RETAILING AND RETAIL MANAGEMENT PRODUCTION
Retailers are an important link in the marketing channel because they are both marketers and customers for producers and wholesalers. They perform marketing Activities, such as buying, selling, grading, risk taking and developing information about customers and accessible to ultimate consumers. They are in a strategic position to gain feedback from customers and to relay ideas to producers and intermediaries in the marketing channel. Retailing is an extraordinarily dynamic area of marketing. In this presentation we examine the return and importance of mailing. We discuss the major types of retail stores -department stores, traditional general merchandise retail stores, emerging general merchandise retailers, and specialty retailers and describe several forms of non-store retailing, such as in-house retailing, telemarketing, automatic lending mail-order retailing. We also look at franchising and other forms of retailing organization. Finally, we present several strategic decisions in retailing management, location, target-market, image, product assortment, retail positioning, atmospheres pricing promotion merchandising and service.
NATURE AND IMPORTANCE OF RETAILING
Retailing includes all transactions in which the buyer intends to consume the product through personal, family, or household use. The buyers in retail transactions are ultimate consumers, A retailer, then, is an organization that purchases products for the purpose of reselling them to ultimate consumers. Although most retailer’s sales are to consumers, non-retail transactions occasionally occur when retailers sell products to other businesses. Retailing ac activities take place in a store or in a service establishment, and mail-order retailing occur outside stores.
Retailing is important to the national economy. Retailing is major source of employment in national economies. For many individuals working in a retail establishment provides the first valuable work experience. Retailing keeps the entrepreneurial to establish their businesses. And most personal income is spent in retail stores.
By providing assortments of products that march consumers wants, retailers create place, time, and possession utilities. Place Utility is moving products from wholesalers or producers to a location where consumers want to buy them. Time utility is the maintaining of specific business hours so that product is available when customers want them. Possession utility involves facilitating the transfer of ownership or use of a product to customers.
In the case of service such as hairdressing, dry-cleaning, restaurants, and automobile repairs, retailers develop most of the product facilities. The services of such retailers provide aspects of form utility associated with the production process. Retailers of services usually have more direct contact with consumers and more opportunity to alter the product component of the marketing mix.
Retail marketing is generally splintered, causing may retailers to create broad product offerings and target their products to many market segments. Consumers with different tasks, and with the ability and willingness to purchase, support a variety of retail establishments. In the following sections we discuss the major types of these establishments: store retailers non-store retailers, retailing organizations.
Retail stores seek to provide product mixes to match customers shopping preferences. These factors are important in classifying the stores according to four main types: Department stores, mass merchandiser, emerging general-merchandise retailers, and specialty retailers.
Department stores are large retail organizations characterized by wide product mixes. To facilitate marketing efforts and internal management in these stores, related product lines are organized into separate departments, such as cosmetics, house wares, apparel, home furnishing, appliance, etc. each department functions much as a self- contained business, and the buyers for individual departments are fairly autonomous,
Department stores are distinctly service-oriented. Their total product includes credit, delivery, personal assistance, merchandise returns, and a pleasant atmosphere. Although some department stores are actually large, departmentalized specialty stores, most department stores are shopping stores. That is, customers compare price, quality, and service at one store with those at competing stores.
Are retailers that generally offer fewer customer services than department stores and emphasis lower prices, high turnover, and large sales volumes. They usually have a wider product mix than department stores. They are characterized by single-story, low-cost facilities, centralized check-nut, and high-volume multiple purchases. They appeal to large, nitrogenous target markets, especially price-conscious customers. With their relatively low operating costs, mass, merchandisers project an image of efficiency and economy. Their operations include discount stores, supermarkets, superstores, home improvement center hypermarkets, warehouse wholesale clubs, and warehouse and catalog showrooms.
Discount Stores: Discount stores sell standard merchandise at lower price by accepting lower margins and selling higher volumes. The use of occasional discounts or specials does not make a discount store. A true discount stores regularly sells its merchandise at lower prices, offering mostly national brands, not inferior goods. Discount stores cut expenses by operating in warehouse like facilities in low rent. They slash prices, advertise widely, and carry a reasonable breadth and depth of products.
