Product Line

Retailers can also be classified by the length and breadth of their product assortments. Some retailers, such as specialty stores, carry narrow product lines with deep assortments within those lines. Today, specialty stores are flourishing. The increasing use of market segmentation, market targeting, and product specialization has resulted in a greater need for stores that focus on specific products and segments.

In contrast, department stores carry a wide variety of product lines. In recent years, department stores have been squeezed between more focused and flexible specialty stores on the one hand, and more efficient, lower-priced discounters on the other. In response, many have added promotional pricing to meet the discount threat. Others have stepped up the use of store brands and single-brand "designer shops" to compete with specialty stores. Still others are trying catalog, telephone, and Web selling. Service remains the key differentiating factor. Retailers such as House of Fraser, Saks, Neiman Marcus, and other high-end department stores are doing well by emphasizing exclusive merchandise and high-quality service.

Supermarkets are the most frequently shopped type of retail store. Today, however, they are facing slow sales growth because of slower population growth and an increase in competition from discount supercenters on the one hand and upscale specialty food stores on the other. Supermarkets also have been hit hard by the rapid growth of out-of-home eating. In fact, supermarkets' share of the groceries and consumables market plunged from 89 percent in 1989 to less than 50 percent in 2008.4 Thus, many traditional supermarkets are facing hard times.

In the battle for "share of stomachs," some supermarkets are cutting costs, establishing more-efficient operations, lowering prices, and attempting to compete more effectively with food discounters. However, they are finding it difficult to profitably match the low prices of superlow-cost operators such as Wal-Mart. In contrast, many other large supermarkets have moved upscale, providing improved store environments and higher-quality food offerings, such as from-scratch bakeries, gourmet deli counters, natural foods, and fresh seafood departments. AFor example, consider Safeway's "lifestyle store" strategy:5

To raise itself above the cutthroat low-pricc food frenzy, during the past four years Safeway has built more than 50 new "lifestyle" stores and remodeled nearly two-thirds of its existing stores under the lifestyle store concept. The lifestyle stores feature upscale touches, such as soft lighting and hardwood floors, along with higher-quality fare, including gourmet and organic foods and premium brands. The restyled stores are supported by a $100 million "Ingredients for Life" marketing campaign, which assures customers that Safeway's food offerings are designed for the way people live today. The strategy has resulted in increased customer loyalty and a 55 percent growth in earnings last year. Safeway plans to remodel all of its stores under the lifestyle concept by 2009.

Convenience stores are small stores that carry a limited line of high-turnover convenience goods. After several years of stagnant sales, convenience stores are now experiencing healthy growth. Much of convenience store revenues come from sales of gasoline; a majority of in-store sales are from tobacco products and beverages.6

In recent years, convenience store chains have tried to expand beyond their primary market of young, blue-collar men, redesigning their stores to attract female shoppers. They are shedding the image of a "truck stop" where men go to buy beverages, cigarettes, or shriveled

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