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
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

5. Three Basic Strategic Positions
Low end
Medium
High end

6. 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

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

10. 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
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
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
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
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
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
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

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

20. 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
Prices:
Average to
Above average
Atmosphere and
Services:
Average
Merchandise:
Medium width
and low depth
of assortment;
average quality
Promotion:
Moderate

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

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

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

25. Traditional Department Store Strategy Mix
Location:
Business district, shopping
center or isolated store
Prices:
Average to
Above average
Atmosphere and
Services:
Good to excellent
Merchandise:
Extensive width and
depth of
assortment; average to
good quality
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
Prices:
Competitive
Atmosphere/ Services:
Slightly below
average to average
Merchandise:
Extensive width and
depth of
assortment; average to
good quality
Promotion:
Heavy on newspapers;
price-oriented; selling

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

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

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

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