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Lecture 1 Examples of Retail Mix.pdf
- 1. McGraw-Hill/Irwin Retailing Management, Chapter 1 Introductionto the World of Retailing
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- 3. 1-3 The World ofRetailing Content 4: Customer Buying Behavior Content 1: Introduction to Retailing Content 2: Types of Retailers Content 3: Multi-Channel Retailing Content 4: Customer Buying Behavior
- 4. 1-4 Questions 1. What isretailing? 2. What are the roles of retailers in our society? 3. Do retailers add value? 4. What career and entrepreneurial opportunities does retailing offer? 5. What types of decisions do retail managers make?
- 5. 1-5 1. What isRetailing? Retailing – a set of business activities that adds value to the products and services sold to consumers for their personal or family use A retailer is a business that sells products and/or services to consumers for personal or family use.
- 6. 1-6 Examples of Retailers ◼Retailers: BigC, thegioididong, Guardian, Target, Macy’s, Walmart, Amazon.com, Avon… ◼ Firms that are retailers and wholesalers - sell to other business as well as consumers: Office Depot, The Home Depot, United Airlines, Bank of America, Costco
- 7. 1-7 Manufacturer’s Perspective The FourP’s of Marketing Distribution Retailers are part of the distribution channel Retailers are part of the distribution channel Product Price Promotion
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- 9. Typical Supply ChainNetwork Suppliers Plants Distribution Centers Customers retailers
- 10. 1-10 2. What arethe roles of retailers in our society? A Retailer’s Role in a Supply Chain ◼ Retailers are the final business within a supply chain which links manufacturers to consumers. ◼ A Supply Chain is a set of firms that make and deliver a given set of goods and services to the ultimate consumer.
- 11. 1-11 Manufacturing, Wholesaling andRetailing Vertical Integration – firm performs more than one set of activities in the channel Ex: retailer invests in wholesaling or manufacturing Backward Integration – retailer performs some distribution and manufacturing activities Ex: JCPenney sells Arizona jeans (Private Label) Forward Integration – manufacturers undertake retailing activities Ex: Ralph Lauren (New York Jones, Liz Claiborne) operates its own stores Large retailers engage in both wholesaling and retailing Ex: Wal-Mart, Lowe’s, Safeway, Brown Shoe Company
- 12. 1-12 3. Do RetailersAdd Value? a box of crackers at a grocery store ◼ costs $1 to manufacturer ◼ sells at a price of $2 Retailers add significantly to the prices consumers face Why not buy directly from the manufacturer? Does that mean that grocery stores are very profitable? Example
- 13. 1-13 Manufacturer Vendor Distributor Wholesaler Retailer $11 $14 $19.95 $10 $ 13 $ 18 Consumer Price to Distributor Price to Retailer Price to Consumer Why Not Get Rid of the Middlemen?
- 14. 1-14 ▪Better services to customers ▪Moreefficient Why Not Get Rid of the Middlemen?
- 15. 1-15 Example: Music IndustryChannel Composer Lyricist Publisher Record Company Music Retailer Artist Distributor
- 16. 1-16 Cost for CD Retailer$5.00 Record Company Manufacturing .75 Distribution 1.50 Marketing 2.00 Coop advertising 1.00 Artist/Repertoire 1.00 Artist royalty 1.25 Lyricist .75 Overhead/Profit 2.00 Total 15.25 • 4 out of 5 CDs fail to make a profit • $300,000 cost to prepare a CD for release • 30,000 recording artists
- 17. 1-17 How Retailers AddValue? ■ Provide Assortment Buy other products at the same time ■ Break Bulk Buy it in quantities customers want ■ Hold Inventory Buy it at a convenient place when you want it ■ Offer Services See it before you buy; get credit; layaway Ryan McVay/Getty Images
- 18. 1-18 How Retailers AddValue? The value of the product and service increases as the retailer performs functions. Bicycle is developed at manufacturer Bicycle is developed in several styles Bicycle is offered in convenient locations in quantities of one Bicycle is featured on floor display Bicycle can be bought on credit or put on layaway
- 19. 1-19 Examples: How RetailersAdd Values ◼ BagBorrowerSteal.com ◼ jewelry and bag rental; Get (not buy, but borrow) exactly what you want ◼ Home Depot ◼ DIYer (Do-it-yourselfer); Learn how to do it yourself with in-store clinics and online workshops