In recent times, discount stores have moved beyond general merchandise into specialty merchandise stores, such as discount, sporting goods stores, electronic stores and bookstores. Due to increasing competition from departments’ stores and other retailers, discounters are improving stores services, atmosphere, and location, raising discount and sometimes bearing the distribution between discount houses and department stores, thus increasing their risks and operating expenses.
Supermarket: Are large, self-service stores that carry a complete line of food products, as well as some nonfood products such as cosmetics and nonprescription drugs, supermarket are arranged in departments for efficiency in stocking and handling products but have central check-out facilities. They offer combine broad assortments of food product with low-prices, self-service operations, resulting in high-volumes sales. Three factors in their success are: price consciousness of consumers, improve packaging and refrigeration technologies and the widespread use of automobiles, which enable the stores to attract many customers. Supermarkets have become the dominant form of retailing of food products.
Super Stores: combine features of discount stores and supermarkets. They are giant retail stores that carry not only all food and nonfood products ordinarily found in supermarkets, but also carry many consumer products that are purchased routinely. In addition to a complete food line, superstores sell house wares, hardware’s small appliances, clothing, personal-care products, garden products, and auto-care products-in all. about four times as many items as supermarkets sell. Services available at superstore include laundry and dry-cleaning, automotive repair, and snack bars.
To cut handling and inventory costs, they use sophisticated operating techniques and often tall, visible shelving to display entire assortments of products. Consumers are most attracted to superstores by the lower prices and the one-stop shopping feature.
Home Improvement Centers: Represent, a combination of the traditional hardware store and number yard. .These centers provide the services and resources to assist do-it you in remodeling and redecorating their homes. Products available include lumber, paint, hardware, lighting, electrical supplies, wallpaper, plumbing and fixtures, tools, lawn and garden supplies and a verity of building materials.
The merchandises in many home improvement centers are presented in a warehouse arrangement. They focus on providing home improvement with service at a discount price. Their goal is to educate the amateur on how id do simple task, hoping they will return later when they undertake bigger projects, such as decks and room remodeling.
Hypermarkets: Combine supermarket and discount store shopping in one location. They are larger than even superstores. They commonly attract 40 to 50 percent of their selling space to grocery products and the remainder to general merchandise, including footwear apparel, home appliances, stereos, house wares, toys, jewelry, hardware, automotive supplies, etc, many of them lease space to non competing businesses such as banks, opticians, fast-food restaurants. Because they offer so many diverse products in one location, hypermarkets have been referred to as “malls within walls”. A*focus on how prices and vast selection of goods.
Warehouse/Wholesale Clubs: Are the newest form of mass merchandising large sells, members-only selling operations that combine cash-and-carry, wholesaling features with discount retailing. Small business owner’s account for about 60 percent of a typical warehouse club’s sales. Thus a warehouse/wholesale clubs could be viewed as a wholesaler. For a nominal fee, small retailers may purchase products at wholesale prices for business use or for resale. Warehouse clubs also sell to ultimate consumers who are affiliated with government agencies, credit unions, schools, hospitals, and banks, but instead of paying a membership fee, individual consumers pay slightly on each item than do retailers.
Sometimes called buying clubs, warehouse clubs offer the same size of products as discount stores do, but in limited range of sizes and styles, usually brand leaders. But because their product lines are shallow and sales volumes high, warehouse clubs can offer a broad range of merchandise, including nonperishable foods, beverages, books, appliances, house wares, automotive parts, hardware, furniture, and sundries.
To keep their prices lower than those of supermarkets and discount stores, warehouse clubs provide few services. They generally do not advertise, except through direct mail. Their facilities are often located in industrial parks and have concrete floors and aisles wide enough for forklifts. Merchandise is tacked on pallets or displayed on pipe racks. All payments must be in cash, and customers must transport their purchases themselves.
