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marketing 8/5/10 Free Background from

  1. 1. How important is retailing to the U.S. economy? <ul><li>Retailing is one of the largest employers </li></ul><ul><li>Retailers ‘ring up’ a third of U.S. GDP </li></ul><ul><li>Industry is dominated by a few giant organizations, such as Wal-Mart </li></ul>
  2. 2. Who are the largest U.S. retailers? <ul><li>Wal-Mart </li></ul><ul><li>Home Depot </li></ul><ul><li>Target </li></ul><ul><li>Sears/K-Mart </li></ul><ul><li>Kroger </li></ul><ul><li>Costco </li></ul><ul><li>Albertson’s </li></ul><ul><li>Safeway </li></ul><ul><li>JCPenney </li></ul>
  3. 3. Retailer Classification Variables <ul><li>Ownership —independent, chain, or franchise? </li></ul><ul><li>Level of Service —self-service to full-service </li></ul><ul><li>Product Assortment —mass merchandisers to specialty stores </li></ul><ul><li>Price —discounters to full-price stores </li></ul>
  4. 4. Gross Margin <ul><li>The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted </li></ul>
  5. 5. Department Stores’ Shrinking Share! <ul><li>Discount stores (e.g. Wal-Mart, Target) have upgraded their apparel and merchandise </li></ul><ul><li>Manufacturers (e.g. Ralph Lauren, Tommy Hilfiger) have opened their own outlets or stores </li></ul><ul><li>Specialty stores (e.g. Gap, Eddie Bauer) have become more cost and value-oriented </li></ul>
  6. 6. How are department stores fighting back? <ul><li>Using the “boutique within the store” format </li></ul><ul><li>Increasing ‘value-added’ services (e.g. personal shoppers, free alterations) </li></ul><ul><li>Remodeling and revitalizing </li></ul><ul><li>Going to smaller store formats </li></ul>
  7. 7. Supermarkets are practicing ‘scrambled merchandising’! <ul><li>“ the addition of non-core goods to add convenience for shoppers and to increase store revenues” </li></ul><ul><li>Examples of Scrambled Merchandising </li></ul><ul><ul><li>Supermarkets sell gasoline, fresh flowers, greeting cards, school supplies, hardware, and pharmaceuticals </li></ul></ul><ul><ul><li>Drugstores sell milk, juice, cereals, foods, and gardening supplies </li></ul></ul>
  8. 8. Convenience stores are changing! <ul><li>Adding more fresh food and hot food items </li></ul><ul><li>Partnering with fast food franchises and banks </li></ul><ul><li>“ Upscaling”—hardwood floors, stainless steel shelving, bistro tables, better lighting, upgraded restrooms </li></ul>
  9. 9. ‘ Extreme Value Retailers’ are growing! <ul><li>“full-line discounters with smaller stores, narrower selections, and rock-bottom prices” </li></ul><ul><li>Examples—Dollar General, Family Dollar, Fred’s </li></ul><ul><li>Target Market—low-income and fixed- income households </li></ul>
  10. 10. ‘ Category killers’ rule certain retail categories! <ul><li>Category killer—single-line, high-volume retailer that dominates a narrow merchandise segment (e.g. pet supplies, toys) </li></ul><ul><li>Examples—Staples, Best Buy, Toys R Us, PetCo, Home Depot </li></ul>
  11. 11. Non-store retailing is booming! <ul><li>Non-store retailing—shopping without visiting a bricks & mortar store </li></ul><ul><li>Four Major Forms: </li></ul><ul><ul><li>Automatic Vending </li></ul></ul><ul><ul><li>Direct Retailing </li></ul></ul><ul><ul><li>Direct Marketing </li></ul></ul><ul><ul><li>Electronic Retailing </li></ul></ul>
  12. 12. About non-store retailing forms— <ul><li>Automatic Vending—not just snacks and soft drinks anymore! </li></ul><ul><li>In airports, hotels, restrooms, mass transit stations, theaters </li></ul><ul><li>Office supplies, toys, DVDs, underwear, toiletries, disposable cameras, hot foods </li></ul><ul><li>Machines work with debit/credit cards—no coins needed </li></ul>
  13. 13. Direct Retailing vs. Direct Marketing <ul><li>Direct Retailing —the selling of products through home parties, office parties, or door-to-door </li></ul><ul><li>Direct Retailing is not just Avon and Tupperware!—includes food items, cookware, make-up, baby items, lingerie, clothes, home accessories </li></ul><ul><li>Direct Marketing —the selling of products by direct mail, phone, or catalog </li></ul><ul><li>Direct mail success depends on: (1) the quality of the mailing list, and (2) the effectiveness of the mailing piece </li></ul>
  14. 14. Franchising—moving beyond McDonald’s Business Format Franchising (e.g. Taco Bell, Mail Boxes Etc., Midas) Product and Trade Name Franchising (e.g. Coca-Cola, Goodyear Tires, Honda) Basic Forms of Franchising
  15. 15. Franchising fees—One-time fee + royalties
  16. 16. The ‘Retail Mix’—keys to retail success <ul><li>Product (Mix—Width and Depth) </li></ul><ul><li>Place (Location and Hours) </li></ul><ul><li>Promotion </li></ul><ul><li>Price </li></ul><ul><li>Presentation (Layout and Atmosphere) </li></ul><ul><li>Personnel (Employees and Customer Service) </li></ul>
  17. 17. Important Retail Trends <ul><li>“ Shoppertainment ” – stores as ‘destinations’, couches, cafes, video screens, guest appearances </li></ul><ul><li>Convenience and Efficiency –delivery, in-store services, preselection, refrigerators with bar code scanners </li></ul><ul><li>Customer Management – data warehousing, databases, mass customization, ‘narrowcasting’ </li></ul>