LO 1 Discuss the importance of retailing in the U.S. economy LO 2 Explain the dimensions by which retailers can be classified LO 3 Describe the major types of retail operations LO 4 Discuss nonstore retailing techniques Learning Outcomes
LO 5 Define franchising and describe its two basic forms LO 6 List the major tasks involved in developing a retail marketing strategy LO 7 Describe new developments in retailing Learning Outcomes
The Role of Retailing Discuss the importance of retailing in the U.S. economy LO 1
Retailing Retailing LO 1 All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.
The Role of Retailing
Over 1.6 million U.S. retailers employ more than 24 million people
Retailers account for 11.6 percent of U.S. employment
Retailing accounts for 13 percent of U.S. businesses
Retailers ring up almost $4 trillion in sales — nearly 40 percent of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
Because of the recession, customers are in a particularly cost-conscious mood and focusing on value. To grab their attention retailers can:
Beyond the Book Stress “Value” to Attract Customers SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com.
Offer unique value propositions, i.e. prices, customer services, loyalty programs
Use innovative marketing concepts that will resonate with consumers, e.g. pop-up shops or a “green emphasis
Appeal to time-strapped customers with an efficient multi-channel shopping experience
REVIEW LEARNING OUTCOME The Importance of Retailing LO 1 11.6% 13% 40% Retailing as a % of U.S. employment Retailing as a % of U.S. businesses Retailing as a % of GDP
Classification of Retail Operations Explain the dimensions by which retailers can be classified LO 2
Classification of Retail Operations Ownership Level of Service Product Assortment Price LO 2
Classification of Ownership LO 2 Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization The right to operate a business or sell a product
Level of Service LO 2 Full Service Self Service Discount stores Exclusive stores Factory outlets Warehouse clubs
Types of Stores and Their Characteristics LO 2 Assort- ment Price Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Broad Broad Med-Narrow Narrow Mod-High Mod-High Moderate Mod High Moderate Mod Low Mod Low-low Low-very low Low Low-High Mod High High Low Mod High Low Mod Low Mod Low Low Low Low-High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant Service Level Mod Hi-High High Low Low Low-Mod Mod-Low Mod-Low Low Low Low-High Department Store
Price Gross Margin LO 2 The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.
Major Types of Retail Operations Describe the major types of retail operations LO 3
Major Types of Retail Operations LO 3 Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants Online http://www.walgreens.com
Categories of Discount Stores LO 3 Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Discount Retailers
Discount Stores Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. LO 3 Mass Merchandising
Discount Stores LO 3 Supercenter Retail store combining groceries and general merchandise goods with a wide range of services. Full-line discounter Retailer offering consumers very limited service and carrying a broad assortment of well-known, nationally branded “hard goods”.
Specialty Discount Stores Category Killers Specialty discount stores that heavily dominate their narrow merchandise segment. LO 3
Types of Retail Operations Department Stores Specialty Stores Supermarket Drugstores Convenience Stores Discount Stores Restaurants Scrambled Merchandising Shopping Specialty Goods Distinctive Products Customer Service Food Products Medications Health and Beauty Cosmetics Specialty High Turnover Goods LO 3 Full-line supercenter extreme- value category killer factory outlet Specialty Warehouse Off-price
Started in 1976 in Iowa, ALDI is increasing its market presence as a discount grocer. Offering a slim 1,400 products as ALDI select brands, the chain is able to give consumers deep discounts through supplier deals and their no-frills approach.
Products must meet national brand standards, but consumers purchase for up to 50% less.
