In class, we discussed the impact of retailing. Please choose a consumer retail store that is widely considered an exemplar. Briefly identify key characteristics of retailing, and explain how this retailer addresses those key characteristics.
- focal consumer retail store: E-life Mall Corporation[1]
- product category: consumer electronic and home appliances
- established: 1975 in Taipei, Taiwan
- location: 329 stores in Taiwan, hiring more than 1,600 employees
Below I briefly identify 10 key characteristics of retailing, and explain how E-life Mall Corporation addresses them.
- Channel
Retail channel can be brick-and-mortar or online, where the company can reach its target.
The company has 329 physical outlets around Taiwan and runs its own online shopping mall. The huge extent it owns physical stores is justified by the preference of target groups, who are more appealed by offline service. Hence, the company focuses more offline channels while remaining a modest online presence. In addition, the company also features online purchase and offline pick-up/service which differentiate itself with other electronic retailers. But severe competition from online channels (e.g., MOMO and Pchome are offering 6-hour delivery to Taipei destinations at no additional cost) has made the company less profitable online.
- Product assortment
The product assortment decides if the company meets target’s shopping expectation
The company has a product assortment which justifies itself in the consumer electronic and home appliance destination categories. Its name in Chinese contains “electronic” suggesting its product assortment and helps consumers to identify by its name.
Inside its classic stores, products range are broad and shallow whereas in its Digital City stores, product range is narrow and deep with a focus on TV, speaker and game consoles. The company used to have channel-exclusive products[2], but it is hardly the case now.
- price
Based on the profile of its target consumers (mainly offline, less price sensitive, 35+ year old), price is not the highlight of this retailer. Rather, the price premium is justified by service that is the core benefit for the target group. In the contrary, its competitor, TKEC, offers cheaper price but is infamous for service quality.
The company has mid to low markup for mid to high volume product, given the relatively short lifecycle of electronic product. It signals to the target market by sending direct biweekly newsletter to neighborhood about deals of the week. Based on personal experience, consumers may negotiate for a price in its store.
- Service
Pre-purchase, post-purchase and auxiliary service.
To addresses to its target groups, the company has a call center dedicated to online and store consumers. It also highlights window display of latest TV products. Within its Digital City, a sofa corner is prepared for potential consumers to try audio-visual experience. The open hour fits in the target group, too. The long hour (11am to 10pm) prepares the store ready to serving communities.
The company offers free shipping for online order; consumer can also choose to deliver to store for pickup. It also provides wrapping services (mainly for corporate gifts purpose) but is upon advance request. Given the expertise of the company, it takes customization order of home entertainment design. In addition, the company differentiates itself in terms of installation service. Namely, its air condition installation service has a top reputation in the nation[3].
It also welcomes the community to bring broken electronic products to the stores where their technicians are willing to fix without charge. Last but not least, the stores sell value cards for iTunes and online gaming as an auxiliary service.
- Procurement
The company seems to manage its procurement in accordance of the direct product profitability concept. For instance, heavy objects (e.g. TV and refrigerator) incurring higher handling cost are stored at arcade (yes, it does) on the ground floor during store hours, and are moved inside just before the store closes at night. This tactic saves the company space cost and minimize object movements between floors.
- Location
The company’s locations are aligned with its target group who are mostly living by its neighborhood. The company opens stores in shopping strips in downtown area, and as stand-alone stores in suburban.
- Community
Generate traffic and purchase from the neighborhood
The company features many TV commercials[4], which are appealed to its target customers. It also utilizes biweekly newsletter to connect with the neighborhood. Yet, it rarely uses coupon as a community build tool since the primary benefit for the target group is service rather than discount.
- Store activities and experience
Shopping experience as a differentiator
Classic store: more restrained, simplistic environment highlight product function
Digital City: equipped with video game to showcase the quality of TV; in-store entertainment trial available to attract adoption
- Target market
Following its STP marketing strategy, the company builds its retailing to address target market’s need and want.
Will be discussed in the next section.
- Atmosphere
Will be discussed in the final section.
Describe the primary target market that this retailer serves and explain how it the retailer is positioned in the marketplace.
- primary target market
As inferred from its advertisement, store locations, and product mix, the company targets to consumers who are mainly offline, living in the neighborhood in urban area, and aged 35 and above (e.g., generation X, baby boomer, and the silent generation). The demographics are primarily first-time users with a medium usage rate and an indifferent attitude toward product. Their preferred benefit is service. The company addresses this by opening locations equipped with technician staffs within communities to offer better accessibility. As a result, the company earns loyalty from its target market.
