Retailing Q&a 2

RETAILING ASSIGNMENT-2

Submitted by: S.MAHENDRAN (07MBA059) II MBA - A

1. Elaborate the categorization of retail institutions by store based strategy mix.

Food-Oriented

General Merchandise

 Convenience store

 Specialty store

 Conventional supermarket

 Traditional department

 Food-based superstore

 Full-line discount store

 Combination store

 Variety store

 Box (limited-line) store

 Off-price chain

 Warehouse store

 Factory outlet  Membership club  Flea market

Convenience Store Strategy Mix: Location: Neighborhood Prices: Average to Above average Merchandise: Medium width and low depth of assortment; average quality Atmosphere and Services: Average Promotion: Moderate

Conventional Supermarket Strategy Mix: Location: Neighborhood Prices: Competitive Merchandise: Extensive width and depth of assortment; average quality; manufacturer, private, and generic brands Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers, and coupons Food-Based Superstore Strategy Mix: Location: Community shopping center or isolated site Prices: Competitive Merchandise: Full assortment plus health and beauty aids and general merchandise Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers Combination Store Strategy Mix: Location: Community shopping center or isolated site Prices: Competitive Merchandise: Full assortment plus health and beauty aids and general merchandise Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers

Box Store Strategy Mix: Location: Neighborhood Prices: Very low Merchandise: Low width and depth of assortment; few perishables; few national brands Atmosphere and Services: Low Promotion: Little or none Warehouse Store Strategy Mix: Location: Secondary site, often in industrial area Prices: Very low Merchandise: emphasis on Manufacturer brands bought at discount Atmosphere and Services: Low Promotion: Little or none Specialty Store Strategy Mix: Location: Business district or shopping center 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 Traditional Department Store Strategy Mix: Location: Business district, shopping center or isolated store Prices: Average to above average Merchandise: Extensive width and depth of assortment; average to good quality Atmosphere and Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling Full-Line Discount Store Strategy Mix: Location: Business district, shopping center or isolated store Prices: Competitive Merchandise: Extensive width and depth of assortment; average to good quality Atmosphere/Services: Slightly below average to average Promotion: Heavy on newspapers; price-oriented; selling Variety Store Strategy Mix: Location: Business district, shopping center or isolated store Prices: Average Merchandise: Good width and some depth of assortment; average quality Atmosphere/Services: Below average

below-average to

Promotion: Use of newspapers Factory Outlet Strategy Mix: Location: Out of the way site or discount mall Prices: Very Low Merchandise: Moderate width and poor depth of assortment; low continuity Atmosphere/Services: Very low Promotion: Little Membership Club Strategy Mix: Location: Isolated store or secondary site Prices: Very Low Merchandise: Moderate width and poor depth of assortment; low continuity Atmosphere/Services: Very low Promotion: Little; some direct mail

2. The concept of ease of entry usually has less impact on chain of retailers than independent retailers. State your reasons why 0r why not. Ease of entry: Ease of entry has less impact on the chain of retailers than that of independent retailers. This is because of the following reasons a. The chain of retailers have more contacts that they make any market an easy entrant b. They have no problems regarding the investment so they will invest a lot wherever they enter so the locals will also be benefited c. They have a recognizable brand name which will make the customers to repeatedly buy in their retail stores. So they will receive a huge market as soon they enter. d. The independent retailers will hesitate to invest a lot regarding the risks involved. e. The chain of retailers may not receive profit in all areas they operate but overall they will get profit f. But the independent investors have to get profit in the certain store which they open

So if the entry is easy, the independent investors will be more benefited than the chain of retailers.

3. Write short notes on advantages and disadvantages of www? a. From the consumers perspective b. From the retailers perspective

a. From the consumers perspective Advantages: Convenience

of

shopping

on-line

with

increasingly

secure

technologies safeguarding Internet transactions, e.g. on June 27th Visa International announced that more than 60 of the world's top Internet solutions providers combined to launch its "Visa Authenticated Payment". This will enhance the security of Internet-based payments on a global scale. This provides Visa and the consumer the same level of security in the virtual world as they have in the physical world. While established brand names do attract traffic, it is a positive shopping experience that brings the customer back. Consumers are finding that their shopping experience on-line is more convenient, there is greater ease of making price comparisons and gaining information about products and services. With Internet retailing there is a good selection of products and services. For the Internet retailers, there are reduced unit operating and customer acquisition costs; it is a low cost medium.

