What is Retailing?

• 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.
 Retailing

“First Moment of Truth”—the critical

three to seven seconds that a shopper
considers a product on a store shelf.

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Retailers’ Uniqueness in Channel

Sell Smaller
Quantities,
More Frequently

Retailers’
Uniqueness

Emphasize Provide
Atmospherics Assortments
 Retailers’ Uniqueness in Channel
What Are Atmospherics?
The controllable characteristics of retail space which entice customers to enter the
store, shop, and purchase are atmospherics. 
Features of atmospherics include:
• A layout of the space including the location of clerks and check out counters
• The overall temperature of the retail space
• Scents or aromas designed to excite and entice the shopper
• The location of pricing information or other signage
• Music to inspire, sooth, or stimulate
• Decorations which represent the brand

Uniqueness of Retail Offering Finally, the convenience of their locations is less important

for retailers with unique, differentiated offerings than for retailers with an offering similar to other retailers. For
example,
Bass Pro Shops provides a unique merchandise assortment and store atmosphere.
Interwood & Habitt provides a unique merchandise assortment and store atmosphere.
Types of Retailers

Independent Independent retailers own and operate

Retailers only one retail outlet – they account for
more than three-fourths of all retail
establishments.

A retail chain owns and operates

Chains
multiple retail outlets. By far, chain stores
sell more merchandise than any other
category of retailers.
 Retailing
Types of Retailers
Classification Characteristics:
Amount of service

Product lines

Relative prices

Organization
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 Retailing
Types of Retailers
Amount of Service Classifications

Self-service

Limited service

Full service

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 Retailing
Types of Retailers: Self Service

A type of retail business where customers help themselves to the products that they wish to
purchase. Examples of business models that permit their customers an aspect of self-
service might include a self-service food buffet, a self-service gas station or a self-
service market.

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 Retailing
Types of Retailers: Limited Service

A retailer that provides only a limited number

of services to shoppers, but usually sells
goods at a discount.

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 Retailing
Types of Retailers: Full Services

Full service retail stores employs qualified, customer-friendly and

informative sales force along with a wide range of desired goods at highly
reasonable retail prices.

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 Types of Retailers
Product Line Classifications

Specialty stores

Department stores

Convenience stores

Superstores

Category killers

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 Types of Retailers
Product Line Classifications: Specialty Stores

Specialty Retailers: Specialize in a specific category of products.

Interwood, Jewelers, Toys 'R' Us, Victoria's Secret, and Nike
are examples of specialty retailers.

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 Types of Retailers
Product Line Classifications: Discount Stores

A discount store or discount shop is a retail shop which sells products at prices that are lower
than the typical market price.

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 Types of Retailers
Product Line Classifications: Covenienence Stores

A convenience store, convenience shop, or corner store is a small retail

business that stocks a range of everyday items such as coffee, groceries, snack
foods, confectionery, soft drinks, tobacco products, over-the-counter drugs,
toiletries, newspapers, and magazines.

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 Types of Retailers
Product Line Classifications: Superstores

A very large retail store which sells a vast variety of product lines ranging apparels,
footwears, sports goods, electronic devices, computers, home appliances, food,
cosmetics and many more. ... The examples of superstores are Wall mart, Hyperstar
etc.

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 Types of Retailers
Product Line Classifications: Category Killers

A category killer is a retailer that specializes in and carries a deep product

assortment within a given category and through selection, pricing and market
penetration obtains a massive competitive advantage over other retailers. Chains
such as Barnes & Noble, Best Buy, and Staples are considered category killers.

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 Types of Retailers
Relative Price Classifications

Discount Off-price
stores retailers

Factory Warehous
outlets e clubs

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 Types of Retailers
Organizational Approach

Corporate chains Voluntary chains

Retailer Franchise
cooperatives organizations

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 Types of Retailers
Organizational Approach

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 Types of Retailers
Organizational Approach

Corporate chains are two or more outlets that are commonly owned
and controlled.
• Size allows them to buy in large quantities at lower prices and gain
promotional economies
• Macy’s
• CVS

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 Types of Retailers
Organizational Approach

Voluntary chains are wholesale-sponsored groups of independent

retailers that engage in group buying and common merchandising.
• IGA
• Western Auto

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 Types of Retailers
Organizational Approach

Retailer cooperatives are a group of independent retailers that band

together to set up a joint-owned, central wholesale operation and
conduct joint merchandising and promotion efforts.
• Ace Hardware
• Associated Grocers

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 Types of Retailers
Organizational Approach
Franchises are contractual
associations between a
manufacturer, wholesaler, or service
organization (a franchisor) and
independent business people
(franchisees) who buy the right to
own and operate one or more units
in the franchise system.

