Retail Management For Departmental Stores And Discount Stores

Definition of Departmental Stores and Discount Stores

Discuss about the Retail Management for Departmental Stores and Discount Stores.

Retailing over the years has changed contextual relevance, multi screen world and constant connectivity are responsible for changing the online and offline shopping. Owners of retailers are hoping for the possibilities of changing the in store and digital experiences of retailing. The concept of retailing is changing day by day. The concept of click and collect revolution is responsible for changing the trends of retailing in different parts of the world. Apart from that, the growth of internet shopping in different departmental stores and discount stores is responsible not only for increase of revenue but also it is responsible for creating different types of jobs. The study focuses on the changing patterns of the departmental stores and discount stores and their way of changing business patterns. The concepts of mergers, diversification, cost containment and the value driven retailing are also explained in details in the perspective of retailing industry in a global scale. Apart from that, the change of retailing industry is described by taking the consideration of the theoretical frameworks of retail life cycle and wheel of retailing concept. Scrambled merchandising is also a concept that is used by modern retailers while assembling the merchandise for the target consumers.

Departmental stores are also known as magazine. The concept of departmental stores has been emerged in the 19^th century and it was present only in the major metropolitan cities of the different countries of the world. It can be said that in 19^th century, the concept of departmental stores is responsible for changing the shopping patterns and purchasing decisions of the consumers at that time. The changing patterns include the reshape of shopping habits, and improved definition of luxury and service (Arcidiacono et al. 2016). Definition of departmental store illustrates a retail establishment that offers the consumers a wide array of consumer products in various product categories, which are known as departments. There are different sections that modern departmental stores possess such as furniture, clothing, toys, home appliances, cosmetics, sporting goods, houseware, paint, gardening, do it yourself, books, jewelleries, stationeries, groceries, etc. Examples of department stores include David Jones, Myer, Woolworths, etc (Brea?Solís et al. 2015).

Discount stores are defined as the retail stores that are responsible for selling different categories of products at a lower price than the market value of those products. There are mass merchandiser and full line discount stores that offers wide range of products at a lower cost and focus on the service provided to the customers. There is a sharp difference between a discount store and a variety store (Cho, Chun and Lee 2015). Examples of discount stores include Lidl, Walmart, Aldi, etc. The main discount stores in Australia are Kmart, Aldi, Target, Big W, etc. The concept of discount stores has emerged from World War II with a concept of low profit margin strategy and a high volume of products.

Market Segments of Retail Customers

The marketing techniques and the merchandise present in the departmental stores and discount stores are different from one another. The target markets of the different departmental stores and discount stores are different but they are working on the concept of wheel of retailing. It is a most common theoretical framework of retailing. There are four stages of the framework that the big retails are following the model. The first stage is characterised with penetrative and low margin (Choi and Shen 2016). The second stage is characterised with establishing and higher margins. The third stage is characterised with strongly established retail with high price and high cost. The fourth stage i.e. the last stage is illustrated with lower margins, penetrative whenever a competitor enters in the retail industry.

Aldi is a retailer when came into existence, then they follow the cost leadership strategy with amazing discounts and implementing cost cutting procedures. In this stage, the entry barriers are not high. It is a technique of establishing and penetrating the merchandise in the market (Çifci et al. 2016).

The second step is expanding the market. In this stage, Aldi has started the market expansion in the target market with new stores in the country. After that, it will increase the sales of the merchandise and other products of the company while increasing the brand value. The retailer is new in the market hence the main target is to represent the target market. In this way, they can increase their customer base.

In the third stage, Aldi will stabilize their business model that will attract a lucrative profit margin. In this stage, Aldi will enjoy a substantial increase of customer base as well as increase of profit margin. The more demand in the supply will help the company in creating a niche. Increase of competition in the market responds to the establishment of the business model (Ellickson, Houghton and Timmins 2013).

In the fourth stage, the entry of other retail in the industry is responsible for increase of price of facilities and operations. Ultimately, the retail i.e. Aldi will become a high cost price service retailer in the market in terms of selling certain goods.

 Mergers and diversification are the strategies of marketing that the different departmental stores and discount stores must have to implement in order to expand their market in different countries of the world. For instance, Walmart has a merger with Jet.com, Inc. in order to increase the acceleration of the business in the field of growth of e-commerce reach of the company. Whenever a company enters into a new country, then it has to choose an entry mode to make business in that country (Hamilton and Chernev 2013). Retail companies are also doing mergers and acquisitions while operating their business operations on their target market.

Mergers and Diversification

Another strategy that departmental stores and other luxury retail brands are adopting is the strategy of diversification. Diversification is a part of Porter’s generic strategy that focuses on either niche markets and niche segments of customers. Apart from that, diversification is also a strategy that is implemented in terms of new specialised development of products in the country of operations (Hançerlio?ullar? et al. 2016). Discount stores like Tesco, Spencers, etc. develop food products and specialised items that are popular in the operating country. Diversification strategy is a common strategy adopted by big retailers of the world in terms of attracting customers and increased revenue of the company.

