Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-1 Retail Institutions by Store-Based Strategy Mix RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS 1

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-2 Chapter Objectives  To describe the wheel of retailing, scrambled merchandising, and the retail life cycle and to 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 2

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-3 Retailer Strategy Mix A strategy mix is the firm’s particular combination of:  store location  operating procedures  goods/services offered  pricing tactics  store atmosphere  customer services  promotional methods 3

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-4 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 4

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-5 Figure 5-1: The Wheel of Retailing 5

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-6 Figure 5-2: Retail Strategy Alternatives 6

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-7 Figure 5-3: Scrambled Merchandising by a Shoe Store 7

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-8 Retail Life Cycle Retail institutions pass through identifiable life stages  introduction  growth  maturity  decline 8

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-9 Figure 5-4: The Retail Life Cycle 9

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-10 How Retail Institutions Are Evolving  Mergers, diversification, and downsizing  Cost-containment and value- driven retailing 10

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-11 Mergers, Diversification, and Downsizing  Mergers: combinations of separately owned firms (e.g., Bank of America and Commerce Bank)  Diversification: retailers become active in businesses outside their normal operations (e.g., Yum! Brands)  Downsizing: unprofitable stores are closed or divisions are sold off (e.g., Kmart) 11

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-12 Figure 5-5: West Elm from Williams-Sonoma 12

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-13 Methods for Cost Containment  Standardizing procedures, store layouts, store size, and product offerings  Using secondary locations  Placing stores in smaller communities  Using inexpensive construction materials  Using plainer fixtures and displays  Buying refurbished equipment  Joining cooperative buying and advertising  Creatively financing inventories 13

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-14 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 14

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-15 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 15

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-16 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 16

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-17 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 17

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-18 Figure 5-7: Supermarkets Have Come a Long Way 18

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-19 Combination Store 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 19

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-20 Box Store Strategy Mix Location: Neighborhood Merchandise: Low width and depth of assortment; few perishables; few national brands Prices: Very low Atmosphere and Services: Low Promotion: Little or none 20

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-21 Warehouse Store Strategy Mix Location: Secondary site, often in industrial area Merchandise: Moderate width and low depth of assortment; emphasis on manufacturer brands bought at discount Prices: Very low Atmosphere and Services: Low Promotion: Little or none 21

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-22 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 22

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-23 Figure 5-8: Old Navy – A Discount Power 23

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-24 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 24

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-25 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 25

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-26 Variety Store Strategy Mix 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 26

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-27 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 27

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-28 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 28

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-29 Membership Club Strategy Mix Location: 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 29

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-30 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

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