Retail Strategy Mix and Wheel of Retailing. Retailer Strategy Mix A strategy mix is the retailer’s...
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Transcript of Retail Strategy Mix and Wheel of Retailing. Retailer Strategy Mix A strategy mix is the retailer’s...
Retailer Strategy MixRetailer Strategy Mix A strategy mix is the retailer’s specific
combination of: store location, operating procedures, goods/services offered, pricing tactics, store atmosphere, customer services, and promotional methods
THE WHEEL OF RETAILINGTHE WHEEL OF RETAILING
A cyclical theory of retail evolution that assumesevolving retail institutions from low price – low serviceconcept to higher level of service and higher prices offering.
A cyclical theory of retail evolution that assumesevolving retail institutions from low price – low serviceconcept to higher level of service and higher prices offering.
„ The wheel always revolves, sometimes slowly, sometimesmore rapidly, but it does not stand still. The cycle frequentlybegins with the bold new concept, the innovation. Somebody gets a bright new idea … At the outset he isin bad odour, ridiculed, scorned and condemned as illegitimate.” MacNair, (1931)
Retailing StrategyRetailing StrategyA retailer develops a marketing strategy
based on the firm’s goals and strategic plans– Two fundamental steps:
Selecting a target market Developing a retailing mix to satisfy the chosen
target market
– Retail image: Consumers’ perceptions of a store and the shopping experience it provides
Selecting a Target MarketSelecting a Target Market– Retailers analyze demographic,
geographic, and psychographic profiles to segment and select potential markets
Merchandising StrategyMerchandising Strategy– Planograms: Diagrams of how to exhibit
selections of merchandise within a store– Category management: Retailing strategy
which views each product category as an individual profit center, and the retailer manages the performance and growth of the entire category
The Battle for Shelf SpaceThe Battle for Shelf Space– Stockkeeping unit (SKU): specific product
offering within a product line that is used to identify items within the line
– Slotting allowances: fees paid by manufacturers to secure shelf space from retailers for their products
Customer Service StrategyCustomer Service Strategy– Retailers must decide on the variety of services
they make available for shoppers Examples include gift wrapping, bridal registry,
return privileges, electronic shopping, and delivery and installation
Objectives are to enhance shopper comfort and attract and retain customers
Pricing StrategyPricing Strategy– Markup: The amount a retailer adds to a
product’s cost to determine its selling price Determined by the services the retailer performs and
the inventory turnover rate
– Markdown: The amount by which a retailer reduces a product’s original selling price
Location/Distribution StrategyLocation/Distribution Strategy– Planned shopping center: A group of retail
stores planned, coordinated, and marketed as a single unit
– Four types of planned shopping centers: Neighborhood Community Regional Power
Promotional StrategyPromotional Strategy– Retailers use a variety of promotional techniques
to establish store images and communicate information about their stores
– Selling up: retailing selling technique in which salespeople try to persuade customers to buy higher-priced items than originally intended
– Suggestive selling: involves salespeople attempting to broaden a customer’s original purchase by adding related items, promotional products, and/or holiday or seasonal merchandise
Store AtmosphericsStore Atmospherics– Physical characteristics and amenities that
attract customers and satisfy their shopping needs
Types of RetailersTypes of RetailersRetailers can be categorized by:
– Form of ownership– Shopping effort expended by customer– Services provided to customers– Product lines– Location of retail transactions
Retail Life CycleRetail Life Cycle
Retail institutions pass through identifiable life stagesintroductiongrowthmaturitydecline
Store-Based Retail Strategy Store-Based Retail Strategy MixesMixes
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
Convenience Store Strategy MixConvenience Store Strategy Mix
Location:Neighborhood
Merchandise:Medium width and low depth of assortment; average quality
Prices:Average to
Above average
Atmosphere andServices:Average
Promotion:Moderate
Conventional Supermarket Conventional Supermarket Strategy MixStrategy Mix
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
Food-Based Superstore Food-Based Superstore Strategy MixStrategy Mix
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
Specialty Store Strategy MixSpecialty 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
Traditional Department Store Traditional Department Store Strategy MixStrategy 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 andServices:
Good to excellent
Promotion:Heavy ad and catalog
use; direct mail; personal selling
Full-line Discount Store Strategy Full-line Discount Store Strategy MixMix
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
Off-Price Chain Strategy MixOff-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
Factory Outlet Strategy MixFactory 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
Flea Market Strategy MixFlea 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
DIALECTIC PROCESSDIALECTIC PROCESS
New retail institutions result from storesborrowing characteristics from other very different competitors and much like childrenare a combination of the genes of their parents.
Framework of the theory:Thesis: established retail institution
Antithesis: innovative retail institution
Synthesis: combination of the establishedand innovative retail concept.
DIALECTIC PROCESSDIALECTIC PROCESS
Specialty store• High margin• Low turnover• High prices• Full service• Narrow variety• Deep assortment
Specialty store• High margin• Low turnover• High prices• Full service• Narrow variety• Deep assortment
Full-line discount store:• Low margin• High turnover• Low prices• No service• Broad variety• Shallow assortment
Full-line discount store:• Low margin• High turnover• Low prices• No service• Broad variety• Shallow assortment
Category specialist:• Modest margin• Medium turnover• Low prices• Limited service• Narrow variety• Deep assortment
Category specialist:• Modest margin• Medium turnover• Low prices• Limited service• Narrow variety• Deep assortment
THESISTHESIS
ANTITHESISANTITHESIS
SYNTHESISSYNTHESIS