Types of Retail outlets

Department Stores

A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. Department stores provide a wide range of options to the consumers and thus fulfill all their shopping needs.

Merchandise: Electronic Appliances Apparels Jewellery Toiletries Cosmetics Footwear Sportswear Toys Books CDs, DVDs

Examples - Shoppers Stop, Pantaloon

Discount Stores

Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.

Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.

Merchandise: Almost same as department store but at a cheaper price.

Supermarket

A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

Merchandise: Bakery products Cereals Meat Products, Fish products Breads Medicines Vegetables Fruits Soft drinks

Frozen Food Canned Juices

Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.

Mom and Pop Store (also called Kirana Store in India)

Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are not at all organized. The size of the store would not be very big and depends on the land available to the owner. They wouldn t offer high-end products.

Merchandise: Eggs Bread Stationery Toys Cigarettes Cereals Pulses Medicines

Speciality Stores

As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range.Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.

Example -You will find only Reebok merchandise at Reebok store and nothing else, thus making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

Malls

Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.

E Tailers

Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.

Example - EBAY, Rediff Shopping, Amazon

Dollar Stores

Dollar stores offer selected products at extremely low rates but here the prices are fixed.

Example - 99 Store would offer all its merchandise at Rs 99 only. No further bargaining is entertained. However the quality of the product is always in doubt at the discount stores.

Types Of Retailers

Presentation Transcript

1. Chapter 2 : Types of Retailers HDCS 3303 Section 12711 Introduction to Merchandising Evangeline Caridas 2. I. Types of Retailers Over time, different types of retailers have emerged and prospered because they have attracted and maintained a significant customer base. 3. I. Types of Retailers (Cont.) A. Nature of Retail Mix The most basic characteristic of a retailer is its retail mix-the elements used by retailers to satisfy their customer s needs. 4 elements of the retail mix that are particularly useful for classifying retailers are the type of merchandise sold, the variety and assortment of merchandise sold, the level of customer service, and the price of the merchandise. 4. I. Types of Retailers (Cont.) A. Nature of Retail Mix (Cont.) The difference between the retail mix of department and discount stores illustrated the tradeoff retailers make between the price of merchandise they sell and the services they offer to their customers. To make profit and provide these additional benefits to its customers, department stores have to increase the prices of its merchandise to cover the additional costs. This is referred to as the price-cost tradeoff. 5. I. Types of Retailers (Cont.) B. Types of merchandise The US Bureau of the Census developed and uses a classification scheme to collect data on retail activity in the US. It classifies all retail firms into a hierarchical set of four digit Standard Industrial Classification (SIC) codes. To address problems with classification using SIC codes and develop economic statistics similar to international trading partners, the US Bureau along with Mexico and Canada, adopted a new classification system, the North American Industrial Classification System (NAICS), which started to appear in 1999. 6. I. Types of Retailers (Cont.) B. Types of merchandise (Cont.) Conversion from SIC to NAICS will be completed in 2004. The NAISC system recognized the growth in services and specialty store retailing by assigning numbers to categories such as nail salons and pet supply stores. The degree to which retailers compete against each other isn t always based on the similarity of their merchandise. The variety and assortment of the merchandise they offer and the services they provide must also be considered. 7. I. Types of Retailers (Cont.) 1. Variety and Assortment Variety is the number of different merchandise categories a retailer offers. Assortment is the number of different items in a merchandise category. Each different item of merchandise is called and SKU ( stock keeping unit). Variety is often referred to as the breadth of merchandise and assortment is referred to as the depth of merchandise. 8. I. Types of Retailers (Cont.) C. Customer Services Retailers also differ in the services they offer customers. Customers expect retailers to provide some services--accepting personal checks, proving parking, and displaying merchandise. 9. I. Types of Retailers D. Cost of Offering Breadth and Depth of Merchandise and Services When a retailer offers many SKUs, inventory investment increases because the retailer must have back-up stock for each SKU. Similarly, services attract customers to the retailer, but they are also costly. A critical retail

