International Retailing System, Chapter-1

Chapter Outline

1) What is Retailing?
Chapter-1 2) Retailers’ Marketing Decisions
Introduction to Retailing 3) Functions performed by retailers
Course Title: International Retailing System 4) Variety, Assortment and SKU
5) Services Offered by Retailers
Course Instructor :
S.M. Akterujjaman 6) Types of Retailers.
Associate Professor
Dept. of Business Administration, BUFT
E-mail: smakter2010@gmail.com
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What is Retailing?
What is Retailing? • All the activities involved in selling goods or
services directly to final consumers for their
Retailing includes all the activities involved in personal, nonbusiness use.
selling goods and services directly to final • Retailing: All the activities involved in the final
consumers for personal, non-business use. stage of distribution, i.e., selling to final
consumers.
Any organization selling to final consumers-
Whether it is a manufacturer, wholesaler, or • Retailers - businesses whose sales come
retailer-is doing retailing. It does not matter how primarily from retailing.
the goods or services are sold (by person, mail, • Retailers can be classified as:
telephone, vending machine, or internet) or where – Store retailers such as Home Depot, Sears,
they are sold (in a store, on the street, or in the Walmart
consumer’s home). – Nonstore retailers such as the mail,
3 telephone, and Internet. 4

S. M. Akterujjaman, Associate Professor, BUFT 1

International Retailing System, Chapter-1
Retailers’ Marketing Decisions
We will examine retailers’ marketing decisions
in the areas of target market, product
assortment, procurement, services and store
atmosphere, price, communication, and
location.
1. Target Market: A retailer’s most important
decision concerns the target market. Until the
target market is defined and profiled, the
retailer cannot make consistent decisions on
product assortment, store décor, advertising
messages and media, price, and service
levels. 5 6
3. Procurement: After deciding on the
product-assortment strategy, the retailer
must establish merchandise sources,
policies, and practices. In the corporate
headquarters of a supermarket chain,
specialist buyers are responsible for
developing brand assortments and
listening salespersons’ presentations.
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S. M. Akterujjaman, Associate Professor, BUFT
2. Product Assortment: The retailer’s product
assortment must match the target market’s
shopping expectations. The retailer has to
decide on product assortment breadth and
depth. Assortment is the number of different
items in a merchandise/product category A
restaurant can offer a narrow and shallow
assortment (small lunch counters), a narrow
and deep assortment (delicatessen), a
broad and shallow assortment (cafeteria), or
a broad and deep assortment (large
restaurant).
4. Services and store atmosphere: The
services mix is a tool for differentiating
one store from another. Retailers must
decide on the services mix to offer
customers: pre-purchase services, post-
purchase services, and ancillary
services. Atmosphere is another element
in the store arsenal. Every store has a
“look”. The store must embody a planned
atmosphere that suits the target market
and draws consumers toward purchase.
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International Retailing System, Chapter-1

5. Price Decision: Prices are a key positioning

factor and must be decided in relation to the 7. Location Decision: Retailers are
target market, the product and service accustomed to saying that the three keys
assortment mix, and the competition. All to success are “location, location, and
retailers would like to achieve high volumes location.” Department store chains, oil
and gross margins. companies and fast-food franchisers
exercise great care in selecting locations.
6. Communication Decision: Retailers use a
wide range of communication tools to
generate traffic and purchases. Each retailer
must use communications that support and
reinforce its image positioning.

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Variety and Assortment

Functions performed by retailers:
• Creating convenience for consumers
• Informing consumers
• Serving the other channel members
Retailing in Rhode Island
Variety is the number of merchandise
categories a retailer offers. (“Breadth of
merchandise”)
Assortment is the number of different
items in a merchandise/product category
(“Depth of Merchandise”)

S. M. Akterujjaman, Associate Professor, BUFT 3

International Retailing System, Chapter-1

SKU Services Offered by Retailers

displaying merchandise
accepting credit cards
parking
Each different item of merchandise is convenient hours
called an SKU (stock keeping unit)
home delivery
gift wrap
selection assistance
warranties

Food Retailers
Types of Retailers

Retailers Are
Classified By: Conventional Supermarket
Limited Assortment Supermarket
 Food Retailers
Supercenter
 General Merchandise Retailers

