chapter

RetailingRetailing

11

chapter

Learning ObjectivesLearning Objectives

11

1.1. Discuss the importance of retailing in the Discuss the importance of retailing in the U.S. economy.U.S. economy.

2. Explain the dimensions by which retailers 2. Explain the dimensions by which retailers can be classified.can be classified.

3. Describe the major types of retail 3. Describe the major types of retail operations.operations.

chapter

Learning Objectives (continued)Learning Objectives (continued)

11

4. Discuss nonstore retailing techniques.4. Discuss nonstore retailing techniques.

5. Define franchising and describe its two 5. Define franchising and describe its two basic forms.basic forms.

6. List the major tasks involved in developing 6. List the major tasks involved in developing a retail marketing strategy.a retail marketing strategy.

chapter

Learning Objectives (continued)Learning Objectives (continued)

11

7. Discuss the challenges of expanding 7. Discuss the challenges of expanding retailing operations into global markets.retailing operations into global markets.

8.8. Describe future trends in retailing.Describe future trends in retailing.

Learning Objective Learning Objective 1

Discuss the importance Discuss the importance of retailing in the U.S. economy.of retailing in the U.S. economy.

RetailingRetailing1

All the activities directly related to the sale of goods and services to the ultimate

consumer for personal, non-business use.

The Role of RetailingThe Role of Retailing

Retailing is one of the largest employers

Retailers ring up almost a third of the U.S. GDP

Industry is dominated by a few giant organizations, such as Wal-Mart

1

Learning Objective Learning Objective 2

Explain the dimensions byExplain the dimensions by which retailers can be classified.which retailers can be classified.

Classification of Retail OperationsClassification of Retail Operations

ClassificationClassificationof of

Retail Retail EstablishmentsEstablishments

Ownership

Level of Service

Product Assortment

Price

2

OwnershipOwnership

IndependentRetailers

Chain Stores

Franchises

ClassificationClassificationof of

OwnershipOwnership

2

Level of ServiceLevel of Service2

Full Service Self Service

Discount stores Exclusive storesFactory outlets Warehouse clubs

Classification SummaryClassification Summary2

Type of RetailerType of Retailer

Department StoreSpecialty StoreSupermarketConvenience StoreDrugstoreFull-line DiscounterSpecialty DiscounterWarehouse ClubsOff-price RetailerRestaurant

Service Service LevelLevel

Mod Hi-HighHighLowLowLow-ModMod-LowMod-LowLowLowLow-High

Assort-Assort-mentment PricePrice GrossGross

MarginMargin

BroadNarrowBroadMed-NarrowMediumMed-BroadMed-BroadBroadMed-NarrowMed-Narrow

Mod-HighMod-HighModerateMod HighModerateMod LowMod Lo-lowLow-lowerLowLow-High

Mod HighHighLowMod HighLowMod LowMod LowLowLowLow-High

Gross MarginGross Margin

The amount of money the retailer makes as a

percentage of sales after the cost of goods sold is

subtracted.

2

Learning Objective Learning Objective

Describe the major types Describe the major types of retail operations.of retail operations.

3

Major Types of Retail OperationsMajor Types of Retail OperationsDepartment Stores

Specialty Stores

Supermarkets

Drugstores

Convenience Stores

Discount Stores

Restaurants

3

Scrambled MerchandisingScrambled Merchandising3

The tendency to offer a wide variety of

nontraditional goods and services under one roof.

Categories of Discount StoresCategories of Discount Stores

Categories Categories of Discount of Discount

StoresStores

Full-LineDiscounters

Discount Specialty Stores

WarehouseClubs

Off-PriceDiscount Retailers

3

Mass MerchandisingMass Merchandising

Retailing strategy using moderate to low prices on

large quantities of merchandise and lower

service to stimulate high turnover of products.

3

Hypermarket and SupercenterHypermarket and Supercenter3

Hypermarket A large retail store combining

a supermarket and a full-line discount store.

SupercenterRetail store combining groceriesand general merchandise goods

with a wide range of services.

Learning Objective Learning Objective

Discuss nonstore retailing techniques.Discuss nonstore retailing techniques.

