retail formats

prashant.mehta

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• Retail Formats & Strategies
Retail formats
• Reaching consumers through formats that differentiates offerings to suit their needs
OR are coming up with new RF
• Ranges from market place-brand to newer forms
• Getting customer’s heart-share more then mind- share by offering a differentiating value- proposition through different formats
Contemporary RF by customer mediation
• Method of mediation in physical store format is human interaction
• In physical store format customer is brought to the store whose as in new store format its brought to the customers
• Where the mediation is by human beings F-to-F S & S interaction & actual presentation is important to achieve customer service objectives
• In non-personal media customer relations are established through remote communication
• Retailer often use combination of both to fulfill their target customer’s need.
• Store formats in Retail Parlance
Positioning & Differentiation
SF by Location
CHAIN STORE FORMAT
HIGH STREET FORMAT
DESTINATION FORMAT
Store formats by ownership
• Franchise format ,Independence store format
Store format by Merchandise Categories
• Family store ,Speciality store ,Department store ,Supermarket ,Emporium
Store Formats by Size
• Superstore ,Shopping mall ,Shopping Center ,Hypermarket
Store Formats by Price
• Discount format ,Every Day low Price format (EDLP) ,Category killer format ,Factory outfit format, War house format ,Single price denomination format.
• STORE FORMATS BY CONCESSIONS
• Stopover Store format ,Kiosk
• IMPACT SCALABILITY OF STORE FORMATS
Ideal/Right Format min Facilitates
• Long-term profitability ,Efficient rollout ,Greater Shopping opportunity with satisfaction ,An attempt to improve shopping experience while competing within themselves ,Establishing a core differentiated value propositions for customers.
Summing Up
• It move retail revolution than Retail evolution happening. Both Contemporary & primitive format still co-exist.
• Store differentiating identities are created in consumers minds through robust store format strategy.
• Consolidating & consistency in value deliveries help to achieve exclusive image.
• Factor of format scalabilities is crucial. This gives flexibility to reach in more geographical areas through an adaptable mix.
• Merchandise
• Width and depth of merchandising depends on specific strategy ie upmarket image,midmarket,economy position
• Range of offer should also complement the chosen positioning
• ROM is important as it affects the need for space for display at the POS and stockholding
• Merchandise
• ROM have to be linked to both expectations and financial consideration of TG
• Display of merchandising should take into account , a consumer wants to purchase from a range of different types of brand
• Merchandise
• ROM have to be linked to both expectations and financial consideration of TG
• Display of merchandising should take into account , a consumer wants to purchase from a range of different types of brand
• categories
• National brands
Heavily advertised, creates consumer pull,no exclusivity, open to price competition from discounting brands
• Own level
Advantage of exclusivity, more control,not heavy advertising expenditure, flexibility to offer at lower unit prices
• Categories ,Licence to merchandise
Add image and symbol to ROM, major opportunitities for increasing desirability
• Retail price
• Retail price usually directly related to the resultant of demand over a period of time with right margins
• Pricing strategy takes into account the complexity created by seasonality of demand and inherent perishability of the product due to factors like fashion or being past the sell-by-date
• Factor to be considered while Retail pricing
• Perceived substitutes effect
Higher the price buyers tend to be more sensitive, may choose a substitute or forego the purchase-if they believe overall value is unacceptable
• Unique value affect
Less sensitivity – value particular attributes that differentiate it from competing brands
• Importance of purchase effect
More the ROP price will not be the critical aspect. Greater the importance – lesser the price sensitivity (more inelastic)
Difficult comparison effect
less sensitive to price when they find difficulty in comparing alternatives. More demand for known brands, greater store loyalty to reduce perception of risk
Price quality effect
Higher price suggests superior quality
Result-less sensitivity to price, not a conclusive effect as it is application specific
Expenditure effect-more sensitivity when expenditure is large in absolute money amount or as % of their income
Most prevalent in LIH
• Fairness effect
When price falls outside a band (judged as reasonable and fair) sensitivity increases
Easy to judge when alternatives offered and therefore easy to switch demand to cheaper alternatives
• PARADIGM OF 1s’’
• 1 Customer buys 1 SKU from 1 Sq. ft. in 1moment
• RETAIL IS DETAIL
• - It implies a first hand transaction with the customer.
• -It implies direct interface with the customer & co-ordination of business activities from end-to-end.
• -Each customer has to be delivered a magic of moment, each SKU has to be a part of range plan,each sq.ft. has to deliver the GMROI.
• FEW OBSERVATIONS
• Organised sector likely to be Rs. 160,000 crore by 2005.
• These growth opportunities have attracted global majors like M&S, Samsonite, Swarvski, Dominos to name a few.
• - Retailing in India is poised to grow at an exponential rate.
• Retail business in yr. 2000- Rs. 400 Crore, estimated to go to Rs. 800 Crore by yr. 2005.
• Consumers will emerge as the emperors with their discerning buying attitude and increasing purchasing power.
• Many manufacturer may take to retailing themselves to be closer to the customer.
THEREFORE THE POWER OF THE CONSUMER AS WELL AS
THAT OF THE RETAILER IN MARKETING CHANNEL THAT WILL
SPEARHEAD THE GROWTH OF RETAILING IN INDIA
• TRENDS IN RETAILING
Basic department stores and cooperatives of early 20th century have given way to Mass Merchandisers,Hypermarkets, Category killers, Convenience stores.
3 PHASES OF ORF
• Retailers decide on category and quality of products and services. Eg Supermarkets, deptt stores, specialitystores
• Retailers carve niche based on product category & price
Eg discount stores
• Retailers compete on price & product range, lack in product depth & service components eg hypermarkets
Globally organised retailing has brought radical benefits & helped the consumers to be king.
Three factors influencing how consumers will shop are-
1.CROSS BORDER MOVEMENT
2. CONSOLIDATION
3. MIGRATION OF FORMATS
• INDIAN RETAILING- key drivers
Pre- Liberalization Supply- led market- Power rested with manufacturers.
Demand- led market- Consumers call the shots
CONSUMER PULL- Haves (HIS) &Less Haves (MIS,LIS)
INCREASING DISPOSABLE INCOME
MEDIA EXPLOSION
-
• INDIAN RETAILING- key drivers
CONSUMERISM CYCLE
ENTRY OF CORPORATE SECTOR
CHANGE IN SCALE OF OPERATIONS
BUILDING CHAINS AROUND BRANDS
• PROJECTED TRENDS ,Nation of shopkeepers with largest density of retail outlets, Online retailing is miniscule but industry is evolving ,More outlets on basic MOM - & -POP store formats ,Increase of outlets from 0.25 million (1950) to 12 million today, translating growth over 48 times ,GROWTH OF ORGANISED RETAILING
OR in India will soon be catapulted through stages of its growth to its culmination in maturity.
Four Gear Paths for organised retail trade suggested by KSA Technopack places india in the second gear & predicts that it will match global standards by 2010.
• FOUR- GEAR PATH
Stage of infancy
Meeting customer expectations
Shift in power equation between manufacturer & retailers
Period of consolidation.
• CONSUMER BEHAVIOUR IN RETAIL CONTEXT
While the term consumer seem to indicate singular concept of demand, reality is there is a wide diversity of Consumer behaviors with decisions made for a range of reasons
• CONSUMER BEHAVIOUR IN RETAIL CONTEXT
Retail consumers need to be understood because—
-They are problem solvers, deciding on what offer satisfies their needs. Promotions & other activities
Should be designed accordingly.
-Consumers seek to reduce perceived risk. Retailers should provide sufficient informaton & assurance.
• CONSUMER BEHAVIOUR IN RETAIL CONTEXT
Retail consumers need to be understood because—
-Consumers shop for variety of reasons. Complexity of the shopping trip per se need to be understood
-Demographic & other changes have impact on purchasing patterns.
• RETAIL BUYING PROCESS
NEED AROUSAL , NEED RECOGNITION , INVOLVEMENT LEVEL
INFORMATION SEARCH & IDENTIFICATION OF ALTERNATIVES
• RETAIL BUYING PROCESS
EVALUATION OF ALTERNATIVES
DECISION
PURCHASE ACTION
POST PURCHASE BEHAVIOUR (PPB)

