Retailing 1224232380049014 9

Retailing

Objectives
To Understand the Functions of Retailers in the Marketing Channel
To Identify the Major Types of Retailers
To overview the Major Types of Franchising
To identify Strategic Issues in Retailing

Retailing
Retailers implement and conclude the actual sale of products to the final consuming units, the ultimate user.
Possession Utility Time, place, form & information utility

Importance Of Retailing
Impact on the Economy … - 18% of employment (24 mil 2005)
Distribution Functions - Time, Place
Marketing Functions - Information & Possession Utility

A Retailing Career Retail Career Salary Career Progression Geographic mobility Women in retailing Societal Perspective

Prerequisites for Success Success Hard Work Analytical Skills Creativity Decisiveness Flexibility Initiative Leadership Organization Risk Taking Stress Tolerance Perseverance Enthusiasm

Retailing: Major Types of Product (Retail Stores & Services)
General Merchandise Retailers
- Department Stores --Discount Store
- Supermarket -- Superstore--Hypermarket
- Warehouse Club --- Catalog Showroom
Specialty Retailers
- Limited Line
- Off Price Retailers
- Category Killers
- C onvenience stores
In-Store

Department Store
Chain operations
Wide variety & selection
Full service - delivery, credit, returns, repair
Examples:
Boscov’s, Macy’s
Bloomingdale’s

Supermarkets - Large, self service stores with wide variety of food & some nonfood products
Low mark ups & profit margins, Departmentalized with Centralized checkout, Ex: Albertson’s, Safeway
Superstores –Very large outlets that carry food and nonfood products found in supermarkets, plus most routinely purchased consumer products

Hyper-markets: A Sure - Fire Hit, Bombs . Average size (in square feet ) Employees Annual sales per store (in millions) Gross profit margins Stock-keeping units (Number of different kinds of items stocked) 70,000 200 - 300 $10 - $20 18% - 19% 60,000 - 80,000 150,000 300 - 350 $20 - $50 15% - 16% 100,000 230,000 400 - 600 $75 - $100 7% - 8% 60,000 - 70,000 Discount Store Super Center Hypermarket

Specialty Stores
Deep Selection (Product line)
Fashion response leader
Personalized service
Narrow Variety (Product line)
High markup
Ex: The GAP, a SPA, bookstore
Wallpapers to Go,
Convenience Stores
Limited variety
Shallow selection
Fast service, High markup
Examples: 7-11, Wawa Circle K, Sheetz
STOP & GO

Other Types of In-Store Retailing
General mass merchandiser
Catalog showroom
Warehouse club
Specialty mass merchandiser
Off-price retailer
Category Killer - Ex. Toys R US

Category Killers Just For Feet, the category killer in the athletic footware and apparel sector founded in 1977, cruised through the 1990s. However, Just For Feet has suffered financial setbacks from a lack of adapting to changes in the evolving retail landscape.

The Wheel of Retailing High : status, margin, price (Specialty store) - retailers usually enter the market with low service, low margin & price operations but evolve into higher service, cost & price merchants. Conventional department stores Mass merchandise retailers Low : status, margin price, service (Wholesale clubs) Maybry’s at the Mall

Wheel of Retailing High Prices & Markups, Many services, Expensive Surroundings, Low prices & Low markups, few services, (austere) surroundings Small general stores Department stores 1890 - 1910 Entry of Discount stores Department Stores 1955 - 1970 Factory outlets “ Members Only” discount outlets Category killers Low price s & markups, few services , austere 1990s Enter Department stores

History
In 1936,at age 30, Paul D'Amour , a bread route salesman for the Wonder Bread Baking Co. purchased the Y Cash Market in Mass.
In 1947, it was incorporated, Big Y® Foods, Inc. In 1952, they leased a 10,000 square foot store (Springfield)
In the 1980’s it was a technology leader in scanning, information systems & security.
Progressive Grocer, Mar. 2003

MARCH 25, 2003 -- It expanded its online shopping service to include Unlimited Choices, a program to give customers access to more than 30,000 additional products such as ethnic & special dietary foods & A wide assortment of non-food items, including toys, books, housewares and gifts not carried in a typical Big Y store. A typical 55,000 square foot Big Y store carries some 35,000 different items.( bigy.com)
Their goal is to exceed their customers' evolving expectations by seeking better ways to create and deliver world class service and value.

3 Major Types of Non Store Retailing
A. Direct Selling
(face to face)
B. Direct Marketing
(non personal mediums)
C. Automatic Vending

A. Forms of Direct Selling
Direct Selling
Bank Retailing
Sales Visits

B. Forms of Direct Marketing
Catalog Marketing
Direct-Response Marketing Television Home Shopping Telemarketing $388

On line Retailing (E-Tailing): Advantages Not location bound Interactive Convenient Shopbots Forms of Direct Marketing E-tailing was about 20 billion dollars in 2000 and estimated to rise to over 100 billion by 2005.

