Retailing Q&A 2

RETAILING

ASSIGNMENT-2

Submitted by:

S.MAHENDRAN

(07MBA059)

II MBA - A

1. Elaborate the categorization of retail institutions by store based strategy

mix.

Food-Oriented General Merchandise

Convenience store

Conventional supermarket

Food-based superstore

Combination store

Box (limited-line) store

Warehouse store

Specialty store

Traditional department

Full-line discount store

Variety store

Off-price chain

Factory outlet

Membership club

Flea market

Convenience Store Strategy Mix:

Location: Neighborhood

Prices: Average to Above average

Merchandise: Medium width and low depth of assortment; average quality

Atmosphere and Services: Average

Promotion: Moderate

Conventional Supermarket Strategy Mix:


Prices: Competitive

Merchandise: Extensive width and depth of assortment; average quality;

manufacturer, private, and generic brands


Promotion: Heavy use of newspapers, flyers, and coupons

Food-Based Superstore Strategy Mix:

Location: Community shopping center or isolated site

Prices: Competitive

Merchandise: Full assortment plus health and beauty aids and general merchandise


Promotion: Heavy use of newspapers, flyers

Combination Store Strategy Mix:

Location: Community shopping center or isolated site

Prices: Competitive

Merchandise: Full assortment plus health and beauty aids and general merchandise


Promotion: Heavy use of newspapers, flyers

Box Store Strategy Mix:


Prices: Very low

Merchandise: Low width and depth of assortment; few perishables; few national

brands Atmosphere and

Services: Low

Promotion: Little or none

Warehouse Store Strategy Mix:

Location: Secondary site, often in industrial area

Prices: Very low

Merchandise: emphasis on Manufacturer brands bought at discount

Atmosphere and Services: Low

Promotion: Little or none

Specialty Store Strategy Mix:

Location: Business district or shopping center

Prices: Competitive to Above average

Merchandise: Very narrow width and extensive depth of assortment; average to

good quality

Atmosphere and Services: Average to excellent

Promotion: Heavy use of displays Extensive sales force

Traditional Department Store Strategy Mix:

Location: Business district, shopping center or isolated store

Prices: Average to above average

Merchandise: Extensive width and depth of assortment; average to good quality

Atmosphere and

Services: Good to excellent

Promotion: Heavy ad and catalog use; direct mail; personal selling

Full-Line Discount Store Strategy Mix:


Prices: Competitive


Atmosphere/Services: Slightly below average to average

Promotion: Heavy on newspapers; price-oriented; selling

Variety Store Strategy Mix:


Prices: Average

Merchandise: Good width and some depth of assortment; below-average to

average quality

Atmosphere/Services: Below average

Promotion: Use of newspapers

Factory Outlet Strategy Mix:

Location: Out of the way site or discount mall

Prices: Very Low

Merchandise: Moderate width and poor depth of assortment; low continuity

Atmosphere/Services: Very low

Promotion: Little

Membership Club Strategy Mix:

Location: Isolated store or secondary site

Prices: Very Low



Promotion: Little; some direct mail

2. The concept of ease of entry usually has less impact on chain of retailers

than independent retailers. State your reasons why 0r why not.

Ease of entry:

Ease of entry has less impact on the chain of retailers than that of

independent retailers. This is because of the following reasons

a. The chain of retailers have more contacts that they make any market an

easy entrant

b. They have no problems regarding the investment so they will invest a lot

wherever they enter so the locals will also be benefited

c. They have a recognizable brand name which will make the customers to

repeatedly buy in their retail stores. So they will receive a huge market

as soon they enter.

d. The independent retailers will hesitate to invest a lot regarding the risks

involved.

e. The chain of retailers may not receive profit in all areas they operate but

overall they will get profit

f. But the independent investors have to get profit in the certain store

which they open

So if the entry is easy, the independent investors will be more

benefited than the chain of retailers.

3. Write short notes on advantages and disadvantages of www?

a. From the consumers perspective

b. From the retailers perspective

a. From the consumers perspective

Advantages:

Convenience of shopping on-line with increasingly secure

technologies safeguarding Internet transactions, e.g. on June 27th Visa

International announced that more than 60 of the world's top Internet solutions

providers combined to launch its "Visa Authenticated Payment". This will enhance

the security of Internet-based payments on a global scale. This provides Visa and

the consumer the same level of security in the virtual world as they have in the

physical world.

While established brand names do attract traffic, it is a positive

shopping experience that brings the customer back. Consumers are finding that

their shopping experience on-line is more convenient, there is greater ease of

making price comparisons and gaining information about products and services.

With Internet retailing there is a good selection of products and services.

For the Internet retailers, there are reduced unit operating and

customer acquisition costs; it is a low cost medium.

Disadvantages:

Many websites usually don't have the advantage of established brand

names and customer bases; they have to start from ground zero. Only few

companies are immediately able to serve their existing customers on-line and,

synchronistically, focus on acquiring new customers, but many do not have the

advantage of an established brand name, customer base, and an inventory system,

but must devote their resources and time to building a brand name and customer

base.

Security and technical problems sometimes have to be dealt with; they

must retrain for the Internet sales format, must learn how to use an e-mail dialogue

with customers, starting slowly and, because customer trust of the online retailer is

often lacking, they must gradually build the customers' trust.

