8/10/2019 Ch#2 Typesofretailers II

1/12

2-26

Types of General Merchandise Retailers

Department Stores

Specialty Stores

Category Specialists

Home Improvement Centers Discount Stores

Drugstores

Off-Price retailers

Extreme Value Retailers

8/10/2019 Ch#2 Typesofretailers II

2/12

8/10/2019 Ch#2 Typesofretailers II

3/12

2-29

Three Tiers of Department Stores

Rob Melnyc huk/Getty Images

First Tier: Upscale, high fashion chainswith exclusive designer merchandise andexcellent customer service

Nordstrom, Neiman Marcus, Saks

Second Tier: Retailers sell more modestlypriced merchandise with less customerservice

Macys

Third Tier: Value oriented caters to moreprice conscious customer

JCPenney, Sears, Kohls

2-30

Issues in Discount Store Retailing

Wal-Mart s Dominance

Differentiate Strategy

Wal-Mart = Low Price and Good value

Target = More Fashionable Apparel

Competition from Category Specialists

Toys-R-Us, Circuit City, Sports Authority

McGraw-Hill Companies,Inc./Gary He,

photographer

8/10/2019 Ch#2 Typesofretailers II

4/12

2-31

Issues in Drug Store Retailing

Consolidation Walgreens,CVS, Rite-Aid

Competition from Supermarkets,discount Stores and mail-inorders

Evolution to a New Format-Stand Alone Sites with Drive Thru

Windows

-offering more frequent purchase fooditems

Improved s ystems providepersonalized service in thepharmacy

2-32

Category Specialists

Deep and Narrow

AssortmentsDestination Stores

Category killers

Low Price and Service

Wholesaling toBusiness Customersand Retailing to

Consumers

Incredible GrowthBass Pro Shops

8/10/2019 Ch#2 Typesofretailers II

5/12

Specialty Store Strategy Mix

Location:

Bu siness di stri ct or

shopping center

Merchandise:

Very narrow width and

extensi ve depth ofassortment; average to

good q uality

Prices:

Competit ive to

Above aver age

Atmosp here and

Services:

Aver age to excell en t

Promotion:

Heavy use of displays

Extensive sales force

8/10/2019 Ch#2 Typesofretailers II

6/12

2-36

Issues in Extreme Value Retailing

Focuses on Lower Income Consumers

Names mostly imply good value not $1 price points

Low Cost Location

Limited Services

One of the Fastest Growing Retail Segments

Dollar TreeFamily DollarDollar General99 Cents Only Store

8/10/2019 Ch#2 Typesofretailers II

7/12

2-38

Off-Price Retailers

Close-out retailers

Closeouts are end-of-season merchandise that willnot be used in following seasons

Offer an inconsistent assortment of brand namemerchandise at low prices

Outlet stores/Factory outlets are offprice retailers ownedby manufacturers or retailers

8/10/2019 Ch#2 Typesofretailers II

8/12

Services Retailer (store based)

2-40

Merchandise/Service Continuum

8/10/2019 Ch#2 Typesofretailers II

9/12

Service Sector in US & BD

@US Car Maintenance $ 150 billion

@US Beauty & Barber shops 80,000

@India: Jawed Habib 225 outlets (RS 55/per capita spending)

@US Laundry Shop 42,000

@US Hotels 55, 000 with 49 lac room (60%occupancy) $ 122 billion industry

@US Sports & Recreation Club 25,000 @BD Hospital 2765 & Dhaka 594

2-42

Services vs. Merchandise Retailers

IntangibilityProblems in Evaluating Service QualityPerformance of Service Provider

Simultaneous Production & Delivery (ins eparability)Importance of Service Provider

PerishabilityNo Inventory, Must Fill Capacity

Inconsistency of the Offering (Heterogeneity)Importance of HR Management

8/10/2019 Ch#2 Typesofretailers II

10/12

2-43

Types of Retail Ownership

(c)Bran d X Pictures/Punch Stock

Independent, Single StoreEstablishments

Wholesale-sponsoredvoluntary group

Corporate Retail Chains

Franchises

Ownership Forms

Independent

Chain (Agora/PQS, Meena Bazaar)

Franchise (Bata/Singer/Pizza Hut/Bandbox)

Leased department (Drug Store/Tailor/FastFood inside a big store)

Vertical marketing system(Mfg>Wholesaler>Retailer)

Consumer cooperative (inside a govt. office)

8/10/2019 Ch#2 Typesofretailers II

11/12

2-45

Retailers Using Franchise Business Model

8/10/2019 Ch#2 Typesofretailers II

12/12

2-47

Reasons for Franchising Growth

Technological advances

Profitable utilization of capital resources

Demographic expansion

Product/service consistency

2-48

Reasons for Franchising Failure

Inept / incompetent management

Fraudulent activities

Market saturation