PPT 2-1 5th Edition

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  • 1. 5 th Edition
  • 2. Types of Retailers Chapter 2 McGraw-Hill/Irwin Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 3. The World of Retailing Introduction to Retailing Types of Retailers Multi-Channel Retailing Customer Buying Behavior
  • 4. Trends in Retailing Growing Diversity of Formats Increasing Industry Concentration Globalization
  • 5. New Types of Retailers
    • Category Specialists
    • -PetsMart
    • -Bed, Bath and Beyond
    • - Michaels
    • CarMax and Auto Nation
    • Wal-Mart Supercenters
    • -Supermarket + Discount Store
    • Ebay, Priceline, Travelocity
  • 6. Increasing Concentration Drug Stores Walgreens, CVS, Rite-Aid and Eckerds 53% of sales 85% of sales Discount Stores Wal-Mart, Target and Kmart
  • 7. Globalization of Wal-Mart
  • 8. Types of Retailers
    • Retailers Use Different Retail Mixes
    • -merchandise: variety (breadth) / assortment (depth)
    • -services
    • -store design, visual merchandising
    • -location
    • -pricing
    • Infinite Variations
    • Survival of the Fitness – Some combination of retail mixes satisfy the needs of significant segments and persist over time.
  • 9. Classification by Type of Merchandise
  • 10. Sales by Merchandise Category
  • 11. Merchandise Offering
    • Variety (breadth of merchandise)
    • - The number of merchandise categories
    • Assortment (depth of merchandise)
    • -the number of items in a category (SKUs)
  • 12. Variety and Assortment of Bicycles
  • 13. Types of Retailers
    • Food Retailers
    • Mom and Pop Stores
    • Convenience Stores
    • Supermarkets
    • Supercenters
    • General Merchandise Retailers
    • Department Stores
    • Specialty Stores
    • Discount Stores
    • Category Specialists
    • Off-Price Retailers
    • Warehouse Clubs
  • 14. Outlet % Shopping Number of Weekly Weekly Trips Spending Supermarkets 100 2.4 $ 72.82 General merchandise 68 1.3 32.53 discount stores Fast-food restaurants 65 1.9 16.32 Drug stores 39 1.2 18.70 Convenience stores 37 2.4 19.72 Wholesale clubs 27 1.7 75.12 Specialty food stores 9 1.0 23.70 Source: “Consumers Are Skeptical Again,” “63rd Annual Report of the Grocery Industry,” Progressive Grocer , April 1996, p.42. Shopping Patterns by Types of Retail Outlets
  • 15. Food Retailers
    • Mom and Pops – Supermarkets
      • -Cars, highways and TV to build brands
      • -Knowledgeable customers – self service
      • -Perishable vs. packaged goods
      • Big Box Retailers
      • -Warehouse Clubs
      • -Supercenters
      • -Hypermarkets
      • Convenience Stores
  • 16. Types of Food Retailers
  • 17. Issues in Food Retailing
    • Competition from Discount Stores
    • Changing Consumption Patterns
    Efficient Distribution Lower Costs Lower Prices Time Pressure Eating Out More Meal Solutions
  • 18. Types of General Merchandise Retailers
    • Discount Stores
    • Specialty Stores
    • Category Specialists
    • Home Improvement Centers
    • Department Stores
    • Drugstores
    • Off-Price retailers
    • Value Retailers
  • 19. Characteristics of General Merchandise Retailers
  • 20. Issues in Discount Store Retailing
    • Only Big Three Left – Wal-Mart, Kmart, Target
    • Wal-Mart’s Dominance
    • Differentiate Strategy
    • -Wal-Mart = Low Price and Good value
    • -Target = More Fashionable Apparel
    • Competition from Category Specialists
    • -Toys-R-Us, Circuit City, Sports Authority
  • 21. Issues in Specialty Store Retailing
    • Mall-Based Apparel Retailers :
    • Decline in Mall Shopping and Apparel Sales
    • -Lack of New Fashions
    • -Less Interest in Fashion
    • -Increase Price Consciousness
    • Lifestyle Formats – Banana Republic and Hot Topics
  • 22. Category Specialists
    • Deep and Narrow Assortments – Destination Stores
    • Low Price and Service
    • Wholesaling to Business Customers and Retailing to Consumers
    • Incredible Growth
    • Increased Competition with National Expansion and Consolidation
  • 23. Issues in Department Store Retailing
    • Competition
    • -Discount Stores on Price
    • -Specialty Stores on Service, Depth of Assortment
    • Lower Cost by Reducing Services (?)
    • -Centralized Cash Wraps
    • More Sales (?)
