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Transcript of Stores & Nonstore
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Stores & Nonstores
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Types of Retailers
Use Different Mixes
merchandise Variety (Breadth)
Assortment (Depth)
services
store design, visual merchandising
location
pricing
Infinite Variations
Survival of the Fitness -- Formats that
Satisfy the Needs of Significant Segment
PPT2-1
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Categorizing Retailers
Census Bureau
Number of Outlets
Margin versus Turnover
Location
Size
LO3
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LO3
LowTurnover
HighTurnover
High Margin
Low Margin
High-Margin/Low-Turnover
Retailers
High-Margin/High-Turnover
Retailers
Low-Margin/Low-Turnover
Retailers
Low-Margin/High-Turnover
Retailers
Retailers Classified byMargin and Turnover
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SIC System for Classifying
Retailers by Type of
Merchandise
PPT2-2
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Sales by SIC Category
PPT2-3
Source: U.S. Department of Commerce, 1998 Census of Retail Trade.
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Merchandise Offering
Variety (breadth of Merchandise)
The number of merchandise categories offered by
a retailerAssortment (Depth of Merchandise)
The number of different items (SKUs) offered in
a merchandise category
PPT2-4
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Types of Retailers
Food Retailers
Mom and Pop Stores
Convenience stores
Supermarkets
Supercenters
General MerchandiseRetailers
Department Stores
Special ty Stores
Discount Stores
Category Special is ts
Off-Price Retailer
Warehouse Club
PPT2-7
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Shopping Patterns byTypes of Retail Outlets
Outlet % Shopping Number of Weekly
Weekly Trips Spending
Supermarkets 100 2.4 $ 72.82
General merchandise 68 1.3 32.53discount stores
Fast-food restaurants 65 1.9 16.32
Drug stores 39 1.2 18.70
Convenience stores 37 2.4 19.72
Wholesale clubs 27 1.7 75.12
Specialty food stores 9 1.0 23.70
Source: Consumers Are Skeptical Again, 63rd Annual Report of the Grocery Industry, Progressive Grocer, April 1996, p.42.
PPT2-8
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Trends in the Retail Industry
Growing Diversity of Formats
New retail formats (category specialist &supercenters
Non store retailing & Electronic Retailers Increasing Industry Concentration
Centralization of Decision-Making
Information and Communication Systems
Globalization
Private labels
PPT2-6
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E-tailingLO2
E-tailing is one of the most
dynamic areas of retailingaccounting for more than 20
billion dollars in 2000 and
estimated to rise to over 100billion by 2005. Bluefly, a
leading on-line retailer since
its launch in Sept. 1997
continues to find success in
the on-line format.
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E-tailingLO2
Although the opportunities
in e-tailing can beenormous. E-tailers, such
as eToys, which closed its
web site in February of2001, have found that the
competition is intense and
sustaining a competitive e-
tail enterprise is
challenging.
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U.S. On-line Sales Forecast
Category 2000 2003
#1 Books $1.9 $ 4.9#2 Computers 5.2 10.2#3 CDs .6 2.6#4 Apparel 1.4 6.7#5 Tickets 7.8 13.6
LO2
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LO2
Category Killers
Just For Feet, the category killer in the
athletic footware and apparel sector foundedin 1977, cruised through the 1990s.However, Just For Feet has suffered
financial setbacks from alack of adapting tochanges in the evolvingretail landscape.
LO4 E hibit 4 6
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Future Changes in Retail Competition:
Supercenters
LO4: Exhibit 4.6
Number of Supercenters by Retailer
1998 1999 2000Wal-Mart 564 721 894Meijer 117 127 144
Kroger 105 126 135Kmart 102 105 115Target 14 16 31
LO4
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Leading U.S. Retailers by Sales
Wal-Mart
K-Mart
Sears
A&P
$200B
$30B
$10B
$ 8B
$ 7B$ 6B$ 5B$ 4B$ 3B$ 2B$ 1B
$800m$500m$300m$200m
1900 20 30 40 50 60 70 80 90 2000
LO4
LO4
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The Relationship of Price Versus
Nonprice Actions and Demand Curve
LO4
Price
Quantity
PriceD2
D1
Pricing Actions movethe consumer up anddown the currentdemand curve.
Non-price Actionsseek to shift thedemand curve to rightand make it moreinelastic.
