Retail

Institutions by
RETAIL
Store-Based MANAGEMENT:
Strategy Mix A STRATEGIC
APPROACH
11th Edition

BERMAN EVANS

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
5-11
Chapter Objectives
 To describe the wheel of retailing, scrambled
merchandising, and the retail life cycle and to
show how they can help explain the performance
of retail strategy mixes
 To discuss some ways in which retail strategy
mixes are evolving
 To examine a variety of food-oriented retailers
involved with store-based strategy mixes
 To study a range of general merchandise firms
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
 promotional methods

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Earning Destination Retailer Status
Must be price-oriented and cost efficient
Must be upscale
Must be convenient
Should offer a dominant assortment
Should offer superior customer service
Must be innovative or exclusive

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 Figure 5-1: The Wheel of Retailing

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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: The Retail Life Cycle

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How Retail Institutions Are Evolving

 Mergers, diversification, and

downsizing
 Cost-containment and value-
driven retailing

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Mergers, Diversification, and Downsizing

 Mergers: combinations of separately owned

firms (e.g., Bank of America and Commerce
Bank)
 Diversification: retailers become active in
businesses outside their normal operations (e.g.,
Yum! Brands)
 Downsizing: unprofitable stores are closed or
divisions are sold off (e.g., Kmart)

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Figure 5-5: West Elm from Williams-Sonoma

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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
 Variety store
superstore
 Combination store  Off-price chain
 Box (limited-line)  Factory outlet
store  Membership club
 Warehouse store  Flea market

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 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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 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, & generic brands and coupons

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 Location:
Prices:
Community shopping
Competitive
center or isolated site

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

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Figure 5-7: Supermarkets Have Come a Long Way

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 Location: Prices:
Community shopping center
Competitive
or isolated site

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

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 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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 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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 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: Old Navy – A Discount
Power

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 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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 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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 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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 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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 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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 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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 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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