IGNOU Study Notes BRL-003 | CH-2 [ RETAIL PLANNING PROCESS ]

UNIT 2 RETAIL PLANNING PROCESS

Structure

2.0 Objectives
2.1 Introduction
2.2 Retail Planning Process
2.3 Features of Planning
2.4 Steps in Planning
2.5 Types of Plans
2.6 Barriers to Effective Planning
2.7 Qualities of Good Plan
2.8 Benefits of Retail Planning Process
2.9 Let Us Sum Up
2.10 Key Words
2.11 Terminal Questions
2.12 Further Readings

OBJECTIVES

After studying this unit, you should be able to:
• Define planning;
• Detail the planning and types of plans;
• Find barries in planning process;
• Identifiy qualities of an effective plan; and
• Explain benefits of retails planning process.

INTRODUCTION

Retail Planning forms one of the essential and major activity for any retail organization, which is one of the core function aimed at effective delivery as well as fulfilling goals of the organization.

2.2 RETAIL PLANNING PROCESS

The core of achieving success in an organization is the proper planning of the strategy to be adopted in short as well as as in the long run.
It has been well said, "If you fail to plan then you plan to fail" such is the importance of planning.
Planning is the concept of executive action that embodies teh skills of anticipating, influenceing and controlling the nature and direction of change.
There are two components of planning - mission and vision.
Mission outlines the goal of the enterprise and the strategy to pursued
Vision motivate for the future development and expanison of teh activites.

2.3 FEATURES OF PLANNING

The following are the identifiable features of planning.
1. Planning is a process of determining the future course of action.
2. Planning requires forecasting of future situation. The effectiveness of planning depends upon the accuracy of forecasting.
3. Planning is done at all levels of organization. Thus, plans are develpoed at the top management level, division level, department level and section level also.
4. Planning involves selection of right course of action. Effective planning involves selection of such alternative that provides maximum benefit to the organization compared to other alternatives.
5. Planning is Continuous managerial function. Plans are required for undertaking all managerail activites effectively. Plans are required for offical functioníng and for leading the organization towards the desired position in furture.

2.4 Steps In Planning:

1. Identification of opportunities:
• Business environiment is dynamic and ever changing.
• Changes create many opportunities.
• One has to study teh changes and spot out the right opportunities.

2. Setting Objectives:
• Once the opportunities are identified.
• The next step in the planning process is establishing objectives.
• Objectives specify the results expected.
• The managers should be clear about the desired result of a plan. The desire result may be in terms of profit to be achieved, market share, turnover (sales), customer retention etc.

3. Determining Planning Premises:
• The Premises are the expected internal and external conditions that influences directly or indirectly the plans and their execution in an organization.
• The external Premises include: political, socail, technical, Competitive, economic and so on.
• The internal Premises include: company policies, human as well as financial resources, strenghts and weakness, etc.
• Plans are formulated generally by taking both internal and external premises as applicable to a type of plan.

4. Identification of alternatives:
• It is believed that an objective can be achieved through several ways.
• Identification of alternative is an important step in the planning process.
• An alternative is one of the ways of solving a problem or achieving a result.
• Therefore, each alternative is capable of achieving the objective. Such alternative are needed to be listed out for evaluation.

5. Evaluation of alternative: • At this stage, each alternative is analysed in all dimensions to assess its contribution or benefit in the light of resources and constraints.
• An evaluation criteria will be develpoed to find our which alternative is more beneficial to organization.

6. Decision on future course of action:
• Selection of the best alternative is called decision making.
• The selection of best course of action for future is planning. So, the best course of action is decided for execution.

7. Development of support plan:
• The basic plan often requires support plans.
• For example, the plan to build coustomer relationship may require support plans in the area of human resources, training, communication, etc.

8. Development of action plan:
• Action plan is nothing but sequencing the activites required for effective execution of a plan.
• The action plan details the time frame for each part of the and fixes responsibilities. In other words, it gives the details of what to do, when to do, where to do, how to do, who will do and at what time.

