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Retail Institutions by Ownership
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Independent
Chain
Franchise
Leased department
Vertical marketing system
Consumer cooperative
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99.8% of overall enterprises are small and medium sizedenterprises; approx. 40% of them has activities in retailingindustry in Turkey.
In theWorld, account for one-third of total store sales
70% of independents operated by owners and their families
Why so many? Ease of entry
From the local florist to the hardware store to the funky boutique
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Advantages
Flexibility in formats, locations, and strategy
Control over investment costs, personnel functions, and strategies
Personal image
Consistency and independence
Strong entrepreneurial leadership
Disadvantages
Lack of bargaining power
Lack of economies of scale
Labor intensive operations
Over-dependence on owner
Limited long-run planning
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Operate multiple outlets under common ownership
Engage in some level of centralized or coordinated purchasing and decision making
In the U.S., there are roughly 110,000 retail chains operating about 900,000 establishments
4-8
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The Hong Kong
Dispensary was
founded in Hong
Kong in 1841
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Advantages
Bargaining power
Cost efficiencies
Efficiency maintained by computerization, warehouse sharing, and other functions
Defined management philosophy
Considerable efforts in long-run planning
Disadvantages
Limited flexibility
Higher investment costs
Complex managerial control
Limited independence among personnel
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A contractual agreement between a franchisor and a retail franchisee that allows the franchisee to conduct business under an established name and according to a given pattern of business
Franchisee pays an initial fee and a monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in an area
IN US The number of franchise establishments increased 1.7% in 2015, franchise employment was up 3.0%.
Adding 278,000 direct jobs to the economy this year for a total of 9.1 million
The number of establishments will grow this year by 13,359, or 1.7 percent, to 795,932
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http://www.franchise.org/
Product/ Trademark
franchisee acquires the identity of a franchisor by agreeing to sell products and/or operate under the franchisor name
franchisee operates autonomously
Business Format
franchisee receives assistance: location, quality control, accounting systems, startup practices, management training
common for restaurants, real-estate
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Advantages
low capital required
acquisition of well-known names
operating/ management skills taught
cooperative marketing possible
exclusive rights
less costly per unit
Disadvantages
over-saturation could occur
franchisors may overstate potential
contractual confinement(limitations)
agreements may be cancelled or voided
royalties are based on sales, not profits
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Initial payment: 30.000 USD + VAT
Total investment required: 500.000- 1,100,000 USD + VAT (depending on location and size)
10 years long agreement
Application First interviewOn the job evaluation (5 days) Last interview with top management 6-8 months long training
Over monthly net sales
ROYALTY: 11%
FOR ADVERTISEMENTS : 5%
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https://www.mcdonalds.com.tr/CMSFiles/Image/Download/Franchisingbrosur.pdf
http://fortune.com/2016/03/08/mcdonalds-mccafe-gay-ad-watch/
Since 1970
Number of sales point over 40,000
More than 450 Flormar stores
Sales in more than 80 countries
French cosmetics group Yves Rocher has bought a 51-percent stake in Turkish beauty products company Flormar in 2012
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A leased department is a department in a retail store that is rented to an outside party
The proprietor is responsible for all aspects of its business and pays a percentage of sales as rent
The department store sets operating restrictions to ensure consistency and coordination
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Benefits
provides one-stop shopping to customers
reduces store costs
provides a stream of revenue
Potential Pitfalls
lessees may negate store image
procedures may conflict with department store
problems may be blamed on department store rather than lessee
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Functions:
Manufacturing
Wholesaling
Retailing
Ownership:
Independent Manufacturer
Independent Wholesaler
Independent Retailer
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Partially Integrated Channel System
Functions:
Manufacturing
Wholesaling
Retailing
Ownership:
Two channel members own all facilities and
perform all functions.
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Fully Integrated Channel System
Functions:
Manufacturing
Wholesaling
Retailing
Ownership:
All production and distribution functions
are performed by one channel member.
