chapter 8- retailing
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CHAPTER 8RETAILING
Definition of retailing
All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.
Retailing
Classification of retail operations
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
1) Classification of ownership
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
Owned by a single person or partnership and not part of a larger retail institution, eg. Florists, shoe stores, hair salons, bakery shop.
Owned by a single person or partnership and not part of a larger retail institution, eg. Florists, shoe stores, hair salons, bakery shop.
Owned and operated as a group by a single organization.
The administrative tasks and purchase of merchandise are handled by the home office for the entire chain, eg. Starbucks, Kamdar, Jakel.
Owned and operated as a group by a single organization.
The administrative tasks and purchase of merchandise are handled by the home office for the entire chain, eg. Starbucks, Kamdar, Jakel.
The right to operate a business or sell a product.
Owned and operated by individuals but are licensed by large supporting organization, eg. KFC, McDonalds, Pizza Hut.
The right to operate a business or sell a product.
Owned and operated by individuals but are licensed by large supporting organization, eg. KFC, McDonalds, Pizza Hut.
Level of serviceLevel of service
The level of service that retailers provide can start from full service to self service.
Some retailers provide high levels of service (eg. Boutique) which provide consultation, alterations, gift wrapping, to delivery.
But some retailers operate their stores with self services, such as petrol kiosks.
The level of service that retailers provide can start from full service to self service.
Some retailers provide high levels of service (eg. Boutique) which provide consultation, alterations, gift wrapping, to delivery.
But some retailers operate their stores with self services, such as petrol kiosks.
2) Level of service
Level of service
Full Service Self Service
Discount stores Exclusive storesFactory outlets Warehouse clubs
Types of stores and their characteristics
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
3) Product Assortment
Retailers classify their stores through product assortment according to the breadth and depth of their product line.
Eg; Toy R Us – concentrated on product assortment bycarrying single / narrow product lines.
4) Price
GrossMargin
GrossMargin
The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.
Retailers position their stores by price, eg. Mydin and factory outlets offer low prices to attract shoppers.
Major types of retail operations
Department StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants
Major types of retail operations Department Stores - Consists of several department under one roof and carry wide variety
of shopping and specialty goods. - Purchases are made within each department.
For example: Metrojaya, Parkson Grand and Aeon Jaya Jusco.
Department Stores - Consists of several department under one roof and carry wide variety of shopping and specialty goods.
- Purchases are made within each department. For example: Metrojaya, Parkson Grand and Aeon Jaya Jusco.
Specialty Stores - Merchandise is tailored to specific target markets, such as sporting goods, children clothing, pet supplies. - Price is a secondary consideration to consumers.
- These stores provide a low-risk testing ground for many new products. For example, Al Ikhsan, Toy R Us and Padini.
Specialty Stores - Merchandise is tailored to specific target markets, such as sporting goods, children clothing, pet supplies. - Price is a secondary consideration to consumers.
- These stores provide a low-risk testing ground for many new products. For example, Al Ikhsan, Toy R Us and Padini.
Supermarkets – This type of retailer is a large, departmentalized self service, low cost, low margin, high volume retailer that specializes in fresh food, dried food, and daily non-food households. - Offer large product varieties with focus on product assortments.
- Located near to housing area, eg. Jaya Supermarket & Jaya Jusco Supermarket.
Supermarkets – This type of retailer is a large, departmentalized self service, low cost, low margin, high volume retailer that specializes in fresh food, dried food, and daily non-food households. - Offer large product varieties with focus on product assortments.
- Located near to housing area, eg. Jaya Supermarket & Jaya Jusco Supermarket.
Drugstores – These stores sell medicines, health care products like vitamins and treatment oil and toiletries. Some store have pharmacists who give advice and distribute controlled and prescribed m medicines. - For example, Watson and Guardian Pharmacy..
Drugstores – These stores sell medicines, health care products like vitamins and treatment oil and toiletries. Some store have pharmacists who give advice and distribute controlled and prescribed m medicines. - For example, Watson and Guardian Pharmacy..
Convenience Stores- defined as a miniature supermarket, carrying only a limited line of convenience goods.
- Located near to residential area that are open for long hours seven days a week and fast services.- Price normally higher as compared to supermarkets.- For example: 7-Eleven & Kedai Mesra (Petronas)
Convenience Stores- defined as a miniature supermarket, carrying only a limited line of convenience goods.
