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.
• Report structure, format, presentation and layout (3 marks) • Application of knowledge and course concepts (4 marks) • Critical analysis and research demonstrated in country retailing trends (6 marks) • Overall conclusion and strength of arguments/ recommendations (4 marks) • Research quality and referencing (3 marks)
Assignment: Retail Management
Today, with increased globalization and increased competition, the format of the supermarkets, department stores, discount stores, and other such retail store formats have changed a lot. To overcome the challenges of the market environment and also to meet the changing requirements of the customers, these stores need to modify their formats and store strategies (Raff & Schmitt, 2012).
It is observed that there are different types of store formats adopted by them to meet the increasing demands of the consumers. Initially, they used to be retail stores to cater to the daily and weekly demands of the consumers. However, with the increase in the purchasing power parity and due to increase in overall demands, these stores changed their formats.
The senior management of these organizations identifies the new trends in the retail-store markets and according modified their strategies as well. It subsequently helped them manage the different complexities associated with a given retail store. However, the role of the staff was important in managing these small firms as they the scale of operations was increasing day-by-day.
They were also required to be trained on the aspects of services management in a given scenario. A department store is a retail establishment that will be offering a wide range of products across different departments. These stores changed their appearance and overall shopping experience of the customers based on the shopping habits, purchasing patterns, and overall demands of the customers (Raff & Schmitt, 2012). It is thereby important to evaluate the changes found in the retail store formats from beginning till present. Also, it is important to determine the changes that might happen to these store formats in the near future.
Considering the increasing competition, it might also happen that certain stores will be merging them to overcome the market completion and thereby focus on meeting the demands of the customers. There are both departmental stores and discount stores existing selling similar items but through different pricing and promotion strategies. Hence, it is also important to analyze the mode of operations of these two types of stores in a given environment and determine the changes from a long-term perspective.
Background: Department Stores and Discount Stores
The department stores follow different items to the customers. These include apparels, clothing, furniture, gardening, toys, cosmetics, sporting goods, housewares items, hardware, do it yourself goods and paint products. Today, however, these stores have added new range of products such as food, books, stationary, jewelry, and photographic equipment. Some of the stores will be retail stores will be of size like normal retail shops (Whyte, Gendall, & Hoek, 2014).
While some of the stores will be like big malls that will providing a wide range of products to the customers. The formats will vary based on the demands of the customers and also the requirements of the customers. The role of the geographical location, the economy, purchasing power parity of the customers, changing demands, basic needs of the customers, and the new product launches play a vital role in the formats of the departmental stores.
Some of these stores are also retail chains that are operating in different parts of a given nation. They have even introduced their e-commerce channel for the providing goods and products to the customers through home-based delivery options (Whyte, Gendall, & Hoek, 2014). Today, there are several departmental stores such as Walmart and Tesco that are focusing on improving their supply chain operations.
The stores believe in improving their overall efficiency and providing the best products to the customers. Similarly, a discount store resembles to a retail shop that will be performing similar operations to that of departmental stores but will be offering discounts on the products to attract more customers toward their stores (Whyte, Gendall, & Hoek, 2014).
A mass merchandiser like Aldi can be also be resembled as a discount store as they are offering several discounts on different products to the customers. There are very less differentiation factors between both the types and hence it is important to analyze each of them in a given working scenario.
Mergers and Diversification
The early-stage departmental stores were basic stores that were selling basic necessities to the different customers. However, with the increasing demand of the customers, the formats of the store started changing. The new formats of the stores that were revolutionized throughout a given period included - middle-range departmental store, discount stores, specialized category-based stores, malls, and several others (Hammond et al., 2015).
Some of the stores combined through strategic joint ventures while others started their retail chains in different parts of the nation. They later on expanded in other parts of the world. The key examples of these types of stores include Target, Walmart, and K-Mart. Further, the bigger stores acquired smaller stores to overcome the market competition.
The smaller stores were aware of the fact that it was difficult for them to sustain in this challenging market situation. Such stores were either required to get merged with the big retail discount stores such as Walmart or deploy differentiation strategies for the purpose of overcoming the market competition.
However, considering the discounts offered and other promotions applied to different products, it was difficult for smaller stores to continue their operations. Even, in the developing economies of the world, this culture got initiated and the big players started their mall chains in the nation (Saltorato et al., 2014). One of the key examples of the departmental stores that started in a similar fashion is DMart.
It has started the operations in India and is running successfully across the nation. To cater to the needs of the people, it is continuing with its operations through low-cost and differentiation strategy. The company is able to overcome the market completion through their strategic partnerships with smaller retail stores.