• INFLUENCES ON THE CONSUMPTION PROCESS
ENERGISERS OF DEMAND ,FILTERERS OF DEMAND ,EFFECTERS ,ROLES

• MOTIVATIONAL FORCES—THE NEED & INVOLVEMENT STAGE
Shopping activities are also characterised by these social motives –
-Social experiences outside home ,-Communicating others having similar interest ,-Peer group attraction ,-Pleasure of bargaining ,- Status & authority
Patronage of a RO are likely to be based on certain motives–
-Convenience ,-Reputation ,-Retail environment characteristics ,-Service encounter expectations ,-Expectations of the merchandise ,-Expectations of value

• IN A FLASH
Consumer Behaviour will provide useful insights into the process & therefore is useful in RM decision making.
- Growing consumerism is likely to pave the way for greater consumer orientation & consumer enlightment.
- Growth of retailing will continue to be fuelled by the consumer, his expectation & demands for more value.

• IN A FLASH
- Shopping activities are characterised by the following social motives-
- Social experiences outside the home, - Peer group attraction, - Status & authority, Pleasure of bargaining, Consumer’s emphasis will shift from product- based to experience- based shopping.


RETAIL STRATEGIES
3 generic strategies to acquire competitive advantage based on getting an edge in following dimensions—
OPERATIONAL EXCELLENCE
-high operational standards ,-quick delivery process ,-satisfying customers in a progressive & cost- effective manner ,-standardising operating process
RETAIL STRATEGIES
PRODUCT DIFFERENTIATION
-frequent product innovation ,merchandise with unique characteristics , effective pricing strategy
( retailer can increase its foot falls by leader pricing strategy/ provide value with loss leader pricing strategy)
RETAIL STRATEGIES
CUSTOMER INTIMACY
-creating stickiness ,CRM ,striving to exceed the expected levels of customer service
MARKET EXPANSION STRATEGY
MARKET PENETRATION
-sell more in present customer markets with product range.
STRATEGY- ADD NEW STORES, IMPROVE COMMUNICATION STRATEGY, CHANGE STORE PRESENTATION
MARKET EXPANSION STRATEGY
MARKET DEVELOPMENT
-new markets for current products.
STRATEGY- ADD MORE STORES , IDENTIFY POCKETS WHERE COMPETITORS ARE STRONG, MAKE AN ENTRY OFFER.
MARKET EXPANSION STRATEGY
PRODUCT RANGE DEVELOPMENT
- offering new/ modified products to current market markets .
STRATEGY- SHUFFLE SUPPLIERS,LAUNCH NEW PRODUCT LINE, INTRODUCE OWN LABEL, UNDERSTAND REGIONAL FLAVOUR
MARKET EXPANSION STRATEGY
DIVERSIFICATION
- new formats for new markets .
STRATEGY- GADUATE TO NEW FORMATS, TAP THE NEW MARKET WITH NEW PRODUCT LINE, TRY VALUE ADDED SERVICES , TRY DIVERSIFIED FORMAT
 
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