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; below-average to

average quality

Atmosphere/Services: Below average

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