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 firm’s 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. Penney’s 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 Wendy’s 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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