New Concepts in Retailing

Emerging Retail Strategies: Because it is difficult to categorize retailers solely by one type of merchandise they carry, it is useful to view store types in terms of their basic strategy mix. The point presents two extreme polar strategic alternatives: low end and high end. Within any merchandise category, it is generally possible to identify specific firms that pursue the two extremes. These are usually an assortment of firms that attempt to operate between the two extremes. For example, in general merchandise retailing, department stores such ad Macy’s or Dayton Hudson feature merchandise having moderately to extremely good quality. They also provide significant sales assistance, credit, delivery, and other services in a store atmosphere that is spacious and visually appearing. Most full line discounters as K mart or Target offer similar merchandise categories but they typically have popular brands of average quality, fewer support services, lower prices, and a less sophisticated store atmosphere.

Supermarkets provide a further example of a differential retail strategy. The Bureau of the Census identifies six different supermarket store categories. A conventional supermarket is a departmentalized store offering a wide variety of food and food related products. Sale of general merchandise is quite limited in a conventional store.

Retail Strategy Mix Alternatives:

Low end strategy >
Low rental location, side street
High end strategy>
High retail shopping center or central business district location.

Low end strategy>
No services or services charged at additional fee (or service may be limited to credit and returns).
High end strategy>
Elaborate services available included in price such as:
Alterations decorating
Credit gift wrapping
Delivery Layaways
Low end strategy>
Spartan fixtures and displays
High end strategy>
Elaborate fixtures and displays

Low end strategy>
Simple retail personnel organization
High end strategy>
Elaborate retail personnel organization

Low end strategy >
Price emphasis in promotion
High end strategy>
No price emphasis in promotion

Low end strategy>
Self service or high sales per store personnel
High end strategy>
Product demonstrations, low sales per store personnel ratio.

Low end strategy>
Crowded store interior
High end strategy>
Spacious store interior

Low end strategy>
Most merchandise visible
High end strategy>
Most merchandise in back room.

A super store offers a wider variety of products than a conventional supermarket and devotes considerable space to nonfood or general merchandise. Warehouse stores typically offer limited product variety and few, if any, services. Products are generally displayed in manufacturers’ cases in a no frills setting. Combination store combines two forms of conventional retailing such as supermarkets and drugstores within one facility. A super warehouse is simply expanded warehouse store that includes meat, delicatessen, and/or seafood departments and greater product variety. Hypermarkets are extremely large stores that offer a wide assortment of general merchandise in addition to the full line grocery departments.

Although the number of retail outlets in the United States has not changed dramatically over the past several decades, there have been major shifts in type of operation within the overall retail structure. Some outlets, such as conventional supermarkets, have declined dramatically while other types such as superstores have increased in significance. Retailers are constantly searching for a new retail mix combination that they can package as innovative strategies to gain greater consumer acceptance and competitive advantage. Some of the more prevalent of these innovative strategies are discussed.

Super specialty Strategy: Super specialty stores are generally small in size and very narrow in merchandise line offering their strategy revolves around meting customers’ needs in one of two ways: (1) offering a broad, deep selection within a very limited product category or (2) catering to very narrowly defined market segments.

The Sock Shop and Home Depot are two examples of companies that have chosen a super specialist strategy based on a limited product category. The Sock Shop, for example, stocks several thousand different types of socks and hosiery, emphasizing new styles and designs in very small outlets. In contrast, Home Depot specifically targets the do-it-yourself market with a broad range of products.

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