2.5 TYPES OF PLANS

The following are the different types of plans.

1. Corporate plan: This plan covers the total organizational activites. Corporate planning includes the setting of objectives, organizing the work, people, and systems to enable those objectives to be attained, motivating through the planning process and through the plans, measuring performance and so controlling process of the plans and developing people through better decision making, clear, objectives, more involvement, and awarness of progress.
2. Functional plan: Functional plan is for a segment or part of the organization. Functional plans are within the scope of the corporate plan These plans include: marketing plans, finance plan, human resource plan, etc.
3. Strategic plan: This plan is a long term plan. Strategic plan details the way in which the company plan to use its strenghts to exploit opportunities and face threats.
4. Operational plan: These plans are short term plans covering operational activites of the organization. These plans are based on strategic plans. Examples of operational plans are resource allocation plan, implementation plan, etc.
5. Formal plan: This plan is develpoed through a well structured process of planning. There will be a well defined organizational system, processes and procedures for the development and finalisation of plans. Big business organization develop formal plans.
6. Informal plan: When a well structured process is absent for the development of a plan, such plan is called as informal plan. The planning process is based on managers perceptions and gut feelings rather than a systematic evaluation of various alternatives. Small business organization, generally, due to lack of sufficient resource develop informal plans.
7. Short term plan: These plans are related to existing operations of the organization. The plans usually cover a time period of one year or less than one year.
8. Long term plan: These plans usually covers all fuctional areas of the business. They take into consideration the existing as well as future changes in economic, social and technological factors. These plans usually involves more than a year and may extend to more than 20 year also.

2.6 BARRIERS TO ERRECTIVE PLANNING

The following are the important barries of effective planning.

1. Planning premises are difficult to formulate accurately: Planning execise is done under certain assumption of future happenings. Therefore. uncertainty of future happenings become one of the serious limitation and stands as barrier.
2. Rapid pace of change in the business environiment: The boom of organized retailing has significant affects on the economy. The competition scenario, technology applications, store design and layout, product offerings, value additions and so on are changing at alarming pace. These changes are further complicating the planning process.
3. Internal problems: The resistance to change among employees of an organization may become a hurdle in planning, Incorporating changes frequently in the policies and procedures may not be possible in all the organization. Such inflexibility or rigidity in policies and procedures also cause problems for planners.
4. External problems: External problems like changes in legal system, tax system, technology, etc. also influence planning process.
5. Efficiency of planners: Planning must be done by people with required skills and expertise. The quality of the planning process depends upon the quality of planners. All orgnizations may not have efficient human resource for the development of plans.

2.7 QUALITIES OF GOOD PLAN

The following are the quallities of a good plan.

1. Plans must be linked to long term objectives of the organization.

2. Plans should porvide direction for furture course of action.

3. Plans must be consistent in terms of external and internal factors. Therefore, orgnizations can have systematic growth over a period of time.

4. Plans must be feasible for implementation. They should take into consideration the realistic conditions of the organization.

5. Plans must be understandable. Therefore, plans should be simple and expresed in simple terms. The people who implement the plans should understand the motives of the planners to implement them effectively.

6. Plans should be flexible to incroporate changes that take place from time to time.

2.8 BENEFITS OF RETAIL PLANNING PROCESS

Benefits of the retail planning process are:

• Effective Cost Control
• Effective Stock Management
• Effective Store Sanagement
• Effective Display Sanagement
• Effective Customer Service
• Enhanced Customer Satisfaction
• Providing the requested product, at the right place and at right time,
• Striking a balance of size and operations as per local needs.


• Increased Profit by planning :-
• More profitable product combinations.
• Reduced frequency of over-stocking.
• Minimal "Stock Outs"
The other benefits include:
• Planning timely promotional campaigns
• Improved negotiations by increased buying power
• Faster stock turnover
• Real-time merchandizing
• Enhanced forecasting capabilites
• Market analysis
• High goodwill in the market
• Reduced competition