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Retailing 16 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Chapter Objectives Define retailing; understand how retailing evolves and some ethical issues in retailing Understand how we classify retailers Describe the more common forms of nonstore retailing including B2C e-commerce Understand the importance of store image to a retail positioning strategy and explain how a retailer can create a desirable image in the marketplace
Retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall The final stop in the distribution channel in which organizations sell goods and services to consumers for their personal use
Wheel   of retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Figure 16.1 The Wheel of Retailing
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Retail  life cycle INTRODUCTION Aggressive entrepreneurs Pop up retailers GROWTH Sales grow New competitors Stores expand offerings MATURITY Multiple competitors Profits decline New products offered DECLINE Offerings become obsolete
Future   of retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall The economy Demographics Technology Globalization
Demographics Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Technology Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Technology is revolutionizing retailing – particularly in terms of how consumers shop.  The Internet not only offers marketers a new selling venue, it has become a primary source of information for shoppers.
Globalization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
 
 
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Self-Service Classify  Retailers by Service Level Limited-Service Full-Service
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORES NON-STORE Retail  types Convenience Supermarkets Specialty Discount Off-price Warehouse clubs Factory outlets Department  Hypermarkets
Classify  Retailers Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall NARROW BROAD SHALLOW DEEP Merchandise Depth Merchandise Breadth Convenience stores  (airport gift shop) Warehouse club  (Sam ’s, Costco) Specialty stores  (Legendaryheroes.com) Super retailers  (Amazon.com) by Merchandise selection
Table 16.1 Major Types of Retailers
Table 16.1 Major Types of Retailers, Cont.
Copyright © 20112Pearson Education, Inc. Publishing as Prentice Hall Store   Types
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Convenience  Store
Convenience Stores
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORES NON-STORE Retail  types Convenience Supermarkets Specialty Discount Off-price Warehouse clubs Factory outlets Department  Hypermarkets Direct selling Door to door Party selling Vending machines Auctions/eBay Garage sales, Craigslist.com Online retailers
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Non-Store
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall B2C   E-commerce Virtual channels are unlikely to replace traditional ones Stores must continue to evolve to lure shoppers away from computers
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall E-commerce Benefits  to the firm   allows consumers and marketers to easily find and make exchanges in a global marketplace
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall E-commerce Limitations  to the firm   Site maintenance costs can be high e-commerce can be hard to implement may cannibalize in-store sales
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Benefits  to the Consumer  What do you like best about online shopping?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Limitations  for the Consumer  delays in in delivery, fraud risks, the inability to feel the goods or check sizing Have you ever had any problems with online shopping?
Table 16.2 Benefits and Limitations of  E-Commerce
 
 
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store   Image   how the target market perceives the store—its market position relative to the competition
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall LUXURY THRIFTY TRADITIONAL FASHION FORWARD Store  image   mapping   Macy ’s Sears Saks Fifth Ave. Lord & Taylor Bergdorf  Goodman Bloomingdales Barney ’s Henri Bendel
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORE DESIGN Image   elements Atmospherics Music, color, lighting  Traffic flow Visual merchandising PRICING STORE PERSONNEL
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Atmospherics  The use of materials, furnishings, and other design elements can create a desired store image
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Lighting, color, music
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store   Layout The arrangement of merchandise in the store, and how shelves, racks, tables, and cash registers are placed.  The arrangement of each element is critical for directing the traffic flow, or how shoppers move through the retail environment.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store   Layout
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Visual Merchandising
Copyright © 2021 Pearson Education, Inc. Publishing as Prentice Hall Pricing  and store image   Pricing policy - Price points are price ranges - of a store ’s merchandise  - Price points play a role in establishing its image
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store   Location Business districts  Shopping centers Freestanding retailers Nontraditional store locations
Figure 16.7 Business Districts
Figure 16.7 Shopping Centers
Figure 16.7 Freestanding Stores
Figure 16.7 Nontraditional Store Locations
 
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc.   Publishing as Prentice Hall

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Chapter 16 - Retailing

  • 1.  