Still, warehouse clubs appeal to many price-conscious customers and small retailers who may not be able to obtain wholesaling service from larger distributors. With their large sales volume and higher stock turnover, warehouse clubs sell their goods before manufacturer payment periods are up, virtually eliminating the need for capital.
Warehouse and Catalog Showrooms: Warehouse showrooms are retail facilities with five basic characteristic: (1) a large, low-cost building, (2) use of warehouse materials-handling technology, (3) use of vertical merchandise display space, (4) a large on-premises inventory, and (5) minimum services. Although some superstores, hypermarkets, and discount supermarket have used warehouse retailing, large furniture retailers operate most of the best showrooms. They’re high volume, low-overhead operations stores, fewer personnel and services. Lower costs are possible because some marketing functions have been shifted to consumers, who must transport, finance, and perhaps store merchandise. Most consumers carry away their purchases in the manufacturer’s carton, although the stores will deliver for a fee.
In Catalog Showrooms: One item of each product is on display, often in Blocked case, and remaining inventory is stored out of the buyer’s reach, using catalogs that have been mailed to their homes or are on counters in the store, customers order products by phone or in person. Clerks fill the order from the warehouse area, and products are presented in the manufacturers carton. In contrast to traditional catalog retailers, which offer no discounts and require that customers wait .for deliver, catalog showrooms usually sell below list price and often provide goods immediately.
Catalog showrooms usually sell jewelry, image photographic equipment, toys, small appliances and house wares, sporting goods, etc. They advertise extensively and carry established brands and models that are not likely to be discounted. Because they have higher product turnover lower loses through shoplifting, and lower labour cost than department stores, they are able to feature lower prices. And they offer minimal services. Customers may have to stand in line to examine items to place orders.
In Contrast to department stores and mass merchandisers, which offer broad product mixes, specialty retailers emphasis the narrowness and depth of their product. A specialty store carries a narrow product line with a deep assortment within that line. Examples of specialty retailers are apparel stores, flowers shops, and bookstores. Specialty stores can be sub classified by the degree of narrowness in their product line. A clothing store would be a jingle-line store; men’s clothing store would be a limited-store, and a man’s custom jeans would be a super-specialty stores. Some analysts contend that, in the future, super-specialty stores will grow the fastest to take advantage of increasing opportunities for market segmentation, market targeting and product specialization.
Shopping goods such as apparel, jewelry, sporting goods, art supplies, fabrics, computers, are commonly sold through specialty retailers. By capitalizing on fashion, service, personnel, atmosphere, and location; these specialty retailers can position themselves strategically to attract customers in special market segments. They may even become exclusive dealers in their markets for certain products. Though specialty stores, small-business owners can provide unique services to match customers varied desires. For customers dissatisfied with the impersonal nature of large retailers, the close, personal contract offered by a small specialty store can be a welcome change.
Besides these traditional specialty retailers discussed above, a second type of specialty retailers is the ‘off-price Retailer’. Off-price retailer are stores that buy from manufacturers second, over runs, returns, and off-season production runs .at below-wholesale prices for resale to customers at deep discounts. Unlike true discount stores, which pay regular wholesale price for their goods and usually carry second-line brand names, off-price retailer offer limited-lines of national brand and designer merchandise, usually clothing, shoes, or house wares.
Off-price stores charge 20 to 50 percent less than do department stores for comparable merchandise but offer few customer services. They often feature dressing rooms, central checkout counters, and no credit, returns, or exchanges. Off-price stores may not sell goods with original labels in fact.
Another form of off-price retailer is the manufacturer factor outlet, which makes available manufacturers overstocks and unsold merchandise from other retail outlets, at- low prices. To ensure a regular flow of merchandise into their stores, off-price retailers must establish long-term relationships with suppliers that can provide large quantities of good at reduced prices, manufacturers may approach retailers with samples, discontinued products, or items that producers, offering to pay cash for selling their market down goods, in direct competition with off-price retailers.
NON-STORE RETAILING AND DIRECT MARKETING
Non store retailing is the selling of goods or services outside the confines of a retail facility. This form of retailing accounts for an increasing percentage of sales and includes personal sales method such as in-home retailing and telemarketing, and. non personal sales methods, such as automatic vending and mail order retailing which includes catalog retailing.
