Chapter 5. Describe –Wheel of Retailing –Scrambled Merchandising –Retail Life Cycle Discuss Retail Strategy Evolution Examine Store-Based Retail Strategies.

Chapter 5

• Describe– Wheel of Retailing– Scrambled Merchandising– Retail Life Cycle

• Discuss Retail Strategy Evolution• Examine Store-Based Retail Strategies

– Food-Oriented– General Merchandise

• Location• Operating Procedures• Goods/Services Offered• Pricing Tactics• Atmospherics• Customer Services• Promotional Methods

• Be Price-Oriented and Cost-Efficient• Be Upscale• Be Convenient• Offer Dominant Assortment• Offer Superior Customer Service• Be Innovative or Exclusive• Provide A Unique Way of Operating

Low-End Strategy• Low Prices• Limited Facilities and Services• Price Sensitive Consumers

Medium Strategy• Moderate Prices• Improved Facilities• Broader Base of Value- and Service- Conscious Consumers

High-Ended Strategy• High Prices• Excellent Facilities and Services• Upscale Customers

Low-Ended Strategy High-Ended Strategy

No Services or Services Chargedat Additional Fee (or Services May Be Limited to Credit and Returns

Elaborate Services Available Included in Price, Such As: Credit Decorating Delivery Gift Wrapping Alterations Layaway

Spartan Fixtures and Displays Elaborate Fixtures and Displays

Simple Retail Personnel Organization Elaborate Retail PersonnelOrganization

Price Emphasis in Promotion No Price Emphasis in Promotion

Self-Service or High Sales per StorePersonnel Ratio

Product Demonstrations, Low Sales Per Store Personnel Ratio

Crowded Store Interior Spacious Store Interior

Most Merchandise Visible Most Merchandise in Backroom

Low Rental location -- Side Street High Rental Shopping Center orCentral Business District Location

OriginalMerchandise

Mix

Shoes

Shoe PolishSandals

Slippers

ScrambledMerchandise

Mix

Shoes

Shoe PolishSandals

Slippers

Handbags

Glo

ves

Belts

Socks

Innovation Maturity DeclineAcceleratedDevelopment

MaturityInnovation DeclineAcceleratedDevelopment

Number of Competitors

Very Few Very Few Moderate Many Direct Moderate Direct Moderate Indirect Many Indirect

L

MaturityInnovation DeclineAcceleratedDevelopment

Growth/Profitability/Duration

Very Few Very Rapid Rapid Moderate to Slow Slow or Negative Low to Moderate High Moderate Very Low 3-5 Years 8 Years Indefinite Indefinite

L

MaturityInnovation DeclineAcceleratedDevelopment

Investment/Growth/Risk Decisions

Very Few Investment Min Investment High Tightly Controlled Growth Marginal Capital High Risk to Sustain in Untapped Markets Expenditures, & Accepted Growth Only if Necessary

L

MaturityInnovation DeclineAcceleratedDevelopment

Central Management Concerns

Very FewConcept Refinement Establishing a Excess Capacity & Engaging in aThrough Adjustment Preemptive Overstoring; Prolonging Run-Out & Experimenting Market Position Maturity & Revising the Strategy Business Concept

MaturityInnovation DeclineAcceleratedDevelopment

Use of Management Control Techniques

Very Few Minimal Moderate Extensive Moderate

MaturityInnovation DeclineAcceleratedDevelopment

Most Successful Management Style

Very Few Entrepreneurial Centralized Professional Caretaker

• Mergers• Diversification• Downsizing• Cost Containment• Value-Driven Retailing

• Convenience Store• Conventional Supermarket• Food-Based Superstore• Combination Store

– Supercenter– Hypermart

• Box (Limited-Line) Store• Warehouse Store

• Specialty– Category Killer

• Traditional Department Store

• Full-Line Discount Store• Variety Store• Off-Price Chain• Factory Outlet• Membership Club• Flea Market

• How the Wheel of Retailing, Scrambled Merchandising, and Retail Life Cycle Help Explain Performance

• The Evolution of Retail Strategy Mix• The Nature of Store-Based Retailers

– Food-Oriented– General Merchandise

Questions?