1 Chapter 15: Retailing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle,...

1

Chapter 15: Retailing

Prepared by Amit Shah, Frostburg State University

Designed by Eric Brengle, B-books, Ltd.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes

2

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

LO1

LO2

LO3


Learning Outcomes

3

Discuss nonstore retailing techniques

Define franchising and describe its two basic forms

List the major tasks involved in developing a retail marketing strategy

Describe new developments in retailing

LO5

LO6

LO7

LO4


The Role of Retailing

4

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

LO1



5

All the activities directly related to the sale of goods and services

to the ultimate consumer for personal, non-business use.



6

Over 1.6 million U.S. retailers employ more than 24 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


Review Learning OutcomeThe Importance of Retailing

7

LO1

11.6% 13%

40%

Retailing as a %of U.S. employment

Retailing as a %of U.S. businesses

Retailing as a %of GDP


Classifying Retailers

8

Explain the dimensions by which retailers can

be classified.

LO2


Classification of Retail Operations

9

OwnershipOwnership

Level of ServiceLevel of Service

Product AssortmentProduct Assortment

PricePrice


Classification of Ownership

10

IndependentRetailers

IndependentRetailers

Chain StoresChain Stores

FranchisesFranchises

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

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

Owned and operated as a group by a single organization

Owned and operated as a group by a single organization

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


Level of Service

11

Full Service Self Service

Discount stores Exclusive storesFactory outlets Warehouse clubs


Types of Stores and Their Characteristics

12

Assort-Assort-mentment PricePrice GrossGross

MarginMargin

Broad

Narrow

Broad

Med-Narrow

Medium

Med-Broad

Med-Broad

Broad

Med-Narrow

Narrow

Mod-High

Mod-High

Moderate

Mod High

Moderate

Mod Low

Mod Lo-low

Low-very low

Low

Low-High

Mod High

High

Low

Mod High

Low

Mod Low

Mod Low

Low

Low

Low-High

Type of RetailerType of Retailer

Specialty Store

Supermarket

Convenience Store

Drugstore

Full-line Discounter

Specialty Discounter

Warehouse Clubs

Off-price Retailer

Restaurant

Service Service LevelLevel

Mod Hi-High

High

Low

Low

Low-Mod

Mod-Low

Mod-Low

Low

Low

Low-High

Department Store


Price

13

Gross Margin - The amount of money the

retailer makes as a percentage of sales

after the cost of goods sold is subtracted.


Major Types of Retail Operations

14

Describe the major types of retail operations.

LO3


Major Types of Retail Operations

15

Online

http://www.walgreens.com

Department StoresDepartment Stores

Specialty StoresSpecialty Stores

SupermarketsSupermarkets

DrugstoresDrugstores

Convenience StoresConvenience Stores

Discount StoresDiscount Stores

RestaurantsRestaurants


http://www.walgreens.com/

http://www.walgreens.com/

Categories of Discount Stores

16

• Full-Line Discounters

• Specialty Discount Stores

• Warehouse Clubs

• Off-Price Discount Retailers


Discount Stores

17

Mass Merchandising- Retailing

strategy using moderate to

low prices on large quantities

of merchandise and lower

service to stimulate high

turnover of products.


Discount Stores

18

Supercenter - Retail store

combining groceries and

general merchandise goods with

a wide range of services.

Extreme-value Retailing- Smaller

stores emphasizing daily

necessities at rock-bottom

prices.


Specialty Discount Stores

19

Category Killers- Specialty

discount stores that heavily

dominate their narrow merchandise

segment.


Review Learning OutcomeTypes of Retail Operations

20

LO3

Department Stores

Department Stores

Specialty Stores

Specialty Stores SupermarketSupermarket DrugstoresDrugstores Convenience

Stores

Convenience Stores

Discount Stores

Discount Stores RestaurantsRestaurants

ScrambledMerchandising

ScrambledMerchandising

Full-line

Specialty

Warehouse

Off-price

supercenter

extreme- value

categorykiller

factoryoutlet


Nonstore Retailing

21

Discuss nonstore retailing

Techniques.