Some retailers consider the Internet technology to be too expensive,

too difficult to use, of little value, or intrusive. Many consumers believe that ads

and cookies invade their privacy. Many consumers hesitate to shop from a pure

play retailer because they cannot try or feel an item before purchasing nor, in the

case of clothing, try it on. Many find it inconvenient to return purchased goods if

they are not satisfactory and a large percentage is not comfortable using a credit

card online and disclosing their personal information. Customer service is often

lacking, as well as proper delivery of goods.

b. From the retailers perspective

Advantages:

Retailers are able cover a whole lot of customers from all over the

world.

No additional cost involved as inventory holding cost.

Payment can be received easily

In most of the case delivery takes place only after payment

4. Do you really think non-store based retailing will continue to grow faster

than store based retailing, justify your answer.

In recent years the customers are so busy that they don’t get time to visit stores.

They were also not ready to waste time in the stores. So non-store based retailing is

gaining momentum and will shine in years to come.

Emerging Trends:

Evolving activities

Changing customer lifestyles

Increasing competition

Increasing usage of dual distribution channels

Changing media roles, technological advances, and global penetration

Selection Factors by Customers:

Company reputation and image

Ability to shop whenever consumer wants

Types of goods and services

Availability of toll-free phone number or Web site for ordering

Credit card acceptance

Speed of promised delivery time

Competitive prices

Satisfaction with past purchases and good return policy

Increase in use of Credit and Debit Cards

According to an “Instant insight-Research” by ICICI Bank in 10

cities, credit card spend in 2003 was Rs.984cr per month, up from Rs. 721cr per

month in 2002 indicating a growth of around 37% from more than 90 lakh national

users resulting in a per annum spend on cards to the tune of Rs. 12000cr.

The research results are encouraging for retailers to go in tie-up with

credit card companies for mutual benefit.

Besides the above, nuclear family structure, growing literacy,

increasing urbanization, increased media penetration an d increasing number of

working women are some of the other factors responsible for the development of

the retail sector in India.

5. Do you feel that the parking needs for shoe store, barber shop and an

apparel store differ so, if justify your answer?

The parking need differ from business to business. They differ a lot

for shoe store, barber shop compared to apparel store.

Apparel shop differs:

Unlike other shops apparel shops are frequently visited by customers. But

the frequency of visits in a barber shop or shoe store is very low.

Parking:

Parking is one of the crucial elements to be considered before

selecting the location of any kind of store. In case of barber shop or shoe store they

will be located in any plaza or some frequently visited places by people. So such

places will have sufficient parking space. So such shops no need to bother for the

parking lot.

But in case of apparel shops a special parking lot should be required for the

customers. This is also because of the reason that such persons are wealthy persons

who will not wait for silly reasons like parking problems, traffic, etc.

So the parking need differs a lot for barber shop and an apparel store.

6. A restaurant chain has decided to open outlets in a combination of isolated

locations, unplanned business districts and planned shopping center

comment on each of this strategy individually.

A restaurant's location is as crucial to its success as great food and

service. It will influence many parts of your restaurant, including the menu.

There are four crucial elements to consider when looking at a

potential restaurant location:

Population Base:

Are there enough people in the area to support your business? For

example, is the restaurant location in the heart of a thriving downtown shopping

district, or along a busy freeway? There needs to be enough people who live in the

area, or pass through the area on a regular basis to keep you busy. To determine the

population base of a particular area, you can do a site study. However, these can

cost up to $25,000. Most people looking at their first restaurant don’t have enough

money in their budget for a professional survey. A less expensive method to

determine the population base of certain area is to use a circle graph, as well as

asking the local chamber of commerce and town office for more information.

Parking:

Will there be enough parking to accommodate all the seats in your

new restaurant? Ideally, a new restaurant location should have its own parking lot.

If that isn’t an option, is there public parking near the restaurant location?

Accessibility:

There’s a reason that major restaurant chains are often located near

highway and freeway exits: It makes them accessible for customers. Motorists can

reach the restaurant without fighting traffic or driving out of their way. Most

successful restaurant locations (but not all) are easy to find.

Visibility:

This goes along with accessibility and this is very important for new

restaurant locations. People have to know the restaurant is there. This is why

property prices in downtown districts and developed strips are higher than other

areas. They offer a level of visibility that can bring in a great deal of walk-in

business.

Strategy for isolated location:

Prices: Very Low



Promotion: Little; some direct mail

Strategy for unplanned business district:

Prices: Competitive


Atmosphere/Services: Slightly below average to average

Promotion: Heavy on newspapers; price-oriented; selling

Strategy for planned shopping center:

Prices: Average to above average


Atmosphere and

Services: Good to excellent

Promotion: Heavy ad and catalog use; direct mail; personal selling

7. Elucidate clearly the wheel of retailer theory?

The Wheel of Retailing

Low End Strategy:

Low rental location

No services or services charged at additional fee (or services may be

limited to credit and returns)

Simple fixtures and displays

Simple retail personnel organization

Price emphasis in promotion

Self-service or high sales per store personnel ratio

Crowded store interior

Most merchandise visible

High end Strategy:

High rental shopping centeror central business district location

Elaborate service included in the price, such as,

o Credit

o Delivery

o Alternation

o Decoration

o Gift wrapping

o Layaway

Elaborate fixtures and displays

Elaborate retail personnel organization

No Price emphasis in promotion

Product demonstrations, low sales per store personnel ratio

Spacious store interior

Most merchandise in back room

Retailing Q&A 2

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