CH4.pptx – Assignment: – EssaysForYou

Exhibit 4.6 – Wheel of Retailing

The Retail Accordion
Describes how retail institutions evolve from:
Outlets that offer wide assortments to specialized stores
Is vague about the competitive importance of providing wide assortments to customers
L O 3

The Retail Life Cycle (1 of 3)
Introduction
Simple methods of distribution
Savings passed to the customers
Low profits despite increasing sales levels
Growth
Sales and profits explode
Towards the end, cost pressure increases
Market share reaches maximum levels
Profitability begins to decline
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The Retail Life Cycle (2 of 3)
Maturity – Market share stabilizes and profits decline due to:
The shift from a simple and small high growth firm to a large and complex firm with static growth
Overexpansion
Intense competition
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The Retail Life Cycle (3 of 3)
Decline
Major loss of market share
Profits fall
Once-promising idea is no longer required
L O 3

Resource-Advantage Theory
Firms gain competitive advantage by:
Offering superior value to customers
Having lower costs of operating
Important lessons for retailers:
Superior performance is due to tangible or intangible resources
All retailers cannot achieve superior results at the same time
A retailer uses unique resources to:
Offer greater relative value to the marketplace
Operate firms at a lower cost
L O 3

Future Changes in Retail Competition
Nonstore retailing
New retailing formats
Heightened global competition
Integration of technology
Increasing use of private labels
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Nonstore Retailing
Result of accelerated communication technology and changing consumer lifestyles
Prerequisite for the success of e-tailing:
Having enough consumers with access to the Internet
Paying attention to customer service
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New Retailing Formats (1 of 3)
Off-price retailers
Sell products at a discount
Do not carry certain brands on a continuous basis
Carry brands that can be bought at closeout or deep one-time discount prices
Merchandise brands and selection could be unpredictable
Examples of off-price retailers – Factory outlets, independent carriers, and warehouse clubs
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New Retailing Formats (2 of 3)
Supercenter
Combination of supermarket and discount department store
Carries more than 80,000 to 100,000 S K Us
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New Retailing Formats (3 of 3)
Recycled merchandise retailers
Sell used and reconditioned products
Examples – Pawn and thrift shops, auction houses, flea markets, and eBay
Liquidators – Purchase the inventory of the existing retailer
Rentals
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Heightened Global Competition
The increase in the rate of change in retailing
Greater diversity
Creation of new retail formats
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Integration of Technology
Technological innovations can be grouped under:
Supply chain management – Using new initiatives such as:
Direct store delivery (D S D)
Collaborative planning, forecasting, and replenishment (C P F R) systems
Customer management
Customer satisfaction
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Increasing use of Private Labels
Set the retailer apart from the competition
Private-label branding strategies
Develop a partnership with:
Well-known celebrities, noted experts, and institutional authorities
Traditionally higher-end suppliers
Reintroduce products that have strong name recognition
Brand an entire department or business
L O 4