Fmd 258 assignment 4 PDF

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Assignment 4 mandatory for class, very in depth essay style, for retail management class with professor ian mull. These assignments I got an A on and understood materials well. very useful in class....

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Mackenzie Arthur Assignment 4 DEPARTMENT STORES Key Characteristics A department store is a store that sells more than one type of item. A department store could sell thing like cosmetics, clothing, furniture, footwear and much more. These types of purchases generally happen in a decentralized selling point because they are not specifically focusing on one product. Department stores are usually located in places where other stores are in operation such as a mall or a shopping district. A department store can include a men’s, women’s, and children’s department all within one store and then they will have departments for all of the various other products they carry such as cosmetics or appliances. Each department within a department store specializes in their own types of selling. In a department store there may be different check out registers or kiosks for each different department making it easier for customers to check out by not having one check out register for all departments. In terms of buying it is usually not done in the store setting but is done in a corporate office to decide what products they will buy for a department store. Department stores gear their products and geographical locations to a customer by looking at specific target markets and the different pricing strategies that they use. To further explain this, department stores will use a different pricing strategy if their customer is a low income or high-income customer. For example, they will try to target to their lower income customers in a value driven department store by using prices that they can afford and using discounts and sales because this is what that type of customer is looking for. Department stores face challenges when it comes to problems with the economy where people aren’t making as much income or are losing their jobs, when new competitors are brought to the market, and when competing department stores are carrying the

same products as their department store. These are all issues because they lose customers when situations like this arise. . Department stores have begun to create apps for mobile phones, have built online websites for their stores, and have even created spin offs of their department stores In an attempt to reach their target customers in the most efficient way and to reach as many target customers as possible. An important characteristic of a department store is that it often times will contain a store within a store. This means that another store has set up a kiosk or area within the department store in which they will sell their products at. These shops may lease the space and will hire their own employees and set up their own visual merchandising within the department store. A good example of this would be a Sephora in a JC Penny’s store. Department stores will carry their own private label brands within their stores so that way they avoid the problem of having all of their competitors carrying the same products as them. Department stores are huge within the marketplace because they carry such an assortment of products it attracts customers who are looking for non-specific items while shopping. This is huge in the marketplace because they are covering various different target market groups and are carrying more products than a lot of its competitors, so it is convenient for shoppers when they need to go shopping for more than one item that are not in the same product category.

DEPARTMENT STORES Types of stores and examples There are a few different types of department stores that can be built. There are value driven department stores which are stores that operate on lower gross margins. These types of department stores are pleasant to be in but are not anything too over the top or fancy. A value driven department store focuses on offering lower prices to their consumers because a lot of their

consumers are looking for low priced value items and good deals within the marketplace. An example of this type of department store would be JC Penny’s and Target. This is because both stores are targeting to customers who are looking for the best price they can find on a product and are making lower incomes. The second type of department store is mid-market department store. These department stores operate on higher gross margins than the value driven store. These types of department stores are a lot nicer looking and well-kept than a value driven department store. Mid-market department stores are the store that is the middle between value driven and luxury type stores and offer a middle range price to the middle class of customers. These may be customers that still are looking for priced products but aren’t going to go out of their way to ensure they are getting the cheapest price possible. An example of a mid-market department store is Macys and Dillards. Both of these are mid-market department stores because their stores goal is not to produce and market products in the cheapest way possible for the consumer, they still care about the price but are more focused on quality of the products than the value driven stores. These stores are also both selling to people in the middle-class region of income. The third type of department store is luxury department stores. These department stores operate on high gross margins. These stores are the most well-kept and are upscale and have a fancier appeal and lifestyle associated with them. A luxury department store sells products at a high price and sells to customers who are of high income. An example of a luxury department store would be Barneys New York and Saks Fifth Avenue. These are both examples of a luxury department store because their target markets are individuals who are not price sensitive and are making a high income putting them in the high-class category. Both stores also are capturing aspirational shoppers’ wallets, meaning that they are successfully selling to people who want a higher social status or higher status clothing items, or customers who have already achieved this. I did

research on the different price points on all three websites to find the lowest and highest prices of each store in order to categorize them into their groups of value driven, mid-market, and luxury. Barneys New York and Saks Fifth Avenue both had the most expensive products and the most expensive cheapest item out of all three store types. Macys and Dillards were in the middle between the two. They had price ranges that were not as expensive as Barneys and Saks Fifth Avenues most expensive items and their most expensive items were the same price range as the luxury stores middle range items. JC Penny and Targets highest priced items were still only in the mid-range price point of the mid-market stores. Their cheapest price points were a lot lower than both the midmarket and luxury department stores lowest prices.