Percentage of Sales Online by Retail Segment Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6.

Internet Retailing: Disadvantages Forms of Direct Marketing Examination Privacy/Security

C. Forms of Automatic Vending
The use of machines to dispense products includes items such as candy, chewing gum, soft drinks, cigarettes, newspapers, and coffee
Advantages: small amount of space needed and no sales personnel
Disadvantages: high costs of equipment and frequent servicing

Strategic Retailing Issues: The Marketing Mix #1 Customers Product Price Place Promotion Merchandise Assortment Store Atmospherics Customer Service Location, Location, Location! Retail List Price Discounts Credit Advertising Personal Selling Publicity Sales Promotion

Strategic Issue #1. Retail Store Location
Factors affecting location
Intended target market
Type of products
Suitability of site for customer access
Characteristics of existing retail operations
Three most important words in retailing: Location … location … location!

Strategic Issues #1. Location Dynamics
Consumers want convenience, a subjective measurement
Convenience Measurements
- Distance - Parking
- Time - Traffic congestion
 = Convenience

LOCATION sets the trading area
Free standing structure
Central Business District (CBD)
Shopping Malls (avg. age 23 yrs 2002)
- Neighborhood shopping center
- Community shopping center
- Regional shopping center
Non Traditional Shopping Center
- Factory Outlets
- Mini warehouse mall

Consumer Shopping Patterns
% of Retail Chains’ Customers also shopping at
Retail Chains Sears Penny K-Mart
Sears X 66 81
Penny 75 X 80
K-Mart 69 60 X
Source: Scarborough Research, “Cross Shopping Patterns,” Stores (June 1986), p. 13. Locate near to competitors for comparison shopping

Strategic Issue #2 Merchandise Assortment
Retail buyers must match their product selection, quality, price with constantly changing consumer wants.
Scrambled merchandising- adding unrelated products to generate traffic & higher margins

Types of Merchandise Change
- The retail store merchandise must change as consumer wants change
Product Selling Cycles
Fad…..a relatively short term selling life cycle - (under six months)
Fashion….a relatively enduring selling lifecycle - (over 1-2 years)

Strategic Issue #2 Merchandise Assortment Plus: Store Location Store Promotions Store Layout/Image Store Personnel Store Services Store Hours Targeted Customers

Many consumers value finding bargains.

Store Atmospherics
The sum total of all store stimuli, interior & exterior physical characteristics that appeal to emotions (psychological field)
Components: Ambient factors, Design and Social Factors.
Ambient Factors ( Perceptions)
- lighting - sounds
- smell

Store Atmospherics
Design Factors ( Perceptions)
- Floor covering - Ceilings - Wall coverings - Dressing Rooms - Displays/Fixtures - Aisles
- Color - Layout
- Cleanliness - Signage
- Furnishings - windows

Social factors: In store service (sales personnel social & emotional labor)
- Courteous  Rude behavior
- Knowledgeable  Low information
Service  Insincere
Employee dress norms (casual ??)
Make it convenient & pleasurable for customers to shop and pay for merchandise
Store Atmospherics Body Scan computers: personal service, selling & awareness?

In Store Pre sale Service
Personal Service Climate - Calls for a highly motivated, experienced & well paid work force
- Retail jobs often pay poorly, are not challenging and produce high turnover
Average length of employee tenure with retailers Estimates: 2005

Post-Sale Services
Complaints and adjustments
Credit Policies
Product maintenance
Product information
Pick up/Delivery

Strategic Issue Retailer Advertising
Location + Merchandise + Services + Atmospherics + ?  Store Image
Advertising Medium(s) Newspapers - Television - Radio - Magazine - Direct Mail - Videos-Web

Ideal Stores: W hat factors are most important in deciding where to shop? surveyed women said:
Price and Value
Quality and Selection of Merchandise
Service
Shopping Environment
44% 34% 11% 11% Source: Newspaper Advertising Bureau Inc. (1986)

Retail Positioning
Identifying an underserved market niche, or segment, and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment
Target Market - Middle class family
Position - Price Leadership
“ Every Day Low Prices”
“ Rollback” gimmick
“ Special Buys”
Example : Wal-Mart

Segmentation, targeting and positioning
Sam Walton computerized operations to lower costs to lower prices to meet target market needs with four different retail concepts:
Wal-Mart discount stores
Supercenters
Neighborhood Markets
Sam’s Club

Packaged Retail Environments
Functional Advantages
- Focus on customer satisfaction
- Integrate “total” product offerings
Result
- Added value to product
- Consumer loyalty increases
Examples: Disneyland, Sea Cruises, Destination Resorts

Potential Channel Conflicts
Retailers Suppliers
Exclusive Distribution Intense Distribution
Store Loyalty Brand Loyalty
High Markup +Volume Low Markup/High Volume
Love - Hate Relationship

