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Chapter 18 Retailing Retailing Includes all activities ...

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Chapter 18 Retailing Retailing Includes all activities ...

  1. 1. Chapter 18 Retailing
  2. 2. Retailing <ul><li>Includes all activities involved in selling, renting, and providing goods and services to ultimate consumers </li></ul>
  3. 3. Classifying Retail Outlets <ul><li>Form of ownership </li></ul><ul><li>Level of Service </li></ul><ul><li>Merchandise Line </li></ul>
  4. 4. Form of Ownership <ul><li>Independent Retailer-- owned by individual </li></ul><ul><li>-advantage: owner can be his/her own boss </li></ul><ul><li>-may offer more personal service to consumers </li></ul><ul><li>Corporate Chain-- multiple outlets, common ownership </li></ul><ul><li>-centralized decision making, purchasing </li></ul><ul><li>-consumers benefit from similar merchandise, mgt. policies </li></ul><ul><li>Contractual System-- independently owned stores band </li></ul><ul><li>together to act like a chain </li></ul><ul><ul><li>Franchise-- parent companies provide name, know-how, </li></ul></ul><ul><ul><li>and set of guidelines in exchange for fee and royalties </li></ul></ul>
  5. 5. Level of Service <ul><li>Self Service-- customer performs most functions (gas stations) </li></ul><ul><li>Limited Service-- outlets provide some service (typical retailer) </li></ul><ul><li>Full Service-- provide many services (dept. stores) </li></ul>
  6. 6. Merchandise Line <ul><li>Depth of Product Line-- number of items in product line </li></ul><ul><ul><li>Category Killers--specialty discount outlets that dominate </li></ul></ul><ul><ul><li>market in a category (e.g., Toys “R” Us, Home Depot) </li></ul></ul><ul><li>Breadth of Product Line-- number of different product lines </li></ul><ul><ul><li>General Merchandise Stores--broad product line, limited depth </li></ul></ul><ul><ul><ul><li>Scrambled Merchandising--unrelated product lines </li></ul></ul></ul><ul><ul><ul><ul><li>Hypermarkets / Supercenters--food and other goods </li></ul></ul></ul></ul>*New phenomenon: Intertype competition
  7. 7. The Largest Retailers Category Retailers Sales ($ , in billions ) Department stores Sears J C Penney 41.322 30.678 Apparel Limited TJX 9.347 7.949 Consumer Electronics Circuit City Best Buy 8.871 8.358 Drug and Discount Wal-Mart Kmart 139.208 33.674 Home Improvement Home Depot Lowe’s 30.219 12.245 Home Shopping Service Merchandise Fingerhut 3.327 1.912 Specialty Retailers Costco Toys R Us 24.270 11.200
  8. 8. Retail Positioning Strategies Types of Retailers Keys to Success High Value-added/ broad line (Bloomingdale’s) Creative merchandising image— excitement, leader High price/high margin Store Ambiance Low Value-added/ broad line (K-Mart) Economies of scale—volume Image— “good guys,” conveniences Low price/low margin Low or self service Efficiency of operations High Value-added/ narrow line (Tiffany) Unique or high quality products Image—exclusive specialty High price/high margin Personal service/advice Expensive presentation Low Value-added/ narrow line (Just for Feet) Specialty mass merchandising Image— value conscious, consistent Low price, loss leaders Little or self service “ Cookie-cutter” stores
  9. 9. The Retailing Mix <ul><li>Retail Pricing </li></ul><ul><ul><li>decide markup / markdown </li></ul></ul><ul><ul><li>timing of discounts </li></ul></ul><ul><ul><li>off-price retailing (e.g., warehouse clubs, factory outlets) </li></ul></ul><ul><li>Store Location </li></ul><ul><ul><li>central business district </li></ul></ul><ul><ul><li>regional shopping centers </li></ul></ul><ul><ul><li>community shopping centers </li></ul></ul><ul><ul><ul><li>strip locations / power centers </li></ul></ul></ul><ul><ul><li>freestanding stores </li></ul></ul><ul><li>Image and Atmosphere </li></ul>
  10. 10. Image and Atmosphere <ul><li>Store personality </li></ul><ul><li>Store layout </li></ul><ul><ul><li>Traffic flow (grid vs. free-flow) </li></ul></ul><ul><li>Merchandise density </li></ul><ul><li>Fixtures and Furniture </li></ul><ul><li>Music </li></ul><ul><li>Color and lighting </li></ul><ul><li>Store personnel </li></ul>
  11. 11. The Retail Life Cycle Market share or profit Early growth Accelerated development Maturity Decline Value-retail stores On-line retailers Single-price stores Warehouse clubs Fast food outlets Convenience stores Supermarkets Department stores Catalog Retailers Malls (?) General store Factory outlet stores Profit Market share Single-brand stores
  12. 12. Nonstore Retailing <ul><li>Direct marketing </li></ul><ul><li>Customers are exposed to products through print or electronic media </li></ul><ul><ul><li>Direct mail / Catalogs </li></ul></ul><ul><ul><ul><li>Eliminates the cost of a store and clerks </li></ul></ul></ul><ul><ul><ul><li>Segmentation and targeting efficiencies </li></ul></ul></ul><ul><ul><li>In-home shopping </li></ul></ul><ul><ul><ul><li>Includes television-assisted retailing and computer-assisted retailing. </li></ul></ul></ul><ul><li>Direct selling </li></ul><ul><ul><li>Involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or offices. </li></ul></ul><ul><ul><ul><li>e.g., door-to-door, parties, multilevel networks </li></ul></ul></ul><ul><ul><li>Telemarketing </li></ul></ul><ul><ul><ul><li>Uses the telephone to interact with and sell directly to consumers. </li></ul></ul></ul><ul><li>Automatic vending </li></ul><ul><ul><li>Serves customers when and where stores cannot. </li></ul></ul>
  13. 13. Telemarketing Rules from the FTC Telemarketers must: <ul><li>state they are making a sales call, and the nature of the product being offered; </li></ul><ul><li>disclose that no purchase is necessary to win prize promotions; </li></ul><ul><li>tell consumer the cost of the products and any restrictions on getting the goods or prizes before asking for money; </li></ul><ul><li>obtain a verifiable authorization before attempting to collect for a purchase; </li></ul><ul><li>call after 8:00 a.m. and before 9:00 p.m.; and </li></ul><ul><li>discontinue calls to consumers who have said they don’t want to be called. </li></ul>

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