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This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century was to invite favoured customers into a back-room of the store, where goods were permanently on display. Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients.
Samuel Pepys, for example, writing in , describes being invited to the home of a retailer to view a wooden jack. Savitt has argued that by the eighteenth century, American merchants, who had been operating as importers and exporters, began to specialise in either wholesale or retail roles.
They tended not to specialise in particular types of merchandise, often trading as general merchants, selling a diverse range of product types. These merchants were concentrated in the larger cities. They often provided high levels of credit financing for retail transactions. By the late eighteenth century, grand shopping arcades began to emerge across Europe and in the Antipodes.
A shopping arcade refers to a multiple-vendor space, operating under a covered roof. Typically, the roof was constructed of glass to allow for natural light and to reduce the need for candles or electric lighting. Some of the earliest examples of shopping arcade appeared in Paris, due its lack of pavement for pedestrians. Retailers, eager to attract window shoppers by providing a shopping environment away from the filthy streets, began to construct rudimentary arcades. For Parisians, the location was seen as too remote and the arcade closed within two years of opening. However, prices were never a deterrent, as these new arcades came to be the place to shop and to be seen.
Arcades offered shoppers the promise of an enclosed space away from the chaos that characterised the noisy, dirty streets; a warm, dry space away from the elements, and a safe-haven where people could socialise and spend their leisure time. As thousands of glass covered arcades spread across Europe, they became grander and more ornately decorated.
By the mid nineteenth century, they had become prominent centres of fashion and social life. Promenading in these arcades became a popular nineteenth century pass-time for the emerging middle classes. The Illustrated Guide to Paris of summarized the appeal of arcades in the following description:. The Palais-Royal, which opened to Parisians in and became one of the most important marketplaces in Paris, is generally regarded as the earliest example in the grand shopping arcades. The retail outlets specialised in luxury goods such as fine jewellery, furs, paintings and furniture designed to appeal to the wealthy elite.
Retailers operating out of the Palais complex were among the first in Europe to abandon the system of bartering, and adopt fixed-prices thereby sparing their clientele the hassle of bartering. Stores were fitted with long glass exterior windows which allowed the emerging middle-classes to window shop and indulge in fantasies, even when they may not have been able to afford the high retail prices.
Thus, the Palais-Royal became one of the first examples of a new style of shopping arcade, frequented by both the aristocracy and the middle classes. Shopping arcades were the precursor to the modern shopping mall. While the arcades were the province of the bourgeoisie, a new type of retail venture emerged to serve the needs of the working poor.
John Stuart Mill wrote about the rise of the co-operative retail store, which he witnessed first-hand in the mid-nineteenth century. Stuart Mill locates these co-operative stores within a broader co-operative movement which was prominent in the industrial city of Manchester and in the counties of Yorkshire and Lancashire. Buyer and seller meet as friends; there is no overreaching on one side, and no suspicion on the other These crowds of humble working men, who never knew before when they put good food in their mouths, whose every dinner was adulterated, whose shoes let in the water a month too soon, whose waistcoats shone with devil's dust, and whose wives wore calico that would not wash, now buy in the markets like millionaires, and as far as pureness of food goes, live like lords.
The modern era of retailing is defined as the period from the industrial revolution to the 21st-century. The term, "department store" originated in America. In 19th century England, these stores were known as emporia or warehouse shops. Many of the early department stores were more than just a retail emporium; rather they were venues where shoppers could spend their leisure time and be entertained.
Some department stores offered reading rooms, art galleries and concerts. Most department stores had tea-rooms or dining rooms and offered treatment areas where ladies could indulge in a manicure. The fashion show, which originated in the US in around , became a staple feature event for many department stores and celebrity appearances were also used to great effect. Themed events featured wares from foreign shores, exposing shoppers to the exotic cultures of the Orient and Middle-East. During this period, retailers worked to develop modern retail marketing practices.
