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1. RETAIL STRATEGY Title Slide with Graphic DELETE THESE INSTRUCTION BOXES FROM FINAL PRESENTATION.

2. LEARNING OBJECTIVES Explain the concept of strategy Describe the concept of a business model Discuss the importance of strategy and process of strategy formulation in retail Analyze the elements of retail value chain 28 Divider Slide with Graphic For visual consistency, use either “photo” or “graphic” treatment for Dividers. (Do not mix styles within a presentation.) DELETE THIS INSTRUCTION BOX FROM FINAL PRESENTATION. Update Footer Text in Insert Tab's Header & Footer [Title Case]

3. Concept of Strategy The word strategy comes from ancient Greece. The word spread to France as stratégie and then to English as “strategy” in 1810. The primary definition examined is by Carl von Clausewitz’ ‘the art of the employment of battles to gain the object of war’. This definition views strategy as policy and believes that battle is the only means of achieving strategic ends. George Steiner, considered as the father of strategic planning notes that strategy entered the management literature as a way of referring to what one did to counter a competitor’s actual or predicted moves. Steiner points out that there is little agreement to the meaning of strategy in business. Some of the definitions Steiner pointed include : • Strategy is that which top management does that is of importance to the organisation . • Strategy refers to basic directional decisions, that is, to purposes and missions. • Strategy consists of the important actions necessary to realise these directions. • Strategy answers the question: What should the organisation be doing? • Strategy answers the question: What are the ends we seek and how should we achieve them? 29 Update Footer Text in Insert Tab's Header & Footer [Title Case]

4. Concept of Strategy The rise and subsequent fall of strategic planning brings us to the definition of strategy put forth by Henry Mintzberg. According to Henry Mintzberg, people use ‘strategy’ in several different ways, the most common being the following: Strategy is a plan, a ‘how’, a means of getting from here to there. Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a ‘high-end’ strategy. Strategy is position; that is, it reflects decisions to offer products or services in markets. Strategy is perspective, that is, vision and direction. Strategy as the basis for competition is best understood from the perspective of Michael Porter. According to Porter, competitive strategy is ‘about being different’. He adds, ‘It means deliberately choosing a different set of activities to deliver a unique mix of value’ 30 Update Footer Text in Insert Tab's Header & Footer [Title Case]

5. Concept of Strategy Benjamin Tregoe and John Zimmerman define strategy as ‘the framework, which guides those choices that determine the nature and direction of an organization’. This can be interpreted as selecting products to offer and markets in which to offer. Treacy and Wierseman identify three ‘value disciplines’ that can serve as the basis for strategy: operational excellence, customer intimacy, and product leadership. As with driving forces, only one of these value disciplines can serve as the basis for strategy. Strategy is perspective, position, plan and pattern. Strategy is the bridge between policy or high-order goals on the one hand and tactics or concrete actions on the other. Strategy is a framework that provides guidance for actions to be taken and, at the same time, is shaped by the actions taken. While creating a strategy, it must be remembered that every business has its distinctive way of organising the many activities that are involved in delivering its product or service to the end consumer. I 31 Update Footer Text in Insert Tab's Header & Footer [Title Case]

6. Concept of the Business Model 32 Update Footer Text in Insert Tab's Header & Footer [Title Case] A business model, helps understand, describe and predict the ‘activity of buying and selling goods and services’ and ‘earning money’ of a particular company. A synthesis of literature shows that there are mainly nine building blocks to help us describe business models, which are listed below – 1.The target customer segments addressed by the retailer; 2. The value proposition of what is offered to the market; 3. The communication and distribution channels to reach customers and offer the value proposition; 4. The relationships established with customers; 5. The configuration of activities required to implement the business model; 6. The core competencies needed to make the business model possible; 7. The revenue streams generated by the business model constituting the revenue model; 8. The cost structure resulting for the business model; 9. The partners and their motivations of coming together to make a business model happen.