Certain non-store retailing method are in the category of direct marketing., involving the use of non-personal media to introduce products to customers; who then purchase the products by mail or telephone. In the case of telephone orders, sales persons may be required to complete the sales. Telemarketing and mail order and catalog retailing are all examples of direct marketing as sales generated by coupons, direct mail, and tool-free telephone numbers.
i) In-Home Retailing (Direct Selling):
In-home retailing is selling via personal contact with customers in their own homes. Organizations such as Avon cosrnetics, sent representatives to the homes of pre-selected prospects. Merchandise such as Encyclopedias, -electrical appliances, personal care products, health products is also sold to customers in their homes. A mention of in-home retailing is the home demonstration or party plan. One customer acts as lost and invites a number of friends to view products (merchandise) at his or her home, where a salesperson is on hand to demonstrate the products. Successful home party-plan selling requires both a network jof friends and neighbors who have the time to attend such social gathering, and a large number of effective salespersons. Another variation of in-home retailing, involving direct selling, is called multi-level marketing. Companies recruit independent business people who act as (distributors for their products, who in turn recruit and sell to sub distributors, who eventually recruit others to sell their products, usually” in customer homes. A distributors compensation includes a percentage of the sales to the entire sales or direct sales to retail customers. This system is also called “pyramid selling”.
Has its roots in mail order marketing but today involves reaching people in other ways than visiting their homes or offices, including telemarketing television direct-response marketing and electronic-shopping. Direct marketing is an interactive marketing system that uses one more advertising media to offer a measurable response and / or transaction at any location. Higher costs of driving, traffic congestion, parking headaches, lack of time, a shortage of retail sales help, and queues at checkout counters, all encourage in-home shopping.
Electronic communication and advertising media are showing rapid growth. The creation of the “information supper highway” promises to revolution commerce (including retailing and wholesaling). Electric commerce is the general term for a buying and selling process that is supported by the electronic mean (such as the Internet) and personal computers). Shoppers are having instant access to information about competing products. Electronic markets are being created. Electronic shopping is changing the role of “place” in marketing, in that customers can order products from anywhere and at anytime, without going to a store. Electronic markets result in the need for fewer intermediaries between manufacturers and consumers, a process known as retail ‘disintermidiation’.
Telemarketing is direct selling of goods and services by telephone, based on either a search of the telephone directory or a preserved list of prospective clients. Telemarketing encourages customers to initiate a call or to request information about placing an order. Research indicates that telemarketing is most successful when | combined with other marketing strategies, radio, and television.
Automatic vending is the use of machines to dispense products to customers. It is one of the most impersonal Forms of retailing. Small, standardized, routinely purchased products (chewing gum. candy, newspapers, cigarettes, sots drinks, coffee, sand witches) can be sold in machines because consumers usually buy them at the nearest available location. Vending machines are located in areas of heavy traffic (such as factories, public places, stores, offices, institutions, and government facilities), providing efficient and continuous services to customers. The elimination of sales personnel and the small amount of space necessary for vending machines give, this retailing method some advantages over stores. The disadvantages are partly offset by the expense of the frequent servicing and repair needed.
iv) Mail-order Retailing;
Mail-order retailing involves selling by description because buyers usually do not see the actual product until it arrives in the mail. Sellers contact buyers through direct mail, catalogs, television, radio, magazines, and newspapers. A wide assortment ‘of products, such as records, compact discs, book, and clothing are sold to customers through the mail. The advantages of mail order selling include efficiency and convenience. Mail-order houses are usually located in remote; low-cost areas and forgo the expenses of lore fixtures,-by .eliminating personal selling efforts and tore operation which result to tremendous savings that can be passed along to customers in the form of lower prices. On other hand, mail-order retailing is inflexible, provides limited service/ and is more appropriate for specialty products than for convenience products, when catalog retailing (a specific type of mail-order retailing) is used, customers receive their orders, by mail, or they may pick them up if the catalog retailer has stores. However, research toes that customer’s favour home delivery.
