Retailing

Objectives
 To

Understand the Functions of Retailers in the Marketing Channel  To Identify the Major Types of Retailers  To overview the Major Types of Franchising  To identify Strategic Issues in Retailing

Retailing

Retailers implement and conclude the actual sale of products to the final consuming units, the ultimate user.

Possession Utility Time, place, form & information utility

18% of employment (24 mil 2005) Impact on the Economy … Distribution Functions .Time.Importance Of Retailing    .Information & Possession Utility Marketing Functions . Place .

A Retailing Career Salary Societal Perspective Geographic mobility Retail Career Women in retailing Career Progression .

Prerequisites for Success Analytical Skills Leadership Hard Work Flexibility Decisiveness Success Perseverance Organization Creativity Enthusiasm Initiative Stress Risk Taking Tolerance .

Department Stores --Discount Store .Off Price Retailers .Limited Line .Convenience stores In-Store .Retailing: Major Types of Product (Retail Stores & Services)  General Merchandise Retailers .Catalog Showroom  Specialty Retailers .Category Killers .Supermarket -.Superstore--Hypermarket .Warehouse Club --.

Macy’s – Bloomingdale’s . repair  Examples:  – Boscov’s. credit. returns.delivery.Department Store Chain operations  Wide variety & selection  Full service .

Departmentalized with Centralized checkout. Safeway  Superstores –Very large outlets that carry food and nonfood products found in supermarkets. Ex: Albertson’s. self service stores with wide variety of food & some nonfood products Low mark ups & profit margins. plus most routinely purchased consumer products .Large.  Supermarkets .

Bombs Discount Store Super Center Hypermarket .8% 60.350 $20 .$20 150.000 .Fire Hit.000 60.000 70.000 400 .000 100.19% 15% .$100 Employees Annual sales per store (in millions) Gross profit margins Stock-keeping units (Number of different kinds of items stocked) 18% .000 300 .000 80.000 200 .Hyper-markets: A Sure .16% 7% . Average size (in square feet) 70.300 $10 .$50 230.600 $75 .

High markup  Examples: 7-11. STOP & GO . Sheetz     Deep Selection (Product line) Fashion response leader Personalized service Narrow Variety (Product line) High markup Ex: The GAP. bookstore – Wallpapers to Go. Wawa Circle K. a SPA.Specialty Stores   Convenience Stores  Limited variety  Shallow selection  Fast service.

Toys R US  .Ex.Other Types of In-Store Retailing General mass merchandiser – Catalog showroom – Warehouse club  Specialty mass merchandiser – Off-price retailer – Category Killer .

the category killer in the athletic footware and apparel sector founded in 1977. .Category Killers Just For Feet. cruised through the 1990s. Just For Feet has suffered financial setbacks from a lack of adapting to changes in the evolving retail landscape. However.

cost & price merchants. low margin & price operations but evolve into higher service.retailers usually enter the market with low service. Conventional department stores High: status.The Wheel of Retailing . margin. service (Wholesale clubs) . price (Specialty store) Mass merchandise retailers Low: status. margin price.

Category killers Entry of Discount stores 1955-1970 (austere) surroundings Department stores 1890 -1910 Low price s & markups. austere 1990s . few services.Wheel of Retailing High Prices & Markups. Many services. Small general stores Department Stores Factory outlets “Members Only” discount outlets Enter Department stores Low prices & Low markups. Expensive Surroundings. few services .

at age 30. they leased a 10. 2003 . it was incorporated. Mar.History    In 1936. information systems & security. purchased the Y Cash Market in Mass. Big Y® Foods. In 1947. Paul D'Amour . Progressive Grocer. a bread route salesman for the Wonder Bread Baking Co. In 1952.000 square foot store (Springfield) In the 1980’s it was a technology leader in scanning. Inc.

000 additional products such as ethnic & special dietary foods & A wide assortment of non-food items.  MARCH 25. books.000 different items. including toys. A typical 55. 2003 -.com) .It expanded its online shopping service to include Unlimited Choices.000 square foot Big Y store carries some 35. a program to give customers access to more than 30.( bigy.Their goal is to exceed their customers' evolving expectations by seeking better ways to create and deliver world class service and value. housewares and gifts not carried in a typical Big Y store.

Automatic Vending . Direct Selling (face to face) B.3 Major Types of Non Store Retailing A. Direct Marketing (non personal mediums) C.

A. Forms of Direct Selling Direct Selling Sales Visits Bank Retailing .

Forms of Direct Marketing Direct-Response Marketing Catalog Marketing $388 Television Home Shopping Telemarketing .B.

.Forms of Direct Marketing On line Retailing (E-Tailing): Advantages Not location bound Convenient Interactive Shopbots E-tailing was about 20 billion dollars in 2000 and estimated to rise to over 100 billion by 2005.

