Whether you’re setting up shop or have owned a retail business for years, you might wonder if a formal retail strategy is necessary. You may rely on your intuition or gut instinct to make decisions about growing sales and increasing margins.
But boosting those numbers doesn’t happen at the drop of a hat. As you scale your business, you need an effective retail strategy to guide those important decisions.
Ahead, we’ll break down the core components of a retail strategy and highlight merchant examples of successful retail marketing strategies.
Table of contents:
What is a retail strategy?
A retail strategy outlines how a store chooses and sells its products to customers. It includes the strategies a business uses to attract shoppers, what products it sells, and how it encourages customers to return.
A well-thought-out retail strategy highlights the right products, prices, and promotions, helping a store stand out from the competition. The goal of a retail strategy is to help the store achieve sales goals and grow over time.
5 key components of a retail strategy
Your retail strategy needs to include everything from how you choose products to how they’re distributed. Here are the five key components you should include:
- Product selection
- Pricing strategy
- Customer experience
- Marketing and promotion
- Location and distribution channels
1. Product selection
Choosing the right products is the cornerstone of a successful retail strategy. It involves understanding what your customers want and ensuring those items are available in your store.
Good product selection also involves regularly updating your offerings to keep up with trends and evolving customer preferences.
2. Pricing strategy
Setting the correct product prices will help you attract customers and make a healthy profit. While creating your pricing strategy, consider factors like:
- Cost.
- Competition.
- Customer expectations.
Thoughtful pricing helps position your retail store competitively, encourage sales, and build customer loyalty.
3. Customer experience
Customer experience is how customers feel when they shop with you online and in-store. It includes everything from the ease of finding products to the checkout process and the service they receive. A great customer experience keeps shoppers happy, encourages repeat business, and turns customers into brand advocates.
4. Marketing and promotion
Marketing and promotion are the ways you tell potential customers about your products and special offers. Depending on your business, you may want to build a retail content marketing strategy and create a presence on social media platforms like TikTok, Instagram, and Facebook.
Consider how you can use promotions to drive traffic to your store, introduce new products, and boost sales during slower periods.
📚Learn more: 21 Types of Marketing to Promote Your Brand (2024)
5. Location and distribution channels
Where and how you choose to sell products will influence customer perception of your products and if they reach your target audience.
A strategic location can significantly increase foot traffic, while diverse distribution channels, such as online sales platforms or mobile commerce, can broaden your reach.
6 steps to create a retail strategy
Creating your retail strategy requires a mix of methodical and creative thinking. Here are six basic steps:
- Do market research
- Define your value proposition
- Decide what products you’ll offer
- Develop a pricing strategy
- Choose a channel strategy
- Market your store
1. Do market research
Start by gathering information about your target customers and what they want. Research market trends, customer preferences, and your competitors' offerings. Spend time on social media platforms like TikTok and Instagram to see what’s trending and driving engagement.
You could also browse community forums like Reddit and Quora to identify the problems your ideal customers face. Next use in-person and social media surveys to understand demand. Later, you could also hold focus groups and analyze global sales data to corroborate your findings.
If you’re setting up a brick-and-mortar store, research the area's footfall and potential competitors. Research the busiest times of the week in your potential store locations to determine if they match your target audience.
For example, if you’re targeting young mothers, you may want your store location to be in an area with high footfall around school pick-up and drop-off times.
💡Pro tip: Before committing to a physical space, hold a pop-up shop to determine if the location is right for your new store.
2. Define your value proposition
Decide what makes your store unique. Your value proposition should clearly articulate why customers should choose your store. Is it your unique product selection, superior customer service, or your sustainability commitment?
Understanding and communicating your unique strengths will help attract and retain customers who are looking for what only you can offer. Your value proposition is the foundation of your marketing efforts––guiding advertising, customer engagement, and product development decisions.
3. Decide what products you’ll offer
Choose products that align with your value proposition and meet your customers' needs. Start by analyzing market trends, customer feedback, and competitor offerings. Consider factors like profitability, supply chain reliability, and alignment with your brand identity. Aim to create a balanced mix of bestsellers and unique items that differentiate your store.
It’s also important to consider product variety and how often you’ll rotate or update your offerings.
