3.2 Types of store layouts
The basic arrangement of the selling, it affects all other design decisions. The type of store layouts are categorized into three basic types: grid, free flow, boutique. (Anon, 2006)
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3.2.1 free-flow layout:
Free-flow layout is arranged more irregular patterns and more freedom to move in any direction. Many fashion stores use a free-flow layout for encouraging customers’ appeal. (Peter J. McGoldrick, 2002) In this picture, the grid pattern can be seen. This store has different racks for showing clothes, including straight rack, four-way.
Zara use free-flow layout, it has some advantages: the first is giving customers a relaxed shopping environment. Customers might buy clothes for themselves unplanned. (Anon, 2006) The second is the manager can arrange merchandise to focus customer attention on areas of merchandise.(Newman.A, Cullen.P, 2002) From this picture, when the customer gets into the Zara store, they will first see one counter. In the first counter, the retailer can put the most fashionable clothes for attracting the customer’s eye. The third is that it encourages browsing and impulse buying. In this free-flow layout, it always reduces the fixed area. This means that customers need to spend more time to find products which they like. As they spend more time browsing products, it might be that they will see products which they want to buy. (Newman.A, Cullen.P, 2002)
However, this layout also has some disadvantages. The first disadvantage is inefficient use of space. This part of Zara needs more labor and looking after the products and increases the cost. The second disadvantage is there is less visual perception of items that restocking, it makes stock control more difficult.(Newman.A, Cullen.P, 2002)
3.2.2 Display
The product displayed is important in attracting customers. The retailer uses the display to show the customer as much as possible of the available store. It can save the customer time and convenience. (Newman.A, Cullen.P, 2002) display is divided into two types: visual merchandising and on-shelf merchandising. (Lusch, Dunne and Gebhardt 1993)
‘On-shelf merchandising refers to the way the goods are displayed on shelves, racks and other types of fixtures in the store.’ (Newman.A, Cullen.P, 2002) Zara is a fast fashion retailer. Usually, racks are fixtures in the Zara. However, it is only products which are constantly updated.
Part B comparative analysis of:
4. Competitive strategies in retail
According to Porter of competitive strategy, Porter thinks a successful strategy is to take different strategies and different approaches to competing and operating the business. ‘Sustainable competitive advantage is the key to long-term above-average performance.’(Peter J. McGoldrick, 2002) Through comparisons with its competitors, it can find strengths and weakness. Competitive advantage has two types: low cost and differentiation. (Peter J. McGoldrick, 2002)
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4.1 target of customers
H&M’S main aim market is 18-30 age customers. Zara target age male is 20-40 age customers. (Mintel, 2007) From this digital, they are very great competitors. Customers target age is very similar and they have the same understanding of fast fashion. It is not only age, but also segmentation is the same range.
