When was the last time your organization evaluated its retail strategy? Having a strategy that aligns with your organization’s goals and capabilities, but also allows room to scale and adapt, is paramount. Creating a retail strategy is an important step in this process, but retail organizations should not overlook the importance of reevaluating this strategy on a regular basis to ensure it is continually meeting organization and customer needs.

When to Reevaluate Your Retail Strategy

It is important to reevaluate your organization’s retail strategy at the right time to ensure the best use of company time and resources. There are a few critical times throughout the business and industry lifecycle when a company should consider evaluating its retail strategy.

Market changes. The retail market is constantly shifting. When major shifts occur, such as customer preferences, demographics or purchasing behavior, it is time to take a look at your retail strategy and ensure it aligns with the new environment.

Performance challenges. Being unprepared for significant fluctuations in demand, brand loyalty and profitability are all signs that your retail strategy may not be optimized. When you start to notice these signs, consider reassessment to identify the underlying causes and implement solutions.

Company expansion. Growth is a great thing for any company, whether that be expansion into a new market, region or product category. To ensure your infrastructure is ready for expansion and determine the most effective approach for the new organizational structure, you will need to complete a retail strategy assessment.

Economic shifts. Economic shifts will require a reassessment of the retail strategy as customer behavior will start to change based on the direction of the shift. Whether customer spending will decrease or increase, a strategy adjustment will be required.

Performance metrics. Data monitoring is critical in any retail organization. Metrics such as sales, inventory turnover, customer lifetime value and return on investment, when accurate to what is happening in the business, can all be indicators when a strategy assessment needs to occur.

Rise in artificial intelligence (AI). Retail is seeing rapid technological advances, especially with the recent influx of AI tools. When this happens, retail organizations should assess their strategy to leverage new tools, platforms and customer engagement methods if it makes sense for their business. An assessment can also be useful for determining if these new technology systems will even be beneficial to the organization’s goals and needs.

Supply chain disruptions. Supply chain disruptions like natural disasters, geopolitical events and pandemics can create new challenges for retail organizations. Amid a long-term disruption, it could be beneficial to reassess the retail strategy and ensure it can meet any sudden needs as well as adapt to future disruption more seamlessly.

Retail Strategy Reevaluation Checklist

There are certain aspects of a retail strategy reevaluation that must be present to ensure it is comprehensive. These aspects fall into three categories: People, processes and technology.

People

Implement change management. Change management is critical to adopting anything new from a retail strategy assessment. This is a continuous exercise, so it’s important not to lose sight of the infrastructural changes that will be required when a change is made to the business.

Have a holistic demand point of view. Consumer demand is people-based and incredibly nuanced. Your organization’s demand should apply to the product holistically regardless of selling channel. It is important to be communicating with the right people in your organization about demandand to have actions associated with it.

Don’t lose sight of the goal. Clearly align your business goals with your people, processes and technology. Conducting a full capabilities assessment of your organization will clearly illustrate the pain points, gaps and opportunities for growth and improvement along with a timeline to execute, resulting in improved strategies and execution.

Process

Align metrics to business needs. You cannot improve what you do not measure. Rather than jumping into an assortment planning software investment, implement stronger metrics that are representative of what your leadership needs to know. This is a lower-cost, lower-risk way to increase profitability.

Focus on process. A strong assortment justification process can align inventory and influence product design to mitigate the cost of overdevelopment, over-assorting and housing too much inventory. Assessing and improving this process would ultimately improve profitable revenue.

Have a strong returns strategy. Based on historical data, returns are likely to run 16-18 percent in 2023. Retailers cannot overlook a detailed returns strategy and plan. It is critical to have a clear view of inventory that is truly available to sell versus existing somewhere in the pipeline.

Position inventory appropriately. Ensure your inventory and demand are aligned from the point of distribution and sale. Push what is needed to be brand positive and tell the merchandise story at the store. Once established, let sales dictate where and how your replenishment flows.

Keep an end-to-end perspective. All inventory should be held accountable for expected sales and profit performance from conception to final sale. This is measured through a series of linked plans, such as corporate sales goals, merchandise financial plans by channel, assortment planning at all levels, demand planning and forecasting, allocation and replenishment.  

Technology

Leverage data to drive decisions. Quality data is of the utmost importance in any retail strategy. Implementing clearly defined data governance and management will ensure your data is accessible, available and ready for use across the enterprise, facilitating more efficient and informed decisions.

Automate solutions wisely. Artificial intelligence and machine learning are removing much of the guesswork in decision-making. Be sure to develop a plan to take advantage of those features within your existing technology.

Optimize the technology you own. Owning technology does not guarantee benefiting from it. Implement processes supporting the use of the technology then review them on a regular basis.

Retail strategy assessment is an ongoing process that will keep your organization at the top of its class with customers and competitors. Ready to get started? Consider partnering with enVista to complete your capabilities assessment, which will ensure the alignment of your organization’s goals and capabilities. Or just reach out to our retail consulting team. Let’s have a conversation.®