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MKTG30006 : Retail Management

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MKTG30006 : Retail Management

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Course Code: MKTG30006
University: The University Of Melbourne

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Country: Australia


The changing face of retailing: How department stores and discount stores are evolving. This report should cover the historical development of department stores and discount stores in any country of choice. Obviously you would start by defining both of these types of retail institutions and then describe what merchandise they carry and how they market to distinct types or market segments of retail customers. You may like to discuss mergers, diversification and downsizing in your assignment, as well as cost containment and value driven retailing being driving forces behind the evolution of these institutions into the retail outlets of tomorrow. Do you think retailing will be different in 5 years’ time, or in 10 years’ time? Why – what do you think will make these types of store different? Do you think there will be other types of stores that will open up in different markets? Use examples wherever possible to substantiate your opinions in the report. In your answer you also need to refer to the wheel of retailing concept, and the retail life cycle. You will also discuss ways in which shops assemble their merchandise for consumers, such as scrambled merchandising.



With the passage of time, there has been a drastic change in the face of retailing. Over the past few years, the shopper’s behavior has completely changed with their preference shifting from smaller purchases to experience- oriented retail locations (Cozens, 2018). Departmental stores and discount stores are two types of retail institutions which sell the products to the ultimate consumer. Departmental stores are type of retail establishment which offers a wide range of products to the customers in different categories known as “departments”. On the other hand, products are sold by the discount stores at the prices lower than the typical market prices. This report is focused on the changing face of retailing i.e. the evolution of departmental stores and discount stores.
Historical Development of Departmental Stores and Discount Stores in Australia
The history of departmental stores and discount stores is different in different countries. The departmental stores first emerged in France and Britain in the 19th century. The first departmental store was established in Australia in the year 1825 in Sydney. David Jones is considered to be the oldest departmental store in Australia. The store is still there and is traded under the same name. After some years, Coles Bool Arcade got established in Australia and became the largest departmental store in Australia. The store lasted for the period ranging from the year 1873- 1929. The premises of this store are still remembered as it was well – organized and included different departments for books, stationery, photographic studio, confectionery, toys, entertainment and library (Varley, 2014).
With the passage of time, these departmental stores started gaining the loyalty of the customers as they started using innovative ways for it such as credit cards. Some stores also started provided store cards to their regular customers which can be utilized for making purchases at the different branches of the same store. Soon a large number of departmental stores got established in the 20th century. Harris Scarfe, Myer and David Jones are the most popular among them. However, some stores started disappearing as they faced severe difficulty in their survival. Most of the discount stores do not provide credit card rights to their customers (Thangam and Karthikeyan, 2015).
Departmental stores and discount stores have started taking a number of steps in order to overcome the challenges in the marketplace such as online competition, international retailers and weak sentiments of the customers. Departmental stores created an image of retail innovator in the minds of the customers and started dealing with the changes taking place in the dynamic environment. Innovative strategies are introduced by these departmental and discount stores from time to time for the purpose of attracting the customers. This has often led them towards improved stock control, high sales turnover model and increased the cash sales of these stores (Seifhashemi, Capra, Milller and Bell, 2018).
The evolution of discount stores was first witnessed in the late 19th century. In the 1930s, supermarkets and chain stores created immense competition for the predecessors of discount stores. Later on, the establishment of Kmart proved that the discount stores can lad the chain store of Australia and can effectively deal with the competition from other discount stores, drugstores and supermarkets. Aldi, Big W, Target and Kmart are some of the leading discount shops today (Volpe, Risch and Boland,  2017).
Merchandise in Discount Stores and Departmental Stores  
