Chapter 55Retail Institutions by Store-Based Strategy Mix

RETAIL MANAGEMENT:A STRATEGICAPPROACH,

10th Edition

BERMANBERMAN EVANS EVANS

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Chapter Objectives To describe the wheel of retailing, scrambled

merchandising, and the retail life cycle, and show how they can help explain the performance of retail strategy mixes

To discuss some ways in which retail strategy mixes are evolving

To examine a variety of food-oriented retailers involved with store-based strategy mixes

To study a range of general merchandise firms involved with store-based strategy mixes

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Retailer Strategy Mix• A strategy mix is the firm’s particular

combination of: store location, store or nonstore format ,place of area and

kinder of site is it shopping center operating procedures; kind of personal sale ,management

style, store hours goods/services offered; categories, quality pricing tactics; prestige ,skimming, penetration store atmosphere; physical attributes, customer services; personal attention ,return policy ,delivery promotional methods; displays, advertising, personal selling

and sales promotion

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Earning Destination Retailer Status

Be price-oriented and cost efficientBe upscaleBe convenientOffer a dominant assortment Offer superior customer serviceBe innovative or exclusive

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Figure 5-1: The Wheel of Retailing

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Figure 5-2: Retail Strategy Alternatives

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Figure 5-3: Scrambled Merchandising by a Shoe Store

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Retail Life Cycle

• Retail institutions pass through identifiable life stages

Sales/Profitability Positioning completion Introduction Low/growing concept innovation None Growth rapid /high Social Need Limited Maturity High level/Declining Broad Maker Extensive/ Saturated Decline Dropping Niche Intensive/

Consolidated

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How Retail Institutions Are Evolving

Mergers, Diversification, Downsizing Cost-Containment and Value-Driven Retailing through:- holding down initial investment- Operating costsCost commitment could achieved through:• Standardized operating procedures ,layout and size of

store• Using secondary location • Buying refurbished equipments• Using inexpensive construction materials• Placing stores in smaller communities

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Mergers, Diversification, and Downsizing

Mergers: combination of separately owned firms (e.g., Movie Gallery and Hollywood Entertainment)

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)

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Figure 5-5: west elm from Williams-Sonoma

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Table 5-1: 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

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Convenience Store Strategy MixMini market

Location:Neighborhood

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

Prices:Average to

Above average

Atmosphere andServices:Average

Promotion:Moderate

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Conventional Supermarket Strategy Mix Self service supermarket

Location:Neighborhood

Merchandise:Extensive width and depth of assortment;

average quality; manufacturer, private,

and generic brands

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers, and coupons

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Food-Based Superstore Strategy Mix Superstore

Location:Community shopping center or isolated site

Merchandise:Full assortment plus

health and beauty aids and general merchandise

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers

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Figure 5-7: Supermarkets Have Come a Long Way

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Combination Store Strategy Mix Hypermarket (Carrefour)Location:

Community shoppingcenter or isolated site

Merchandise:Full assortment plus

health and beauty aids and general merchandise

Prices:Competitive

Atmosphere andServices:Average

Promotion:Heavy use of

newspapers, flyers

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Warehouse Store Strategy Mix/groceries

Location:Secondary site, often in

industrial area

Merchandise:Moderate width and

low depth of assortment; emphasis on

manufacturer brandsbought at discount

Prices:Very low

Atmosphere andServices:

Low

Promotion:Little or none

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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 andServices:

Average to excellent

Promotion:Heavy use of displaysExtensive sales force

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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

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Variety Store Strategy Mix/Apparel and accessories

Location:Business district, shopping

center or isolated store

Merchandise:Good width and some depth of assortment;

below-average to average quality

Prices:Average

Atmosphere/Services:Below average

Promotion:Use of newspapers

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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

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Membership Club Strategy MixCustomers membershipLocation:

Isolated store or secondary site

Merchandise:Moderate width and

poor depth of assortment;

low continuity

Prices:Very Low

Atmosphere/Services:Very low

Promotion:Little;

some direct mail