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EXAM 1 The urban core consists of many entertainment districts which include things like sporting, shopping and distillery and nightclubs. For example, when looking at the sporting facilities during major sporting events there is a huge inflow of people /baseball fans that come to watch the game. With a solid crowd of about 53 K people visiting the stadium on a sold out game, will be flooding the streets after each game. Retailers take advantage of this since people are coming from various parts of the city and surrounding areas that they don’t necessarily have to target a specific group. Retailers know that these fans will be here for a specific amount of tie for a specific purpose. In order to target these people they have to have related products and services. Bars for example know that after each game fans come there and drink and enjoy. Therefore, targeting these people is easy. Some of the population also visits nightclubs therefore; nightclub owners try to focus on this population. Nightclub owners know that they are not dependant on the surrounding population except for those that are generating from such sporting events because they know that these people come from the various parts of the city therefore these entertainment retailers know that in order to succeed they have to make this population stay in the city longer thus creating more revenue and profits catering to the public’s needs. This is how these entertainment districts are created as an aftermath of a population visiting the city for a specific purpose. Oligopoly is when there are a few sellers influencing the market. As seen in the food/grocery industry within the Canadian market, Loblaws, Sobeys, and Metro provides a good example of an oligopoly. For example, loblaws has a bunch of retail chains such as the great Canadian superstore, Loblaws, Fortinos, and no frills. Prices within these chain vary greatly depending on the target market thus giving the customers a perception of competition however, in reality these chains are all owned by a few parent companies where the sales and revenues ends up with the parent company such as Loblaws, or Metro which is why there is oligopoly within the Canadian market. Most of the home depot stores operate in a big box format. They also operate in a warehouse style format because of the type of the products they are selling which require a large space to illustrate design ideas. Because of what they sell, they need people with a certain level of knowledge of the goods they are selling. Home depot requires people with experience so that they can point customers to the right direction. Typically they tended to employ people on a part time basis from the construction industry. However, these skilled people require higher wages. When the construction industry boomed these people ion the industry didn’t really need to work for home depot as they were being paid higher wages. Therefore, they started employing younger part time workers. One of their strategies is to be open longer hours or work on a 24 hour basis in order to satisfy their customers’ needs. Also, HD ran workshops to teach customers how to basic renovation techniques such as hanging dry wall and building decks. They also have certified contractors so that when you visit he store and place an order HD sends out a contractor to your home to see if will work. They also have a strategy of forward linkages in terms of providing their customers with credit cards to increase their sales and thus profits and also to keep customers loyal. In urban areas, the population is very diverse and dense thus making it hard to market to these people. Whereas, the population in suburban areas are relatively ho9mopgenous in terms of age, income, family structure. In other words, the population in suburban areas is clustered so it is easier for retailers to market to this population. The only difference within the suburban population is the ethnicity. A suburban retail environment is mostly a planned environment o Suburban  Relatively homogenous  Very focused on young families  Same attitude towards lifestyle  Only real diversity comes from ethnicity o Urban  Much more diversity (lifestyle, age, income level, ethnicity, etc) - Impact on retail o If you have a diversified pop’n, your retail culture will need to be diversified o Suburban  Since pop’n is homogenous, we see many malls since they know who their target population is o Urban  More independent stores specialized in specific products  Street retail  Flagship stores for clothing and music  Elite shopping areas • Tend to focus on fashion components (such as in the Yorkville district) o Very upscale type of environment o There are also other specialized categories such as antiques and art • They’re not entirely dependent on the pop’n near them, because their focus on the core gets them their customers • People that are visiting can access these areas very easily • Many of these places are surrounded by international hotels, which usually has customers that have a lot of money and will spend a lot of money at these stores • These are successful because they are easily accessible not only through subways, but underground pathways as well Advantages: It offers brand name recognition, which means that you don’t have to advertise your store or “introduce” to an area. It also provides a defined business plan which as a franchisee you don’t have to experiment with different business ideas such as trial and error which could end up saving money because with a defined business plan, you know it works for other franchises so you don’t have to worry about it failing. It also provides security for the customers because they know what thjey are being offered in terms of