retailing: bricks and clicks. 2 chapter objectives define retailing how retailing evolves retail...
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Retailing: Bricks and Clicks
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Chapter Objectives
• Define retailing
• how retailing evolves
• Retail classifications
• Nonstore retailing
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Chapter Objectives
• B2C e-commerceits benefits, limitations, and future
promise
• store image positioning strategycreating a desirable image in the
marketplace
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Retailing: Special Delivery
• Retailing:
• the process by which goods and services are sold to consumers for their personal use
CABELA’S
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Retailing: Special Delivery
• The retailer adds/subtracts value from the offering
• with its image, • inventory, • service quality, • location, and • pricing policy.
CABELA’S
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Retailing: A Mixed (Shopping) Bag
• Retailing is big business: one of every five U.S. workers is employed in retailing.
BARNES and NOBLE
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Retailing: A Mixed (Shopping) Bag
• Retailers = final channel of distribution,
• providing utilities to customers time, place, and ownership.
BARNES and NOBLE
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The Evolution of Retailing
• The wheel-of-retailing hypothesisNew types of retailers
• enter the market • by offering lower-priced goods.
They gradually improve • facilities, quality and • assortment of merchandise, and amenities
and increase prices.
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The Evolution of Retailing (cont’d)
• The retail life cycleRetailers are born, grow and mature, and eventually
die or become obsolete.
Introduction stage Growth stage Maturity stage Decline stage
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The Evolution Continues: What’s “In Store” for the Future?
• Demographics: • retailers must find new ways to sell to diverse
groups.
convenience for working consumers
Catering to specific age segments
Recognizing ethnic diversity
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The Evolution Continues: What’s “In Store” for the Future? (cont’d)
• TechnologyInternet and e-tailingElectronic point-of-sale (POS) systemsCart-top computer
• to scan purchases as customers move through store
RFID tagsIntellifit System
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The Evolution Continues: What’s “In Store” for the Future? (cont’d)
• GlobalizationNeed to adjust to different conditions
• around the world
Innovative retailing concepts • developing overseas• influencing U.S. retailing
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Classifying Retail Stores
• what they sell: merchandise mix
• level of serviceSelf-service
Full-service
Limited service
NEIMAN MARCUS
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Classifying Retail Stores (cont’d)
• Classifying by merchandise selectionMerchandise assortment:
• selection of products a retailer sells
Merchandise breadth: • number of different product lines
Merchandise depth: • choices available in each product line
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Figure 16.1: Classification of Retailers by mdse. Selection
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Classifying Retail Stores (cont’d)
• Retail FormatConvenience stores
Supermarkets
Specialty stores
Discount stores
Warehouse clubs
Factory outlet stores
Department stores
Hypermarkets
KOHL’S
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Non-store Retailing
• Any method a firm uses
• to complete an exchange
• that does not require
• a customer to visit a store
LL BEAN
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Nonstore Retailing (cont’d)
• Direct sellingDoor-to-door salesParty plan systemMultilevel network:
• a master distributor recruits other people to become distributors
Illegal pyramid schemes: • people pay money to advance in company,
profiting from others who might join
• Automatic vendingAMWAY
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B2C E-commerce
• (B2C) e-commerce:
• online exchange • between companies & individual consumers
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B2C E-commerce
• Benefits of B2C e-commerceFacilitates global marketplace exchanges Increases consumer convenience fulfills experiential needs. For specialized businesses.price information available.reduce business costs.
DOGTOYS.COM
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B2C E-commerce (cont’d)
• Limitations of B2C e-commerceCustomers must wait
• to receive products.
poorly designed Sites. Security concerns.Internet fraud Can’t touch-and-feel”.
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B2C E-commerce (cont’d)
• More Limitations
• Firms need “bricks-and-mortar” presence to maintain base of loyal customers.
• Developing countries with cash economies can’t easily pay for Internet purchases.
PEAPOD.COM
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B2C E-commerce (cont’d)
• One More Limitation
• Online inventory
• may cannibalize
• major retailer store sales. (Victoria Secret catalog??)
PEAPOD.COM
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B2C’s Effect on the Future of Retailing
• Virtual channels unlikely to replace traditional ones.
• Stores must evolve to lure shoppers away from computers.
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B2C’s Effect on the Future of Retailing
• In destination retail, • consumers will visit stores • for total entertainment
experience.
