Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall5-1
Retail Institutions by Store-Based Strategy Mix
RETAIL MANAGEMENT:A STRATEGICAPPROACH11th Edition11th Edition
BERMAN EVANS
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing 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 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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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-3
Retailer Strategy MixA strategy mix is the firm’s
particular combination of:store location operating procedures goods/services offered pricing tacticsstore atmosphere customer servicespromotional methods
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-4
Earning Destination Retailer StatusEarning Destination Retailer Status
Must be price-oriented and cost efficientMust be upscale Must be convenientShould offer a dominant assortment Should offer superior customer serviceMust be innovative or exclusive
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-5
Figure 5-1: The Wheel of Retailing
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-6
Figure 5-2: Retail Strategy Alternatives
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-7
Figure 5-3: Scrambled Merchandising by a Shoe Store
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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
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5-9 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 5-4: The Retail Life Cycle
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-10
How Retail Institutions Are EvolvingHow Retail Institutions Are Evolving
Mergers, diversification, and downsizing
Cost-containment and value-driven retailing
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-11
Mergers, Diversification, and DownsizingMergers, 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)
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-12
Figure 5-5: West Elm from Williams-Sonoma
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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
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5-14 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 5-1: Store-Based Retail Strategy Mixes
Food-OrientedConvenience storeConventional
supermarketFood-based
superstoreCombination storeBox (limited-line)
storeWarehouse store
General MerchandiseSpecialty storeTraditional
departmentFull-line discount
storeVariety storeOff-price chainFactory outletMembership clubFlea market
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5-15 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Neighborhood
Merchandise:Merchandise:Medium width and low depth of assortment; average quality
Prices:Prices:Average to
Above average
Atmosphere andAtmosphere andServices:Services:Average
Promotion:Promotion:Moderate
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5-16 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Neighborhood
Merchandise:Merchandise:Extensive width
and depth of assortment;
average quality; manufacturer,
private, & generic brands
Prices:Prices:Competitive
Atmosphere andAtmosphere andServices:Services:Average
Promotion:Promotion:Heavy use of
newspapers, flyers, and coupons
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5-17 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Community shopping center or isolated site
Merchandise:Merchandise:Full assortment plus
health and beauty aidsand generalmerchandise
Prices:Prices:Competitive
Atmosphere andAtmosphere andServices:Services:Average
Promotion:Promotion:Heavy use of
newspapers, flyers
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-18
Figure 5-7: Supermarkets Have Come a Long Way
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5-19 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Community shopping center
or isolated site
Merchandise:Merchandise:Full assortment plus
health and beauty aidsand general merchandise
Prices:Prices:Competitive
Atmosphere andAtmosphere andServices:Services:Average
Promotion:Promotion:Heavy use of
newspapers, flyers
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5-20 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Neighborhood
Merchandise:Merchandise:Low width and depth of
assortment; fewperishables; few national
brands
Prices:Prices:Very low
Atmosphere andAtmosphere andServices:Services:
Low
Promotion:Promotion:Little or none
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5-21 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Secondary site, often in
industrial area
Merchandise:Merchandise:Moderate width and
low depth of assortment; emphasis on
manufacturer brandsbought at discount
Prices:Prices:Very low
Atmosphere andAtmosphere andServices:Services:
Low
Promotion:Promotion:Little or none
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5-22 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Business district or
shopping center
Merchandise:Merchandise:Very narrow width and
extensive depth of assortment; average to
good quality
Prices:Prices:Competitive to Above average
Atmosphere andAtmosphere andServices:Services:
Average to excellent
Promotion:Promotion:Heavy use of displaysExtensive sales force
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 5-23
Figure 5-8: Old Navy – A Discount Power
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5-24 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Business district, shopping
center or isolated store
Merchandise:Merchandise:Extensive width and
depth of assortment; average to
good quality
Prices:Prices:Average to
Above average
Atmosphere andAtmosphere andServices:Services:
Good to excellent
Promotion:Promotion:Heavy ad and catalog
use; direct mail; personal selling
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5-25 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Business district, shopping
center or isolated store
Merchandise:Merchandise:Extensive width and
depth of assortment; average to
good quality
Prices:Prices:Competitive
Atmosphere/Services:Atmosphere/Services:Slightly below
average to average
Promotion:Promotion:Heavy on newspapers;price-oriented; selling
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5-26 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Business district, shopping
center or isolated store
Merchandise:Merchandise:Good width and some depth of assortment;
below-average to average quality
Prices:Prices:Average
Atmosphere/Services:Atmosphere/Services:Below average
Promotion:Promotion:Use of newspapers
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5-27 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Business district, shopping
center or isolated store
Merchandise:Merchandise:Moderate width and
poor depth of assortment;
average to good quality;low continuity
Prices:Prices:Low
Atmosphere/Services:Atmosphere/Services:Below average
Promotion:Promotion:Use of newspapers;
brands not advertised;limited selling
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5-28 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Out of the way site
or discount mall
Merchandise:Merchandise:Moderate width and
poor depth of assortment;
low continuity
Prices:Prices:Very Low
Atmosphere/Services:Atmosphere/Services:Very low
Promotion:Little
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5-29 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Isolated store or
secondary site
Merchandise:Merchandise:Moderate width and
poor depth of assortment;
low continuity
Prices:Prices:Very Low
Atmosphere/Services:Atmosphere/Services:Very low
Promotion:Promotion:Little;
some direct mail
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5-30 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Location:Location:Isolated store
Merchandise:Merchandise:Extensive width and
poor depth of assortment;
low continuity; variable quality
Prices:Prices:Very Low
Atmosphere/Services:Atmosphere/Services:Very low
Promotion:Promotion:Limited
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5-31 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
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