Zara and H&M core range is fashion. H&M’s other products are footwear, cosmetic, lingerie, hosiery. Zara’s other products are underwear, footwear, accessories. H&M retailer can be a threat to Zara due to their range of categories. The range is women, men, and children. (Mintel, 2007) They are the same kind of stores and targets are very similar. It is increased competitor degree. (Anon, 2006) H&M is Zara most similar and great competitor. (Kerry Capell, 2006)
4.2 Different strategy
Differentiation strategy seeks competitive advantage by products or services, including design, brand image, or customer service. (Anon, 2006) Cost leadership strategy is low cost producer in an industry and has level of quality. The company wishes to gain more market share. If a price war happens, the firm can keep profitability while the competition suffers losses. If there is no price war, the company can keep its prices low for a longer period of time. (Anon, 2007) H&M has a large inventory, items sourced from cheap Asian factories. However, Zara often is fresh designs and quickly through the stores. (Rachel Tiplady, 2006) H&M manufacture spend on labor and source is lower than Zara. However, H&M needs a large inventory for putting clothes. In contrast, Zara uses a successful method of doing business in the fast fashion by working. H&M and Zara’s key similarities are that they are lower price European fashion retailers. H&M differs from Zara because they spend more money on advertising and are price-oriented. Zara chooses trendy clothing that they have designed based on the international level. However, H&M sells trendy cheaper styles. It uses more advertising to publicize its brand. Zara only uses the self business method to publicize. In the advertising cost, H&M has a higher advertising cost than Zara. Many of the customers have a deep impression of H&M. (Craig.A et.al, 2004)
5 Retail value equation
Customers’ consumption concept is changing. Today consumers have known the money and non-price traded off and moving into a new of value. Consumer’s perception and propensity to purchase is affected by many factors, including product quality, choice and availability, convenient opening hours, good service, pleasant environment, money, time, effort, stress, risk. (In Focus, 2006)
5.1 choice and availability and time
Zara has stores in 68 countries and than 400 cities in Europe, the Americas, Asia and Africa. In the future, Zara will continue to extent stores in the world(Inditex, 2007) H&M is a Swedish Clothing company, also is offering fashionable clothing. Today it has more than 1300 stores in 24 different countries. (Anon 2007) H&M’s target is increase the number of stores by 10-15% per year. (Bruno Zavrsnik, 2006) In the UK, H&M and Zara are very famous stores. Many customers all know these two brands and are a recognized brand. (Anon, 2006) Both stores are very convenient for customers. In Europe, customers can go to Zara and H&M stores near where they live for buying products. In contact, customers do not need too much time to buy products. Today customers think that time also is a cost.
5.2 Good service and stress
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VS
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From these two pictures, as can be seen, Zara uses the Free-flow layout for putting its products. Many fashion stores use a free-flow layout for encouraging customers appeal. (Peter J. McGoldrick, 2002). However, this layout needs customers to spend time browsing products, because products are not fixed in the store. At the same time, it needs more staff for caring for the products and introducing products to customers. Zara has confident for using free-flow layout. It also means that Zara can provide more service for customers. In contact H&M use boutique layout in relation to its products. Using this layout for putting products, usually, all the products are fixing racks in the store. It can save time for customers. H&M use boutique layout for putting products. It can use less staff for servicing in the store than Zara. At the time, H&M provide service for customers less than Zara. Due to less staff for store service, it might quality service lower than Zara. When customers want to buy products, they also think better of service quality.
Meantime, many staff working in Zara store. This environment makes great pressure to customers. Staff has more time introduce product and more service for customers. When staff constant introduce product to customers, sometime they will feel pressure. However, H&M do not need much staff for working. Usually, staff does not introduce products to customers. Consumers can freely see anything and spend much time in the store. When customers feel pressure for shopping, they would not like to purchase products. Most customers go shopping for relaxing. They do not like stress when they purchase products.
5.3 Product quality and money
Zara and H&M are the same kind of stores and the aim is very similar. Customers think that Zara store design is more elegant and more fashionable. One people do a questionnaire, the 68% of respondents think that H&M is more expensive and the quality is bad. The 32% of respondents think that H&M is cheaper and there is more choice in the store. Zara and H&M quality is about the similar. They want to become fashionable products with low prices. However, H&M price is cheaper than the Zara price. (Anon, 2006)
6 Retail marketing mix design
‘The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market.’ (Anon, 2006)
6.1 Price
Product of price was determined by the cost of goods and profit. (Cox.P&Brittain.P, 2004)
(Bruno Zavrsnik, 2006)
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Above of the picture, it is shown the different ways that are used to price a product. Based on Zara and H&M target, they can take price skimming for setting a price. They can make price skimming for extending broad marketing.
