Chapter 2

Retail Formats
Faiza Nasir

Retail formats?

Merchandises Division
Product Width Product Length Product Depth

SKUs?


A common term for a unique numeric identifier, used to refer to a specific product in inventory or in a catalog. Inventory control count that represents one or more items that will be sold together. For example, a retail bed store would consider one bed frame with four wheels equal to one SKU (even though the frame and the wheels come from different suppliers), because a frame is never sold without wheels, and wheels are never sold alone. Conversely, a frame, a box spring, and a mattress would be considered three SKUs, because any of the three items might be sold separately. Warehousing item that is unique because of some characteristic (such as brand, size, color, model) and must be stored and accounted for separate from other items. Every SKU is assigned a unique identification number (inventory or stock number) which is often the same as (or is tied to) the items UPC.

Store vs. NonNon-Store formats

Store Formats by Location

a) Chain store MultiMulti-locational Operates multiple outlets under common ownership Engages in some level of centralized or coordinated purchasing and decision making b) High street format: A retail chain that seeks to locate itself in busy shopping areas (generally less than 2,000 sft, with no parking facilities and focused merchandise categories) c) Destination format: Independent retail stores located specifically in an area with alluring propositions (usually large in size, with ample concessions, huge parking space, wide merchandise categories) d) Convenience store format: Accessible carrying wide array of consumable goods (less than 5,000 sft, extended hours, parking for few vehicles, convenience merchandise)

Competitive State of Chains

Advantages Bargaining power Cost efficiencies Efficiency from computerization, sharing warehouse and other functions Defined management philosophy Considerable efforts in long-run planning longDisadvantages Limited flexibility Higher investment costs Complex managerial control Limited independence among personnel

Convenience Store Strategy Mix

Location: Neighborhood Prices: Average to Above average Atmosphere & Services: Average Promotion: Moderate

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

Store Formats by Ownership

a) Independent Generally higher level of independent retailers exists 50% of these are run by owners and their families Why so many? Ease of entry b) Franchise: A contractual agreement between a franchisor and a retail franchisee, which allows the franchisee to conduct business under an established name and according to a given pattern of business Franchisee pays an initial fee and a monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in an area

Competitive State of Independents

Advantages Flexibility in formats, locations, and strategy Control over investment costs and personnel functions, strategies Personal image Consistency and independence Strong entrepreneurial leadership Disadvantages Lack of bargaining power Lack of economies of scale Labor intensive operations OverOver-dependence on owner Limited long-run longplanning

Competitive State of Franchising

Advantages Disadvantages small capital required oversaturation could occur acquire well-known wellnames franchisors may overstate potential operating/management skills taught locked into contracts cooperative marketing agreements may be possible cancelled or voided exclusive selling rights royalties are based on sales, not profits less costly per unit

From the Franchisors Perspective

Benefits national or global presence possible qualifications for franchisee/ operations are set and enforced money obtained at delivery royalties represent revenue stream Potential Problems potential for harm to reputation lack of uniformity may affect customer loyalty ineffective franchised units may damage resale value, profitability potential limits to franchisor rules

Store Formats by Merchandise Category

a) Family store Store dealing in all categories of related item (For e.g. apparel store offering merchandise to suit the wardrobe of a family) b) Specialty format: Narrow product lines with good depth. Specializing in a given type of merchandise, offering attentive customer services. c) Department store format: Large in size having several departments working as SBUs d) Super market format: Departmentalized, specializing in foodstuff, grocery and limited nonnon-food categories, free access displays so that customers can pick from shelves. e) Emporium: Selling a variety of a particular group of merchandise (sari emporium).

Specialty Store Strategy Mix

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

Department Store Strategy Mix

Location: Business district, shopping center or isolated store Prices: Average to Above average Atmosphere and Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling

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

Conventional Supermarket Strategy Mix

Location: Neighborhood Merchandise: Extensive width and depth of assortment; average quality; manufacturer, private, & generic brands Prices: Competitive Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers, and coupons

Store Formats by Size

a) Superstore format SingleSingle-level large store, twice the size of a supermarket, offers nonnon-traditional goods and services like pharmacy, flower shop, bookstore, salad bar, bakery etc. b) Shopping Mall: Spread over a large area, arrangement of retail stores and places for leisure activities. c) Shopping Center: Plaza combining five or more tenant spaces developed under one building. d) Hypermarket: Wide variety, offering in large quantities in each category selling huge volumes at low margins.

Store Formats by Price

a) Discount format Bazaar format, believing in discounts more often. b) EDLP format: Specialize in a particular merchandise line, assuring consistently low prices. c) Category killer format: Large specialty store having enormous selection of its product category at relatively low prices. d) Factory-outlet format: FactoryOwned and operated by the manufacturer e) Warehouse format: Large sale of discontinued merchandise, has large width and depth in many categories it retails. f) Single-price denomination format: SingleScrambled merchandise at just one price point, generally at a low one.

Discount Store Strategy Mix

Prices: 25% or more below MRP Merchandise: Extensive width and depth of assortment; average to good quality (overruns, irregulars, cut-sizes) Atmosphere/ Services: Slightly below average to average Promotion: Heavy on newspapers; price-oriented; selling

Factory Outlet Strategy Mix

Prices: Very Low Merchandise: Moderate width and poor depth of assortment; low continuity (cancelled orders, discontinued merchandise) Atmosphere/ Services: Very low

Promotion: Little

Warehouse Store Strategy Mix

Location: Secondary site, often in industrial area Merchandise: Moderate width and low depth of assortment; emphasis on manufacturer brands bought at discount Prices: Very low Atmosphere and Services: Low Promotion: Little or none

Store Formats by Concessions

a) Stopover store format Like petrol pump, offers instant use or ready-to-eat categories of ready-tomerchandise. b) Kiosk: Small freestanding pavilion c) Alliances: With brands that customers trusts

Bazaars?
   

Seasonal Structured UnUn-structured Thematic

Scalability and its importance