 Non-store Retailing
Warehouse Club
 Service Retailers. Convenience Store

S. M. Akterujjaman, Associate Professor, BUFT 4

International Retailing System, Chapter-1
Conventional Supermarket
Traditional grocery store with largest
product selection is called Conventional
Supermarket. For e.g. Kroger, Sprouts,
HEB, and Whole Foods.
a self-service food store offering
groceries, meat and produce with limited
sale of non-food items
about 30,000 SKUs
Supercenters
A very large supermarket that sells food and also a
wide range of other products, usually at lower prices
than other stores: The supercenter offers a full line
of groceries, an optical department, a tire and oil-
change department, a grill, portrait studio, hair
salon, photo-processing lab, plus yogurt and cookie
shops.
a supermarket combined with a full-line discount
store
100,000-150,000 SKUs
S. M. Akterujjaman, Associate Professor, BUFT
Limited-Assortment
Supermarkets
These items are often off-brand or store-brand
items. Due to their limited assortments, these
stores are typically smaller than conventional
supermarkets. Sava-A-Lot, Trader Joe's, and
Aldi are common examples of limited
assortment supermarkets.
Only about 1250 SKUs
Only 1-2 brands and sizes
40-60% lower prices
Warehouse Clubs
An organization with very large stores where customers
who are members can buy large quantities of products at
low prices.
A warehouse club is a large shop which sells goods at
reduced prices to people who pay each year to become
members of the organization that runs the shop.
For e.g. City Club, operates in Mexico only
Sam's Club, operates in the U.S., Mexico and other
countries
Offer a limited and irregular assortment of food and general
merchandise with little service at low prices.
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International Retailing System, Chapter-1
Convenience Stores
A convenience store is a small retail business that
stocks a range of everyday items such as coffee,
groceries, snack foods, confectionery, soft drinks, ice
creams, tobacco products, lottery tickets, over-the-
counter drugs, toiletries, newspapers and magazines.
provide a limited variety and assortment of
merchandise
2000-3000 SKUs
Department Stores
A department store is a large-format retail
business that sells a wide variety of products
through multiple departments, such as apparel,
jewelry, beauty, home furnishings and toys.
Retailers that carry a broad variety and deep
assortment
offer customer service
organize their stores into distinct departments
S. M. Akterujjaman, Associate Professor, BUFT
General Merchandise Retailers
Department Stores
Full-Line Discount Stores
Specialty Stores
Drugstores
Category Specialists (and Category Killers)
Extreme Value Retailers
Off-Price Retailers (Outlet Stores/Factory
Outlets)
Full-Line Discount Stores
A retail store that sells products at prices lower
than those asked by traditional retail outlets.
Full-line discount stores are retailers that offer a
broad variety of merchandise, limited service,
and low prices. The largest full-line discount
store chains are Walmart, Target, and Kmart
(Sears Holding).
retailers that offer a broad variety of
merchandise, limited service and low prices
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International Retailing System, Chapter-1
Specialty Stores
Specialty stores are retail businesses that focus
on specific product categories, such as office
supplies, men's or women's clothing, or carpet.
concentrate on a limited number of
complementary merchandise categories
provide a high level of service in relatively
small stores
deep but narrow assortments and sales
associate expertise
Category Specialists
Discount stores that specialize in a particular
category are called category specialist
retailers. They are also known as discount
specialty stores. Examples: Toys 'R' Us,
Circuit City.
big box discount stores that offer a narrow but
deep assortment of merchandise
can be ‘category killers’
S. M. Akterujjaman, Associate Professor, BUFT
Drugstore
A pharmacy which also sells toiletries
and other articles.
a store that sells medicines and various
other products (such as newspapers,
candy, soap, etc.).
specialty stores that concentrate on
health and personal grooming
merchandise
Extreme Value retailers
Extreme-value retailer- A general
merchandise discount store found in lower-
income urban or rural areas.
small, full-line discount stores (Dollar Tree)
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International Retailing System, Chapter-1

Off-Price Retailers Non-store Retailing

Off-price retailers are retailers who
provide high quality goods at cheap prices. Electronic Retailing
They usually sell second-hand goods, off- Catalog Retailing
the-season items etc. Direct mail Retailers
an inconsistent assortment of brand name Direct Selling
merchandise at low prices
Television Home Shopping
close outs/irregulars
Vending Machine Retailing
outlets stores/factory outlets

Electronic Retailing Catalogue Retailing

Electronic Retailing (online) is a

retailing format in which the retailers
the retail offering is communicated to a
communicate with customers and offer
customer through a catalogue
products and services for sale over the
internet.

S. M. Akterujjaman, Associate Professor, BUFT 8

International Retailing System, Chapter-1
Direct-Mail Retailers
communicate to customers using letters
and brochures
Television Home Shopping
a retail format in which customers
watch a television program that
demonstrates merchandise and place
orders - usually by telephone
3 Types - dedicated cable channels,
infomercials and direct response
advertising
S. M. Akterujjaman, Associate Professor, BUFT
Direct selling
Independent salespeople contact customers
directly in a convenient location, demonstrate
merchandise benefits, take orders, deliver the
merchandise or perform the service
Party-plan system - salespeople encourage
customers to act as hosts and invite friends and
coworkers
Multilevel network - people serve as master
distributers, recruiting other people to become
distributers of their network
Vending machine retailing
merchandise or services are stored in a
machine and dispensed to customers
when they deposit cash or use a credit
card
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International Retailing System, Chapter-1

Service Retailers
• Firms that primarily sell services rather than
merchandise.
• Services are generally intangible
• Services have simultaneous production and
consumption (service providers create and
deliver the service as the consumer is
using/consuming it)
• Services are perishable or time-sensitive
• Services can be inconsistent

S. M. Akterujjaman, Associate Professor, BUFT 10