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RetailInstitutions byStore-BasedStrategy Mix
RETAILMANAGEMENT:
A STRATEGIC
APPROACH11th Edition
BERM N EV NS
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Chapter ObjectivesTo describe the wheel of retailing, scrambled
merchandising, and the retail life cycle and to
show how they can help explain the performanceof retail strategy mixes
To discuss some ways in which retail strategymixes are evolving
To examine a variety of food-oriented retailersinvolved with store-based strategy mixes
To study a range of general merchandise firmsinvolved with store-based strategy mixes
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Retailer Strategy Mix A strategy mix is the firms particular
combination of:
store locationoperating procedures
goods/services offered
pricing tactics
store atmospherecustomer services
promotional methods
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Earning Destination Retailer Status
Must be price-oriented and cost efficient
Must be upscale
Must be convenient
Should offer a dominant assortment
Should offer superior customer service
Must 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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Figure 5-4: The Retail Life Cycle
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How Retail Institutions Are Evolving
Mergers, diversification, and
downsizing Cost-containment and value-
driven retailing
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Mergers, Diversification, and Downsizing
Mergers:combinations of separately ownedfirms (e.g., Bank of America and CommerceBank)
Diversification:retailers become active inbusinesses 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, storesize, and product offerings
Using secondary locations
Placing stores in smaller communities
Using inexpensive construction materials
Using plainer fixtures and displays
Buying refurbished equipmentJoining cooperative buying and advertising
Creatively financing inventories
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Table 5-1: Store-Based Retail Strategy Mixes
Food-OrientedConvenience store
Conventionalsupermarket
Food-basedsuperstore
Combination store
Box (limited-line)store
Warehouse store
General Merchandise
Specialty store
Traditional department
Full-line discount store
Variety store
Off-price chain
Factory outletMembership club
Flea market
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Convenience Store Strategy Mix
Location:
Neighborhood
Merchandise:
Medium width
and low depth
of assortment;
average quality
Prices:
Average to
Above average
Atmosphere and
Services:
Average
Promotion:
Moderate
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Conventional Supermarket Strategy Mix
Location:
Neighborhood
Merchandise:
Extensive width
and depth
of assortment;average quality;
manufacturer,
private, & generic brands
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:Heavy use of
newspapers, flyers,
and coupons
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Food-Based Superstore Strategy Mix
Location:
Community shopping
center or isolated site
Merchandise:
Full assortment plus
health and beauty aidsand general
merchandise
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers
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Figure 5-7: Supermarkets Have Come a Long Way
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Combination Store Strategy Mix
Location:Community shopping center
or isolated site
Merchandise:
Full assortment plus
health and beauty aidsand general merchandise
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers
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Box Store Strategy Mix
Location:
Neighborhood
Merchandise:
Low width and depth of
assortment; fewperishables; few national
brands
Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none
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Warehouse Store Strategy Mix
Location:
Secondary site, often in
industrial area
Merchandise:
Moderate width and
low depth of
assortment; emphasis onmanufacturer brands
bought at discount
Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none
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Specialty Store Strategy Mix
Location:
Business district or
shopping center
Merchandise:
Very narrow width and
extensive depth ofassortment; average to
good quality
Prices:
Competitive to
Above average
Atmosphere and
Services:
Average to excellent
Promotion:Heavy use of displays
Extensive sales force
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Figure 5-8: Old Navy A Discount Power
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Traditional Department Store Strategy Mix
Location:
Business district, shopping
center or isolated store
Merchandise:
Extensive width and
depth ofassortment; average to
good quality
Prices:
Average to
Above average
Atmosphere and
Services:
Good to excellent
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
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
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Variety Store Strategy Mix
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
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Off-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
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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
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Membership Club Strategy Mix
Location:
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
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Flea 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
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