products. Furthermore, the advertising is also controlled by the franchisor since it can be an expensive process, franchisees don’t have to advertise for their specific store. Disadvantages: Though it is an easy way into business, it is quite expensive. For example, when you buy a franchise, you will have to give up some of your profits to the franchisor. Also, since it has a defined business plan, there is a lack of flexibility for the owner in terms of buying the supplies from the franchisor and there is no choice in terms of menu format. Secondly, the idea of spatial monopoly doesn’t really exist because most people assume that your franchise will be ina specifc trade area with no competitors; however, the idea of a franchise is that anyone can buy a franchise and open it up anywhere thus dividing customers of each individual franchise in a particular area. Furthermore, anything bad that happens in the broad franchise has an immediate impact on the franchisee itself. Fir example, with the outbreak of Avian Flu, sales in a KFC franchise will be affected even though there chicken isn’t affected by the actual virus. • Department stores are good because they could attract a lot of people and generate traffic • In most instances, the anchor tenants are department stores • The idea of anchor tenants is that it provides a basis of the shopping malls and generate most traffic since they are the most crucial they get the best spots in the Mall o In most instances, the anchor tenants will be department stores o The idea of the anchor tenants is to provide a basis of the shopping malls and generate the most traffic o Since they were the most crucial, they got the best spots in the malls o To increase their value, each anchor had parking facilities associated with it so that when people entered the mall, they didn’t do it through the main entrance, but through the actual anchor which generated sales o Anchors get the most space, but they also pay the lowest rent per square foot  Called so because it’s arranged by departments (menswear, hardware, etc)  Was a reflection of the past retail economy, because they were trying to appeal to as many markets as possible  This was fine, and they were successful until competition started to arise  We’re seeing more specialized stores emerging, and they’ve started to eat at the markets that would normally go to the department stores • They were forced into the suburban area as a reaction  So As the retail economy has become more specialized, the department stores are becoming useless  Dept stores shut down huge departments in their stores (such as electronics and furniture), and all that`s really left is fashion and cosmetics  This is bad for malls since they`re the anchor tenants for the mall  They’re trying to diversify and bring in more customers  This has been difficult because they tend not to have the same generative capacity as the older stores that were there  There’s also a hybrid sense because malls like Sherway have a mall and a power centre aspect to them  Is a Canadian operation  Typified by smaller stores with street area storefronts  Franchising, Buyer’s Cooperative • Many of the store are franchises • They focus upon professionalism and customer service • Sort of a friendship association • They had been moving into bigger centres, but are still dominated by a much smaller level of stores (Explain) Big box retailers include stores such as Wal-Mart, Rona, and Canadian tire. These are stores that basically go in an area first and generate traffic/customers. This causes expansion of the area in terms of attracting other stores such as clothing store, banks, food outlets etc. in what is called a spill over effect. This creates a self sufficient environment. /(7) • Department stores have lost that department component • It’s difficult for them to run furniture components and music components • They ‘re contracted to a fashion component only • They have different strategies, and have worked towards their own brand name (eg. the Bay has Togo) • They also have boutiques, as opposed to departments • It’s a difficult strategy because there’s so much competition in the area • They have entered into the Big Box format (eg. Home Sense, Home Outfitters) • They have narrowed their focus • Because of this narrow format, they’ve also relocated to power malls and smart centres • Up to 2 years ago, there was a discussion that there would be more US stores in Canada (eg. Bloomingdale’s) • This didn’t materialize because the market wasn’t big enough to support itself • People also thought we’d see more American discounters such as Target (to counter Wal-Mart) • This is highly unlikely as they don’t have the capital to do this • It’s unlikely that department stores won’t disappear, but we also won’t see expansion • If we do see any expansion, it’ll be in fringe cities and will be associated with discounter stores as opposed to the department store oThe savings which they make are ones that they can pass on to the customers oBecause retailers have narrowed their product range, they are dealing with less suppliers, which means that they are working with more specialized suppliers o Consolidation/investment  Have shut down older stores  Their progression has been to move to larger stores o Penetration  They’ve created a lot more stores in addition to moving to larger stores o National retailer  If you’re operating in a small market, you can’t operate the same style of store that you would in the GTA  You have to adjust your store for the market that you’re in o Backward linkages  They’re backing their own brand name, Master Craft  Allows them to control the supply side of things o Forward Linkages  Fairly aggressive in terms of financial side, as they’re one of the biggest credit card issuers in Canada o Integration  