4. Develop a pricing strategy
Set prices that attract customers while leaving room for profit. Start by understanding your costs and the price points of your competition. Then, consider your customers' perceived value of your products and how pricing can strategically position your brand.
Use a mix of pricing tactics, such as competitive pricing, keystone pricing, or discount promotions, to attract different customer segments.
For example, you could implement pricing tactics like discounts for bulk purchases or promotions during peak shopping seasons.
Ultimately, your strategy should reflect your overall market positioning—whether you’re a budget-friendly option or a premium brand.
Your pricing strategy will evolve with your business. So, regularly review and adjust your prices based on market conditions, sales data, and customer feedback to ensure they align with your business goals and market dynamics.
5. Choose a channel strategy
Next, decide where and how to sell your products to reach the most customers. Combining physical stores with an online presence offers a great combination of convenience and accessibility.
It’s also worth evaluating the possibility of selling on third-party platforms like marketplaces or using social media for direct sales. But always check the fees associated with set-up, payment processing, and commission, as these can quickly eat into your margins.
Select channels that align with your customer's shopping preferences and your business goals. For example, if your target customers are mainly Gen Z shoppers, create a digital marketing strategy focusing on TikTok and Instagram.
6. Market your store
Your marketing plan will develop alongside your business. First, prioritize a few core channels for driving brand awareness and reaching your target audience. It’s best to focus on fewer channels and market your business regularly rather than spread thin over too many channels.
For instance, if you’re setting up a physical store, you might start with Facebook, email newsletters, and local advertising to connect with potential customers. Next, you could host some events, hold special promotions, or start a loyalty program to boost customer interest and retention.
Later, add other channels like Instagram or host limited edition pop-up shops with other brands.
📚Learn: What is Retail Marketing? 9 Strategies & Examples (2024)
9 retail marketing strategies
Need some inspiration to kickstart your retail strategy? Here are nine of the most effective retail marketing strategies and several merchant examples to help you get started.
- Local partnerships
- Loyalty programs
- Online sales
- Local search
- In-store interaction
- Events
- Optimized POS
- Inventory management
- Subscriptions
1. Local partnerships
Local partnerships help amplify brand reach and solidify your community presence. You could partner with local businesses that complement your offerings. For example, a coffee shop could partner with a local bookstore to offer combined discounts.
Alternatively, collaborate with another brand and create exclusive products that merge the strengths of both businesses. This could involve releasing a special edition item that's only available for a limited time, sparking interest and increasing foot traffic. You can also use local partnerships to highlight your brand’s core value and mission.
Take GOODEE, a home decor store that works with independent artists worldwide. It focuses on fair trade and ethical practices. Their business model supports global artisans and gives each home décor item a unique story, enhancing the brand's appeal through its commitment to sustainable and ethical production.
📚Learn more: Local Marketing: How to Drive Local Shoppers to Your Brick-and-Mortar Store
2. Loyalty programs
Loyalty programs are a great way to incentivize your existing customers to continue purchasing from your brand.
Here’s how you could use loyalty programs to boost sales and customer retention:
- Reward purchases: Implement a points system where spending leads to rewards like discounts or special offers, incentivizing continued shopping.
- Tiered benefits: Introduce levels within your loyalty program to encourage higher spending, offering greater rewards as customers climb tiers.
- Exclusive offers: Provide members early access to products or special events, adding a layer of exclusivity and value to the loyalty membership.
- Targeted marketing: Use customer data from the program to send personalized promotions and communications.
For example, Pacifica Beauty designed a tiered loyalty program to encourage repeat purchases. Each tier offers repeat customers different benefits, including gifts, early access to product launches, and special birthday offers.
3. Online sales
Setting up an online shop is the right step when you’re ready to expand your customer base beyond local shoppers. Launching an ecommerce store will also allow you to consider new revenue streams. For example, you could begin selling wholesale to other businesses or letting shoppers customize products online.
For example, Verve Coffee Roasters opened a single neighborhood cafe branch in 2007. The brand now has an online shop selling a range of blends, filters, merch, and custom subscriptions.
4. Local search
Optimizing for local search is key for retailers with a brick-and-mortar store. Prioritizing local SEO will help potential customers find your business when they’re in your area searching for the products and services you sell.
Here’s how to effectively use local search:
- Google Business Profile: Set up and manage a Google Business Profile. Ensure your listing has up to date information, including address, hours, and contact details.