6.2 Product
‘A product is anything that can be offered to a market that might satisfy a need or a want.’ (Cox.P&Brittain.P, 2004) Zara designed unique fashion to create shapes, colors and cause special effects to customers. (Corel Draw, 2007) However, H&M is a modern mix of couture, elegant glamour and minimalism. (Anon, 2007)
6.3 Place
H&M and Zara store use cannel intermediaries for selling their product. H&M and Zara are famous brands, they can provide products and services for promotion and merchandising. (Marketing teacher, 2000)
6.4 Promotion
H&M makes all materials and other printed for promotion. Creative advertising development and media buying all were that H&M handles advertising and public relations. (Anon, 2006) However, Zara use an effective way to manage personal customer relationship. They develop branch in every where. Every branch store tends to be trained for personal selling.
6.5 Physical
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From above of two pictures, it can be seen that Zara and H&M have different packing. Two kinds of packing give customers different feeling. Zara give customers a grave feeling. However, H&M give customers a youth feeling.
6.5 People
Service is very important and meets the individual needs of the personal consuming it. People are attention to service. Whatever is Zara store or H&M store, it should set up services and experiences are supported by customer services teams. (Marketing teacher, 2000)
6.6 Process
Process is a part of service. In the different time, customers need a different clothing style. It is need that manager spend few time for design the new style clothes. Zara and H&M are also belonging to fast fashion. They need to observe customers’ requirements. (Marketing teacher, 2000)
7 Consumer and segmentation variables
‘Segmentation is the dividing of a market into subsets of customers, any one or more of which can be selected as a target market to be satisfied with a distinct retailing mix.’ (Cox.P&Brittain.P, 2004) Segments are offering the retailer an opportunity to serve and know customer needs. Segmentation can be divided into five kinds: geographic, geodemographic, psychographic and behavioural. (Cox.P&Brittain.P, 2004)
‘In behavioural segmentation customers are grouped according to certain aspects of their behaviour in relation to the store, rather than as previously by inferring behaviour from other facors.’ (Cox.P&Brittain.P, 2004) Store segmentation classification is decision by occasions, benefits and loyalty status. (Cox.P&Brittain.P, 2004)
7.1 Behavioural segmentation
Occasion is when customers need develop, retailers according to customers’ requirements for segmented. (Cox.P&Brittain.P, 2004) H&M provide more products to customers. It can be satisfied extent customers demand. It trend occasions for segment. However, benefits sought are benefit segmentation seeks to determine the prime benefit sought by shopper. (Cox.P&Brittain.P, 2004) Zara is very attentive to fast fashion for trendy young customers.
7.2 Market segmentation-demographic segmentation
Demographic segmentation is dividing the market into groups based on variables, including age, gender, family income, occupation, education, religion, race and nationality. (Tutor 2u, 2006)
- Age
Market and product design differently to meet the wants of different age groups. (Tutor 2u, 2006) H&M’S main aim market is 18-30 age customers. Zara target age male is 20-40 age customers. (Mintel, 2007) These two stores are attracting the young customers. These two stores target is trendy fashion products.
- Gender
Gender segmentation also is consumer marketing. (Tutor 2u, 2006) Zara and H&M are similar.
- Income
Segmentation is long-standing retail practice by income. Below is a graph that shows Zara and H&M’S fashion and price position in which are belongs to section. They are lower price and more fashion store. Zara’s prices are higher than H&M. Zara products are more fashionable than H&M.
Source: Ghemawat and Nueno, 2006
- Advantages and disadvantages of segmentation
Advantage of segmentation is a group of customers that we hope to serve. The retailers can accurately know customer needs and wants and satisfy them. (Cox.P&Brittain.P, 2004) It can help them improve sales and make customers like the products in the store.
However, it also has some disadvantages, the first is cost inefficiency. If a store is only fit for a small group, they will lose some money. (Cox.P&Brittain.P, 2004)
Appendix:
Zara sales are creased than half year. Sales have increased 23 percent to €1.76 billion (Anon 2006) In 2006, it has 14 percent in brand value.
Spanish retail group Inditex, the first Zara shop was opened in Spain. Now Zara has more than 400 cities in Europe. (Iditex, 2007)
Millions of Euros
Convenient opening hours and effort
H&M and Zara opening hours are the same and effort are the similar.
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