‘Retail Formats’
PROF.C.VIGNALI PhD
Presentation Layout
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’.
Introduction
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
USAPrinciple – manufacturers selling brand
name products at a discounted price.First outlet in UK – Hornsea, 1992Format – Large site containing several
‘units’ and other amenities, i.e. restaurants, play areas.
Factory Outlet Retailing
Background cont.Largest outlet in UK – Cheshire
OaksContains approx. 140 retail unitsMost common items sold at these
outlets include; designer label clothing, crockery and homewares.
Factory Outlet Retailing
Characteristics;Good quality brands at discounted pricesAllows manufacturer to sell surplus stockLeisure amenities offered encourage the
people to spend the day there.
Factory Outlet Retailing
Disadvantages;Forces in place by government to
restrain their development.Transport links poor for those
without carsTakes away trade from town centre
retailers
Factory Outlet Retailing
Functional Strategies;Popular brands, discounted pricesOut-of-town locationsAmenities i.e, ample parking, fast
food, toilets, play parksOut-of-town location reduces
operating costs/distribution channel is shortened
Factory Outlet Retailing
Retail Example – Cheshire OaksContains;Spacious food court2 full service restaurantsStores include, DKNY, Burberry, M&S,
NextTourist information centre3,000 free car parking spacesFirst class road and rail links
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
1993Require membershipLarge scale premisesOffer extremely low cost products
inc; housewares, furniture, car parts, appliances
Discount/Warehouse Clubs
Characteristics;Extremely low pricesLow gross marginsAppeal to price conscious
consumers & small retailers who cannot purchase from larger distributors
Discount/Warehouse Club
Disadvantages;Availability of stock unreliableHigh degree of self-serviceLittle assistance available in-storeNo delivery options available
Discount/Warehouse Club
Functional Strategies;Great range of product line in limited
sizes/stylesSituated in industrial areasLayout – concrete floors, aisles wide for
forklifts, merchandise displayed on palletsAll payments must be cashCustomers responsible for transporting
their purchases
Discount/Warehouse Club
Retail Example – CostCoFirst US style warehouse club in UKTrades from over 360 outlets in 7
countriesProvides supplies for small-medium
sized businessesProvides 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 financeAccess to extensive advertisingAccess to lower costs and possibly
centralised buyingFew start up problemsUse of well-known trademark or trade
name
Franchising
Disadvantages;Onerous reporting requirementsPossible exaggeration of franchiser
advantagesCosts of franchise & other fees may
reduce profit marginsInflexibility 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 – McDonaldsCommitted to franchising as way of
doing business70% of restaurants worldwide are
franchisesWorldwide number 1 franchiseMember 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 growthMay be situated in town centres,
this may draw back attention to these areas
Conclusions
Franchising;Threat from internet shoppingFranchising 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
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.comwww.british-franchise.orgwww.frain.org.zawww.costco.co.uk