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5-3 Retailer Strategy Mix A strategy mix is the firm’s particular combination of: store location, store or nonstore format,place of area and kinder of site is it shopping center operating procedures; kind of personal sale,management style, store hours goods/services offered; categories, quality pricing tactics; prestige,skimming, penetration store atmosphere; physical attributes, customer services; personal attention,return policy,delivery promotional methods; displays, advertising, personal selling and sales promotion
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Chapter 55Retail Institutions by Store-Based Strategy Mix
RETAIL MANAGEMENT:A STRATEGICAPPROACH,
10th Edition
BERMANBERMAN EVANS EVANS
5-2
Chapter Objectives To describe the wheel of retailing, scrambled
merchandising, and the retail life cycle, and 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
5-3
Retailer Strategy Mix• A strategy mix is the firm’s particular
combination of: store location, store or nonstore format ,place of area and
kinder of site is it shopping center operating procedures; kind of personal sale ,management
style, store hours goods/services offered; categories, quality pricing tactics; prestige ,skimming, penetration store atmosphere; physical attributes, customer services; personal attention ,return policy ,delivery promotional methods; displays, advertising, personal selling
and sales promotion
5-4
Earning Destination Retailer Status
Be price-oriented and cost efficientBe upscaleBe convenientOffer a dominant assortment Offer superior customer serviceBe innovative or exclusive
5-5
Figure 5-1: The Wheel of Retailing
5-6
Figure 5-2: Retail Strategy Alternatives
5-7
Figure 5-3: Scrambled Merchandising by a Shoe Store
5-8
Retail Life Cycle
• Retail institutions pass through identifiable life stages
Sales/Profitability Positioning completion Introduction Low/growing concept innovation None Growth rapid /high Social Need Limited Maturity High level/Declining Broad Maker Extensive/ Saturated Decline Dropping Niche Intensive/
Consolidated
5-9
How Retail Institutions Are Evolving
Mergers, Diversification, Downsizing Cost-Containment and Value-Driven Retailing through:- holding down initial investment- Operating costsCost commitment could achieved through:• Standardized operating procedures ,layout and size of
store• Using secondary location • Buying refurbished equipments• Using inexpensive construction materials• Placing stores in smaller communities
5-10
Mergers, Diversification, and Downsizing
Mergers: combination of separately owned firms (e.g., Movie Gallery and Hollywood Entertainment)
Diversification: retailers become active in businesses outside their normal operations (e.g., Limited Brands)
Downsizing: unprofitable stores are closed or divisions are sold off (e.g., Kmart)
5-11
Figure 5-5: west elm from Williams-Sonoma
5-12
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
5-13
Convenience Store Strategy MixMini market
Location:Neighborhood
Merchandise:Medium width and low depth of assortment; average quality
Prices:Average to
Above average
Atmosphere andServices:Average
Promotion:Moderate
5-14
Conventional Supermarket Strategy Mix Self service supermarket
Location:Neighborhood
Merchandise:Extensive width and depth of assortment;
average quality; manufacturer, private,
and generic brands
Prices:Competitive
Atmosphere andServices:Average
Promotion:Heavy use of
newspapers, flyers, and coupons
5-15
Food-Based Superstore Strategy Mix Superstore
Location:Community shopping center or isolated site
Merchandise:Full assortment plus
health and beauty aids and general merchandise
Prices:Competitive
Atmosphere andServices:Average
Promotion:Heavy use of
newspapers, flyers
5-16
Figure 5-7: Supermarkets Have Come a Long Way
5-17
Combination Store Strategy Mix Hypermarket (Carrefour)Location:
Community shoppingcenter or isolated site
Merchandise:Full assortment plus
health and beauty aids and general merchandise
Prices:Competitive
Atmosphere andServices:Average
Promotion:Heavy use of
newspapers, flyers
5-18
Warehouse Store Strategy Mix/groceries
Location:Secondary site, often in
industrial area
Merchandise:Moderate width and
low depth of assortment; emphasis on
manufacturer brandsbought at discount
Prices:Very low
Atmosphere andServices:
Low
Promotion:Little or none
5-19
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 andServices:
Average to excellent
Promotion:Heavy use of displaysExtensive sales force
5-20
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
5-21
Variety Store Strategy Mix/Apparel and accessories
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
5-22
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
5-23
Membership Club Strategy MixCustomers membershipLocation:
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