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The changing face of retailing: How department stores and discount stores are evolving. This report should cover the historical development of department stores and discount stores in any country of choice. Obviously you would start by defining both of these types of retail institutions and then describe what merchandise they carry and how they market to distinct types or market segments of retail customers. You may like to discuss mergers, diversification and downsizing in your assignment, as well as cost containment and value driven retailing being driving forces behind the evolution of these institutions into the retail outlets of tomorrow. Do you think retailing will be different in 5 years’ time, or in 10 years’ time? Why — what do you think will make these types of store different? Do you think there will be other types of stores that will open up in different markets? Use examples wherever possible to substantiate your opinions in the report. In your answer you also need to refer to the wheel of retailing concept, and the retail life cycle. You will also discuss ways in which shops assemble their merchandise for consumers, such as scrambled merchandising.

Definition of departmental and discount store

The changing nature of the retail market is one of the trending aspects that come with the process of globalisation. The process of e-commerce and cash sale business in online process is the key process that customers are accustomed to and the market is growing in a radical manner. The change in decision making for customers is also significant in case buying. Customers trust on the online marketing is important in that case (Piotrowicz and Cuthbertson 2014). The report will compare departmental and discount stores and also establish their market segmentation through the process. The changing business nature is important in that process and examples like modern business scenario are also important for the development of the retail market.

A departmental store is mainly a retail establishment where the customers can expect various ranges of consumer goods in different product item categories. This retail store offers various products in different departments where the customers check the products in different segments; however, some of the departmental stores have the sales counter within each of the department. As stated by Goworek et al. (2015), departmental stores came into existence during the 1960s and it reshaped the shopping habits of the consumers. Departmental stores in recent time are the synonym for better service and luxury. Departmental stores mainly offer the groceries, clothing, furniture, toys, home appliances, houseware, toiletries, hardware and sporting goods. A departmental store is mainly one of the stores of renowned retail chain or it can be owned by the independent owner. In the USA, departmental stores include Kohl’s, Dillard’s, Belk and Macy’s.

Discount stores are retail shops which mainly sell the products at lower prices than the departmental or supermarket stores. Discount stores have the wide assortment of items with focusing on price, not on the service to the customers. Discount stores have their merchandise line and they offer lower prices products and these stores do not focus on display, speciality or wide choice within the same product line. Discount stores are not variety stores and discount stores provide customers with single price-point (Varley and Rafiq 2014). After the Second World War II, the shop owners started providing the high-volume products with low-profit margin to allure the price-conscious consumers. In the USA, discount stores include Big Lots, Costco and Bi-Mart.

Owners of the departmental stores mainly divide the market into two groups. In geographic segmentation, departmental stores can attract the customers based on regions in which area the stores are located. The density of the area is another factor in which the stores can segregate the customers. Most of the departmental stores are located in urban areas. Psychographic segmentation is based on the lifestyle of the people where traditionalists’ people are mostly targeted. In addition, easy-going and purchase determined people are grouped based on the previous purchase behaviour. Departmental stores mainly communicate their offering through television advertising and they provide membership cards along with e-commerce merging (Yoshimoto et al. 2017).

Discount stores owners divide their market based on the demographic market group. Discount stores make the group of the customers based on the income of the customers where lower and middle-income group is targeted. The social status of the people is another criterion for grouping of the people where the working class and lower-middle-class people are segmented. Behavioural segmentation is done based on the people's seeking of benefits as discount stores provide a cost advantage to the consumers. In discount stores, the customers sometimes visit on a daily basis to have the lower-priced products. Therefore, an active user of discount stores can be segmented. Discount stores attract the desired market segment with a lower pricing strategy.

