspect of their marketing, sales, and operations to maximize profits.
Developing a retail strategy from start-to-finish is now a crucial part of doing business in this sector. This guide will give you a template for developing an effective retail strategy. It will begin by outlining the key elements and core marketing strategies that you can implement in your planning. From there, it will highlight specific aspects of retail planning, and it will end by discussing some of the common challenges faced by modern retailers.
Core Elements of Effective Retail Strategy
As you begin to outline your retail strategy, you must understand the four key elements of an effective marketing plan. These include objective setting, customer identification, strategic planning, and implementation.
Objective Setting
Your first step in establishing a marketing strategy is setting your objective. This phase determines what you want to achieve and sets a timeline for completion. The goals you establish should be specific and attainable. Specific objectives outline a clear measure of success, and attainable ones can be realistically accomplished in your set timeframe.
To understand how to best set objectives, suppose that a retailer wants to increase sales of a particular product. “Sell more product X” is a poor goal because it does not provide a way to measure success or a clear timeline. Instead, your objective should read something like, “increase sales of product X by 50% in one month.” This statement sets a clear standard (a 50% increase in sales) and a timeline (one month).
Customer Identification
Next, you need to identify your customers to market to them. This step involves gathering and analyzing market data to determine who is likely to buy your product. A convenience store, for example, will look at local demographics to understand its target market. You can find this data through internal research, existing data, and government websites. Then, you can use the information you find to paint a picture of your target audience. Gaining a thorough understanding of who your customers are will help you better understand how to best sell to them.
Strategic Planning
After you have set an objective and identified your audience, you can begin strategic planning. You can begin this phase by assessing your resources — the time, tools, and budget that you have at your disposal. This step is crucial to forming your plan because it can determine which strategies are most realistic. Once you have assessed your resources, you can begin laying out a chronological plan of action. This plan will include necessary steps before, during, and after execution to ensure your strategy’s success.
Implementing your Plan
Finally, you will implement your strategic marketing plan. Throughout implementation, you will need to troubleshoot problems as they arise and adjust your plan as needed. You will also need to collect and monitor data to see if your plan is working as anticipated. If your plan is not succeeding, then you want to identify that early in the process so you can make changes as needed to attain your objective.
Powerful Retail Marketing Strategies
In the planning phase of retail strategy, you will need to decide on a marketing plan that will achieve the objective that you originally set. Retailers have many powerful marketing strategies at their disposal. Some of the most powerful strategies include social media marketing, spatial merchandising, boosting employee morale, and competitive pricing. The most powerful strategy for your business will depend on your objective and your circumstances. For example, if your prices are already competitive, then using a pricing strategy might not be your most effective option. You should therefore consider the benefits and drawbacks of each strategy before deciding which is best for your company.
Social Media Marketing
Retailers need to make sure that they are using social media ads to their fullest potential. A brand needs to isolate its target audience and market on the channels that its audience actually uses. You can also use this information to pay for advertising that targets demographic groups and geographic locations. Additionally, your company should foster organic brand interaction on digital platforms through resources like Facebook Groups.
Spatial Merchandising
Reorganizing your store layout is another way that you can boost sales. Retail merchandising principles, such as placing impulse buy items by your POS, can raise your revenue with little cost to your business. This strategy will be discussed more in-depth in the next section.
Raising Employee Morale
Your employees are the most important part of your business. Happy and healthy employees sell more effectively and can be your biggest promoters in the community and on social media. Increasing pay or benefits can therefore help you increase your sales numbers. Companies also gain good PR from raises and new benefits, which further boosts your marketing strategy.
Competitive Pricing
Slashing prices is a great way to bring more customers into your store. As inflation makes consumers more aware of their spending, a good deal becomes increasingly difficult to pass up. Sales and promotions help get customers in the door, and during these promotional periods, retailers often profit from selling items that are not at a discount alongside sale merchandise. This strategy also has the benefit of clearing out inventory before new shipments.
Using Store Design to Convert Sales
Retail merchandising is one of the most powerful marketing strategies available to companies. Retail merchandising involves using your store design and various displays to covert sales. In general, you want to create an inviting ambiance in your stores that invites customers to take their time browsing. You also want to lay out your floorplan ergonomically to match your natural flow of traffic and give shoppers plenty of personal space.
Using your store design to increase revenue also involves product placement. Your new arrivals and displays should be at the front of the store to ensure that every shopper and passerby can see them. In the back, you should place sale racks and your most popular items. This encourages customers to see all of your products even if they are only shopping for sale or specific items. Finally, you should always place a variety of add-on and impulse buy items near your POS to further increase sales.
Attracting Customers who will Pay Full Price
Another important element of retail strategy is attracting the right customers through good marketing. In retail, the right customer is one who will pay full price for your products. These strategies will help you court this clientele:
- Use targeted ads,
- Create lifestyle appeal,
- Build your brand,
- Establish scarcity around your product, and
- Normalize higher prices.
Most importantly, you will need to be willing to deal with rejection as you build a strong customer base. To win the right customers, you need to be willing to part with the wrong ones.
Streamlining your Sales Process
Successful retail strategies also include methods of streamlining your sales process. To improve your sales process, you must begin by outlining and identifying problems in your current pipeline. Then, you can implement solutions such as:
- Redesigning your physical and digital space,
- Utilizing CRM software,
- Introducing loyalty programs, and
- Improving employee sales training.
An efficient sales process is a key element of both customer and employee satisfaction. Your retail strategy must therefore address problems within it to achieve success.
Retaining your Customers
Customer retention is one of the top problems that retailers face. When people start to shop elsewhere, your profits suffer, and employee morale declines. Fortunately, there are many strategies that you can implement to keep your customer base happy, including:
- Loyalty programs,
- Price reductions,
- New products or services,
- An updated website, and
- Improvements to customer service.
To determine how to best improve your customer retention, you should use satisfaction surveys. These give people the opportunity to voice their opinions about your business, and you can use this feedback to target areas for improvement.
Common Problems with Retail Strategy
Finally, when building your retail strategy, you will need to anticipate common problems and understand how to address them. Along with customer retention, one of the most challenging aspects of your strategy can be creating a continuous experience for customers across online and in-store platforms. For example, a customer who sees an item listed as in-stock online will expect to see it in your store. This issue can extend to your marketing strategy, where managing omnichannel platforms is a major challenge for retailers. Between Instagram, email blasts, and traditional media, retailers must carefully design their marketing content to fit the appropriate platform.
Businesses must also contend with issues that fall outside of their control, such as supply chain management. In these circumstances, you will need to anticipate problems ahead of time, develop contingency plans, and use your own resources to find temporary solutions. Problem-solving is a key element of retail strategy, so you should outline potential challenges and form a plan B.
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