Also, they have merged few retailer to create a win-win situation in a given market. Considering this scenario, it seems that the giant retailers are now deploying the big malls formats and are selling the items through such stores. Also, they have expanded the product range and have now started including several products, which earlier were not found in such stores.
The departmental stores are now focusing on new market strategies to address the needs of the people. Considering the recent advances in the field of globalization and also with the recent advances in the field of technology, the stores are aware of the fact that they will be facing stiff competing from E-commerce stores (Groeppel-Klein & Kamm, 2014).
There are several new players in the market who did not possess any of the physical presence in any part of the nation; but they have directly started the same range of products rough online mode. They have implemented similar strategies and are thereby creating value for the customers. Also, the customers are expecting greater offers on the new products as they want to value associated with a given product.
Further, the new options enabled in the form of delivery has enhanced the value parameters of such products. Today, these products are developed at the door-step of the customer; the entire process is hassle-free and subsequently saves time, efforts, and costs associated with purchasing the same products from the retail stores.
The departmental stores have thereby focused on improving the supply chain operations so that they can easily and quickly deliver the products of the customers at their preferred time. Further, during different occasions, these stores have stared new promotional campaigns to attract the customers and thereby increase the overall base of the customers (Novak & Gilliland, 2011).
The companies are launching new offers, new products, and other promotions on their online platforms; in some cases, certain products will be available only through online mode. Thus, the different departmental stores need to identify these challenges of the near future. Customers are expecting better quality products at their doorstep and that too with great discounts on it. Further, these products should exceed their expectations and deliver value to them so that their satisfaction levels increases in a given purchasing process (Pancras, Sriram, & Kumar, 2012).
Changes in the Store Formats after 5-10 Years
With increase in the automation activities within the store outlets, the future formats will change to such an extent that the customers will be required to only punch the bar-code of the products. There will be an ordered list prepared at the check-out counters and with the help of Radio Frequency Identification (RFID) the entire order will be purchased.
The customers do not need to physically the products to their homes. The order will be purchased and the delivery of the products will then be made by the store at the prescribed time by the customers (Loertscher & Schneider, 2011). It will thus save a lot of time and efforts in purchasing from such stores. However, these departmental and discount stores need to upgrade them with necessary technologies.
Further, they need to train the employees on the new modules of technology as well as on the aspects of change management. The role of the Human Resources (HR) department in such cases will be important as they will be providing nectary training to all the employees of the organization (Ellickson, Houghton, & Timmins, 2013). Also, they will be adhering to the norms and will help the employees in performing the daily routine activities of the organization.
Further, the organization needs to ensure that they upgrade the technologies on a constant basis so that they can upgrade their future systems and thereby deploy new retail store formats for the customers. The departmental stores will keep more open spaces and will also introduce new means of entertainment within the outlet to ensure that customers do not get tired while shopping; instead, it will enhance their overall shopping experience in a given store.
There will be waiting lounges where the aged customers can rest while rest of the family members will be carrying out their shopping activities in a given environment. It will thereby help the departmental stores to achieve their desired objectives in a given challenging environment (Haskel & Sadun, 2012). They will be able to increase the overall customers and also will be able to increase the net sales for the organization. It will subsequently assist in improving bottom-liens of the organization.
The future retail stores will also vary in the size and in the formats as they will be focusing more on the delivery and communication channels. It is important for such stores to address the changing needs of the customers. Further, even customers can provide their opinion and share their valuable feedback about their expectations from the stores. It will thereby help the senior management of the departmental stores to redesign the shopping environment and subsequently focus on the purchasing pattern of the customers. It will help them fulfill the needs as well as the satisfaction levels of these customers in a given environment.
The role of the operations team and the marketing team is important in identifying such needs as it will help them overcome the operational challenges and ensure designing new promotions for the organization. The new store outlets will thereby capture new target audience that will increase the overall customer base of the organization in a given challenging and competitive environment.
This report has provided an introduction about the departmental and discount stores that are operating in different parts of the world. However, the formats of these stores have changed over a period. There are several factors due to which the formats have changed and some of them include - change in demand patterns, change in consumption patterns, increasing requirement of the customers, and development of the economy.
Also, the government is supporting the development of such stores so that they can provide maximum value to the customers (Haskel & Sadun, 2012). The report has also identified the future formats of such stores that will include more automation considering the growth of technology in the present times. The senior management, however, need to finalize the strategies and monitor the performance in a given working environment. They can thereby make necessary changes wherever required so that they can achieve desired objectives.