  • 2. Retailing 16 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
  • 3. Chapter Objectives Define retailing; understand how retailing evolves and some ethical issues in retailing Understand how we classify retailers Describe the more common forms of nonstore retailing including B2C e-commerce Understand the importance of store image to a retail positioning strategy and explain how a retailer can create a desirable image in the marketplace
  • 4. Retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall The final stop in the distribution channel in which organizations sell goods and services to consumers for their personal use
  • 5. Wheel of retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
  • 6. Figure 16.1 The Wheel of Retailing
  • 7. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Retail life cycle INTRODUCTION Aggressive entrepreneurs Pop up retailers GROWTH Sales grow New competitors Stores expand offerings MATURITY Multiple competitors Profits decline New products offered DECLINE Offerings become obsolete
  • 8. Future of retailing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall The economy Demographics Technology Globalization
  • 9. Demographics Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
  • 10. Technology Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Technology is revolutionizing retailing – particularly in terms of how consumers shop. The Internet not only offers marketers a new selling venue, it has become a primary source of information for shoppers.
  • 11. Globalization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
  • 12.  
  • 13.  
  • 14. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Self-Service Classify Retailers by Service Level Limited-Service Full-Service
  • 15. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORES NON-STORE Retail types Convenience Supermarkets Specialty Discount Off-price Warehouse clubs Factory outlets Department Hypermarkets
  • 16. Classify Retailers Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall NARROW BROAD SHALLOW DEEP Merchandise Depth Merchandise Breadth Convenience stores (airport gift shop) Warehouse club (Sam ’s, Costco) Specialty stores (Legendaryheroes.com) Super retailers (Amazon.com) by Merchandise selection
  • 17. Table 16.1 Major Types of Retailers
  • 18. Table 16.1 Major Types of Retailers, Cont.
  • 19. Copyright © 20112Pearson Education, Inc. Publishing as Prentice Hall Store Types
  • 20. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Convenience Store
  • 22. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORES NON-STORE Retail types Convenience Supermarkets Specialty Discount Off-price Warehouse clubs Factory outlets Department Hypermarkets Direct selling Door to door Party selling Vending machines Auctions/eBay Garage sales, Craigslist.com Online retailers
  • 23. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Non-Store
  • 24. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall B2C E-commerce Virtual channels are unlikely to replace traditional ones Stores must continue to evolve to lure shoppers away from computers
  • 25. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall E-commerce Benefits to the firm allows consumers and marketers to easily find and make exchanges in a global marketplace
  • 26. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall E-commerce Limitations to the firm Site maintenance costs can be high e-commerce can be hard to implement may cannibalize in-store sales
  • 27. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Benefits to the Consumer What do you like best about online shopping?
  • 28. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Limitations for the Consumer delays in in delivery, fraud risks, the inability to feel the goods or check sizing Have you ever had any problems with online shopping?
  • 29. Table 16.2 Benefits and Limitations of E-Commerce
  • 30.  
  • 31.  
  • 32. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store Image how the target market perceives the store—its market position relative to the competition
  • 33. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall LUXURY THRIFTY TRADITIONAL FASHION FORWARD Store image mapping Macy ’s Sears Saks Fifth Ave. Lord & Taylor Bergdorf Goodman Bloomingdales Barney ’s Henri Bendel
  • 34. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall STORE DESIGN Image elements Atmospherics Music, color, lighting Traffic flow Visual merchandising PRICING STORE PERSONNEL
  • 35. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Atmospherics The use of materials, furnishings, and other design elements can create a desired store image
  • 36. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
  • 37. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Lighting, color, music
  • 38. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store Layout The arrangement of merchandise in the store, and how shelves, racks, tables, and cash registers are placed. The arrangement of each element is critical for directing the traffic flow, or how shoppers move through the retail environment.
  • 39. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store Layout
  • 40. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Visual Merchandising
  • 41. Copyright © 2021 Pearson Education, Inc. Publishing as Prentice Hall Pricing and store image Pricing policy - Price points are price ranges - of a store ’s merchandise - Price points play a role in establishing its image
  • 42. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Store Location Business districts Shopping centers Freestanding retailers Nontraditional store locations
  • 43. Figure 16.7 Business Districts
  • 46. Figure 16.7 Nontraditional Store Locations
  • 47.  