Pioneering merchants who contributed to modern retail marketing and management methods include: Retail, using mail order, came of age during the midth century. Although catalogue sales had been used since the 15th century, this method of retailing was confined to a few industries such as the sale of books and seeds. However, improvements in transport and postal services, led several entrepreneurs on either side of the Atlantic to experiment with catalogue sales. In , Welsh draper Pryce Pryce-Jones sent catalogues to clients who could place orders for flannel clothing which was then despatched by post.
This enabled Pryce-Jones to extend his client base across Europe. He also devised the catch-phrase "satisfaction guaranteed or your money back" which was implemented in Edward Filene, a proponent of the scientific approach to retail management, developed the concept of the automatic bargain Basement. If the merchandise remained unsold after two months, it was given to charity. He instituted a profit sharing program, a minimum wage for women, a hour work week, health clinics and paid vacations.
He also played an important role in encouraging the Filene Cooperative Association, "perhaps the earliest American company union". Through this channel he engaged constructively with his employees in collective bargaining and arbitration processes. In the post-war period, an American architect, Victor Gruen developed a concept for a shopping mall; a planned, self-contained shopping complex complete with an indoor plaza, statues, planting schemes, piped music, and car-parking.
Gruen's vision was to create a shopping atmosphere where people felt so comfortable, they would spend more time in the environment, thereby enhancing opportunities for purcahsing. The first of these malls opened at Northland Mall near Detroit in He went on to design some 50 such malls. Due to the success of the mall concept, Gruen was described as "the most influential architect of the twentieth century by a journalist in the New Yorker.
Throughout the twentieth century, a trend towards larger store footprints became discernible. The average size of a U. As the 21st century takes shape, some indications suggest that large retail stores have come under increasing pressure from online sales models and that reductions in store size are evident. The distinction between "strategic" and "managerial" decision-making is commonly used to distinguish "two phases having different goals and based on different conceptual tools. Strategic planning concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment.
On the other hand, managerial decision-making is focused on the implementation of specific targets. In retailing, the strategic plan is designed to set out the vision and provide guidance for retail decision-makers and provide an outline of how the product and service mix will optimize customer satisfaction. As part of the strategic planning process, it is customary for strategic planners to carry out a detailed environmental scan which seeks to identify trends and opportunities in the competitive environment, market environment, economic environment and statutory-political environment.
The retail strategy is normally devised or reviewed every 3— 5 years by the chief executive officer. The strategic retail analysis typically includes following elements: At the conclusion of the retail analysis, the retail marketers should have a clear idea of which groups of customers are to be the target of marketing activities. Research studies suggest that there is a strong relationship between a store's positioning and the socio-economic status of customers. In a highly competitive market, the retail strategy sets up long-term sustainability.
It focuses on customer relationships, stressing the importance of added value, customer satisfaction and highlights how the store's market positioning appeals to targeted groups of customers. See also product management ; promotion mix ; marketing mix ; price ; servicescapes and retail design. Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail marketing mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation also known as physical evidence.
A number of scholars have argued for an expanded marketing, mix with the inclusion of two new Ps, namely, Personnel and Presentation since these contribute to the customer's unique retail experience and are the principal basis for retail differentiation. Yet other scholars argue that the Retail Format i. The primary product-related decisions facing the retailer are the product assortment what product lines, how many lines and which brands to carry ; the type of customer service high contact through to self-service and the availability of support services e.
That's why we work with the best minds in business and finance Under a range of leading imprints, including Financial Times Delivery of goods--Management. I. the Distinguished Service Award of the USA Council of Supply Chain . from Managing the Supply Chain: A Strategic Perspective, Macmillan Press. Within product businesses, for example, product development defers to Because a great many customer experiences aren't the direct consequence of the process in which every function worries about delivering a good experience, and Direct contact generally occurs in the course of purchase, use, and service and is.
