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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. pu blishi ng as Prentice Hall5-1

RetailInstitutions byStore-BasedStrategy Mix

RETAILMANAGEMENT:

A STRATEGIC

APPROACH11th Edition

BERM N EV NS

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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. pu blishi ng as Prentice Hall 5-2

Chapter ObjectivesTo describe the wheel of retailing, scrambled

merchandising, and the retail life cycle and to

show how they can help explain the performanceof retail strategy mixes

To discuss some ways in which retail strategymixes are evolving

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

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

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Retailer Strategy Mix A strategy mix is the firms particular

combination of:

store locationoperating procedures

goods/services offered

pricing tactics

store atmospherecustomer services

promotional methods

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Earning Destination Retailer Status

Must be price-oriented and cost efficient

Must be upscale

Must be convenient

Should offer a dominant assortment

Should offer superior customer service

Must be 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 introduction

growth

maturity

decline

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Figure 5-4: The Retail Life Cycle

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How Retail Institutions Are Evolving

Mergers, diversification, and

downsizing Cost-containment and value-

driven retailing

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Mergers, Diversification, and Downsizing

Mergers:combinations of separately ownedfirms (e.g., Bank of America and CommerceBank)

Diversification:retailers become active inbusinesses outside their normal operations (e.g.,

Yum! 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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Methods for Cost Containment

Standardizing procedures, store layouts, storesize, and product offerings

Using secondary locations

Placing stores in smaller communities

Using inexpensive construction materials

Using plainer fixtures and displays

Buying refurbished equipmentJoining cooperative buying and advertising

Creatively financing inventories

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Table 5-1: Store-Based Retail Strategy Mixes

Food-OrientedConvenience store

Conventionalsupermarket

Food-basedsuperstore

Combination store

Box (limited-line)store

Warehouse store

General Merchandise

Specialty store

Traditional department

Full-line discount store

Variety store

Off-price chain

Factory outletMembership club

Flea market

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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

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Conventional Supermarket Strategy Mix

Location:

Neighborhood

Merchandise:

Extensive width

and depth

of assortment;average quality;

manufacturer,

private, & generic brands

Prices:

Competitive

Atmosphere and

Services:

Average

Promotion:Heavy use of

newspapers, flyers,

and coupons

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Food-Based Superstore Strategy Mix

Location:

Community shopping

center or isolated site

Merchandise:

Full assortment plus

health and beauty aidsand general

merchandise

Prices:

Competitive

Atmosphere and

Services:

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

Location:Community shopping center

or isolated site

Merchandise:

Full assortment plus

health and beauty aidsand general merchandise

Prices:

Competitive

Atmosphere and

Services:

Average

Promotion:

Heavy use of

newspapers, flyers

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Box Store Strategy Mix

Location:

Neighborhood

Merchandise:

Low width and depth of

assortment; fewperishables; few national

brands

Prices:

Very low

Atmosphere and

Services:

Low

Promotion:

Little or none

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Warehouse Store Strategy Mix

Location:

Secondary site, often in

industrial area

Merchandise:

Moderate width and

low depth of

assortment; emphasis onmanufacturer brands

bought at discount

Prices:

Very low

Atmosphere and

Services:

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 ofassortment; average to

good quality

Prices:

Competitive to

Above average

Atmosphere and

Services:

Average to excellent

Promotion:Heavy use of displays

Extensive sales force

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Figure 5-8: Old Navy A Discount Power

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Traditional Department Store Strategy Mix

Location:

Business district, shopping

center or isolated store

Merchandise:

Extensive width and

depth ofassortment; 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

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Full-Line Discount Store Strategy Mix

Location:



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

Location:



Merchandise:

Good width and

some depth of

assortment;below-average

to average quality

Prices:

Average


Below average

Promotion:

Use of newspapers

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Off-Price Chain Strategy Mix

Location:



Merchandise:

Moderate width and

poor depth of

assortment;average to good quality;

low continuity

Prices:

Low


Below average

Promotion:Use of newspapers;

brands not advertised;

limited selling

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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


Very low

Promotion:

Little

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Membership Club Strategy Mix

Location:

Isolated store or

secondary site

Merchandise:

Moderate width and

poor depth of

assortment;

low continuity

Prices:

Very Low


Very low

Promotion:Little;

some direct mail

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Flea Market Strategy Mix

Location:

Isolated store

Merchandise:

Extensive width and

poor depth of

assortment;low continuity;

variable quality

Prices:

Very Low


Very low

Promotion:

Limited

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Retail Mgt 11e (c) 2010 Pearson Education Inc pu blishi ng as Prentice Hall 5 31

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berman ch 05 11e

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