Types of retailers

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Types of retailers

  1. 1. Retailer Characteristics type of merchandise sold variety and assortment of merchandise level of customer service price of the merchandise
  2. 2. Types of Merchandise The US Bureau of the Census uses a hierarchical set of four digit codes called the Standard Industrial Classification (SIC). The US Bureau along with Mexico and Canada, adopted a new classification system, the North American Industrial Classification System (NAICS).
  3. 3. NAICS Code Hierarchy
  4. 4. Variety and Assortment Variety is the number of different merchandise categories a retailer offers (breadth). Assortment is the number of different items in a merchandise category (depth) Each different item of merchandise is called a stock keeping unit (SKU).
  5. 5. Services Offered Customers expect retailers to provide some services--accepting credit cards, proving parking, and displaying merchandise. Some retailers go beyond this and provide other services such as gift wrapping and home delivery, at a charge.
  6. 6. Price Offering more depth and breadth of merchandise is appealing to customers. Offering services attracts customers. To make a profit with more depth and breadth or services retailers must charge higher prices.
  7. 7. Sales and GrowthRate for Retail Sectors
  8. 8. Food Retailers Conventional Supermarket Limited Assortment Supermarket Supercenter Warehouse Club Convenience Store
  9. 9. Characteristics of FoodRetailers
  10. 10. Supermarket Self-service Offer  Groceries  Meat  Produce  Limited non-food items
  11. 11. Supercenters Fastest growing sector of food retailer. 150,000 to 200,000 sq. ft. stores that combine a superstore and a full-line discount store. Sell groceries at low prices to build store traffic. One stop shopping
  12. 12. Warehouse Clubs Large ( about 100,000 sq. ft.) and located in low rent districts. Little service at low prices to ultimate consumers and small businesses. Reduce costs by carrying a limited assortment of fast-selling items. Members must pay an annual fee
  13. 13. Convenience Stores Modern versions of the neighborhood mom-and pop stores. Convenient location in a 2,000 to 3,000 sq. ft. store with a speedy checkout. Limited variety and assortment of merchandise. Gasoline and cigarettes account for over 55% of annual sales.
  14. 14. General Merchandise Retailers Department stores Full-line discount stores Specialty stores Drug stores Category specialists Home improvement centers Off-price retailers.
  15. 15. Characteristics of GeneralMerchandise Retailers
  16. 16. Department Stores Broad variety and deep assortment Offer considerable customer services Organized into separate departments for displaying merchandise  women’s , men’s and children’s clothing and accessories  home furnishing and furniture  kitchenware and small appliances.
  17. 17. Department StoresCategorized into three tiers  Tier One  Upscale  High-fashion chains  Exclusive designer merchandise  Neiman Marcus  Bloomingdale’s  Saks Fifth Avenue
  18. 18. Department StoresCategorized into three tiers  Tier Two  Modestly priced merchandise  Less customer service  Macy’s  Dillards
  19. 19. Department StoresCategorized into three tiers  Tier Three  Value-oriented  More price-conscious consumers  Sears  Kohl’s  JCPenny
  20. 20. Full-Line Discount Stores Offers low prices Broad variety of merchandise both private labels and national brands. Major Players  Walmart  Target  Kmart
  21. 21. Specialty Stores Narrow variety but deep assortment High level of service Target specific market segments  Victoria’s Secret  Levi’s  Apple  Polo/Ralph Lauren
  22. 22. Drug Stores Specialty stores that concentrate on health and personal grooming merchandise. Prescription pharmaceuticals represent almost 70% of sales.  Walgreens  CVS  Rite Aid
  23. 23. Category Specialists Big-box store that offers a narrow variety but deep assortment . Often called “category killers” They can use their buying power to negotiate lower prices, excellent terms, and assured supply when items are scarce.
  24. 24. Category Specialists
  25. 25. Home Improvement Centers Combines the traditional hardware store and lumberyard. Focuses on providing material and information. Merchandise is displayed in a warehouse atmosphere. Salespeople are available to assist customers in seeking merchandise and to tell them how to use it.
  26. 26. Extreme-Value Retailers Small discount stores Limited merchandise assortment Very low prices Target market low-income consumers  Dollar General  Family Dollar  Dollar Tree
  27. 27. Off-Price Retailers Inconsistent assortment of brand name, fashion-oriented soft goods at low prices. Typically, merchandise is purchased at one-fifth to one-fourth of the original wholesale price.
  28. 28. Services Retailing Sell services rather than products Important differences  Intangibility  Simultaneous Production and Delivery  Perishability  Inconsistency of the Offerings
  29. 29. Continuum of Merchandise andServices Retailers
  30. 30. Types of Ownership Another way to classify retailers is by their ownership.  Independent, Single-Store Establishment  Corporate Chains  Franchises
  31. 31. Independent, single-storeestablishments Many retail start-ups are owner- managed Direct contact with customers Not bound by bureaucracies inherent in large retail organizations Very flexible  React quickly to customer needs and market changes
  32. 32. Corporate Retail Chain Operates multiple retail units under common ownership. Centralized decision making for defining and implementing strategy. May be two stores or many thousand stores.
  33. 33. Franchising Contractual agreement between a franchiser and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchiser. More than 40 percent of all U.S. retail sales are made by franchisees.
  34. 34. Franchising Franchisees are motivated to make their store successful because they receive the profits after the royalty is paid. The franchiser is motivated to develop new products and systems to promote the franchise because it receives a royalty on all sales.
  35. 35. Retailers Using FranchiseBusiness Model

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