- 20. 1-20 World’s 20 LargestRetailers in 2015 Rank Company 2015 Retail Sales (000) 1 Wal-Mart Stores $353,108,000 2 The Kroger Co. $103,878,000 3 Costco $83,545,000 4 The Home Depot $79,297,000 5 Walgreens Boots Alliance * $76,604,000 6 Target $73,226,000 7 CVS Health $72,151,000 8 Amazon.com $61,619,000 9 Albertsons $58,443,000 10 Lowe’s Companies $57,486,000 11 McDonald’s $35,837,000 12 Best Buy $35,148,000 13 Apple Stores / iTunes $34,949,000 14 Publix Super Markets $32,633,000 15 Macy’s $27,002,000 Source: https://nrf.co m/resources/ annual- retailer- lists/top-100- retailers/stor es-top- retailers- 2016
- 21. 1-21 Nature of RetailIndustry is Changing Mom and Pop Store To Today’s Retailer
- 22. 1-22 Retailing is aHigh Tech Industry ◼ Selling Merchandise through the Internet ◼ Using Internet to manage supply chains ◼ Analyze POS data to tailor assortments to stores ◼ Computer systems for merchandise planning and tracking
- 23. 1-23 Retailers are aBusiness Like Manufacturers The McGraw-Hill Companies, Inc./Andrew Resek, photographer MIS Accounting Operations Finance Marketing Human Resources
- 24. 1-24 What career andentrepreneurial opportunities does retailing offer? ■ People with a wide range of skills and interests needed because retailers’ functions include ◼ Finance ◼ Purchase ◼ Accounting ◼ Management information system (MIS) ◼ Supply management including warehouse and distribution management ◼ Design and new product development
- 25. 1-25 Types of Jobsin Retailing Most entry level jobs are in store management or buying, but there’s… -accounting and finance -real estate -human resource management -supply chain management -advertising -public affairs -information systems -loss prevention -visual merchandising
- 26. 1-26 5. What typesof decisions do retail managers make? Retail Management Decision Process
- 27. 1-27 Retail Strategy ■ Needto identify the competition ▪ intratype competition (competition between the same type of retailers) (e.g., Dillard’s vs. JCPenney) ▪ intertype competition (competition between the same type of retailers sale similar merchandise, use different types of retail outlet) (e.g., Dillard’s vs. Wal-Mart) ■ Identifying customers ▪ What are the significant demographic and life-style trends ▪ Who are your target customers
- 28. 1-28 Retail Strategy ■ Aretail strategy should identify ◼ the target market ◼ the product and service mix ◼ a long-term comparative advantage
- 29. 1-29 JC Penney’s StrategicEvolution(1) ◼ Main Street (small town) private label, soft goods (apparel, home furnishings), decentralized retailer ◼ Changes in environment -- increased disposable income, growth of suburbs, interstate highway program ◼ Emulate Sears in moving to enclosed suburban malls ◼ Add hard goods (appliances, automotive) ◼ Diversify – drug stores, insurance, specialty stores ◼ Develop catalog channel
- 30. 1-30 JC Penney’s StrategicEvolution(2) ◼ Focus on department store format and soft goods develop electronic retail channel ◼ Mid-market, mall based department store, between Wal-Mart/Target and Macy’s/Dillards ◼ Competition from Target, Kohl’s ◼ Centralization to reduce cost, increase responsiveness - centralized buying, warehouse delivery ◼ Off the mall stores to increase customer convenience ◼ Improving store atmospherics ◼ Upgrading merchandise offering (e.g., Sephora, American Living by Polo Ralph Lauren)
- 31. 1-31 Wal-Mart’s Strategic Evolution ◼Small Town - Discount Store selling hard goods and soft goods ◼ limited service, efficient distribution ◼ Enter suburban markets ◼ Warehouse Clubs (Sam’s) ◼ Supercenters ◼ International Expansion ◼ Supermarkets, neighborhood markets
- 32. 1-32 Sears’ Strategic Evolution ◼Large number of merchandise categories -- appliances, hardware, apparel ◼ Malls evolved into places for buying soft goods, hard goods sold at category killers ◼ The Softer Side of Sears ◼ Refocused on value -- Testing carts in stores ◼ Acquired Lands’ End ◼ Acquired by Kmart
- 33. 1-33 Whole Foods Implementation Strategy- organic and natural foods supermarket chain Assortment beyond organic/natural foods Private labels - Whole Food™, 360 Day Value™ Love, trust, and employee empowerment Equality in compensation
- 34. 1-34 Decision Variables forRetailers Customer Service Store Design and Display Merchandise Assortment Communication Mix Location Pricing Retail Strategy
- 35. Examples of RetailMix 1. Walmart 2. Claire 3. Macy 4. Target 1-35
- 36. 1) Wal-Mart’s RetailMix 1-36 Retail Strategy Customer Service Location Merchandise Assortment Pricing Communication Mix Store Design And Display