Quantity
LO4
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Global Competition in Theme Park Industry
LO4
California theme park giantDisneyland saw competitionincrease dramatically with
the introduction of Legoland
from Danish competitorLego. Today, competition inthe theme park industry is
global and intense.
LO4
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Future Changes in Retail Competition
LO4
Integration of Technology1. Supply Chain Management2. Customer Management3. Customer Satisfaction
LO4
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Future Changes in Retail Competition
LO4
Increasing Use of Private Labels1. Helps in protecting retailer niche2. Sets retailer apart from competition
LO4
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Arizona Jeans Co.LO4
JCPenney has built significant store
loyalty through the introduction anddevelopmentof the private
label brandArizonaJeans Co.
MQ4
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Managerial Question
Should retailers advertise the fact that they
are the owners of the private label brand(s)
they sell?
MQ4
LO4
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Future Changes in Retail Competition
LO4
Private Label Branding Strategies
1. Developing a partnership with well-known celebrities,
noted experts, and institutional authorities.
2. Developing a partnership with traditionally higher-end
suppliers to bring an exclusive variation on their highlyregarded brand name to the market.
3. Reintroducing products with strong name recognition
that have fallen from the retail scene.
4. Branding an entire department or business; not just a
product line.
LO4
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Kmart and Martha StewartLO4
Kmart and Sears have
joined together withwell known celebrity,Martha Stewart, to
employ a private labelbranding strategy toposition themselves inthe marketplace.
LO3
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Evolution of Retail Competition
LO3
1. The Wheel of Retailing
2. The Retail Accordion
3. Retail Life Cycle
LO3
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Evolution of Retail CompetitionLO3
Wheel of Retailing TheoryNew types of retailers enter the market as
low-status, low-margin, low-price
competitors and take market share awayfrom established retailers. These newretailers gradually acquire more elaboratefacilities, becoming less efficient, and are
replaced by new low-status, low-margin,low-price retailers.
LO3
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Wheel of RetailingLO3
Some would argue that McDonalds has
become a victim of the wheel of retailing.When McDonalds started out, it served a
select menu. Over the years, the McDonalds
product offering has expanded to the
inclusion of playgrounds, thus opening theway for new, low-cost fast-food providers,such as Checkers.
LO3
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Evolution of Retail Competition
The Retail Accordion
Wide Assortment
Wide Assortment
NarrowAssortment
Time
LO3
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Evolution of Retail Competition
The Retail AccordionRetail institutions evolve from outlets that
offer wide assortments to specializedstores that offer narrow assortments andcontinue repeatedly through the pattern.
LO3
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Evolution of Retail Competition
The Retail Life CycleRetail institutions pass through anidentifiable cycle which includes:
1. Introduction2. Growth3. Maturity
4. Decline
E l i f R il C i i
LO3
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Evolution of Retail Competition:
The Retail Life Cycle
IntroductionBegins with an aggressive, bold
entrepreneur who is willing and able to
develop a different approach to retailing ofcertain products. During this stage profits
are low, despite increasing sales levels.
E l i f R il C i i
LO3
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Evolution of Retail Competition:
The Retail Life Cycle
GrowthSales and profits increase, validating theentrepreneurs good idea. New retailers
enter the market and begin to copy theretailers idea. Late in this stage both
market share and profitability approach
their maximum levels.
E l i f R il C i i
LO3
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Evolution of Retail Competition:
The Retail Life Cycle
MaturityMarket share stabilizes and profits declinebecause:
1. managers used to managing simplesmall retail outlets must now manage large
complex firms,
2. industry has over expanded, and3. competitive assaults by new retailformats.
E l ti f R t il C titi
LO3
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Evolution of Retail Competition:
The Retail Life Cycle
DeclineThe once promising idea is no longer
needed in the marketplace. As a result,market share and profits fall.
Retail Institutions in their Various
LO3: Exhibit 4.5
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Retail Institutions in their VariousStages of the Retail Life Cycle
Introduction
E-tailing (1990s)
Supercenters (1990s)
Growth
Food Courts (1980s)
Airport-based
Retailers (1980s)
Maturity
Warehouse Clubs (1970s)
Department Stores (1860s)
Supermarkets (1930s)
Convenience Stores (1960s)
Category Killers (1970s)
Decline
Variety Stores (1890s)
Factory Outlet Malls
(1970s)