Percentage of Sales Online by Retail Segment Source: Investor’s Business Daily. 2001. Wednesday. p. September 5. A6. .

Forms of Direct Marketing Internet Retailing: Disadvantages Examination Privacy/Security .

and coffee   Advantages: small amount of space needed and no sales personnel Disadvantages: high costs of equipment and frequent servicing .C. soft drinks. chewing gum. Forms of Automatic Vending  The use of machines to dispense products includes items such as candy. newspapers. cigarettes.

Strategic Retailing Issues: The Marketing Mix Merchandise Assortment Store Atmospherics Customer Service Product Price Retail List Price Discounts Credit #1 Customers Location. Location. Location! Place Promotion Advertising Personal Selling Publicity Sales Promotion .

Strategic Issue #1. Retail Store Location  Factors affecting location Intended target market  Type of products  Suitability of site for customer access  Characteristics of existing retail operations  Three most important words in retailing: Location … location … location! .

a subjective measurement Convenience Measurements .Parking .Traffic congestion    = Convenience .Strategic Issues #1. Location Dynamics  Consumers want convenience.Distance .Time .

Community shopping center .Factory Outlets .Mini warehouse mall . age 23 yrs 2002) .Neighborhood shopping center .Regional shopping center  Non Traditional Shopping Center .LOCATION sets the trading area    Free standing structure Central Business District (CBD) Shopping Malls (avg.

13. p. .Consumer Shopping Patterns % of Retail Chains’ Customers also shopping at Sears Penny K-Mart X 66 81 75 X 80 69 60 X Retail Chains Sears Penny K-Mart Locate near to competitors for comparison shopping Source: Scarborough Research.” Stores (June 1986). “Cross Shopping Patterns.

quality. Scrambled merchandising. price with constantly changing consumer wants.Strategic Issue #2 Merchandise Assortment   Retail buyers must match their product selection.adding unrelated products to generate traffic & higher margins .

a relatively enduring selling lifecycle (over 1-2 years) .Types of Merchandise Change .The retail store merchandise must change as consumer wants change Product Selling Cycles Fad…..a relatively short term selling life cycle (under six months) Fashion….

Strategic Issue #2 Merchandise Assortment Plus: Store Location Store Hours Targeted Customers Store Promotions Store Services Store Personnel Store Layout/Image .

Many consumers value finding bargains. .

lighting . interior & exterior physical characteristics that appeal to emotions (psychological field) Components: Ambient factors.  Ambient Factors (Perceptions) .smell . Design and Social Factors.sounds .Store Atmospherics   The sum total of all store stimuli.

Layout Cleanliness .Aisles Color .Dressing Rooms Displays/Fixtures .windows .Store Atmospherics  - - Design Factors (Perceptions) Floor covering .Signage Furnishings .Ceilings Wall coverings .

Service  Insincere . selling & awareness? .Courteous  Rude behavior .Knowledgeable  Low information .Employee dress norms (casual ??)  Make it convenient & pleasurable for customers to shop and pay for merchandise  Body Scan computers: personal service.Store Atmospherics Social factors: In store service (sales personnel social & emotional labor) .

2 years 3 . are not challenging and produce high turnover Personal Service Climate.Retail jobs often pay poorly.5 years 5 + years 33% Estimates: 2005 .Calls for a Average length of employee tenure with retailers 29% 8% 30% 7 .In Store Pre sale Service  highly motivated.12 months 1 . experienced & well paid work force .

Post-Sale Services      Complaints and adjustments Credit Policies Product maintenance Product information Pick up/Delivery .

Strategic Issue

Retailer Advertising
Location + Merchandise + Services + Atmospherics + ?  Store Image
Advertising Medium(s) Newspapers - Television - Radio Magazine - Direct Mail - Videos-Web

Ideal Stores: What factors are most important in deciding where to shop? surveyed women said:
Price and Value Quality and Selection of Merchandise

44%

34%
Service

11%
Shopping Environment

11%
Source: Newspaper Advertising Bureau Inc. (1986)

Retail Positioning

Identifying an underserved market niche, or segment, and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment

Example : Wal-Mart

Target Market - Middle class family  Position - Price Leadership

– “Every Day Low Prices” – “Rollback” gimmick – “Special Buys”

Sam Walton computerized operations to lower costs to lower prices to meet target market needs with four different retail concepts: Wal-Mart discount stores Supercenters Neighborhood Markets Sam’s Club . targeting and positioning  1.Segmentation. 4. 3. 2.

Integrate “total” product offerings  Result .Added value to product .Focus on customer satisfaction .Packaged Retail Environments  Functional Advantages . Destination Resorts .Consumer loyalty increases Examples: Disneyland. Sea Cruises.