  • 48. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc.   Publishing as Prentice Hall

Editor's Notes

  1. Retailing is the final stop on the distribution path—the process by which goods and services are sold to the consumer for their personal use. A retail outlet is more than a place. It adds or subtracts value from the offering with its image, inventory, service quality, location, and pricing policy. Retailers belong to a channel of distribution, providing time, place, and ownership utility to customers
  2. Retailing is the final stop on the distribution path—the process by which goods and services are sold to the consumer for their personal use. A retail outlet is more than a place. It adds or subtracts value from the offering with its image, inventory, service quality, location, and pricing policy. Retailers belong to a channel of distribution, providing time, place, and ownership utility to customers Retailing is big business: 2009 U.S. sales totaled $4.5 trillion More than one of every ten U.S. workers is employed in retailing Retailers: Belong to a channel of distribution Provide time, place, and ownership utility to customers Retailing is different around the globe
  3. Wheel-of-retailing hypothesis states that new types of retailers find it easiest to enter the market by offering goods at lower prices than competitors. As they gain a foothold, they trade up, improving facilities, increasing the quality and assortment of merchandise, and offering amenities. This upscaling results in greater investment and operating costs, so the store raises its prices to remain profitable. This makes the business vulnerable to newer entrants that can afford to charge lower prices. The wheel turns. Pier 1 Imports initially sold low-priced beanbags and love beads, but today shoppers find much higher quality items Can you think of another retail chain or restaurant that exemplifies the wheel of retailing?
  4. LECTURE NOTES: Retailing has taken many forms over time. As the economic, social, and cultural factors change, different types of retailers emerge and often squeeze out older, outmoded forms of retailers. The Wheel of Retailing Theory explains how retail firms change, becoming more upscale as they go through their life cycle. Visually, the Wheel of Retailing is displayed in Figure 16.1. During the entry phrase, new types of retailers enter the market by offering lower-priced goods with little focus on additional services or the facility itself. During the trading-up phrase, these retailers gradually improve their facilities, quality and assortment of merchandise, and amenities and also increase prices. Finally, retailers move up to a high-end strategy with superior facilities, desirable amenities (free gift wrapping), higher operating costs, and of course higher prices. However, this leaves them vulnerable to the entry of new competitors, who undercut their price, offer limited services, and etc., as the entry phrase begins anew. New ways to sell products are constantly appearing. American Airlines tested the concept of selling services such as Heathrow Express train tickets on London-bound flights, and items from the SkyMall catalog on 165 of its planes. Still, trading up or upgrading too quickly can spell disaster for a retailer. Walmart attempt to upgrade its clothing line from the basic t-shirt, shorts, and pants collections to brand-name apparel that proved to be out-of-reach of the loyal core user. While the wheel of retailing helps explain how some retailing forms develop, it doesn ’t explain everything. For example, some retailers never trade-up but instead choose to continue to serve their niche as discounters. Still other retailers strategically choose to begin their life as upscale specialty stores, though the sometimes choose to open “sister” stores at the lower end of the price spectrum (as was the case when Gap Stores chose to open Old Navy).
  5. Retailers evolve through the retail life cycle . In the introduction stage, the new retailer often is an aggressive entrepreneur who takes a unique approach to doing business. Profits are low because of high development costs. In the growth stage, the retailer catches on with shoppers, and sales and profits rise. Others copy and competition increases so the store expands what it offers. In the maturity stage, many other retailers have copied the unique idea of the original entrepreneur to form an entire industry. The industry has over expanded, and intense competition makes it difficult to maintain customer loyalty. Profits decline as competitors cut prices to keep customers. In the decline stage, retail businesses become obsolete as newer ways of doing business emerge. LECTURE NOTES: Similar to the product life cycle, retail organizations and forms can be characterized as following a life cycle. Retailers are born, grow, mature, and eventually die or become obsolete. In the Introduction Stage , the new retailer is typically an aggressive entrepreneurs who takes a unique approach to doing business. While this may mean that they use technology or some other factor to offer low priced goods, it could also mean that the retailer is distributing goods in an innovative fashion, or offering a distinctive product assortment of some type. Internet grocery stores such as Netgrocer are still in the introduction stage. While some retailers and forms of retail die without ever getting past the introduction stage, many progress to the next stage, growth. Businesses that make it to the Growth stage are accepted by at least a segment of consumers, and experience strong sales growth. However, more competitors enter the marketplace, and the original entrepreneur typically responds by expanding its product offerings. Retailers may also open more outlets, though this often cuts into profits due to the large investment in new buildings and fixtures. Once