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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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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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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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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How Retail Institutions Are EvolvingHow Retail Institutions Are Evolving

Mergers, diversification, and downsizing

Cost-containment and value-driven retailing

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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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Figure 5-5: West Elm from Williams-Sonoma

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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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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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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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