These decisions depend on careful analysis of the market, demand, competition as well as the retailer's skills and expertise. The term product assortment refers to the combination of both product breadth and depth. The main characteristics of a company's product assortment are: For a retailer, finding the right balance between breadth and depth can be a key to success. An average supermarket might carry 30,—60, different product lines product length or assortment , but might carry up to different types of toothpaste product depth. Costco, for example, carries 5, different lines while Aldi carries just 1, lines per store.
Large assortments offer consumers many benefits, notably increased choice and the possibility that the consumer will be able to locate the ideal product. However, for the retailer, larger assortments incur costs in terms of record-keeping, managing inventory, pricing and risks associated with wastage due to spoiled, shopworn or unsold stock.
Carrying more stock also exposes the retailer to higher risks in terms of slow-moving stock and lower sales per square foot of store space. On the other hand, reducing the number of product lines can generate cost savings through increased stock turnover by eliminating slow-moving lines, fewer stockouts, increased bargaining power with suppliers, reduced costs associated with wastage and carrying inventory, and higher sales per square foot which means more efficient space utilisation. When determining the number of product lines to carry, the retailer must consider the store type, store's physical storage capacity, the perishability of items, expected turnover rates for each line and the customer's needs and expectations.
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from [the] retail establishment. In addition, the retailer needs to make decisions about sales support such as customer delivery and after sales customer care. Retail stores often seek to differentiate along customer service lines. For example, some department stores offer the services of a stylist ; a fashion advisor, to assist customers selecting a fashionable wardrobe for the forthcoming season, while smaller boutiques may allow regular customers to take goods home on approval , enabling the customer to try out goods before making the final purchase.
The variety of supporting services offered is known as the service type. At one end of the spectrum, self-service operators offer few basic support services. At the other end of the spectrum, full-service operators offer a broad range of highly personalised customer services to augment the retail experience. When making decisions about customer service, the retailer must balance the customer's desire for full-service against the customer's willingness to pay for the cost of delivering supporting services.
Self-service is a very cost efficient way of delivering services since the retailer harnesses the customers labour power to carry out many of the retail tasks. However, many customers appreciate full service and are willing to pay a premium for the benefits of full-service. A sales assistant's role typically includes greeting customers, providing product and service-related information, providing advice about products available from current stock, answering customer questions, finalising customer transactions and if necessary, providing follow-up service necessary to ensure customer satisfaction.
Such skills may include product knowledge, inventory management, handling cash and credit transactions, handling product exchange and returns, dealing with difficult customers and of course, a detailed knowledge of store policies. The provision of excellent customer service creates more opportunities to build enduring customer relationships with the potential to turn customers into sources of referral or retail advocates.
In the long term, excellent customer service provides businesses with an ongoing reputation and may lead to a competitive advantage. Customer service is essential for several reasons. Secondly, evidence suggests that a retail organization which trains its employees in appropriate customer service benefits more than those who do not. Customer service training entails instructing personnel in the methods of servicing the customer that will benefit corporations and businesses. It is important to establish a bond amongst customers-employees known as Customer relationship management.
Place decisions are primarily concerned with consumer access and may involve location, space utilisation and operating hours. Selecting the right site can be a major success factor. When evaluating potential sites, retailers often carry out a trade area analysis ; a detailed analysis designed to approximate the potential patronage area.
Techniques used in trade area analysis include: Radial ring studies ; Gravity models and Drive time analyses. In addition, retailers may consider a range of both qualitative and quantitative factors to evaluate to potential sites under consideration:. A major retail trend has been the shift to multi-channel retailing. To counter the disruption caused by online retail, many bricks and mortar retailers have entered the online retail space, by setting up online catalogue sales and e-commerce websites.
However, many retailers have noticed that consumers behave differently when shopping online. For instance, in terms of choice of online platform, shoppers tend to choose the online site of their preferred retailer initially, but as they gain more experience in online shopping, they become less loyal and more likely to switch to other retail sites.
