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- 2. (1) Definition of Retailing (2) Classificationof Retail Operations (4) Non Store Retailing (5) Franchising (3) Types of Retail Operations RETAILING 2
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- 4. Lamb: All theactivities directly related to the sale of goods and services to the ultimate consumer for personal, non- business use 4
- 5. Retailers accountfor 11.7 percent of U.S. employment Retailing accounts for 13 percent of U.S. businesses Retailers ring nearly 40 percent of the U.S. GDP Industry is dominated by a few giant organizations, such as Wal-Mart 5
- 6. 2004 rank CompanyRevenue # of stores 1 Wal-Mart $258.6 billion 4906 2 Home Depot $64.8 billion 1707 3 Kroger $53.7 billion 3774 4 Target $48.1 billion 1553 5 Costco $42.5 billion 420 6 Sears $41.4 billion 1970 7 Safeway $35.6 billion 1817 8 Albertson’s $35.4 billion 2305 9 Walgreen $32.5 billion 4227 10 Lowe’s $30.8 billion 952 6
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- 8. Ownership Level of Service ProductAssortment Price Independent Retailers Chain Stores Franchises 8
- 9. 1. Ownership a) Independentretailer Retailers owned by a single person / partnership & not operated as part of a larger retail institution Eg; Bakery Shop, Local Florists, Shoe Shop, etc b) Chain Stores Stores owned & operated as a group by single organization Eg; Kamdar, Globe Silk Store, Nagoya c) Franchises Owned & operated by individuals but are licensed by a larger supporting organization Eg; KFC, McD, Pizza, etc 9
- 10. 2. Level ofservice The level of service that retailers provide can be classified along a continuum, from full-service to self- service. Discount stores Exclusive stores Factory outlets Warehouse clubs Full Service Self Service 10
- 11. 3. Product Assortment By the breadth & depth of product line Eg; Toy R Us – concentrate on product assortment by carrying single / narrow product lines 4. Price Traditional department stores & specialty stores typically charge FULL SUGGESTED RETAIL PRICE While many more discount stores may offer LOWER PRICE to attract volume purchases among customers Eg; Mydin – practice discount store, offer lower price Eg; Watson – practice full suggested retail price 11
- 12. MAJOR TYPES OF RETAILOPERATIONS 12
- 13. Department Stores Specialty Stores Supermarkets Drugstores ConvenienceStores Discount Stores Restaurants 13
- 14. Department Stores ◦A wide variety of product lines ◦ Carries a wide variety of shopping and specialty goods including apparel, cosmetics, electronics, etc ◦ Purchases are made within each department ◦ Eg; Jaya Jusco, Sogo, Parkson Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 14
- 15. Specialty stores ◦Narrow product line with a deep assortment within that line ◦ Merchandise is tailored to specific target markets ◦ Price is a secondary consideration to consumers ◦ These stores provide a low- risk testing ground for many new products ◦ Eg; Toys “R” Us, The Body Shop, BATA Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 15
- 16. Supermarkets ◦ Whooperate large, low-cost, low-margin, high volume & self-service stores serving customer’s total needs for food, laundry & household, etc ◦ U.S. Consumers spend about a tenth of income in supermarkets ◦ Trends: The growth of prepared foods and time-saving products, and the need for convenience ◦ Eg; Batu Road, Jaya supermarket, Jaya Jusco supermarket, Parkson Grand supermarket, etc Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 16
- 17. Drugstores ◦ Tosell pharmacy related products & services to the customers ◦ Carry a wide selection of over the counter (OTC) medications ◦ Products offer included medicines, cosmetics, health products, beauty items, etc ◦ Stock pharmacy-related products and services ◦ Eg; Guardian, Watson, Georgetown Pharmacy, etc Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 17
- 18. Convenience Stores ◦Defined as a miniature (small) supermarket, carrying only a limited line of convenience goods ◦ Set up near residential areas & remain open 24 hours, 7 days a week, charge high price to make up higher operating cost, lower sales volume ◦ Eg; 7-Eleven store, many petrol stations (Shell, Petronas, Esso, Caltex) Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 18
- 19. Discount stores ◦A retailer that competes on the basis of low prices, high turnover, and high volume ◦ 4 major categories:- A. Full-line discount store Mass merchandiser Supercenter B. Specialty discount store Category-killer C. Warehouse discount store D. Off-price discount store Factory outlet Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 19
- 20. Restaurants ◦ Straddlethe line between retailing establishments and service establishments ◦ Offer tangible products – food & beverage BUT they are also provide valuable service for consumers in the form of food preparation & food service Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 20
- 21. Type of Retailer DepartmentStore Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant Service Level Mod Hi-High High Low Low Low-Mod Mod-Low Mod-Low Low Low Low-High Assortment Price Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Broad Broad Med-Narrow Med-Narrow Mod-High Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low Low-lower Low Low-High Mod High High Low Mod High Low Mod Low Mod Low Low Low Low-High 21
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- 23. Automatic Vending Direct Retailing DirectMarketing Electronic Retailing Door-to-Door Office-to-Office Home Sales Parties Telemarketing Catalogs & Mail Order Direct Mail In-bound call Out-bound call On-Line Retailing Shop-at-Home Networks 23
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- 25. Franchiser –the originator of a trade name, product, methods of operation, & so on, that grants operating rights to another party to sell its product Franchisee – an individual / business that is granted the right to sell another party’s product by paying the franchiser for the right to use its name, product / methods Franchise – a continuing relationship in which franchiser grants to a franchisee the business rights to operate or sell a product Basic Forms of Franchising Business Format Franchising Product and Trade Name Franchising 25
- 26. 26 Product/Trade name Franchise This type of franchise system involves the franchisee acquires sales right which includes the trade name, trademark, and/or products from the franchisor upon the signing of the so- called dealership contract, and agreed to sell the product line identified by the franchisor. This type of franchise system is commonly used in the automotive, petrol kiosk and service station, soft beverages, and tyre industries.
- 27. 27 Business Format Franchise This franchise system is also named “full-fledge franchise” The franchisee is granted the right to manufacture and market the franchisor’s product and/or services using a complete franchisor’s business “set-up” which comprises of intellectual properties (trade name. trade mark, etc.); marketing strategies (pricing structure guideline, promotional activities etc.), guided operational activities (franchisee is equipped with operation manual and has to undergo a training), premise settings and layout ( exterior and interior layout; ambience, colour scheme and decoration must in-line with franchisor’s brand and image).
- 28. Company expansionwith limited capital requirements Motivate store owners Bulk purchasing of inventory An opportunity to become an independent businessperson with reduced operating capital A product / service with has already been established in the marketplace Technical training & managerial assistance form the from franchiser Positive results achieved by quality control & product uniformity 28