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Retail Strategy Mix and Wheel of Retailing. Retailer Strategy Mix A strategy mix is the retailer’s specific combination of:  store location,  operating.

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Presentation on theme: "Retail Strategy Mix and Wheel of Retailing. Retailer Strategy Mix A strategy mix is the retailer’s specific combination of:  store location,  operating."— Presentation transcript:

1 Retail Strategy Mix and Wheel of Retailing

2 Retailer Strategy Mix A strategy mix is the retailer’s specific combination of:  store location,  operating procedures,  goods/services offered,  pricing tactics,  store atmosphere,  customer services, and  promotional methods

3 THE WHEEL OF RETAILING THE WHEEL OF RETAILING A cyclical theory of retail evolution that assumes evolving retail institutions from low price – low service concept to higher level of service and higher prices offering. A cyclical theory of retail evolution that assumes evolving retail institutions from low price – low service concept to higher level of service and higher prices offering. „ The wheel always revolves, sometimes slowly, sometimes more rapidly, but it does not stand still. The cycle frequently begins with the bold new concept, the innovation. Somebody gets a bright new idea … At the outset he is in bad odour, ridiculed, scorned and condemned as illegitimate.” MacNair, (1931)

4 The Wheel of Retailing The Wheel of Retailing

5 Three Basic Strategic Positions  Low end  Medium  High end

6 Retail Strategy Alternatives Retail Strategy Alternatives

7 Retailing Strategy A retailer develops a marketing strategy based on the firm’s goals and strategic plans – Two fundamental steps: Selecting a target market Developing a retailing mix to satisfy the chosen target market – Retail image: Consumers’ perceptions of a store and the shopping experience it provides

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9 Selecting a Target Market Selecting a Target Market – Retailers analyze demographic, geographic, and psychographic profiles to segment and select potential markets

10 Merchandising Strategy Merchandising Strategy – Planograms: Diagrams of how to exhibit selections of merchandise within a store – Category management: Retailing strategy which views each product category as an individual profit center, and the retailer manages the performance and growth of the entire category

11 The Battle for Shelf Space The Battle for Shelf Space – Stockkeeping unit (SKU): specific product offering within a product line that is used to identify items within the line – Slotting allowances: fees paid by manufacturers to secure shelf space from retailers for their products

12 Customer Service Strategy Customer Service Strategy – Retailers must decide on the variety of services they make available for shoppers Examples include gift wrapping, bridal registry, return privileges, electronic shopping, and delivery and installation Objectives are to enhance shopper comfort and attract and retain customers

13 Pricing Strategy Pricing Strategy – Markup: The amount a retailer adds to a product’s cost to determine its selling price Determined by the services the retailer performs and the inventory turnover rate – Markdown: The amount by which a retailer reduces a product’s original selling price

14 Location/Distribution Strategy Location/Distribution Strategy – Planned shopping center: A group of retail stores planned, coordinated, and marketed as a single unit – Four types of planned shopping centers: Neighborhood Community Regional Power

15 Promotional Strategy Promotional Strategy – Retailers use a variety of promotional techniques to establish store images and communicate information about their stores – Selling up: retailing selling technique in which salespeople try to persuade customers to buy higher-priced items than originally intended – Suggestive selling: involves salespeople attempting to broaden a customer’s original purchase by adding related items, promotional products, and/or holiday or seasonal merchandise

16 Store Atmospherics Store Atmospherics – Physical characteristics and amenities that attract customers and satisfy their shopping needs

17 Types of Retailers Retailers can be categorized by: – Form of ownership – Shopping effort expended by customer – Services provided to customers – Product lines – Location of retail transactions

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19 Retail Life Cycle Retail institutions pass through identifiable life stages  introduction  growth  maturity  decline

20 Store-Based Retail Strategy Mixes Store-Based Retail Strategy Mixes Food Oriented  Convenience store  Conventional supermarket  Food-based superstore  Combination store  Box (limited-line) store  Warehouse store General Merchandise  Specialty store  Traditional department  Full-line discount store  Variety store  Off-price chain  Factory outlet  Membership club  Flea market

21 Convenience Store Strategy Mix Location: Neighborhood Merchandise: Medium width and low depth of assortment; average quality Prices: Average to Above average Atmosphere and Services: Average Promotion: Moderate

22 Conventional Supermarket Strategy Mix Location: Neighborhood Merchandise: Extensive width and depth of assortment; average quality; manufacturer, private, and generic brands Prices: Competitive Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers, and coupons

23 Food-Based Superstore Strategy Mix Location: Community shopping center or isolated site Merchandise: Full assortment plus health and beauty aids and general merchandise Prices: Competitive Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers

24 Specialty Store Strategy Mix Location: Business district or shopping center Merchandise: Very narrow width and extensive depth of assortment; average to good quality Prices: Competitive to Above average Atmosphere and Services: Average to excellent Promotion: Heavy use of displays Extensive sales force

25 Traditional Department Store Strategy Mix Location: Business district, shopping center or isolated store Merchandise: Extensive width and depth of assortment; average to good quality Prices: Average to Above average Atmosphere and Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling

26 Full-line Discount Store Strategy Mix Location: Business district, shopping center or isolated store Merchandise: Extensive width and depth of assortment; average to good quality Prices: Competitive Atmosphere/ Services: Slightly below average to average Promotion: Heavy on newspapers; price-oriented; selling

27 Off-Price Chain Strategy Mix Location: Business district, shopping center or isolated store Merchandise: Moderate width and poor depth of assortment; average to good quality; low continuity Prices: Low Atmosphere/ Services: Below average Promotion: Use of newspapers; brands not advertised; limited selling

28 Factory Outlet Strategy Mix Location: Out of the way site or discount mall Merchandise: Moderate width and poor depth of assortment; low continuity Prices: Very Low Atmosphere/ Services: Very low Promotion: Little

29 Flea Market Strategy Mix Location: Isolated store Merchandise: Extensive width and poor depth of assortment; low continuity; variable quality Prices: Very Low Atmosphere/ Services: Very low Promotion: Limited

30 DIALECTIC PROCESS DIALECTIC PROCESS New retail institutions result from stores borrowing characteristics from other very different competitors and much like children are a combination of the genes of their parents. Framework of the theory: Thesis: established retail institution Antithesis: innovative retail institution Synthesis: combination of the established and innovative retail concept.

31 DIALECTIC PROCESS DIALECTIC PROCESS Specialty store High margin Low turnover High prices Full service Narrow variety Deep assortment Specialty store High margin Low turnover High prices Full service Narrow variety Deep assortment Full-line discount store: Low margin High turnover Low prices No service Broad variety Shallow assortment Full-line discount store: Low margin High turnover Low prices No service Broad variety Shallow assortment Category specialist: Modest margin Medium turnover Low prices Limited service Narrow variety Deep assortment Category specialist: Modest margin Medium turnover Low prices Limited service Narrow variety Deep assortment THESIS ANTITHESIS SYNTHESIS


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