See also Pricing Strategies. The broad pricing strategy is normally established in the company's overall strategic plan. In the case of chain stores, the pricing strategy would be set by head office. Broadly, there are six approaches to pricing strategy mentioned in the marketing literature:. When decision-makers have determined the broad approach to pricing i.
Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals. The tactical approach to pricing may vary from time to time, depending on a range of internal considerations e. Accordingly, a number of different pricing tactics may be employed in the course of a single planning period or across a single year.
Typically store managers have the necessary latitude to vary prices on individual lines provided that they operate within the parameters of the overall strategic approach. All payment options require some type of handling and attract costs. If credit is to be offered, then credit terms will need to be determined.
If lay-by is offered, then the retailer will need to take into account the storage and handling requirements. If cash is the dominant mode of payment, the retailer will need to consider small change requirements, the number of cash floats required, wages costs associated with handling large volumes of cash and the provision of secure storage for change floats. Large retailers, handling significant volumes of cash, may need to hire security service firms to carry the day's takings and deliver supplies of small change. A small, but increasing number of retailers are beginning to accept newer modes of payment including PayPal and Bitcoin.
Discount pricing is where the marketer or retailer offers a reduced price. This method is extensively used by supermarkets. High-low pricing refers to the practice of offering goods at a high price for a period of time, followed by offering the same goods at a low price for a predetermined time. This practice is widely used by chain stores selling homewares. The main disadvantage of the high-low tactic is that consumers tend to become aware of the price cycles and time their purchases to coincide with a low-price cycle. A loss leader is a product that has a price set below the operating margin.
Loss leadering is widely used in supermarkets and budget-priced retail outlets where it is intended to generate store traffic. The low price is widely promoted and the store is prepared to take a small loss on an individual item, with an expectation that it will recoup that loss when customers purchase other higher priced-higher margin items.
In service industries, loss leadering may refer to the practice of charging a reduced price on the first order as an inducement and with anticipation of charging higher prices on subsequent orders. Price bundling also known as product bundling occurs where two or more products or services are priced as a package with a single price.
There are several types of bundles: The prices of the bundle is typically less than when the two items are purchased separately. Price lining is the use of a limited number of prices for all product offered by a business. Price lining is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. In price lining, the price remains constant but quality or extent of product or service adjusted to reflect changes in cost.
The underlying rationale of this tactic is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices. Price lining continues to be widely used in department stores where customers often note racks of garments or accessories priced at predetermined price points e.
Promotional pricing is a temporary measure that involves setting prices at levels lower than normally charged for a good or service. Promotional pricing is sometimes a reaction to unforeseen circumstances, as when a downturn in demand leaves a company with excess stocks; or when competitive activity is making inroads into market share or profits.
Psychological pricing is a range of tactics designed to have a positive psychological impact. Psychological pricing is widely used in a variety of retail settings. Because patronage at a retail outlet varies, flexibility in scheduling is desirable. Employee scheduling software is sold, which, using known patterns of customer patronage, more or less reliably predicts the need for staffing for various functions at times of the year, day of the month or week, and time of day.
Usually needs vary widely. This may result in financial problems for the workers, who while they are required to be available at all times if their work hours are to be maximized, may not have sufficient income to meet their family and other obligations. Retailers can employ different techniques to enhance sales volume and to improve the customer experience:. One of the unique aspects of retail promotions is that two brands are often involved; the store brand and the brands that make up the retailer's product range. Retail promotions that focus on the product range, are designed to cultivate a positive attitude to the brands stocked by the store, in order to indirectly encourage favourable attitudes towards the store itself.
Retailers make extensive use of advertising via newspapers, television and radio to encourage store preference. In order to up-sell or cross-sell, retailers also use a variety of in-store sales promotional techniques such as product demonstrations, samples, point-of-purchase displays, free trial, events, promotional packaging and promotional pricing. In grocery retail, shelf wobblers, trolley advertisements, taste tests and recipe cards are also used. Many retailers also use loyalty programs to encourage repeat patronage.