RETAIL ORGANIZATIONS (Corporate Retailing)
Although many retail stores are independently owned, increasing number -are falling under some form of Corporate retailing. The five major types of corporate chain, Hilary chain and retailer cooperatives, consumer cooperatives,” merchandising conglomerates, and franchise organizations. They are described in this section as follows:
i) Corporate Chain Stores:
A chain store system is an organization consisting of two or more stores that are centrally owned and managed. Chain stores are characterized by the sale of similar merchandise and by similar architecture formats, centralized buying and common ownership. Centralized buying is a key feature. It allows economies of scale and lower prices. They can afford to hire corporate-level specialists to deal with such areas as pricing, promotion, merchandise inventory control, and sales for casting. Chain stores gain promotional economies because their advertising costs are spread over many stores and a large sales volume. Some chains permit their local units to meet variations in consumer preferences and competition in local markets. Corporate chains appear in all types of retailing, but they are strongest in department stores, variety stores, drugstores, shoe stores, and clothing stores chains typically feature staple merchandise for which there is little variation in customer preference. Higher overhead expenses, less operational flexibility are disadvantages of chain stores.
ii) Voluntary Chain and Retail Cooperative:
The growing competitions from corporate chains have led independent retailers to form two types of associations. One is the “Voluntary Chain” which consists of a wholesaler sponsored group of independent retailers engaged in bulk-buying and common merchandising. The other is the “Retailer Cooperative” which consists of independent retailers, who set up a centralized buying organization and conduct joint promotional effort. These organizations have become effective in meeting the price challenge of corporate chains.
iii) Consumer Cooperatives:
A consumer cooperative (or co-op) is any retailing [firm owned by its customers. Community residents who feel that local retailers are not serving them well, either charging too high prices or providing poor quality products, encourage the start of consumer cooperatives. The residents contribute money to. open their own store, and they vote on its policies and elect a group to manage it. The store might set its prices low or. alternatively, set normal prices with members receiving a patronage dividend based on their individual level of purchases.
iv) Merchandising Conglomerates:
Merchandising conglomerates are free-form of corporations that combine several diversified retailing lines and forms under control ownership, along with some integration of their distribution and management function. More corporate chains are adopting diversified retailing. However, it is being argued whether diversified produces superior management systems and economies that benefit ell of the separate retail lines.
v) Franchise Organisation:
A franchise organization is a contractual arrangement between a franchisee (manufacturer, wholesaler, or services organization) and franchisers (independent businessmen, retailers, dealers), whereby the franchiser grants the franchisee the right to sell products in exchange for furnishing, equipment, buildings, management know-how, and marketing assistance. The franchisee (retailer, dealer) supplies labour and capital, operates the franchised business, and agrees to abide by the provisions of the franchise agreement.
Franchise organizations are normally based on some unique product, service, or method of doing business, or in a trade name, or patent, or on good will that the franchiser has developed. Franchising has been prominent in fast foods, video stores, specialty stores, health/fitness centers, automobile dealerships and rentals, fire stations and dozens of other product and services areas.
Franchising holds advantages for both the franchiser and the franchisee. It allows the franchiser to crate rapid, extensive distribution and to benefit from the franchisees knowledge of the local market. Profits are relatively sought in a shorter time with smaller risk and less investment than would be incurred in a Solo venture. The franchiser avoids routine managerial tasks and enjoys revenue from several sources (initial fee, royalty on gross sales, rental and leasing fees, share of profits, and sometimes-regular license fee). In a few cases, franchisers have also charged management consulting fees, but usually the franchisee is entitled to this service as part of the total package.
The franchisee is able to share a proven business idea and benefits from the franchiser’s management and guidance in such areas as purchasing, location, and merchandising techniques. The franchisee also enjoys the opportunity to act as an independent business owner with only modest investment outlays and royalty payments and with less risk of failure.
