Question

After completing your feasibility report a bout your new Business as a retail store what is your biggest THREAT and why do you think you can overcome it? explain in detail

Answer 1

Retail store is a store that sells small quantities of products or services to the customers. Retailers are direct in touch with ultimate consumers. In this competitive world one ignorance lead to huge losses to the company.

In same manner even retail store are expose to certain threats which are as follows with their solution to cope up.

1.COMPETITION:

Retail store can be started by anyone,there is minimal barriers to entry. This result cut throat competition,normal profit for long run and hinder growth of the retail store.Sometime to capture market seller try to use unfair means like predatory pricing(seller set price of their goods or service at such a low level that other firms can not compete and are forced to leave the market).

Solution

i) Determine competitors and periodically monitor product price in the market.

ii) Uses concept of loyalty cards,which help consumer analysis as well as predicting the product that satisfy expectation.

iii) Adopt product pricing strategy by understanding consumer behavior and the manner by which they make purchasing decision.

iv) Prepare plan for sales increase by organizing sport event or competition, in order to get edge in the market.

ONLINE PLATFORM:

Due to smart phone and easy access of internet boost the business of e-commerce. Retail store losing their potential consumer because of easy click purchasing websites.

Solution:

i) Adopt creative ways to encourage consumer to visit their stores like using promo cards, offers, sales discount etc.

COMPLIED WITH LAWS AND LEGISLATURE

Due to changing or amending policies and laws every now and then, make things difficult for retailer as they fail to complied with laws on time.

Solution:

i) Adopt procedure for identifying and complying with any change made to Laws and legislation

ii) Fixes a time period for initiating the action requires for renewing agreement and licenses prior to expiry.

FRAUD AND THEFT:

Retailer sells goods on credit basis to their close regular customers,sometimes consumer fail to pay and run.

Employee manipulate discount card for own benefits.

Consumer or Employees steal goods or money very often in Retail store.

Solution;

i) Develop a clear policy on employee discount ,including a maximum amount of the discount granted to each employees and develop a periodic report on the same.

ii) hires security employees at store containing high value goods and insures goods against theft.

STORAGE:

Goods are sometime stored in improper manner or spoiled by natural calamities like floods, earthquake,fire breakdown etc,

solution:

i) Develop procedure for storing goods in compliance with the all safety conditions;

ii) Regular reviews storage conditions for each type of goods.

iii) Secured good against fire loss by taking insurance policy

SUPPLIERS:

Failure in the supply of goods on right time cause lose of their potential customers.

solution:

i) Maintain more than one suppliers without depending on a specific supplier.

ii) Uses proper forecasting sales.

iii) Adopt an automated system to review the level of available stock in the stores to meet any increase in the sales of a specific product as well as securing direct supply to the stores.

ECONOMY FLUCTUATION:

Due to dynamic economy,specially in the recession stage or depression stage,consumer start spending less; this impact on cash flow which in turn affect the day to day operations relating to purchases from suppliers and working capitals.

consumer spending is affected mainly by international or local policies or economic factors.

Solution:

i) Proper procedure to monitor and consider the impact of the changes in economic indicator such as government expenditure,unemployment and oil prices.

ii) Close monitoring of daily sales and consider the consequences of any decrease in these sales.

Conclusion:

Retail store business is expose to so many risk, threats,that should be addressed to avoid potential losses. Proper monitoring the environment change is must to sustain in this competitive world.