Retail Marketing Chapter 2: Types of Retailers

1. McGraw-Hill/Irwin
Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 2
Types of Retailers

2. RETAILER CHARACTERISTICS
Four elements of the retail mix are
particularly useful for classifying retailers:
1- The type of merchandise and/or services offered,
2- The variety and assortment of merchandise offered,
3- The level of customer service, and
4- The price of the merchandise.
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3. Type of Merchandise
NAICS Code Structure:
• A hierarchical, six-digit code based on the type of products
and services it sells.
• The first two digits identify the firm's business sector.
• The remaining four digits identify various subsectors, offering
more detailed information about the type of products and
services.
• Example 1: Clothing and Clothing Accessories Retailers
1. Business Sector (First Two Digits):
1.44: Retail Trade
2. Subsector (Remaining Four Digits):
1.4481: Clothing Stores
3. Further Subdivision (if applicable):
1.44811: Men's Clothing Stores
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4. • Pakistan:
• Example: Generation is a Pakistani clothing retailer
specializing in women's clothing. Its NAICS code would
fall under 4481.
• Example: Junaid Jamshed is another Pakistani clothing
retailer, primarily focusing on men's and women's
clothing. It also falls under 44811.
• Abroad:
• Example: H&M (Hennes & Mauritz) is a multinational
clothing retailer based in Sweden, offering a wide range
of clothing and accessories for men, women, and
children. Its NAICS code would fall under 4481.
• Example: Macy's, a well-known American department
store, includes various sections for clothing, including
men's, women's, and children's apparel. Its NAICS
code would also fall under 4481
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NAICS Code Exampls:

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6. 2--6
Variety and Assortment
• Variety (breadth of merchandise)
The number of merchandise categories
• Assortment (depth of merchandise)
The number of items in a category (SKUs)
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7. Variety (Breadth of Merchandise):
• Variety refers to the number of merchandise categories or
product lines that a retailer offers in their store. It represents
the diversity of product categories available to customers.
• Examples:
• Pakistan:
• Chase Up: Chase Up is a retail chain in Pakistan that
offers a high variety of merchandise. They sell clothing,
groceries, electronics, toys, home goods, and more,
covering a wide range of product categories.
• Abroad:
• Amazon: Amazon, the multinational e-commerce giant, is
known for its extensive variety. They sell products in
numerous categories, including electronics, books,
clothing, groceries, and even digital services like Amazon
Web Services (AWS)
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8. Assortment (Depth of Merchandise):
Assortment relates to the depth or variety within a specific
merchandise category. It measures the number of items or
Stock Keeping Units (SKUs) available within a particular
product line.
• Examples:
• Pakistan:
• Servis Shoes: This Pakistani footwear retailer
specializes in shoes. Within the "shoes" category, they
have a deep assortment, offering various styles, sizes,
and colors of shoes for men, women, and children.
• Abroad:
• Best Buy: Best Buy is an electronics retailer in the United
States. Within the "electronics" category, they provide a
deep assortment, offering a wide range of products, from
laptops and televisions to headphones and gaming
consoles
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9. Classification Based on Services Offered
• Displaying merchandise,
• Accepting credit cards,
• Providing parking,
• Being open at convenient hours
• Home delivery and gift wrapping.
• Personal assistance
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10. Displaying Merchandise:
Retailers in this category focus on how they present and
showcase their products to attract customers. This can
include visually appealing displays and store layouts.
• Examples:
• Pakistan: Sapphire is a Pakistani clothing retailer known for
its aesthetically pleasing stores and well-organized displays,
making it easy for customers to browse their collections.
• Abroad: Apple Stores worldwide are known for their
minimalist and interactive product displays, allowing
customers to experience Apple's devices before purchasing
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11. Accepting Credit Cards:
Retailers in this category offer the convenience of credit
card payments, making transactions easier for customers.
• Examples:
• Pakistan: Carrefour, a global retail chain with stores in
Pakistan, accepts various credit cards, providing customers
with multiple payment options.
• Abroad: Target, a major U.S. retailer, not only accepts
credit cards but also has its own branded credit card,
offering discounts and rewards to cardholders
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12. Providing Parking:
Retailers in this category offer on-site parking facilities,
making it convenient for customers to visit their stores.
• Examples:
• Pakistan: Dolmen Mall in Karachi provides ample parking
space for customers visiting the mall, which houses
various retail stores.
• Abroad: Walmart stores in the United States often have
large parking lots to accommodate a high volume of
shoppers
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13. Being Open at Convenient Hours:
Retailers in this category prioritize extended operating
hours to accommodate customers' schedules, including
evenings and weekends.
• Examples:
• Pakistan: Naheed Supermarket in Karachi is known for its
extended operating hours, staying open late into the night,
making it convenient for shoppers.
• Abroad: Many 24-hour convenience stores, like 7-Eleven in
the U.S., are open around the clock, catering to customers
at any hour
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14. Home Delivery and Gift Wrapping:
Retailers in this category offer home delivery services
for purchased items and may provide gift wrapping for
special occasions.
• Examples:
• Pakistan: TCS (Tranzum Courier Service) in Pakistan
offers home delivery services for various e-commerce
retailers, ensuring customers receive their orders at their
doorstep.
• Abroad: Amazon Prime in the United States provides
expedited shipping and gift wrapping options for
customers who want their purchases delivered quickly
and beautifully packaged.
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15. Personal Assistance:
Retailers in this category offer personalized assistance
to customers, such as personal shoppers or in-depth
product knowledge.
• Examples:
• Pakistan: Some high-end clothing boutiques in
Pakistan offer personal shopping assistance, helping
customers select outfits that match their style and
preferences.
• Abroad: Nordstrom in the U.S. is known for its
exceptional customer service, offering personal stylists
who assist customers in finding clothing and accessories
tailored to their needs.
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16. Classification Based on the Price of the Merchandise
• Services attract customers to the retailer, but they also are costly.
• To make a profit, retailers that offer broader variety, deeper
assortments, and/or additional services need to charge higher
prices.
• Stocking a deep and broad assortment, like the one Wheelworks
offers in bicycles, is appealing to customers but costly for retailers.
• When a retailer offers many SKUs, its inventory investment
increases because the retailer must have backup stock for each and
every SKU
• For example, department stores have higher prices than discount
stores partially because of their higher costs.
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17. 1. Higher Prices with Broader Variety and Deeper Assortment:
Some retailers choose to differentiate themselves by offering a wide
variety of products and a deep assortment within each category. This
approach can attract customers seeking a comprehensive selection, but it
often comes at a higher price point.
• Examples:
• Abroad: Nordstrom is a well-known U.S. department store that offers a
broad variety of high-quality clothing, accessories, and other merchandise.
The depth of their assortment in fashion and designer brands contributes
to their higher prices compared to discount retailers.
• Pakistan: Liberty Books in Pakistan offers a vast selection of books,
including international bestsellers and niche categories. The extensive
variety and deep assortment contribute to slightly higher book prices
compared to some discount bookstores
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18. 2. Lower Prices with Narrower Variety and Shallower Assortment:
Retailers in this category prioritize affordability by offering a limited
variety and a shallower assortment within product categories. They
often cater to price-conscious customers.
• Examples:
• Abroad: Walmart, a global discount retailer, is known for its lower
prices across various product categories, but it may have a narrower
variety and shallower assortment compared to department stores.
• Pakistan: Utility Stores Corporation in Pakistan focuses on
offering essential goods at affordable prices to cater to the needs of
the economically disadvantaged population. While their variety and
assortment may be limited, prices are lower
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19. 3. Balanced Pricing with Moderate Variety and Assortment:
Some retailers strike a balance between offering a moderate
variety and assortment while maintaining competitive pricing. They
aim to appeal to a broad customer base.
• Examples:
• Abroad: Target in the United States positions itself as a retailer that
provides a reasonable variety and assortment of products while
offering competitive prices. They aim to serve a wide range of
consumers seeking a mix of affordability and choice.
• Pakistan: Hyperstar in Pakistan offers a combination of grocery
items, electronics, clothing, and more, catering to various customer
needs. They aim to strike a balance between variety and pricing.
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20. 4. Specialty Retailers with Unique Value Propositions:
Some specialty retailers focus on providing a unique value
proposition that justifies their pricing strategy. They may offer
specialized products or services not easily found elsewhere.
• Examples:
• Abroad: Whole Foods Market, an American grocery chain, offers a
unique value proposition of organic and premium-quality products,
justifying its relatively higher prices compared to conventional
grocery stores.
• Pakistan: Sana Safinaz, a Pakistani fashion retailer, specializes in
high-end, designer clothing, which comes with premium pricing due
to its unique designs and quality
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