Market segmentation for both the stores

In wheel of retailing concept, the retail owners first provide the products to the customers with lower margins and this strategy is known as penetrative marketing. In the following stage, the owners set the price in higher margin and this stage is known for the establishment period for the departmental stores. According to Rezaei et al. (2014), departmental store sets the price a little higher when the stores reach in the strongly established period. In retail stores, brand loyalty plays the important role to overshadow the competitors in the market. When new competitors emerge in the market, the departmental or retail stores start providing the items at the lower price again. When the competitors enter the market, the retail stores need to merge with another establishment to diversify seemingly unrelated industry or in the same industry to reduce the influence of competitors. As stated by Pantano (2014), diversification of retail store is mainly done to overcome the financial situation of the organisation. Sometimes, diversification helps the retail stores to attract a new customer base. Downsizing creates unemployment and it leads to a restructuring of the organisation.

In retail stores, retailers carry a wider assortment of merchandising when the staffs add items which may be unrelated to each other and it can be odd to the firm's original business. This scrambled merchandising process helps to attract wide numbers of customers. Discount stores control expenses which are required to operate through cost containment process. Discount stores are also done by the cost-containment through pre-planned budgetary constraints as this process is significant and necessary to satisfy the financial target of the organisation. The discount stores also take the strategy of Everyday Low Pricing Strategy as it promises consumers to provide the low price without any sale events. Departmental and discount stores take this strategy so that they can attract the customers. As stated by Naik and Srinivasan (2015), in recent time, the power in retail shopping has shifted to the buyers and retail is not just the destination anymore as it is now the active state of being. Value-driven retailing is the new catchword as the customers expect the best value for their products and the customers expect the retail shops as Omni-commerce.

The change in the retail market is there in the USA and there are some facilities in the online and offline procedure is important in that case.

  • The process of online marketing is trustworthy in modern time and five years back trust over this process is not reliable for customers.
  • Some of the basic amenities are found in earlier times and people are found some basic things from online or offline malls, however, the thing has changed and everything store concept has come up in this globalised world and that makes the process easier for the customers to have all their things under a roof (Doppelt 2017).
  • Amazon has added some pop-up stores to different malls in the country and premium grocery wholesale business is there along with other things (com 2018). These are the smartest kind of physical retail system, that people find their every need under one roof.
  • QVC and home shopping network is there and $15 billion of business in online and television marketing is perfectly adopted by the people in modern times.
  • Location wise marketing or the Geo-targeting process is there and the technology savvy process increases customers to locate their showrooms (Varley 2014). The Omni-channel process helps to engage customers and was not even in the frame of the organisation to engage customers like this.

These stores are important from the customers' perspective as these are the easiest process of marketing. In this globalised market, shops and brand interaction is quite clear about that process and the customer can avail that process through the internet. Most of the physical customer interactions are not avail in recent days rather interact with the automated machine is the trend in the modern market (Padmavathy, Balaji and Sivakumar 2012). The process is effective, time-consuming and exact in most of the cases and this is the major justification for the development and running process of these stores. These stores are important as the traditional markets are failing down and people have less time in their hand to go in person and evaluate the price. Rather, they are quite happy with the changes the market has considered and also they offer discount frequently. The mobile device enables different features in which customers can buy their products and that is one of the convenient ways of the retail management process.

Merger, diversification and downsizing process

The major difference in the market in this recent times is the diversification process in business. In the case of the retail market, facilities like home delivery, supermarket facility need to align with that process. The wholesale food market is the difference that should be brought in the retail delivering process. For instance, Amazon delivers through their retail and online shops and they delivered to the doorstep of customers (Beaverstock, Hall and Wainwright 2013). The process of globalisation also help in that process and make better chances that enter in the global market is the major process in that case (Amazon.com 2018). The e-commerce platform has changed so as the approach of people and they like to save their time. The globalised market for this types of online stores and physical shopping is considered a good move in business. The Amazon Go process is one of the processes that deliver cashless shopping. Every time customers enter the Amazon Go sector will visit the place and buy whatever they want then leave the place (Beaverstock, Hall and Wainwright 2013). The process of the queue system has vanished in this process. The process of computer vision, deep learning algorithm and sensor fusion are aligned with the process of Amazon Go (Amazon.com 2018).  The technology is considered as the "Just Walk out Technology” and people save their time through this. 