Perception as an Excellent Company
Company Executives Analysts
----------------------------------------------------------------------
BJ's (BJ) 44% 81%
Costco (COST) 54% 100%
Dillard's (DDS) 63% 6%
Federated (FD) 33% 56%
----------------------------------------------------------------------
J.C. Penney (JCP) 40% 24%
----------------------------------------------------------------------
Kmart (KM) 33% 0%
----------------------------------------------------------------------
Kohl's (KSS) 46% 94%
----------------------------------------------------------------------
May (MAY) 46% 50%
----------------------------------------------------------------------
Saks (SKS) 52% 6%
----------------------------------------------------------------------
Sears (S) 57% 11%
----------------------------------------------------------------------
Target (TGT) 69% 89%
Wal-Mart (WMT) 75% 94%

Consumer Relevancy Awards
Consumer Relevancy Awards,… Criteria:
Easy to shop/access
Price/Value
Product Assortment
Service
Enjoyable Shopping experience
Consumer Rankings of store attributes:
1. Cleanliness
2. Courtesy & Respect
3. Easily visible prices
4. Well packaged products to avoid damage
5. An “honest” price

Consumer Relevancy Award Winners (2001)
Department Stores
Grocery Chain
Drug Store Chain
Electronic Stores
Specialty Store
Clothing, shoes & accessories
Discount Store Chain
Overall . . . . . . . . . . .
J C Penny
Publix
CVS
Best Buy
Barnes & Noble
GAP
Wal-Mart
???

RESEARCH Knowing Your Customer Level of Customer Service ? High - - - Low Sales Personnel ? Hurried - - - Apathetic Product Selection ? Broad - - - Narrow Store Image ? Conservative - - - Modern? Consumer Profile ? Sex Age Education Income Retail Store Characteristics

Dual Wage Earners and Their Effect on Hours Spent Shopping 1965 1980 1995 Year 200% 100% 12 8 4 0 Families with Dual Incomes (1965 - 100%) Shopping Hours per Month Dual incomes rose ... … and shopping hours dropped SOURCE: Vision for the New Millennium . . .(Atlanta: Kurt Salmon Associates, 1997). Used with permission

Hypothesis
Matching high arousal scent and high arousal music conditions will lead to enhanced
(a) pleasure,(b) store environment, (c) impulse buying and (d) satisfaction, compared to mismatched conditions (ie. high/low or low/high).
Matilla,A.&J.Wortz, Jrl of Retailing,Sumr2001 Congruency of scent and music as a driver of in-store behavior Applied Research In Retailing

Experiment Variables
For Scents:
Lavender = low arousal scent
Grapefruit = high arousal scent
For Music:
Slow tempo classical = low arousal music
Fast tempo classical = high arousal music

Survey Method
343 customers were asked/270 participated
Most were female and under 20
62% said they purchased something in the store
Matching conditions produced higher responses than the mismatching conditions.
Ex) When low arousal music was paired with low arousal scent, the perceived pleasure was higher than when low arousal music was paired with high arousal scent.
+

Focus Group Interview Consumer Summary (1 of 2)
Overall Evaluation
Merchandise Positive Negative
Selection -
Quality + (Mixed) -
Prices + -
Store
Variety + -
Personnel + -
Appearances +

Focus Group Interview Consumer Summary (2 of 2)
Overall Evaluation
Store Positive Negative
Hours -
Merchants + -
Bloomsburg Town
Convenience +
Parking -
Atmosphere +
Malls +

Bloomsburg Retailing Viewed From Three Distinct Perspectives:
Older” Consumers Working Consumers
- limited expenditures - economy is causing minimum
- buy basics purchases
- sees average/good - sees limited variety
variety - mobile, parking is inconvenient
- captured “in town” - willing to travel to get it
market
College Student
- spending limited amounts - waits to go home
- sees poor variety - very selective
- can walk to stores

Retail Information System (RIS) and Merchandise Management Issues Company Goals Human Resources Information Accounting and Financial Information Operating Information Promotion Information Merchandise Information System Technology updates: Computer Body Scanner Internet Strategy Database Marketing RFID

Franchising
A franchiser licenses (to the franchisee) the right to distribute/sell specified products (trademark s) according to operational guide-lines (Time, place, price, supplies, etc.)
Develops & controls marketing strategies

Franchising: Advantages
Less Capital Required
Use the Experience of Others
Assurance of Customers
Rapid Product Distribution
Smaller Probability of Failure
Advertising Assistance
Highly Motivated owner/operators

Franchising: Disadvantages
Controlled by Franchiser (Power)
Cost of Franchise
Hard Work and Long Hours
Reduced Personal Control

Retailing 1224232380049014 9

by dcsastudent on Sep 12, 2009

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Retailing 1224232380049014 9 Presentation Transcript