7. Concept of the Business Model 33 Update Footer Text in Insert Tab's Header & Footer [Title Case] A business model is, thus, a conceptual tool that contains a set of elements and their relationships and allows expressing a company’s logic of earning money. An organisation is not singularly responsible for the success or failure of its business plans. It is affected by an external environment which influences the forces which shape strategy. Companies that thoroughly understand their business model rethink and redesign constantly for long term success. Thus, both strategy and business model evolve in keeping with the requirements of the consumers, changes in technology and other factors affecting the market. Alibaba though an ecommerce company, has a unique business model. It varies significantly from that adopted by Amazon or eBay.

8. Concept of the Business Model 34 Update Footer Text in Insert Tab's Header & Footer [Title Case] Alibaba.com is a business to-business site, a Chinese ecommerce platform represented by three businesses: Alibaba, Taobao and Tmall . It is a business to-business site. Taobao on the connects international businesses to consumers – or consumers to consumers – and Tmall is a marketplace geared towards China’s middle class, focused on large, multi-national brands. An interesting element of its business model is the fact that the Alibaba Group holds no inventory and owns no warehouses. Alibaba has created software platforms that facilitate the exchange of goods and services. While Alibaba’s revenues are less than Amazon’s, the reported operating and profit margins are higher. Deployment of technology and the use of data analysis have played a key role in the success of the group.

9. Strategy – The Retail Perspective A 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 a retail strategy enables other areas within the organisation to determine their strategies. Primary among these are: Store location Merchandising Pricing Marketing Experts have argued that the three most important aspects of any retail business were location, location and location. Model based on discounting may not really require prime locations; in this case, a larger space may be what is needed. In the context of retail today, a retailer would probably need to modify this to the Channel through which he is going to reach the end consumer. 35 Update Footer Text in Insert Tab's Header & Footer [Title Case]

10. Strategy – The Retail Perspective The second factor influenced by the strategy, is the stocked merchandise. Merchandising must match the selling strategy. Very often the merchandising strategy is based more on long-term vendor relationships or competitive distribution issues than on a business strategy communicated throughout the organisation . Merchandise strategies should be based on consumer research. Related to merchandising is pricing, which again is influenced by the business model that the retailer has chosen. The process of strategy formulation in retail is the same as that for any other industry. The mission is the first step - internal strengths, weaknesses, external threats and opportunities are examined for management to decide. The options are examined and the objectives set. Next, the management identifies the major strategic alternatives it could pursue. Markets are then determined - within the country and internationally. The objectives are determined and resources are obtained and allocated to help achieve the objectives. The strategy must then be implemented. Finally, results must be measured and evaluated to ensure that the strategy is working and any 36 Update Footer Text in Insert Tab's Header & Footer [Title Case]

11. Strategy – The Retail Perspective 37 Update Footer Text in Insert Tab's Header & Footer [Title Case] Steps involved in developing a retail strategy

12. The five forces model 38 Update Footer Text in Insert Tab's Header & Footer [Title Case] Five forces of competition

13. The five forces model 39 Update Footer Text in Insert Tab's Header & Footer [Title Case] Michael Porter’s Five Force analysis is a tool for the structural analysis of industries. Entry of competitors: The ease of entry for competitors to enter the market and to start competing and the barriers to entry which may exist. Threat of substitutes: The ease with which a product or a service can be substituted, especially made cheaper. Bargaining Power of Buyers: The position of the buyers, can they work together to gain efficiencies in buying. Bargaining Power of Suppliers: The position of the sellers. Do many suppliers exist or is there a existence of only a few suppliers. Rivalry among the existing players: The level of competition between the existing players, the size and the strength of the players in the industry.

