12.3 The Competitive World of Retailing

Types of Retail Operations

There is a great deal of variety in retail operations. The major types of retailers are described in Table 12.1. There are several ways that retailers can position themselves in the marketplace. For example, they can be a convenience retailer or a specialty retailer. How they define their business impacts all aspects of the company. Most retailers today also have e-commerce stores available through their websites, extending their reach beyond a physical store location.

Atmosphere and Retail Image

In considering retailing as a distribution strategy (place in the 5Ps), it is important to understand that place includes more than channel members or logistics. It also includes atmospherics—the image of the actual retailing store (or, in the case of nonstore retailing, the platform from which the product is offered, such as their website or social media accounts). An important task in retailing is to create this image. Marketers combine the store’s merchandise mix, service level, and atmosphere to make up a retail image. Atmosphere refers to the physical layout and décor of the store. They can create a relaxed or busy feeling, a sense of luxury, a friendly or cold attitude, and a sense of organization or clutter.

These are the most influential factors in creating a store’s atmosphere:

• Employee type and density: Employee type refers to an employee’s general characteristics—for instance, approachable, knowledgeable, or service-oriented. Density is the number of employees per 1,000 square feet of selling space. A discount retailer might have a low employee density, especially if it utilizes self-checkout stations to create an atmosphere with less pressure on the customer to make a purchase. In contrast, a car dealership or furniture store might have a high employee density so that the customer can have one-on-one attention, increasing the chances of making a sale.
• Merchandise type and density: The type of merchandise carried and how it is displayed add to the atmosphere the retailer is trying to create. Often, high-end retailers such as Nordstrom carry more expensive brand names and have more organized and creative merchandise displays. Other retailers, such as Dollar Tree, display goods in a typical aisle-and-shelf set up with the goal of displaying as many products as possible because they are targeting value-conscious buyers who are more motivated by price than brand.

  

• Fixture type and density: Fixtures can be elegant (rich woods) or modern (contemporary colors and finishes), or they can be old, beat-up tables, as in an antique store. The fixtures should be consistent with the general atmosphere the store is trying to create. By displaying its merchandise on tables and shelves rather than on traditional pipe racks, retailers like the Gap and Banana Republic create a relaxed and organized atmosphere. In addition to traditional display racks, Cabela’s retail stores may feature giant aquariums stocked with carp, trout, and other fish or dioramas featuring elephants, lions, zebras, hyenas, and other animals. Cabela's flagship stores can attract millions of visitors annually, functioning as tourist destinations. For example, one Michigan location drew 6 million visitors per year and became the state's largest tourist attraction. Across all Bass Pro Shops and Cabela's locations (which merged in 2017), the combined chain attracts over 200 million visitors annually. It is not unusual for someone to drive many miles to get to a Cabela's, where you can often see license plates from many U.S. states and Canadian provinces. These stores function as destination retail experiences rather than just shopping locations.¹
• Sound: Sound can be pleasant or unpleasant for a customer. Classical music at an upscale restaurant helps create ambiance, just as more upbeat music does at a sports bar or casual dining establishment. Music can also entice customers to stay in the store longer and buy more, or it can encourage them to eat quickly and leave a table for others.
• Odors: Smell can either stimulate or detract from sales. The smell of pastries and breads entices bakery customers, as does the smell of freshly brewed coffee at a local breakfast cafe. Conversely, customers can be repulsed by off-putting odors, such as cigarette smoke, cleaning chemicals, musty smells, or strong room deodorizers.