in the Maturity stage, the retailer faces multiple competitors as the unique idea of the originating firm is copied by others to form an entire industry. As a result, profits decline as the firm loses its uniqueness and competitors resort to price-cutting. Often the industry over expands, placing even more pressure on the retailers at this stage. New products are often offered in an effort to entice new consumers to the firm. Other firms find it necessary to merge with a competitor in order to survive. How many of you know that Sears merged with Kmart a few years back? Yet another survival strategy involves downsizing , in which unprofitable stores are closed or entire divisions are sold off. Prior to merging with Sears, Kmart implemented a downsizing strategy. As another example, Federated Department Stores became Macy ’s Inc. and combined with its various department stores under two brand names: Macy’s and Bloomingdales, while less successful chains such as Stern’s Filene’s, and even Marshall Field’s – a veritable retail institution in Chicago – were closed. During the Decline phase, a retailer becomes obsolete as new and superior ways of doing business emerge. For example, catalog retailers such as Service Merchandise and McDade & Co. exemplify a form of retailing that is all but extinct. Catalog retailing worked in this fashion: direct mail catalogs were sent to area residents promoting merchandise that could be purchased from a brick and mortar store presence. The catalog store provided consumers with a showroom of floor samples, and access to extensive product catalogs filled with merchandise. When a consumer located an item that he or she wanted, an order was placed at the showroom counter (no mail order deliveries were available). This required that a clerk write the order on a sales form, then physically locate the item in the back warehouse. Once located, the item was loaded on a conveyor belt and sent around the warehouse to the pick-up area. Consumers took their order form to the register, paid for the merchandise at the register as designated on the order form, then picked up their item(s) in the pick-up area where they were deposited by conveyor belt. Obviously, the catalog retailer has been replaced by mass merchandisers who allow consumers to save time by self-serving. The lower labor costs also result in lower cost items. Thus catalog retailers represent a retail form made obsolete by changing consumer trends and lower-priced alternatives.
  6. There are several trends that will continue to affect retailers in the future. The economy Demographics Technology globalization
  7. Some of the ways changing demographics are altering the face of retailing include: • Convenience for working consumers. • Catering to specific age segments. • Recognizing ethnic diversity
  8. Technology is revolutionizing retailing with the Internet providing unlimited possibilities. Point-of-sale (POS) systems, which contain computer brains that collect sales data and are connected directly into the store ’s inventory control system, have enabled profound changes. Technology is revolutionizing retailing – particularly in terms of how consumers shop. The Internet not only offers marketers a new selling venue, it has become a primary source of information for shoppers. Point-of-sale (POS) systems are also becoming more advanced. POS systems collect sales data for retailers via the UPC scanner, and are hooked directly into the store ’s inventory control system. This allows stores to create and use a perpetual inventory unit control system , meaning that everyone from managers to clerks can access data regarding sales, returns, transfers to other stores, and in-stock items. One advantage of this type of technology is that it allows stores to develop a computerized reordering system which automatically orders items when inventories reach a critical predefined level. As mentioned earlier, RFID technology, if consumer fears are overcome, will allow the store of the future to serve shoppers in ways that have yet to be envisioned. For example, a shopper who puts a bottle of wine in their shopping cart that has an RFID chip may trigger a video ad or recipe for pasta and shrimp when the shopper ’s cart passes through the pasta aisle. Many restaurants are already using technology in interesting ways. For example, many restaurants use e-menus (video screens located tableside) to show patrons what each dish looks like. Ordering via email, mobile location advertising, and special coupons targeting Facebook users are a few other examples of technology being used by menus. Technology is also important to service industries such as banking and credit cards, allowing users to manage accounts online, make payments, transfer funds, etc.
  9. Retailers are busy expanding to other countries and bringing with them innovations and new management philosophies. This is a two-way street. Innovative retailing concepts developed overseas are influencing U.S. retailing. Globalization cannot be ignored. Many retailers are expanding to other countries and bringing their innovative methods and management philosophies with them. Yet firms must also adjust to different conditions around the world, both in terms of the appropriate merchandise mix given cultural characteristics and with respect to marketing communications strategies. It ’s also important to note that a form of retailing can be at different points in its life cycle within different countries. For example, Chinese consumers flock to department store chains to purchase luxury items, especially since e-commerce isn’t well established in the mainland. Furthermore Chinese department stores have a reputation of avoiding counterfeit goods that are common elsewhere. Department stores are in the growth stage in China, but in the U.S. , department stores are well into the maturity stage.
