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UNIT IV Retail Institutions by Store Based Strategy Mix

The document discusses various retail store strategies and concepts. It describes considerations for developing a retail strategy mix, including store location, operations, products offered, pricing, atmosphere/service, and promotion. Several retail change theories are outlined, such as the wheel of retailing and retail life cycle models. Different types of retail institutions are categorized, including food-oriented stores like convenience stores and supermarkets, as well as general merchandise stores like department stores, discount stores, and specialty retailers. The concept of "scrambled merchandising" is also introduced.

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440 views20 pages

UNIT IV Retail Institutions by Store Based Strategy Mix

The document discusses various retail store strategies and concepts. It describes considerations for developing a retail strategy mix, including store location, operations, products offered, pricing, atmosphere/service, and promotion. Several retail change theories are outlined, such as the wheel of retailing and retail life cycle models. Different types of retail institutions are categorized, including food-oriented stores like convenience stores and supermarkets, as well as general merchandise stores like department stores, discount stores, and specialty retailers. The concept of "scrambled merchandising" is also introduced.

Uploaded by

Topsun Energy
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UNIT IV

Retail Institutions by Store based Strategy Mix


CONTENTS
• Consideration in planning a Retail Strategy Mix, The wheel
of Retailing, Scrambled Merchandising, The Retail Life
Cycle, Categorized, Merger, Diversification, Downsizing
Consideration in Planning a Retail Strategy Mix
A retailer may be categorized by its Strategy Mix, the firm’s particular combination of-

 Store location
 Operating procedures
 Goods/service offered
 Pricing tactics
 Store atmosphere & Customer service
 Promotion method
The Retail Communication Mix
Advertising

Sales Personal
Promotion Selling

Public Direct
Relations Marketing

The Retail Marketing Mix

Retail Mix is also referred to as the “6 P’s.”


• Store location refers to the use of a store or non store format, placement in a geographic
area and the kind of site(Such as shopping center).
• Operating procedures includes the kinds of personal employed management style, store
hours and other factors
• The goods and services offered may encompass several product categories or just one ;
and qualities may be low, medium, or high.
• Pricing refers to a retailers use of prestige pricing (creating a quality image), competitive
pricing (setting prices at the level of rivals), or penetration pricing (underpricing other
retailers).
• Store atmosphere and customer services are reflected by the physical facilities and
personal attention provided , return policies, delivery and other factors.
• Promotional involves activities in such areas as advertising, displays, personal selling, and
sales promotion.
Retail Change Theories

1- The Wheel of Retailing


2- The Retail Life Cycle
3- The Retail Accordion
4- Resource-Advantage Theory
The Wheel of Retailing
A hypothesis of M.P. McNair, The Wheel of Retailing is a hypothesis
that describes how retailers approach to capture market share and
create brand value.

It explains the patterns of change in retailing; the hypothesis is that


new types of retailers cut prices by lowering or eliminating customer
services, but once established they increase prices and customer
services and so become vulnerable themselves to new, low-price
retailers.

As mentioned, the Wheel of Retailing is just a hypothesis and may not
be applicable to all retailing situations. It, however, seems to explain
many retailing trends in many countries.
The Wheel of Retailing
Example-
• A restaurant started in a temporary location would be offering a limited
number of items at low price.
• It looks to develop its client base but as soon as the construction is
completed or final, it starts providing a lot more variety and introduces a
number of new services (free home delivery, boarding , and lodging ) it
also starts increasing its prices on its earlier items.
• This is done to recover its fixed cost quickly and have an early breakeven
so that it can start generating some profit since it is operating in a virgin
market it will look to increase its market share.
• However with passage of time when a new restaurant comes up in its
vicinity and starts offering the same items at a lower price in order to
retain its customers it will bring down its prices back to where its earlier
ones.
The Retail Life Cycle

