1. ‘Retail Formats’ PROF.C.VIGNALI PhD

2. Presentation Layout Introduction to current shopping trends, Factory Outlet Retailing; background, characteristics and functional strategies, Discount/warehouse club; background, characteristics and functional strategies, Franchising; background, characteristics and functional strategies, Conclusions

3. Introduction Shopping is considered to be a ‘leisure experience. (Newby 1993) Consumer trends change according to; - age, demographics, economics, technology, car ownership Consumer is now ‘price and value conscious’.

4. Introduction Nowadays, there is a diverse array of retail formats, such as; Chain stores Supermarkets Discount stores Factory Outlets Franchises Internet

5. Factory Outlet Retailing Background: Factory outlet format originates from USA Principle – manufacturers selling brand name products at a discounted price. First outlet in UK – Hornsea, 1992 Format – Large site containing several ‘units’ and other amenities, i.e. restaurants, play areas.

6. Factory Outlet Retailing Background cont. Largest outlet in UK – Cheshire Oaks Contains approx. 140 retail units Most common items sold at these outlets include; designer label clothing, crockery and homewares.

7. Factory Outlet Retailing Characteristics; Good quality brands at discounted prices Allows manufacturer to sell surplus stock Leisure amenities offered encourage the people to spend the day there.

8. Factory Outlet Retailing Disadvantages; Forces in place by government to restrain their development. Transport links poor for those without cars Takes away trade from town centre retailers

9. Factory Outlet Retailing Functional Strategies; Popular brands, discounted prices Out-of-town locations Amenities i.e, ample parking, fast food, toilets, play parks Out-of-town location reduces operating costs/distribution channel is shortened

10. Factory Outlet Retailing Retail Example – Cheshire Oaks Contains; Spacious food court 2 full service restaurants Stores include, DKNY, Burberry, M&S, Next Tourist information centre 3,000 free car parking spaces First class road and rail links

11. Discount/Warehouse Club Definition; “Discount/warehouse clubs can be described as cash and carries for the general public”. Brassington et al 2001

12. Discount/Warehouse Club Background; Adopted from USA to the UK in 1993 Require membership Large scale premises Offer extremely low cost products inc; housewares, furniture, car parts, appliances

13. Discount/Warehouse Clubs Characteristics; Extremely low prices Low gross margins Appeal to price conscious consumers & small retailers who cannot purchase from larger distributors

14. Discount/Warehouse Club Disadvantages; Availability of stock unreliable High degree of self-service Little assistance available in-store No delivery options available

15. Discount/Warehouse Club Functional Strategies; Great range of product line in limited sizes/styles Situated in industrial areas Layout – concrete floors, aisles wide for forklifts, merchandise displayed on pallets All payments must be cash Customers responsible for transporting their purchases

16. Discount/Warehouse Club Retail Example – CostCo First US style warehouse club in UK Trades from over 360 outlets in 7 countries Provides supplies for small-medium sized businesses Provides quality goods at lowest possible prices

17. Franchising Definition; “Franchising is an arrangement whereby a supplier grants a dealer the right to sell products in exchange for some type of consideration”. Dibb et al 2000

18. Franchising Background; Franchiser receives percentage of sales in return for providing equipment, marketing, branding etc. Organisations which franchise inc; McDonalds, Mercedes Benz, Toyota, the Body Shop Franchising accounts for approx. 1/3 of all retail sales

19. Franchising Characteristics; Possibly easier to finance Access to extensive advertising Access to lower costs and possibly centralised buying Few start up problems Use of well-known trademark or trade name

20. Franchising Disadvantages; Onerous reporting requirements Possible exaggeration of franchiser advantages Costs of franchise & other fees may reduce profit margins Inflexibility due to restrictions imposed by franchiser

21. Franchising Functional Strategies; Larger, well established franchise operation have ad campaigns and solid trading name Good franchisers will offer training programmes Good franchisers will help secure funding for the investment

22. Franchising Retail Example – McDonalds Committed to franchising as way of doing business 70% of restaurants worldwide are franchises Worldwide number 1 franchise Member of the British Franchise Association

23. Conclusions Factory outlet Retailing; Must continue to attract regular customers, i.e. provide additional amenities May seriously affect the likelihood of traditional town centres

24. Conclusions Warehouse/Discount Clubs; Growth inevitable, but government may inhibit growth May be situated in town centres, this may draw back attention to these areas

25. Conclusions Franchising; Threat from internet shopping Franchising will continue as consumers still want the leisure activity of shopping

26. Bibliography 1. Dibb et al (2000)Marketing Concepts & Strategies 2. CIM Coursebook 2002-2003; - Marketing Operations - Marketing in Practice - Marketing Environment 3. Brassington et al (2000) Principles of Marketing

27. Journals International journal of retailing & distribution management; - Volume 30, No. 5, 2002 - Volume 23, No. 1, 1995 - Volume 24, No. 6, 1996 - Volume 22, No. 1, 1994

28. Websites www.mcdonalds.com www.british-franchise.org www.frain.org.za www.costco.co.uk