The Changing Face Of Retailing: Evolution Of Department And Discount Stores

Historical Background

A vast retail trading organization is known as a departmental store. A departmental store is so called because it has many organized departments. These departments are categorized according to the type of goods sold. The discount stores are departmental stores, which offer products at lowered rates or cheap rates. The report gives a detailed idea about the departmental stores and the discount stores detailing about their functioning, their merchandise and their marketing strategies. The paper also sheds light to the historical background of the departmental and discount stores. The paper discusses about the mergers of these departmental and discount stores and it further analyzes the driving force behind these stores. The future of the departmental and discount stores has been discussed and analyzed in this paper. The paper also addresses the concepts of wheel of retailing and retail life cycle. The paper also explains the concept of scrambled merchandising.

The departmental stores were established in the second half of the 19^th century in the major cities around Europe, Australia and North America. In Australia David Jones Limited was one of these established departmental stores during this phase. These retail stores were built in the urban environments. The departmental stores that persisted for a longer duration of time are David Jones,Myer and Grace Bros .Till the year 1970 these departmental stores used to offer the customers with exclusive credit cards by which customers could buy products goods from their stores and its branches . However, by 1974 the banks started launching bank credit cards by using which the customers were able to shop wherever they wished to.

The departmental store, David Jones started segregating their departmental store into several departments based on clothing, shoes and hardware. The comparatively smaller stores of Australia started following these trends of dividing departments. Some of the department stores based in Sydney that includes David Jones Limited and E. Way & Company became the leaders in retail trade .With their flawless service, appealing infrastructure and decors, they became the household name for the city and throughout Australia.  

Departmental stores are retail stores, which are on large scale, and under one-roof. The departments of the departmental stores are categorized into several departments offering individual goods. In other words, departmental stores is a part of retailing business and it is responsible for handling variety of shopping and the stores are segregated into separate departments with the objective of promotion and operation of store . In future the department stores are endeavoring to extend and   add departments of sports goods, automotive parts and provide services departments that will include income tax advisory, travel advice and others. The departmental stores can be classified based on the ownership and income groups, based on the ownership they can be divided into – independent, ownership group and chain department stores .On the other hand based on the income groups they cater their goods and services to high middle and low-income group of people.

Discount stores are stores of general merchandising and self-service (Berg, 2014). They offer wide range of goods, which includes, house wares, clothing, sports accessories and motor vehicle parts .They offer products and goods at a low price rates. The discount stores buy their goods from the manufacturers as well as the distributors of wholesale.

Overview of Departmental and Discount Stores

Then various activities that aids in the sale of products to the retail customers are known as merchandising. Merchandising plays a very important role in luring the customers to the stores and making them to purchase the goods resulting in increase of sale and generation of revenues (Varley, 2014).

David Jones Limited situated in Australia is arguably the oldest department store in the world .The departmental stores generally offers wide range of products categorized in various structured departments .The merchandise of departmental stores includes clothing, accessories for children and adults, house wares, electrical and electronic goods, sport accessories, appliances, furniture and food. The departmental stores are also categorized based on the type of merchandise they carry .The categories include general merchandise, discount, fashion and specialty. The merchandise offered by the discount stores are similar to that of the departmental stores .However, the discount stores offers products at a cheaper rate than the typical market price of products.

To market their products the departmental stores and discount stores implements many marketing strategies. Some of the strategies include:

• Improving the Merchandise: The best way to attract the customer and consumers is, by maintaining proper and attractive merchandise. It is very important to update the store with right kind of merchandise.
• Window Display:To attract the customers the window and the curbside of the store offers many scope (Hamilton, Spencer & Ring, 2013). It is very important to update the items and goods in the window display frequently like once in a month or sometimes in a week if it is a holiday season.
• Marketing by making key partnership –The departmental and discount stores often collaborates with the local business to popularize the brand name of the store.
• Social media platform – The departmental and discount stores often make use of the social media platform like Facebook, Instagram and Pinterest for the promotion of their products and reaching out to the customers (Jarad,  2014).

In order to sustain in the very competitive retail industry they departmental and discount stores are using mergers and diversification to strengthen the growth of sales.

The mergers involve merging of several retail firms, which are owned separately. One such example of merger was between two department store chains Sears and Kmart based in the United States. This is the example of merging of different type .On the other hand merging is possible between same type also .There are various advantages of merging which includes improvement of productivity and bargaining power, curtailing the weakness ,jointly maximizing the resources and also gaining an advantage in the market .

The diversification involves addition of stores for providing different stores and services. The diversification in retail industry provides an opportunity for the retailers to become active in business from their normal mode of operations (Oh, Sohl & Rugman, 2015). Many small retail departmental stores have grown in size because of the mergers and diversification.

Downsizing is also important in retailing industry (Jung, 2014) .There have been instances when then retailers have over-extended their business and stores and faced many problems. On the other hand certain retail firms like Barnes & Noble have persisted with the concept of downsizing .they have less number of stores and they are large in size .Some retail firms prefers to stay within national boundary than being global.

Many retailers have followed cost containment approach in order to limit the initial investment, operational costs, construction cost and maximize the productivity (Akbar & Ahsan, 2014). Many retail firms use the approach of cost containment in order to combat the intense competitions from the firms offering lot of discount.

In the retail industry, the word value describes price, quality and service .The process is very important aspect in retailing Because of the discounted price offered by the discount stores, customers are encouraged to buy goods and products from them instead of going to traditional market. Thus, value driven retailing is the driving force behind these departmental and discount stores.

Merchandising and Marketing of Departmental and Discount Stores

In order to get more customers to their stores and with the intention of earning more profits and for targeting different practices ,some retail firms often follow the approach of scrambled Merchandising . The scrambled merchandising involves selling of goods or merchandise, which are sold in different shop (Mukherjee, Cuthbertson & Banerjee, 2013). The approach of scrambled merchandising can have a negative impact on the customers as they become confused about the merchandise being offered by a particular retail store.

The retail industry of Australia is facing a lot of disturbances (Célérier & Vallée 2013).Many overseas business have entered the Australian retail industry and with their advent they are carrying and bringing various new approaches .With the change in the retail landscapes ,a change has been noticed with the customers as well. The customers have become well informed about the latest technology and they have become wealthy. However, the Australian retail industry is still thriving amidst various disturbances from overseas. In order to sustain and thrive in the retail industry market of Australia it is important to understand the demand and needs of the customers and plan accordingly.

In the next 5 years, new opportunities will come up in the retail industry marketing from the Internet of Things (IoT) ( Chakraborti & Sanyal, 2015). It is also expected that mobile commerce (mCommerce) will also become an important aspect of retailing industry in Australia. The retail sector is the moist dynamic sector as the environmental changes influence the retail market a lot. It is expected that a new retail come up in the Australian market from time to time  and will be taken over by large retail chains. This is similar to the concept of Wheel of Retailing (McCormick et al., 2014). It has four steps, the first step involves establishment of a firm and entering into the market. The second step involves extending and expanding the market. In the third stage, the company has already established itself and stabilizes its position. In the fourth and the last step, the new competitor enters the retail market and brings down the original retail company already present in the market (Fernie,  & Sparks,  2014).

This concept is similar to Retail Life Cycle theory where the retail firms show an S-shaped development curve and it has four phases that includes innovation, acceleration, maturity and decline. The theory explains how the retailer grow rapidly within short duration of time  and after some time due to advent of new stores the earlier existing retail stores decline .

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