14. Ansoff’s matrix Ansoff’s Matrix, helps us understand the options available to a retailer. These alternatives available to the retailer are: • Market penetration • Market development • Retail format development • Diversification. Growth opportunities for a retailer. 40 Update Footer Text in Insert Tab's Header & Footer [Title Case] PRODUCTS MARKETS

15. Ansoff Matrix of IKEA 41 https://boardmix.com/examples/ansoff-matrix-example/

16. 42 Ikea India news https://www.hindustantimes.com/business/this-is-ikeas-plan-for-india-doorstep-delivery-owing-to-online-demand-101706609663663.html

17. The retail value chain The retail Value Chain 43 Update Footer Text in Insert Tab's Header & Footer [Title Case]

18. The retail value chain As the retailer grows from the position of one shop to a chain of retail stores and from a local to a regional and national presence, strategy and planning become important . A firm may create a cost advantage by reducing the cost of individual value chain activities or by reconfiguring the value chain. Once the value chain has been defined, by assigning costs to the value chain activities, one can perform a cost analysis. A firm develops a cost advantage by controlling these drivers better than its competitors. ‘Reconfiguring’ the value chain can also provide a cost advantage. This means structural changes such as a new production process, new distribution channels or a different sales approach. This is especially relevant today with the growth of multiple channels of retail and distribution. Occasionally, there have been references to retail strategy models like the pentagon and the triangle. The retailer can either become a pentagon player or a triangle player. If the retailer chooses to become a pentagon player, he focuses on: • Product • Place • Value • People • Communications 44 Update Footer Text in Insert Tab's Header & Footer [Title Case]

19. Chapter 14 – Human Resource Management In Retail – A Strategic Tool

20. Learning Objectives The Role Of HRM In Retail The Significance Of HRM In Retail The Key Elements Of The Human Resource Function Creating Organization Structures Organization Structure In Retail 46 Update Footer Text in Insert Tab's Header & Footer [Title Case]

21. The Role Of HRM In Retail The early 1990s saw the emergence of Human Resources as a key factor within the gamut of the company’s strategy and its implementation. The function of Human Resources has moved across four strategic paradigms which are: • The Personnel Perspective – The firm purely hires people, but the focus is not on hiring the best or on personnel development. • The Compensation Perspective – The firm uses bonuses, incentives and meaningful distinctions in pay to reward performance. • The Alignment Perspective – The firm does see human capital as assets but does not invest in utilizing the capabilities of the same. • The High-performance Perspective – The firm views Human Resources as an integral element of the firm’s strategy implementation. 47 Update Footer Text in Insert Tab's Header & Footer [Title Case]

22. The Role Of HRM In Retail HRM can be defined as ‘ a strategic and coherent approach to the management of an organizations’ most valued assets – people working there who individually and collectively contribute to the achievement of its objectives’ . Strategic Human Resource Management is the practice of aligning business strategy with that of HR practices to achieve the strategic goals of the organisation. The aim of SHRM is to ensure that HR strategy is not a means but an end in itself. The HRM policy enhances the performance of the organisation, the well-being of employees, or the well-being of society and has to take the four Cs of Commitment, Competence, Cost effectiveness and Congruence into consideration 48 Update Footer Text in Insert Tab's Header & Footer [Title Case]

23. The Role Of HRM In Retail 49 Update Footer Text in Insert Tab's Header & Footer [Title Case]

24. The Role Of HRM In Retail It describes the seven factors that enable a company to be organized in an effective manner. All the factors are interdependent, hence if one does not pay proper attention to one of them, it may influence the others. At the center of the McKinsey model is – shared values, which largely focus on what the organisation stands for and its beliefs and values. A key link to the shared values is strategy, which builds on how the firm plans to achieve its goals. Allocation of resources, understanding consumers and competitors are also important. The next element is structure, which focuses on how the various units within the organisation function and function with each other. The processes and the procedures which take into consideration elements from finance to employee performance are a part of systems, and people in the organisation or the staff is the one who makes it possible along with the skills of the people within the organisation. Last but not the least, it is the style or the leadership style that is adopted within the company. 50 Update Footer Text in Insert Tab's Header & Footer [Title Case]

