Retail Strategy Mix and Wheel of Retailing. Retailer Strategy Mix A strategy mix is the retailer’s specific combination of:  store location,  operating

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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 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. 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 The Wheel of Retailing
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  • Three Basic Strategic Positions Low end Medium High end
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  • Retail Strategy Alternatives 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 Selecting a Target Market Retailers analyze demographic, geographic, and psychographic profiles to segment and select potential markets
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  • Merchandising Strategy 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 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 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 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 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 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 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 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 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, and 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 aids and general merchandise Prices: Competitive Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers
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  • Specialty 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 and Services: Average to excellent 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 Merchandise: Extensive width and depth of assortment; 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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  • 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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  • 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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  • DIALECTIC PROCESS 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 DIALECTIC 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 THESIS ANTITHESIS SYNTHESIS