STRATEGIC RETAIL MANAGEMENT DECISIONS
Consumers often have vague reasons for making a retail purchases. Whereas most industrial (business-to-business) purchases are based on economic planning and necessity, consumer purchases often result from social influences and psychological factors. Because consumers shop for a variety of reasons to search for specific items, to escape boredom, or to learn about something new, retailers must do more than simply fill space with merchandise; they must make desired products available, create stimulating environment for shopping and develop marketing strategies for increasing retail store patronage. In this section, we •cuss how target market selection, store location, product assortment, retail positioning, atmospherics, store image pricing, promotion, merchandising service affect these mailing objectives.
Target Marketing Decision
A retailer’s most important decision concerns the; get market. Should the store focus on upscale, midscale, or downscale shoppers? Do the target shoppers want variety, assortment depth, or convenience? Until the target market is defined and profiled, the retailer cannot make consistent decisions on product assortment, store decor, advertising messages and media, price levels, and so on. Too many retailers have not clarified their target market or are trying to satisfy too many markets, satisfying none of them well. Retailers, who serve so many different people, must try to define better which groups to make their major target Customers, so that they can fine-tune their product assortment, prices, locations, and promotions to these groups.
Store Location Decisions:
The selection of a store location is one of the most crucial long-term decisions that retail management makes. Good locations can particularly offset poor retail management, but poor locations seriously impede even the most skillful retail managers. The locations decision involves the selection of (1) a city or trading area, and (2) the particular site within it. Specific quantitative criteria usually guide the location decision. Retailers consider a variety of factors when evaluating potential locations, including the location of the firms target market within the trading area, the kinds of product being sold, the availability of public transportation, customer evaluate the relative ease of movement to and fro the site, including pedestrian and vehicular traffic, parking, and transportation. Most retailers prefer sites with high pedestrian traffic, certain retailers, such as petrol stations and convenience stores, depend in large numbers of draining customers but try to avoid overly congested locations. In additions, parking space must be adequate and transportation networks must be available to accommodate customers and delivery vehicles.
Retailers also evaluate the characteristics of the site self, the types of stores in the area; the size, shape, and visibility of the lot or building under consideration, and the rental, leasing, and ownership terms under which the building may be occupied. Retailers also look for compatibility with nearby retailers, because stores that complement each other draw more customers. When making the location decisions, retailers must select from among several types of locations: free-standing structures, traditional business districts, neighborhood shopping centers, community shopping centers, regional shopping centers, and non-traditional shopping centers.
The retailer’s product assortment must match the shopping expectations of the target market. In fact it becomes a key element in the competitive battle among similar retailers. The retailers have to decide on the product assortment breath (narrow or wide) and depth (shallow “or deep). Another product assortment dimension is the quality of the goods. The retailer is interested in products quality as well as product range. The stores may limit its assortments to expensive, high quality goods for upper-income market segments; it may stock cheap, how-quality products for low-income buyers; or it may try to attract within its total product assortment.
Because of the emergence of new types of stores (warehouse, clubs, hypermarkets, and discounts house) and the expansion of product offerings by traditional stores, competition among retailers is intensive. Thus, it is important for management to consider the retail organizations market positioning. Retail positioning involves identifying an inserted or underserved market inch, or segment, and serving the segment through a strategy that distinguishes the retailer from others in the minds of customers in that segment. There are several ways in which retailers position themselves. The challenge is to develop a product/service differential strategy. The following are several product/service differentiation strategies for retailers.
Featuring some exclusive national brands, which are not available at competing retail stores, e.g. getting exclusive rights to carry the dresses of a well-known designer.
Featuring mostly private branded merchandise, e.g. store-designing most of the clothes carried in its stores.
Featuring blockbuster distinctive merchandise events, e.g. running monthly shows featuring goods of another country, such as Italian, throughout its store.
Featuring surprise or ever-changing merchandise e.g. changing some portion of its merchandise every month so that customers will want to drop in frequently or offering surprise assortments of distress merchandise, over-stocks, and discounts.
Featuring the latest and newest merchandise, e.g. leading other retailers in introducing the newest electronic.