Disadvantages: Many websites usually don't have the advantage of established brand names and customer bases; they have to start from ground zero. Only few companies are immediately able to serve their existing customers on-line and, synchronistically, focus on acquiring new customers, but many do not have the advantage of an established brand name, customer base, and an inventory system, but must devote their resources and time to building a brand name and customer base. Security and technical problems sometimes have to be dealt with; they must retrain for the Internet sales format, must learn how to use an e-mail dialogue with customers, starting slowly and, because customer trust of the online retailer is often lacking, they must gradually build the customers' trust. Some retailers consider the Internet technology to be too expensive, too difficult to use, of little value, or intrusive. Many consumers believe that ads and cookies invade their privacy. Many consumers hesitate to shop from a pure play retailer because they cannot try or feel an item before purchasing nor, in the case of clothing, try it on. Many find it inconvenient to return purchased goods if they are not satisfactory and a large percentage is not comfortable using a credit card online and disclosing their personal information. Customer service is often lacking, as well as proper delivery of goods.

b. From the retailers perspective Advantages:

• Retailers are able cover a whole lot of customers from all over the world. • No additional cost involved as inventory holding cost. • Payment can be received easily • In most of the case delivery takes place only after payment

4. Do you really think non-store based retailing will continue to grow faster than store based retailing, justify your answer. In recent years the customers are so busy that they don’t get time to visit stores. They were also not ready to waste time in the stores. So non-store based retailing is gaining momentum and will shine in years to come. Emerging Trends:  Evolving activities  Changing customer lifestyles  Increasing competition  Increasing usage of dual distribution channels  Changing media roles, technological advances, and global penetration Selection Factors by Customers:  Company reputation and image

 Ability to shop whenever consumer wants  Types of goods and services  Availability of toll-free phone number or Web site for ordering  Credit card acceptance  Speed of promised delivery time  Competitive prices  Satisfaction with past purchases and good return policy Increase in use of Credit and Debit Cards According to an “Instant insight-Research” by ICICI Bank in 10 cities, credit card spend in 2003 was Rs.984cr per month, up from Rs. 721cr per month in 2002 indicating a growth of around 37% from more than 90 lakh national users resulting in a per annum spend on cards to the tune of Rs. 12000cr. The research results are encouraging for retailers to go in tie-up with credit card companies for mutual benefit. Besides the above, nuclear family structure, growing literacy, increasing urbanization, increased media penetration an d increasing number of working women are some of the other factors responsible for the development of the retail sector in India.

5.

Do you feel that the parking needs for shoe store, barber shop and an apparel store differ so, if justify your answer?

The parking need differ from business to business. They differ a lot for shoe store, barber shop compared to apparel store. Apparel shop differs: Unlike other shops apparel shops are frequently visited by customers. But the frequency of visits in a barber shop or shoe store is very low. Parking: Parking is one of the crucial elements to be considered before selecting the location of any kind of store. In case of barber shop or shoe store they will be located in any plaza or some frequently visited places by people. So such places will have sufficient parking space. So such shops no need to bother for the parking lot. But in case of apparel shops a special parking lot should be required for the customers. This is also because of the reason that such persons are wealthy persons who will not wait for silly reasons like parking problems, traffic, etc. So the parking need differs a lot for barber shop and an apparel store.

6.

A restaurant chain has decided to open outlets in a combination of isolated locations, unplanned business districts and planned shopping center comment on each of this strategy individually. A restaurant's location is as crucial to its success as great food and

service. It will influence many parts of your restaurant, including the menu.

There are four crucial elements to consider when looking at a potential restaurant location: Population Base: Are there enough people in the area to support your business? For example, is the restaurant location in the heart of a thriving downtown shopping district, or along a busy freeway? There needs to be enough people who live in the area, or pass through the area on a regular basis to keep you busy. To determine the population base of a particular area, you can do a site study. However, these can cost up to $25,000. Most people looking at their first restaurant don’t have enough money in their budget for a professional survey. A less expensive method to determine the population base of certain area is to use a circle graph, as well as asking the local chamber of commerce and town office for more information. Parking: Will there be enough parking to accommodate all the seats in your new restaurant? Ideally, a new restaurant location should have its own parking lot. If that isn’t an option, is there public parking near the restaurant location? Accessibility: There’s a reason that major restaurant chains are often located near highway and freeway exits: It makes them accessible for customers. Motorists can reach the restaurant without fighting traffic or driving out of their way. Most successful restaurant locations (but not all) are easy to find. Visibility:

This goes along with accessibility and this is very important for new restaurant locations. People have to know the restaurant is there. This is why property prices in downtown districts and developed strips are higher than other areas. They offer a level of visibility that can bring in a great deal of walk-in business. Strategy for isolated location: Prices: Very Low Merchandise: Moderate width and poor depth of assortment; low continuity Atmosphere/Services: Very low Promotion: Little; some direct mail Strategy for unplanned business district: Prices: Competitive Merchandise: Extensive width and depth of assortment; average to good quality Atmosphere/Services: Slightly below average to average Promotion: Heavy on newspapers; price-oriented; selling

Strategy for planned shopping center: Prices: Average to above average Merchandise: Extensive width and depth of assortment; average to good quality Atmosphere and

Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling

7. Elucidate clearly the wheel of retailer theory?

The Wheel of Retailing

Low End Strategy:  Low rental location  No services or services charged at additional fee (or services may be limited to credit and returns)  Simple fixtures and displays  Simple retail personnel organization  Price emphasis in promotion  Self-service or high sales per store personnel ratio  Crowded store interior  Most merchandise visible

High end Strategy:  High rental shopping centeror central business district location  Elaborate service included in the price, such as, o Credit o Delivery o Alternation o Decoration o Gift wrapping o Layaway  Elaborate fixtures and displays  Elaborate retail personnel organization  No Price emphasis in promotion  Product demonstrations, low sales per store personnel ratio  Spacious store interior  Most merchandise in back room