19.4.2016

1

Retail Institutions by Ownership

4-1

1

4-2

2

Independent

Chain

Franchise

Leased department

Vertical marketing system

Consumer cooperative

4-3

3

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

4-4

4

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

4-5

5

6

19.4.2016

2

7

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

8

The Hong Kong

Dispensary was

founded in Hong

Kong in 1841

9 10

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

4-11

11 12

19.4.2016

3

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

4-13

13

14

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

4-15

15

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

4-16

16

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%

17

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

18

19.4.2016

4

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

19

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

4-20

20

4-21

Functions:

Manufacturing

Wholesaling

Retailing

Ownership:

Independent Manufacturer

Independent Wholesaler

Independent Retailer

21

4-22

Partially Integrated Channel System

Functions:

Manufacturing

Wholesaling

Retailing

Ownership:

Two channel members own all facilities and

perform all functions.

22

4-23

Fully Integrated Channel System

Functions:

Manufacturing

Wholesaling

Retailing

Ownership:

All production and distribution functions

are performed by one channel member.

23

5-24

Retail Institutions by Store-Based Strategy Mix

24

19.4.2016

5

5-25

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

5-26

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

27

Retail Mgt. 11e (c) 2010 Pearson Education,

Inc. publishing as Prentice Hall5-28

28

1954-1974: Migros Trucks

1975-1979: Koç Group investments

1350 Migros and 35 Macro Centers in Turkey;

46 Ramstores in Kazakhstan and Macedonia.

29 30

19.4.2016

6

31 32

33

35

Retail institutions pass through identifiable life stages

introduction

growth

maturity

decline

36

19.4.2016

7

Mergers, diversification

Cost-containment and value-driven retailing

37

5-38

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

38

5-39

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

39

5-40

Location:

Neighborhood

Merchandise:

Medium width

and low depth

of assortment;

average quality

Prices:

Average to

Above average

Atmosphere and

Services:

Average

Promotion:

Moderate

40

5-41

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

41

5-42

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

42

19.4.2016

8

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/

43

5-44

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

44

45 5-46

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

46

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

48

19.4.2016

9

5-49

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

49

5-50

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

50

is a fashion label based in Switzerland. The company is represented worldwide in 38 countries with over 800 stores

FOCUS: Young women’s apparel

51

52

5-53

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

53

54

In 2015, sales of $27 billion

in 870 stores in US

Omnichannel retailer

19.4.2016

10

5-55

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

55

56

57

Every day low prices in limited service environment

5-58

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

58

59 5-60

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

60

19.4.2016

11

5-61

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

61

German based, since 1964

750 wholesale stores in 25 countries; SALES: $ 29.7 bn (2015)

In Turkey, since 1990

62

Street selling

5-63

63