Offering merchandise-customized services e.g making custom tailored suits, shirts, and ties fc: customers, in addition to their ready-made men’-wear.
Offering a higher targeted assortment, e.g. carrying goods for the large women or tall men.
Atmospherics describes the physical elements in stores design that appeal to customer’s emotions and encourage customers to buy. Exterior and interior characteristics, layout, and displays all contribute to a stored atmosphere, Department stores, restaurants, banks, hotels and shops combine these elements in different ways to create specific atmospheres that may be perceived as warm, fresh functional, or exciting.
External atmospheric elements include the appearance of the stores front, display windows, store entrances, a: degree of traffic congestion. Exterior atmospherics particularly important to new customers, who tend to judge an unfamiliar stove by its outside and the women s shoe department may each have a unique atmosphere.
To attract customers, a retail store must project an image which is functional and create psychological picture in the customers’ mind; as to be acceptable to its target market. A store’s image is also shaped by its reputation for integrity, the number of services offered, physical facilities, merchandise assortments, pricing policies, promotional activities, and their twenty components that represent the major attributes of a retail store’s image.
1) Merchandise (Quality, selection, style, and price)
2) Service (Lay-away plan, sales personnel, easy return, credit, and delivery).
3) Client (Customers)
4) Physical facilities (Cleanliness, store layout, shopping ease, attractiveness).
5) Convenience (Location, parking)
6) Promotion (Advertising)
7) Store Atmosphere (congeniality)
8) Institutional (Store reputation)
9) Post-transaction (Satisfaction)
Characteristics of the target market are social class, lifestyle, income level and past buying behaviour also help to form store image. How customers perceived the store could be a major determinant of store patronize; small, high-margin-service good stores. Affluent consumers look for exclusive, high-quality establishments that offer prestige product and labels.
Retailers should be aware of the multiple factors that contribute to store image and recognize that perceptions of image vary, among customers and stores.
vii) Merchandise and Service
The total product offering of the retailer comprises three major elements; most basic element is the merchandise or product mix, which can be thought of as wide or narrow, depending on the number of product lines.
The merchandise the retailer offers to the target customers .plays a major role in developing the customers image of the store. Retail managers have adopted the practice of scrambled merchandising, which means selling product lines immolated to the basic lines the retailer caries, For example, grocery supermarkets now carry such -non-food Items as greeting cards, magazines, assorted household and hardware items, school supplies. Retailers have resorted to scrambled merchandising to improve their drugstores, which have also been especially active in scrambling their merchandise. Retailers adopting the scrambled merchandising strategy hope to accomplish one or more of the following: (1) Convert their store into one-shop shopping centers (2) generate more traffic, (3) realize higher [profit margins; (4) increase impulse purchases. However, in scrambled merchandising, retailers must deal with diverse ‘marketing channels and thus may reduce their own buying, selling, and servicing expertise. The practice can also blur a stores image in consumers’ minds, making it more difficult for a retailer to succeed in today’s highly competitive, saturated markets. Finally, scrambled merchandising intensified competition among traditionally district types of stores and forces suppliers to adjust distribution systems so that new channel members can be accommodated.
The services a retailer offers, are major form of non-price competition and another image making. A retailer can offer varied services: delivery credit, gift-wrapping, money-back complete-satisfaction guarantees, personal selling, and adequate parking. The decision to offer services is determined by a number of factors. Competition and type of merchandise being marketed often influence the type of services offered; for example, bulky and heavy products like furniture and major appliances usually require the retailer to provide delivery services. Discount store customers do not expect many services, while customers, of high-priced department stores do.
The retailer’s prices are a key positioning .factor and must be decided in relation to the target market, product-and-service assortment mix, and competition. Retail management makes pricing decisions on the strategic and tactical levels, and success demands on the pricing decisions be integrated with the retailers overall strategy. The price of merchandise should be considered with the retailer’s strategy and should reinforce the image the retailer is trying to project.
