MKTG30006 : Retail Management

Introduction

With the passage of time, the retail industry has reached a tipping point. Today, a shopper has different expectations of a service, product, environment, value than earlier. This has created difficulty for the retail stores to survive by simply making incremental adjustments in the store format and portfolio. The store proposition is required to be re- defined along with the proper identification of the changing needs of the customers within the four walls of the store (Abratt, Higgs & Nel, 2015). This report focuses on the changing face of retailing. In other words, this report provides the evolution of departmental stores and discount stores.

Departmental Stores and Discount Stores

Definition

A departmental store can be defined as the large retail trading organization having several organized and classified departments. The classification of department is made in accordance with the different types of goods to be sold. All the departments are run under same management, ownership and control. On the other hand, discount stores can be defined as the stores which sell merchandise, particularly consumer goods, at a discount from the retail price suggested by the manufacturer. These stores are also known as discount house. Usually, branded products are offered by these discount stores with a wide variety of items. Discount stores are capable of dropping their prices due to the existence of efficient distribution methods. Discount stores are often called chain stores. The examples of discount stores are Kmart, Target and Walmart (Wang, Soesilo & Zhang, 2015).

Merchandise Carried by These Stores

Departmental stores carry a variety of merchandise such as groceries, packed food goods, cosmetics, cutlery, stationery, garments, computes, medicines, furniture, sports, etc. In this way, departmental stores and discounts stores fulfill all the basic requirements of the customers under one roof. Maximum shopping experience is provided to the customers. On the other hand, the discount stores offer the specific merchandise lines. They aim at keeping the prices low by purchasing products in bulk and developing their own effective distribution system. A variety of national brands is carried by these stores which are directly purchased from the manufacturers (Zulqarnain, Zafar & Shahzad, 2015).

Marketing to Different Market Segments of Retail Customers

Diverse marketing strategies are being adopted by the departmental stores and discount stores with the view to meet the changing needs of the customers. Large stores which have established their brand reputation across the different countries of the world advertise their offers and discounts on television during the offer period. Moreover, the offers are also advertised on large posters and banners. Pamphlets are also distributed in various locations of the city along with advertisement in the newspapers in order to make the customers aware regarding the latest offers (Zhuang & Babin, 2015).

The stores are given an attractive outer look so that the prospective customers can be prompted to make a store visit. This results in increasing the customer base of these stores. Moreover, the retail customers are also informed regarding the offers and discounts through radio advertising (Stathopoulou & Balabanis, 2016).

The increased use of internet have also forced these stores to become digital. Since they have provided their customers to purchase their products online, they also advertise their offers with the help of online marketing. These stores are also adopting social media marketing strategies and search engine optimization for marketing to different market segments of retail customers (Varley & Rafiq, 2014).

The target market segments of these retail stores mostly comprise of families which can fulfill their day to day household requirements under one roof. Families are able to get diverse price range of the single product under various brands to choose from. Therefore, this convenience offered by these stores prompt the customers to make purchases. Purchases made for a larger amount further leads to different offers such as free gift, special discounts, etc. (Scott, 2017)   

Assembling of Merchandise for the Customers

Earlier, departmental stores and discount stores suffered from the problem of scrambled merchandising. The term scrambled merchandising can be defined as the improper assembling of products in the stores or assembling of unrelated goods together. These days, retail stores spend heavy amounts in the proper designing of the interior of their stores and placing of the products. This facilitates the customers to easily find the needed products. These stores assemble the products in the manner such that the customers can have similar product from different brands at a single location. For example, cosmetics are offered at one place and electronics at another. Moreover, similar products are placed at the side so that the time of the customers gets saved and ultimately they get an easy and convenient shopping experience (Das, 2015).

Historical Development of Departmental Stores and Discount Stores in Australia

The concept of departmental store first originated in France in the 19^th century. In 1825, the first departmental store was established in Sydney, Australia. David Jones is the departmental store in Australia which is considered to be the oldest. The largest departmental store in Australia was Coles Bool Arcade which was established after some time. However, the store was closed in the year 1929. However, the store created history due to its organized departments which facilitated ease in searching different products (Gross, 2016).

