Mass Merchandising

From CEOpedia | Management online

Mass Merchandising is the retailing policy where retailers practise gently to decreased prices on big portions of merchandise and more limited service to encourage large turnover of goods (C. W. Lamb, J. F. Hair, C. McDaniel, 2012, p. 538).

Full-Line Discount Stores

Mass merchandisers are usually full-line discounters. In comparison with classical discount store, full-line discount stores provide users very narrow service and offer a much extensive range of popular, publicly branded "hard goods", containing household products, toys, motor elements, computer equipment, athletic products, as well as garden articles, apparel and bed linens. A few of these firms deliver also defined durable food goods like soft beverages, canned products or crisps. Existing as department stores, public chains manage the discounts (C. W. Lamb, J. F. Hair, C. McDaniel, 2012, p. 538).

Walmart is the biggest full-line discount store in reagrd to sales. At the beginning it developed quickly by placing on the suberbs of little towns and claiming enterprise by a mile everywhere. Recenty, most of its prosperity has got round in bigger cities. Now, it owns more than 8,500 shops on four continents (C. W. Lamb, J. F. Hair, C. McDaniel, 2012, p. 538).

Nontraditional Format

Mass merchandising is one type of retail format. This consists of stores which provide equal or similar range of product groups. Formats which have appeared recently, it means mass merchandisers, supercenters (which inlove a mass merchandise store as well as hypermarket together), warehouse stores and dollar stores, are corporately called as nontraditional formats. Formats which have an extended record, it means grocery, drug or department store are known as traditional formats (M. Krafft, M. K. Mantrala, 2005, p. 193).

Incentive of rivarly between these two formats has been the establishment extremely successful mass merchandisers, especially Wal-Mart, that offers unusually broad package of goods. Mass merchandisers (and also the supercenter size they developed) provide gathered products types the same like hypermarkets and chemist's, also clothing and house goods similarly to department stores, and partly the same like production of most type speciality stores (often called "category killers"). In consequence, mass merchanisers together with supercenters compete with hypermarkets, chemist's, department stores as well as category killers for mass acquisitions. Due to Wal-Mart's well promotion cost favor (that is also marked positively, to a narrower range, by more nontraditional format traders), rivarly for these groups has suggested to start closing of traditional formats. Even though forecasting failure of these formats is untimely, there is proof to back this matter. This proof contains:

  1. the thrilling invasion which Wal-Mart's supercenters have formed in grocery sales in last ten years - Wal-Mart currently solicits more grocery stocks than any another trader in the world, what's more 28% of shoppers from US currently think to do the shopping repeatedly at mass merchandisers either supercenters,
  2. latest serious failures of category killers like K-B Toys or Toys 'R' Us and
  3. the main powerlessness amid department store traders (M. Krafft, M. K. Mantrala, 2005, p. 194-195).

Specialization versus Retailing - Wellness's example

Trends are going in a way as to benefit more distributors rather than manufacturers. It may be seen on the basis of changing physical traders during a few of previous decades. The most efficient traders were speciality stores as well as department stores. Nowadays, it is changing, that means the most effective physical traders are "big box", mass merchandisers including Wal-Mart, Costco or Target. Commonly saying, these enterprises absolutely don't own the same qualitative products and services that speciality shops or high guality department stores produce. However, they are leading the marketplace. Distribution is the most important issue here. A product is a close second, because more significant is that to deliver it to consumers. To struggle with mentioned entities, a completely new types of retail entity has created on the marketplace - it's category killer. This is when a firm comes in mass merchandising in special category of stocks. Example of it may be Lowe's that is a category killer, because it concentrates mainly on delivering renovation goods. Other category killers examples may be Staples and Office Depot, which work in the area of office and paper products (S. Sugunendran, 2012, p. 148-149).

That means, if Wellness company doesn't own the stocks to be a broadscale mass merchandiser who offers adequate and efficient delivery of a wide group of Welness-related products, it should not give up. It only has to concentrate on a one group of Wellness stocks that it can efficiently advertise and deliver, and the effects will come. It refers to specialization (S. Sugunendran, 2012, p. 149).

For example, somebody may be a cooking freak, who has knowledge about preparition qualitative Wellness goods than anyone else engaged in the Wellness business currently. So it might be clue to make delicious Wellnes foods speciality section. The same refers to being interested in nutritious supplements and having knowledge about it. If somebody is able to genuinely and also with passion convey the value of a good to customers, it could be a product which somebody should sell and deliver (S. Sugunendran, 2012, p. 149).

Advantages of Mass Merchandising

Mass merchandising provides numerous advantages to retailers. These include:

  • Increased speed of turnover: Mass merchandising enables retailers to quickly move merchandise through their stores, as compared to traditional retail models. This increases the speed with which retailers can acquire and replenish their inventory, which in turn helps to reduce costs.
  • Variety of products and services: By offering a wide variety of items, mass merchandisers can attract a larger and more diverse customer base. This allows them to capitalize on a larger share of the market.
  • Lower prices: Mass merchandisers are able to offer lower prices due to their large-scale purchasing power and production capabilities. This helps to attract budget-conscious consumers and increases the overall demand for their products.
  • Easier access to products: Mass merchandisers typically offer easy access to their products, with many of them offering self-checkout options and home delivery. This provides customers with convenience, which is a major factor in determining where they shop.

Limitations of Mass Merchandising

Mass merchandising is an effective retailing policy, however it has its own limitations that can lead to a decrease in customer satisfaction and loyalty. These limitations include:

  • Limited range of goods: Mass merchandisers often offer a limited range of products, which can lead to customers not finding the products they need or being unable to compare prices and features.
  • Limited customer service: Mass merchandisers typically offer limited customer service as they focus on high volume and low prices, which can lead to customers not being able to get the help they need when making a purchase.
  • Limited store environment: Mass merchandisers often have limited store environments, which can lead to customers feeling overwhelmed or frustrated by the lack of atmosphere.
  • Low-quality goods: Mass merchandisers typically offer low-quality goods at low prices, which can lead to customers not being satisfied with the products they purchase.
  • Limited product knowledge: Mass merchandisers often have limited product knowledge, which can lead to customers not being able to get the information they need to make an informed purchase.

Other approaches related to Mass Merchandising

The following approaches are commonly related to Mass Merchandising:

  • Category Management: This approach is used by retailers to manage product categories and optimize their sales and profits. This approach is based on the understanding that customers have different needs and preferences.
  • Private Label Products: These are products that are produced and sold by a retailer under its own brand name. Private label products are usually less expensive than brand name products.
  • Shelf Space Management: This approach is used to maximize the sales of products by optimizing the shelf space allocated to each product. This is done by placing the most popular products at the front of the shelf and using special displays to draw the customers’ attention.
  • Promotional Pricing: This approach involves offering discounts and other incentives to customers to encourage them to buy more of a particular product.

In summary, Mass Merchandising is often associated with other approaches such as Category Management, Private Label Products, Shelf Space Management and Promotional Pricing, which are used to maximize sales and profits.


Mass Merchandising — recommended articles
Chain stores — Exclusive distribution — Consumer markets — Private label products — Convenience product — Scrambled merchandising — Aggregator model — Differential pricing — Prestige products

References

Author: Aleksandra Otczyk

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