Downsizing concept is defined as the stores that are currently not operating or are closed or sold to a big retailer. For instance, Kmart is a downsizing retailer.

The concept of cost containment is related to the holding of investment of retailers in terms of operating costs and initial investments. The strategy is used when there is intense competition from the discount retailers. However, the cost containment of retailers can be achieved by the following the approaches that are mentioned below. They are:

• Using freestanding units, secondary locations, and standalone locations (second use locations)
• Standardization of operating procedures, size of stores, product offerings and store layouts
• Buying different refurbished equipment
• Encouraging the manufacturers while financing the inventories (Jaafar et al. 2016)

Value driven retailers are considered as a buzzword. It is subjective in nature that can create an impact on quality, convenience, service and price of the products. In terms of retailing, price is a vital factor that the retailers and the consumers are focusing in coping up with the competition and price war of the retailers present in the country. The pricing strategies adopted by the retailers are responsible for bargaining the products by the consumers while distrust in the perspective of sales process and traditional sales. Some consumers are focused on the price of the products rather than quality of goods (Kasemsap 2015).

Retailing in the future is depended on the development of technology and the changing nature of the taste and preference of the consumers. Globally, consumers prefer products, which are environment friendly and follow sustainability. The different types of retailing such as discount stores like Tesco, Aldi, Lidl, etc. are growing in a fast pace in many countries of Europe, Asia, Australia, New Zealand, etc. Use of technology will help the retailing companies in formulating strategies in the development of new products, implementation of appropriate pricing strategies and the formulation of different types of loyalty programs. Many researches regarding consumer behaviour has portrayed the fact that the consumers in terms of selection of foods are turning to be healthy and organic in nature. However, due to intense competition in the retail industry globally, price of goods, quality of products are challenging in nature (Khan 2013). Customers are getting choices of choosing their products from the available alternatives. This leads to development of different improved strategies of developing new formats of retail with improved loyalty programs for attracting customers towards them. Development of internet retailing is an important aspect of development of the revenue of the stores as well as the increase of the operations of the business (Wrigley and Lowe 2014). Retail life cycle is similar to that of product life cycle. It has four stages such as introduction (early growth), growth (accelerated development), maturity and decline. The mall retailers are described in the frame of the retail life cycle. The early growth includes new foreign fashion entrants, multi channel retailer, home furnishing stores, etc. The accelerated development includes stores like upscale department stores, accessories stores. The maturity phase includes shoe, gift card stores, beauty stores, national apparel stores, etc. Decline phase of a mall retailers can include theme stores, traditional department stores, CD or book stores, etc (Pantano 2014).

Types of Retailer	Location	Merchandise	Prices	Services and atmosphere	Promotion
(Food oriented) Conventional supermarket	Neighbourhood	Depth of assortment, extensive width, generic and private brands, average quality	Competitive	Average	Use of flyers, newspapers, coupons and self-service
Convenience store	Neighbourhood	Low depth and medium width assortment, average quality	Above average to average	Average	Moderate (Varley 2014)
(General merchandise) Full line discount store	Isolated store, shopping centre, business district	Depth of assortment and extensive width, good to average quality	Competitive	Average to slightly below	Moderate sales force, price oriented
Traditional department store	Isolated store, shopping centre, business district	Extensive width, average to good quality	Above average to average	Good to excellent	Direct mail, catalog use and heavy ad, personal selling (Varley and Rafiq 2014)

Downsizing, Cost containment and Value Driven Retailing

Scrambled merchandising concept is defined as the practice that the retailers and wholesalers are responsible for carrying a wider array of merchandise. Scrambled merchandising occurs in the retailers when they add different products and services, which are not related to the actual nature of the business and are not related to one another. For instance, a person will go to purchase drug from a drugstore, hardware from hardware stores, and groceries from grocery stores. However, after implementation of scrambled merchandising, the person can buy pet food, drugs, groceries from a single store like Target, Walmart, Zappos and Amazon (Patten and Zhao 2014).

Conclusion

It is seen that the during the years the shopping behaviour of the consumers are changing with the change of the retailing concept of the big departmental stores and discount stores. The consumers across the world is busy in shifting their purchases from big box retailers to convenient stores and smaller format retail due to huge traffic present in the shopping malls or other big box retail chains. Apart from that, it can be said that the growth of e-commerce is responsible for increase of employment and increased sales of goods from different big and small retailers across the world. E-commerce is responsible for accelerating the trend of opening small shops by enabling the managers while moving them in a high frequency and high bulk household goods online. The wheel and retailing concept is an important tool that is used by the retailers of different countries are enjoying benefits from it while implementing different trends of retailing and technology for understanding the consumer behaviour of the target market. The global retail companies are formulating their business models mostly based on the purchasing decisions of the consumers and changing shopping attributes of the customers.

References

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