Retail Formats PROF C VIGNALI Ph D

‘Retail Formats’ PROF. C. VIGNALI Ph. D

Presentation Layout Introduction to current shopping trends, l Factory Outlet Retailing; background, l characteristics and functional strategies, l Discount/warehouse club; background, characteristics and functional strategies, l Franchising; background, characteristics and functional strategies, l Conclusions

Introduction l Shopping is considered to be a ‘leisure experience. (Newby 1993) l Consumer trends change according to; - age, demographics, economics, technology, car ownership l Consumer is now ‘price and value conscious’.

Introduction l l l l Nowadays, there is a diverse array of retail formats, such as; Chain stores Supermarkets Discount stores Factory Outlets Franchises Internet

Factory Outlet Retailing Background: l Factory outlet format originates from USA l Principle – manufacturers selling brand name products at a discounted price. l First outlet in UK – Hornsea, 1992 l Format – Large site containing several ‘units’ and other amenities, i. e. restaurants, play areas.

Factory Outlet Retailing Background cont. l Largest outlet in UK – Cheshire Oaks l Contains approx. 140 retail units l Most common items sold at these outlets include; designer label clothing, crockery and homewares.

Factory Outlet Retailing Characteristics; l Good quality brands at discounted prices l Allows manufacturer to sell surplus stock l Leisure amenities offered encourage the people to spend the day there.

Factory Outlet Retailing Disadvantages; l Forces in place by government to restrain their development. l Transport links poor for those without cars l Takes away trade from town centre retailers

Factory Outlet Retailing Functional Strategies; l Popular brands, discounted prices l Out-of-town locations l Amenities i. e, ample parking, fast food, toilets, play parks l Out-of-town location reduces operating costs/distribution channel is shortened

Factory Outlet Retailing Retail Example – Cheshire Oaks Contains; l Spacious food court l 2 full service restaurants l Stores include, DKNY, Burberry, M&S, Next l Tourist information centre l 3, 000 free car parking spaces l First class road and rail links

Discount/Warehouse Club Definition; “Discount/warehouse clubs can be described as cash and carries for the general public”. Brassington et al 2001

Discount/Warehouse Club Background; l Adopted from USA to the UK in 1993 l Require membership l Large scale premises l Offer extremely low cost products inc; housewares, furniture, car parts, appliances

Discount/Warehouse Clubs Characteristics; l Extremely low prices l Low gross margins l Appeal to price conscious consumers & small retailers who cannot purchase from larger distributors

Discount/Warehouse Club Disadvantages; l Availability of stock unreliable l High degree of self-service l Little assistance available in-store l No delivery options available

Discount/Warehouse Club Functional Strategies; l Great range of product line in limited sizes/styles l Situated in industrial areas l Layout – concrete floors, aisles wide forklifts, merchandise displayed on pallets l All payments must be cash l Customers responsible for transporting their purchases

Discount/Warehouse Club Retail Example – Cost. Co l First US style warehouse club in UK l Trades from over 360 outlets in 7 countries l Provides supplies for small-medium sized businesses l Provides quality goods at lowest possible prices

Franchising Definition; “Franchising is an arrangement whereby a supplier grants a dealer the right to sell products in exchange for some type of consideration”. Dibb et al 2000

Franchising Background; l Franchiser receives percentage of sales in return for providing equipment, marketing, branding etc. l Organisations which franchise inc; Mc. Donalds, Mercedes Benz, Toyota, the Body Shop l Franchising accounts for approx. 1/3 of all retail sales

Franchising Characteristics; l Possibly easier to finance l Access to extensive advertising l Access to lower costs and possibly centralised buying l Few start up problems l Use of well-known trademark or trade name

Franchising Disadvantages; l Onerous reporting requirements l Possible exaggeration of franchiser advantages l Costs of franchise & other fees may reduce profit margins l Inflexibility due to restrictions imposed by franchiser

Franchising Functional Strategies; l Larger, well established franchise operation have ad campaigns and solid trading name l Good franchisers will offer training programmes l Good franchisers will help secure funding for the investment

Franchising Retail Example – Mc. Donalds l Committed to franchising as way of doing business l 70% of restaurants worldwide are franchises l Worldwide number 1 franchise l Member of the British Franchise Association

Conclusions Factory outlet Retailing; l Must continue to attract regular customers, i. e. provide additional amenities l May seriously affect the likelihood of traditional town centres

Conclusions Warehouse/Discount Clubs; l Growth inevitable, but government may inhibit growth l May be situated in town centres, this may draw back attention to these areas

Conclusions Franchising; l Threat from internet shopping l Franchising will continue as consumers still want the leisure activity of shopping

Bibliography 1. Dibb et al (2000)Marketing Concepts & Strategies 2. CIM Coursebook 2002 -2003; - Marketing Operations - Marketing in Practice - Marketing Environment 3. Brassington et al (2000) Principles of Marketing

Journals l International journal of retailing & distribution management; - Volume 30, No. 5, 2002 - Volume 23, No. 1, 1995 - Volume 24, No. 6, 1996 - Volume 22, No. 1, 1994

Websites l www. mcdonalds. com l www. british-franchise. org l www. frain. org. za l www. costco. uk