CHAPTER 5:
RETAIL INSTITUTIONS BY STOREBASED STRATEGY MIX
Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
5-11
Chapter Objectives
• To describe the wheel of retailing, scrambled merchandising, and
the retail life cycle and to 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 storebased strategy mixes
Retailer Strategy Mix
• A strategy mix is the firm’s particular
combination of:
• store location
• operating procedures
• goods/services offered
• pricing tactics
• store atmosphere
• customer services
• promotional methods
Retailer Strategy Mix
• Store location refers to the use of a store format, placement in a geographic area,
and the kind of site (such as a shopping center).
• Operating procedures include the personnel employed, management style, store
hours, and other factors.
• The goods/services offered may encompass many product categories or just one;
quality may be low, medium, or high.
• Pricing refers to the use of Value based pricing (creating a quality image),
competitive pricing (setting prices at the level of rivals), or cost pricing (covering
own costs).
• Store atmosphere and customer services are reflected by the physical facilities
and personal attention, return policies, delivery, and more.
• Promotion involves activities in such areas as advertising, displays, personal
selling, and sales promotion. By combining the elements, a retailer can devise a
unique strategy.
The Pricing Tripod
Earning Destination Retailer Status
• Destination retail refers to a retail store that attracts customers
primarily due to its unique offerings, desirable atmosphere, or special
pricing, making it a worthwhile trip for shoppers.
• These stores go beyond just basic needs, providing an experience that
encourages customers to make the effort to visit, often even traveling
a considerable distance.
• Global examples of destination stores include IKEA
• Local examples of destination stores :
• Karachi Port Grand:
• This area combines shopping with other activities like dining and
entertainment, making it a place where people come to spend a day or
evening, not just for shopping.
• Dolmen Mall Clifton:
• This upscale mall attracts customers seeking a mix of local and
international brands, gourmet dining, and special events.
• Forum Shopping Mall:
• A popular mall with a variety of brands, fashion, electronics, and a food
court, making it a central location for shoppers.
Figure 5-1: The Wheel of Retailing
Lessons of the Wheel of Retailing
• The "wheel of retailing" is a retail theory that describes the evolutionary stages
of a retailer, from entry into the market with low prices and low service, to a
more mature, high-price, high-service operation. It's essentially a cyclical
process of adaptation to changing market dynamics.
• Stages of the Wheel of Retailing:
• Entry: New retailers enter the market by offering low prices, low service, and often a
limited selection of products.
• Growth: As the retailer gains market share, they may start to offer higher prices and
improve service, often introducing more premium products or expanding their
location.
• Maturity: The retailer becomes a well-established, high-price, high-service
operation, often with a wider range of products and a more comfortable shopping
experience.
• Decline: Eventually, the retailer may experience decline due to over-investment in
services, saturation of the market, or the emergence of new retail formats with even
lower prices or more appealing services.
Retail Mgt. 12e (c) Pearson Education, Inc. publishing as Prentice Hall
5-8
Lessons of the Wheel of Retailing
Retail Mgt. 12e (c) Pearson Education, Inc. publishing as Prentice Hall
5-9
Methods of Cost Containment
• Standardizing procedures, store layouts, store size, and product
offerings; centralized buying.
• Using secondary use locations (existing store fixtures, storefronts,
carpeting); placing stores in smaller communities; using
inexpensive construction materials (honest architecture).
• Using plainer fixtures and displays; reusing fixtures from closed
stores.
• Joining cooperative buying and advertising programs; increased
use of the Web versus traditional advertising and catalogs.
• Self-service operations; increased use of part-time personnel.
• Reduced product proliferation.
Figure 5-2: Retail Strategy Alternatives
Retail Life Cycle
• Retail institutions pass through identifiable life
stages
•
•
•
•
introduction
growth
maturity
decline
Figure 5-4: The Retail Life Cycle
Mergers, Diversification, and Downsizing
• Mergers: combinations of separately owned firms (e.g.,
Silk Bank – UBL; Barclays – HBL; Telenor- PTCL)
• Diversification: retailers become active in businesses
outside their normal operations (e.g., Engro Fert,
Polymer & Chemicals, Foods, Powergen)
• Downsizing: unprofitable stores are closed or divisions
are sold off
Figure 5-5: Shopping Cart Sign
Classification of Retail Institutions
Store-based retail
strategy mix
Ownership
• Independent
• Chain
• Franchise
• Leased department
• Vertical marketing system
•
•
•
•
•
•
•
•
•
•
Department stores
Specialty stores
Convenience stores
Discount stores
Chain stores
Franchise stores
Factory outlets
Catalog showrooms
Big box retailers
Auto retailers
Nonstore-based retail
strategy mix &
nontraditional retailing
• Direct marketing
• Direct selling
• Vending machine
• World wide web (WWW)
Store-based Retail Strategy Mix
• Department stores:
• Large retail establishments offering a wide variety of merchandise, often in multiple
departments (e.g., Naheed, Al-Fatah).