The life cycle of retail has two major axes and one of them considered the time and the other is the sale. The process of sale is measured by the amount of productivity delivered by the company. The innovation of the retail company is the primary introduction process that makes growth opportunities for the company as well. After the growth process, the company makes a good amount of profit and want to sustain at that point.

                                                   

                                                            (Source: Padmavathy, Balaji and Sivakumar 2012)

Maturity is the consistent form, and at certain point in time the company has raised this bar and they have reached their maximum position (Bloom et al. 2012). The decline is the last process that comes after the maturity process during which, most of the companies and strategies will decline and the business ends.

Amazon retail store and e-commerce stores recently started Amazon Go concept where the customers can shop conveniently without stopping in the line. The customers of Amazon Go stores just need a Smartphone to shop easily from the stores and money will be deducted from the account. When retail stores run in the loss, the management of retail stores has to take the decision of downsizing of the company. The process of Amazon, home shopping or QVC are the important genre that make changes and these are the changing face of modern retail management.

Conclusion

Therefore, the report can be concluded stating that advanced way of retail management and change face of retailing is the keyway that makes an advanced scenario for business. The encouragement of software and technologies is the key change that enables Amazon to retain its highest level. This process along with the online and offline retail encourage retail cycle as well. The system will work for the development of business and changing retail face is impressive for the customers.  The change in retail management is significant as the buying procedure is important in that case. The accumulation of specific brands is available in online stores because of which people like to spend their time in the online business market.

References

Amazon.com 2018 Amazon Go retrieved from: https://www.amazon.com/b?ie=UTF8&node=16008589011 [Accessed on 26th August, 2018]

Beaverstock, J.V., Hall, S. and Wainwright, T., 2013. Servicing the super-rich: New financial elites and the rise of the private wealth management retail ecology. Regional Studies, 47(6), pp.834-849.

Bloom, N., Genakos, C., Sadun, R. and Van Reenen, J., 2012. Management practices across firms and countries. Academy of Management Perspectives, 26(1), pp.12-33.

Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for business, government and civil society. Routledge.

Goworek, H., McGoldrick, P.J. and McGoldrick, P.J., 2015. Retail marketing management: Principles and practice. Harlow, UK: Pearson.

Naik, K. and Srinivasan, S.R., 2015. An assessment of departmental store service effectiveness using a modified SERVQUAL approach. Journal of Business and Retail Management Research, 9(2), pp.34-45.

Padmavathy, C., Balaji, M.S. and Sivakumar, V.J., 2012. Measuring effectiveness of customer relationship management in Indian retail banks. International Journal of Bank Marketing, 30(4), pp.246-266.

Pantano, E., 2014. Innovation drivers in the retail industry. International Journal of Information Management, 34(3), pp.344-350.

Piotrowicz, W. and Cuthbertson, R., 2014. Introduction to the special issue information technology in retail: Toward omnichannel retailing. International Journal of Electronic Commerce, 18(4), pp.5-16.

Rezaei, J., Fahim, P.B. and Tavasszy, L., 2014. Supplier selection in the airline retail industry using a funnel methodology: Conjunctive screening method and fuzzy AHP. Expert Systems with Applications, 41(18), pp.8165-8179.

Varley, R., 2014. Retail product management: buying and merchandising. Routledge.

Varley, R. and Rafiq, M., 2014. Principles of Retailing. London: Palgrave Macmillan.

Yoshimoto, K., Bae, B.I. and Jonghyun, K., 2017. How important is the distance to discount stores perceived by consumers and the ranking of discount stores in choosing a discount store?: The relationship between characteristics of retail mix and purchase intention. The Pan-Pacific Journal of Supply Chain Management (PCM), 1(2), pp.18-32.

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