To be successful, retailers need to examine market trends through the lens of their business to ensure alignment with business strategy and purpose. Any retailers wishing to get ahead of their competitors in a tangible way, need to be able to anticipate market trends effectively.
If the ability of retailers to investigate and analyse market trends is a core competency, the ability to anticipate market trends and effectively forecast demand is the competency that sorts the professionals from the amateurs.
This is where retail start-ups can get the jump on their competitors. It may be risky territory, yet with effective planning, success is highly possible.
SWOT analysis
SWOT Analysis is a useful technique for understanding a business given its context and the impacts upon it both internal and external to business. SWOT analyses map their strengths and weaknesses, alongside the opportunities and threats they face. A thorough SWOT can help carve a sustainable niche in the market.
What makes SWOT particularly powerful is its ability to help uncover opportunities that the business is well placed to exploit. By understanding the weaknesses of the business, you can manage and eliminate threats that would otherwise eventuate.
More than this, by looking at a business and its competitors using the SWOT framework, it is possible to craft strategies (and the objectives that follow) that helps distinguish a business from its competitors so it can compete successfully in the market.
Strengths:
· What advantages does the business have?
· What does the business do better than anyone else?
· What unique or lowest-cost resources can be drawn upon that others can’t?
· What do people in the market see as the business’ strengths?
· What is the business’s Unique Selling Proposition (USP)?
· Which strategies have been successful in the past?
Consider strengths from both an internal perspective, and from the customers and people in the market. It is helpful to determine a list of the business’s characteristics. Some of these will potentially be strengths. When reviewing the strengths, think about them about those of the competition. For example, if all competitors provide high quality products, a high-quality production process is not a strength in that market, it’s a necessity.
Weaknesses:
· What could be done to improve?
· What should be avoided?
· What are those in the market likely to see as weaknesses?
· What factors lose the business sales?
· What has not been successful in the past?
Again, consider this from an internal and external basis: do other people seem to perceive weaknesses that have not been identified? Are competitors doing any better than the business? It’s best to be realistic now and face any unpleasant truths as soon as possible.
Opportunities:
· What good opportunities exist?
· What lessons have been learned from others and past experiences?
· What interesting trends exist?
· Changes in technology and markets on both a broad and narrow scale
· Changes in government policy related to your field
· Changes in social patterns, population profiles, lifestyle changes…
· Local events
A useful approach when looking at opportunities is to look at the business’s strengths and ask whether these open up any opportunities. Alternatively, look at the business’s weaknesses and ask whether eliminating them could open opportunities.
Threats:
· What obstacles does the business face?
· What are competitors doing?
· Are quality standards or specifications for roles, products or services changing?
· Is changing technology threatening the business position?
· Are there bad debt or cash flow problems?
· Could any weaknesses seriously threaten the business?
When developing a SWOT for a business, ruthlessly prune long lists of factors, and prioritise them to focus on the most significant factors. Ensure that options generated are carried through to formulate the business’s strategies and objectives, rather than forgotten in the process. Finally, it must be applied at the relevant level; for example, a SWOT Analysis may be necessary at product or store level rather than at the much vaguer company level.
Further analysis is required for SWOT data to be of maximum value. Considering how the opportunities and threats arising from SWOT analysis may impact market demand allows retailers to develop strategies to both capitalise on opportunities for growth and mitigate potential threats through the development of necessary contingencies.
The importance of this cannot be underestimated. Contemporary retail is a dynamic industry, influenced by politics, the economy, technology, societal shifts, and consumer preferences and perceptions. Any advantage retailers can leverage that will help them weather the storms and take advantage of fair sailing will set them apart from competitors.
When opportunities are identified, and the business is working to ascertain their potential contribution to ongoing organisational profitability and sustainability, all eyes turn toward the future. How well retailers analyse forecasts of future demand is a significant indicator of their ability to deliver upon the potential of market opportunities.
As a result, for the majority of retailers, data is required to support proposals for strategic change, specifically data on the likely outcomes of taking the suggested course of action. Quantifying future demand forecasts with reliable data allows key stakeholders to evaluate opportunities based upon likely outcomes. Although few retailers have a crystal ball, well researched data that substantiates a potential course of action is far more reliable than instinct.
The ARA Retail Institute runs multiple workshops on retail, planning and strategic management. Join the ARA Retail Institute in their latest workshop which looks into how to analyse merchandise performance results and follow an organisational strategy to plan and enhance ongoing merchandise performance.
The ARA Retail Institute runs multiple workshops on retail, planning and strategic management. Join the ARA Retail Institute in their latest workshop which looks into how to analyse merchandise performance results and follow an organisational strategy to plan and enhance ongoing merchandise performance.
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About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au