Mark’s warehouse is associated with work clothes, so if you’re going to be working on your car, you’re going to need something that absorbs the grease o Cross-merchandising and alliances  Their alliance with Marche allows people to buy food at their gas bars (Discuss)  Quite distinct from shopping centres  There is very limited common space (really it’s only the parking lot)  Costs to retailers are lower since they don’t have to pay for common space  The land they use is usually cheaper land  The build structure is simple, and there is very little in terms of exclusive design structures, which allows for retail turnover since if one store leaves, they can quickly replace them  They are very accessible in terms of car traffic • The big problem is that because they’re so cheap to build, they tend to grow very rapidly and lead to traffic problems • The roads in the area were made to support movement of people, and not vast shopping uses • When people get in to the power centres, they’re still on public roads, and they stop driving according to the rules of the road, and this all increases levels of tension/noise pollution/congestion • Planned retail economy, but different than the mall in that it’s not an enclosed retail space • • Malls are necessary because of the extreme separation of land uses • Established for a predetermined market in terms of size and composition of the market • It’s relatively easy to build the mall because you’ll have a good idea of what to put in the mall in terms of services • You tend not to get many problems with congestion (since road designation is already done) • Parking is internalized, as well as waste management • Advantages of malls is that u can control entrances and exits of customers • A structure of pathways and corridors and having curved corridors between anchor tenants/department stores makes customers see more stores along the way rather than traveling quickly through the mall. • Also, most stores are clusters according to age groups. o Encourages impulse buying Ideal because: centers are planned, urban planners tend to like them a lot , shopping center doesn’t cause conflict in terms of availability of parking – doesn’t cause congestion – no problems in terms of waste management – contrast to street retailing which is very messy. Also, no street retailing no control over neighbour store, so lots of competition – in shopping center stores so not compete against one another – competition is external not internal – easier for leasing agency or developers to secure funds – advertise the centers a whole Generative stores are the ones that generate traffic and attract more stores. Sscipient stores are the ones that are the smaller stores that absorb the main customer flow among each other. These are the ones the ones that have been attracted by the generative stores. Brownfield sites are areas previously allocated to industrial use – appears mostly on the urban fringe – reallocation to industrial land further away from the fringe due to the increase of land costs- decrease of manufacture also causing rezoning from industrial use to commercial or retail. This land is a bit more expensive than Greenfield is still relatively cheap – brownfield are closer to urban core… Brownfield sites are huge amount of land available for redevelopment closer to the downtown core – the old industrial land – no longer required as industries moved out of the city – decline in manufacturing activity as well – governments redevelop these sites for commercial and residential uses – condominium development along the gardener expressway - change the whole landscape – high concentration of large income group in a small areas – generate huge amounts of retail activity – discretionary expense by these occupants – emergence of flagship stores – increasing number of speciality stores – mixture of retail, residential, recreational services, commercial activities etc. • Wal-Mart arrived as an acquisition, and took over a previous type of store • This meant that they were able to just utilize the current market share that was available • We’re seeing a move towards non-unionized labour to keep up with Wal-Mart • Wal mart has acquired competition in order to maximize market share • They provide oligopoly and oligopsony in terms of their buyer and seller power • 5b.Identify and explain the dominant retail strategies employed by Weston. - Expansion – acquisition, new store formats o Aggressive … acquisition and expansion .. eg Dominions being taken over by Metro o Crucial thing – walmart was going to take over the food sector which could have large impact on Canada food market but loblaws stepped in o The way it has chained the employment – non unionzed - Market segmentation – chain banners o Store formats – banner names that focus on middle income groups, high income groups etc o Key things about the segmentation of market is the degree of mobility of population  Low income – immobile – they can charge whatever they want and limit their product range  Mobile population – more competition – typcailly see lower prices in a larger store - Franchising o Vast majority of all of these stores are franchises o Successful strategy because they are not risking their capital but increasing their market share - Backward linkages – own bran products, consolidation of brand names o Presidents choice, irresistible (metro) o Allows them to establish on the supply side and control and make it lower cost to consumer - Forward linkages – financial institutites o Credit cards – presidents choice credit cards, debit marchine in stores o Increases the amount of IMPULSE BUYING – even in terms of food  A good portion of food are impulse buying  Around the cash register are things like can
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