Retailing may be defined as the selling of goods to the general public, rather than sales to businesses. The process usually involves sales of relatively small amounts of finished goods, with purchasers mainly motivated by their own consumption needs and not for resale. Numerous theories have bene developed to explain the patterns and trends that manifest in the retailing and selling. These can be divided into two main categories; cyclic and non-cyclic theories. Cyclic Theories Cyclic theories hypothesize the retail environment and competitive practices of retailers will follow a slightly, repeating pattern, with clear identifiable stages. 1. Wheel of Retailing Theory The wheel of retailing theory is one of the most common cyclic retailing theory. This was first proposed by McNair (1958) is one of the oldest retailing theories, and is frequently cited. The idea is that retailers will enter the market and progress through a cycle of strategies. Initially, Continue reading
Retail Management Basics
Trading Area Adequacy for Retail Layouts
Trading area adequacy is the ability of a trading area to support proposed and the existing retail operations. The support capability may be viewed in a “Gross” as well as “Net” form. Here Gross adequacy is the ability of a trading area to support a retail operation without any consideration of retail competition. That is, the gross adequacy measures the total amount of business available to all the competing retailers within a defined trading area. Contrary to this, “net adequacy” is the ability of a trading area to provide support for a retailer after competition has been taken into account. The Gross Adequacy of Trading Area Measurement of gross adequacy determines the trading area’s total capacity to consume. The capacity of a retail market to consume is the function of the total number of consumers within a trading area at a given time and their need, willingness and the ability Continue reading
Planning Reductions in Merchandise Budgeting
This is a very significant stage in developing the merchandise budget namely planning of reductions. “Retail reductions” are the difference between the merchandise item’s original retail value and its actual final sales value. This difference is the result of three major factors namely, mark-downs, discounts and shortages. “Mark downs” are the reductions in the original retail price for the purpose of stimulating the sale of merchandise. The amount of markdown can vary considerably depending on the type of merchandise and the condition under which it is sold. “Discounts” are reduction in the original retail price that are granted to store employees as special fringe benefits and to special customers in recognition of their special status say senior citizens, disadvantaged customers and religious personalities like clergy, priests, and so on. “Shortages” are the reductions in the total value of the retailer’s inventory as a result of shoplifting, pilferage and merchandise being Continue reading
Exterior Design Considerations in Retail Store Design
The exterior design of any retail store must protect the interior from the outside elements (heat, dust, humidity, light etc.). Just as important, it also serves to convey information to potential customers. The exterior is first part of the store that potential customers see. They will determine from the outside whether or not they wish to enter and shop. It is critical that the outside of the store gain the attention of customers and entice them to enter. If the outside does not reflect an image appropriate to customers, they will not enter into the store. The important exterior design considerations for the retail store design are: 1. New Building versus Existing Facility The decision to build a new facility or seek existing space is a critical element in exterior design planning. Each option has its advantages. Building allows the retailer to design all aspects of the exterior and interior. Continue reading
Freestanding Retail Locations
This type of retail store stands alone, physically separate from other retail stores. It does not enjoy the same benefits that shopping centers offer from the stand point that customer of a free standing retail store must have made a special trip to get there. Shoppers are not “just next door” and decide to walk in as they could in a mall or strip center. Freestanding locations constituted about 22 percent of all retail space, and a recent survey of retailers shows that this category leads all others for future importance. Drive in locations are special cases of freestanding sites that are selected for the purpose of satisfying the needs of customers who shop in their automobile. In some situations, the drive-in aspect of the retail business is only to supplement existing in – store sales, but the same requirements of all drive in location apply. These sites are usually Continue reading
Retail Store Design
Store design is the architectural character or decorative style of a retail store that conveys to the customer “what the store is all about.” Retail stores vary so much in kind, size, and geographical location that it is difficult to generalize about design. The architecture of the store’s exterior creates an initial impression. For example, if a retailer chooses to remodel an older Victorian home, the customer will get a different impression from that of a store in the mall. Because of continued pressure on costs, newer designs reflect a closer attention to all details including store size. The drive to reduce inventory levels has forced a move to smaller stores, because a large store with less merchandise looks as though it is going out of business. The stores showing an increase in store size are those attempting to diversify and broaden merchandise lines. Higher rents, higher building costs, and Continue reading