Nonstore Retailing Discuss nonstore retailing techniques LO 4
Nonstore Retailing LO 4 Automatic Vending Direct Retailing Direct Marketing Electronic Retailing
Direct Retailing LO 4 Door-to-Door Office-to-Office Home Sales Parties Online http://www.avon.com
Types of Direct Marketing Shop-at-home networks Online retailing LO 4 Telemarketing Catalogs & Mail Order Direct Mail Electronic Retailing
Beyond the Book Top E-Tailers by Sales Volume LO 4 America's Top Ten Retail Businesses Rank Company Web Sales Volume (in billions) 1 Amazon.com Inc. $19.2 2 Staples Inc. $5.6 3 Dell Inc. $4.8 4 Office Depot Inc. $4.8 5 Apple Inc. $3.6 6 OfficeMax Inc. $3.1 7 Sears Holding Corp. $2.7 8 CDW Corp. $2.6 9 Newegg.com $2.1 10 Best Buy $2.0
Customer Satisfaction (out of 100 points)
SOURCE: Larry Freed, “Satisfied and Buying,” online at http://www.internetretailer.com. LO 4 Top E-Tailers by Customer Satisfaction Netflix.com 86 QVC.com 84 Amazon.com 83 DrsFosterSmith.com 81 Apple.com 80 Newegg.com 80 Shutterfly 80
Nonstore Retailing Techniques Nonstore Retailing LO 4 Vending Direct retailing Direct marketing Electronic retailing direct mail catalogs telemarketing online shop at home
Vending Machine Variety
Reverse Vending Machines
Input recyclables and the machine sorts, compresses, and pays out refunds based on the container.
Used Golf Ball Vending Machines
Tilly-Miss fills candy-style dispensers with reclaimed golf balls.
Kosher Hot Dog Vending Machines
Kosher Cart cooks hot dogs and other kosher foods
Custom Juice Drinks Vending Machines
Select and mix custom juice drinks
Moobella Custom Ice Cream Vending Machines
Make custom ice cream by mixing base flavors and mix-ins
Franchising Define franchising and describe its two basic forms LO 5
Basic Forms of Franchising Business Format Franchising Product and Trade Name Franchising LO 5
Franchising LO 5 Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising An ongoing business relationship between a franchiser and a franchisee.
Largest U.S. Franchisors LO 5
Retail Marketing Strategy List the major tasks involved in developing a retail marketing strategy LO 6
Retail Marketing Strategy Develop the “Six Ps” Define & Select a Target Market LO 6
Defining a Target Market LO 6 STEP 1: Segment the Market Demographics Geographics Psychographics
Choosing the Retailing Mix LO 6 STEP 2: Choose the Retailing Mix Product Price Promotion Place Personnel Presentation Online http://www.publix.com
The Retailing Mix LO 6 Target Market Product Price Place Promotion Personnel Presentation
Choosing the Retailing Mix The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. LO 6 Product Offering
Retail Promotion Strategy LO 6 Advertising Public Relations Publicity Sales Promotion
The Proper Location Choosing a Community Choosing a Site LO 6 Economic growth potential Competition Geography Freestanding Store Shopping Center Mall
Important Factors for Site Choice
Site’s visibility, parking, entrances and exits, accessibility, and safety
Fit with other stores
Shopping Center and Mall Locations
Design attracts shoppers
Activities and anchor stores draw customers
Sharing of common area expenses
Failure of common promotion efforts
Hours of operation
Anchor store domination
Consumer time limits
LO 6 Advantages Disadvantages
Retail Prices Quality Image High Price Low Price Good Value Single Price Point EDLP LO 6
Presentation of the Retail Store The overall impression conveyed by a store’s physical layout, décor, and surroundings LO 6 Atmosphere
Presentation of the Retail Store LO 6 Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors Online http://www.apple.com
Personnel and Customer Service LO 6 Suggestion Selling Trading Up Two Common Selling Techniques
Customer Service for On-Line Retailers LO 6 Easy-to-use Web site Product availability Simple returns
Developing a Retail Marketing Strategy Location PRICE Advertising, and depth of product assortment Width and hours public relations publicity, Customer service Layout and atmosphere LO 6 TARGET PLACE Promotion PRODUCT Personnel PRESENTATION and personal selling
New Developments in Retailing Describe new developments in retailing LO 7
New Developments in Retailing LO 7 Interactivity Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices.