Presentation on theme: "Retail Institutions by Store-Based Strategy Mix"— Presentation transcript:
1 Retail Institutions by Store-Based Strategy Mix Chapter 5Retail Institutions by Store-Based Strategy Mix
2 Chapter ObjectivesTo describe the wheel of retailing, scrambled merchandising, and the retail life cycle, and show how they can help explain the performance of retail strategy mixesTo discuss some ways in which retail strategy mixes are evolving
3 Chapter Objectives_2To examine a wide variety of food-oriented retailers involved with store-based strategy mixesTo study a wide range of general merchandise retailers involved with store-based strategy mixes
4 Retailer Strategy MixA strategy mix is the firm’s particular combination of:store location,operating procedures,goods/services offered,pricing tactics,store atmosphere,customer services, andpromotional methodsThis is a special effort to create the strategy
5 Earning Destination Retailer Status Be price oriented and cost efficientBe upscaleBe convenientOffer a dominant assortmentOffer superior customer serviceBe innovative or exclusiveFocus is to strive to be dominant in some way
6 Wheel of RetailingTheory to explain how new retailers or forms of retailing beginRetail innovators begin as low price operators with low costs and low profit requirements. Overtime, the innovators upgrades to better products and better facilities. They then become vulnerable to new innovators.
7 Figure 5.1 The Wheel of Retailing High end StrategyHigh pricesExcellent facilitiesUpscale consumersMedium StrategyModerate PricesImproved facilitiesBroader base of value and serviceLow end StrategyLow pricesLimited facilities
8 Three Basic Strategic Positions Low endMediumHigh end
9 Figure 5.2 Retail Strategy Alternatives Low End Strategy• Low rental location• No services• Spartan Fixtures• Simple retail personnelorganization• Price emphasis inpromotion• Most products visible• Self-service• High sales per storepersonnelHigh End Strategy• High rental shopping• center• Elaborate servicesCredit,gift wrapping,• Elaborate fixtures• Elaborate personnelorganization• No price emphasis• Product demonstrations• Spacious interior• products in back room
10 Scramble MerchandiseScrambled merchandising occurs when a retailer adds goods and services that may be unrelated to each other and to the firm’s original businessPopular because it allows ways to improve profits and revenuesName the different retailers that have done this ?
11 Figure 5.3 Scrambled Merchandising by a Shoe Store HandbagsSlippersShoesUmbrellas hatsSlippersShoesOriginalmerchandiseScrambleMerchandiseSocksglovesSandalsSocksSandalsSweatersShoe PolishRubber galoshesShoe PolishRubber galoshes
12 Retail Life CycleRetail institutions pass through identifiable life stagesintroductiongrowthmaturitydecline
13 Figure 5.4 Retail Life Cycle Retail Life Cycle concepts states that retail institutions pass through identifiable life stages: Introduction growth, maturity and declineIntro Stage Growth Maturity DeclineDifferent stores or store formats which fit into these stages now are outline on page 108 in text
14 How Retail Institutions are Evolving Mergers, Diversification, DownsizingCost-Containment and Value-Driven RetailingMerging allows firms to jointly maximize resources, enlarge customer base, improve productivity and bargaining powerDiversifications allows firms to become active in retail firms outside their normal operations or add stores in different goods/service categories.
15 Mergers, Diversification, and Downsizing Mergers: combination of separately owned firms (e.g., Sears and Lands’ End)Diversification: retailers become active in businesses outside their normal operations (e.g., Limited Brands)Downsizing: unprofitable stores are closed or divisions are sold off (e.g., Kmart)
16 Cost Containment and Value Driven Retailing Cost containment is about reducing costs in order to offer lower pricesStrategy is used because of intense competition in the market
17 Methods for Cost Containment Standardizing procedures, store layouts, store size, and product offeringsUsing secondary locationsPlacing stores in smaller communitiesUsing inexpensive construction materialsUsing plainer fixtures and displaysBuying refurbished equipmentJoining cooperative buying and advertisingCreatively financing inventories
20 Conventional Supermarket Strategy Mix Location:NeighborhoodPrices:CompetitiveAtmosphere andServices:AverageMerchandise:Extensive widthand depthof assortment;average quality;manufacturer,private, and generic brandsPromotion:Heavy use ofnewspapers, flyers,and coupons
21 Food-Based Superstore Strategy Mix Location:Community shoppingcenter or isolated sitePrices:CompetitiveAtmosphere andServices:AverageMerchandise:Full assortment plus healthand beauty aids andgeneral merchandisePromotion:Heavy use ofnewspapers, flyers
22 Combination Store Strategy Mix Location:Community shopping centeror isolated sitePrices:CompetitiveAtmosphere andServices:AverageMerchandise:Full assortment plus healthand beauty aids andgeneral merchandisePromotion:Heavy use ofnewspapers, flyers
23 perishables; few national Box Store Strategy MixLocation:NeighborhoodPrices:Very lowAtmosphere andServices:LowMerchandise:Low width and depth ofassortment; fewperishables; few nationalbrandsPromotion:Little or none
24 Warehouse Store Strategy Mix Location:Secondary site, often inindustrial areaPrices:Very lowAtmosphere andServices:LowMerchandise:Moderate width andlow depth ofassortment; emphasis onmanufacturer brandsbought at discountPromotion:Little or none
25 Specialty Store Strategy Mix Location:Business district orshopping centerPrices:Competitive toAbove averageAtmosphere andServices:Average to excellentMerchandise:Very narrow width andextensive depth ofassortment; average togood qualityPromotion:Heavy use of displaysExtensive sales force
26 Traditional Department Store Strategy Mix Location:Business district, shoppingcenter or isolated storePrices:Average toAbove averageAtmosphere andServices:Good to excellentMerchandise:Extensive width anddepth ofassortment; average togood qualityPromotion:Heavy ad and cataloguse; direct mail;personal selling
27 Full-line Discount Store Strategy Mix Location:Business district, shoppingcenter or isolated storePrices:CompetitiveAtmosphere/ Services:Slightly belowaverage to averageMerchandise:Extensive width anddepth ofassortment; average togood qualityPromotion:Heavy on newspapers;price-oriented; selling
28 Variety Store Strategy Mix Location:Business district, shoppingcenter or isolated storePrices:AverageAtmosphere/ Services:Below averageMerchandise:Good width andsome depth ofassortment;below-averageto average qualityPromotion:Use of newspapers
29 Off-Price Chain Strategy Mix Location:Business district, shoppingcenter or isolated storePrices:LowAtmosphere/ Services:Below averageMerchandise:Moderate width andpoor depth ofassortment;average to good quality;low continuityPromotion:Use of newspapers;brands not advertised;limited selling
30 Factory Outlet Strategy Mix Location:Out of the way siteor discount mallPrices:Very LowAtmosphere/ Services:Very lowMerchandise:Moderate width andpoor depth ofassortment;low continuityPromotion:Little
31 Membership Club Strategy Mix Location:Isolated store orsecondary sitePrices:Very LowMerchandise:Moderate width andpoor depth ofassortment;low continuityAtmosphere/ Services:Very lowPromotion:Little;some direct mail
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