‘Retail Formats’
PROF.C.VIGNALI PhD
Presentation Layout
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Introduction to current shopping trends,
 Factory Outlet Retailing; background,
characteristics and functional strategies,
 Discount/warehouse club; background,
characteristics and functional strategies,

Franchising; background, characteristics and
functional strategies,

Conclusions
Introduction
Shopping is considered to be a ‘leisure
experience. (Newby 1993)
 Consumer trends change according to;
- age, demographics, economics,
technology, car ownership
 Consumer is now ‘price and value
conscious’.
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Introduction
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Nowadays, there is a diverse array of retail
formats, such as;
Chain stores
Supermarkets
Discount stores
Factory Outlets
Franchises
Internet
Factory Outlet Retailing
Background:
Factory outlet format originates from
USA
 Principle – manufacturers selling brand
name products at a discounted price.
 First outlet in UK – Hornsea, 1992
 Format – Large site containing several
‘units’ and other amenities, i.e.
restaurants, play areas.
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Factory Outlet Retailing
Background cont.
 Largest outlet in UK – Cheshire
Oaks
 Contains approx. 140 retail units
 Most common items sold at these
outlets include; designer label
clothing, crockery and homewares.
Factory Outlet Retailing
Characteristics;
Good quality brands at discounted prices
 Allows manufacturer to sell surplus stock
 Leisure amenities offered encourage the
people to spend the day there.
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Factory Outlet Retailing
Disadvantages;
 Forces in place by government to
restrain their development.
 Transport links poor for those
without cars
 Takes away trade from town centre
retailers
Factory Outlet Retailing
Functional Strategies;
 Popular brands, discounted prices
 Out-of-town locations
 Amenities i.e, ample parking, fast
food, toilets, play parks
 Out-of-town location reduces
operating costs/distribution channel
is shortened
Factory Outlet Retailing
Retail Example – Cheshire Oaks
Contains;
Spacious food court
 2 full service restaurants
 Stores include, DKNY, Burberry, M&S,
Next
 Tourist information centre
 3,000 free car parking spaces
 First class road and rail links
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Discount/Warehouse Club
Definition;
“Discount/warehouse clubs can be
described as cash and carries for
the general public”. Brassington et al
2001
Discount/Warehouse Club
Background;
 Adopted from USA to the UK in
1993
 Require membership
 Large scale premises
 Offer extremely low cost products
inc; housewares, furniture, car parts,
appliances
Discount/Warehouse Clubs
Characteristics;
 Extremely low prices
 Low gross margins
 Appeal to price conscious
consumers & small retailers who
cannot purchase from larger
distributors
Discount/Warehouse Club
Disadvantages;
 Availability of stock unreliable
 High degree of self-service
 Little assistance available in-store
 No delivery options available
Discount/Warehouse Club
Functional Strategies;
 Great range of product line in limited
sizes/styles
 Situated in industrial areas
 Layout – concrete floors, aisles wide for
forklifts, merchandise displayed on
pallets
 All payments must be cash
 Customers responsible for transporting
their purchases
Discount/Warehouse Club
Retail Example – CostCo
 First US style warehouse club in
UK
 Trades from over 360 outlets in 7
countries
 Provides supplies for small-medium
sized businesses
 Provides quality goods at lowest
possible prices
Franchising
Definition;
“Franchising is an arrangement
whereby a supplier grants a dealer
the right to sell products in
exchange for some type of
consideration”. Dibb et al 2000
Franchising
Background;
 Franchiser receives percentage of sales
in return for providing equipment,
marketing, branding etc.
 Organisations which franchise inc;
McDonalds, Mercedes Benz, Toyota, the
Body Shop
 Franchising accounts for approx. 1/3 of
all retail sales
Franchising
Characteristics;
 Possibly easier to finance
 Access to extensive advertising
 Access to lower costs and possibly
centralised buying
 Few start up problems
 Use of well-known trademark or trade
name
Franchising
Disadvantages;
 Onerous reporting requirements
 Possible exaggeration of franchiser
advantages
 Costs of franchise & other fees may
reduce profit margins
 Inflexibility due to restrictions imposed by
franchiser
Franchising
Functional Strategies;
 Larger, well established franchise
operation have ad campaigns and solid
trading name
 Good franchisers will offer training
programmes
 Good franchisers will help secure
funding for the investment
Franchising
Retail Example – McDonalds
 Committed to franchising as way of
doing business
 70% of restaurants worldwide are
franchises
 Worldwide number 1 franchise
 Member of the British Franchise
Association
Conclusions
Factory outlet Retailing;
 Must continue to attract regular
customers, i.e. provide additional
amenities
 May seriously affect the likelihood of
traditional town centres
Conclusions
Warehouse/Discount Clubs;
 Growth inevitable, but government
may inhibit growth
 May be situated in town centres, this
may draw back attention to these
areas
Conclusions
Franchising;
 Threat from internet shopping
 Franchising will continue as
consumers still want the leisure
activity of shopping
Bibliography
1.
Dibb et al (2000)Marketing Concepts &
Strategies
2.
CIM Coursebook 2002-2003;
- Marketing Operations
- Marketing in Practice
- Marketing Environment
3. Brassington et al (2000) Principles of
Marketing
Journals
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International journal of retailing &
distribution management;
- Volume 30, No. 5, 2002
- Volume 23, No. 1, 1995
- Volume 24, No. 6, 1996
- Volume 22, No. 1, 1994
Websites
www.mcdonalds.com
 www.british-franchise.org
 www.frain.org.za
 www.costco.co.uk
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