On a tactical level, retailers must make decisions on such issue as the frequency of sales, the amount of markdowns or reduction from original selling price, and the use of “loss leaders”. Loss leader pricing refers to the pricing of selected products (show-movers) at prices lower n customers expect. The main objective is to blend traffic in the store. The logic of loss leaders pricing is that the promotional appeal of the loss leader wilt bring in more Comers, who will then purchase merchandise beside the —leader item.
Retailers must use promotional tools that support and reinforce its image positioning. Retail management uses the basic promotional tools: advertising, personal selling, publicity and sales promotion. These should be coordinated and integrated in order to achieve clearly defined objectives, The objectives for promotion in general and advertising in particular fall into two categories: (1) the accomplishment of some communication objective such as increased awareness or comprehension of advertising messages and (2) the attainment of sales increase.
Fine stores will place tasteful ads in popular magazines and newspapers. Discount retailers will place loaned ads on radio, television, and newspapers touting how prices and specials, fine stores will carefully train their sales people on how to greet customers, interpret their needs, and handle their doubts and complaints. Discounts stores will use less well-strained salespeople and use a whole range of sales promotional tools to generate traffic:
THEORIES OF RETAIL INSTITUTIONAL CHANGE
Retailing is a dynamic industry, and retail’ management .must be willing and able to adapt to the many changes confronting it. Retailers are: affected by changes in consumer markets as well as by management practices. Several theories have been advanced to explain changes in retail institutions. Three of the most popular theories are the wheel of retailing, the Accordion theory, and retail life cycles.
The Wheel of Retailing Theory.-
The wheels of retailing emphasis those new retailers [who usually enter the market as low-status, low margin, and aw-price operators. Gradually they acquire more elaborate establishments and facility, which require both increased investment and higher operating costs. Finally, the nature as high-cost, high-price merchants, vulnerable to new retailers (who, in turn, go through a similar wheel pattern). Examples of retail institutions that follow the wheel of retailing pattern re discount stores and supermarkets. Not all types of stalling institution follow the wheel pattern are discount stores and supermarkets. Not all types of retailing institutions follow the wheel pattern. Nonconforming examples include vending matinees, department store branch operation, and shopping centers. These retailing institutions started as high-cost, high-margin, and high convenience type of operations.
The Retail Accordion Theory:
The accordion theory of retail development focuses on changes in the width of the product mix. The department store replaced the general store with a somewhat more narrow and specialized product mix. The mail-order store, tended to be more, specializes, develo ped after the department store. With the population concentration in urban areas, the opportunity to develop specialty stores increased. Consequently, single-line and specialty stores developed for books, phonographs, drugs, garden supplies, appends, etc. but since the past decades, retailers have added product lines to their mixes, making the product mix more generalized (wider). Grocery stores have added product lines unrelated to their basic grocery business, such as magazines, school supplies, and selected hardware and so on. These retailers have tried to attract more customers and improved profit margins by offering a more generalized product mix.
The Retail Life-Cycle Theory:
The retail life-cycle theory states that retail institutions have life cycles. The retail life cycle consists of four stages: early growth, accelerated growth, maturity, and decline.
In the early growth stage, a new type of retail institution emerges. It usually represents a drastic change from existing retailing approaches and offers customers a significant advantage. Often the advantage is lower price, but it may also include a destructive product assortment, ease of location, or different advertising and promotion methods. Supermarket are excellent and promotion method. The supermarkets in an excellent examples of a retail innovation based on cost and price advantage. In the accelerated-growth stage, both sales and profit grow rapidly. This growth usually attracts many competitors. For example since the discount department store was established as a permanent retailing institution, nature competitors started their own discount operations. The influx of these new competitors frequently necessitated higher levels of investment to sustain growth. In the maturity stage, both sales growth and market share level off. Several major problems confront retailers at this stage of the life cycle. First, the entrepreneur who-started the retail institution. Secondly, excess capacity1 becomes a problem if retailer expands beyond levels justified by the size of the space to unprofitable level, Finally, new forms of competition usually confront the retailer at this stage. In the decline stage, sales struggle to avoid, decline in repositioning their stores or .by modifying their marketing approach. Such changes may only delay their inevitable end.