With the passage of time, these stores started adopting innovative strategies in order to attract the customers. They initiated providing store cards to the customers through which special discounts can be availed at different branches of the store. David Jones, Harris Scarfe and Myer are considered the most popular and largest departmental stores.

The origination of discount stores is largely associated with United States. Slowly and gradually these stores have spread worldwide in Latin America, Europe, Japan and Australia. For example, the first international outlet of Walmart Stores Inc., the discount store operator, was opened in the year 1991 in Mexico City which slowly made it the largest retailer of the world by the end of 20^th century. Big W, Target and Kmart are some of the popular discount stores (Kumar, Anand & Song, 2017).

Slowly, competition started to increase in Australia due to which these stores required to adopt innovative strategies in order to survive in the market. Moreover, international retailers established in Australia and the living style of the customers began to change which caused departmental and discount stores to bring the needed changes. Technological innovation was considered by these stores which also brought an effective improvement in their internal operations (Espina & Pérez, 2015).

The Changing Face of Retailing

The popularity of the discount stores has led them towards bringing a hike in their prices. The hike is the result of their popularity in the market and brand recognition. This can be associated with the theory of wheel of retailing. Wheel of retailing provides various patterns of retail development in which market is entered into by the new retailers as a low margin and low price operator. With the passage of time, the facilities and premises are elaborated by such retailers and suddenly they move upward. This theory is also known as retail wheel which provides that retailers start their operations as discount stores and gradually boost their prices after their establishment. Then the former niche of such stores is filled by some newer discount businesses (Paul & Ponnam, 2018).

The concept of retail life cycle provides that every retail organization goes through the four stages namely innovation, development, maturity and decline. At the first stage, a retail firm enters the market and takes a number of steps for the purpose of improving the convenience and advantage to the ultimate customers. At this stage, the organization only has a few competitors. The next stage is that of accelerated growth where the organization faces a rapid increase in their sales and establishes a position of leadership. After this, the organization enters into the stage of maturity where it faces competitive pressures which lead to the decline in the growth rates. The last stage is where the competitive edge is lost by the organization and there is a significant decline (Chakraborty, Lee, Bagchi- Sen, Upadhyaya & Rao, 2016).

These days, departmental stores and discount stores are expanding their operations globally with the help of mergers, downsizing and diversification. The acquisition of Coles by Wesfarmers is the biggest example of Australia for this purpose. This assisted Coles in acquiring required funding and facilitated expansion. Moreover, retail stores are increasingly adopted value driven retailing along with the cost- containment approach for the purpose of ensuring effective handling of immense competition in the market. These approaching are also assisting the retail stores in bringing the required increase in their productivity. Slowly and gradually, the adoption of these approaches along with several innovative approaches has led these stores to become the retail outlets of tomorrow.

Future of Retailing 

Retailing is expected to reach new heights in the coming 5 to 10 years. The technological developments are taking place at the rapid pace. These developments will have a positive impact on both the internal operations of these stores along with shopping experience of the customers. The billing queues are also expected to reduce as a result of technology. All the processes of the store will be digitalized right from the incoming of the stock in stores till the departing of the customer from the store (Wrigley & Lowe, 2014).

It is expected that robot customer service will be utilized by the big departmental and discount stores in order to assist the customers in having a convenient shopping experience. The robotic service will offer assistance in different languages so that none of the customer suffers as a result of language barrier. The need of employing store staff will also be minimized to a great extent. The requirements of the customers will be understood by the robots in a proper way so that it can be met accordingly. The billing will be done by the robots in an instant manner thereby reducing the waiting lines and queues. In this way, technology will assist in providing outstanding shopping experience to the customers (Piotrowicz & Cuthbertson, 2014).  