    • -Customers Wait for Sale
    • Focus on Apparel and Soft Home
    • Develop Private Labels and Exclusive Brands
  • 24. Issues in Drug Store Retailing
    • Consolidation – Walgreens, CVS, Rite-Aid, Eckerds
    • Competition from Supermarkets and Discount Stores – Pharmaceuticals
    • Evolution to a New Format
    • -Stand Alone Sites with Drive Thru Windows
    • -Convenient Store Front End
  • 25. Issues in Off-Price Retailing
    • Opportunistic Buying
    • Hurt By Sales in Department Stores
    • Buying First Line Merchandise
  • 26. Issues in Value Retailing
    • Target Lower Income Families
    • Low Cost Low Prices
    • -Low Cost Location
    • -Limited Services
    • One of the Fastest Growing Retail Segments
  • 27. Summary
    • Many New Types of retailers, Increased Diversity to Meet Diverse Needs
    Many New Types of retailers, Increased Diversity to Meet Diverse Needs Most People Shop at All Types Depending on Situations – Growth in Cross-Shopping
  • 28. Non-store Retail Formats
    • Electronic Retailing
    • Catalog and Direct Mail
    • Direct Selling
    • Television Home Shopping
    • Vending Machines
  • 29. Types of Nonstore Retailers
  • 30. Sales by Non-store Format 2005
  • 31. Issues in Catalog Retailing
    • Low Start Up Cost
    • Evolution of Multi-Channel Offering
    • - Electronic Channel, Stores
    • Increasing Mail Costs
    • Clutter from other Catalogs
  • 32. Services vs. Merchandise Retailers
    • Intangibility
    • -Problems in Evaluating Service Quality
    • -Performance of Service Provider
    • Simultaneous Production and Delivery
    • -Importance of Service Provider
    • Perishability
    • -No Inventory, Must Fill Capacity
    • Inconsistency of the Offering
    • -Importance of HR Management
  • 33. Examples of Service Retailers Type of Service Service Retail Firms Airlines American, Delta, British Airways, Singapore Airways Automobile maint/repair Jiffy Lube, Midas, AAMCO Automobile rental Hertz, Avis, Budget, Alamo Banks Citibank, NCNB, Bank of America Child care centers Kindercare, Gymboree Credit cards American Express, VISA, Mastercard Education University of Florida, Babson College Entertainment parks Disney, Universal Studios, Six Flags Express package delivery Federal Express, UPS, US Postal Service Financial services Merrill Lynch, Dean Witter Fitness Jazzercise, Bally’s, Gold’s Gym Health Care Humana, HCA Home maintenance Chemlawn, MiniMaid, Roto-Rooter
  • 34. Examples of Service Retailers Type of Service Service Retail Firms Hotels and motels Hyatt, Sheraton, Marriott, Days Inn Income tax preparation H & R Block Insurance Allstate, State Farm Internet access/Elec info. American On-Line, CompuServe Long-distance telephone AT&T, MCI, Sprint Movie theaters AMC, Loews/Sony, Universal Real estate Century 21, Coldwell Banker Restaurants TGI Friday’s, Wendy’s, Pizza Hut Truck rentals U-Haul, Ryder Weight loss Weight Watchers, Jenny Craig Video rental Blockbuster Vision centers Lenscrafter, Pearle
  • 35. Merchandise/Service Continuum
  • 36. Types of Retail Ownership
    • Independent, Single Store Establishments
      • Consumer Owned Cooperatives
      • Wholesaler Owned Cooperatives
    • Corporate Chains
    • Franchises
  • 37. Trends in Ownership
    • Concentration on One Format
    • Growth in Services Franchising
  • 38. Franchising 30 – 40% of US Retail Sales Franchisee Pays Fixed Fee Plus % of Sales Franchisee Implements Program Why is This Ownership Format Efficient?
  • 39. Reasons for Franchising Growth Technological advances Profitable utilization of capital resources Attainment of the “American Dream” Demographic expansion Product/service consistency
  • 40. Types of Franchise Systems Territorial Operating Mobile Distributorship Co-ownership Co-management Leasing/Licensing Manufacturing Service
  • 41. Reasons for Franchising Failure Inept management Fraudulent activities Market saturation
  • 42. Franchisor Positions in the Marketing Channel Manufacturer - retailer Manufacturer - wholesaler Wholesaler - retailer Service sponsor - retailer
  • 43. Franchisor Benefits Continuous market Market information Money
            • Sales of products
    Rental and lease fees
            • License fees
    Management fees Royalty fees
  • 44. Franchisee Benefits Initial Services Market survey and site selection, facility design and layout, lease negotiation advice, financing advice, operating manuals, management training programs, and employee training . Continuous Services Field supervision, merchandising and promotional materials, management and employee retraining, quality inspection, national advertising, centralized purchasing, market data and guidance, auditing and record keeping, management reports, and group insurance plans.
  • 45. Franchisor Advantages/Disadvantages Advantages Rapid expansion, highly motivated franchisees do a good job, additional profits by selling franchisees products and services. Disadvantages Company-owned units may be more profitable, less control then independent retailers over advertising, pricing, personnel practices, etc.
  • 46. Franchisee Advantages/Disadvantages Advantages Established/proven product/service, business and technical assistance, and reduction in risk. Disadvantages Loss of control since only semi-independent, franchisee outlets may compete with corporate-owned outlets, and high royalties, fees, costs on equipment, supplies, merchandise, rental/lease rates and mandatory participation in promotional and support services.
  • 47. Franchising Trends for the New Millennium Sustained growth Enduring plus un-imagined applications International expansion Increasing tensions Greater emphasis on financial returns
  • 48. Theories of Retail Institution Change CYCLICAL THEORIES Wheel of retailing (price/service) Accordion Theory (assortment) EVOLUTIONARY THEORIES Dialectic process (retailer) Natural selection (customer)
  • 49. Wheel of Retailing
  • 50. The Dialectic Process Department store High margin Low turnover High price Full service Downtown location Plush facilities THESIS ANTITHESIS SYNTHESIS Source: Reprinted with the permission of Macmillan College Publishing Company from Retailing, 4 th Edition, by Dale M. Lewison. Copyright © 1991 by Macmillan College Publishing Company, Inc. Discount store Low margin High turnover Low price Self-service Low rent location Spartan facilities Discount department store Average margins Average turnover Moderate prices Limited services Suburban locations Modest facilities