Retailing and Merchandising in Textiles and Appare

Retailing and Merchandising in Textiles and Appare 3(2+1)

Lesson 07 : Store Retailing (contd…)

Off- Price Retailing

Both discount and off-price retailing are the selling of merchandise, often brand names, at less-than-regular prices. There is a slight difference; however, between off price and discount retailing in terms of how the merchandise is acquired. In discount retailing the discounter pays the same price for merchandise as everyone else and sells it for less than traditional retailers, whereas with off-price retailing, merchandise is purchased at cute-rate prices and the savings are passed on to customers. Off-price retailers specialize in making special purchases, including manufacturer's surplus stock, over cuts, distress merchandise, closeouts, and job lots. Although technically there is a slight difference in meaning between discount and off-price retailing stress branded merchandise in their assortments, which are a mix of current and out-of-season goods. Some also sell merchandise that they have developed themselves and have had produced to sell under their own private brand names.

One special type of off-price retailer is the factory outlet store. Originally the term meant a manufacturer-owned store often located at the factory site or nearby. The factory outlet was just that, a place where unwanted inventory could be sold. These stores sold production overruns, merchandise returned from the retailers, irregular and second quality goods. Today the term factory outlet is being used by a variety of more than one manufacturer. Factory outlet stores are often located in factory malls competing directly with traditional retailers.

It is the selling of brand name and designer-label merchandise at lower-than-normal retail prices, but still at the late rise or early peak of the fashion cycle. Discounters sell merchandise at the late peak and decline stages of the fashion cycle. Off price retailers keep their selling expenses down to the discounter level by limiting services and maintaining austere surroundings in low-rent areas. Some stores and retail chain operations are entering the off-price apparel business.

Off-price retailers have provided an invaluable service to manufacturers and price conscious customers alike. Because manufacturers must commit to fabric houses so early (up to 18 months before the garments are actually in the stores) they are at considerable risk of not having enough orders from their regular retail clients to use all the fabric. If this is the case, manufacturers can turn to off-pricers, who will often pay full price for the piece goods if the manufacturers will make them into garments at a lower cost. Selling to off-pricers helps manufacturers to

• Avert financial difficulties and to keep their plants operating.
• Off-pricers benefit by getting garments for less than what regular retailers pay
• Low overhead,
• Able to operate on a smaller markup
• Customers benefit by being able to buy garments for far less than they would sell for in department stores or specialty shops.
• Off-price retailers have taken a big portion of the brand-name clothing market.
• The off-pricer will be able to make a nice profit while selling the garments for a great deal less than the price asked by prestige stores during the peak selling period.
• Off-price retailing seems to have found the right formula to satisfy growing ranks of customers.

Factory Outlet Stores

• Another fast-rising source of discount fashion buying in the mid-1980s is the factory outlet store. This form of retailing began decades ago when a manufacturer would open a little store in one corner of the plant to sell company products at reduced rates to the company's employees.
• An outlet buys merchandise from the parent company at over 30 percent off regular whole sale prices. Most of the major manufacturers are careful to use their outlet stores only for closeouts and seconds. It is vital that these manufacturers continue to protect their status with the department stores and specialty stores that are their major regular-priced customers.
• The future route that will be taken by factory outlet stores is unpredictable. The majority of factory outlets want to be located in areas with other off-price discounters since they realize that they would attract more customers if located near other retailers. In many cases manufacturers lack the retailing expertise of their competition-although they are quickly learning. The factory outlet store, depending as it does on manufacturers' closeouts and a price conscious public, seems set for continued growth.

Boutiques

• A boutique is a type specialty store that sells fashion apparel and accessories selected for a very specific customer. In french the term means "little shop," but in American retailing the term may be applied to a small specialty store or to an area with in a larger store where the emphasis is on merchandise selected for a specific customer type.
• Boutiques present merchandise in an attractive and whiffed manner often with an atmosphere of individualized attention from the sales personnel. The term boutique is especially associated with small shops that carry few-of-a-kind merchandise, generally in fashion-forward or extreme styling, and presented in a creative manner.
• Boutique may be described as having a distinct personality and appealing to a customer who also is distinctive.
• The original boutiques were found in France where couture designers offered select group accessories designed to accompany the designers appeal creations. Although few categories of merchandise were offered, the merchandise was highly coordinated to complete the total fashion look for the designer's customer.
• Boutiques became popular in the United States and England during the early 1960's as an outgrowth of the antiestablishment "do your own things" attitude of the times. Boutiques carried the off-beat clothing popularized by the avant-grade youth of the population. They provided one-stop shopping where a specialized customer could find outwear and accessories that expressed both the stores and the customer's personality.
• Department stores and large specialty stores adopted the boutique concept of merchandising. These stores added boutiques each designed to meet the needs of a specific customer type. Some of the boutiques carried unusual merchandise appealing to the avant-grade customer; others pulled together the total look for the high-fashion customer. Department stores even carried the boutique concept into home fashions, house wares, gourmet food and men's wear.
• The boutique concept continued to be popular as European couture designers entered ready-to-wear production and selected stores to carry their lines in the United States. Many Department and specialty stores today present each designer's line in a separate department or boutique. In addition, it has become popular for both American and European designers to open their own boutiques.

Whole sale Warehouse Clubs

• One of the newer formats in discount retailing is the wholesale warehouse club, which combines the concepts of wholesaling and retailing. These stores sell a limited selection of brand-name goods on a cash-and-carry basis. Stores are typically located in warehouse buildings with concrete floors and high ceilings allowing for high steel warehouse shelving.
• Merchandise is offered in bulk quantity and is displayed stacked in packing cartons or on pipe racks. The decor is "no frill" as are the services. Credit or delivery services are not offered nor are there the usual store amenities of restroom and paper bags. Little advertising or promotion is done. Price is the primary appeal to the customers.
• Warehouse clubs are basically in the commodity business, not the fashion business. They combine the selling of commodity products such as groceries with hardware and soft goods. Typical merchandise includes food, liquor, sundries, house wares, appliances, electronics, hardware, and automotive products. Some warehouse clubs carry furniture and plants. Although certainly not fashion stores, warehouse clubs do sell some basic apparel items and footwear as home textiles such as sheets towels. All merchandise carried by warehouse clubs is brand name because these stores do not carry private-label merchandise.
• Wholesale clubs are expected to have their biggest impact on supermarkets, small wholesalers, and appliance stores. Yet these stores are representing a new competitive force for traditional department stores and discounters. Warehouse clubs are providing a new form of competition of customers' disposable dollars, and traditional retailers are concerned that their market share will be reduced because of the expansion of these stores.