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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall5-1

Retail Institutions by Store-Based Strategy Mix

RETAIL MANAGEMENT:A STRATEGICAPPROACH11th Edition11th Edition

BERMAN EVANS

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Retailer Strategy MixStore location - Refers to the use of a store OR nonstore format, placement in geographic area and the kind of site (such as shopping center)operating procedures – Include the kind of personnel employed, management style and store hours.Goods/services offered – Encompass several productcategories or just one, quality may be low, medium or high.Pricing tactics – Refers to a retailer use of prestige pricing (creating quality image), competitive pricing or penetrating prices (under pricing other retailers)

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Retailer Strategy MixStore atmosphere and Customer services - Are

reflected by the physical facilities, personal attention

provided, return policies and delivery.Promotional methods – Involves activities like advertising, displays, personal selling, and salespromotion.

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By combining these elements, a retailer can develop unique strategies

To flourish today, a retailer should strive to be dominant in some way and reach the status of “DESTINATION RETAILER status”

Retailer Strategy Mix

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“DESTINATION RETAILER” status whereby consumers view the company distinctive enough to become loyal to it and go out of their way to shop there.

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-5

Business ModelBusiness ModelA special concept started by Mohindra & Mohindrain 2009Store Size 5,000 – 10,000 sq ftStores to be located in metros, major Cities at high street or mall locationsThe concept provides various functionally important products that offer safety & qualityProducts that are currently lacking in India

Product OfferingProduct OfferingProduct basket would comprise maternity wearFashion apparel for babies, toddlers & young Kids, toys & games, travel & safety products etcPartnershipDestination Maternity, Evenflo, Grasco (USA)CAM (Itlay) Avado (Australia)

Target AudienceTarget Audience

Primary for company “9 to 9”Expecting Mothers

ORMothers who have kids up to 9

Add on’sAdd on’sValue added services – play area, feeding Value added services – play area, feeding Area, nappy change area & other facilitiesArea, nappy change area & other facilitiesLike a stroller to use at the store, readingLike a stroller to use at the store, reading

lounge etc.lounge etc.M&M will conduct morning coffeeM&M will conduct morning coffee

meetings, consultation with experts & many meetings, consultation with experts & many such events for knowledgesuch events for knowledge

Website will serve as forum for Website will serve as forum for Information sharingInformation sharing

Earning Destination Retailer StatusEarning Destination Retailer Status

Must be price-oriented and cost efficientMust be upscale Must be convenientShould offer a dominant assortment Should offer superior customer serviceMust be innovative or exclusive

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Retail Strategy Alternatives

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Scrambled Merchandising by a Shoe Store

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Original Merchandising by a Shoe Store

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The Wheel of Retailing

The Wheel of RetailingBased on Four Principles1. There are many price sensitive shoppers who will trade customer

services, wide selections and convenient locations for lower prices2. Price sensitive shoppers are often not loyal and will switch to lower

prices. However, prestige sensitive customers enjoy shopping at retailers with high end strategies

3. New institutions are frequently able to have lower operating costs than existing institution

4. As retailers move up the wheel, they typically do so to increase the sales, broaden the target market and improve their image

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Retail Life Cycle

Retail institutions pass through identifiable life stages introduction growth maturity decline

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Introduction Growth Maturity Decline

Sales Low/growing Rapid acceleration

High, Leveling off

Dropping

Profitability

Break even High High, declining

Low to break even

Positioning

Concept Innovation

Special need

Broad market

Niche

Competition

None Limited Extensive saturation

Intensive consolidated

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How Retail Institutions Are EvolvingHow Retail Institutions Are Evolving

Mergers, diversification, and downsizing

Cost-containment and value-driven retailing

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Mergers, Diversification, and DownsizingMergers, Diversification, and Downsizing

Mergers: combinations of separately owned firms (e.g., Bank of America and Commerce Bank)

Diversification: retailers become active in businesses outside their normal operations (e.g., Yum! Brands)

Downsizing: unprofitable stores are closed or divisions are sold off (e.g., Kmart)

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West Elm from Williams-Sonoma

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Methods for Cost Containment Standardizing procedures, store layouts, store size,

and product offerings Using secondary locations Placing stores in smaller communities Using inexpensive construction materials Using plainer fixtures and displays Buying refurbished equipment Joining cooperative buying and advertising Creatively financing inventories

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Store-Based Retail Strategy Mixes

Food-OrientedConvenience storeConventional

supermarketFood-based superstoreCombination storeBox (limited-line) storeWarehouse store

General MerchandiseSpecialty storeTraditional departmentFull-line discount storeVariety storeOff-price chainFactory outletMembership clubFlea market

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Store-Based Retail Strategy Mixes Food-Oriented Convenience store – is typically a well located store - Open long hours - Carries moderate number of items- Facilities are small with average to above average prices - Average atmosphere and customer service Conventional supermarket - Departmentalized food store with a wide range of food and related

products. - Sales of general merchandize are limited. - 75 years back, it was recognized that large scale operation let a retailer

combine volume sales, self service and low prices. - Self service enabled super market to cut cost and increase volume.



