Retail Formats: Faiza Nasir

Chapter 2 Retail Formats Faiza Nasir

Retail formats?

Merchandise’s 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 item’s UPC.

Store vs. Non-Store formats

Store Formats by Location a) Chain store  Multi-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

Disadvantages  Limited flexibility  Higher investment costs  Complex managerial control  Limited independence among personnel

Convenience Store Strategy Mix Location: Neighborhood

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

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

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  Over-dependence on owner  Limited long-run planning

Competitive State of Franchising Advantages Disadvantages  small capital required  oversaturation could occur  acquire well-known  franchisors may names overstate potential  operating/management  locked into contracts skills taught  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 Franchisor’s 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 non-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

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

Prices: Average to Above average Atmosphere and Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling

Conventional Supermarket Strategy Mix Location: Neighborhood

Prices: Competitive

Merchandise: Extensive width and depth of assortment; average quality; manufacturer, private, & generic brands

Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers, and coupons

Store Formats by Size a) Superstore format  Single-level large store, twice the size of a supermarket, offers non-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:  Owned 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:  Scrambled merchandise at just one price point, generally at a low one.

Discount Store Strategy Mix

Merchandise: Extensive width and depth of assortment; average to good quality (overruns, irregulars, cut-sizes)

Prices: 25% or more below MRP 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 merchandise. b) Kiosk:  Small freestanding pavilion c) Alliances:  With brands that customers trusts

Bazaars?    

Seasonal Structured Un-structured Thematic

Scalability and its importance