4

Nonstore RetailingNonstore Retailing

Major FormsMajor Formsofof

NonstoreNonstoreRetailingRetailing

Automatic Vending

Direct Retailing

Direct Marketing

Electronic Retailing

4

Direct RetailingDirect Retailing4

Door-to-Door

Office-to-Office

Home SalesParties

Direct RetailersDirect Retailerssell products:sell products:

Direct MarketingDirect Marketing4

Telemarketing

Catalogs & Mail Order

Direct Mail

Types Types of of

DirectDirectMarketingMarketing

Electronic Retailing

Electronic RetailingElectronic Retailing

On-Line Retailing

Shop-at-Home NetworksTypes Types ofof

ElectronicElectronicRetailingRetailing

4

Learning Objective Learning Objective

Define franchising and Define franchising and describe its two basic forms.describe its two basic forms.

5

Basic Forms of FranchisingBasic Forms of Franchising

Business FormatFranchising

Product and Trade Name FranchisingBasic FormsBasic Forms

of of FranchisingFranchising

5

Basic Forms of FranchisingBasic Forms of Franchising

Product and Trade Name Franchising

Dealer agrees to sell certain products provided by a manufacturer

or wholesaler.

BusinessFormat

Franchising

An ongoing business relationship between a franchiser

and a franchisee.

5

Learning Objective Learning Objective 6

List the major tasks involved List the major tasks involved in developing a retail marketing strategy.in developing a retail marketing strategy.

Retail Marketing StrategyRetail Marketing Strategy

Develop the “Six P’s”

Define & Select a Target MarketKey Tasks Key Tasks

in in StrategicStrategicRetailingRetailing

6

Defining a Target MarketDefining a Target Market

STEP 1:Segment the Market

Demographics

Geographics

Psychographics

6

Choosing the Retailing MixChoosing the Retailing Mix

STEP 2:Choose the Retailing Mix

Product

Price

Promotion

Place

Personnel

Presentation

6

The Retailing MixThe Retailing Mix

TargetTargetMarketMarket

Product

Price

Promotion

Place

Personnel

Presentation

6

Product OfferingProduct Offering

The mix of products offered to the consumer by the retailer; also called the product assortment or

merchandise mix.

6

Retail Promotion StrategyRetail Promotion Strategy6

RetailRetailPromotion Promotion

StrategyStrategy

Advertising

Public Relations

Publicity

Sales Promotion

The Proper LocationThe Proper Location6

Large, long-term commitment of resources

Location will affect future growth Local environment may change

over time

LocationLocation6

FreestandingStore

ShoppingCenter

Mall

LocationLocationDecisionsDecisions

Shopping Center and MallShopping Center and MallLocationsLocations

AdvantagesAdvantages

Design attracts shoppers

Anchor stores draw customers

Ample parking Unified image

DisadvantagesDisadvantages

Expensive leases Failure of common

promotion efforts Lease restrictions Anchor store

domination Direct competitors

6

PricePrice

QualityImage

High Price Low Price

Good Value

6

Presentation of the Retail StorePresentation of the Retail StoreEmployee Type & Density

Merchandise Type & Density

Fixture Type & Density

Sound

Odors

Visual Factors

Factors Factors inin

CreationCreationof a Store’sof a Store’s

Atmosphere Atmosphere

6

Personnel and Customer ServicePersonnel and Customer Service

Suggestive Selling

Trading UpTwo Common Two Common

SellingSellingTechniquesTechniques

6

Learning Objective Learning Objective

Discuss the challenges of Discuss the challenges of expanding retailing operations expanding retailing operations

into global markets.into global markets.

7

Global RetailingGlobal Retailing

Spread of communication and mass media

Lowering of trade barriers and tariffs

Growth potential in underserved

markets

Reasons for Reasons for Global ExpansionGlobal Expansion

7

Global RetailingGlobal RetailingMarket Size & Economics

Infrastructure & Distribution

Competition

Operations

Financial & Tax Reporting

Merchandise Acceptability

Partnering Capability

Factors UsedFactors Usedto Analyzeto Analyze

Global Retail Global Retail MarketsMarkets

7

Global RetailingGlobal Retailing

Prerequisites forPrerequisites forGoing GlobalGoing Global

Secure DomesticPosition

Long-TermPerspective

ConsistentGlobal andCorporateStrategies

7

Learning Objective Learning Objective

Describe future trends in retailing.Describe future trends in retailing.

8

Trends in RetailingTrends in Retailing

Trends in Trends in RetailingRetailing

Entertainment

Convenience and Efficiency

Customer Management

8

Customer ManagementCustomer Management8

Customer Relationship

MarketingLoyalty

Programs

Clienteling

CustomerCustomerManagementManagement

StrategiesStrategies