Potential Channel Conflicts Retailers Exclusive Distribution Store Loyalty High Markup +Volume Suppliers Intense Distribution Brand Loyalty Low Markup/High Volume Love .Hate Relationship .

        Perception as an Excellent Company Company Executives Analysts ---------------------------------------------------------------------BJ's (BJ) 44% 81% Costco (COST) 54% 100% Dillard's (DDS) 63% 6% Federated (FD) 33% 56% ----------------------------------------------------------------------     J. Penney (JCP) 40% 24%         ---------------------------------------------------------------------Kmart (KM) 33% 0% ---------------------------------------------------------------------Kohl's (KSS) 46% 94% ---------------------------------------------------------------------May (MAY) 46% 50% ---------------------------------------------------------------------Saks (SKS) 52% 6% ---------------------------------------------------------------------Sears (S) 57% 11% ----------------------------------------------------------------------   Target (TGT) Wal-Mart (WMT) 69% 75% 89% 94% .C.

4c (Jan/Feb 01 Survey) . Courtesy & Respect 3.Consumer Relevancy Awards       Consumer Relevancy Awards. Well packaged products to avoid damage 5.p. Easily visible prices 4.2001. Cleanliness 2. An “honest” price Chain Store Age.… Criteria: Easy to shop/access Price/Value Product Assortment Service Enjoyable Shopping experience       Consumer Rankings of store attributes: 1.

Consumer Relevancy Award Winners (2001)         Department Stores Grocery Chain Drug Store Chain Electronic Stores Specialty Store Clothing. shoes & accessories Discount Store Chain Overall . . . . . . . . . . .         J C Penny Publix CVS Best Buy Barnes & Noble GAP Wal-Mart ??? .

Narrow Retail Store Characteristics Consumer Profile? Sex Age Education Income Store Image? Conservative ....Apathetic Product Selection? Broad .Modern? ....RESEARCH Knowing Your Customer Level of Customer Service? High ...Low Sales Personnel? Hurried .

. . . 12 8 … and shopping hours dropped 4 100% 1965 1980 Year 1995 0 SOURCE: Vision for the New Millennium . Used with permission .Dual Wage Earners and Their Effect on Hours Spent Shopping 200% Dual incomes rose . 1997).(Atlanta: Kurt Salmon Associates..

&J.(b) store environment. (c) impulse buying and (d) satisfaction.Applied Research In Retailing Congruency of scent and music as a driver of in-store behavior Hypothesis Matching high arousal scent and high arousal music conditions will lead to enhanced (a) pleasure. Matilla.Wortz.A. high/low or low/high). compared to mismatched conditions (ie.Sumr2001 . Jrl of Retailing.

 For Scents: Experiment Variables – Lavender = low arousal scent – Grapefruit = high arousal scent  For Music: – Slow tempo classical = low arousal music – Fast tempo classical = high arousal music .

• Ex) When low arousal music was paired with low arousal scent. . the perceived pleasure was higher than when low arousal music was paired with high arousal scent. Survey Method – 343 customers were asked/270 participated – Most were female and under 20 – 62% said they purchased something in the store + • Matching conditions produced higher responses than the mismatching conditions.

Focus Group Interview Consumer Summary (1 of 2) Merchandise Selection Quality Prices Store Variety Personnel Appearances Overall Evaluation Positive Negative + (Mixed) + - + + + - .

Focus Group Interview Consumer Summary (2 of 2) Store Hours Merchants Bloomsburg Town Convenience Parking Atmosphere Malls Overall Evaluation Positive Negative + + + + .

spending limited amounts .very selective .sees poor variety .sees average/good variety .limited expenditures .buy basics .economy is causing minimum purchases . parking is inconvenient .Bloomsburg Retailing Viewed From Three Distinct Perspectives: Older” Consumers .captured “in town” market College Student .mobile.willing to travel to get it .waits to go home .can walk to stores Working Consumers .sees limited variety .

Retail Information System (RIS) and Merchandise Management Issues Company Goals Merchandise Information System Promotion Information Human Resources Information Operating Information Accounting and Financial Information .

place. price.Franchising  A franchiser licenses (to the franchisee) the right to distribute/sell specified products (trademark s) according to operational guide-lines (Time. supplies.) Develops & controls marketing strategies  . etc.

.

.

Franchising: Advantages        Less Capital Required Use the Experience of Others Assurance of Customers Rapid Product Distribution Smaller Probability of Failure Advertising Assistance Highly Motivated owner/operators .

Franchising: Disadvantages     Controlled by Franchiser (Power) Cost of Franchise Hard Work and Long Hours Reduced Personal Control .

Sign up to vote on this title
UsefulNot useful