  10. The classification of retail stores provides a method by which retailers can benchmark performance Several classification methods exist: Classifying by what they sell (the merchandise mix) Classifying by level of service Classifying by merchandise selection Classifying by level of service Self-service retailers: Shoppers make selections without any help Limited-service retailers: May offer credit service and merchandise return services but little else; the majority of shopper selection is done without assistance Full-service retailers: Offer supporting services such as gift wrapping; trained sales associates assist buyers
  11. Convenience stores carry a limited number of frequently purchased items and cater to consumers willing to pay a premium for the ease of buying staple items close to home. Supermarkets are food stores that carry a wide selection of edibles and nonedible products Specialty stores have narrow and deep inventories. They offer a good selection of brands within the limited lines that they sell. Specialty stores can tailor their assortment to the specific needs of a targeted consumer, and they can offer a high level of knowledgeable service. General merchandise discount stores offer a broad assortment of items at low prices and with minimal service and are the dominant outlet for many products. Off-price retailers obtain surplus merchandise from manufacturers and offer brand-name, fashion-oriented goods at low prices. Warehouse clubs have a bargain mentality reinforced by merchandise displayed in a cavernous, bare-bones facility. The clubs often charge a membership fee to consumers and small businesses. The factory outlet store is owned by a manufacturer. Some allow the manufacturer to sell off defective merchandise or excess inventory while others are simply another distribution channel. Most are located in outlet malls where a large number of factory outlet stores cluster together in the same location. Department stores sell a broad range of items and offer a deep selection organized into different sections of the store. In the United States, department stores have struggled in recent years. In other parts of the world, they are thriving. Hypermarkets combine the characteristics of warehouse stores and supermarkets. These stores are very popular in different parts of the world. Consumers in the United States find the hypermarkets to be too large and shopping in them too time-consuming.
  12. A retailer ’s merchandise assortment, or selection of products sold, has two dimensions: breadth and depth. Merchandise breadth , or variety, is the number of different product lines available. A narrow assortment means that shoppers will find only a limited selection of product lines. A broad assortment means there is a wide range of items. Merchandise depth is the variety of choices available for each specific product. A shallow assortment means that the selection within a product category is limited. A deep assortment means that there is a great deal of selection within a product category.
  13. LECTURE NOTES: Table 16.1 lists the major types of retailers, and provides insight into the merchandise mix, level of service, size, and price related aspects of the retail store. Convenience stores such as 7-11 carry a limited number of convenience goods and target customers who are willing to pay a premium in order to pick-up the item easily and quickly, close to home. Many are open 24/7 and thus can meet the needs of those who shop at irregular hours. Supermarkets are food stores that carry a wide selection of edible and nonedible items. While popular in the US, the supermarket is not typically found in other countries. Box stores are food stores that have a limited selection of items, few refrigerated goods, and few brands per product type. These stores earn their name from the fact that goods are displayed in open boxes. Customers bag their own purchases, but benefit from lower prices Specialty stores do not carry many product lines, but offer a strong selection of brands within the lines that they do carry. “Big and Tall” men’s store would be an example of a specialty store. Leased departments , such as hair styling salons, in-store banks and the like, often exist within larger retail stores.