See Merchandising ; Servicescapes ; Retail design. Presentation refers to the physical evidence that signals the retail image. The environment in which the retail service encounter occurs is sometimes known as the retail servicescape. Collectively, these elements contribute to the perceived retail servicescape or the overall atmosphere and can influence both the customer's cognitions, emotions and their behaviour within the retail space. Retail designers pay close attention to the front of the store, which is known as the decompression zone.
An open-plan floor design is effective in retail as it allows customers to see everything. In terms of the store's exterior, the side of the road cars normally travel, determines the way stores direct customers. New Zealand retail stores, for instance, would direct customers to the left.
In order to maximise the number of selling opportunities, retailers generally want customers to spend more time in a retail store. However, this must be balanced against customer expectations surrounding convenience, access and realistic waiting times. The retail service environment plays an important role in affecting the customer's perceptions of the retail experience. The retail environment not only affects quality perceptions, but can also impact on the way that customers navigate their way through the retail space during the retail service encounter. Layout, directional signage, the placement of furniture, shelves and display space along with the store's ambient conditions all affect patron's passage through the retail service system.
Layout refers to how equipment, shelves and other furnishings are placed and the relationship between them. In a retail setting, accessibility is an important aspect of layout. For example, the grid layout used by supermarkets with long aisles and gondolas at the end displaying premium merchandise or promotional items, minimises the time customers spend in the environment and makes productive use of available space. For example, the meat cabinet at the supermarket might use a merchandise outpost to suggest a range of marinades or spice rubs to complement particular cuts of meat.
As a generalisation, merchandise outposts are updated regularly so that they maintain a sense of novelty. According to Ziethaml et al. Signs and symbols provide cues for directional navigation and also inform about appropriate behaviour within a store. Functionality refers to extent to which the equipment and layout meet the goals of the customer. The way that brands are displayed is also part of the overall retail design.
Where a product is placed on the shelves has implications for purchase likelihood as a result of visibility and access. Products placed too high or too low on the shelves may not turn over as quickly as those placed at eye level. Through sensory stimulation retailers can engage maximum emotional impact between a brand and its consumers by relating to both profiles; the goal and experience. Purchasing behaviour can be influenced through the physical evidence detected by the senses of touch, smell, sight, taste and sound.
Coffee shops allow the aroma of coffee to waft into streets so that passers-by can appreciate the smell and perhaps be lured inside. Clothing garments are placed at arms' reach, allowing customers to feel the different textures of clothing. Within the retail environment, different spaces may be designed for different purposes. Hard floors, such as wooden floors, used in public areas, contrast with carpeted fitting rooms, which are designed to create a sense of homeliness when trying on garments.
Peter Alexander , retailer of sleep ware, is renowned for using scented candles in retail stores. Ambient conditions, such as lighting, temperature and music, are also part of the overall retail environment. Studies have found that "positively valenced music will stimulate more thoughts and feeling than negatively valenced music", hence, positively valenced music will make the waiting time feel longer to the customer than negatively valenced music. The design of a retail store is critical when appealing to the intended market, as this is where first impressions are made.
Certain techniques are used to create a consumer brand experience, which in the long run drives store loyalty. Two different strands of research have investigated shopper behaviour. One strand is primarily concerned with shopper motivations. Another stream of research seeks to segment shoppers according to common, shared characteristics.
To some extent, these streams of research are inter-related, but each stream offers different types of insights into shopper behaviour. Utilitarian motivations are task-related and rational.
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For the shopper with utilitarian motives, purchasing is a work-related task that is to be accomplished in the most efficient and expedient manner. On the other hand, hedonic motives refer to pleasure. The shopper with hedonic motivations views shopping as a form of escapism where they are free to indulge fantasy and freedom. Hedonic shoppers are more involved in the shopping experience. Many different shopper profiles can be identified. Retailers develop customised segmentation analyses for each unique outlet. However, it is possible to identify a number of broad shopper profiles.
