Chapter 5

Retail Institutions by Store-Based

Strategy Mix

RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
9th Edition

BERMAN EVANS
 Chapter Objectives
To describe the wheel of retailing,
scrambled merchandising, and the retail
life cycle, and show how they can help
explain the performance of retail
strategy mixes
To discuss some ways in which retail
strategy mixes are evolving

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 Chapter Objectives_2
To examine a wide variety of food-
oriented retailers involved with store-
based strategy mixes
To study a wide range of general
merchandise retailers involved with
store-based strategy mixes

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 Retailer Strategy Mix
A strategy mix is the firms particular
combination of:
store location,
operating procedures,
goods/services offered,
pricing tactics,
store atmosphere,
customer services, and
promotional methods

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 Earning Destination Retailer Status

Be price oriented and cost efficient

Be upscale
Be convenient
Offer a dominant assortment
Offer superior customer service
Be innovative or exclusive

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 Figure 5.1 The Wheel of Retailing

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 Three Basic Strategic Positions

Low end
Medium
High end

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 Figure 5.2 Retail
Strategy Alternatives

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 Figure 5.3 Scrambled Merchandising
by a Shoe Store

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 Retail Life Cycle
Retail institutions pass through
identifiable life stages
introduction
growth
maturity
decline

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 Figure 5.4 Retail Life Cycle

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 How Retail Institutions are Evolving

Mergers, Diversification, Downsizing

Cost-Containment and Value-Driven
Retailing

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 Mergers, Diversification, and
Downsizing
Mergers: combination of separately owned
firms (e.g., Sears and Lands End)
Diversification: retailers become active in
businesses outside their normal operations
(e.g., Limited Brands)
Downsizing: unprofitable stores are closed
or divisions are sold off (e.g., Kmart)

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 Figure 5.5 J.C. Penneys Eckerd

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 Methods for Cost Containment
Standardizing procedures, store layouts,
store size, and product offerings
Using secondary locations
Placing stores in smaller communities
Using inexpensive construction materials
Using plainer fixtures and displays
Buying refurbished equipment
Joining cooperative buying and advertising
Creatively financing inventories
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 Table 5.1 Store-Based Retail
Strategy Mixes
Food Oriented General Merchandise
Convenience store Specialty store
Conventional Traditional department
supermarket
Full-line discount store
Food-based
superstore Variety store
Combination store Off-price chain
Box (limited-line) Factory outlet
store Membership club
Warehouse store Flea market

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 Convenience Store Strategy Mix
Prices:
Location:
Average to
Neighborhood
Above average

Atmosphere and
Merchandise: Services:
Medium width Average
and low depth
of assortment; Promotion:
average quality Moderate

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 Figure 5.6 Wendys and Pilot

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 Conventional Supermarket
Strategy Mix
Location: Prices:
Neighborhood Competitive

Merchandise: Atmosphere and

Extensive width Services:
and depth Average
of assortment; Promotion:
average quality; Heavy use of
manufacturer, newspapers, flyers,
private, and generic brands and coupons

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 Food-Based Superstore
Strategy Mix
Location:
Prices:
Community shopping
Competitive
center or isolated site

Atmosphere and
Services:
Merchandise: Average
Full assortment plus health
and beauty aids and Promotion:
general merchandise Heavy use of
newspapers, flyers

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 Figure 5.7 Supermarkets Have
Come a Long Way

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 Combination Store
Strategy Mix
Location:
Prices:
Community shopping center
Competitive
or isolated site

Atmosphere and
Services:
Merchandise: Average
Full assortment plus health
and beauty aids and Promotion:
general merchandise Heavy use of
newspapers, flyers

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 Box Store Strategy Mix

Location: Prices:
Neighborhood Very low

Atmosphere and
Merchandise: Services:
Low width and depth of Low
assortment; few
perishables; few national Promotion:
brands Little or none

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 Warehouse Store Strategy Mix
Location:
Prices:
Secondary site, often in
Very low
industrial area

Atmosphere and
Merchandise: Services:
Moderate width and Low
low depth of
assortment; emphasis on
manufacturer brands Promotion:
bought at discount Little or none

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 Specialty Store Strategy Mix
Location: Prices:
Business district or Competitive to
shopping center Above average

Atmosphere and
Merchandise: Services:
Very narrow width and Average to excellent
extensive depth of
assortment; average to Promotion:
good quality Heavy use of displays
Extensive sales force

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 Figure 5.8 Home Depot

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 Traditional Department Store
Strategy Mix
Location: Prices:
Business district, shopping Average to
center or isolated store Above average

Atmosphere and
Merchandise: Services:
Extensive width and Good to excellent
depth of Promotion:
assortment; average to Heavy ad and catalog
good quality use; direct mail;
personal selling

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 Full-line Discount Store Strategy
Mix
Location:
Prices:
Business district, shopping
Competitive
center or isolated store

Atmosphere/ Services:
Merchandise: Slightly below
Extensive width and average to average
depth of
assortment; average to Promotion:
good quality Heavy on newspapers;
price-oriented; selling

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 Variety Store Strategy Mix
Location:
Prices:
Business district, shopping
Average
center or isolated store

Merchandise: Atmosphere/ Services:

Good width and Below average
some depth of
assortment;
below-average Promotion:
to average quality Use of newspapers

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 Off-Price Chain Strategy Mix
Location:
Prices:
Business district, shopping
Low
center or isolated store

Merchandise: Atmosphere/ Services:

Moderate width and Below average
poor depth of
assortment; Promotion:
average to good quality; Use of newspapers;
low continuity brands not advertised;
limited selling

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 Factory Outlet Strategy Mix
Location:
Prices:
Out of the way site
Very Low
or discount mall

Atmosphere/ Services:
Merchandise: Very low
Moderate width and
poor depth of
assortment; Promotion:
low continuity Little

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 Figure 5.9 Brooks Brothers:
Realizing the Power of the Factory Outlet

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 Membership Club Strategy Mix
Location:
Prices:
Isolated store or
Very Low
secondary site

Atmosphere/ Services:
Merchandise: Very low
Moderate width and
poor depth of
assortment; Promotion:
low continuity Little;
some direct mail

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 Flea Market Strategy Mix

Location: Prices:
Isolated store Very Low

Merchandise: Atmosphere/ Services:

Extensive width and Very low
poor depth of
assortment;
low continuity; Promotion:
variable quality Limited

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