Variety and assortment are crucial retail market structure elements and have some distinguishing features. The significant difference between assortment and variety is that assortment refers to the number of different items provided in a category of merchandise. In contrast, variety refers to the quantity of the types of merchandise that retailers offer in the market (Levy et al., 2018). In addition, variety is known as the breadth of merchandise, whereas assortment is also called the depth of merchandise.
Variety and assortment are essential because they facilitate different retail offerings in a retail market structure, differentiating retailers from one another. Assortment strategies can increase sales and assist retailers in growing their customer base. They determine which goods customers interact with, leading to purchasing decisions. In essence, assortment and variety are essential to the retail market structure (Levy et al., 2018). If retailers fail to offer a considerable number of products, they cannot expand their business and generate more sales and profits.
Traditional grocery stores face competitive pressures from drug stores, convenience stores, extreme-value retailers, warehouse clubs, and supercenters. Such retailers have enlarged the amount of space, variety, and assortment of consumables to provide various customers with excellent products. For instance, warehouse clubs and supercenters are troublesome for traditional grocery stores since their operating efficiencies facilitate low prices and costs. Also, conventional grocery stores lack the bargaining market power that provides economies of scale associated with warehouse clubs and supercenters (Levy et al., 2018). In addition, traditional grocery stores have little investments in emerging supply chain technologies, pricing systems, and assortment planning to reduce inventories and increase sales margins.
To compete effectively against competition from other retailing formats, traditional grocery stores can differentiate their products by targeting ethnic and health-conscious consumers and focusing on perishables. Furthermore, grocery stores can provide better value through private-label merchandise and an improved shopping experience. Private-label inventory will provide more product choices, improved brand loyalty, and lesser promotional costs (Levy et al., 2018). Creating a better shopping experience can be done by enhancing customer service and store ambiance.
Off-price retailers use low prices as the primary source of their competitiveness. Such retailers indirectly compete with high-end service formats like specialty and department stores, and they face fierce rivalry from discount stores. Off-price stores are relatively disadvantaged because they purchase merchandise through opportunistic buying, whereas discount stores offer low prices every day. Off-price retailers cannot improve service quickly because it may increase costs and weaken their competitive advantage (Levy et al., 2018). Therefore, they should focus on keeping prices and costs low as well as exploring methods of retaining and attracting customers.
Off-price retailers can locate lower-cost rural and urban areas to operate in terms of operational costs. Furthermore, they can implement merchandise and inventory management systems that are more efficient. Additionally, off-price retailers can expand sourcing and imports from international markets, offering low-cost products. They face rivalry and threats from internet stores that publicize low prices and try to equal price preferences by reverse auctions and bidding (Levy et al., 2018). Therefore, off-price retailers can utilize the internet for low-cost advertising regarding current merchandise.
The retail mixes of warehouse stores, superstores, traditional supermarkets, and convenience stores are different. Regarding the location element of the retail mix, a convenience store is located in easily freestanding sites. On the other hand, warehouse stores, superstores, and traditional supermarkets are all located in strip shopping centers. A convenience store has a limited assortment and variety in merchandise assortment, whereas traditional supermarkets have an average assortment and variety (Levy et al., 2018). A superstore has a greater variety and deeper assortment than a supermarket, while a warehouse store has a wider variety and assortment similar to that of a supermarket.
The pricing element of the retail mix differs across various merchandising formats. A convenience store has higher prices than supermarkets, whereas traditional supermarkets have average pricing. Both superstores and warehouse stores use lower prices than supermarkets. Convenience stores have limited advertising as frequent shopping programs are tied to the sales of gasoline, while traditional supermarkets use high-low pricing advertising in weekly specials. On the other hand, limited marketing is done for superstores, while warehouse stores use minimal promotion. Store displays and designs in convenience stores are made for easy and quick merchandise checkout and selection. Traditional supermarkets, superstores, and warehouse stores utilize grid-iron, extensive signs (Levy et al., 2018). The service element is minimal inconvenience and warehouse stores, whereas, in conventional supermarkets and superstores, some services are for fish, meat, bakery, and product categories.
All four kinds of retail formats will persist since they appeal to varying consumer needs. Warehouse stores have larger packs that are attractive to large families and small families. Additionally, brand loyal customers might not shop in the four types of stores. Convenience stores offer speedy and easy transactions and provide healthy, fast, and fresh food choices. The superstores offer low prices but are inconvenient due to the large size. As a result, they attract price-conscious customers who can drive longer distances and spend more time shopping. Conventional supermarkets offer convenience to less price-conscious consumers who value service (Levy et al., 2018). They are popular because they are convenient and are found in most parts of major metro cities.
Several factors are slowing down the rate of economic growth of Walmart. First, the company is a full discount store that faces competition from other E-commerce giants, Amazon and Target. Second, Walmart faces some operational inefficiencies which cannot enable it to compete with Amazon. Amazon has taken up the majority of the E-commerce market share due to efficient delivery times. In addition, some competitors dominate the market for certain product categories, making it hard for Walmart to penetrate such markets. However, Walmart can accelerate its growth by creating supercenters from some stores that generate higher traffic and more efficient operations (Levy et al., 2018). Furthermore, Walmart can expand to more urban areas through smaller storefronts.
The franchise industry continues to face new challenges; however, the majority of existing franchisors have grown while others have experienced a decline in growth. I have patronized three franchises in 2021: Taco Bell, Dunkin’, and Popeyes Louisiana Kitchen. Taco Bell offers Mexican food, while Dunkin’ sells doughnuts, coffee, and baked food. Popeyes Louisiana Kitchen sells seafood, biscuits, and fried chicken. Before visiting the three franchises, I did not know if they were enfranchisement. All these franchises have excellent customer service and provide high-quality products. The franchises are ranked according to financial stability and strength, system size, years of operation, and growth rate. In 2020, Dunkin’, Taco Bell, and McDonald’s were ranked first, second, and third, respectively. In a year, McDonald’s moved from the third position to the eleventh position, attributed to the reduced McDonald’s growth rate (Entrepreneur, n.d.). Service-based retailers often use the franchise system, especially services that enable the standardization of retail formats and business practices.
References
Entrepreneur. (n.d.). 2021 Franchise 500 Ranking. Web.
Levy, M., Weitz, B. A., & Grewal, D. (2018). Retailing management (10th ed.). McGraw-Hill Education.