- 37. 1) Wal-Mart’s RetailMix 1-37 Free-standing Stores Customer Service Merchandise Assortment Pricing Communication Mix Store Display And Design Location Strategy
- 38. 1) Wal-Mart’s RetailMix 1-38 Location Pricing Communication Mix Store Design and Display Customer Service Large Number of Categories Few Items in Each Category Assortment Strategy
- 39. 1) Wal-Mart’s RetailMix 1-39 Location Communication Mix Store Design and Display Customer Service Merchandise Assortment Low, EDLP Pricing Strategy
- 40. 1) Wal-Mart’s RetailMix 1-40 Communication Mix TV and Newspaper Insert Ads Location Pricing Store Design and Display Customer Service Merchandise Assortment
- 41. 1) Wal-Mart’s RetailMix 1-41 Store Design and Display Basic, Special Displays for Products Customer Service Location Merchandise Assortments Pricing Communication Mix
- 42. 1) Wal-Mart’s RetailMix 1-42 Customer Service Limited Location Merchandise Assortment Pricing Communication Mix Store Design and Display
- 43. 2) Claire’s RetailMix 1-43 Retail Strategy Customer Service Location Merchandise Assortment Pricing Communication Mix Store Design and Display
- 44. 2) Claire’s RetailMix 1-44 Enclosed malls Location Strategy
- 45. 2) Claire’s RetailMix 1-45 Jewelry, accessories and cosmetics for tweens and teens Assortment Strategy
- 46. 2) Claire’s RetailMix 1-46 Location Communication Mix Store Design and Display Customer Service Merchandise Assortment Modest with Sales Pricing Strategy
- 47. 2) Claire’s RetailMix 1-47 Communication Mix TV and Magazine Ads Store Design And Display Customer Service Location Merchandise Assortment Pricing
- 48. 2) Claire’s RetailMix 1-48 Store Design and Display Bright, fashionable and fun boutique layout Customer Service Location Merchandise Assortments Pricing Communication Mix
- 49. 2) Claire’s RetailMix 1-49 Customer Service Modest Location Merchandise Assortment Pricing Communication Mix Store Design & Display
- 50. 3) Macy’s RetailMix 1-50 Retail Strategy Customer Service Location Merchandise Assortment Pricing Communication Mix Store Design and Display
- 51. 3) Macy’s RetailMix 1-51 Enclosed Malls Customer Service Merchandise Assortment Pricing Communication Mix Store Display &Design Location Strategy
- 52. 3) Macy’s RetailMix 1-52 Location Pricing Communication Mix Store Design & Display Customer Service Many Items in Apparel and Soft Home Assortment Strategy
- 53. 3) Macy’s RetailMix 1-53 Location Communication Mix Store Design & Display Customer Service Merchandise Assortment Moderate with Frequent Sales Pricing Strategy
- 54. 3) Macy’s RetailMix 1-54 Communication Mix TV, Newspaper Ads and Special Events Store Design & Display Merchandise Assortment Pricing Customer Service Location
- 55. 3) Macy’s RetailMix 1-55 Store Design and Display Racetrack with Displays Customer Service Location Merchandise Assortments Pricing Communication Mix
- 56. 3) Macy’s RetailMix 1-56 Customer Service Modest Location Merchandise Assortment Pricing Communication Mix Store Design & Display
- 57. 4) Target’s RetailMix 1-57 Retail Strategy Customer Service Location Merchandise Assortment Pricing Communication Mix Store Design and Display
- 58. 4) Target’s RetailMix 1-58 Free-standing Stores Customer Service Merchandise Assortment Pricing Store Display & Design Location Strategy
- 59. 4) Target’s RetailMix 1-59 Location Pricing Store Design & Display Customer Service Large Number of Categories Private Labels Few Items in Each Category Assortment Strategy
- 60. 4) Target’s RetailMix 1-60 Location Communication Mix Store Design & Display Customer Service Merchandise Assortment Low to Modest Pricing Strategy
- 61. 4) Target’s RetailMix 1-61 Communication Mix TV and Newspaper Insert Ads
- 62. 4) Target’s RetailMix 1-62 Store Design and Display Colorful, wide aisles displays for products with a grid layout Customer Service Location Merchandise Assortments Pricing
- 63. 4) Target’s RetailMix 1-63 Customer Service Limited
- 64. 1-64 Ethical Situations fora Retail Manager ◼ Should a retailer sell merchandise that they suspect utilized child labor? ◼ Should it advertise that its prices are the lowest in an area even though some items are not? ◼ Should a buyer accept an expensive gift from a vendor? ◼ Should salespeople use high-pressure sales when they know the product is not the best for the customer’s needs? ◼ Should a retailer give preference to minorities when making a promotion decision? ◼ Should a retailer treat some customers better than others?
- 65. 1-65 Checklist for MakingEthical Decisions