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Retail Institutions by Store-Based Strategy Mix
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A strategy mix is the firm’s particular combination of:
store location
operating procedures
goods/services offered
pricing tactics
store atmosphere
customer services
promotional methods
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Must be price-oriented and cost efficient
Must be upscale
Must be convenient
Should offer a dominant assortment
Should offer superior customer service
Must be innovative or exclusive
Retail Mgt. 11e (c) 2010 Pearson Education,
Inc. publishing as Prentice Hall5-27
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Retail Mgt. 11e (c) 2010 Pearson Education,
Inc. publishing as Prentice Hall5-28
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1954-1974: Migros Trucks
1975-1979: Koç Group investments
1350 Migros and 35 Macro Centers in Turkey;
46 Ramstores in Kazakhstan and Macedonia.
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Retail institutions pass through identifiable life stages
introduction
growth
maturity
decline
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Mergers, diversification
Cost-containment and value-driven retailing
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Standardizing procedures, store layouts, store size, and product offerings
Using secondary locations
Placing stores in smaller communities
Using inexpensive construction materials
Using plainer fixtures and displays
Buying refurbished equipment
Joining cooperative buying and advertising
Creatively financing inventories
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Food-Oriented
Convenience store
Conventional supermarket
Food-based superstore
Combination store
Box (limited-line) store
Warehouse store
General Merchandise
Specialty store
Traditional department
Full-line discount store
Variety store
Off-price chain
Factory outlet
Membership club
Flea market
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Location:
Neighborhood
Merchandise:
Medium width
and low depth
of assortment;
average quality
Prices:
Average to
Above average
Atmosphere and
Services:
Average
Promotion:
Moderate
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Location:
Neighborhood
Merchandise:
Extensive width
and depth
of assortment;
average quality;
manufacturer,
private, & generic brands
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers,
and coupons
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Location:
Community shopping
center or isolated site
Merchandise:
Full assortment plus
health and beauty aids
and general
merchandise
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers
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Whole Foods Market Inc. is an American supermarket chain specializing in organic food that opened on September 20, 1980, in Austin, Texas
http://www.wholefoodsmarket.com/
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Location:Community shopping center
or isolated site
Merchandise:
Full assortment plus
health and beauty aids
and general merchandise
Prices:
Competitive
Atmosphere and
Services:
Average
Promotion:
Heavy use of
newspapers, flyers
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Location:
Neighborhood
Merchandise:
Low width and depth of
assortment; few
perishables; few national
brands
Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none
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47 5-48
Location:
Secondary site, often in
industrial area
Merchandise:
Moderate width and
low depth of
assortment; emphasis on
manufacturer brands
bought at discount
Prices:
Very low
Atmosphere and
Services:
Low
Promotion:
Little or none
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Food-Oriented
Convenience store
Conventional supermarket
Food-based superstore
Combination store
Box (limited-line) store
Warehouse store
General Merchandise
Specialty store
Traditional department
Full-line discount store
Variety store
Off-price chain
Factory outlet
Membership club
Flea market
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Location:
Business district or
shopping center
Merchandise:
Very narrow width and
extensive depth of
assortment; average to
good quality
Prices:
Competitive to
Above average
Atmosphere and
Services:
Average to excellent
Promotion:
Heavy use of displays
Extensive sales force
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is a fashion label based in Switzerland. The company is represented worldwide in 38 countries with over 800 stores
FOCUS: Young women’s apparel
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Location:
Business district, shopping
center or isolated store
Merchandise:
Extensive width and
depth of
assortment; average to
good quality
Prices:
Average to
Above average
Atmosphere and
Services:
Good to excellent
Promotion:
Heavy ad and catalog
use; direct mail;
personal selling
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In 2015, sales of $27 billion
in 870 stores in US
Omnichannel retailer
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Location:
Business district, shopping
center or isolated store
Merchandise:
Extensive width and
depth of
assortment; average to
good quality
Prices:
Competitive
Atmosphere/Services:
Slightly below
average to average
Promotion:
Heavy on newspapers;
price-oriented; selling
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Every day low prices in limited service environment
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Location:
Business district, shopping
center or isolated store
Merchandise:
Moderate width and
poor depth of
assortment;
average to good quality;
low continuity
Prices:
Low
Atmosphere/Services:
Below average
Promotion:
Use of newspapers;
brands not advertised;
limited selling
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Location:
Out of the way site
or discount mall
Merchandise:
Moderate width and
poor depth of
assortment;
low continuity
Prices:
Very Low
Atmosphere/Services:
Very low
Promotion:
Little
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Location:
Isolated store or
secondary site
Merchandise:
Moderate width and
poor depth of
assortment;
low continuity
Prices:
Very Low
Atmosphere/Services:
Very low
Promotion:
Little;
some direct mail
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German based, since 1964
750 wholesale stores in 25 countries; SALES: $ 29.7 bn (2015)
In Turkey, since 1990
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Street selling
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