However, this segment is decreasing due to aging population, product cycle getting into mature phase, as well as the development of online shopping. The company responded by remodeling some of its retail outlets since 2017, rebranding as Digital City. It highlights audio-visual electronic products, targeting late generation X and generation Y which were ill-targeted by its classic stores. These new targeting groups prefer product quality more than service, prefer to experience the product prior to purchase. As they are already regular and heavy user, they are mostly at higher readiness stage to purchase, and have positive attitude toward products. Their demographics differ, too. Most are well educated, married and having children under 18. But they are less loyal compared to previous target group. The company remodels its retailing with more relevant offering in the hope to exploit this target market. I will discuss Digital City in more depth in the final section.
- positioning
The company has a key differentiator of better service toward community which distinguishes itself amongst other competitors. This unique positioning signals better quality and justifies for a higher markup which its target customers are willing to exchange with higher price. But foreseeing the growth of new segmentation, the company opens new type of stores, Digital City, to feature the audio-visual experiences from top-notch high-quality electronic products.
Although Digital City was introduced only after 2017, we can observe its positioning by its location, decoration and commercials[5]. First, its locations are mainly city centers, suggesting the store’s trendy position and offers accessibility to younger consumers. Second, its decoration highlights white and red, signaling quality (while the classic store uses yellow and red that signal for friendliness). Finally, its product assortment includes virtual reality, drone and electronic gaming facilities, directly speaking to the new target groups who are younger, willing to try new products, and possess more product knowledge.
Explain how this retailer handles atmospherics, offering details, and explain how these atmospherics connect to the target market and develop the retailer’s brand.
As mentioned earlier, I am going to use the example of Digital City to demonstrate how its distinct atmospherics connect to the target market and develop brand equity for the company. Currently, there are 23 Digital City outlets in Taiwan[6] with consistent design and product assortment which reflect the changing desires of its new target customers (late generation X and younger). I enclose some pictures in the next page to show how different it is compared to the classic stores.
| Classic store https://www.ettoday.net/news/20160415/681133.htm |
Digital City https://www.niusnews.com/=P0ggkkw0 |
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The atmospherics of Digital City features trendy design, simplest store layout and clean window and interior display. It creates spaces for each product categories to show off their uniqueness, allowing consumers to compare the functionality and quality of each offerings. This atmospheric is designed toward a target market that is more mature in electronic products. The remodeled uniform (although not provided in the picture) expresses a feeling of professionalism, reliability and good quality by the color white and red.
In each of the Digital City store, physical layout is arranged as a showroom where each product and its add-ons are displayed at same place, similar to a collection of art pieces. Meanwhile, drinking water is provided to prolong consumer stay in store. The company also minimizes its cashier to the side of the store as part of its overall atmospherics, leaving space for the product to speak to consumers. The staff actively serve as a technician sale who offer better experience for potential consumer, such as home entertainment solution.
https://tw.stock.yahoo.com/news/%E4%BD%A0%E6%B3%A8%E6%84%8F%E5%88%B0%E4%BA%86%E5%97%8E-%E5%8F%B0%E7%81%A3%E5%90%84%E5%9C%B0-%E5%85%A8%E5%9C%8B%E9%9B%BB%E5%AD%90-digital-city-105534306.html
The overall message of Digital City according to its atmospherics are expertise in electronics, along with narrow and deep product assortment compared to classic stores. The selection of product is pre-dominantly TV, audio, game console, as well as smart (i.e., IoT) home appliances. It creates spaces for consumers to try out these new gadgets and even include a corner where flat-screen TV set and superb speakers are equipped as a luxury home theater that consumers are looking for. Its product selection brings higher markup and mid to low volume.
The effort of Digital City atmospherics increases the company’s awareness for the once missed-out segment, inviting new customers to this 45-year-old brand. It is ranked top 2nd in physical retail channel for electronic products[7]. Though, the company may still be conservative in expanding this type of retail because only 23 out of its 329 stores have been remodeled into Digital City. The company may still be watching the potential of its target group.
Overall judgement: brand development
As the comparison between classic store and Digital City illustrates, the company is trying to pivot its marketing strategy. Store atmospherics is part of the transition that the company tries to catch up with its aging loyal customer base. With this remodeled store atmospherics, the company strives for higher profitability, more share of mind and hopefully to have their newly targeted become loyal to the brand. It follows the want and needs of the younger generation by proposing relevant product and service proposition, such as higher quality and more expensive products. Still, this attempt to appeal more segments facing the competition from the ubiquitous online shopping who offers lower price and speedy delivery. To conclude for our focal company, its strength in location and technician style staff can largely transform consumers from showrooming to buying, thanks to its high-quality experience communicated through carefully designed atmospherics.
[1] Corporate information (in Chinese) https://web.elifemall.com.tw/zh/management.php
[2] https://www.chinatimes.com/realtimenews/20160121004169-260410?chdtv
[3] See this https://www.elifemall.com.tw/newweb/images/right_banner/air11.html
[4] See https://youtu.be/HKcpzMnzZ5k
[5] https://youtu.be/rg9gT1TJY_8
[6] https://udn.com/news/story/7239/4938474
[7] https://issuu.com/james00324/docs/ux_____digital_city________________