CHAPTER 5:
RETAIL
INSTITUTIONS BY
STORE-BASED
STRATEGY MIX
Retail Mgt. 12e (c) 2013 Pearson Education
5-11
Chapter Objectives
• To describe the wheel of retailing, scrambled
merchandising.
• To discuss some ways in which retail strategy
mixes are evolving
• To examine a variety of food-oriented retailers
involved with store-based strategy mixes
• To study a range of general merchandise
firms involved with store-based strategy mixes
©2013 Pearson Education 5-2
Retailer Strategy Mix
• A strategy mix is the firm’s
particular combination of:
• store location
• operating procedures
• goods/services offered
• pricing tactics
• store atmosphere
• customer services
• promotional methods
©2013 Pearson Education 5-3
Earning Destination Retailer Status
• Examples of destination stores include
Virgin Mega Stores and IKEA
• Some combination of price-oriented and
cost efficient, innovative or exclusive
merchandise, and superior customer
service
• Wide or deep merchandise strategy
©2013 Pearson Education 5-4
Figure 5-1: The Wheel of Retailing
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Figure 5-2: Retail Strategy Alternatives
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Scrambled Merchandising
• Desire for one-stop shopping format.
• Concern to adopt “hot” products to increase
store traffic
• Looking to increase store sales per square foot
especially in a recessionary period
• Desire for cross selling opportunities
• Looking for high gross profit businesses
©2013 Pearson Education 5-7
Figure 5-3: Scrambled Merchandising
by a Shoe Store
©2013 Pearson Education 5-8
Scrambled Merchandising
• Starbucks faces more
competition in the coffee
market from Dunkin’
Donuts, McDonald’s and
other chains.
• The result: Starbucks sells
many items outside its
original coffee business like
salads, sandwiches and
pastries.
©2013 Pearson Education 5-9
Table 5-1: Store-Based Retail
Strategy Mixes
Food-Oriented General Merchandise
• Convenience • Specialty store
store
• Traditional
• Conventional department
supermarket
• Food-based • Full-line discount
superstore store
• Box (limited-line) • Off-price chain
store • Factory outlet
• Warehouse store • Membership club
• Flea market
©2013 Pearson Education 5-10
Food Oriented Stores
©2013 Pearson Education 5-11
Convenience Store Strategy Mix
Prices
Average to
Location
Above average
Neighborhood
Atmosphere &
Services
Average
Merchandise
Medium width
and low depth Promotion
of assortment;
average quality Moderate
©2013 Pearson Education 5-12
Conventional Supermarket Strategy Mix
Prices
Location Competitive
Neighborhood Atmosphere &
Services
Merchandise
Average
Extensive width
and depth of Promotion
assortment; Heavy use of
average quality; newspapers,
manufacturer, flyers, and
private, & coupons.
generic brands
©2013 Pearson Education 5-13
Food-Based Superstore Strategy Mix
Location Prices
Community Competitive
shopping
center
Atmosphere &
Services
Merchandise Average
Full assortment
plus
health and beauty Promotion
aids Heavy use of
and general newspapers, flyers
merchandise
©2013 Pearson Education 5-14
Box Store Strategy Mix
Prices
Location Very low
Neighborhood
Atmosphere &
Services
Merchandise Low
Low width and depth
of
assortment; few
Promotion
perishables; few
national Little to none
brands
©2013 Pearson Education 5-15
Warehouse Store Strategy Mix
Prices
Location Very low
Secondary site, often in
industrial area
Atmosphere &
Services
Merchandise Low
Moderate width and
low depth of
assortment; emphasis Promotion
on manufacturer brands
Little to none
bought at discount
©2013 Pearson Education 5-16
General Merchandise
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Specialty Store Strategy Mix
Prices
Location Competitive to
Business district or Above average
shopping center
Atmosphere &
Services
Merchandise Average to
Very narrow width excellent
and Promotion
extensive depth of Heavy use of
assortment; displays
average to Extensive sales
good quality force
©2013 Pearson Education 5-18
Traditional Department Store Strategy Mix
Location Prices
Business district, Average to
shopping Above average
center or isolated store
Atmosphere & Services
Good to excellent
Merchandise
Extensive width and Promotion
depth of assortment; Heavy ad and catalog
average to good quality use; direct mail;
personal selling
©2013 Pearson Education 5-19
Harrods: One of the World’s Great
Department Stores
©2013 Pearson Education 5-20
Video
• London, England: Harrods Department
Store
[Link]
RQC8
15 Things You Didn't Know About
HARRODS
[Link]
QhGg
©2013 Pearson Education 5-21
Full Line Discount Store Strategy Mix
Location
Prices
Business district, Competitive
shopping
center or isolated Atmosphere &
store Services
Slightly below
average to average
Merchandise
Promotion
Extensive width and
Heavy on
depth of assortment;
newspapers;
average to good
quality price-oriented;
selling
©2013 Pearson Education 5-22
Off-Price Chain Strategy Mix
Location Prices
Business district, Low
shopping center or
Atmosphere &
isolated store
Services
Merchandise Below average
Moderate width Promotion
and Use of
poor depth of newspapers;
assortment; brands not
average to good advertised;
quality; limited selling
low continuity
©2013 Pearson Education 5-23
Factory Outlet Strategy Mix
Prices
Location Very low
Out of the way site
or discount mall
Atmosphere & Services
Very low
Merchandise
Moderate width and
Promotion
poor depth of assortment;
Little
low continuity
©2013 Pearson Education 5-24
©2013 Pearson Education 5-25
Video
• Why outlet stores aren’t as good a deal as
they seem
[Link]
HhtG8
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Membership Club Strategy Mix
Prices
Location Very low
Isolated store or
secondary site
Atmosphere &
Services
Very low
Merchandise
Moderate width and
poor depth of Promotion
assortment; Little, some direct mail
low continuity
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©2013 Pearson Education 5-28
Costco
©2013 Pearson Education 5-29
Flea Market Strategy Mix
Prices
Location Very low
Isolated store or
secondary site
Atmosphere &
Services
Merchandise Very low
Extensive width and
poor depth of Promotion
assortment; low
Limited
continuity; variable
quality
©2013 Pearson Education 5-30
The Grand Bazaar – Istanbul
©2013 Pearson Education 5-31
Khan El Khalili - Cairo
©2013 Pearson Education 5-32
Assignment
Watch
Why You Spend So Much Money At
Costco
[Link]
6uYQI
1. Write the techniques that Costco use to
encourage customers to buy more items
and increase sales.
2. Do you think these techniques could be
used by retailers in Egypt? Justify
©2013 Pearson Education 5-33
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