13-18
Nonstore Retailing

Direct retailing is the portion of direct

Direct
marketing in which ultimate consumers,
Retailing
not business customers, do the buying.

Direct selling: the sale of a consumer

Direct
product or service, person-to-person,
Selling
away from a fixed retail location.

Vending Vending machines allow customers to

Machine purchase and receive merchandise
Sales from a machine.
 Theories in Retailing
• Wheel of retailing: from a simple, low margin retailer to adding value through
additional services and going on to a premium store.
• Accordion theory: a general retailer grows into a specialized one and then on to
being a bigger general retailer
• Theory of natural selection: environmental factors influence the evolution of
retail stores
• Retail life cycle: innovation, quick growth, maturity and decline

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Theories in Retailing

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Theories in Retailing

28
Theories in Retailing Theory of
natural selection

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Theories in Retailing

30
Theories in Retailing

31
How Retailers Add Value
• Breaking Bulk
-Buy it in quantities customers want
• Holding Inventory
-Buy it at a convenient place when you want it
• Providing Assortment
-Buy other products at the same time
• Offering Services
-See it before you buy, get credit, layaway
 The Four P’s of Marketing

Retailersare
Retailers are part
part of of
thethe
distribution
distribution channel
channel
Product

Distribution Price

Promotion
Decision Variables for Retailers
Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix
Globalization of Retailing
• Source Merchandise From Around the World
• Wal-Mart Operates in U.S., China, Mexico, UK, Germany
• Carrefour has Stores in 25 Countries
Retail Environment Differs Across
the Globe
US Japan
Concentration High Medium

Store Size Big Small

Role of Low High

Wholesaling

Efficiency High Low

Categories of Shoppers
• Identified by Cook & Walters
• Task focused shopper – visits the store to buy specific things he has
planned for
• Convenience, minimum time, easily accessible goods, pleasing store format
• Grocery shopping is an example
• Leisure shopper – more interested in the ambience and
environment
• Has plenty of time, wants to have a good time while shopping
• Lifestyle stores are examples
 Category of Shoppers
• Convenience goods (low value): probable gain from shopping and making
comparisons is small compared to the time, effort and mental discomfort
required in the search -toothpaste
• Shopping goods (high value): gain is large - refrigerator
• Specialty goods: clearly distinguished by brand preferences – Maruti Zen car or
Tag-Heuer watch
 Retail Strategy
• Positioning of the retailer
• Merchandising
• Pricing strategy
• Target market segments
• Customer service
• Customer communication

SDM- Ch 10 39
 Positioning Strategy
• Wide range with a high value add – Lifestyle brand of stores
• Limited range but a high value add – Tanishque jewelry store
• Limited range with a limited value add – Bata stores
• Wide range of goods but a limited value add – a Food World outlet

SDM- Ch 10 40
 Merchandising
• A set of activities involved in acquiring goods and services and making them
available at the places, times and prices and the quantity that enable a retailer to
reach his goals
• The most critical function in retail
• Directly effects the revenue and profitability of the store
• Also takes into account the assortment of goods and their quality

SDM- Ch 10 41
 Customer Service Strategy
• Developed to create ‘stickiness’ in customers
• Personal data collected using IT – including purchasing practices and preferences
• Customer loyalty programs planned
• Create ‘customer’ delight
• Location strategy to give competitive advantage
• Understanding the buying profile of the customers
Customer Communication
• The manner in which the retailer makes himself known to
his customers. Has two parts to it:
• The messages which the retailer sends to his customers and
prospects
• The word of mouth support which satisfied customers give to the
retailer by talking to others
• Retailer communicates about:
• Announcing the opening of a store
• Promotions running in the store
• Additional facilities introduced by the stores