Different markets will further adopt better technology due to which new stores will open up in the market. Other type of stores involves specialty stores, convenience stores, supermarkets, etc.  Such stores are expected to enhance the shopping experience of the customers through expert assistance. The automated environment of the stores will reduce costs and will offer competitive advantage to the firms. For example, Walmart is taking a number of steps for bringing automation in their stores in order to gain competitive advantage (Richey & Skinner, 2015).

Conclusion:

Therefore, it can be concluded that the retail industry has reached a tipping point. The expectation of the shoppers has changed from the products and services. This report focused on the changing face of retailing and provided the evolution of department stores and discount stores. A departmental store can be defined as the large retail trading organization having several organized and classified departments. David Jones, Harris Scarfe and Myer are considered as the most popular and largest departmental stores. On the other hand, discount stores can be defined as the stores which sell merchandise, particularly consumer goods, at a discount from the retail price suggested by the manufacturer. Big W, Target and Kmart are some of the popular discount stores. The report further provided the historical development of these stores in Australia.  Retailing is expected to reach new heights in the coming 5 to 10 years.

References: 

Abratt, R., Higgs, N., & Nel, D. (2015). Ethical Perceptions of Retail Managers in Australia, Singapore, South Africa and Zimbabwe. In Proceedings of the 1993 World Marketing Congress (pp. 516-520). Springer, Cham.

Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S., & Rao, H. R. (2016). Online shopping intention in the context of data breach in online retail stores: An examination of older and younger adults. Decision Support Systems, 83, 47-56.

Das, G. (2015). Impact of store attributes on consumer-based retailer equity: An exploratory study of department retail stores. Journal of Fashion Marketing and Management, 19(2), 188-204.

Espina, C., & Pérez, M. (2015). The Effect of Self-Scanning on Consumers’ Expectations and Satisfaction: An Exploratory Study In A Retail Service Setting. In Proceedings of the 2007 Academy of Marketing Science (AMS) Annual Conference(pp. 308-313). Springer, Cham.

Gross, T. S. (2016). Positively outrageous service: how to delight and astound your customers and win them for life. Skyhorse Publishing, Inc..

Kumar, V., Anand, A., & Song, H. (2017). Future of retailer profitability: An organizing framework. Journal of Retailing, 93(1), 96-119.

Paul, R., & Ponnam, A. (2018). Teaching Customer Experience Quality and its Significance in Retail Management: A Role Playing Game using Chinese Puzzle ‘Tangram’. Decision Sciences Journal of Innovative Education, 16(2), 126-139.

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

Richey, R. G., & Skinner, L. (2015). A Multi-Level Approach to Retail Management Education. In Revolution in Marketing: Market Driving Changes (pp. 120-120). Springer, Cham.

Scott, P. (2017). Geography and retailing. Routledge.

Stathopoulou, A., & Balabanis, G. (2016). The effects of loyalty programs on customer satisfaction, trust, and loyalty toward high-and low-end fashion retailers. Journal of Business Research, 69(12), 5801-5808.

Varley, R., & Rafiq, M. (2014). Principles of retailing. Palgrave macmillan.

Wang, S. C., Soesilo, P. K., & Zhang, D. (2015). Impact of luxury brand retailer co-branding strategy on potential customers: A cross-cultural study. Journal of International Consumer Marketing, 27(3), 237-252.

Wrigley, N., & Lowe, M. (2014). Reading retail: A geographical perspective on retailing and consumption spaces. Routledge.

Zhuang, W., & Babin, B. J. (2015). The Influence of E-Service-Quality on Customer Value Perception and Satisfaction: The Case of Third-Party Web Sites. In Marketing Dynamism & Sustainability: Things Change, Things Stay the Same… (pp. 114-117). Springer, Cham.

Zulqarnain, H., Zafar, A. U., & Shahzad, M. (2015). Factors that affect the choice of consumers in selecting retail store, for grocery shopping. International Journal of Multidisciplinary and Current Research, 3(1), 1167-1172.