Maturity
SALES

Decline

Growth Profit

Innovation

TIME
• Innovation Stage-In this stage The new retailer will have few competitors,
rapid growth in sales but low profitability due to start-up costs, etc.
• Growth Phase-Rapid growth of both sales and profit , existing companies
expand their markets and new competitors employing the same retail
format enter the market. Profitability is high due to the economies of
scale now possible. However, competitors will spot this and begin to
encroach on this market.
• Maturity Phase-Bought on by market saturation, which in turn is caused
by a high number of firms using the retail format and competition from
new formats. Sales growth declines and profit margin may have to be
reduced to stimulate sales. Once maturity is reached , the main goal is to
prevent the business from decline and to sustain profits for as long as
possible.
• Decline-Sales volume declines and prices and prices and profitability
shrink.
The Retail Accordion or General–Specific–
General Cycle
• This theory focuses on the width of product assortment sold
by retail outlets and claims a general- specific-general cycle.
• Retailing institutions as evolving from outlets selling a wide
variety of products , then specializing by offering an narrow
assortment and then returning to a wider assortment.(general
specific –general process)
OR
• Theory describing the evolution of retail institutions from
general, broad-based outlets with wide assortments, to
narrow-based institutions carrying specialized assortments,
and back to general, broad-based assortments
Resource-Advantage Theory
• Resource-advantage asserts that
a retailer can achieve high financial
performance even in a constantly-changing
market because consumer preferences are
always shifting, and retailers can match that
shift by changing their retail offerings.
Scrambled Merchandising
• Scrambled Merchandising refers to a practice by wholesalers
and retailers that carry and adds goods and services that are
unrelated to each other and to the firm's original business.
• A retailer may opt for scrambled merchandizing to boost his
top line/bottom line and also for better space utilization
• The phenomenon is generally observed with small or medium
sized retailers whose only aim is to make more money.
Example
• - It used to be that you went to a drug store for drugs, you can
buy groceries at the drug store
• – Paan shops generally start from selling only Paan but start
cigarettes and other items as they keep on growing, slowly,
they sell deodorants, mobile recharge coupons etc.
 Scrambling merchandising increases intertype competition.
 Intertype Competition -occurs between retailers that sell
similar merchandise using different formats such as discount
and department stores.
Scrambled Merchandising by a Shoe Store
• Retail institutions may be categorized by Store-based Strategy Mix
are divided into Food-Oriented and General Merchandise
groupings.

• Convenience Store • Specialty


• Category Killer
• Conventional Supermarket
• Traditional Department Store
• Food-Based Superstore
• Full-Line Discount Store
• Combination Store
• Variety Store
• Supercenter
• Off-Price Chain
• Hypermart
• Factory Outlet
• Box (Limited-Line) Store
• Membership Club
• Warehouse Store
• Flea Market
Food-Oriented Store-based retailers
• A Convenience store is well located, is open long hours, and offers a moderate
number of fill-in items at average to above-average prices.
• A Conventional supermarket is departmentalized and carries a wide range of
food and related items; there is little general merchandise; and prices are
competitive.
• A Food-based superstore is larger and more diversified than a conventional
supermarket but smaller and less diversified than a combination store.
• A Combination store unites supermarket and general merchandise in a large
facility and sets competitive prices; the supercenter (hypermarket) is a type of
combination store.
• The box (limited-line) store is a discounter focusing on a small product selection,
moderate hours, few services, and few manufacturer brands.
• A warehouse store is a discounter offering a moderate number of food items in a
no-frills setting.
General Merchandise
• A Specialty store Retailer that concentrates on selling one goods or service line
• The Category killer Very large specialty store featuring an enormous selection in its product
category and relatively low prices. It draws consumers from wide geographic areas.
• A Department store is a large retailer that carries an extensive assortment of goods and
services.
• The Traditional store in which merchandise quality ranges from average to quite good,
pricing is moderate to above average, and customer service ranges from medium levels of
sales help, credit, delivery, and so forth to high levels of each.
• A full-line discount store is a department store with a low-cost, low-price strategy.
• A Variety store has inexpensive and popularly priced items in a plain setting. Such as apparel
and accessories, costume jewelry, notions and small wares, candy, toys, and other items in
the price range.
• An off-price chain features brand-name items and sells them at low prices in an serious
environment.
• A factory outlet is manufacturer-owned and sells that firm’s closeouts, discontinued
merchandise, and irregulars at very low prices.
• A membership club appeals to price-conscious shoppers, who must be members to shop
there.
• A flea market Location where many vendors offer a range of products at discount prices in
plain surroundings. Many flea markets are located in nontraditional sites not normally
associated with retailing.
• Mergers – The combinations of separately owned
retail firms.

• Diversification – Way in which retailers become


active in business outside their normal operations –
and add stores in different goods/service categories.
• Downsizing – Unprofitable stores closed or divisions
sold off by retailers unhappy with performance.
Thank You

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