  14. LECTURE NOTES: Variety stores began life originally as dime stores in the late 1800s. Merchandise in these stores sold for a nickel or dime; today ’s variety stores sell a variety of inexpensive items from kitchen gadgets to toys. “Dollar Stores” are the more modern version of the variety store. Discount stores carry general merchandise. Target, Kmart and Walmart dominate this category by selling a broad assortment of items at low prices. However, many discounts stores are increasingly carrying designer-name clothing at bargain prices which has been specifically created for the discount market. There are several subcategories of discount stores. Some discount stores are known as off-price retailers by virtue of the fact that obtain surplus merchandise from brand name manufacturers, particularly in the fashion industry. T.J. Maxx and Marshalls are two examples. Warehouse clubs such as Sam ’s Club and COSTCO offer none of the amenities of a full-service store and stock goods in larger-than normal package sizes and quantities. Membership fees are common. Some warehouse stores are in the process of “trading up” (recall the wheel of retailing) in terms of what they sell, and may offer luxury items such as finer wines or jewelry. Factory outlet stores are owned by manufacturers. Originally, these stores were conceived as a way of for manufacturers to sell off defective or “second quality” merchandise. Other factory outlet stores provide prime quality merchandise, often in greater variety than can be found at regular retailers. Department stores such as Macy ’s or Dillard’s sell a broad range of items, from fashion to furniture, in a compartmentalized fashion (by department). Department stores continue to thrive in many countries but have struggled for years in the US, being unable to compete with discount stores and direct marketers that offer the same items as lower prices. Hypermarkets combine the characteristics of warehouse stores and supermarkets. Originating from Europe, Hypermarkets often contain between 200,000 and 300,000 square feet of space, which is equivalent to the size of four football fields. Hypermarkets house restaurants, children ’s play areas, beauty salons, and more. Hypermarket Carrefour is expanding into developing countries such as China that offer a large, eager shopping population. However, consumers in the US market find hypermarkets to be TOO big and too time-consuming to shop.
  15. Two successful store concepts in the US are Starbucks and Bass Pro.
  16. 7-Eleven ’s new “urban store” upgrades the convenience store shopping experience with a huge coffee bar, fresh-made deli sandwiches and pastries
  17. LECTURE NOTES: Convenience stores don ’t have to be staid and boring. The 187 store chain Maverik Country Stores, Inc. reinvented itself from an Old West country store to match its slogan, “Adventure’s First Stop.” Customers from soccer moms to mountain bikers think it’s a fun place. The Adventure First Stop stores feature cascading waterfalls of fountain drinks, a winding river of coffee, and snowy mountains made of frozen yogurt. Unique names of destination areas of the store include the Bodacious Bean coffee station, Fountain Falls beverage dispensers, and Big Moon restrooms. The stores even wrap their fuel pumps and tanker delivery trucks in murals of sports images such as jet skis and snowmobiles.
  18. Nonstore retailing is any method a firm uses to complete an exchange that does not require a customer to visit a store. Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise. Most people involved in direct selling are independent agents who buy the merchandise from the company and then resell it to consumers. (Mary Kay cosmetics). Door-to-door selling is popular in some countries, but is declining in the United States because fewer women are home during the day. Those who are home are reluctant to open their doors to strangers. A home shopping party occurs when a company representative makes a sales presentation to a group of people who have gathered at the home of a friend. People get caught up in the “group spirit,” buying things they would not normally buy if alone. Coin-operated vending machines are a tried-and-true way to sell convenience goods. They are best suited to the sales of inexpensive merchandise, food, and beverages. There are also a number of consumer-to-consumer retail options such as eBay and Craigslist , garage sales. The key type of non-store retailing today is online shopping.
  19. Business-to-consumer (B2C) e-commerce is the online exchange between companies and individual consumers. Online retailing is growing incredibly. Electronic commerce in retailing has enormous potential if retailers can offer sites that are entertaining and informative and worth surfing even after novelty has worn off. Despite the growth of B2C e-commerce, it is unlikely that e-commerce will ever completely replace physical store locations. Even in banking, consumers seem to value the choice of being able to go to an actual location for F2F transactions, as well as being able to shift funds or pay bills over the Internet. While many retailers would prefer to avoid the cost and hassle of staffing physical stores, it doesn ’t seem to be in the cards anytime soon. However, more and more brick-and-mortar retailers are finding it necessary to entertain consumers as part of the shopping experience in order to lure them away from their computers. One destination retailers is Cabalas in Forth Worth Texas. This store enhances the shopping experience by maintaining huge freshwater aquariums containing a variety of American sporting fish. They also offer a wildlife museum of trophy deer heads and various wildlife animals.
  20. E-commerce has several benefits for a firm. E-commerce allows consumers and marketers to easily find and make exchanges in a global marketplace. Electronic marketing has increased convenience and improved the quality of life. It ’s easy to get price information. Shoppers can browse brands, features, reviews, and information on where to buy a particular product. E-commerce allows businesses to reduce cost. There is no need for expensive buildings or in-store sales associates.