LO4


Non-store Retailing

22

Automatic VendingAutomatic Vending

Direct RetailingDirect Retailing

Direct MarketingDirect Marketing

Electronic RetailingElectronic Retailing


Direct Retailing

23

Online

http://www.avon.com

Door-to-DoorDoor-to-Door

Office-to-OfficeOffice-to-Office

Home SalesParties

Home SalesParties


http://www.avon.com/

http://www.avon.com/

Types of Direct Marketing

24

TelemarketingTelemarketing

Catalogs & Mail OrderCatalogs & Mail Order

Direct MailDirect Mail

Electronic RetailingElectronic Retailing Shop-at-home networksOn-line retailing


Review Learning OutcomeNonstore Retailing Techniques

25

LO4

Vending

Direct retailing

Direct marketing

Electronic retailing

direct mailcatalogstelemarketing

onlineshop at home

Nonstore RetailingNonstore Retailing


Franchising

26

Define franchising and describe its

two basic forms.

LO5


Basic Forms of Franchising

27

Business FormatFranchising

Business FormatFranchising

Product and Trade Name Franchising

Product and Trade Name Franchising


Franchising

28

Product and Trade Name Franchising-dealer agrees to sell in products

provided by a manufacturer orwholesaler.

Business Format Franchising- Anongoing business relationship between

a franchiser and a franchise.


Largest U.S. Franchisors


Review Learning OutcomeDefine Franchising and Describe its Two Basic Forms

30

LO5


Retail Marketing Strategy

31

List the major tasks

involved in developing a retail

marketing strategy.

LO6


Retail Marketing Strategy

32

Develop the “Six Ps”

Define & Select a Target Market


Defining a Target Market

33

STEP 1:Define the

Target Market

STEP 1:Define the

Target Market

DemographicsDemographics

GeographicsGeographics

PsychographicsPsychographics


Choosing the Retailing Mix

34

STEP 2:Choose the Retailing Mix

STEP 2:Choose the Retailing Mix

ProductProduct

PricePrice

PromotionPromotion

PlacePlace

PersonnelPersonnel

PresentationPresentation

Online

http://www.publix.com


http://www.publix.com/

http://www.publix.com/

TargetTargetMarketMarket

ProductProduct

PricePrice

PlacePlace

PromotionPromotion

PersonnelPersonnel

PresentationPresentation

The Retailing Mix


Choosing the Retailing Mix

36

The mix of products offered to

the consumer by the retailer;

also called the product

assortment or merchandise mix.


Retail Promotion Strategy

37

AdvertisingAdvertising

Public RelationsPublic Relations

PublicityPublicity

Sales PromotionSales Promotion


The Proper Location

38

Economic growth potential

Economic growth potential

CompetitionCompetition

GeographyGeography

Choosing a Community Choosing a Site

Freestanding StoreFreestanding Store

Shopping CenterShopping Center

MallMall


Important Factors for Site Choice

39

Neighborhood socioeconomics

Traffic flows

Land costs

Zoning regulations

Public transportation

Site’s visibility, parking, entrances and exits, accessibility, and safety

Fit with other stores


Shopping Center and Mall Locations

• Design attracts shoppers

• Activities and anchor stores draw customers

• Ample parking

• Can target different demographic groups

• Sharing of common area expenses

40

Expensive leases

Failure of common promotion efforts

Lease restrictions

Hours of operation

Anchor store domination

Direct competitors

Advantages Disadvantages


Retail Prices

41

QualityImage

High PriceHigh Price Low Price Low Price

Good ValueSingle Price Point

EDLP


Presentation of the Retail Store

42

Atmosphere - The overall

impression conveyed by a

store’s physical layout, décor,

and surroundings.


Presentation of the Retail Store

43

Employee type and densityEmployee type and density

Merchandise type and densityMerchandise type and density

Fixture type and densityFixture type and density

SoundSound

OdorsOdors

Visual factorsVisual factors

Online

http://www.apple.com


http://www.apple.com/

http://www.apple.com/

Personnel and Customer Service

44

Increase market share among existing customers

Suggestion SellingSuggestion Selling

Trading UpTrading UpTwo Common Two Common

SellingSellingTechniquesTechniques


Customer Service for On-Line Retailers

45

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

Product availabilityProduct availability

Simple returnsSimple returns


Review Learning OutcomeDeveloping a Retail Marketing Strategy

46

LO6


New Developments in Retailing

47

Describe new developments in retailing.

LO7


New Developments in Retailing

48

Interactivity - Consumers areinvolved in the retail experience.

M-Commerce - Purchasing goods through mobile devices.

Pop-up Shops - Temporary retailestablishments that provideflexible locations without a

long-term commitment.


1 Chapter 15: Retailing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle,...

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