Types of Retailers
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Transcript of Types of Retailers
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TYPES OF RETAILERS
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Retailer Characteristics type of merchandise sold variety and assortment of merchandise level of customer service price of the merchandise
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Types of Merchandise The US Bureau of the Census uses a
hierarchical set of four digit codes called the Standard Industrial Classification (SIC).
The US Bureau along with Mexico and Canada, adopted a new classification system, the North American Industrial Classification System (NAICS).
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NAICS Code Hierarchy
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Variety and Assortment Variety is the number of different
merchandise categories a retailer offers (breadth).
Assortment is the number of different items in a merchandise category (depth)
Each different item of merchandise is called a stock keeping unit (SKU).
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Services Offered Customers expect retailers to provide
some services--accepting credit cards, proving parking, and displaying merchandise.
Some retailers go beyond this and provide other services such as gift wrapping and home delivery, at a charge.
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Price Offering more depth and breadth of
merchandise is appealing to customers. Offering services attracts customers. To make a profit with more depth and
breadth or services retailers must charge higher prices.
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Sales and Growth Rate for Retail Sectors
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Food Retailers Conventional Supermarket Limited Assortment Supermarket Supercenter Warehouse Club Convenience Store
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Characteristics of Food Retailers
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Supermarket Self-service Offer
Groceries Meat Produce Limited non-food items
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Supercenters Fastest growing sector of food retailer. 150,000 to 200,000 sq. ft. stores that
combine a superstore and a full-line discount store.
Sell groceries at low prices to build store traffic.
One stop shopping
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Warehouse Clubs Large ( about 100,000 sq. ft.) and
located in low rent districts. Little service at low prices to ultimate
consumers and small businesses. Reduce costs by carrying a limited
assortment of fast-selling items. Members must pay an annual fee
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Convenience Stores Modern versions of the neighborhood
mom-and pop stores. Convenient location in a 2,000 to 3,000
sq. ft. store with a speedy checkout. Limited variety and assortment of
merchandise. Gasoline and cigarettes account for over
55% of annual sales.
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General Merchandise Retailers Department stores Full-line discount stores Specialty stores Drug stores Category specialists Home improvement centers Off-price retailers.
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Characteristics of General Merchandise Retailers
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Department Stores Broad variety and deep assortment Offer considerable customer services Organized into separate departments for
displaying merchandise women’s , men’s and children’s clothing and
accessories home furnishing and furniture kitchenware and small appliances.
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Department Stores Categorized into three tiers
Tier One Upscale High-fashion chains Exclusive designer merchandise
Neiman Marcus Bloomingdale’s Saks Fifth Avenue
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Department Stores Categorized into three tiers
Tier Two Modestly priced merchandise Less customer service
Macy’s Dillards
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Department Stores Categorized into three tiers
Tier Three Value-oriented More price-conscious consumers
Sears Kohl’s JCPenny
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Full-Line Discount Stores Offers low prices Broad variety of merchandise both
private labels and national brands. Major Players
Walmart Target Kmart
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Specialty Stores Narrow variety but deep assortment High level of service Target specific market segments
Victoria’s Secret Levi’s Apple Polo/Ralph Lauren
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Drug Stores Specialty stores that concentrate on
health and personal grooming merchandise.
Prescription pharmaceuticals represent almost 70% of sales. Walgreens CVS Rite Aid
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Category Specialists Big-box store that offers a narrow variety
but deep assortment . Often called “category killers” They can use their buying power to
negotiate lower prices, excellent terms, and assured supply when items are scarce.
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Category Specialists
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Home Improvement Centers Combines the traditional hardware store
and lumberyard. Focuses on providing material and
information. Merchandise is displayed in a
warehouse atmosphere. Salespeople are available to assist
customers in seeking merchandise and to tell them how to use it.
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Extreme-Value Retailers Small discount stores Limited merchandise assortment Very low prices Target market low-income consumers
Dollar General Family Dollar Dollar Tree
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Off-Price Retailers Inconsistent assortment of brand name,
fashion-oriented soft goods at low prices.
Typically, merchandise is purchased at one-fifth to one-fourth of the original wholesale price.
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Services Retailing Sell services rather than products Important differences
Intangibility Simultaneous Production and Delivery Perishability Inconsistency of the Offerings
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Continuum of Merchandise and Services Retailers
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Types of Ownership Another way to classify retailers is by
their ownership. Independent, Single-Store Establishment Corporate Chains Franchises
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Independent, single-store establishments Many retail start-ups are owner-
managed Direct contact with customers Not bound by bureaucracies inherent in
large retail organizations Very flexible
React quickly to customer needs and market changes
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Corporate Retail Chain Operates multiple retail units under
common ownership. Centralized decision making for defining
and implementing strategy. May be two stores or many thousand
stores.
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Franchising Contractual agreement between a
franchiser and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchiser.
More than 40 percent of all U.S. retail sales are made by franchisees.
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Franchising Franchisees are motivated to make their
store successful because they receive the profits after the royalty is paid.
The franchiser is motivated to develop new products and systems to promote the franchise because it receives a royalty on all sales.
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Retailers Using Franchise Business Model