Discount stores are known for their specialization in the specific merchandise lines which is dependent. They purchase the products in bulk and have their own efficient distribution system in order to keep the costs low.  The discount stores are also given the name of a full- line discount shop/ store or a mass merchandiser and are also called the big box stores. A diverse range of products is included in their stores along with a section of grocery. As they have started gaining immense popularity in the market, they have brought a hike in their prices due to their brand reputation. This is similar to the wheel of retailing concept which provides for the market entry by the new retailers with low prices. Gradually they acquire large premises and facilities and increase the prices. Kmart is the perfect example of his situation (Vazifehdust and Mirvaisi, 2016). However, Kmart was incapable of maintaining the profitability by adopting this approach. This is further associated with the theory of retail life cycle that specifies the different stages of the retail including innovation, accelerated growth, maturity and decline (Sutton- Brady, Kamvounias and Taylor, 2015)
The departmental stores sells various kinds of merchandise including cosmetics, gardening, clothing, furniture, toys, houseware, toiletries, sporting goods, paint, hardware and home appliances. Some departmental stores also include the diverse product range of pet products, baby products, food, stationery, jewelry, photographic equipment, etc.
Marketing by Retail Stores to Distinct Market Segments  
Departmental stores and discount stores adopt a number of marketing strategies for attracting the customers. A large amount is spent by these stores for the purpose of advertising their latest offers and discounts. The outer front of the stores is always attractive with posters relating to the current offers. This makes the customers aware regarding the current offers and prompts them to visit the stores once. The offers are also marketed by the stores in different newspapers, pamphlets, banners and on television and radio (Goworek, McGoldrick and McGoldrick, 2015). Online marketing have also become popular among the large departmental stores and discount stores. These stores collect the information of the customers such as emails, name, etc. on the online portal or in the stores which is utilized by them for sending them latest offers from time to time. There are e- commerce sites of almost every departmental store and discount stores which allows the customer to view the offers online and place orders. Search engine optimization and social media marketing is also gaining popularity among these stores. In other words, the use of both online and offline modes of marketing is helping these stores in reaching the prospective customers (Choi and Shen, 2017).
Discount stores basically target families while the target of the departmental stores range from middle to high income group people. They offer different products to the customers along with its variants from different brands. This allows these stores to offer products of diverse price range to the customers. Buy 1 Get 1 offers play an important role in the marketing of the products by these stores. They also provide the facility to the customers to try the clothes for checking the size. In case of specified products, returns are accepted by these stores under certain circumstances (Narayan and Chandra, 2015).
The success of these stores is also a result of mergers, takeovers, and diversification. Big organizations are diversifying into these businesses as it provides various growth opportunities. Wesfarmers acquired Coles group which is often regarded as one of the biggest takeover of Australia. Three new divisions were created after the acquisition namely Coles, Kmart and Target. The cost- containment approach along with value- driving retailing has become popular among the retail stores. Various firms are using this for the purpose of handing intense competition from the competitors and increasing the productivity of the firm. Therefore, this assists these stores by acting as a driving force in its evolution as the retail stores of tomorrow (Zentes, Morschett and Schramm- Klein, 2017).
Retailing in Future
The future of retailing is expected to be completely different. With the passage of time, people are becoming self- reliant and they want ease in shopping. Technology is being increasingly used by these stores for performance of variety of operations which, in turn, ease its internal operations and also provides convenience to the customers. Technology is also being used by the retailers for the purpose of customer engagement. In future, target information will be offered to the customers by the retailers and will aim at the creation of deep customer engagement. Furthermore, it is expected that all the business operations of the retail will be integrated in order to create an operating model without any channels.  The customers will also be able to avail the discount which is available online. The offers provided to the social- media followers of the stores will also be allowed to avail such offers in store. The adoption of such technological innovation will enhance the performance of thee stores as well (Voigt, Buliga and Michl, 2017).
Robot customer service is also expected to be used by these stores for the enhancement of its operations and performance. These robots will assist the customers in searching for the required products thereby reducing the requirement of employing store staff. Moreover, the customers will be able to specify their requirements to the robots as such robots will be able to communicate in multiple languages. Robots are also expected to be used by the stores for security purposes. In the coming years, the requirement for employing the sales staff will be minimized (Cho, Chun and Lee, 2015). Therefore, in the coming 5 to 10 years, there will be a lot of changes in these stores. Other store types are also expected to open in diverse markets. Such stores will not only provide outstanding shopping experience to the customers but will also allow the customers to co- create and design special things with the help of expert assistance. The store environment is further expected to be automated in the future which will not only provide them a competitive advantage but also reduce the associated costs. Walmart is the perfect example of the store which has already proceeded in this direction (Bhatnagar and Syam, 2014).