  21. There are also some limitations or pitfalls for a firm using e-commerce. Site maintenance costs can be high. In developing countries that do not have ready access to credit, e-commerce can be hard to implement. Internet sales may cannibalize in-store sales and can be characterized by intense price competition.
  22. E-commerce gives great convenience to buyers as well as providing more choice and access to specialized goods. It also allow better brand comparisons and enhanced price information. There also tend to be attractive prices and experiential benefits.
  23. Limitations for the consumer include delays in in delivery, fraud risks, the inability to feel the goods or check sizing. It is also harder to return goods through the mail or UPS.
  24. LECTURE NOTES: As Table 16-2 illustrates, business-to-consumer e-commerce offers a number of benefits to both marketers and consumers. Clearly B2C e-commerce increases the convenience for consumers by eliminating travelling and allowing for shopping to occur 24 hours a day, from any location. In less developed countries, consumers can find products that can ’t be located locally. For experiential shoppers, a key benefit of online shopping stems from the fact that they enjoy the “thrill of the hunt” when searching for items. Consumers enjoy other benefits as well, such as the ease with which shopping bots allow consumers to price items sold by different vendors. For marketers, the key benefits include the ability to expand their customer base – globally, if desired, and the ability to develop specialized businesses that would not be profitable if bound to a brick-and-mortar store. Excess inventory can be easily be sold by online retailers, or sold through online liquidators such as Overstock.com. E-commerce also reduces business costs – facility rentals and store interior design costs go out the window in the virtual environment, while product and packaging costs disappear for items that can be downloaded virtually such as software or music. With respect to the limitations of B2C E-commerce, as fast delivery options may be, consumers must still wait longer to receive most goods than if they went to the local mall and bought purchased the item off of the shelf. Poorly designed web sites can frustrate consumers with poor navigation, disappearing shopping baskets, or lack of FAQs or other access to customer service. Security concerns remain for both the consumer and the marketer. As consumers often want to touch and feel certain items prior to purchase, the Internet is at disadvantage when tactile considerations are important, or when consumers wish to be absolutely certain about how something fits, or the exact color of the item. Developing countries operating on primarily cash economies are difficult targets for marketers, as few people use credit cards or banks that protect against the fraudulent use of their card. However, PayPal and similar services provides an alternative for these global consumers. For Brick and Click stores, meaning those that have both an online presence as well as physical retail stores, cannibalization of in-store sales by the online alternative can be problematic. Some stores solve this problem by offering online items that are not stocked in the store.
  25. Store image is how the target market perceives the store—its market position relative to the competition. Store managers work hard to create a “personality.”
  26. Stores can be mapped on a perceptual space to represent how their images differ in consumers ’ minds.
  27. Store image depends on a number of factors including design features, ambient conditions, layout, quality of merchandising, personnel in the store, and overall price level. A store ’s image reflects the way the marketplace perceives a retailer relative to the competition. Shoppers may use terms such as exciting, old-fashioned, or tacky, for example. Many store design, personnel, and pricing decisions influence consumer’s perception of a given store’s image. Ideally, all of the elements in Figure 16.5 should work together to create a clear, coherent, and consistent image that meets the consumers’ expectations of what the shopping experience should be.
  28. One image component refers to the design of the store or its atmospherics . The use of materials, furnishings, and other design elements can create a desired store image Atmospherics provide critical perceptual cues to consumers regarding the “feel” of the retail environment. Atmospherics include use the use of lighting, scents, sounds, décor and other design elements. Even the materials used in the interior design process can contribute to the atmosphere. For example, a heavy emphasis on wood as part of the design process, particularly if portrayed in a rustic manner, creates an outdoorsy feel to the retail experience. While this is suitable for Bass Pro Shops, such a decision would be disastrous if implemented for Victoria’s Secret.
  29. Even non-store retailers can use atmospherics to make a shopping visit more appealing
  30. The use of color, lighting, scents, and sounds, also influence store image
  31. Store layout can make a store seem intriguing or confusing. A store ’s layout refers to the arrangement of merchandise in the store, and how shelves, racks, tables, and cash registers are placed. The arrangement of each element is critical for directing the traffic flow, or how shoppers move through the retail environment. For example, many restaurants are arranged so that bar patrons have immediate access to the lounge upon entering the facility without having to pass through the dining area, possibly disturbing diners or presenting obstacles to busy waiters. On the other hand, many stores design layouts that force consumers to walk past as many items as possible in an attempt to prompt impulse buying. Placing staple items and those that are most desirable towards the back of the store is quite common.
