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Types of Retailers and Retail Formats Strategic Profit Model The Wheel of Retailing Competitive Advantage Competitive Positioning
Low Price Convenience Variety / Assortment Service
Types of Retailers
Type of retailer depends on:
Merchandise Variety (Breadth) Assortment (Depth) Services, rather than merchandise Service Pricing
Infinite Variations Survival of the Fittest - Formats must best satisfy needs of significant segment(s)
Warehouse Clubs
Costco, Sams Club
Hypermarket
Carrefour
Self Service
Full Service
Retailers of Services
Type of Service
Airlines
Automobile maint/repair Automobile rental Banks Child care centers Credit cards Education Entertainment parks Financial services Fitness Health Care Home maintenance
Retailers of Services
Type of Service
Hotels and motels Income tax preparation Insurance Internet access/Elec info. Long-distance telephone Movie theaters Real estate Restaurants Truck rentals Weight loss Video rental Vision centers
Net profit
Asset turnover
= Return on assets
Net sales (crossed out) = Net profit Total assets Total assets
Gross margin
+
Fixed expenses Inventory Total expenses
Net profit
Net Sales
x +
Accounts receivable
Total current assets
Return on assets
Net sales
Total assets
Asset turnover
+
Other current assets
+
Fixed assets
=
=
Wal-Mart:
$ 4,430 $49,996
Tiffany:
$ 90 $1,057
8.51%
Low
High Stationary/ Greeting Cards Shoes Kitchen/ Hardware/ Men's House- Building Wear wares Supplies Toys Automotive Sporting Goods
Women's Wear
Hosiery Paint & Girls Wallpaper Boys Wear Pet Luggage Wear Supplies
Books
Infants Ware Lawn & Garden Photo CDs & Goods Tapes RTA Furniture
Magazines
Consumer Electronics
Low
Tobacco
Low
High
Milk
Ice cubes
Spices Pasta
Bread
Ice cream
Teas Rices
Cat litter
Cookies Soup
Toilet tissue
Low
High
Hot Bev Ice Sandwiches Other SandFast Candy & -Fresh Food wichesGum Cooked Salty GM Juices Food Auto Frozen Snacks Bottled CookIce HBC Cream ies PckgdWater Deli Frozen Deli Svcs Food Groceries Wine/ Liquor Produce Breads & Cakes Eggs Milk Publications Fountain Drinks Frozen Bev
Soft Drinks
Tobacco Low
Beer
Wheel of Retailing
Competitive Advantage - An advantage enjoyed by a given retailer relative to others in the market General sources of competitive advantage: Overall cost leadership - can offer best value (i.e., lowest
prices) or earn higher margins Wal-Mart
Competitive Positioning
Depends on: Retailers competitive advantage(s) Needs and wants of target customers Current perceptions of the retailer
G H
C
A
Convenience
User Image
Retailers Go International
Wal-Mart expands outside the US Retailers spread through Europe and Asia
Multi-Channel Retailing
Various Formats Now Offer: Pharmacy Financial Services, Banking Video Rental Prepared Foods Health Care?
40%
20%
Data Source: IRI panel of 589 panelists from Oct 1995 - Oct 1997
Data Source: IRI panel of 589 panelists from Oct 1995 - Oct 1997
Drug stores
Walgreens, CVS, Eckerd