- Local keywords: Add local keywords to your website content and metadata. Keywords should reflect the local area you serve and what you offer. For example, book store in Seattle or soap shop in Boston.
- Customer reviews: Encourage happy customers to leave positive reviews on your Google Business Profile and other relevant platforms. High-quality reviews improve your visibility in local search results.
- Mobile optimization: Make sure your website is mobile-friendly––close to 60% of searches take place on mobile.
5. In-store interaction
Positive in-store interactions will make customers feel good about shopping in your store and encourage them to return. Here’s how to optimize these interactions:
- Personalized service: Train staff to offer personalized recommendations to improve customer satisfaction
- Product demos: Perform live demonstrations to showcase product uses and benefits to enhance customer understanding.
- Interactive displays: Use tablets or kiosks to provide detailed product information.
- Immediate feedback: Use direct interactions to collect instant feedback to refine products and services.
Merchants like furniture brand Kroft use physical spaces to test new products and gather customer feedback directly. This hands-on approach encourages customer engagement and highlights if there’s demand for a product before they invest in inventory.
6. Events
Hosting events is a powerful way to increase brand visibility and build deeper community ties. Organize in-store events like product launches or workshops to draw in customers and engage with them directly.
You could also participate in community events or sponsor local activities to broaden your exposure and showcase your commitment to the community.
For instance, Fly by Jing uses events and partnerships, like its collaboration with Disney and Shake Shack, to challenge perceptions of Chinese food in the US. Recently, the brand partnered with Arrae to create two limited-edition spicy sauces for sensitive tummies. This approach helps promote its brand while educating the public about its unique products.
7. Optimized POS
A POS system will help you speed up the checkout process and reduce customer wait times, allowing quicker service. Most POS systems also automatically track product sales and update inventory levels, helping you track stock accurately and reorder products efficiently.
POS systems like Shopify also provide detailed reports on sales performance, inventory, and customer preferences, which help you make better business decisions. Your POS system can also store customer data, manage loyalty programs, and track purchase histories, enabling personalized marketing and improving customer service.
8. Inventory management
Inventory management systems automatically track and update inventory levels, reducing the risks of overstocking or stockouts.
When you use Shopify, you get access to real-time inventory data. This data helps you decide when to reorder stock, which items are fast-moving, and adjust purchase orders.
This way, you’ll ensure that popular products are in stock and reliably meet customer demand. You’ll also lower costs by avoiding excess inventory and reducing storage space requirements.
9. Subscriptions
Introducing a subscription service is a smart move to stabilize revenue and enhance customer loyalty. This approach ensures your customers receive new products or exclusive services regularly, keeping your brand top-of-mind and simplifying the repurchase process.
Customize your subscriptions to match customer preferences—be it monthly product deliveries, access to special editions, or VIP service options. To attract subscribers, highlight the benefits of convenience, exclusivity, and discovery.
When executed well, a subscription model secures a predictable income stream and fosters a dedicated customer base, turning casual shoppers into loyal advocates for your brand.
For instance, TheraBox provides a curation subscription service, delivering monthly boxes filled with self-care products. Each box is themed differently, creating a sense of surprise and delight that encourages ongoing subscriptions.
Build a retail strategy to propel your business in 2024
Creating a retail strategy will help guide all your important business decisions. Strategic planning will also help you increase your bottom line and grow sales. As you learn what works and what doesn’t, you can evolve your retail strategy to always be in tune with customer demand.
Retail strategy FAQ
What is the best retail strategy?
The best retail strategy focuses on understanding customers and consistently meeting their needs. This means having the right products, setting fair prices, and providing excellent service, making your store a favorite place for consumers to shop.
What is a retail sales strategy?
A retail sales strategy is a plan that helps a store sell its products effectively. It includes setting the right prices, choosing where and how to sell products, and promoting them to attract customers. The goal is to increase sales and make customers happy so they keep returning.
What are the three keys to retail success?
The three keys to retail success are:
- High-quality products: Offer items that customers want and need, prioritizing quality and variety.
- Excellent customer service: Make sure every customer feels valued and supported, in-store and online.
- Relevant marketing: Use advertising and promotions to attract new customers and keep existing ones engaged.
