1. 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

2. 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

3. 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

4. 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

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

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

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

8. 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

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

10. 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

11. 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

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

13. 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

14. 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

15. 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

16. 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

17. 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

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

19. 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

20. 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

21. 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

22. 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

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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. 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

31. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-31 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.