Chapter 12 Copyright ©2013 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

Lamb, Hair, McDaniel

CHAPTER 15

Retailing

2012-2013

Discuss the importance of retailing in the U.S. economy

Explain the dimensions by which retailers can be classified

Describe the major types of retail operations

Discuss nonstore retailing techniques

Learning OutcomesLearning Outcomes

Define franchising and describe its two basic forms

List the major tasks involved in developing a retail marketing strategy

Describe new developments in retailing

Learning OutcomesLearning Outcomes

Discuss the importance of

retailing in the U.S. economy

The Role of RetailingThe Role of Retailing

Retailing

RetailingRetailing

The Role of Retailing

U.S. retailers employ nearly 25 million people

Retailers account for 11.6 percent of U.S. employment

Retailing accounts for 13 percent of U.S. businesses

Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP

Industry is dominated by a few giant organizations, such as Wal-Mart

Explain the dimensions by which retailers

can be classified

Classification of Retail OperationsClassification of Retail Operations

Classification of Retail Operations

OwnershipOwnership

Level of ServiceLevel of Service

Product AssortmentProduct Assortment

PricePrice

Exhibit 15.1Exhibit 15.1Types of Stores and Their Types of Stores and Their

CharacteristicsCharacteristics

Assort-ment Price Gross

Margin

Narrow

Med-Narrow

Medium

Med-Broad

Med-Narrow

Narrow

Mod-High

Moderate

Mod High

Moderate

Mod Low

Mod Lo-low

Low-very low

Low-High

Mod High

Mod Low

Low-High

Type of Retailer

Specialty Store

Supermarket

Convenience Store

Drugstore

Full-line Discounter

Specialty Discounter

Warehouse Clubs

Off-price Retailer

Restaurant

Service Level

Mod Hi-High

Low-Mod

Mod-Low

Low-High

Department Store Broad

Medium

Mod-High

Moderate

Mod High

LowSupermarket

Drugstore

Mod Hi-High

Low-Mod

Department Store

IndependentRetailers

Chain StoresChain Stores

FranchisesFranchises

Owned by a single person or partnership and not part of a larger retail institution

Owned and operated as a group by a single organizationOwned and operated as a group by a single organization

The right to operate a business or to sell a productThe right to operate a business or to sell a product

Classification of Ownership

Level of Service

Full Full ServiceService

Self Self ServiceService

Product Assortment

Classification based on BREADTHBREADTH and DEPTHDEPTH of product lines.

GrossMargin

Describe the major types of

retail operations

Major Types of Retail OperationsMajor Types of Retail Operations

Major Types of Retail OperationsDepartment StoresDepartment Stores

Specialty StoresSpecialty Stores

SupermarketsSupermarkets

DrugstoresDrugstores

Convenience StoresConvenience Stores

Discount StoresDiscount Stores

RestaurantsRestaurants

Types of Retail Operations

Department StoreDepartment Store

A store housing several departments under one roof.Each department is headed by a buyer, or department head who selects merchandise.

Specialty StoreSpecialty Store A retail store specializing in a given type of merchandise.

A retail store specializing in a given type of merchandise.

Types of Retail Operations

SupermarketSupermarket

Large, departmentalized, self-service retailer. Specializes in food. Some use scrambled merchandising.

DrugstoreDrugstoreA retail store that stocks pharmacy-related products and services as its main draw.

A retail store that stocks pharmacy-related products and services as its main draw.

Convenience StoreConvenience Store

A miniature supermarket, carrying only a limited line of high-turnover convenience goods.

Categories of Discount Stores

Full-LineDiscounters

Specialty Discount Stores

WarehouseClubs

Off-PriceRetailers

Discount Stores

Full-line discount store

A retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded “hard goods”.

Discount Stores

Mass Merchandising

A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products.

SupercenterSupercenter

Retail store that combines groceries and general merchandise goods with a wide range of services.

Discount Stores

a retail store that offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover.

a specialty discount store that heavily dominate their merchandise segment.

A Specialty Discount Store is…

A Category Killer is…

Discount Stores

Warehouse membership clubs

Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash-and-carry basis to members.

Off-price retailerOff-price retailer

A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its store and usually doesn’t ask for return privileges.

Restaurants

• Straddle the line between retail and service establishments

• Sell tangible products (food, drink) but also services (food prep, food service)

• Many could be considered specialty retailers

Discuss nonstore retailing techniques

Nonstore RetailingNonstore Retailing

Nonstore Retailing

Automatic VendingAutomatic Vending

Direct RetailingDirect Retailing

Direct MarketingDirect Marketing

Electronic RetailingElectronic Retailing

the use of machines to offer goods for sale.

Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending

machines selling billions or dollars worth of goods annually.