SPECIALTY STORE Key Characteristics A specialty store is a store that focuses on a specific product category. These types of stores may carry one specific product or category of products within their store such as women’s clothing, a lamp store, or office supplies. What makes a store a specialty store depends on the number of products that the store offers to consumers as it should be a small variety of products. Specialty stores have to work hard to stay as a competitor in the retail industry because they are so focused on a specific product group and therefore they don’t reach out to as many different target market groups as other retail stores and they do this by developing differential advantages. By developing differential advantages, it shows how they stand out from their competitors and what it is that they offer that their competitors do not. These differential advantages are what keep them successful within the marketplace and make customers want to purchase from them over their competition. There are a few different types of specialty retailers and they include

boutiques which are small stores that sell stylish clothing. There are also destination stores which are stores that carry unique products that customers specifically go to the stores to purchase. Another type of specialty retailer is spin off stores which are an independent company made through use of an existing business. Fast fashion is another specialty retailer, and this is where production is done at a very quick pace so that new trends get onto the market as quickly as possible. Pop up shops are another type of specialty retailer and they are stores that are opened up for a short term amount of time and are closed down after that term is over with. Specialty retailers are known for using market segmentation. This is because their product or product categories that they sell are so specific that they are targeting a specific segment of the market and a certain lifestyle, so they will be targeting the same type of target customer throughout their whole store. Due to this they have to pay close attention to the information about their target customers such as demographic and psychographics in order to reach their target customer in an efficient way and to make sure they are reaching them at the right time and in the right location.

SPECIALTY STORE Examples Three examples of fashion specific specialty stores would be Moosejaw, Aerie, and Topshop. Moosejaw would be a destination store type of specific retailer. This is because they offer unique products that draw people to make a purchase, so a lot of customers go to these stores just to make the purchase of a Moosejaw product. They sell products that are specifically made for outdoor sports and activities so people will go to this store destination specifically to make purchases on outdoor sport apparel items. Aerie would be an example of a spin off store specialty retailer. This is because Aerie created their company through use of a business that

already existed which was American Eagle. By starting through a business that already exists Aerie was able to become their own business and have their own properties but may have taken existing products from American Eagle that already existed. Aerie is targeting to women who want to purchase undergarments such as bras and underwear. Aerie specializes in this product category which is what makes them a specialty retailer. Topshop is an example of a fast fashion specialty retailer. This is because Topshop produces and orders products quickly and in a cheap manner but also are keeping up with the new trends all the time because they are constantly changing the products in their inventory to keep up with their competitors. The fast fashion industry is where companies come out with new products sometimes more than once a week but at a very quick pace and get rid of old products at the same rate which is what Topshop does as a retailer. Topshop specifically sells items that are in season and by constantly changing their inventory and products it allows them to stay on trend which is what makes them a fast fashion specialty retailer. CATEGORY KILLER Characteristics A category killer is a type of discount store that sells only specific merchandise such as jewelry, or electrical appliances. Category killers offer products at low prices and they require low service. These types of stores carry deep and narrow assortments of products. A category killer is different than the other types of stores because it is dominant in its specific product categories. These types of stores offer a large selection of merchandise and do so at very low prices which is what makes it hard for stores to compete against these category killers. Category killers are highly specialized so when you go into a category killer store you are looking for a specific product or type of product group in which they will carry an assortment of products

within this category. These types of stores tend to have less conflicts within the store because they are only selling specific merchandise that people are going in specifically to look at (thebalancemb.com, 2018). Category killers buy their products in bulk which is what helps them to keep their prices low. By buying in bulk it allows them to get products for a cheaper price to begin with which then allows them to sell these products to consumers for a cheaper price. They also can assure supply when items are scarce a lot of the time because they are buying their products in bulk and have a lot more in inventory then other store types. Also, because they have such a specified product group they are selling to a specific target market category which means that like the specialty stores they must also pay close attention to customers demographic and psychographic information so that they can assure they will reach their target market in an efficient way. CATEGORY KILLER Examples An example of a category killer would be home depot. Home depot is a category killer because they specifically only sell products that are made for home improvement such as construction and tool products. It kills other store types in terms of competition because it has all of the products a person could need for home improvements. People specifically go to home depot when they need a home improvement product which is why it is a category killer. They wouldn’t want to go to another store because Home Depot carries all the products that they could need for home improvements all within one store. Another example of a category killer is bed bath and beyond. Bed bath and beyond sells products for home interior needs. Bed bath and beyond has more options than any normal home interior needs store and it specifically only carries products of this category. This is a category killer store because it solely carries interior