Food-based superstore

- larger and more diversified than conventional supper market - But usually smaller and less diversified than a combination

store. - This format originated in 70’s as supper markets sought to

stem sales declines by expanding store size and the number of non food items carried.


Store-Based Retail Strategy Mixes Food-Oriented- Combination store – - Combination of supper markets and general merchandise - General merchandise accounting for 25 to 40% of sales- Supper Market & Drug store or Supper market & General Merchandize- Area 30,000 to 100,000 sq ft- US - 4000 Combination stores - Annual sales $145 billion - Meijer, Fred Mayer, Albertson

Box (limited-line) store – is food based discounter that focuses on a small selection of items, moderate hour of operation ( compare to supper mkts) , few services and limited manufacturer brands. Prices are on shelves or overhead signs. Stores rely on low priced private labeled brand with 20/30 % lower prices than supper mkt.



Warehouse store is food based discounter offering moderate number of

food items in a no frills setting It appeals to one stop food shoppers Concentrates on special purchases of popular brands Offers little service Posts prices on shelves and locate in secondary sites.



General MerchandiseSpecialty storeTraditional departmentFull-line discount storeVariety storeOff-price chainFactory outletFlea market

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Location:Location:Business district or

shopping center

Merchandise:Merchandise:Very narrow width and

extensive depth of assortment; average to

good quality

Prices:Prices:Competitive to Above average

Atmosphere andAtmosphere andServices:Services:

Average to excellent

Promotion:Promotion:Heavy use of displaysExtensive sales force

Apparel, Personal Care, Electronic, Book, Toys, Jewelry, Sports


Location:Location:Business district, shopping

center or isolated store

Merchandise:Merchandise:Extensive width and depth of assortment average to good quality

Prices:Prices:Average to

Above average


Good to excellent

Promotion:Promotion:Heavy ad and catalog

use; direct mail; personal selling

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Merchandise:Merchandise:Extensive width and

depth of assortment; average to

good quality

Prices:Prices:Competitive

Atmosphere/Services:Atmosphere/Services:Slightly below

average to average

Promotion:Promotion:Heavy on newspapers;price-oriented; selling

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Merchandise:Merchandise:Good width and some depth of assortment;

below-average to average quality

Prices:Prices:Average

Atmosphere/Services:Atmosphere/Services:Below average

Promotion:Promotion:Use of newspapers

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Merchandise:Merchandise:Moderate width and

poor depth of assortment;

average to good quality;low continuity

Prices:Prices:Low

Atmosphere/Services:Atmosphere/Services:Below average

Promotion:Promotion:Use of newspapers;

brands not advertised;limited selling

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Location:Location:Out of the way site

or discount mall



low continuity

Prices:Prices:Very Low

Atmosphere/Services:Atmosphere/Services:Very low

Promotion:Little

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Location:Location:Isolated store

Merchandise:Merchandise:Extensive width and


low continuity; variable quality

Prices:Prices:Very Low

Atmosphere/Services:Atmosphere/Services:Very low

Promotion:Promotion:Limited

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-Many retailers vendors sell range of products in discount Many retailers vendors sell range of products in discount prices in plain surroundingsprices in plain surroundings- Rooted old tradition of street sellingRooted old tradition of street selling- Shoppers touch the product & haggle over pricesShoppers touch the product & haggle over prices- Vendors used to sell “Antiques” onlyVendors used to sell “Antiques” only-Today, they also frequently sell new goods like clothing, Today, they also frequently sell new goods like clothing, cosmetics, watches, consumer electronics and gift itemscosmetics, watches, consumer electronics and gift items

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Location:Location:Neighborhood

Merchandise:Merchandise:Medium width and low depth of assortment; average quality

Prices:Prices:Average to

Above average

Atmosphere andAtmosphere andServices:Services:Average

Promotion:Promotion:Moderate

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Merchandise:Merchandise:Extensive width

and depth of assortment;

average quality; manufacturer,

private, & generic brands



Promotion:Promotion:Heavy use of

newspapers, flyers, and coupons


Location:Location:Community shopping center or isolated site

Merchandise:Merchandise:Full assortment plus

health and beauty aidsand generalmerchandise




newspapers, flyers


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Location:Location:Community shopping center

or isolated site

Merchandise:Merchandise:Full assortment plus

health and beauty aidsand general merchandise




newspapers, flyers

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Merchandise:Merchandise:Low width and depth of

assortment; fewperishables; few national

brands

Prices:Prices:Very low


Low

Promotion:Promotion:Little or none

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Location:Location:Secondary site, often in

industrial area


low depth of assortment; emphasis on

manufacturer brandsbought at discount

Prices:Prices:Very low


Low

Promotion:Promotion:Little or none

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any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United

States of America.

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