25. The Key Elements Of The Human Resource Function The Human Resources function in retail involves: • Identifying various roles in the organisation • Recruiting the persons with the right attitude to fit the jobs • Training • Motivation of employees • Evaluation of employee performance 51 Update Footer Text in Insert Tab's Header & Footer [Title Case]

26. The Key Elements Of The Human Resource Function 1. Identifying Various Roles In The Organization: This helps in determining the number of people required for various jobs, the skill sets, and educational background needed and the location where they are going to be based depending on the organization structure defined and the size of the retail operation. Key tasks in a typical retail organization involve: • Buying and merchandising • Store management and operations • Technology support • Supply chain and logistics • The function of managing people • Marketing, customer service and customer experience 52 Update Footer Text in Insert Tab's Header & Footer [Title Case]

27. The Key Elements Of The Human Resource Function 2. Recruitment and Selection: Next step is to categorize job based on the functional or geographic needs. The aim of the recruitment process is to make available job applicants for a specified job/s. Common ways of recruitment include newspaper advertisements, visits to colleges, existing employees, references, recruitment agencies and even websites. 3. Training : Training is an important aspect of HRM in retail which is needed for • Inducting new persons/staff into the organization • Training of sales staff for skill enhancements Training of staff/personnel for skill enhancements • Training for functional areas and related to the workforce 53 Update Footer Text in Insert Tab's Header & Footer [Title Case]

28. The Key Elements Of The Human Resource Function 4. Motivation of employees: Success in a retail environment largely depends on the workforce. The need to influence people within the organization to perform the tasks as needed by the organisation is very important. The key factors that help in motivating people are: 1) The organisation culture 2) The rewards and recognition 3) The monetary benefits 4) Prospects for growth and job enrichment 5. Evaluation of employee performance: The basis for performance evaluation is the goals that have been set. Goals, which are specific, tied to rewards and voluntarily committed to by employees. Goals make the expected level of performance clear and help improve performance by measuring the progress of a task 54 Update Footer Text in Insert Tab's Header & Footer [Title Case]

29. Creating Organisation structures 55 Update Footer Text in Insert Tab's Header & Footer [Title Case]

30. Creating Organisation structures 56 Update Footer Text in Insert Tab's Header & Footer [Title Case] The first step in creating an organization structure, which will work for the retailer, is to define the various tasks/activities that need to be performed. They can broadly be classified as: • Top Management • Buying and Merchandising • Store Operations • Administration and Human Resources • Support functions like – Advertising, Marketing, PR and Accounts Once these tasks have been identified, the management needs to take into consideration its own requirements and targets and how they can be achieved. It needs to consider the requirements of the target market and the needs of its own internal customers, i.e., the employees. An organization structure or an organization chart is then developed after taking into consideration all these factors.

31. Organisation Structure In Retail The way a retailer is organized contributes to its uniqueness. The organization structure makes a definite impact on the various functions within the organization. Various factors, which influence the creation of organizational structures, are: • Scope and scale of operation viz local, regional, national or international • Types of products sold • Type of departmentalization, i.e., functional, product wise or geographic 57 Update Footer Text in Insert Tab's Header & Footer [Title Case]

32. Organisation Structure In Retail 58 Update Footer Text in Insert Tab's Header & Footer [Title Case]

33. Organisation Structure In Retail The four functions that he recommended are: 1. Control : This department is usually responsible for looking after the assets of the organisation and functions like accounting; credit and control are a part of it. 2. Publicity : Responsibilities include advertising, sales promotions, public relations, publicity, etc. 3. Operations : Include responsibilities the actual operations of the store, including receiving goods, checking, maintaining recorded and customer relations. 4. Merchandising : Duties of this department would start with forecasting the merchandise required, procuring the merchandise, pricing it and making it available at the retail stores. 59 Update Footer Text in Insert Tab's Header & Footer [Title Case]