The Marketing Book 5th Edition

Retailing 785

While food discounters attracted most
interest in the 1990s, attention has now shifted
to discounting in non-food sectors. In their
decision to exit the UK market in 2001, C&A
cited the growth of clothing discounters,
including Matalan, which had rapidly over-
taken C&A in the menswear sector shares.
International discounters have also entered the
clothing market, including the US chain TK
Maxx and Dublin-based Primark (Key Note,
2000b).

Retailing strategy

Each element of the value chain can serve to
increase value, real or perceived. Most elements
incur costs but can contribute to the process of

differentiation. For comprehensive discussions

of strategic planning in retailing, see Johnson

(1987) or Walters and Hanrahan (2000).

Understanding needs and wants

Fundamental to the formulation of retail mar-

keting strategy is a clear understanding of

customer needs, motives and patronage deci-

sion processes. Without this, there is a tendency

for strategy formulation to dwell upon the

range of existing solutions, rather than devel-

oping formats to satisfy specific sets of con-

sumer requirements.

The constant and widespread interface

between retailers and their customers can easily

lead to an illusion of empathy. In some large

organizations, however, the key decision

makers have become remote and largely iso-

lated from their customers. It then becomes all

too easy to impose their own values and

preferences, in the sincere belief that these

reflect those of the customers: this is somewhat

improbable. Sophisticated retail marketers have

had to develop new ways of hearing and

understanding their customers, and their non-

customers.

The research industry has responded with

a range of information services, including

tracking studies of customer attitudes/opin-

ions and large panels of shoppers, whose

purchase and patronage decisions are mon-

itored in considerable detail. These data are,

however, in the public domain, albeit to the

exclusive club of competitors that can afford to

purchase. In-house focus groups can also help

to keep decision makers attuned to customer

needs; however busy the diary or crowded the

in-tray, some marketing managers insist on

taking time out to attend these discussions, or

simply to watch and talk to shoppers using

their stores.

Complaints/suggestions should also be

welcomed positively, rather than seen as a

nuisance to be handled. There are few more

cost-effective approaches to diagnosing dissat-

isfaction, often before it becomes fatal, or of

Table 30.8 Discounters and

hypermarkets: financial models

Typical key indices Discount

supermarket

Hypermarket

Store size (m^2 ) 600 6000

Number of lines 1000 35,000

Stockturns per year 40 22

Gross margin % of

sales

14.5 16.0

As % of sales:

Labour 5 7

Distribution 2 3

Property 1 2

Other costs 3 2

Net margin as % of

sales

3.5 2.0

Asset turnover (times) 7 9

Return on investment

(%)

24.5 18.0

Source: derived from Tordjman (1993).