  32. Most supermarkets use a grid layout while other retailers may choose a more organic approach. A grid layout, such as the one illustrated in Figure 16.6, is common in grocery and discount stores. This type of layout features rows of neatly spaced shelves and decently sized aisles that allow consumers to pass one another easily in the aisle. Department and specialty stores will often use a free-flow layout instead, which is less structured and more conducive to browsing.
  33. The quality of the visual merchandising also affects store perceptions and image. For example, clean, uncrowded aisles and artistic displays may enhance a store ’s image. Visual merchandising refers to the design of all things customers see both inside and outside of the store. Thus the feelings of shoppers are influenced by furnishings, fixtures, the amount of clutter, etc. Upscale stores create more space for sitting areas and dressing rooms. The storefront, or physical exterior of a store along with the marquee (sign that shows the store ’s name) are critical in setting consumer’s expectations.
  34. The price level found in a store provides an important cue for store image. Consumers form expectations of price points, or the price ranges they should be expected to pay at a given store based on many factors. For example, slogans, such as “Friends don’t let friends pay retail” imply a lower priced merchandise selection. The frequency and type of sales used by retailers also affects the image of the store, as well as consumer’s behavior. Consumers’ quests for deals over the past few years caused many department stores to offer sales to attract consumers. Unfortunately, this strategy backfired, as consumers became conditioned to shopping ONLY during sales. It should also be remembered that the pricing policy used by a retailer can influence consumers perception merchandise quality.
  35. There are four basic types of store locations. Central business district (CBD) is the traditional downtown area. They have suffered in recent years because of concerns about security, lack of parking, and the lack of customer traffic on evenings and weekends. Shopping centers : are a group of commercial establishments owned and managed as a single property. They range in size and scope from strip malls to massive superregional centers. Rents tend to be high in shopping malls, making it difficult for many stores to be profitable. Many small specialty stores find it hard to compete with a mall ’s anchor stores. A new form of shopping center is a lifestyle center, which combines the feel of a neighborhood park with the convenience of a strip mall. Freestanding retailers : are located by themselves in a separate building. These retailers benefit from lower rents and fewer parking problems but must be attractive enough to be a destination point. Nontraditional store locations: are stores that come in a variety of forms from carts, small moveable stores, to kiosks. Locating a Pizza Hut within a Target store is also an untraditional retail mix.
  36. LECTURE NOTES: A central business district is the traditional downtown business area found in any city. During weekdays, many people are drawn to the area to shop, eat, or work. However, lack of parking, security concerns, and low traffic on weekends have made these retail locations less than desirable in recent years, and many have either gone out of business, or relocated. Some cities are offering tax breaks to businesses willing to locate in the business district as one method of revitalizing the area. The most successful downtown areas are those that develop a festival marketplace that draws visitors during the weekends, such as Boston ’s Quincy market. Shopping centers are groups of stores
  37. LECTURE NOTES: A shopping center is a group of commercial establishments which is owned and managed as a single property. They range in size from strip centers to massive superregional centers such as the Mall of America ’s discussed earlier. While strip centers focus on basic conveniences, such as dry cleaners and restaurants, while shopping malls offer access to a greater variety of stores, merchandise, and entertainment. Lifestyle centers present a happy medium between strip mall and shopping center, and are typically located in affluent neighborhoods.
  38. LECTURE NOTES: Freestanding retailers such as IKEA or Kids “R” Us, typically occupy their own facility. Compared to shopping malls, rents may be lower, competition in the same location is non-existent, and parking is more abundant. The drawback is that the store must be important enough to attract consumers to the destination since the retailer can’t count on the drawing power of nearby stores to provide it with customer traffic.
  39. LECTURE NOTES: Finally, nontraditional store locations are continually being created as innovative retailers find new ways to reach consumers. Carts and kiosks are often used to sell many products in different locations, such as in malls, airports, or other public facilities. Kiosks are slightly larger than carts and offer store-like facilities including telephone hook-ups and electricity. In the example shown here, Taco Bell has created a location inside of Target. The Popups mentioned earlier in the chapter also represent another form of nontraditional retailers.