One of the most well-known and widely cited shopper typologies is that developed by Sproles and Kendal in the mids. Some researchers have adapted Sproles and Kendall's methodology for use in specific countries or cultural groups. At its most basic level, a retail format is a simple marketplace , that is; a location where goods and services are exchanged.
In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands.
Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains. In Britain and Europe, the retail sale of goods is designated as a service activity. The European Service Directive applies to all retail trade including periodic markets, street traders and peddlers. Retailers carrying highly perishable foodstuffs such as meat, dairy and fresh produce typically require cold storage facilities.
Softline retailers sell goods that are consumed after a single use, or have a limited life typically under three years in they are normally consumed. Soft goods include clothing , other fabrics , footwear , toiletries , cosmetics , medicines and stationery. Grocery stores, including supermarkets and hypermarkets, along with convenience stores carry a mix of food products and consumable household items such as detergents, cleansers, personal hygiene products.
Consumer consumables are collectively known as fast-moving-consumer goods FMCG and represent the lines most often carried by supermarkets, grocers and convenience stores. For consumers, these are regular purchases and for the retailer, these products represent high turnover product lines. Grocery stores and convenience stores carry similar lines, but a convenience store is often open at times that suit its clientele and may be located for ease of access. Retailers selling consumer durables are sometimes known as hardline retailers  — automobiles , appliances , electronics , furniture , sporting goods , lumber , etc.
Goods that do not quickly wear out and provide utility over time. For the consumer, these items often represent major purchase decisions. Consumers purchase durables over longer purchase decision cycles. For instance, the typical consumer might replace their family car every 5 years, and their home computer every 4 years. Specialist retailers operate in many industries such as the arts e. Furniture and homewares retailers are said to be hardline retailers.
Pictured Furniture retailer in Hong Kong. Stores that sell a mix of perishable and consumable goods to cater for household needs are known as grocery stores. A shopping arcade refers to a group of retail outlets operating under a covered walkway. Arcades are similar to shopping malls, although they typically comprise a smaller number of outlets. Shopping arcades were the evolutionary precursor to the shopping mall, and were very fashionable in the late 19th-century.
Stylish men and women would promenade around the arcade, stopping to window shop, making purchases and also taking light refreshments in one of the arcade's tea-rooms. Arcades offered fashionable men and women opportunities to 'be seen' and to socialise in a relatively safe environment.
Arcades continue to exist as a distinct type of retail outlet. Historic 19th-century arcades have become popular tourist attractions in cities around the world. Amusement arcades , also known as penny arcades in the US, are more modern incarnation of the eighteenth and nineteenth century shopping arcade. An anchor store also known as draw tenant or anchor tenant is a larger store with a good reputation used by shopping mall management to attract a certain volume of shoppers to a precinct.
The term, ' bazaar ' can have multiple meanings. It may refer to a Middle-Eastern market place while a 'penny bazaar' refers to a retail outlet that specialises in inexpensive or discounted merchandise. In the United States a bazaar can mean a "rummage sale" which describes a charity fundraising event held by a church or other community organization and in which either donated used goods are made available for sale. A Boutique is a small store offering a select range of fashionable goods or accessories.
The term, 'boutique', in retail and services, appears to be taking on a broader meaning with popular references to retail goods and retail services such as boutique hotels, boutique beers i. By supplying a wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers. Toys "R" Us, established in , is thought to be the first category killer, dominating the children's toys and games market.
Rival retail stores are forced to reduce their prices if a category killer enters the market in a given geographic area. Examples of category killers include Toys "R" Us and Australia's Bunnings hardware, DIY and outdoor supplies and Officeworks stationery and supplies for the home office and small office. Some category killers redefine the category.
For example, Australia's Bunnings began as a hardware outlet, but now supplies a broad range of goods for the home handyman or small tradesman, including kitchen cabinetry, craft supplies, gardening needs and outdoor furniture.