Retail Strategy Mix

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Retail Strategy Mix and Wheel of Retailing
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Retailer Strategy Mix

• A strategy mix is the retailers specific
  combination of
• store location,
• operating procedures,
• goods/services offered,
• pricing tactics,
• store atmosphere,
• customer services, and
• promotional methods

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THE WHEEL OF RETAILING
A cyclical theory of retail evolution that
assumes evolving retail institutions from low
price low service concept to higher level of
service and higher prices offering.
The wheel always revolves, sometimes slowly,
sometimes more rapidly, but it does not stand
still. The cycle frequently begins with the bold
new concept, the innovation. Somebody gets a
bright new idea At the outset he is in bad
odour, ridiculed, scorned and condemned as
illegitimate. MacNair, (1931)
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The Wheel of Retailing
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Three Basic Strategic Positions

• Low end
• Medium
• High end

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Retail Strategy Alternatives
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Retailing Strategy

• A retailer develops a marketing strategy based on
  the firms 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

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• Selecting a Target Market
• Retailers analyze demographic, geographic, and
  psychographic profiles to segment and select
  potential markets

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• Merchandising 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

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• The 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

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• Customer 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

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• Pricing Strategy
• Markup The amount a retailer adds to a
  products 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 products original selling price

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• Location/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

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• Promotional 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 customers original
  purchase by adding related items, promotional
  products, and/or holiday or seasonal merchandise

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• Store Atmospherics
• Physical characteristics and amenities that
  attract customers and satisfy their shopping
  needs

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Types of Retailers

• Retailers can be categorized by
• Form of ownership
• Shopping effort expended by customer
• Services provided to customers
• Product lines
• Location of retail transactions

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Retail Life Cycle

• Retail institutions pass through identifiable
  life stages
• introduction
• growth
• maturity
• decline

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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

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Convenience Store Strategy Mix
Location Neighborhood
Prices Average to Above average
Atmosphere and Services Average
Merchandise Medium width and low depth of
assortment average quality
Promotion Moderate
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Conventional Supermarket Strategy Mix
Location Neighborhood
Prices Competitive
Atmosphere and Services Average
Merchandise Extensive width and depth of
assortment average quality manufacturer,
private, and generic brands
Promotion Heavy use of newspapers, flyers, and
coupons
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Food-Based Superstore Strategy Mix
Location Community shopping center or isolated
site
Prices Competitive
Atmosphere and Services Average
Merchandise Full assortment plus health and
beauty aids and general merchandise
Promotion Heavy use of newspapers, flyers
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Specialty Store Strategy Mix
Location Business district or shopping center
Prices Competitive to Above average
Atmosphere and Services Average to excellent
Merchandise Very narrow width and extensive
depth of assortment average to good quality
Promotion Heavy use of displays Extensive sales
force
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Traditional Department Store Strategy Mix
Location Business district, shopping center or
isolated store
Prices Average to Above average
Atmosphere and Services Good to excellent
Merchandise Extensive width and depth of
assortment average to good quality
Promotion Heavy ad and catalog use direct
mail personal selling
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Full-line Discount Store Strategy Mix
Location Business district, shopping center or
isolated store
Prices Competitive
Atmosphere/ Services Slightly below average to
average
Merchandise Extensive width and depth of
assortment average to good quality
Promotion Heavy on newspapers price-oriented
selling
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Off-Price Chain Strategy Mix
Location Business district, shopping center or
isolated store
Prices Low
Atmosphere/ Services Below average
Merchandise Moderate width and poor depth of
assortment average to good quality low
continuity
Promotion Use of newspapers brands not
advertised limited selling
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Factory Outlet Strategy Mix
Location Out of the way site or discount mall
Prices Very Low
Atmosphere/ Services Very low
Merchandise Moderate width and poor depth of
assortment low continuity
Promotion Little
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Flea Market Strategy Mix
Location Isolated store
Prices Very Low
Merchandise Extensive width and poor depth of
assortment low continuity variable quality
Atmosphere/ Services Very low
Promotion Limited
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DIALECTIC PROCESS
New retail institutions result from
stores borrowing characteristics from other very
different competitors and much like children are
a combination of the genes of their parents.
Framework of the theory Thesis established
retail institution Antithesis innovative retail
institution Synthesis combination of the
established and innovative retail concept.
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DIALECTIC PROCESS
THESIS

• Specialty store
• High margin
• Low turnover
• High prices
• Full service
• Narrow variety
• Deep assortment

SYNTHESIS

• Category specialist
• Modest margin
• Medium turnover
• Low prices
• Limited service
• Narrow variety
• Deep assortment

ANTITHESIS

• Full-line discount store
• Low margin
• High turnover
• Low prices
• No service
• Broad variety
• Shallow assortment