• MOA & amusement park• West Edmonton Mall• Nike Store (Chicago)
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Retailing as Theater
• Store image: • the way a retailer • is perceived • in the marketplace • relative to the competition
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Retailing as Theater
• Store image: • Atmospherics: the use of:• color, lighting, • scents, furnishings, • sounds, other design elements • to create a desired setting
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Figure 16.2: Mapping a Store’s Personality
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Store Image (cont’d)
• Store design: setting the stageStore layout:
• arrangement of merchandise in store – determines traffic flow – (grid layout vs. free-flow layout)
Fixture typemerchandise densitysound of musicColor & lighting
• to set a mood
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Store Image (cont’d)
• Store personnel: should complement a
store’s image
• Pricing policyPrice points/ranges of store’s merchandise helps establish image
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Retailing as Theater (cont’d)
• Store locationTypes of store locations
• Business districts • Shopping centers• Freestanding retailers• Nontraditional store locations
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Retailing as Theater (cont’d)
• Store location (Site selection)• Store’s trade area:
–geographic zone that accounts for the majority of its sales and customers
–Primary – Secondary - Tertiary
•Saturated trade area•Understored trade area •Overstored trade area
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TOP RETAILERS
• www.stores.org
• Top 100 retailers (U.S)
• Top 200 global retailers
• Retailer of the year
• NRF conferenceNew York City - January
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Non-traditional retailing
• Tourism retailingSouvenir shops
• Museums, events, resorts
Shopping trips• MOA, Dallas, New York City
• Secondary retailingGarage salesThrift shopsConsignment retailers
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The end
• Go shopping
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Real People, Real Choices
• Eskimo Joe’s (Stan Clark)• A new Oklahoma law raised the legal drinking
age from 18 to 21.• How to ensure that Eskimo Joe’s would survive
the new law? Option 1: convert the beer bar into a full-service restaurant. Option 2: continue operating as a beer bar and offset declining beer sales with an increase in apparel sales. Option 3: close Eskimo Joe’s bar and refocus on building the growing apparel business.
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Real People, Real Choices
• Eskimo Joe’s (Stan Clark)• Stan chose option 1: convert
the beer bar to a full- service restaurant focused on selling great food.The success was immediate, and Stan
credits the result with paying close attention to the quality of food and service.
ESKIMOJOES.COM
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Discussion
• The wheel-of-retailing theory suggests the retailer’s normal path is to enter the marketplace with lower-priced goods and then increase quality, services, and prices. --Why do you think this happens? --Is it the right path for all retailers? --Why or why not?
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Discussion
• Wal-Mart has become a dominant retailer in the U.S. marketplace, accounting for over 30 percent of the total sales of some products. --Is this good for consumers? --For the retail industry?
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Discussion
• Department stores may be declining in popularity in the United States but remain the primary place to shop in other countries such as Japan.--Why do you think this is so?
--Can department stores in the U.S. turn this trend around?
MACY’S
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Group Activity
• You and two friends decide to open a combination coffee shop and bookstore near your college. To attract college students and other customers, you’ll need to carefully design the store image. --Develop a detailed plan that specifies how your group will use atmospherics to create the store image.
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Discussion
• Experts predict a rosy future for B2C e-commerce, with exponential increases in Internet sales of some product categories within a few years. --What effect do you think the growth of e-retailing will
have on traditional retailing? --In what ways will this be good for consumers, and in
what ways will it not be so good?
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Discussion
• Pyramid scheme promoters recruit at frenzied meetings that make potential members fearful of passing up a great opportunity if they don’t join.--Why do people continue to be lured into these
schemes?
--What do you think should be done to stop these unethical promoters?
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Discussion
• Macy’s and other stores use vending machines to sell electronics such as iPods.List other opportunities for vending
machine sales.
What are the negative and positive elements of vending sales?
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Group Activity
• Your team are business consultants for a chain of 37 traditional department stores in 12 Midwestern U.S. cities.
• The stores’ revenues have declined as specialty stores and hypermarkets have begun to squeeze them out. The chain has asked your group for suggestions to increase its business--Outline your recommendations and present them to the class.
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Group Activity
• Your client is a local caterer planning to open a new retail outlet selling take-out gourmet dinners.
• Your group of marketing consultants is examining locations: the central business district, a shopping center, a freestanding entity, or a nontraditional location. --Outline the advantages and disadvantages of each
type of location.
47
Marketing Plan Exercise
• Think about a new retail venture, a specialty store that sells timepieces such as men’s and ladies’ watches and clocks. --What retailing strategies do you recommend for the
first two years of the business—what merchandise, what store image, and what location(s)?
--What long-term retailing strategies do you recommend?
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Marketing in Action Case:You Make the Call
• What is the decision facing IKEA?
• What factors are important in understanding this decision situation?
• What are the alternatives?
• What decision(s) do you recommend?
• What are some ways to implement your recommendation?
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