- Located near to residential area that are open for long hours seven days a week and fast services.- Price normally higher as compared to supermarkets.- For example: 7-Eleven & Kedai Mesra (Petronas)
Discount Stores- a retailer that competes on the basis of low prices, high turnover, and high volume of merchandise. - There are 4 types of discount stores, full line discount stores or mass merchandise, supercenters, specialty discount stores and off- price retailers.
Discount Stores- a retailer that competes on the basis of low prices, high turnover, and high volume of merchandise. - There are 4 types of discount stores, full line discount stores or mass merchandise, supercenters, specialty discount stores and off- price retailers.
Restaurants - Straddle the line between retailing establishments and service establishments. - Tangible products are food and drinks. Service elements are food preparation and food service. - For example Restaurants Sri Thai.
Restaurants - Straddle the line between retailing establishments and service establishments. - Tangible products are food and drinks. Service elements are food preparation and food service. - For example Restaurants Sri Thai.
Department Stores
Department Stores
Specialty Stores
Specialty Stores SupermarketSupermarket DrugstoresDrugstores Convenience
StoresConvenience
StoresDiscount
StoresDiscount
Stores RestaurantsRestaurants
ScrambledMerchandising
ScrambledMerchandising
Full-line
Specialty
Warehouse
Off-price
supercenter
extreme- value
categorykiller
factoryoutlet
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LO3
Non Store RetailingNon Store Retailing
Non Store Retailing
Refers to shopping without visiting a store and is currently growing faster than in store shopping because of consumer demand for convenience.
Non-store retailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
Non-store retailing Automatic Vending – is a form of non store retailing that uses automated machine.
- can found everywhere to sell a wide variety of convenience and impulse goods. For example candy, snacks and drinks. - Product assortments are narrow, prices are moderate and there is no service.
Automatic Vending – is a form of non store retailing that uses automated machine. - can found everywhere to sell a wide variety of convenience and impulse goods. For example candy, snacks and drinks. - Product assortments are narrow, prices are moderate and there is no service.
Direct Retailing – is selling through personal contact to homes, offices, or at home sales parties such as techniques used by Avon dealers selling cosmetics among
office workers and Tupperware parties organized by housewives or sales in the office.
Direct Retailing – is selling through personal contact to homes, offices, or at home sales parties such as techniques used by Avon dealers selling cosmetics among
office workers and Tupperware parties organized by housewives or sales in the office.
Direct Marketing – sometimes or called direct marketing, through various advertising media that interact with consumers, generally calling the consumer to make direct response. - For example: direct mail, catalogs and telemarketing.
Direct Marketing – sometimes or called direct marketing, through various advertising media that interact with consumers, generally calling the consumer to make direct response. - For example: direct mail, catalogs and telemarketing.
Electronic Retailing – Online retailing is available to users with computers and access to internet. More convenience and less costly. For example Amazon.com & Ebay.Com.
- Television home shopping allows consumers to watch a shopping channel on which products are display and they can order through telephone.For example Smartshop.
Electronic Retailing – Online retailing is available to users with computers and access to internet. More convenience and less costly. For example Amazon.com & Ebay.Com.
- Television home shopping allows consumers to watch a shopping channel on which products are display and they can order through telephone.For example Smartshop.
Automatic VendingMachine
Direct Retailing
Electronic Retailing
Non-store retailing techniques
Vending
Direct retailing
Direct marketing
Electronic retailing
direct mailcatalogstelemarketing
onlineshop at home
Nonstore RetailingNonstore Retailing
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A franchise is a continuing relationship in which a franchiser grants to a franchisee the business rights to operate or to sell aproducts.
• The franchisor originates the trade name, product, method of operation, etc.
• The franchisee, in return pays the franchisor for the right to use its name, product or business method.
FranchisingLO5
Basic forms of franchising
Business FormatFranchising
Business FormatFranchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Franchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Dealer agrees to sell in products provided by a manufacturer or wholesaler.Eg. Pepsi bottler in Malaysia is licensedTo bottle and sell Pepsi’s soft drinks in Malaysia.
Dealer agrees to sell in products provided by a manufacturer or wholesaler.Eg. Pepsi bottler in Malaysia is licensedTo bottle and sell Pepsi’s soft drinks in Malaysia.
BusinessFormat
Franchising
BusinessFormat
Franchising
An ongoing business relationship between a franchiser and a franchisee.For example, McDonalds, KFC and Secret Recipe.
An ongoing business relationship between a franchiser and a franchisee.For example, McDonalds, KFC and Secret Recipe.