home products and people go to this store when they are looking for products for their home. They have a wide inventory selection while at the same time only carrying home interior goods. They have all items that you could want to but for home interior goods which is why customers will specifically go to these stores when they need this type of product. Another example of a category killer is Best Buy. Best buy is a store that carries all electronics for consumers. Whenever someone needs a new laptop or camera chances are they will go to best buy to buy it because they are specialized in selling these products and can give the consumer the most information on the products and will be able to best help them because they only carry products within the electronics category (thebalancemb.com, 2018). Best Buy specifically sells to people who are looking for products in the electronics category and they sell a wide assortment of different electronic devices within their store. A category killer is a store that sells items of one specific product category and specializes in that category and that is what home depot, bed bath and beyond and best buy all do within their stores.

DISCOUNT RETAILERS AND OFF-PRICE RETAILERS Differences The main difference between discount retailers and off-price retailers is that a discount retailer will buy merchandise at a full wholesale price while an off price retailer will buy merchandise for a cheaper price than the wholesale price. A discount store offers normal merchandise to consumers for low prices. They have a focus on keeping prices low by using efficient operations within the workplace. A discount retailer sells products at lower prices than the typical market value for the product. Discount retailers offer a wide variety of products that require limited service. A discount retailer offers prices at a low-price range. There are a few

different types of discount retailers and they include discount department stores which would be stores like Walmart and target. They also include category specialists or category killers which are stores that offer products at low price and require low service. They rely on consumers who purchase in bulk to keep their costs low. Some examples of this type of store would be book stores, jewelry stores, and pet stores. Another type of discount store is a warehouse club which is a store that sells a wide variety of products in large quantities. An example of this type of store would be a store that requires members to pay an annual membership to shop in such as Costco. The last type of discount retailer is a factory outlet. This is a store that carries goods that there was too much stock of and so a manufacturer receives the products at a discount such as Tanger. This can also be seen as a type of off-price retailer because they are getting merchandise for a cheaper price than it was priced originally and are selling them for lower prices than other retailers. Off price retailers sell to the markets that are left open by discount stores (Jottedlines.com, 2018). This means that the markets that discount stores don’t cover or sell to is what off price retailers are selling to. Off price retailers do have similarities with discount stores but they offer products at even lower prices and in high supply. Off Price retailing is a type of store that offer an assortment of brand name fashion goods for a low price. They pay prices that are lower than the wholesale price when getting merchandise. In off price retailing, merchandise is sold at a price that is lower than that its retail competitors. Merchandise is bought by the retailer from manufactures who have too many of specific products. This may be because the manufacturer couldn’t sell products, had too much stock, or the products were seasonal and now won’t sell because they are out of season. The main difference between difference between discount retailers and off-price retailers is that a discount retailer will buy merchandise at a full

wholesale price while an off-price retailer will buy merchandise for a cheaper price than the wholesale price.

OFF PRICE RETAILERS Examples Two examples of off-price retailers that sell fashion products are TJ Maxx and Marshalls. TJ Maxx is an off-price retailer because they buy their merchandise from manufactures who have too many of a specific product or because they were seasonal items that won’t sell. TJ Maxx sells all of the products that couldn’t originally sell in store, so they get sold to TJ Maxx for a cheaper price and then they sell them at really low prices for consumers (https://www.inturn.co/off-price , 2018). TJ Maxx focuses on the lower income consumers who are looking for a good deal which is also why they are categorized as an off-price retailer. Another example of an off-price retailer is Marshalls. Marshalls and TJ Maxx are actually competitors in the marketplace because they are both off price retailers. Marshalls also buys the extra products from manufactures that either couldn’t sell or they had too many in stock of. They then market their products for very low prices and sell them to consumers for a price that other stores can’t compare to. Marshalls also targets the lower income consumers who care about getting the cheapest price, so it is important for them to keep selling their products at a lower price point then other channels. Both TJ Maxx and Marshals are perfect examples of off-price retailers within the retail industry because they both are selling products that are of good value but are priced at lower price points and are selling products that other channels could not fulfil or sell.

BRICK AND MORTAR STORES Strengths Two strengths that brick and mortar stores have that other retail channels do not have are the personal touch that they can give a consumer. By customers being able to come into stores and physically touch a product it allows them to make a connection with the product that other retail channels do not have. By a customer feeling a physical or emotional attachment to a product it gives them more of a reason to make a purchase on that product. Customers have a chance to sample the products for how they look and feel and get to determine if it is the right purchase to fulfil their need. Other retail channels don’t have the ability to let their consumers feel a personal touch with a product which a lot of times results in customers never buying the product or just forgetting about it. This happens becau...