• Specialty stores:
• Focus on a specific type of merchandise, such as furniture, electronics, or sports
equipment (e.g., Khaadi, Habitt, MeatOne).
• Convenience stores:
• Small stores offering a limited selection of everyday items, often open extended
hours (e.g., 7-Eleven).
• Discount stores:
• Sell goods at lower prices than traditional retailers (e.g., Imtiaz, Metro).
• Chain stores:
• Multiple locations operating under the same brand, offering a standardized
shopping experience (e.g., Carrefour).
Store-based Retail Strategy Mix
• Franchise stores:
• Stores operating under a franchised agreement, following established guidelines and
branding (e.g., McDonald's, Subway).
• Factory outlets:
• Sell items at discounted prices, often from a specific manufacturer's excess inventory
(e.g., Nike, Levis, any factory outlets).
• Catalog showrooms:
• Offer customers a catalog to browse and then purchase products in-store. (e.g. Argos)
• Big box retailers:
• Large stores offering a wide range of goods in multiple categories (e.g., Walmart).
• Auto retailers:
• Dealerships selling vehicles and related services.
Specialty Stores vs. Department Stores
Specialty stores are businesses that sell a specific type of product, while
department stores are businesses that sell a variety of products.
Specialty stores exist because they can offer a higher level of expertise
on the products they sell. They also usually carry a wider selection of
products than department stores. And because they focus on a specific
type of product, they can offer customers a more personalized shopping
experience e.g. Khaadi, Junaid Jamshed.
Department stores, on the other hand, exist because they can offer a
one-stop shopping experience for customers. Customers can come to a
department store and find everything they need, all in one place.
Department stores also usually offer lower prices than specialty stores
because they buy products in bulk and sell them at a discount e.g.
Imtiaz, Chase, Naheed.
Types of Retail Stores
1. Apparel stores
Starting strong on our types of retail stores blog is an apparel store. This store focuses on
selling clothing and accessories. Clothing stores come in all shapes and sizes, from small
boutiques and thrift shops to large department stores.
2. Furniture stores
Furniture stores are retail businesses that sell furniture and home furnishings. These stores
can range from small local shops to large national chains. And they can sell all types of
furniture, from sofas and chairs to bedroom sets and dining room tables.
3. Discount stores
Everyone loves a bargain. And that's what makes discount stores so popular. These types of
retail stores sell products at lower prices than other stores.
Discount stores can be small, local businesses or large national chains. And they sell all
types of products, from clothes to groceries.
4. Convenience stores
A convenience store is a type of retail store that is open long hours and sells a wide variety
of items, such as food, snacks, drinks, and cigarettes.Convenience stores are often located
near busy areas, such as bus stations and highway exits.
Convenience stores also tend to be open much later than regular grocery stores as well.
Types of Retail Stores
5. Drug stores/pharmacists
A drug store also called a pharmacy, is a type of retail store that sells medications and
other health-related products. Drug stores can be small, local businesses or large national
chains. And they are typically found in high-traffic areas, such as shopping malls and
hospitals.
6. Supermarkets/grocery stores
A supermarket is a large, self-service store that sells a wide variety of food and household
products. Supermarkets are typically found in high-traffic areas, such as busy city streets
or major highways. Similarly, a grocery store is also a retail stores that sell food and
household products. However, a it's typically smaller than a supermarket and found in
more rural areas.
7. Department stores
Department stores are a type of retail store that sells a wide variety of items, including
clothing, furniture, home decor, and electronics. Department stores are usually large
stores with many different departments - hence their name.
8. Barbershop
A barber shop is a type of business that offers hair-cutting and other grooming services.
Barber shops are usually small businesses with a limited number of employees.
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