Automatic Vending is…

Direct Retailing

Door-to-DoorDoor-to-Door

Office-to-OfficeOffice-to-Office

Home Sales PartiesHome Sales Parties

Types of Direct Marketing

Catalogs and Mail OrderCatalogs and Mail Order

Direct MailDirect Mail

TelemarketingTelemarketing

Electronic RetailingElectronic Retailing

Shop-at-Home NetworksShop-at-Home Networks

Top E-Tailers by Sales VolumeAmerica's Top Ten Retail Businesses

Rank Company Web Sales Volume (in billions)

1 Amazon.com Inc. $34.2

2 Staples Inc. $10.2

3 Apple Inc. $5.2

4 Dell Inc. $4.8

5 Office Depot Inc. $4.1

6 Walmart.com $4.0

7 Sears $3.1

8 Liberty Media (owns QVC) $3.0

9 Office Max $2.8

10 CDW $2.7

Define franchising and describe its two basic forms

FranchisingFranchising

The Basic Forms of Franchising

Product and Trade Name Franchising

Dealer agrees to sell in products provided by a manufacturer or wholesaler.

BusinessFormat

Franchising

BusinessFormat

Franchising

An ongoing business relationship between a franchiser and a franchisee.

Top 10 Franchisors

1.1. SubwaySubway2.2. McDonald’sMcDonald’s3.3. 7-Eleven Inc.7-Eleven Inc.4.4. Hampton Inn/Hampton Inn Hampton Inn/Hampton Inn

& Suites& Suites5.5. SupercutsSupercuts6.6. H & R BlockH & R Block7.7. Dunkin’ DonutsDunkin’ Donuts8.8. Jani-KingJani-King9.9. ServproServpro10.10. ampmampm

List the major tasks involved in developing

a retail marketing strategy

Retail Marketing StrategyRetail Marketing Strategy

Retail Marketing Strategy

Develop a Retailing Mix

Define & Select a Target Market

Defining a Target Market

STEP 1:Segment the Market

DemographicsDemographics

GeographicsGeographics

PsychographicsPsychographics

Choosing the Retailing Mix

STEP 2:Choose the Retailing Mix

ProductProduct

PromotionPromotion

PersonnelPersonnel

PlacePlace

PricePrice

PresentationPresentation

Exhibit 15.3Exhibit 15.3The Retailing MixThe Retailing Mix

Choosing the Retailing Mix

ProductOffering

The mix of products

offered to the consumer by

the retailer; also called the

product assortment or

merchandise mix.

Retail Promotion Strategy

Public RelationsPublic Relations

PublicityPublicity

Sales PromotionSales Promotion

AdvertisingAdvertising

The Proper Location

Economic growth potential

CompetitionCompetition

GeographyGeography

Choosing a Community

The Proper Location

Socioeconomic characteristics

Traffic flowsTraffic flows

Land costsLand costs

Choosing a Specific Site

Zoning RegulationsZoning Regulations

Public TransportationPublic Transportation

Choosing the Type of Site

Freestanding StoreFreestanding Store

Shopping CenterShopping Center

MallMall

Mall Stores Try to Shrink

• Traditional mall retailers like Gap and AnnTaylor are trying to restructure the size of their mall stores.

• Sales per square foot have sunk in recent years.

• By shrinking the store size, retailers hope to provide a more intimate shopping experience while maximizing store efficiency.

Source: Elizabeth Holmes, "Sizing Up Property, Mall Stores Try to Shrink," March 19, 2010, B1.

Retail Prices

QualityImage

High PriceHigh Price Low Price Low Price

Good ValueSingle Price Point

Presentation of the Retail Store

AtmosphereAtmosphere

The overall impression

conveyed by a store’s

physical layout, décor,

and surroundings

Presentation of the Retail Store

Employee type and densityEmployee type and density

Fixture type and densityFixture type and density

SoundSound

OdorsOdors

Visual factorsVisual factors

Merchandise type and densityMerchandise type and density

Personnel and Customer Service

Suggestion SellingSuggestion Selling

Trading UpTrading Up

Two Common Selling

Techniques

Customer Service for On-Line Retailers

Easy-to-use Web site Easy-to-use Web site

Product availabilityProduct availability

Simple returnsSimple returns

Describe new developments

in retailing

New Developments in RetailingNew Developments in Retailing

New Developments in Retailing

InteractivityInteractivityConsumers areinvolved in the retail experience.

Consumers areinvolved in the retail experience.

M-commerceM-commercePurchasing goods through mobile devices.

Purchasing goods through mobile devices.

Chapter 15 Video

Sephora - Retailing

As you watch the video, notice what other retailing methods Sephora uses to promote sales.

http://www.cengage.com/marketing/book_content/9781133190110_lamb/videos/ch15.html

Part 4 Video

Distribution Decisions

Watch the video on White Rock. What are some of the key distribution decisions the company has to make to maintain their marketing channels?

http://www.cengage.com/marketing/book_content/1439039429_lamb/part_videos/part04.html

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