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Chapter
14

Retailing

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McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 After studying this chapter
you should be able to:
► Understand the economic importance of
retailing and its role in the marketing channel.

► Cite evidence of the globalization of retailing.

► Discuss some of the advances in retailing

technology.

► Explain the reasons behind the growth of non-

store retailing

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 After studying this chapter
you should be able to:
► Describe
key factors in the retail
marketing environment, and understand
how they relate to retail strategy.

► Citeimportant ethical and legal issues

facing retailers.

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 The Role of Retailing

► Retailing:
 An important part of many marketing
channels, includes all the activities involved in
selling products and services to the ultimate,
or final, consumer.

► Retail Sales:
 Sales to final consumers; wholesale sales are
those to other businesses that in turn resell the
product or service, or use it in running their
own businesses.

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 Economic Importance
Sales Profits
Company ($ millions) ($ millions)
Employees
1. Wal-Mart 219,812 6,671 1,383,000
2. Home Depot 53,553 3,044 256,300
3. Kroger 50,098 1,043 288,000
4. Sears Roebuck 41,078 735 310,000
5. Target 39,888 1,368 223,550
6. Albertson’s 37,931 501 220,000
7. Kmart 36,910 (95) 240,525
8. Safeway 34,301 1,254 193,000
9. JC Penny 32,004 98 270,000
10. In the U.S., 3 24,623
Walgreen million retailers
886 generate 106,000
$2.5 trillion in revenues annually!

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 Retailers’ Uniqueness
in the Channel

Sell Smaller
Quantities of Product
Provide
More Frequently
Product
Assortment

Emphasize
Store
Atmospherics

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 Types of Retailers

► Independent ► Chains:
Retailers:  A retail chain owns
 Own and operate and operates
only one retail multiple retail
outlet. outlets.

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 Types of Retailers

►Franchising:
►
Franchising:
 Retail
Retailfranchising
franchisingisisaaform
formofofchain
chainownership
ownership
ininwhich
whichaafranchisee
franchiseepays
paysthe
thefranchisor
franchisor
(parent
(parentcompany)
company)feesfeesororroyalties
royaltiesand
andagrees
agrees
totorun
runthe
thefranchise
franchisebybyprescribed
prescribednorms,
norms,inin
exchange
exchangeforforuse
useofofthe
thefranchisor’s
franchisor’sname.
name.
►McDonald’s
►
McDonald’s
►Jiffy Lube
►
Jiffy Lube
► There are
Holiday Inn 3,000 franchise companies
►Holiday Inn
in the U.S. that operate 558,000
separate establishments!

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 Top 10 International
Retail Franchises
1. McDonald’s
2. Great Wraps
3. Subway
4. Kentucky Fried Chicken
5. Kumon Math and Reading Centers
6. Meineke Discount Muffler Shops
7. TCBY Treats
8. Thrifty Car Rental
9. Blimpie Subs & Salads
10. Mail Boxes Etc.

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 Types of Retailers

► Leased Departments:
 Leased departments are sections in a retail
store that the owner rents to a second
party.

► Cooperatives

► Retail Cooperatives:
 Independent retailers banding together to
counter chain store competition.

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 Trends in Retailing

Global
Retailing Technological
Advances Stronger
Customer
Service

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 Nonstore Retailing

► Direct Retailing
► Direct Marketing
► E-Retailing
► Direct Selling Stores account for
90% of retail sales, but
► Vending Machine Sales
nonstore retailing is
growing faster than
store-based
retailing!

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 Developing Retailing Strategy

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 Uncontrollable Factors

► Consumers
► Competition
► Economic Conditions
► Seasonality

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 Controllable Factors

► Location
 Central Business District (CBD)
 Strip Centers
 Shopping Malls
 Freestanding Sites

► Goods and Services

► Pricing

► Marketing Communications

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 Types of Strategy Mix
Specialty Stores
►Specialty
► Stores
Department Stores
►Department
► Stores
Convenience Stores
►Convenience
► Stores
Margin and
►Margin
► and Turnover
Turnover Strategy
Strategy
Mixes
Mixes
Gross Margin
►Gross
► Margin
Inventory Turnover
►Inventory
► Turnover

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 Ethical and Legal Issues
in Retailing
Consumer Fraud
►Consumer
► Fraud
Supplier Labor
►Supplier
► Labor Practices
Practices
Retail Theft
►Retail
► Theft
Slotting Allowances
►Slotting
► Allowances
Use of
►Use
► of Customer
Customer
Information
Information
Ecological Considerations
►Ecological
► Considerations

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