Retail marketing strategy - Essay Example

Retail Marketing Strategy The retail industry provides an exciting way of life for more than 3.2 million people who earn their livelihood in this sector of the U.K. economy. Retailers provide the goods and services needed--from food, auto parts, apparel, home furnishings, appliances and electronics to advice, home improvement and skilled labor. Retailing is one of the fastest-growing segments of the economy. As one of the nations largest employers, the retail industry provides excellent business opportunities. At least one-third of the 100,000 or so new enterprises launched each year are retail operations. The entrepreneurs behind these ventures risk their capital, invest their time and make a living by offering consumers something they need or want. Most retailing involves buying merchandise or a service from a manufacturer, wholesaler, agent, importer or other retailer and selling it to consumers for their personal use. The price charged for the goods or services covers the retailers expenses and includes a profit. Each year, this vital sector of the UK economy accounts for about 08 percent of our gross national product--more than $1 billion.. Most are store retailers, though there are other types of enterprises--such as e-commerce, mail order, automatic-merchandising (vending) machines, direct retailing (door-to-door and home party sales), and service providers. There are a considerable number of commentaries on the changing food retailing sector in UK. The sector is seen as being at the fore front of change and the leading food retailers are amongst the largest companies. Growing concentration in the economy has been associated with the increasing power of multiple retailers and a decline in the strength of the co-operatives and independents. The rise of the multiple retailers particularly through economies of scale and replication has produced a situation where only a handful of companies dominate food retailing. Currently the leading food retailers are Sainsbury and Tesco with Safeway in third place. Strategically, food retailing has become a highly competitive industry increasingly answerable to the City and shareholder pressure. Labour represents the second largest financial outlay for the retailer after merchandise costs. The most efficient means of labour utilization are therefore a strategic priority. Attempts to improve market share and increase profitability have resulted in operational changes that have influenced the structure of the retail food labour market. In this essay we would be discussing about the largest food retailer in UK and the various retailing concepts applied by the firm. Types of Retailers : To get an overview of the competitive marketplace, well take a look at the various faces and configurations of selling to the consumer. We have to proceed further keeping in mind that all these enterprises began as a simple concept and grew to various proportions through popularity and perseverance. -> Store retailing: The retail scene in Britain is a dazzling array of independent shops, department stores, discount and off-price enterprises, convenience stores, membership warehouse clubs, national and regional chains, category-killer stores, conventional supermarkets and other large-scale enterprises that seem to dominate the retail sector. Store retailers operate fixed point-of-sale locations designed to attract a high volume of walk-in customers. In general, stores have extensive merchandise displays and use mass- media advertising to attract customers. They typically sell merchandise to the general public for personal or household consumption, but some also serve business and institutional clients. These include establishments such as office supply stores, computer and software stores, building materials dealers, and plumbing and electrical supply stores. -> Specialty retailing: While power retailers like Wal-Mart or Target tend to sell "needs," specialty retailers tend to sell "wants." They focus more on neighborhood convenience, the richness of the shopping experience, and inventory that meets the needs of their target customer on a personalized basis. Small stores show surprising strength and resilience in the face of competition from large-scale retailers and e-commerce outlets. They offer the consumer a warmer atmosphere, and perhaps a broader and deeper selection of merchandise. Many stores can be owned and operated by one person with minimal assistance. Compared to manufacturing operations, specialty retail outfits are relatively easy to start both financially and operationally. However, a number of failures are due to undercapitalization, poor location and insufficient market analysis. -> Nonstore retailing : When you look at the array of business opportunities in retailing, be sure and include the $123 billion non store retailing sector. These businesses are primarily engaged in the retail sale of products through television, electronic shopping, paper and electronic catalogs, door-to-door solicitation, in-home demonstration, portable stalls, vending machines, and mail order. With the exception of vending, these businesses do not ordinarily maintain stock for sale on the premises. There are many advantages to this type of retailing--one being that buying, maintenance and protection of a large inventory is not necessary as you contract with others to handle these matters. . -> Mail order: From glossy wish books to basic brochures, catalogs are popular with those who live far from shopping areas, the elderly, those seeking the unusual or obscure, and those who simply hate to shop. With direct mail, sales materials can be sent to thousands of potential customers at one time to either make a sale or generate a sales lead. Mail order enterprises include general merchandise businesses, companies that sell specialty goods of all kinds, novelty firms, various types of clubs (CDs, DVDs, books) and so on. In most cases, catalogs are sent to consumers in defined niches on a regular basis. One can work out of their home, a warehouse or a brick-and-mortar store. An up- to-date mailing list is the key to direct-mail profits with back-end fulfillment and relational database support. -> The internet : The internet has changed the retail landscape, connecting companies, markets and individual consumers. "The retailer who does not understand the impact of the internet on its store and catalog channels is likely to under invest in the Internet, missing opportunities to capture incremental sales in all channels," according to Ken Cassar, a senior analyst with Jupiter Communications. Each type of retailing has strengths and weaknesses certain products/services appear more suitable for online sales; others remain more suitable for offline sales. Many successful purely virtual companies deal with digital products, including information storage, retrieval, and modification, music, movies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, E-bay and Paypal. Virtual marketers can sell some non-digital products and services successfully. Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letter-box, such as music CDs, DVDs and books - are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot – com companies, has historically concentrated on this field. Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number. UK – Store Retailing : Arguably, within the UK, the retail sector and within that the food retailing sector, is one of the ost advances employers of labour in terms of flexibility. With de-regulation a motif of the sector, as with land-use planning legislation and trading hours, labour use has had to become fficient and effective. The dominant format in UK food retailing is the superstore. With these large food retailers having higher margins than comparative companies elsewhere there is an additional competitive question about labour usage. Food retailers in the United Kingdom are highly effective and in some aspects of their business are clearly world-leaders. Part of their success is due to their use of labour and the framework for that use that is provided by the state. There is a large variety of types of stores found in the food retail sector in UK. These includes hypermarkets, superstores, convenient stores, format discount stores and so on. Hypermarkets : Hypermarket is a huge store which can be considered as a combination of a departmental store and a super market. It is not merely a very large supermarket ( to give an order of magnitude, supermarkets range from 400 to 1500 square meters, whereas hyermarkets range from 2500 to 12000 square meters).Hypermarkets feature a variety of general merchandise totalling 30,000 to 100,000 products. It sells all possible goods with the consumers paying at the same cashier for food and non-food products. The range of non-food products varies from clothing to consumer electronics to pleasure goods. The challenge of the hypermarket is the optimal trade-off between the varieties of the goods to be sold and the logistics necessary for managing the flows and stock of so many different products ( and related services). However, the solution to both the problems had been developed and implemented and as such there are no major hurdles or obstacles which are in the way of its progress. Superstores: Superstores is usually referred to a super market which is larger than a convenience store but smaller than a hyper market (in terms of size).As discussed, UK food retailing is dominated by superstores and superstores operators, although the market is currently experimenting with various other formats. This dominance is both commercial through the stores and market shares and also political through the power wielded by these companies at national and international level. Whilst the format (superstores) may be under threat; it will remain the dominant format for some time. The companies who operate this format are however becoming stronger through their range of activities at both national and international level. One important component of their strength is their efficiency in labor management which provides both operational efficiency through cost control and profitability and corporate recognition through service and attitude generation. Convenience store: Whilst convenience stores remains relatively new in the UK, the format is gradually replacing a whole series of store formats. Stores which have previously traded as small groups (i.e., symbols and Co-ops), CTNs (confectioners, tobacconists and news agents), petrol forecourt shops and off licenses, have broadened their product range as a means of replacing turnover lost to the multiples. The format of convenience stores look to continue changing. Changes in demographics and the increases in single person households who has less need for superstore trolley shopping is driving convenience stores more towards ready meals and meal solutions. Discount stores: A department store is a retail establishment which specializes in selling a wide range of products without a single predominant merchandise line. Department stores usually sell products including apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewellery, toys, and sporting goods. Certain department stores are further classified as discount department stores. Discount department stores commonly have central customer checkout areas, generally in the front area of the store. Department stores are usually part of a retail chain of many stores situated around a country or several countries. CONCLUSION: In a retailing business, the success of a firm depends on the value it drives. In today’s cut throat competitive market, to gain an advantage the firm must be efficient to implement good and valuable customer services. The successful implementation of good customer service as a differentiation strategy requires recognition that it has to apply within as well as outside the organization. Implementation of good customer service requires management to view staff as internal customers (and vice versa), and the staff are given the resources to meet customers needs effectively and competitively. REFERENCES :  Cox, R. and Brittain, P. (2004). Retailing – an introduction. 5th ed., Harlow: Financial Times Prentice Hall.  Fernie, J., Fernie, S. and Moore, C. (2003). Principles of retailing. Oxford: Butterworth Heinemann.  McGoldrick, P. (2002). Retail marketing. London: McGraw-Hill.  Newman, A. and Cullen, P. (2002). Retailing: environment and operations. London: Thomson Learning.  Sullivan, M. and Adcock, D. (2002). Retail marketing. London: Thomson Learning.  Varley, R. and Rafiq, M. (2004). Principles of retail management. Basingstoke: Palgrave Macmillan. Read More