Assembling of Merchandise for the Customers
Assembling of merchandise plays an important role in providing a complete experience to the customers. When the merchandise is not properly assembled, it becomes scrambled merchandising. The term scrambled merchandising can be defined as the practice where unrelated goods and services are assembled by the retailers together. However, this is generally avoided in case of departmental stores and discount stress by taking the assistance of experts who are responsible for deciding the place of every product and its variants. For example, one of the biggest Australian discount stores, Aldi is famous for the perfect arrangement of its products. The ‘special buys’ of the week are placed at the middle of the store so that every customer gets to know about the special discount. Similarly, the frozen foods such as fruits, vegetables and dairy products are placed at the back of the store which is close to the checkout (Chatterjee, 2017). This is planned so that such frozen foods do not get spoiled by squashing in the trolley. Variety is provided to the customers by assembling products from diverse brands and manufacturers. For example, household requirements are arranged at one place and all electronics are arranged at one place in order to provide a convenient experience to the customers (Bailey, Price, Pyman and Parker, 2015).
Therefore, it can be concluded that the preference of the customers have changed along with the respective change in their shopping behavior. Departmental stores and discount stores are two types of retail institutions which sell the products to the ultimate consumer. Departmental stores are type of retail establishment which offers a wide range of products to the customers in different categories known as “departments”. On the other hand, products are sold by the discount stores at the prices lower than the typical market prices. With the passage of time, there has been a drastic change in the face of retailing. This report focused on the historical development of these stores in Australia. Moreover, it also provided the changes expected to take place in the future of retailing. It is recommended that these stores should make investment in creating attractive window displays in order to tempt the customers and should increase the pay of the employees so that they make their best possible effort for creating an exceptional experience for the customers.   
Bailey, J., Price, R., Pyman, A. and Parker, J., 2015. Union power in retail: Contrasting cases in Australia and New Zealand. New Zealand Journal of Employment Relations, 40(1), p.1.
Bhatnagar, A. and Syam, S.S., 2014. Allocating a hybrid retailer’s assortment across retail stores: Bricks-and-mortar vs online. Journal of Business Research, 67(6), pp.1293-1302.
Chatterjee, S., 2017. Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart. Strategy & Leadership, 45(5), pp.18-25.
Cho, J., Chun, H. and Lee, Y., 2015. How does the entry of large discount stores increase retail employment? Evidence from Korea. Journal of Comparative Economics, 43(3), pp.559-574.
Choi, T.M. and Shen, B. 2017. Luxury fashion retail management. Springer Singapore.
Cozens, P., 2018. Shoplifting in Small Stores: A Qualitative Case Study in Perth, Western Australia. In Retail Crime (pp. 155-177). Palgrave Macmillan, Cham.
Goworek, H., McGoldrick, P.J. and McGoldrick, P.J., 2015. Retail marketing management: Principles and practice. Harlow, UK: Pearson.
Narayan, G. and Chandra, R., 2015. Factors affecting the purchase of food and grocery products from modern retail stores: An empirical study. IUP Journal of Management Research, 14(2), p.7.
Seifhashemi, M., Capra, B.R., Milller, W. and Bell, J., 2018. The potential for cool roofs to improve the energy efficiency of single storey warehouse-type retail buildings in Australia: A simulation case study. Energy and Buildings, 158, pp.1393-1403.
Sutton- Brady, C., Kamvounias, P. and Taylor, T., 2015. A model of supplier–retailer power asymmetry in the Australian retail industry. Industrial marketing management, 51, pp.122-130.
Thangam, M. and Karthikeyan, P., 2015. Customers’ perception and preference towards departmental stores in Erode district. Intercontinental Journal of Marketing Research Review, 3(5), pp.16-23.
Varley, R., 2014. Retail product management: buying and merchandising. Routledge.
Vazifehdust, H. and Mirvaisi, M., 2016. Intensive Distribution: Survey Someofits Main Elements on Customer Value (A Case Study of Iranian Food Delivery Company in Three Province). International Business Management, 10(14), pp.2649-2659.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Striving for Customer Benefit: The Case of Aldi. In Business Model Pioneers (pp. 11-24). Springer, Cham.
Volpe, R., Risch, C. and Boland, M., 2017. The determinants of price adjustments in retail supermarkets. Managerial and Decision Economics, 38(1), pp.37-52.
Zentes, J., Morschett, D. and Schramm-Klein, H., 2017. Store-based Retailing–Food and Near-food. In Strategic Retail Management (pp. 25-46). Springer Gabler, Wiesbaden.

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