Retail Formats: Part 1

Now that we have presented ways in which retailers can be classified, we now use these categories to distinguish general formats or business models that best describe retail operations. These categories are designed to identify the primary format a retailer follows. In some cases, particularly with the advent of the internet, a retailer will be involved in more than one format.

Mom-and-Pop

Represent the small, individually owned and operated retail outlet. In many cases these are family-run businesses catering to the local community often with a high level of service but relatively small product selection.

Mass Discounters

These retailers can be either general or specialty merchandisers but either way their main focus is on offering discount pricing (e.g., Walmart). Compared to other store types, mass discounters offer fewer services and lower quality products.

Boutique

This retail format is best represented by a small store carrying very specialized and often high-end merchandise. In many cases a boutique is a full-service retailer following a full-pricing strategy.

Specialty Store

A step above the boutique store is the specialty store, which is generally represented by mid-sized stores carrying more depth than boutique stores (e.g., Michaels). The service level of specialty stores is not as focused as it is with boutiques, though customer service is a key element to their success.

Category Killers

Many major retail chains have taken what were previously narrowly focused, small specialty store concepts and have expanded them to create large specialty stores. These so-called “category killers” can be found in such specialty areas as electronic (e.g., Best Buy), office supplies (e.g., Staples), and sporting goods (e.g., Dick’s Sporting Goods).

Department Stores

These retailers are general merchandisers offering mid-to-high quality products and strong level of services, though in most cases these retailers would not fall into the full-service category. While department stores are classified as general merchandisers, some carry a more selective product line. For instance, while Sears once carried a wide range of products from hardware to cosmetics, Nordstrom focuses their products on clothing and personal care products.

Warehouse Stores

This is a form of mass discounter that often provides even lower prices than traditional mass discounters. In addition, they may require buyers to make purchases in quantities that are greater than what can be purchased at mass discount stores. These retail outlets provide few services and product selection can be limited. Furthermore, the retail design and layout is as the name suggests, warehouse style, with consumers often selecting products off the ground from the shipping package. Some forms of warehouse stores, called warehouse clubs (e.g., Costco), require customers purchase memberships in order to gain access to the outlet.

Retail Categories: Ownership Structure
Retail Formats: Part 2