decision involves the trade-off between costs and benefits of maintaining additional inventory or providing additional services. 10. II. Trends in Retail Industry The retail industry is changing rapidly. Some of the most important changes involve the greater diversity of retailers, increasing industry concentration and globalization. 11. II. Trends in Retail Industry (Cont.) A. Greater Diversity of Retail Formats Consumers now can purchase the same merchandise form a wider variety of retailers. The Internet has spawned a new set of retailers offering consumers the opportunity to buy merchandise and services at fixed prices, participate in an auction, or submit a take-it-or-leave-it bid. New types of retailers coexist with traditional retailers. Each type of retailer offers a different set of benefits, thus consumers patronize different retailers for different purchase occasions. 12. II. Trends in Retail Industry (Cont.) B. Increasing Industry Concentrations While the number of different retail formats has grown, the number of competitors within each format is decreasing. A few national retailers dominate most formats. Much of this consolidation has occurred through acquisitions and mergers. Historically retailing was a local business. However, the development of efficient distribution and communication systems meant that large national firms could gain substantial cost advantages over smaller regional and local retailers. 13. II. Trends in Retail Industry (Cont.) C. Globalization Some factors stimulating globalization of retailing are the maturation of the domestic market, the development of skills and systems to effectively manage global operations, and the removal of trade barriers. 14. II. Trends in Retail Industry (Cont.) 1. Maturation of Domestic Markets: Most large retailers have saturated their domestic markets. Opening additional stores in the U.S. results in limited additional sales leading large U.S. retailers to look for growth opportunities in international markets. 2. Skills and Systems: Retail firms are better prepared with international knowledge and experience to effectively manage stores in non-domestic markets. To facilitate global sourcing of merchandise, retailers operate global information and distribution systems. 3. Trade Barriers: The relaxation of trade barriers makes global expansion easier. 15. III. Food Retailers A. Conventional Supermarkets A conventional supermarket is a self-serviced food store offering groceries, meat, produce, and limited non-food items. Half of the conventional supermarkets are very promotional. This is called a hi-low pricing strategy. The other half of conventional supermarkets use very few promotions and sell almost all merchandise at the same price every day. This is called an everyday low pricing (EDLP) policy. 16. III. Food Retailers (Cont.) B. Big Box Food Retailer Over the past 25 years, supermarkets have increased in size and have begun to sell a broader variety of merchandise. In 1979, conventional supermarkets accounted for 85% of supermarket sales. By 1998, only 41% of supermarket sales were in conventional supermarkets due to the growth of big box food retailing formats- superstores, combination stores, and warehouse-type stores. Superstores are large supermarkets (20,000 to 50,000

sq. ft) stores that combine a superstore and a full-line discount store. Combination stores are foodbased retailers of 30,000 to 100,000 sq. ft that have over 25% of their sales from non-food merchandise. 17. III. Food Retailers (Cont.) B. Big Box Food Retailer (Cont.) 1. Supercenters are 150,000 to 200,000 sq. ft stores that combine a superstore and a full-line discount store The supercenters and full-line discount stores, sell groceries at low prices to build store traffic. By offering broad assortments of grocery and general merchandise under one roof, supercenters provide a one-stop shopping experience. 18. III. Food Retailers (Cont.) B. Big Box Food Retailer (Cont.) 2. Warehouse Club is a retailer that offers a limited assortment of food and general merchandise with little service at low prices to ultimate consumers and small businesses. Stores are large ( about 100,000 sq. ft) and located in low rent districts. Along with low-cost locations and store designs, warehouse clubs reduce inventory holding costs by carrying a limited assortment of fast-selling items. Typically members must pay an annual fee of $25 to $35. 19. III. Food Retailers (Cont.) C. Convenience Stores Convenience stores provide a limited variety and assortment of merchandise at a convenient location in a 2,000 to 3,000 sq. ft store with a speedy checkout. They are modern versions of the neighborhood mom-and pop stores. Convenience stores enable consumers to make purchases quickly without having to search through a large store and wait in long checkout lines. Now almost all convenience stores sell gasoline, that accounts for over 55% of annual sales.